High input costs combined with declining farmgate prices are creating pressure beyond the row crop sector, according to commentary from the U.S. Apple Association. Apple producers are experiencing similar challenges as production expenses continue to rise while returns to growers weaken.
Christopher Gerlach of the U.S. Apple Association said that grower margins have been under strain for several consecutive years. "So, for the last couple of years in a row, we've had prices paid to growers continue to fall while the cost of production, everything from gas to labor, has been increasing, so we've actually seen net negative returns for the last several years running."
According to Gerlach, export volumes have declined, and the loss of access to the Indian market has added further pressure. At the same time, price dynamics along the value chain remain uneven. He indicated that consumer prices have remained relatively stable while growers have absorbed most of the adjustment. "They're driving a hard bargain on the grower price and keeping that retail price where it is."
Labour remains the largest single cost component for apple production in the United States. Gerlach noted that hand-harvesting accounts for a substantial share of total costs, given the scale of production. He said the labour required to pick around 25 billion apples represents the biggest expense for growers, though he expressed some expectation that changes to H-2A wage rates could offer limited relief.
Gerlach made the comments during the Growing Wisconsin Conference held in Wisconsin Dells, Wisconsin.
Source: Brownfield
