Transcript Who Wants to Just Break Even?

Who Wants to Just
Break Even?
How long will it take
for Red Delicious to
start making money?
David Allan and David Marshall
January 16, 2001
Washington State Red Production
70,000
50,000
40,000
Estimate per Jan 1 2001 Storage Report
Carloads (1000 boxes)
60,000
Alternate bearing since 1994, but production appears to
be trending downward in deference to other varieties.
When will it level off?
30,000
20,000
10,000
Projections
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: Yakima Valley Growers & Shippers
F.o.b. Price of Red & Golden Delicious
$24
$20
Golds
$16
Reds
$12
Est
$8
$4
Average price Adjusted
to CPI 2000
$0
1988
1989
1990
1991
Source: Growers Clearing House
1992
1993
1994
1995
1996
1997
1998
1999
2000
Red & Golden Delicious Return per Bin
$300
Years below break-even:
Reds: 8 out of 13 years
Golds:5 out of 13 years
$250
$200
Golds
$150
Break-even price
assumed $120/bin.
$100
Reds
$50
Average f.o.b. price adjusted by percent packout and
packing costs as published each year by the GCH.
Packout varies from 58% to 87%.
Packing Cost varies from $5.68 to $7.25 per box.
Est
Adjusted to CPI 2000
$0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: Growers Clearing House
$20
Price v. Quantity, Red Delicious
Washington Growers Clearing House
(All grades and sizes)
91
90
$18
Price per 42-lb. Unit (f.o.b.)
$16
95
92
$14
96
93
94
$12
$10
$8
Average price Adjusted to
CPI 2000
$6
40,000
44,000
48,000
Source: Growers Clearing House
52,000
56,000
60,000
64,000
Price v. Quantity, Red Delicious
Washington Growers Clearing House
(All grades and sizes)
$20
91
90
$18
95
Price per 42-lb. Unit (f.o.b.)
$16
92
$14
A demand
shift ??
97
96
93
94
99
$12
00
98
$10
Authors'
Estimate
$8
Average price Adjusted to
CPI 2000
$6
40,000
44,000
48,000
Source: Growers Clearing House
52,000
56,000
60,000
64,000
Price v. Quantity, Red Delicious
Washington Growers Clearing House
(All grades and sizes)
$20
91
90
$18
Authors'
Projection
95
Price per 42-lb. Unit (f.o.b.)
$16
92
2003-05
$14
94
97
$12
$10
Demand could
continue to shift
downward.
96
99
00
93
98
Authors'
Estimate
$8
Average price Adjusted to
CPI 2000
$6
30,000
35,000
40,000
Source: Growers Clearing House
45,000
50,000
55,000
60,000
65,000
Washington State Red Production
70,000
Assuming a reduction of 2.5 million
boxes each year, we will reach
economic viability around ’03/05.
Later -- if demand is still dropping.
Carloads (1000 boxes)
60,000
50,000
40,000
30,000
20,000
10,000
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cars 56,845 61,408 48,190 55,975 44,052 52,222 41,397 45,394 36,397 40,088 32,397 36,088 31,397 35,088 31,397 35,088
Source: Yakima Valley Growers & Shippers
Washington State Red Production
70,000
If Red Growers react slower, and
production drops by 1.5 million boxes
each year, we wouldn’t get down to
profitable levels until 2005 / 2007.
Later -- if demand is still dropping.
Carloads (1000 boxes)
60,000
50,000
40,000
30,000
20,000
10,000
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cars 56,845 61,408 48,190 55,975 44,052 52,222 41,397 45,394 38,397 42,088 35,397 39,088 32,397 36,088 29,397 33,088
Source: Yakima Valley Growers & Shippers
Price v. Quantity, Red Delicious
Washington Growers Clearing House
(All grades and sizes)
$20
91
90
$18
95
Price per 42-lb. Unit (f.o.b.)
$16
92
R2 = 45%
$14
96
97
93
94
99
$12
00
98
$10
R2 = 53%
Authors'
Estimate
$8
Average price Adjusted to
CPI 2000
$6
40,000
44,000
48,000
Source: Growers Clearing House
52,000
56,000
60,000
64,000
$25.00
Price v. Quantity, Golden Delicious
Washington Growers Clearing House
(All grades and sizes)
91
Price per 42-lb. Unit (f.o.b.)
$20.00
93
90
95
97
92
99
$15.00
96
R2 = 13%
94
00 Proj.
98
$10.00
Average price Adjusted
to CPI 2000
Source: Growers Clearing House.
$5.00
12,000
13,000
14,000
Source: Growers Clearing House
15,000
16,000
17,000
18,000
Old Red Crop Shipments
1998-99
Crop
Total Shipments
Shipped After
Sep 1 of New
52,222
1,695
Source: Yakima Valley Growers & Shippers
1999-00
Crop
41,397
3.2%
2,282
5.5%
$24.00
Price v. Quantity, Granny Smith
Washington Growers Clearing House
(All grades and sizes)
91
$22.00
Price per 42-lb. Unit (f.o.b.)
95
$20.00
96
94
$18.00
90
99
97
00 Proj.
98
$16.00
93
R2 = 65%
$14.00
92
$12.00
Average price Adjusted
to CPI 2000
Source: Growers Clearing House.
$10.00
4,000
5,000
Source: Growers Clearing House
6,000
7,000
8,000
9,000
Price v. Quantity, Fuji
Washington Growers Clearing House
(All grades and sizes)
$60.00
92
$55.00
$50.00
91
Price per 42-lb. Unit (f.o.b.)
$45.00
$40.00
93
$35.00
95
$30.00
94
$25.00
96
99
$20.00
97
$15.00
R2 = 83%
00 Proj.
98
$10.00
Average price Adjusted
to CPI 2000
$5.00
Source: Growers Clearing House.
$0.00
0
1,500
3,000
Source: Growers Clearing House
4,500
6,000
7,500
9,000 10,500 12,000 13,500
Price v. Quantity, Gala
Washington Growers Clearing House
(All grades and sizes)
$45.00
$40.00
92
$35.00
Price per 42-lb. Unit (f.o.b.)
91
$30.00
93
$25.00
95
94
96
$20.00
97
99
$15.00
R2 = 86%
98
00 Proj.
$10.00
$5.00
Average price Adjusted
to CPI 2000
Source: Growers Clearing House.
$0.00
0
2,000
Source: Growers Clearing House
4,000
6,000
8,000
10,000
Total U.S. Apple Production, by Variety
1993: 254.4 million boxes
Other
19%
Empire
1%
Red
43%
Rome
6%
McIntosh
5%
Gala
2%
Fuji
2%
Granny
7%
Source: US Apple, 1998
Goldens
15%
Total U.S. Apple Production, by Variety
Other
18%
2000: 254.2 million boxes
Red
35%
Empire
2%
Rome
5%
McIntosh
4%
Gala
6%
Fuji
8%
Source: US Apple, 2000
Granny
8%
Goldens
14%
Total U.S. Apple Production, by Variety
2008 or 2009: 175.2 million boxes (4% annual reduction)
Red
21%
WHAT IF WE REMOVED…
WHAT WILL
FILL THE
HOLE?
36% of the Red Production
20% of the Gold production
50% of the Rome and McIntosh,
50% of the 'other' varieties,
especially those grown for
processing. ?????
31%
Goldens
10%
Granny
8%
Other
10%
Source: Pure Speculation
Empire
2% RomeMcIntosh
3%
3%
Gala
6%
Fuji
6%
Market Share of Washington Grown
Apple Varieties, 1920-1999
Gala
Granny
100%
Braeburn
Percent of Total Production
90%
80%
Golden Delicious
Winesaps
70%
60%
50%
40%
Red Delicious
30%
20%
Standard Delicious
10%
0%
1920
1930
1940
Source: Growers Clearing House
1950
1960
Crop Year
1970
1980
1990
Fuji
Contact Info:
David Allan
3630 Lateral B
Wapato, WA 98951
509-877-2065
[email protected]
David Marshall
408 North First Street
Yakima, WA 98901
509-453-4851
[email protected]
Copies of this material are available
upon request. This Power Point
presentation can be downloaded at:
http://www.agrimgt.com/newsletters.htm