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If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
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AgWest Farm Credit’s 12-month outlook sees apple growers as slightly unprofitable to breakeven and packers as slightly profitable.
12-Month Profitability Outlook
Northwest crop large with good quality
The Washington State Tree Fruit Association’s first official estimate on the 2023 crop came in at 134 million 40-lb boxes, a 28% gain from 2022 and 10% above the 5-year average. Quality is reportedly good across the region. Gala and Honeycrisp varieties are experiencing lower-than-expected yields, but excellent fruit quality and favorable packouts should mitigate the negative impact on growers.
U.S. 2023 apple crop size average
USDA estimates a total U.S. apple crop of 262 million 40-lb box equivalents for 2023, up 1.5% year over year and near the five-year average. Michigan state’s estimate is 28.8 million 40-lb boxes, 15% smaller than the previous season but 11% above the state’s 5-year average. A large crop in Michigan could reduce Northwest producers’ access to East Coast markets given its closer proximity.
Prices soften
Prices softened for conventional varieties, Gala (16%), Fuji (6%) and Honeycrisp (34%), during September as the 2023 crop hit markets. While it remains early in the season, many expect prices to settle lower than last season due to the larger crop.
Season-to-Date Prices by Variety
Source: WSTFA September 20, 2023, Weekly Summary Bulletin Report. N/A: Not Available.
Elevated interest rates reduce margins
The cost to carry inventory and/or large amounts of inputs is rising, as is borrowing for capital expenses. Rising interest expenses reduce margins and thus profitability, especially for operations with more variable rate financing. Please refer to our Quarterly Economic Update for more information on interest rates.
India removes tariff on apple imports from the U.S.
India and the U.S. signed a trade agreement in September 2023 that removes a 20% import tariff on U.S. apples. While this may provide an additional market for Northwest apples, the competitive environment has changed significantly over the last three years. India now sources apples from a diversified base, which includes low-cost producers such as Turkey and Iran (see chart below). It may be difficult for Northwest producers to regain significant market share.
Apple Imports to India by Country
Source: UNCOMTRADE Database, amounts reported by India.
Apple producers should be slightly unprofitable to breakeven and packers slightly profitable over the next 12 months. Most expect prices to settle below last year due to the larger crop, but packers should benefit from greater throughput. Michigan will likely experience an above-average crop size and this could reduce access to East Coast markets for Northwest producers. Elevated interest rates are pressuring profitability. India’s removal of a 20% tariff should provide an additional outlet for Northwest apples; however, the potential remains unclear given increased competition from low-cost producers.
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