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“The competitive challenges facing the BC tree fruit industry are significant…”, is stating what may be obvious to many in the tree fruit sector. This quote is from a recent study on the BC tree fruit sector, titled Strategic Choices and Directions for the Next Decade, by Globalwise Inc and Belrose Inc. and published by the BCFGA on November 20, 2018. The study sets out many individual and industry imperatives, to be “implemented with dispatch”.
Companies create strategic plans to identify competitors, to make operations efficient and effective, and determine the products and services that consumers will demand. Industry strategies are put in place so that the companies in a sector can find what individual packers and growers in the region have in common and improve their competitive success as a group, against competitors in other regions. Viability (ongoing survival) and profitability (adequate return to justify investments) are the goals of strategic planning.
Strategic Choices and Directions is available by following the links to the tree fruit competitiveness fund at www.bcfga.com. The study is compelling in its direction for the tree fruit industry and all participants to address basic questions about viability and profitability.
Part of the story - challenges and issues - is especially concerning for apples, though that could be counterbalanced by the opportunities and market control that is possible with new varieties. The challenges for cherries appear to be fewer during this period of strong growth in cherry acreage and production - growth made possible by the adoption of new cherry varieties by growers. The combined industry faces many challenges that are outside of its ability to directly influence, including:
- Rising world apple production and emerging cherry production in areas such as Turkey and Poland.
- Lack of growth in per capita consumption in the developed world.
- Unprecedented retailer consolidation in Canada.
- Increasing integration of grower-packer-marketers worldwide and the emergence of international alliances to adopt promising new varieties.
These challenges make it more important than ever for growers to seek out information and act on maximizing productivity (yields) and quality fruit.
Understanding markets and meeting the essential product standards will be important to success for tree fruit operations. Industry associations have placed a large effort into maintaining adequate labour for the horticultural and harvest activities. As one grower recently said ‘Thank goodness for SAWP’ - the Seasonal Agricultural Worker Program that provides seasonal Work Permits to Mexican and Caribbean workers for their work on Canadian farms. That is a huge competitive advantage over those areas where adequate labour is a looming issue.
It is not challenge - BC has some built-in advantages. The dry interior climate, Summerland Varieties Corporation, and the Sterile Insect Release Program are competitive advantages. While many government regulations could impinge on the success of the industry, it is my experience that there are many more politicians and government managers and staff who have the best interests of the industry at heart. We may not always agree on how to make the industry successful, but we all want it to succeed.
Another challenge for the tree fruit sector is the ‘infrastructure deficit’. The challenge for apples is the renewal of old packinghouses storages, grading lines and the expansion of existing infrastructure, while cherries grading and storages must be expanded. With low interest rates for borrowing, new federal tax rules that benefit accelerated capital cost allowances, and possible access to the AgriInnovate program, infrastructure investment should be one of the hurdles that is low enough to clear easily, but the planning process is slow. The Tree Fruit Competitiveness Fund hopes to address the slow pace of change by assisting with funding for planning.
Potential Remedial Actions Identified in Strategic Choices and Directions
Grower Level
- Adjustments (sometimes major) to varieties grown.
- Improve yields and fresh packouts
- Manage to the goal: generate enough surplus that can be reinvested in continually upgrading the orchard.
- Commitment to continual improvement.
- Work with like-minded growers. Call upon outside resources to help the group.
- Consider organization in new ways to help growers reach international competitiveness, including younger growers.
Packing and Storage
- OTFC storage and packing capacity with renewed infrastructure, including a financial plan supported by grower members.
- Gain support for substantial subventions in infrastructure renewal from the BC or Canadian governments.
Marketing
- Improve consistent packs.
- Adopt and focus marketing efforts on new varieties.
Industry Structural Changes
- Centralizing storage and packing operations appears to be the right direction for apples.
- Ensure that marketing is not subsidiary to storage and packing operations.
Communications
- “Even the best communication skills cannot compensate for the lack of good news.” Announce positive steps to change the outlook and attitudes of industry participants.
- Implement a grower program to help improve orchard operations. e.g Australia’s Apple and Pear Association Limited (APAL) “Future Orchards” and Pipfruit New Zealand’s “Apple Futures” program.
Faced with many hurdles and challenges, apple growers will naturally question what the future holds. Adopting new varieties is expensive and risky, even with the assistance of the Tree Fruit Replant Program. While many export cherry operations have expanded acreage and consolidated further, this option is not open to the many of BC cherry and apple producers with relatively small acreages compared to international competitors, and the possibility of consolidating smaller agricultural parcels in the Okanagan is limited. Even so, there are many examples of consolidation of smaller parcels into moderate-sized operations. The previous solution for smaller Okanagan farms was to consolidate the packing effort through cooperative organizations. But basic issues for the growers participating in cooperatives must be addressed.
The industry strategy update says “While average yields are important, the quality of those yields is even more important to grower returns.” Growing that new variety is not enough - tree fruit producers must achieve high yields, high quality, and all while juggling new labour regulations (a Temporary Farm Labour Employer Registry is being introduced by the province) and costs (minimum wages are increasing). Rallying around the directions in the Strategic Choices and Directions recommendations will help overcome hurdles and bring new vitality to the tree fruit sector.
Fortunately, the Tree Fruit Competitiveness Fund is taking some steps in making the tree fruit sector as competitive as it can be, by making investments in developing markets, new research projects, and infrastructure planning. More government subvention may be needed. Much remains to be done at the initiative of individual growers and industry organizations - ‘dispatch is needed’.
Glen Lucas, General Manager, BCFGA
