How Tree Fruit Growers Can Avoid the ‘Death Spiral’

The current turbulence in the apple industry – not that growers of other tree fruits are dancing in the streets – is leading many folks to say a lot of trees need to be pulled out.

The argument is not only is there too much fruit on the market, but much of it is also only mediocre. What’s needed is less quantity, and more quality. Unfortunately, in the tree fruit business, that means pulling out trees.

It seemed to me that I had heard an outline of exactly this situation years ago. It turns out I have —17 years ago. I turned up a 2007 story I’d written about Oregon State University Agricultural Economist Clark Seavert’s work with growers. (Seavert retired as a professor a few years ago and is now a private consultant.) This paragraph in particular rang a bell:

“Pulling out trees is tough, Seavert concedes. But in today’s tree fruit industry, you have to be tough to survive. In fact, that’s why he believes so many growers look to cutting costs, because it’s a lot easier than biting the bullet and investing in quality. It’s just that it doesn’t always make financial sense, particularly after the tough times the tree fruit industry has undergone. ‘If you can cut your costs — without impacting your revenues — cut your costs,’ said Seavert. ‘But in today’s environment, most growers have already cut to the bone, and there’s no more to cut.’”

Then, as today, quantity wasn’t the problem, it was quality, said Seavert. Growers who focus on yields above all have to rethink that strategy because it’s a game plan for losing. “When you cut costs to save money you’re caught in a spiral, because your quality goes down,” Seavert said. “And when your quality goes down, your profits go down even more.”

It doesn’t take an economist to see where that strategy is heading, I wrote back then, and nothing’s changed. Seavert conceded it’s tough to increase quality when you don’t have the cash to invest in the practices that will increase quality and, therefore, profits. Those growers will simply have to take a very hard look at their operations. “Look internally and start assessing your blocks,” he said. “If there are any losers, get rid of them.”

One interesting note that I’d forgotten is Seavert said growers already have a pretty good idea of which blocks need to go, which led to a good line from him. “If your county Extension agent is coming out to give a tour, what blocks don’t you want them to see? Identify those losers,” he said, “and get them out of there.”

Yet another facet of the problem that I hear today is one that was true back then: Many growers are resistant to pulling blocks because they think they have to have something in the ground. Back in those days, a lot of apple growers resisted pulling their old ‘Red Delicious’ blocks. The growers conceded those old trees weren’t consistently paying off, but some years they made money. And besides, the growers argued, they couldn’t afford to replant a newer variety. How did Seavert respond? “They might not be losers every year, but over time they’re losers,” he said. “You’re better off taking them out and spreading those dollars over other acreage.”

Growers who want to avoid the death spiral should remind themselves that it’s not about quantity, it’s about quality. Any block that isn’t producing high-quality fruit should be pulled, said Seavert, repeating what today has proved to be good advice to growers who can’t bear to see their land going fallow. “Instead of farming 100 acres, you’re going to farm 80 acres,” he said, pausing for emphasis, “but you’re going to do it well.”