Recent Trends in Certified Organic Tree Fruit in Washington State: 2016

Document date June 8, 2017

Elizabeth Kirby and David Granatstein WSU-Center for Sustaining Agriculture and Natural Resources In cooperation with Washington State Department of Agriculture Organic Program, Oregon Tilth, and CCOF Document Outline Slides • Introduction 3 • Demand Trends 3 - 9 • Global and National Area 10-19 • Washington State Trends 21-25 • Organic Apples 26-55 • Organic Pears 56-64 • Organic Cherries 65-71 • Soft Fruit 72 • Exports 73-77 • Additional U.S. Data 79-82 Abbreviations used: CSANR WSU Center for Sustaining Agriculture & Natural Resources CSA Community Supported Agriculture operation AMS USDA Agricultural Marketing Service ERS USDA Economic Research Service NOP USDA National Organic Program 2 NASS USDA National Agricultural Statistics Service WSDA Washington State Dept. of Agriculture The following set of slides presents the current data on organic tree fruit area and production for Washington State, with some associated global and national data. Data come from various sources including certifiers [e.g., Washington St. Dept. of Agriculture (WSDA) Organic Program; Oregon Tilth Certified Organic (OTCO), California Certified Organic Farmers (CCOF)], The World of Organic Agriculture annual publication http://www.organic-world.net/index.html, USDA, Calif. Dept. Food and Agric. (CDFA), and industry sources [Washington State Tree Fruit Association (WSTFA), Wenatchee Valley Traffic Association (WVTA), Washington Growers Clearinghouse (WGCH), Pear Bureau Northwest (PBNW)]. Data from WSDA were extracted on March 27, 2017. Organic agriculture continues to be consumer driven. Globally, retail sales of organic food were $81.6 billion in 2015. The U.S. was the largest single country market (35.8 billion €), followed by Germany (8.6 billion €), France (5.5 billion €), and China (4.7 billion €). Switzerland was the country with the highest per capita organic expenditure, at about 5% of total food dollars. The global organic market has been divided between North

America and Europe for years, but the Asian market is 3 accounting for an increasing share (slide 4). Consumer Demand for Organic Food Market Share of Sales by Region (%) North Amer. Europe Other 2003 46 52 2 2005 45 51 4 2007 43 54 3 2009 48 48 4 2011 50 46 4 2012 50 45 5 2013 49 43 8 2014 48 44 8 2015 51 39 8 (Asia) Note: % has changed in part due to US$ vs euro currency fluctuations. 4 Source: World of Organic Agriculture The next slide (6) shows the growth in retail sales of organic food in the U.S. since 2002. Growth dipped during the recession but did not stop, and has rebounded to 10-12% per year. Growth of the fruit and vegetable category was much more stable (slide 7), confirming that these products are very core to organic consumers. These consumer data come from the Organic Trade Association (OTA) annual industry survey.

OTA did a first-ever survey of organic produce in cooperation with Nielsen Co. in 2016 (slides 8 and 9). Organic fruit sales grew faster than organic vegetables since 2011. Berries were the top selling organic produce item, while apples were 7th, and bananas were 10th. Organic apples had average annual growth of 21% for the past 4 years, and of 14% for the most recent year.

According to the survey, household penetration of organic apples was 4.5%, compared with 20% for organic pre-cut salad and carrots. But organic apples had the second highest annual expenditure on a produce item. Sales for a number of organic apple varieties were down versus the previous year due to a 5 smaller 2015 Washington crop. Consumer Demand Growth of US Organic Food Sales 50

45 Fruits & Vegetables All organic food

40 5.3% of US retail food sales 35

30

25

20

15

Organic Sales (Billion $) 10

5

0 2002 2004 2006 2008 2010 2012 2014 2016 Retail organic food sales increased 8.4% in 2016. Organic fruits and vegetable sales increased 8.4% and were 36% of all organic food sales; 6 >10% of all fruits and vegetables sales ($) in U.S. in 2016 were organic. Source: OTA, Nutrition Business Journal Consumer Demand for Organic Food Annual growth rates for organic foods 25

All food 20

15

10 Fruits & % % Growth Annual Vegetables 5

Recession 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 - based on supermarket retail sales; does not include direct market, specialty stores 7 Source: OTA, Nutrition Business Journal OTA State of Organic Produce June 2016 2015 U.S. organic produce - $13 bil $5.7 bil + $4.7 bil + $2.6 bil Mass Specialty, Direct Market Natural sales

Organic produce sales growth since 2011 Fruit +123% Veggies +92% Other +94%

Top organic produce categories (sales) #1 Berries #7 Apples CAGR 1 yr 14%; 4 yr 21% #10 Bananas 8 Source: OTA/Nielsen Fresh 2016 State of Organic Produce OTA State of Organic Produce June 2016 All levels of organic shoppers (light, moderate, enthusiast) buy organic apples

% household penetration Spends $/yr Org apple 4.5 (#11) 14.93 (#2) Org carrot 23.7 (#1) 6.64 (#12) Org pre-cut salad 20.7 (#2) 15.56 (#1) Org strawberry 6.6 (#8) 11.91 (#4)

Past 52 weeks sales (4/30/16) Org Braeburn -20% Org Pink Lady +96% Org Honeycrisp -22% Org Bing -25% 9 Source: OTA/Nielsen Fresh 2016 State of Organic Produce Estimates of global area of organic horticultural crops, including tree fruits, have been made several times in the past by the authors to help track trends. The most recent data (2015) from The World of Organic Agriculture were used in the following slides. Not all major producing countries, including the US, provide complete data each year. Some of the upward trends in organic area simply represent more complete reporting (e.g., China). Organic tree fruit represented about 1% of all organic agricultural land globally, with temperate tree fruits having 39% of all organic tree fruit area (slide 11). Tropical/ subtropical tree fruits are now the largest category of organic tree fruit. Avocado (data not shown) had the largest area for a specific fruit, followed by apple and banana (slide 12).

Area of organic tree fruit expanded in 2015, with new data from certain countries (slides 13 and 15). However, several temperate trees fruits declined, as did oranges (slide 12) . This may be due to disease challenges such as citrus greening in orange, as well as withdrawal of subsidy-induced apple land in Poland (slide 14). Europe continues with the largest area of organic temperate tree fruit (Poland 41,326 ha; Italy 17,889 ha; Turkey 14,808 ha), followed by China (25,266 ha) and the U.S. (17,038 ha). Data by crop were missing for the U.S. Europe 10 accounted for 72% of the organic apple area (slide 16). Global Organic Tree Fruit Area Organic tree fruit crops 734,000 ha ~1% of organic agriculture land

Hectares* % of organic % change % of all 2015 tree fruit from 2014 global Temperate 296,662 40 +53 2.3 Citrus 70,798 10 -1 0.6 Tropical/ 374,769 50 +8 1.0 Subtropical *certified + transition 1 hectare (ha) = 2.47 acres

Large increases in temperate and tropical/subtropical are in part due to better reporting. 11 Source: World of Organic Agriculture; FAO Global Organic Tree Fruit Area Hectares* % change % of % of all 2015 from 2014 organic global# category Apple 80,911 -9 25 1.4 Apricot 18,201 -13 6 3.6 Cherry 12,200 +14 4 3.0 Peach/Nect. 9,838 +43 3 0.1 Pear 10,076 -4 3 0.6 Plum 12,984 +11 5 0.5 Other, no 138,180 48 details Banana 60,432 +5 17 0.1 Orange 14,160 -57 20 <0.1 *certified + transition; # using 2014 FAO global data 12 Source: World of Organic Agriculture; FAO Organic Apple Trends Expansion of Global Area 100,000 90,000 80,000 70,000 World 60,000 Europe 50,000 U.S. 40,000 China Hectares* 30,000 S. America Austr./NZ 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 *Certified + Transition area 1 hectare = 2.47 acres 13 Data courtesy of H: Willer, FiBL Organic Apple Area in Poland 40,000

35,000

30,000

25,000

20,000 Trans

Hectares Cert 15,000

10,000

5,000

0 2009 2010 2011 2012 2013 2014 2015

14 Data courtesy of H: Willer, FiBL Organic Tree Fruit Trends Expansion of Global Area 20000 18000 16000 14000 12000 Cherry 10000 Pear 8000 Peach/Nect Hectares* 6000 Plum 4000 2000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015

*Certified + Transition area 15 Data courtesy of H: Willer, FiBL World Organic Apple Area 2015 Ha % change (C+T) from 2014 World 80,911* -9 Europe is the leading region for producing US 8,160 +4 organic tree fruits. Europe 58,484 -9 • 72% of world Poland 22,899 -27 organic apple area Germany 5,120 +7 WA organic Italy 4,267 +8 apples, 2015 France 6,934 +11 • 5,782 ha cert. Turkey 4,788 +12 • 71% of US area China 10,004 -13 • 7% of world certified area (2015) Argentina 1,302 +4 Chile 1,129 0 New Zealand 450 0 16 1 hectare (ha) = 2.47 acres *includes US estimate Data courtesy of H: Willer, FiBL Data on the area of organic tree fruit production in the U.S. are not collected regularly and are not segregated by the fruit type, except for apple. The results in the following tables (slides 18 to 20) come from USDA ERS reports, certifier data, CDFA, and USDA NASS surveys. In general, >90% of certified organic apple area has been located in the semi- arid regions of the western U.S. where there is little summer rainfall which minimizes many key diseases. This pattern holds true for other temperate tree fruit as well, such as pears, sweet cherries, peaches/nectarines, plums, and apricots. For example, based on data from the NASS 2015 Organic Production Survey, Washington State is the major producer of organic apples, pears, and cherries. It has 71% of the reported organic apple acres, producing 93% of the reported fresh fruit volume in the country. It also has 57% of the organic pear acres and 79% of the volume, and 75% of the sweet cherry acreage and 93% of the volume. A similar situation exists for peaches/nectarines and plums/prunes in California. Additional data can be found on slides 78 to 82. 17 U.S. Organic Temperate Tree Fruit Area (ac)

2015 (acres) 2016 (acres) US WA CA estimate WA CA Apple 14,283 3,460 20,156 16,191 3,186 Pear 2,050 761 3,167 2,243 682 Apricot 260 449 ? 251 442 Cherry 2,056 470 3,291 2,078 433 Nectarine 395 990 ? 379 1,047 Peach 553 1,675 3,112 553 1,761

Data from various certifiers, CDFA, and USDA-NASS. 18 US Organic Apple Area (acres, estimated)

State 2000 2001 2003 2005 2007 2008 2011 2014 2015 WA* 4,228 6,540 7,003 6,721 8,018 12,936 14,296 14,052 14,283 CA* 4,423 4,853 4,045 3,402 3,900 3,393 2,322 3,392 3460 AZ 1,795 1,715 835 865 816 816 354 ? ? CO 431 635 235 202 209 164 509 194 176 OR 350 350 265 123 106 136 234 262 143 Other West 281 677 171 83 147 139 96 17 59 West total 11,508 14,770 12,554 11,396 13,196 17,584 17,934 17,917 18,121 Midwest 419 567 650 708 612 655 1,207 319 563 NY & NE 83 52 5 392 212 193 361 645 555 S & SE 28 15 1 8 47 33 40 11 10 US Total 12,038 15,404 13,210 12,504 14,067 18,465 19,542 19,370 20,156 *WA and CA values are from WSDA, OTCO, CCOF, and CDFA

Combined data sets from WSU-CSANR ,USDA-ERS, 19 >90 % in arid west USDA-NASS; Other West states include ID, MT, NM, NV, UT; updated 2011 to ERS values. U.S Certified Organic Apple Area 25,000

20,000

15,000

Acres 10,000

5,000

0 1997 2000 2001 2003 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

U.S. West WA CA East/Midwest

Data are mostly from USDA-ERS and USDA-NASS; except WA is from certifiers, CA is from CDFA 20 The acreages of different organic tree fruits in Washington over time are shown in slide 22. While accounting for about 21% of all certified organic acres in the state, organic tree fruit generates over 60% of the farmgate value of all organic products grown in the state (slide 23). Storage, packing, and marketing add another $80-90 million of value each year. Estimates for the value of organic tree fruit that is processed could not be determined, but demand for these products is growing (e.g., juice, puree, sliced apples). Organic apples dominate the organic tree fruit sector for area, production, and value, and sales value has been rapidly increasing (slide 24). Organic apples, pears, and cherries set record sales values ($) with the 2015 crop.

21 Organic Tree Fruit Acres Washington State

Trans --- Certified acres --- ARS Photo acres† 2010 2011 2012 2013 2014 2015 2016 2016 Apple 14,790 14,296 13,657 14,030 14,052 14,283 16,191 4,244 Pear 2,033 1,917 1,900 1,820 1,843 2,050 2,243 374 Cherry 2,147 1,827 1,792 1,850 1,939 2,056 2,078 373 Apricot* 299 296 266 285 299 260 251 -- Nectarine 550 528 488 464 440 395 379 -- Peach 701 619 618 594 580 553 553 0.25 Plum/Prune* 125 92 89 64 58 56 76 -- Mixed stone 13 17 45 22 17 32 -- -- Total* 20,658 19,592 18,855 19,129 19,228 19,685 21,771 4,991 *apricot includes aprium; plum includes pluot and plumcot; totals do not include mixed tree fruit; †only those acres registered with a certifier Tree fruit had a 21% share of all organic acreage in Washington State in 2016. 22 Combined certifier data Value of WA Organic Tree Fruits

2009 2010 2011 2011 2012 2013 2014 2015 (Mil $) Sales Yr Farmgate Value Crop Yr Packed Value Apple 77.85 96.28 121.04 198.55 277.40 317.0 391.9 398.1 Pear 8.87 8.66 11.87 22.71 27.04 31.4 37.6 38.2 Cherry 9.92 10.05 17.09 15.31 16.15 17.9 25.4 27.3 Other 5.05 7.49 10.95 >11.0 ? ? ? ? Total 101.69 122.48 160.95 >248 >320 >343 >455 >464 Sales year = Jan.-Dec., regardless of when the crop was harvested. Crop year = value of the crop harvested in the given year, that may be sold over multiple years; uses Packed value based on FOB price.

23 Data: WSDA, WGCH, WVTA Value of Fresh WA Organic Apples and Pears 450 400 Apple Pear Cherry 350 300 250 200 150 Processed: pre-sliced, IQF, 100 puree, juice, etc. Packed Fruit SalesPacked (Mil $) 50 0

Based on shipped volume for the crop (e.g., 2008 harvest was shipped in both 2008 and 2009) and estimated weighted average price per packed box during the same period. Dashed line is polynomial trend 24 line estimate. Does not included processed fruit. Data: WSTFA, WGCH, WVTA The expansion of organic apple area in the state has proceeded in a stepwise fashion as shown in slide 26. Partly this is due to the 3-year transition requirement that creates a lag between a market signal to growers and their ability to enter the market. There is also a lag in exiting, for example when prices fall, since growers have invested in the transition period and in various production practices. Increases in area have been spurred by crisis situations, such as Alar in 1989, and the crash in conventional ‘Red Delicious’ prices in the late 1990s.

While ‘Red Delicious’ remains the most widely planted cultivar under conventional management, ‘Gala’ and ‘Fuji’ dominate organic plantings, with ‘Honeycrisp’ increasing rapidly in area (slide 27). The change in area of cultivars over time can be seen in slides 28 and 29. In addition, many new and specialty cultivars are being grown organically, including some for hard cider production (slide 30).

25 Organic Apple Acreage

Photo: F. Peryea Washington State Est. 30,000 Recession 25,000 $ drop 20,000

Retail chains 15,000 $ drop $ drop Acres 10,000 MD Alar 5,000

0 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 Certified apple Transition apple Organic (C+T) = 11.3% of WA apple bearing acreage (based on 2016 WSDA estimate of 180,961 acres) Some historical events that have influenced organic apple production include the Alar incident, price volatility ($ drop), the introduction of mating disruption (MD) for codling moth control, and market entry by national chain supermarkets (Retail chains). 26 Combined certifier data Organic Apple Variety WA Fuji; ARS Photo Acres Washington 2016 Gala Fuji Honeycrisp Granny Smith Red Del Cripps P Cert Trans Golden D Cameo Braeburn Transition acres are only those Kanzi registered with a certifier. Oth Yel Pinova Other & NS 0 1,000 2,000 3,000 4,000 5,000 6,000 • Fuji and Gala = 48% of certified apple acres • Honeycrisp tops Red and Granny since 2013 • Opal, Jonagold, Ambrosia, Pacific Rose, Envy, Autumn Glory, Lady Alice and Jazz: ~ 460 ac cert. 27 Combined certifier data; Cripps Pink includes Pink lady; Pinova includes Pinata and Sonata. Organic Apple Varieties Washington State Acres Trend Photo: B. Barritt 6,000 6,000 Certified Transition Certified Transition 5,000 5,000 4,000 4,000 GALA FUJI 3,000 3,000 2,000 2,000 Acres 1,000 1,000 0 0 00 02 04 06 08 10 12 14 16 00 02 04 06 08 10 12 14 16 6,000 6,000 Certified Transition Certified Transition 5,000 5,000 4,000 4,000 RED DELICIOUS HONEYCRISP 3,000 3,000 Acres 2,000 Acres 2,000 1,000 1,000 0 0 00 02 04 06 08 10 12 14 16 00 02 04 06 08 10 12 14 16 28 Combined certifier data Organic Apple Varieties Washington State Acres Trend

Photo: ARS

4,000 4,000 Certified Transition Certified Transition 3,000 3,000 GRANNY SMITH CRIPPS PINK 2,000 2,000 Acres 1,000 1,000

0 0 00 02 04 06 08 10 12 14 16 00 02 04 06 08 10 12 14 16 4,000 Certified Transition 3,000 GOLDEN TYPES 2,000

Acres 1,000

0 29 00 02 04 06 08 10 12 14 16 Combined certifier data Organic Specialty Apples Washington State 2016 Over 100 varieties of organic apples grown in WA, from small to larger quantities WA Apple Commission

• 50-100 ac: Opal®, Jonagold, Ambrosia®, Pacific Rose™, Envy™, Lady Alice®, Autumn Glory • 11-50 ac: Jazz™, Ginger Gold®, Golden Supreme®, Jubilee, McIntosh, Minneiska (SweeTango®), RosaLynn, Empire • 1-10 ac: Sansa, Winesap, Winter Banana, Rome, Tsugaru, Earligold™, Zestar!®, Crimson Crisp™, Mollie’s Delicious, Liberty, Arkansas Black, Gravenstein Varieties listed in WSDA producer directory: http://agr.wa.gov/FoodAnimal/Organic/docs/wsda_cert_org_producers.pdf 30 Combined certifier data A large number of apple acres are in transition to organic, with ‘Gala’, ‘Fuji’, and ‘Honeycrisp’ dominating (slide 32). These data are for those transition acres registered with a certifier. An informal survey found that these accounted for only about half the actual area in transition. At the same time, organic apple yields appear to be increasing, with the transition of many acres of modern, high-density plantings (slide 33). These data were calculated by dividing the actual number of packed boxes shipped each year (by variety), by the actual number of certified acres for that variety, both values that are very accurate. Yields went from around 400 packed boxes per acre in 2008 to 600 in 2015.

There are fewer transition acres for pears and cherries, and these increases are not expected to result in a large new pulse of fruit.

31 Organic Apple Variety WA Fuji; ARS Photo Transition Acres Washington 600 2017 2018 500

400 Transition acres are only those registered with a certifier. 300 Acres 200

100

0

Only about 50% of acres actually in Combined certifier data; 32 transition are registered. Cripps Pink includes Pink lady. Organic Apple Yield Trend - WA

1000 900 800 700 Red Del Gold Del 600 Granny 500 Fuji 400 Gala 300 CrippsPink 200 Honeycrisp

Packed Boxes / Acre(x1000) Packed Boxes / 100 0 2008 2009 2010 2011 2012 2013 2014 2015

• Total shipped organic boxes / total certified acres • Does not account for processor or other diverted fruit 33 In 2016, certified organic apples represented about 11% of all bearing apple acres in the state. This has translated to about 8% of the fresh shipments of apples (slides 35 and 36), with an unknown amount of organic fruit going to the processor market or being sold as conventional for various reasons.

A general upward trend of shipments has occurred since a big jump in 2008 (slide 37), despite slight declines in acreage after 2009. This can be attributed to newer high- yielding plantings coming into production, as well as less fruit being diverted to conventional or other markets. The increase has been driven by dramatic rises in ‘Gala’ and ‘Fuji’ shipments, with these expected to ship about 3.7 million and 2.4 million boxes, respectively, for the 2016 crop, which set a new record (slides 38, 39). The rise of organic ‘Honeycrisp’ production is also evident. Despite the rapid rise in supply, prices have also risen during this period (slide 37). 34 Washington Apple Volume Conventional and Organic 160,000 Conventional Organic 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Apple volume (Boxes*1000) 0

Data: WSTFA, WVTA, WGCH 35 Organic Share of Apple Shipments Washington State

10 9 8 7 6 5 4 8.2 6.8 7.0 6.1 6.3 6.1 6.5 6.2 3 5.4 2 3.6 3.8 2.5 2.9 1 1.8 2.2 2.0 2.1 Organic % % Organic of all apples shipped 0

36 Data: WSTFA, WVTA, WGCH Organic Apple Sales Volume and Price Trends - WA 12 Est. 50

10 40

8 30 6 20 4 Price ($/box ($/box FOB)Price 10 2 Shipped Volume (Mil Boxes) Shipped Volume

0 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 Shipped Volume Price

40 lb box. Data: WSTFA, WVTA, WGCH; organic season 37 average FOB history; priced boxes all grades ,sizes, storage Total Shipped Organic Volume by year and variety, Washington State 4,000 3706 Season totals 3,500 Season2003/04 totals to 2003/04 2014/15 to 2016/17* (* preliminary) 3,000 2491 2,500 2,000 1,500 918 1,000 920 500 Shipped Volume (1000 Boxes) Shipped Volume 465 254 288 212 0 Gala Fuji Red Delicious Granny Smith

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17*

38 Data: WSTFA, WGCH, WVTA ARS Photo Total Shipped Organic Volume by year and variety, Washington State

3,000 Season totals 2003/04 to 2014/15 Season totals 2003/04 to 2,500 2016/1* (*preliminary) 2,000

1,500

1,000 879 833

500 251 Shipped Volume (1000 Boxes) Shipped Volume 67 190 0 Golden Delicious Cripps Pink Honeycrisp 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17*

Data: WSTFA, WGCH, WVTA 39

ARS Photo The 2016 crop was the largest ever for organic apples, estimated at 11.3 million boxes (slide 41). This was 11% higher than the previous record in 2014, and 36% higher than the smaller 2015 crop (due to alternate bearing). Season-to-date shipments for the whole crop at the end of April 2017 were well ahead of the 2014 crop. ‘Red Delicious’ and ‘Golden Delicious’ were behind, while most other varieties were ahead, particularly ‘Gala’ and ‘Fuji’.

Storing organic apples longer will be critical for marketing the larger crop in coming years. New post-harvest technology is continually be tried, some of which is proving quite successful. The opportunity to sell more WA organic apples is illustrated by the sources of organic apples in groceries identified by USDA-AMS in August 2016 (slide 42).

40 Washington Organic Apple Crops

12 Est. 5/1/17 Projected Shipped 10

8

6

4 MillionBoxes

2

0 2011 2012 2013 2014 2015 2016

Comparison of recent organic apple crop size estimates (December 1) with actual season-end volume shipped.

Data: WSTFA, WVTA, WGCH 41 Organic Apples in U.S. Market August 2016

Red D Gala Fuji Brae Pink Zestar! Baltimore WA Boston ARG WA ARG NZ ARG Chicago ARG NZ NZ ARG ARG San Fran. CA, CH, CH OR WA NZ WA=Washington; CA=California; OR=Oregon; ARG=Argentina; CH=Chile; NZ=New Zealand

USDA-AMS national specialty crops organic summary, Aug. 11, 2016 https://www.ams.usda.gov/mnreports/fvdorganic.pdf 42 Prices for organic tree fruit have been collected by the industry starting in the mid-1990s, and now include most of the crop (reporting is voluntary). Organic prices are almost always higher than conventional, but the magnitude of the difference varies from year to year. However, the direction of price change from year to year was generally the same between the two, until after the 2012 crop, indicating that market forces are becoming less similar. Both organic and conventional experience some alternate bearing which affects supply and price. The prices on the following slides (44 to 47) are for fresh packed apples (40 lb box) for all sizes and grades, domestic and export. Organic price premiums are plotted in slide 48 as both the absolute dollar amount as well as the percent difference. The dollar premium per box has been at record levels in recent years.

43 Price Trends Washington Apples

Gala to 12/11/16 Fuji $60 $60 $50 $50 $40 $40 Organic $30 $30 $/SEB $20 $/SEB $20 $10 $10 Conventional $0 $0 95 97 99 01 03 05 07 09 11 13 15 95 97 99 01 03 05 07 09 11 13 15

SEB=standard equivalent box of 40 lb. Data: WSTFA, WGCH; FOB averages, all storage, grades, sizes. Annual data points represent season 44 averages: season approx. Sept 1 to end of Aug. Price Trends Washington Apples Photo: B. Barritt

Red Delicious to 12/11/16 Golden Delicious $60 $60 $50 $50 $40 $40 Organic $30 $30 $/SEB $20 $/SEB $20 $10 Conventional $10 $0 $0 95 97 99 01 03 05 07 09 11 13 15 95 97 99 01 03 05 07 09 11 13 15

Data: WSTFA, WGCH; FOB averages, all storage, grades, sizes. Annual data points represent season 45 averages: season approx. Sept 1 to end of Aug. NY Apple Assoc. Price Trends Washington Apples

WA Apple Comm. Granny Smith to 12/11/16 Cripps Pink $60 $60 $50 $50 $40 $40

Organic $/SEB $/SEB $30 $30 $20 $20 $10 $10 Conventional $0 $0 95 97 99 01 03 05 07 09 11 13 15 95 97 99 01 03 05 07 09 11 13 15

Data: WSTFA, WGCH; FOB averages, all storage, grades, sizes. Annual data points represent season 46 averages: season runs approx. Sept 1 to end of Aug. Price Trends Washington Apples

Honeycrisp to 12/11/16 Braeburn $80 $60 $70 Organic $50 $60 $40 $50 $40 $30 $/SEB $/SEB $30 $20 $20 Conventional $10 $10 $0 $0 95 97 99 01 03 05 07 09 11 13 15 95 97 99 01 03 05 07 09 11 13 15

Data: WSTFA, WGCH; FOB averages, all storage, grades, sizes. Annual data points represent season 47 averages: season runs approx. Sept 1 to end of Aug. Organic Premiums Washington Apples $30 $25 $20 $/Box $15 $10 $5 $0 95 97 99 01 03 05 07 09 11 13 15 Photo: B. Barritt 120% 100% Premiums are 80% expressed as the Percent 60% price difference 40% between organic and conventional, 20% as $ per box, or 0% as a percent. 95 97 99 01 03 05 07 09 11 13 15 Gala Red Del Fuji 48 Data: WSTFA, WGCH. Annual data points represent season averages: season runs approx. Sept 1 to end of Aug. The USDA Agricultural Marketing Service (AMS) tracks data reported to them for various commodity prices at the point of shipment (FOB) and the retail price (based on grocery store advertisements). In slides 50 and 51, monthly price trends over 5 marketing seasons are plotted for ‘Gala’ and ‘Fuji’ apple, for both conventional and organic. A dotted trend line is also included to make the general trend more obvious. For ‘Gala’, organic shipping point prices are trending up, while conventional prices are flat. In contrast, retails prices are trending up for both types. For ‘Fuji’, organic shipping point prices are trending up considerably more than conventional, while organic retail prices are trending up and conventional prices trending down. Given that the cost of production is generally trending upwards, the implication for conventional growers is that prices will no longer cover costs at some point, while organic growers should be able to cover increasing costs. Gaps in the shipping point data point out where the WA supply of organic apples has been sold out.

49 Organic Gala Apples

Shipping point, Washington 70 60 50 40 30 20

Price ($/box) 10 0 Jun Jun Jun Jun Jun Mar Mar Mar Mar Mar Dec Dec Dec Dec Dec Dec Sep Sep Sep Sep Sep Sep 2011 2012 2013 2014 2015 2016 Ship point FOB $/box Conv. Ship point FOB $/box Org. Retail, National 3.00 2.50 lb ) 2.00 1.50 1.00

Price ($/ 0.50 0.00 Jul Jul Jul Jul Jul Jan Jan Jan Jan Jan Mar Mar Mar Mar Mar Nov Nov Nov Nov Nov Nov Sep Sep Sep Sep Sep Sep May May May May May Source: USDA-AMS 2011 2012 2013 2014 2015 2016 50 Retail Price $/lb Conv. Retail Price $/lb Org. Organic Fuji Apples Shipping point, Washington 80 60 40 20 Price ($/Box) 0 Jun Jun Jun Jun Jun Mar Mar Mar Mar Mar Dec Dec Dec Dec Dec Dec Sep Sep Sep Sep Sep Sep 2011 2012 2013 2014 2015 2016 FOB $/box Conv. FOB $/box Org.

Retail, National 3.00 2.50 2.00 ($/lb)1.50 ce 1.00 Pri 0.50 0.00 Jun Jun Jun Jun Jun Mar Mar Mar Mar Mar Dec Dec Dec Dec Dec Dec Sep Sep Sep Sep Sep Sep 2011 2012 2013 2014 2015 2016 51 Retail Price $/lb Conv. Retail Price $/lb Org. Source: USDA-AMS Various projections have been made regarding likely organic apple volumes in the coming years and potential impacts on price. In one scenario from Matt Miles at First Fruits Marketing, the relationship between the increase in shipped volume from increased new acres, price, and total crop value were estimated (slide 53). As volume increases, the per box price and total crop value decline, suggesting that a more measured expansion would be economically optimal. The 2016 crop appears close to the ‘50% of transition acres’ scenario, while average prices may be lower than projected.

In another projection (slide 54), increased supply (red line) was predicted based on the estimated acres in transition, as well as the biennial bearing. Demand (blue lines) was grown at different rates (10-15% per year) based on historical growth and projections from various marketing studies. 2018 is the year in which supply may exceed demand. But given that supply has been constrained for years, estimates of true demand may be low. 52 WA State Organic Fresh Crop Apple Production Potential crop size and gross dollars for 2016 16,000 $600 $534.63 $511.55 13,869 14,000 13,006 $500 12,142 $488.47 12,000 11,279 $384.62 $465.39 $400 10,000 9,552 Avg. $/ctn $47.40 Avg. $/ctn Avg. $/ctn 8,000 Avg. $/ctn $42.13 $300 $37.56 Avg. $/ctn $40.27 $33.56 6,000

$200 Millions ofDollars 1000 case cars Using the information from the previous slide we can estimate how total gross dollars will be affected 4,000 by a significant change in volume. The estimated point of diminishing return is a one year increase of 31% in volume. $100 2,000

0 $0 2014 2016 W/50% T 2016 W/ 75% T 2016 W/ 100% T 2016 W/ 125% T acres Acres Acres Acres Volume (1000 cs units) Gross $ Crop year data from Transitional acreage date from: WSU Extension / Center for Sustaining Agriculture and Natural Resources 53 Courtesy: Matt Miles Organic Apple Supply and Demand Projection 35

30

25 Supply 20 10% D 15 12.69% D

MillionBoxes 10 15% D

5

0 2016 2017 2018 2019 2020 2021 • Assumes alternate bearing; even years “on” • Annual demand growth of between 10-15% per year (3 scenarios: 10% D, 12.69% D, 15% D) • Supply (red line) may exceed demand in 2018, depending on growth

“Global Organic Food and Beverage Market 2015-2019” – 12.69% growth; 54 TechSci Research, 2016-2021 – 14% growth Similar data as for apple are presented for organic pear in Washington in the next slides (56 to 64). Organic pear area has tended to be more stable over time than apple or cherry. Only a few pear varieties are currently in demand by the market, and pear consumption in general in the U.S. is much lower than apple. Pear orchards tend to be kept in production for many years (over 50 years is not uncommon) and renewal to the hottest new variety or planting system is still limited. While fire blight is a serious threat to all pear producers in Washington, it is relatively less so than in most other parts of the country, leading to a large percent of all organic pears being produced here or in California. Washington is the leading producer of conventional and organic pears in the U.S. Organic pear prices and volume have risen since 2009 in a pattern similar to apple.

55 Organic Pear Acreage Washington State

2,500

2,000 2,243 2,033 1,500

Acres 1,000

500 374

0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Certified pear Transition pear

2016 organic = 10.8% of total WA pear acreage (based on WA-NASS 2015 value of 20,80 pear acres) 56 Combined certifier data Organic Pear Acres by Variety Washington 2016 Tosca Oth/NS Asian Concorde 2% 2% 1% 2%

Reds: Bart, Anjou, Oth 13% D'Anjou 31%

ARS Photo Bosc 17%

Bartlett 32% 57 Combined certifier data; NS = not specified Organic Pear Variety Trend Washington State

1000 D'Anjou Bartlett Bosc Red types Other or NS 800

600

400 Acres

200

0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

58 Photo: Agyle Combined certifier data Organic Specialty Pears Washington State 2016

• Over 25 varieties of organic pears and Asian pears grown in WA, from small to larger quantities.

• >25 ac: Concorde, Starkrimson, Tosca, Asian

• Small areas: Comice, Forelle, Red Clapp, Seckel, Conference, Perry varieties, others

• Varieties are listed on the WSDA producer list: http://agr.wa.gov/FoodAnimal/Organic/docs/wsda_cert_org_producers.pdf

59 WSDA data Organic Pear Sales Volume and Price Trends As of May 1400 19, 2017 45 40 1200 35 1000 30 800 25

600 20 Boxesx1000

15 SEB (FOB)$ 400 10 200 5 0 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Shipped volume Price

SEB = Standard Equivalent Box of 44 lb. 60 Data Sources: WSTFA, WGCHA & WVTA Shipped Organic Pear Volume by year and variety, WA and OR 500

400

300

200 Boxes*1000 100

0 Bartlett Red Bartlett D'Anjou Bosc Red Anjou Other W&S 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17* Oregon volume ~2% of total NW organic pear volume *2016 volume as of 6/2/17 Standard Equivalent Box = 44 lb. Data Sources: 61 WSTFA, PBNW, WGCH, WVTA (11/12-13/14 Price Trends Washington Pears Bartlett to 12/11/16 D’Anjou $50 $50 $40 $40 Organic $30 $30 $20 $20 $/SEB $/SEB $10 $10 Conventional $0 $0 96 98 00 02 04 06 08 10 12 14 16 96 98 00 02 04 06 08 10 12 14 16 $50

Bosc $40 $30

$20 $/SEB $10 Bosc photo: US Pear $0 96 98 00 02 04 06 08 10 12 14 16 62 SEB = Standard Equivalent Box; Data: WSTFA, WGCH. Annual data points represent FOB season price averages. Price Trends Washington Pears

to 12/11/16 $50 Red Bartlett $50 Red D’Anjou $40 $40 Organic $30 $30 $20 $20 $/SEB $/SEB Conventional $10 $10 $0 $0 96 98 00 02 04 06 08 10 12 14 16 96 98 00 02 04 06 08 10 12 14 16

SEB = Standard Equivalent Box; Data: WSTFA, WGCH. 63 Annual data points represent FOB season price averages. Organic Premiums Washington Pears $20

Hedrich, 1921 $15 Bartlett $/box $10 D'Anjou $5 Bosc

$0 00 02 04 06 08 10 12 14 100%

80%

60% Bartlett Percent 40% D'Anjou Bosc 20%

0% 00 02 04 06 08 10 12 14 64 SEB = Standard Equivalent Box; Data: WSTFA, WGCH. Annual data points represent FOB season price averages. Washington leads the nation in sweet cherry production, both for conventional and organic. A key quarantine pest, the western Cherry Fruit Fly, was a major barrier to organic cherry production for many years. The development of the GF-120 control protocol (a biologically based insecticide) by Tim Smith, WSU Extension, led to major increases in organic cherry area in the mid- 2000s. In 2008, the new pest, Spotted Wing Drosophila, was found in the state for the first time and has expanded statewide. This pest was not controlled by GF-120 and thus organic pest management was seriously disrupted. Growers rely on Entrust® insecticide and reliance on this sole product poses risk of resistance.

Similar data as for apple and pear are presented for organic sweet cherry in Washington in the next slides (66 to 70). Globally, organic cherry volume is rising faster than area, with the U.S., Turkey, and Italy the leading producers (slide 71). Slide 72 shows the area trend for other organic soft fruit (peaches, etc.); no other data were available. Washington is second to California in the production of most of these other organic soft fruits.

65 Organic Cherry Acreage Washington State (sweet + tart)

2,500

2,000 2,437 2,078 1,500

Acres 1,000

500 373

0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Certified cherry Transition cherry

2016 organic = 5.6% of total WA cherry area (based on 2015 WA-NASS estimate of 37,1000 acres) 66 Combined certifier data Organic Cherry Variety Acres Washington State 2016

Other Sweet 10% Variety NS Sweetheart 21% 5%

Rainier 8%

Skeena 7% Tart 17%

Chelan 15% Bing 17% 21% of cherries not reported by variety in 2016 Combined certifier data; 67 compared to 57% in 2008 NS = not specified WA Organic Sweet Cherry Prices 5.00 4.50 4.00 3.50 )

lb 3.00 2.50 2.00 Price ($/ Price 1.50 1.00 0.50 0.00 04 05 06 07 08 09 10 11 12 13 14 15 16 Dark Sweet Light Sweet All organic All conventional

Data: WSTFA, WGCH. Annual data points 68 represent FOB season price averages. WA Organic Cherries

2013 2014 2015 2016 ORG CONV ORG CONV ORG CONV ORG CONV Dark Sweet Volume (1000 box*) 232 11,992 352 19,428 361 16,646 349 14,795 % of crop 90 93 85 94 89 94 86 94 Light Sweet Volume (1000 box*) 34 1,237 61 1,786 60 1,517 58 1,289 % of crop 10 7 15 6 11 6 14 6

Organic Share of 2.0 1.9 2.3 2.5 all, % Calculated Yield 2,809 4,122 3,970 3,833 (lb/ac packed) 69 *Standard Equivalent Box: Dark Sweet = 20 lb; Light Sweet = 15 lb. Data: WSTFA WA Organic Cherries

4500 4

4000 3.5

3500 3 3000 2.5 2500 2

2000 Price 1.5 1500 1000 1 500 0.5 0 0 2010 2011 2012 2013 2014 2015 2016 Acres Shipped tons Price ($/lb)

70 Data: WSTFA Global Organic Cherries

Global Organic Cherry Trends – Area and Production Volume Estimated Organic Cherry Yields 30000 Area Product Yield 25000 (ha) ion (MT) (MT/ha) Turkey 3,165 6,832 2.16 20000 Italy 2,776 6,035 2.17 15000 Bulgaria 1,618 879 0.54 US 1,082 8,714 8.05 10000 Poland 1,041 328 0.32 5000 Spain 449 1,468 3.27 Hungary 491 1,228 2.50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ha MT

Ha = hectares; MT = metric tons 71 Source: World of Organic Agriculture reports Washington State Other Stone Fruit Trends

800

600 Certified acres

400

200 Certified Acres 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Plum/Prune Apricot Nectarine Peach 800 Transition acres 600 ARS Photo

ARS photo gallery 400 200 Transition Acres Transition 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Combined certifier data Exports of organic tree fruit from Washington have occurred for years, and have been relatively stable (slide 74). But markets have changed (slide 75). Considerable volumes were shipped to Europe, especially the UK, in previous years, but that has virtually ceased. Canada is by far the largest export destination for organic tree fruit from Washington, accounting for 76% and 84% of all organic apples and pears exported for the 2015 crop, respectively. Exports represented ~6% of both the 2015 organic apple and pear crops. ‘Gala’ apple and ‘d’Anjou’ pear are the leading organic tree fruit exports by volume (slides 76, 77).

73 Organic Apple and Pear Exports Washington State 1,000 WA Apple WA Pear 900 800 700 600 500 400 300 200 100 Organic Exports (Boxes* 1000) 0 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 *16/17 Exports ~6% of both the 2015 organic apple and pear crops; Canada, largest export destination; 76% of apples, 84% of pears; *16/17 value as of 4/30/17 74 Data: WSTFA, WGCH. Export includes Canada. Washington Organic Apple Top Export Destinations

700

600

500 Canada

400 EU

300 Asia/S. Pac

Exports (Boxes ) x1000 200 Mexico

100 MidEast

Organic 0 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

Data: WSTFA, WVTA 75 WA Organic Apple Exports by Variety

1,000 900 800 Other 700 Golden Del 600 Granny

(Boxes * * 1000) (Boxes Fuji 500 Red Del 400 Gala

Exports Exports 300 200 100 Organic Organic 0 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

35-40% of exports = Gala 76 Data: WSTFA, WVTA WA Organic Pear Exports by Variety

140

120

100 Other Bosc 80 Bartlett 60 D'Anjou

40

20 Organic Exports (Boxes*1000) 0 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

77 Data: WSTFA, WVTA U.S. Organic Exports Fresh fruits are an important U.S. organic export. Apples is the leading fresh fruit product, but exports have declined in recent years. 160 140 120 100 80 60 Value (Mil $) Value 40 20 0 2011 2012 2013 2014 2015 2016 Apple Cherry Pear Grapes Leaf lettuce 78 Source: USDA-FAS GATS Additional data on the U.S. organic temperate fruit situation are presented in slides 80 and 81. These are estimates derived from the USDA-NASS organic survey as well as data directly from certifiers. Slide 80 shows that the U.S. has about 5% of the global organic grape area, 10% for apples and other tree fruits, and 11% for all berries.

The high concentration of organic fruit production (based on volume of product, not area) in WA and CA is clear from slide 81, with over 90% accounted for in these two states for most fruits.

USDA FAS collects data on organic product imports and exports. Apples have been a leading export product by value (slide 78). In recent years, the value of organic apple exports has declined while the value of imports has increased (slide 82). This is likely due to the influence of the strong U.S. dollar, and to increasing demand in the U.S. market for organic apples in late spring and summer when U.S. supplies of certain varieties are depleted. 79 US Organic Temperate Fruit

• Total certified area >32,000 ha (2014) • >90% in semi-arid western U.S. • CA, WA are leading states • 8% apple, 40% blueberry of global organic area in U.S. • Cannot accurately track national growth with current data; 2014 NASS data – incomplete, some errors. Estimated U.S. Area of Temperate Fruits ha % global Grapes 15,000 5 Apples 7,850 Other tree fruit 4,000 10

Berries 5,000 11 80 USDA-NASS, 2015; Willer & Lernoud, 2016 Concentration of U.S. Organic Fruit 2015 U.S. Ac* % of U.S. Production WA CA Apple 15,763 88 (93 F) 7 Pear 2,286 81 11 Cherry, Sw 2,078 91 5 Peach/Nect 2,790 16 73 Plum/Prune 2,025 <1 99 Grape, all 27,912 5 91 Blueberry 5,706 33 34 Raspberry 1,091 2 96 Strawberry 4,031 <1 96 81 *certified acres; not adjusted for WA or CA certifier data. F=fresh (USDA-NASS, 2016) U.S. Organic Trade Organic Apples (fresh) 160 140 120 2016 100 • Apples were 15% of 80 export $, 4% of import $ 60 Million $ Million 40 • Apples, largest organic 20 export value of any 0 product 2011 2012 2013 2014 2015 2016 • Grapes, #2, Lettuce #3, All Organic Products Strawberries #4 2000 • Since 2013, apple exports declining, 1500 imports increasing

Million $ Million 1000

500

0 2011 2012 2013 2014 2015 2016 82 Exports Imports Data: USDA-FAS \

More information on Washington organic tree fruit statistics is available on-line at: http://tfrec.cahnrs.wsu.edu/organicag/organic-agriculture/organic- statistics/ http://csanr.wsu.edu/pages/Organic_Statistics http://www.nass.usda.gov/Statistics_by_State/Washington/Publications/ Fruit/FruitTreeInventory2011.pdf

Citation: Kirby, E. and D. Granatstein. 2017. Recent trends in certified organic tree fruit: Washington State 2016. Organic Trend Series, Center for Sustaining Agriculture and Natural Resources, Washington State University, Wenatchee, WA. http://csanr.wsu.edu/pages/Organic_Statistics

83