How the apple industry is navigating the rising cost of business
It’s no secret the cost of food is a major talking point among consumers. But what do those outside the produce industry know and understand about the cost of production?
In a recent LinkedIn post, Jim Bair, president and CEO of the U.S. Apple Association, attempted to do just that by reaching more than 11,000 people. Bair elaborated in the latest episode of the "Tip of the Iceberg" podcast.
“Since 2020, the cost to buy apples is up 13%, but the cost to grow apples is up 30%,” he said. “Fuel is some of that [cost] for freight of chemicals. But the biggest contributor to that would be our No. 1 input cost, which is labor, and that continues to go up and up and up.”
Bair says the apple industry worked hard to get the Farm Workforce Modernization Act to pass both chambers — it passed in the House twice but failed in the Senate. This act would cap the adverse effect wage rate and any future increases. Bair says USApple continues to work on the Farm Workforce Modernization Act, but he doesn’t see it as an easy thing to pass in today’s political climate.
Bair says large crops of the 2022-23 and now 2023-24 seasons also complicate returns. With more apples in holding, it’s tough to move a large crop and cover the cost of growing the apples.
“Growers are telling USApple now that they’re losing anywhere from $50 to $100 per bin, and that’s just not sustainable,” he said.
Another thing complicating both grower returns and the number of apples in holding is the reduction in exports.
“The U.S. exported 22 million bushels fewer than we did in 2014 and 2015,” he said. “That’s down 41%, and a big part of that was losing the Indian market.”
Bair says in 2018, India became the second-largest export market for U.S. apples but fell victim to retaliatory tariffs in response to the U.S.’ steel and aluminum tariffs. And exporters decided to pull out of India. He says the association worked with the current administration to alleviate the tariff pressure on apples, but it takes time to reestablish in a market where other countries took the U.S. place.
“We’re shipping to India again,” he said. “At the end of this year, we’ll probably be maybe one-third of what we were in 2018. In the meantime, U.S. apple growers lost about half a billion [dollars] in sales to India. That’s painful for any sector of agriculture, and it’s especially painful for us because it took decades to build that market, so to lose it was really painful, but at least we’re back in the game again.”
Listen to this podcast episode using the player above, or click here.
