Granny Smith apples in harvest bins

Granny Smith apples in harvest bins

The New Royal Bluff Orchards, like all Washington State fruit growers, produce and own their apple crops until they are sold to the ultimate retail market, comprised mainly of supermarket chains, which includes mega-retailers such as Wal-Mart and Costco. The packinghouses sort and pack the apples for sale and distribution. They also provide controlled atmosphere storage, which allows for year-round freshness and marketability. This means that growers and packinghouses must work together very closely to produce apples according to the specifications and demands of the market.

 Fuji apples in the packinghouse

Fuji apples in the packinghouse

The packinghouse is a typical middleman, and a vital link between the apple growers and the retail stores. The competition is robust among packinghouses, which create their own brands and provide the resources needed to manage inventory and restocking at the large retail chains. Furthermore, many retailers have demanded that packinghouses implement new capabilities, such as increased selection of box sizes, custom fruit labeling, and product tracking using RFID tags – all of which require additional capital investments.

Upon harvest, the grower consigns the fruit to the packinghouse and accrues a fee for its storing, packing and selling services. Once the market is made by the packinghouse, sales follow and the growers are paid the selling price, net of all accrued service fees. 

The apple industry is seasonal. The growing season begins in December with tree pruning and extends through the October harvest. Cash flow is managed according to prior agreements in which the packinghouse usually pays the grower advance installments in October, January, March and May, totaling about 80% of the expected crop value. The final 20% is paid in September, after all sales and fees are accounted for.