September 1, 2017
CapitalPress.com
3
Smaller apple crops elsewhere may
benefit Washington’s marketers
By DAN WHEAT
Capital Press
YAKIMA, Wash. —
Smaller apple crops elsewhere
in the U.S. and in Mexico,
Canada and Europe may help
Washington marketers main-
tain sales and prices for the
state’s huge crop this season.
The total 2017 U.S. apple
crop is estimated at 248 mil-
lion, 42-pound boxes, down 8
percent from last season.
The national forecast was
released Aug. 25 by the U.S.
Apple Association at its an-
nual outlook conference in
Chicago.
“All in all, people were op-
timistic the U.S. crop should
allow for solid prices,” said
Mike Preacher, director of
marketing at Domex Super-
fresh Growers in Yakima,
Wash. He attended the con-
ference.
The global picture looks
good for Washington apples
but it’s too early to know how
good, he said. Early Gala pric-
es are solid, he said.
Desmond O’Rourke, ap-
ple market analyst and retired
Washington State University
ag economist, said it’s doubt-
ful this season will be as good
as 2012, but that it should be
better than the 2016 season
now ending.
Washington had a huge
crop in 2012, when many oth-
er apple-producing regions
were down. It enabled Wash-
ington to sell record volumes
at high prices.
O’Rourke said he sees the
year-long average wholesale
price of all varieties bouncing
back up to $25 after being $22
this past season.
Red Delicious should
climb back up to $20 from
$15 and Gala should go from
$21.50 to $22, he said. Gener-
ally, $17 to $18 is breakeven.
Michigan’s apple crop is
27 percent down at 20.3 mil-
lion boxes because of a freeze.
“It’s an easier market for
Dan Wheat/Capital Press
Susana Flores picks Gala apples at Cameron Lewis’ orchard in
East Wenatchee, Wash., on Aug. 28. Washington is starting har-
vest of a large crop and hopes to have a better season since other
apple-producing regions have lighter crops.
our guys to tap into because
it’s closer than New York,”
O’Rourke said.
New York is advancing
strongly in fresh market with
growing volumes of its new
SnapDragon and RubyFrost
varieties, developed by Cor-
nell University and marketed
by Crunch Time Marketing
Group, he said.
Mexico’s crop is down
30 percent and is Washing-
ton’s largest export market. It
should be an excellent oppor-
tunity, O’Rourke said.
“That all helps, but big
crops are always tough,” said
Andy Handley, a small grow-
er in East Wenatchee, Wash.
There’s a lot of new pro-
duction in Quincy and it’s
hard to know how big it real-
ly is, Handley said, adding he
suspects the crop may be big-
ger than forecast.
Washington’s fresh crop
is forecast at 130.9 million,
40-pound boxes. Its total
fresh and processing crop is
estimated at 159.5 million,
42-pound boxes, down 8 per-
cent from 2016.
Other state fresh and pro-
cessing forecasts: New York,
28 million, even with 2016;
Michigan, 20.3 million, down
27 percent; and Pennsylvania,
11.2 million, up 6 percent.
The next tier: Virginia, 5.2
million boxes, up 22 percent;
Oregon 4.1 million, down 10
percent; California, 5 mil-
lion, down 16 percent; North
Carolina, 2.3 million, down
7 percent; West Virginia, 2.3
million, up 21 percent; Idaho,
1.2 million, down 8 percent;
and Ohio, 1.1 million, up 40
percent.
U.S. Apple’s national fore-
cast of 248 million boxes is
even with its five-year aver-
age. It’s 400,000 boxes less
than a USDA estimate.
Mark Seetin, U.S. Apple’s
director of regulatory and in-
dustry affairs, there’s real rea-
son to be optimistic about the
2017 season given industry
advancements of recent years.
He listed the ability to effec-
tively market larger crops,
increased productivity, im-
proved quality in storage, new
varieties aimed at consumer
preferences, innovative mar-
keting and export prospects.
Apple production was 6
percent higher in 2016 than in
1995 but on 31 percent fewer
acres, Seetin said. Yield per
acre has increase 50 percent
in the past 13 years.
In 2016, 67 percent of the
U.S. crop was fresh market
and 33 percent processed ver-
sus 51 percent fresh and 49
percent processed in 1994,
Seetin said. Fresh market
growth is driving grower in-
come, he said.
Total U.S. USDA apple
farmgate value was $3.46
billion in 2016, up 3 percent
from 2015, for a record. Even
after adjusting the 1994 crop
for inflation growers received
more from the similar-sized
2016 crop, Seetin said.
Mark Boyer, a principal in
Ridgetop Orchards, Fisher-
town, Pa., was elected chair-
man of the board at the U.S.
Apple meeting. Kaari Stan-
nard, president and owner of
New York Apple Sales, Glen-
mont, N.Y., was elected vice
chairman. Jeff Colombini,
president of Lodi Farming,
Stockton, Calif., was elected
secretary; and John Graden,
of Crunch Pak, Cashmere,
Wash., was elected treasurer.
Hop broker bankruptcy may signal industry turbulence
By MATEUSZ PERKOWSKI
Capital Press
The bankruptucy of a Wash-
ington state hop merchant may
signal renewed turbulence in
the hops market, with low-
er-than-expected demand for
the crop raising oversupply
concerns.
47 Hops of Yakima, Wash.,
has filed for Chapter 11 bank-
ruptcy protection, which
shields the company from cred-
itors while it develops a restruc-
turing plan to repay debts and
remain operational.
The hop broker has more
than $7.4 million in debt and
$4.3 million in assets, accord-
ing to the filing. In 2016, the
company earned $10.6 million
in revenues, up from $7.1 mil-
lion the previous year.
Douglas MacKinnon, the
company’s president, did not
respond to a request for com-
ment, but on 47 Hops’ website
he blames the bankruptcy on
slower growth in the craft beer
market.
“Unfortunately, during the
past several years, brewers fu-
eled by optimism contracted
for more hops than they now
need,” he wrote.
Some brewers have delayed
paying for hops and taking de-
livery of the crop, saddling 47
Hops with a higher inventory
and debt burden, according to
MacKinnon.
Judging from USDA sta-
tistics, 47 Hops is not alone in
this predicament.
Earlier this year, growers
and dealers held hops stocks of
105 million pounds, three times
the amount held by brewers, ac-
cording to the agency.
To compare, growers and
dealers held hop stocks of 64
million pounds five years earli-
er, while brewers held 53 mil-
lion pounds of the crop.
The growing inventories
reflect excessive enthusiasm
among brewers and farmers,
who both overestimated de-
mand for “aroma” hops used
in craft beers, said John Annen,
a hop grower near Mt. Angel,
Ore., who supplies 47 Hops.
“There are too many aroma
hops around. Too many in the
ground, too many in the ware-
house,” Annen said.
Craft brewers expected the
steep upward trajectory of their
beer sales to remain constant,
spurring farmers to plant more
hops, he said. “One thing builds
on another.”
When sales weren’t as ro-
bust as projected, brewers
pushed back deliveries of hops,
Annen said. “It just starts back-
ing up.”
In 2014, sales of craft beer
grew 22 percent by value and
18 percent by volume, but last
year, sales increased 10 percent
by value and 6 percent by vol-
ume, according to the Brewers
Association.
“We have seen a deceler-
ation,” said Bart Watson, the
group’s chief economist.
Craft beers typically require
three to four times more hops
per barrel than conventional
domestic beer, so the upswing
in craft beer production had
an outsized impact on hop de-
mand, he said.
Many of the new brewer-
ies are small and lack storage
space, though, which partly
helps explain the rising hop
stocks among dealers and
growers, Watson said.
However, in some areas, the
craft beer market has grown in-
creasingly competitive but re-
tailers have been slower to add
shelf space and tap handles to
accommodate new brands, he
said.
“It’s crowded out there,”
Watson said.
The hop industry is no
stranger to turmoil.
In 2007, a shortage of hops
caused brewers to start “panic
buying,” but strong production
soon reversed that trend, lead-
ing to an oversupply in 2009,
said Ann George, executive
director of the Hop Growers
of America. The situation has
grown more complicated as
farmers now produce numerous
hop cultivars to meet brewers’
needs, so there can be surpluses
of some varieties and shortages
of others, she said.
Don Jenkins/Capital Press
Corn grows in a dry field Aug. 29 in southwest Washington. The
federal Climate Prediction Center forecasts temperatures far above
normal in Washington during the first half of September.
An ‘incredibly dry’
Washington to heat up
Weather forecasters
issue warning
By DON JENKINS
Capital Press
Washington state, already
described in the USDA’s lat-
est crop report as “incredibly
dry,” likely will experience
temperatures much above
normal for the first 10 days
of September, the Nation-
al Weather Service warned
Tuesday.
The agency’s Climate Pre-
diction Center’s “hazardous
outlook” for heat also includ-
ed most of Oregon, Idaho and
Northern California, but the
probability of soaring tem-
peratures is particularly high
in Washington, according to
the center.
The state already has been
going through one of its hotter
and drier summers on record.
July was drier than in 2015,
when Washington suffered a
severe statewide drought. In
a report released Monday, the
USDA said that some corn
fields are not developing and
pastures are rapidly drying.
“The state as a whole has
been incredibly dry and many
of the operations were hoping
for some rain to alleviate the
dry conditions,” according to
the USDA’s National Agricul-
tural Statistics Service.
A wet winter and spring
washed away drought condi-
tions for much of the West,
but those conditions are
creeping back in, especially
in Idaho and Washington.
The U.S. Drought Monitor
last week classified 17 per-
cent of Idaho in a “moderate
drought,” up from 4 percent
the week before. A section of
northeast Washington, mak-
ing up 2 percent of the state,
was also classified as in a
moderate drought, the first
time any part of Washing-
ton has been designated in a
drought since October.
Washington State As-
sistant Climatologist Karin
Bumbaco said Tuesday that
this summer has resembled
2015, but the conditions are
comparatively favorable.
“The streams are still look-
ing decent in a lot of places,”
she said. “If we return to fall
rains, we’ll be fine.”
Sea-surface temperatures
in the Pacific Ocean, a key
indicator of the region’s com-
ing weather, are expected to
be neutral this winter. Bum-
baco said making long-range
climate forecasts will be dif-
ficult. “There’s not a strong
signal one way or the other,”
she said.
Two-thirds of the streams
monitored by the U.S. Geo-
logical Survey in Washing-
ton were running at normal
or above-normal levels on
Tuesday. Yakima River Basin
reservoirs held 112 percent of
the average amount of water
for the date, according to the
U.S. Bureau of Reclamation.
The Washington Depart-
ment of Ecology in August
issued curtailment notices to
a total of 108 irrigators in the
Chehalis and Similkameen
basins and warned 75 other ir-
rigators in three basins about
possible water shortages.
Still, it’s unlikely the state
will move toward declaring a
drought, Ecology drought co-
ordinator Jeff Marti said.
“It’s an interesting dispar-
ity between our water-supply
picture, and the dry summer
we’ve had,” he said. “It goes
to show our tank got filled up
pretty well this winter and
spring.”
Clark County, Wash.,
farmer Bill Zimmerman said
Wednesday that an extended
growing season in Western
Washington may help some
crops, but a heat wave could
have lingering effects.
He said his raspberries
produced a good crop af-
ter struggling through a wet
spring, but are now suffer-
ing in the heat. “I say we
could see about a 60 per-
cent loss for next year,” he
said.
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