Why Apple Prices Collapsed in October

Chicago
By Chicago 8 Min Read

New York CNN –

As you head down the grocery aisle, perhaps picking up apple pie supplies, you might notice something interesting. The price of flour, sugar and butter? On. But the price of apples? Until the end.

From September to October, adapting to seasonal fluctuations, flour prices increased 0.9%, butter rose 2.1% and sugar prices increased 1.6%, according to the latest data on the consumer price index provided by the Bureau of Labor Statistics.

But apple prices plummeted by 7.9%.

Consumer packaged goods companies they raised the prices, influencing what shoppers in the middle aisles see. But in the dairy and produce departments, prices are more closely tied to what happens in the natural world. Bad weather, exacerbated by climate change, can mean a bad harvest, squeezing supply and driving up prices. Good weather can have the opposite effect.

Apples are plentiful (and delicious) this year thanks to favorable apple-growing weather — moderate temperatures with nice moist soil — in the spring. This, combined with typical seasonal trends, lower transportation costs and changing dynamics in the export market, has pushed prices lower this fall.

This is good for apple lovers and pastry chefs. But this puts a strain on farmers, who already face a challenging environment due to high costs and unpredictable weather.

In general, apple prices drop in the fall, because that’s when they are harvested and flood the market. But oversupply this year has made the price decline even more pronounced.

Last spring, apple growing conditions in the United States were ideal – a welcome turnaround after some difficult seasons.

Two years ago, extreme heat “cooked the apples on the trees,” said Chris Gerlach, director of industry analysis at the U.S. Apple Association, which represents the U.S. apple industry. And last year, a cold spring made pollinating bees a little sluggish. “There were tired, cold bees that weren’t going from flower to flower as they would have liked,” Gerlach said. This also meant a smaller harvest.

This year, finally, the environment was just right. “We’ve seen pretty ideal conditions” in the U.S. this year, said India Colegrave, a specialty agricultural data scientist at Gro Intelligence. “We have warmer spring temperatures and excellent soil moisture levels.”

The result? A bounty of fruit.

An apple orchard near Leavenworth, Washington.

Washington state, the country’s top apple producer, expects to produce 140 million 40-pound boxes of apples for retail sale this year, according to Jon DeVaney, president of the Washington State Tree Fruit Association. This is a marked increase from last year’s 104 million boxes and is also much higher than 2021’s approximately 123 million.

Over the summer, the US Apple Association expected that the United States overall this season we will have 1.5% more apples than last.

Competition is increasing both abroad and at home

Cheap gas made it more convenient for apple growers to ship across state lines, increasing competition between different parts of the country, Gerlach said.

And in general, more apples remain on the domestic market. In 2019, among global trade war, India imposed retaliatory tariffs on a number of products from the United States, including apples. Tariffs have dramatically reduced apple exports. India lifted those additional measures earlier this year and eventually The USDA expects apple exports to the country “they have the potential to go from $4.8 million in 2022 to $50-80 million in 2024.”

But it may not be so easy to recover, said Lynsee Gibbons, communications director of the US Apple Association.

“In the years we were absent there, they met the demand with apples from Turkey, Iran and other markets,” he said. “Now, the United States needs to…reacquaint itself with that market and re-enter it.”

THE war in Ukraine it also changed the behavior of the international apple market, said DeVaney of the Washington State Tree Fruit Association.

“Many European apples…were previously destined for Russia and Ukraine,” he said. “They are diverting their harvest to other markets in the Middle East and South Asia, which were previously major markets for US and Washington apple exports.”

For farmers, this year’s good harvest is in many ways a relief. But lower prices pose another challenge to their business.

“We’re all pretty worried this year,” said Craig Campbell, a third-generation fruit grower who owns Harmony Orchards in Washington.

“These apples today are sold here at close to, in some cases lower cost of production,” he said. “We have a lot of volume, but I don’t know if we will be able to make any money this year.”

Although gas prices have droppedApple growers face other rising costs, including labor.

“We’re under a lot of pressure,” Campbell said. “This year our production costs are not keeping pace with prices.”

Overall, price trends have not been favorable to farmers, DeVaney said.

Despite recent fluctuations, “we’ve seen fairly stable apple prices for many years,” he noted. “I’ve talked to growers who look at their sales data and say that, 10 years ago, I was getting the same price for my fruit as I am now, in dollars, so no adjustment for inflation.”

From 2008 to today, prices paid to farmers for Red Delicious apples in Washington’s Yakima Valley and Wenatchee have fluctuated up and down, but on average have remained fairly stable, according to data from Gro Intelligence. “Current [price] levels are closer to the middle of the historical range,” said Jonathan Haines, senior research analyst at Gro Intelligence.

To address rising costs and improve sustainability, many farmers have made changes to how they operate, said Todd Fryhover, president of the Washington Apple Commission, which promotes the state’s apple industry.

Some have swapped old varieties for new ones, which can be sold for a higher price, packing more trees per acre when they do so. “We’re trying to make better use of our land,” she said. “Our resources are limited, labor is limited, so we’re trying to make our orchards more efficient to reflect those challenges.”

The efforts have increased apple production over time, he said.

But replanting trees and building new infrastructure requires investments that some small farmers simply cannot afford.

These dynamics have led to more industry consolidation, Fryhover said.

“We’re seeing smaller growers fail to be competitive,” he said. “Either they have to get bigger or they have to get out.”

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