Life After Alar : Apple growers, still reeling from last year’s crisis, now face higher costs and lower prices.
When Don Heinicke looks at his apple orchard--288 fertile acres tucked into a curve of the Columbia River--he sees a stream of money rushing away as fast as the river itself.
Since the furor over Alar hit nine months ago, Heinicke has had to find means to keep his fruit on the tree long enough to turn red without the controversial growth regulator--measures that add as much as $400 per acre in growing costs alone.
Without the chemical, Heinicke has tried methods ranging from complicated pruning strategies to intricate overhead sprinkler systems to redden his crop. A record Washington harvest has compounded his problems, he says; apple prices are as low as he’s seen in five years. “The lack of Alar has hurt us,” says Heinicke, managing partner of Cascade Foothills orchard. “We’ve put in all these extra costs . . . and we’ve overproduced. It’s hard to get along without that crutch.”
Heinicke has just struggled through his first harvest since the Alar controversy rocked the apple industry. It has been a harvest of drastic measures and dire prophecies throughout the nation’s apple-growing regions.
In California, where the Granny Smith is widely grown, depressed prices have trickled down from Washington state. In New England, unseasonable rains have decimated this year’s McIntosh crop. The absence of Alar has also caused many Northeastern farmers to rethink the types of apples that they grow and consider selling family orchards for development.
And in the nation’s apple capital, officials from the Washington Apple Commission have just returned from a whirlwind tour of the country, trying to increase demand for the Red Delicious--the archetypal Washington apple and the major focus of last winter’s Alar controversy.
In February, the nonprofit Natural Resources Defense Council issued a report charging that Alar residues posed an unacceptably high risk for cancer, particularly in children, who consume large amounts of apple products.
Critics of the group questioned the reliability of data used by the council to reach its conclusions. Others voiced concern about the council’s lack of responsibility, complaining that scaring consumers into taking fresh fruits and vegetables out of their diets was as damaging as the Alar itself.
The report, however, caused a furor that briefly took apples off school lunch menus and caused apple sales to plunge. The episode has changed the way that apples look and could cause shortages of several perennial favorites, like the Stayman and the Winesap, which crack without Alar treatment. And the impact is still felt.
“There have only been a few years in this century that have been catastrophes,” said Bob Riggan, president of Gwin, White & Prince, Inc., an apple marketing firm in Wenatchee, Wash. “We’ve had two in a row.”
And if demand for Washington apples doesn’t increase soon, the state’s apple industry could be heading into a third.
The first bad year was 1987, a harvest of miserable quality, one with problems so severe that even Alar didn’t help. Washington growers make their money from so-called fresh market apples, the reddest, prettiest fruit. These are apples raised for sale to supermarkets, not processing companies, made to munch, not mash into juice and sauce.
The rule of thumb is that 75% of Washington’s apple crop is sold in markets throughout the world for eating and baking. Fresh market apples garner about twice the price of apples sold for processing. In 1987, the total harvest was 107 million bushels, but only 68 million, or 63%, were good enough for the fresh market.
“There was a horrendous diversion to processing,” said Charles E. St. John, spokesman for the apple commission. “There were record-high daytime temperatures in September and October. The reds didn’t turn red. Those that did sunburned.”
When the next year’s apple harvest ended in November, 1988, weather again was on the Washington growers’ side. Public opinion, however, was not. Of the 84 million bushels of apples picked, nearly 76% were good enough to sell, and wholesale prices were high--but only for four months.
“Had we followed the trend line we were on up through February (1989), the average season price would have been close to $15 a box,” St. John said. “It would have been an excellent year.”
Instead, the average price for a bushel of apples--also known as a 42-pound box--dropped to $12.62, St. John said. And the price for a bushel of extra fancy Red Delicious had an even more precipitous plunge: September, 1988, $18.67 per bushel. June, 1989, $8.40 per bushel.
For Heinicke of Cascade Foothills in Chelan, the change was quick and dramatic. All of Heinicke’s apples from tart green Granny Smiths to robust Rome Beauties are stored, shipped and sold through a packing house not far from his ranch. The firm starts paying him for his fall harvests in December of the same year, based on market estimates.
Heinicke gets a check a month for 10 months, checks representing a 10th of his entire harvest’s value. In January, for example, he received about $175,000 in payment for his 1988 harvest. March and April checks were closer to $120,000.
“After that, it started going back up slowly,” he said. “But it never did get back up to the $175,000 we had originally.”
What happened? Apples simply stopped selling. After the two largest school districts in the nation--Los Angeles Unified and New York City--pulled apples and apple products from their cafeteria trays, smaller districts around the nation followed suit. Major export markets, such as Taiwan, Thailand and Hong Kong, briefly collapsed.
And consumer confidence was cut nearly in half. The Washington Apple Commission does daily phone surveys of nine major markets nationwide, including Los Angeles. In mid-February, before the NRDC report was released, 89% of the consumers asked said they definitely planned to buy apples in the future. By the end of March, only 55% said apples were on their shopping lists.
“In the work that we did, 11% said they’d reduced their usage based on chemical concerns--basically Alar,” St. John said.
As a result, 3 million to 4 million more bushels of fruit were left in storage than in previous seasons. According to the U.S. Department of Agriculture, Washington state alone lost an estimated $100 million.
The USDA kept the 1988 harvest from being a complete bust with its first apple buyout program. On July 7, the agency announced that it would spend up to $15 million to buy surplus apples and then distribute them to charities, livestock feeders and ethanol distillers. Only $9.5 million was distributed because of lack of participation in the program.
“Most of the $9.5 million went to Washington,” St. John said. “Only about $300,000 went elsewhere. On Aug. 1, the majority of the apples in the country were here in Washington.”
Riggan’s apple marketing firm diverted nearly 50,000 bushels into the program on behalf of growers big and small. The average price received was about $6.30 per bushel--about half of the average price that they could have received had they sold to markets.
But it’s a lot better than nothing, he says.
“The apple market just became a burden, selling red apples,” Riggan said. “This allowed us to really clean up the old crop apples that had the stigma. It cleaned out the pipelines for the new crop.”
Riggan has spent nearly 20 years in greater Wenatchee, a valley of rolling foothills at the base of the Cascade Mountains. Wenatchee is in Chelan County and vies with Yakima as the state’s greatest apple producer.
In November, as the two-month harvest comes to a close, its orchards are a green patchwork stitched together with stands of golden poplars. From the window of Gwin, White & Prince, Riggan watches the harvest wind down and talks of his bitterness over the Alar controversy.
“This is the saddest thing to hit the industry since I’ve been here, 19 years,” he said. “The so-called consumer groups swung the ax and devastated an industry. What’s fair in that? . . . What started as a great year turned into a nightmare.”
St. John and the apple commission are still battling for the hearts and stomachs of the nation’s consumers.
Last Sunday, St. John flew to Los Angeles, the first leg of a tour aimed at “increasing the sales of Washington apples and increasing consumer preference for Washington apples” in a year with a record volume crop and insufficient consumer demand.
It was his second such trip in less than a year and represented only the second time that the commission has taken to the road to stump for its product. The first, of course, was last March.
“In March, I was basically leading the crisis management team on Alar for the industry nationally,” he said. “I was out fighting back brush fires this spring.”
Apple commission surveys show that consumer confidence has rebounded from last winter’s depths. By June, about 80% of those surveyed said they planned to buy apples, a figure that’s held steady through August, the most recent figures available.
But the commission’s fall advertising campaign bears subtle differences from its 1988 predecessor. Last autumn, the national ad slogan was: “Bite into the best--Washington apples.” This year another line has been added to distance the crop from the Alar disaster. It’s now: “Bite into the best--Washington apples. We’ve got a whole new crop.”
To quiet any residual questions, Washington state’s Department of Agriculture instituted an emergency testing program for the 1989 harvest. From Aug. 28 to Sept. 8, technicians picked 10,000 randomly selected apples from 1,125 sites throughout the state.
“This is the first time we’ve done this,” said Mike Schwisow, deputy director of the Washington state department of agriculture. “We took as many samples in this Alar program as we have funds to do all year round in all commodities.”
The price tag: $60,000, half from the growers and half from the governor’s emergency fund. The results: Negative; no traceable Alar was found on the 1989 crop. The impact on sales: too soon to tell.
But growers, shippers and packers have a lot riding on the success of such efforts. Instead of running out of 1988 apples by August, Washington growers put 1.5 million bushels into the USDA diversion program and still had 500,000 bushels left.
Follow that with one of the biggest apple harvests in recent memory--107 million bushels worth--and you have what the apple commission likes to think of as a marketing challenge.
The harvest size has eclipsed the state’s storage capabilities, so there is pressure to sell before the unprotected apples--those not in proper bins and refrigerated rooms--go bad. That in itself pushes prices down, Alar or no.
“We’re selling at prices that we’re not happy with,” says Thomas K. Mathison, president of Stemilt Growers Inc., Washington’s largest packing and shipping house. “The truth of the matter is we have the largest crop in history. And we have to restore consumer confidence in the product.”
In one recent October week, nearly three-quarters of the apples that Stemilt sold went for less than $9 per bushel--around $1 below the break-even point for the company’s clients.
“Right now, if the market price stopped at this level, it’d be a very disappointing year for a lot of people,” Mathison said. “It’s not profitable. There’s loss there for the grower.”
And not just the Washington grower. In California, where little Alar was ever used, the most widely grown apple is the Granny Smith. And growers of the tart, green fruit have had a huge harvest, too. Kenton Kidd, president of the California Granny Smith Assn., predicts that the harvest will reach 5 million bushels, nearly double that of 1988.
But because Washington’s problems have lowered prices throughout the nation, Kidd said, Granny Smith growers could face losses of up to $20 million this season because the apples are averaging $3 to $4 less per bushel than in past seasons.
“We’re all affected by it,” he said. “We couldn’t compete with (Washington’s) low prices without being low-priced ourselves. It’s been a disastrous effect.”
Eastern New York and the New England states produce 65% of the nation’s crop of McIntosh apples, a distinctive two-tone red and green fruit. Bad weather and no Alar struck a double blow to the area’s growers.
John O’Donnell, spokesman for the New York & New England Apple Institute, figures that at least half of the area’s McIntosh growers used Alar to some degree in 1988. A very tender apple, McIntosh have a tendency to fall off the tree long before the entire harvest can be picked. Alar, he said, allows the apple to hang on the tree an extra week or two, basically doubling the harvest time.
“Recognizing there was no Alar this year, the growers geared up and hired as much help as they could, picked as fast as possible,” O’Donnell said. “But they were still losing a great deal that would fall before picked.”
Original predictions put the harvest at about 11 million bushels, O’Donnell said. But bad rains at spring blossom and harvest times, coupled with the inability to use Alar, cut the harvest down to an estimated 9 million bushels.
What growers are doing, he said, is looking at alternatives: different varieties and different use of the land. The heartier Empire apple is one possibility. Selling out entirely is another.
“You are talking about increasing populations of people in an area where land is increasing in value,” he said. “You get awfully tempted when someone says they want your acre of orchard land for $40,000, and you figure all you can get off it is $1,000 in apples. You get awfully tempted.”
Still, the lessons of Alar are not all bad for the nation’s growers. In New England, for example, apple growers realized this season that they had used Alar to keep their fruit on the tree until it was actually overripe.
Washington state’s success with its very red Red Delicious made other growers think that only red would sell, O’Donnell said. Without Alar, New England growers couldn’t get their McIntosh as red as they wanted and ended up with a crisper, tastier crop.
“We were trying to grow red McIntosh when we really shouldn’t have tried so hard,” O’Donnell said. “This has given us a reason to look more at quality, not appearance, in growing practices.”
And, like it or not, Don Heinicke has learned to make do without Alar in Washington state. It’s reduced his crop size, cost him more money, made him rethink his growing practices and made his life miserable. But, so far, it’s worked.
More light means redder apples, so he’s pruned his trees with greater precision, he said, “to open up the trees and manage for light, and we’ve thinned the apples more.” Cooler temperatures mean redder apples, so he’s installed overhead sprinklers to cool down the fruit on hot days.
“All these things cost us money and cut down on our production,” he said, “but it helped our color.”
STORING RED DELICIOUS APPLES
As the year goes on, the numbers of boxes in storage in 1989 compared to 1988 grows as a direct effect of the Alar controversy. Typically, the crop is gone in the latter part of August, around Aug 20. It wasn’t this year. The only thing that saved the day for the Washington apple industry was the USDA diversion program, announced July 7, whereby several million boxes of apples were bought by the government and diverted to non-traditional uses, such as animal feed, ethanol manufacture and food banks.
MONTH YEAR BUSHELS IN STORAGE Jan. 1 1989 28.0 million Jan. 1 1988 30.3 million Feb. 1 1989 24.2 million Feb. 1 1988 25.1 million March 1 1989 20.3 million March 1 1988 20.2 million April 1 1989 16.8 million April 1 1988 15.2 million May 1 1989 13.3 million May 1 1988 10.1 million June 1 1989 9.3 million June 1 1988 5.8 million July 1 1989 5.5 million July 1 1988 2.5 million Aug. 1 1989 2.9 million Aug. 1 1988 0.8 million
Source: Washington Apple Commission
ALAR AND THE PRICE OF APPLES When the Alar scare hit, Washington apples had been commanding record high prices for months. But in February, the effects of the scare began to show. Prices dipped to lows that growers say kept them from breaking even. The following shows the progression in the average price for a 42-pound box (a bushel) of extra fancy Red Delicious apples.
Price per bushel box, in dollars
