YAKIMA, Wash. — The productivity and profitability of Washington apple growers and marketers in recent years could be their biggest challenge in the next five to 10 years.

Washington leaders expect a manageable fresh crop of near 120 million cartons for 2013 but many believe the fresh crop could top 150 million cartons in coming years.

Apple trees that were recently planted and nonbearing accounted for 15% of the total trees planted in Washington state in 2011, according to a Washington Agricultural Statistics Service report. The percentage of young, nonbearing trees accounted for 45% of Honeycrisp acreage and 20% for fuji, signaling the output those varieties will rise faster than the overall average.

The track record of Washington state indicates the challenge can be met.

In 1975, 40 million cartons for the fresh crop was the norm. Now industry leaders say industry can successfully market 130 million. The range of apple varieties has increased and is more tuned to consumer demand, marketers believe.

The market share of apple varieties will continue to shift in the years ahead, said Mike Nicholson, salesman for Columbia Marketing International, Wenatchee. Galas will ascend to the highest volume crop in the next decade. Red and golden delicious will fade.

“What is being planted most heavily is high-color galas, high-colored fujis and Honeycrisp,” he said.

Planting will continues as long as there is liquidity.

“We will be looking at 150 million and 160 million box crops within three or four years,” said Randy Steensma, president of Honey Bear Tree Fruit Co., Wenatchee.

Promise and peril

The rise of the fresh-cut apple industry has spurred greater consumption, and the healthy eating trend has generally helped the apple category, said Scott Marboe, director of marketing for Oneonta Trading, Wenatchee. He said planning of promotions between marketers and retailers has never been more precise, he said.

Even with the great success of marketers moving the fruit and the high demand for newer varieties, the industry faces challenges of continued need to expand domestic and export demand, finding labor to harvest the expanding apple volume and meeting increased food safety regulations, grower-shippers say.

Pending U.S. demands for food safety information on how imported crops are grown could be copied by other countries and make exporting more expensive, said Chris Schlect, president of the Northwest Horticultural Council.

Given all those forces, the industry will evolve to meet the challenges, said John Long, director of sales and operations in Union Gap, Wash., for Raleigh, N.C.-based L&M Cos.

“You are going to see continued integration between marketing companies and packing and growing,” he said.

The state may see various industry state tree fruit associations consolidate as well, shippers said.

The challenge for tree fruit marketers, Long said, will be to sell product that is already in the ground.

“We have to continue to develop and see the market place both domestically and internationally continue to grow or we are not going to be able to move the number of apples and cherries in the ground,” he said. “That will be a challenge for our industry to find a level and a customer base to move the product.”

On the buying side, Long said there is a lot of consolidation that has happened in the past 15 years, but in the last five years that has slowed up.

“There are fewer people to sell your product to and a little more pressure on being able to take care of their business,” he said.

Electronic purchase transactions will increase in the next five to 10 years in the apple industry, said Robbin Erickson, sales manager for FirstFruits Marketing of Washington.

“I don’t know if it is so much of an auction (scenario) as it is that everyone will have similar, great quality product so there isn’t that much of a variance between product from shipper to shipper,” he said. “If you have a certain percentage of a customer’s business, you can count on that weekly,” he said.

Finding a niche

Looking ahead, Erickson said the industry will be much more selective in introducing and promoting varieties, realizing the efforts and costs and commitment that goes into marketing a new variety.

“Five years ago, if you went to a retailer with a new variety, they would say ‘We want it,’” he said. “Now you have to work much harder because there are five more apples looking for that shelf space walking in that retailer’s door right now.”

Lynnell Brandt, president of Proprietary Variety Management, Yakima, said placing niche varieties with retailers will require extensive planning, considering the critical mass needed to place the variety on store shelves.

“If they don’t what it is or don’t recognize it, retailers won’t be staying with it very long, because he’s got 10 more just hoping to get on that shelf,” he said.

Industry is looking for varieties that are grower friendly, can store well and have a flavor profile that is unique, he said.

Heavy supplies and low margins could force more consolidation, said Todd Fryhover, president of the Washington Apple Commission, Wenatchee.

“If we are approaching a time when we could be in a supply-exceeds-demand scenario, which most of us could argue would argue could be happening in the next two to three years, we are going to see further consolidation,” he said.

Most sales entities are always looking for the next apple, but Fryhover said that push might have cooled off a bit in the last few years.

However, Fryhover said a diversification of desirable varieties is essential for growers, especially as production levels escalate.

“If you are growers of premium fruit, almost across any variety, you are going to do fine,” he said.

Growers who are producing No. 2 grades will struggle if supply exceeds demand, he said. “That’s the key message to our growers — you really need to grow premium fruit,” he said.