Marketing Organic Apples Successfully

by Paul Vossen, University of California Cooperative Extension farm advisor, Sonoma County, California

When harvested at proper maturity, most organic apple varieties have very good quality as fresh apples. Unfortunately, much of the fresh market volume, especially of Red Delicious, Yellow Newtown, Gravenstein, and Golden Delicious, consists of fruit picked when immature and thus, of inferior eating quality. Consequently, consumer acceptance may be poor and a potential market ruined. Organic fruit has traditionally been grown by small scale producers who usually sell fruit directly to consumers. Producers have responded to the demand for mature flavorful fruit as well as for growing it with an environmental standard.

Fulfilling Customer Needs

"Give customers what they want" is the motto of good marketers. A certain number of consumers, including apple customers, want organic fruit and are willing to pay more to satisfy their needs. Shoppers at grocery stores associate the organic label with pesticide free food, which is their main interest.

Only a small percentage of the total population is necessary to create a relatively large market. Surveys indicate that about 10 percent of Californians are very interested in purchasing organic produce, including apples, on a regular basis. That represents 3 million people in California who would purchase 54 million pounds of apples each year. The average yield per acre in California is 13 tons per acre. This means that the size of the organic apple industry for California sales is approximately 2,700 acres.

Market Size

The organic market could easily become flooded and did in 1989-90, right after the "60 Minutes" television program about Alar and the potential negative health effects of chemicals applied to apples. The next season, markets were saturated with organic fruit. (At that time, it took only one year to become certified.) Prices dropped dramatically and growers quickly learned that organic production, with its higher costs, was not worth the low prices (prices similar to conventional prices). Since growing apples organically is more costly and more risk prone, it is unlikely that major producers will go that route without the benefit of higher prices. In fact, the market has stabilized during the past several years.

Most of the 600 organic fruit growers in California are small-scale producers. Seventy-six percent have sales of less than $25,000 per year on an average sized farm of 25 acres or less. Since the trend in recent years has been that larger growers are becoming certified organic producers, it could lead to competitive pressures for existing markets. One of the standard rules in the marketplace is that if large conventional growers convert to organic and begin to flood the market with a greater supply, prices will lower for all growers. Buyers will most likely stay with their past sources, but only if the differential in price is not too great. Thus, existing organic growers and marketers should be able to sell their fruit, but at lower prices.

Major breakthroughs in organic pest control or horticultural techniques that would lower the risk of organic production and lower prices could dramatically affect existing organic apple growers. Nothing lasts forever in the market and when organic becomes mainstream, another premium category will have to be invented to position fruit that is even more pure than what is now organic.

Prices and Costs

The price of fresh market organic apples usually ranges from $5 to $10 more per box and $30 to $75 more per ton for processing fruit as compared to conventionally grown fruit. The possibility of additional income per acre looks very attractive and is a major incentive to produce for the organic market. It could just as easily be argued that the additional costs and risk demand higher prices.

Higher organic production costs derive from several factors. One is the lack of chemical thinning agents. This requires more hand thinning and doesn't prevent alternate bearing. In addition, organic pesticides are not as effective as conventional materials, therefore requiring multiple applications. Cultural methods of fertility management that are not as quickly responsive as conventional methods also contribute to higher costs, as do smaller acreage producers without volume benefits and lower yields due to greater cullage of imperfect fruit.

Since the processing market for organic fruit has consistently paid higher prices compared to the conventional market, it is profitable to seek out or develop a processing outlet. Several producers have developed dried, canned, frozen or pasteurized organic apple products. This vertical integration by itself can be a significant advantage for cash flow and sales throughout the year when fresh fruit is not available.

Processing Organic Apples

Sanitation of equipment and fruit prior to fruit processing is the primary precaution of any processing unit. Care must be taken not to contaminate fruit with any raw manure products in the orchard, which could lead to the introduction of bacteria into the food chain. With the spread of E.coli 0157:H7 in 1996 and the death of one individual from consumption of fresh apple juice, the industry is very cautious to prevent a reoccurrence of this disaster.

Another important consideration is the removal of those apples or apple parts that have been infected with codling moth. Codling moth damaged fruit has been associated with certain fungi that enter wounds created by the larvae and break down the fruit. In the breakdown process, the fungi create toxins called aflotoxins that are dangerous even in very small amounts. A well known aflotoxin called patulin has been associated with apple juice on numerous occasions. Care must be taken not to tarnish the reputation of organic apple juice with toxic contaminants.

If fruit is being cut in any way, it must be prepared in a certified facility that is periodically inspected by the State Department of Public Health. Processing fruit should be washed in a disinfectant solution that is approved by the certification agency. Fruit should be carefully inspected and if codling moth damage is present, should be cut to remove any blemished flesh. Tables, equipment, blades or anything that comes in contact with the cut fruit should be sterilized with disinfectants periodically. There are specific time and temperature requirements for proper and safe heat pasteurization. Research is now being conducted on different methods to disinfect apple juice with ozone and/or ultra violet light to retain freshness without heat pasteurization and loss of flavor.

Organic Registration and Certification

Currently, state laws and pending federal laws require organic growers to register with the California State Department of Agriculture (CDFA) annually as organic growers. CDFA monitors grower compliance with the law so that consumers are assured when purchasing organic fruit that it is really organic and grown in accordance with the law. Registration requires a sliding scale fee ranging from $25 to $2,000, depending on the gross sales of the orchard.

Additional fees are charged by the certification agency for marketing and inspection of the farm and farm records. Growers are expected to keep good records of all inputs into the land and trees in order to use the term organic. Most of the certifying agencies require three years of organic practices before fruit can be labeled as organic. During the interim period, fruit can only be labeled "Transitional to Organic," which usually carries no premium price.

This material is excerpted from an upcoming University of California Cooperative Extension organic apple production publication. For more information contact Paul Vossen, UCCE Sonoma County, 2604 Ventura Ave. Room 100, Santa Rosa, CA 95403-2894; (707) 527-2621; e-mail pmvossen@ucdavis.edu