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Thursday, 27 September 2012 13:33

Cider Pressed: Range of factors contributing to higher costs

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Sietsema Orchards Sietsema Orchards Courtesy photos
WEST MICHIGAN — Like the proverbial canary in the mine, the first apple processors to feel the squeeze from this year’s bad harvest are the cider mills.

The reason: The state lost about 90 percent of its annual apple crop this year because of freakish weather this spring. Much of the crop that’s left is good only for cider production, but fans of the traditional fall beverage better get ready to pay more. The cost to produce cider is higher thanks to a series of cause-and-effect events this year.

“We’ve had to buy all of our apples this year; we had nothing on our trees,” said Ed Robinette, president of Grand Rapids-based Robinette’s Apple Haus and Winery. “Normally, we raise enough ourselves to do our cider production and have apples on the shelves, but this year we’ve got nothing.”

Robinette knows firsthand the difficulties of running a cider mill without product. His company operates an orchard as well as cider mill, so normally all of its fruit is grown in-house.

According to a May report by the Michigan State University Product Center, the state lost an estimated 90 percent of its annual apple crop, resulting in a hit of more than $100 million. While the first to feel the sting of the loss were the farmers whose orchards were decimated, cider mills that are now gearing up for the fall tourism and cider season are feeling the squeeze as well.

“Obviously not having the fall harvest will have a tremendous effect on those out in the field,” said Sarah Nicholls, professor at MSU. “The bigger producers will certainly have to buy product from out of state.”

In order to continue cider production, Robinette’s has turned to local growers such as Wittenbach Orchards in Belding and Rasch Family Orchards for product.

“We’ve been buying from other local growers who had 10 or 15 percent of a crop this year,” Robinette said.

Similarly, Sietsema Orchards and Cider Mill in Ada has to look elsewhere to buy product it would normally grow in-house. Andy Sietsema, son of owner Skip Sietsema, said the vast majority of its crop was destroyed by the early spring thaw and freezes. Sietsema’s mill has been buying apples from Chris Kropf’s Hart Farm LLC in Lowell as a result.

“At first we were scrambling, but once we were sure through connections that we were going to have apples, then it wasn’t a problem. We were good to go,” Sietsema said. “We’re lucky in that we’re not so big that we need a ton of all different kinds of apples. We’re not trying to produce 10, 20, 30,000 gallons of cider. I’ll be lucky if I produce 1,500 to 2,000 (gallons) this year, which won’t be a problem.”

The small production scale at Sietsema’s allows the mill to keep few people on staff, keeping overhead costs lower. According to Sietsema, a typical fall sees the hiring of between three and five employees to help out around the mill, but there are no other regular employees aside from himself, his father, and their wives.

“We’re more intimate, more small-scale, and we want to run as efficiently as possible out here as well,” said Sietsema.

However, this lack of Michigan apples is not just causing cider mill owners to purchase from other growers. According to the U.S. Department of Agriculture’s marketing service, the retail cost of apples is higher this year, perhaps best exemplified by Honeycrisp apples. The average retail price per pound for Honeycrisp apples doubled from last year to $3.29 in the Midwest, according to USDA statistics in mid-September.

Prices of apples overall are increasing due to a variety of factors, all of which can be traced back to the initial week of 80-degree weather in March followed by the freezes.

According to Robinette, the scarcity of the crop is but one factor in the higher prices. Growers’ efforts to preserve their crops earlier this year also drove up prices.

“Farmers spent more money this (year than previous years) running their wind machines trying to save the crop from the frost,” Robinette said, referring to the windmills they power to attempt to keep frost off the trees. “Fuel costs were also higher this year, and the added work to save the crop caused farmers to spend more.”

Other crop-loss prevention methods also drove up the cost-per-unit. Even though some orchards were fortunate enough to salvage 10 percent or even 15 percent of their crops this year, the crop was spread out over entire orchards, necessitating total orchard spraying of pesticides and driving harvest costs up.

According to Robinette, farmers were unable to pay workers the typical piece-rate for harvesting since the crop was spread so thinly over the orchards. Instead, farmers had to resort to paying hourly wages, which doubled or tripled the harvesting cost-per-unit.

These higher costs are being passed on to the cider mills and other buyers. However, even though farmers can raise their prices to help offset their losses, the mills don’t have that luxury. Cider prices can only be raised so high before customers will stop buying, says Robinette.

This price cap leads many to seek creative methods of boosting sales. For Sietsema, the key is selling the cider mill experience through events like onsite curated dinners by local chefs and free hayrides and diversifying the product line through the introduction of hard cider this year. So far, it seems to be paying off, he said.

“For the most part people have been understanding — especially because we’re not getting our apples from Washington,” Sietsema said. “We’re getting them from 10-15 miles away. People like that even better.”

Another problem with this year’s harvest is that the overall quality of Michigan apples is poorer. Many growers’ crops were heavily damaged by frost and only fit for cider manufacturing, and the remaining good fruit is likely not to last long, Robinette said.

“The Michigan crop will be gone as soon as it’s harvested,” Robinette said. “Normally crops are stored to be sold through the winter, but what I’ve been hearing is that the Michigan apple crop will be sold out by Christmas.”

All these issues stemming from the unseasonable spring weather continue to trickle down from farmers to processors until they reach consumers. According to Robinette, the challenges will not abate until next year. For the time being, cider mills like Robinette’s and Sietsema’s are working through this year’s troubles.

“We’re pretty much in survival mode,” said Robinette. “What people should know is that there is fruit; there are Michigan apples out there. But people had better know that they’re going fast, so enjoy them while you can.”

Read 1851 times Last modified on Thursday, 27 September 2012 14:24
Carl Dunker

Contributing reporter

cdunker@mibiz.com

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