Positive Outlook Remains for Fruit Industry This Year
January 2, 2019 You could certainly be excused if you were slightly nonplussed by the feelings of your peers coming out of 2018 as reflected in our State of the Industry survey this year, but the situation, as a football referee might proclaim, deserves further review. Let’s put it this way, despite all the perils involved in producing a profitable fruit crop, there are a lot of folks in other industries that would love to have such desirable products.
But you can’t keep a winning streak going forever. From the year we started the survey, following the 2015 season, crop growers in all five areas we cover in every issue — berries, nuts, and grapes, as well as pome and stone fruit — overwhelmingly said they were ramping up production for the coming year.
However, growers seem to be holding pat for 2019. It’s just that all things are relative, and when you see such blinding sunniness, a more normal year where growers see a few clouds on the horizon — mainly over trade/tariffs — seems like a huge step down. But dropping from an “A” to a “B-plus” is nothing to scoff at, particularly in such a difficult course. I go to a fair number of agricultural technology conferences, and the tech guys without an ag background are often horrified at how our industry is so inextricably intertwined with something as unpredictable as the weather.
Even better, economic indicators for the next decade or so really do appear bright. I say that because I had what at first seemed an amazing case of déjà vu this past month in attending two top industry events in the same week — the annual meetings of the Washington State Tree Fruit Association and the Almond Board of California.
The keynote speaker at the Washington conference, Vikram Mansharamani, author of Boombustology: Spotting Financial Bubbles Before They Burst, says fruit growers have been dealing with some slowing demand for their crops in recent years, but that will change. Currently, the world’s largest economies, the U.S. and the EU, are aging, which decreases consumption.
Demographics is destiny, Mansharamani notes, and because of birth and death rates, etc., we know that in the same way the world’s largest economies are slowing, most signs point to a middle-class explosion in Africa and India.
When people have more money in their pockets, as amply demonstrated in China in recent times, they want to eat better. Rice and beans are often replaced with meat and potatoes. And they eat more and better quality apples, cherries, nuts, etc.
It was interesting to hear Mansharamani’s comments in Yakima echoed a couple days later by a couple of other economists in Sacramento that I interviewed at the Almond Conference.
Rabobank Senior Analysts Roland Fumasi and David Magaña say the recent tariff/trade problems obscure the fact that the longtime prognosis is bright. Unbidden, they gave almost the exact same reasoning as Mansharamani.
As incomes continue to increase in developing countries, residents’ eating habits will change, says Magaña, and will include more almonds. The developing countries, unlike the U.S. and Europe, have fast-growing populations. The economists estimate that over the next dozen years, the global middle class will be growing by 150 million people per year. Please pass them a very large bowl of fruit.
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