Strategy

Farming: How do you like them apples?

Apple farming in Canada isn't what it used to be — but a team of entrepreneurs is betting it can revolutionize the industry with a new patented variety, the Red Prince.

Irma and Marius Botden’s patch of orchard at Thornbury, on Lake Huron’s Nottawasaga Bay, looks curiously Old World for an Ontario farm. It’s dense with apple trees. Row after perfectly straight row of them grow on trellises, after the European style, and the trees are short by Canadian standards, topping out around 10 feet tall. The apples growing on the trees are largely familiar: there are acres of McIntoshes and Honeycrisps. But of the 180-hectare spread, nearly half is given over to a new variety, red and firm. It’s called the Red Prince, and this is the only acreage in the country on which it grows. More precisely, it’s the only acreage in the country on which it’s allowed to grow.

Where anybody can grow the Mac, the Honeycrisp, and most every other apple in your local supermarket’s produce aisle, the Red Prince is a “club” apple. That means the trees on which it grows are patented, and protected under international law. If you want to grow it, you have to negotiate the right to do so, and join the club of official growers. It’s a model that’s become common in the U.S. and Europe, but the Red Prince is the first club apple to hit the mass market in Canada – and it represents a risky challenge to this country’s conventional apple-growing industry that may help reverse a long decline in apple farming’s fortunes.

“My dad was a nursery man,” says Marius Botden, and he is too. Now 48 years old, he spent his life working in the family trade, starting with summers and weekends in his father’s family fruit-tree nursery business in the Netherlands. He earned a degree in horticulture with a specialization in fruit growing, then started his own nursery and orchard in his home country. In 2001, he, his wife, Irma, and their four children moved to Canada and became partners in Global Fruit, a venture with another Dutch-Canadian, Hans Soer. Global Fruit has a self-proclaimed mandate to “revolutionize” the domestic Canadian apple industry. The Red Prince, and what it represents, is a key part of that plan.

Our orchards aren’t what they used to be. Though a number of popular apple varieties originated here, the Canadian market has been flooded with imports, particularly outside the domestic harvest season: apples of all descriptions, with foreign passports. “When you check the stores just after Christmas, you see more and more import apples on the shelves. More than half the apples sold in Ontario are imports,” Botden says. Meanwhile, Canada’s apple export business has dwindled in the face of stiff competition from foreign competitors – the U.S., New Zealand and a booming Chinese industry. According to Statistics Canada, we produced 376,459 tonnes of apples in 2006, down almost a quarter from a decade earlier and the lowest number in 45 years. The country’s apple trade deficit now stretches into the nine figures. Meanwhile, Canadian apple consumption has been static for almost 20 years, while market share for more exotic fruit is on the rise. The industry has long been in downsizing mode, with growers converting their apple acreage to grow cranberries, or grapes for wine, if not selling it to housing developers.

In the past couple of years, apple production has rebounded modestly, up to 393,435 tonnes in 2008. There are flickerings of increased demand in the domestic market, spurred by the new cachet Canadian apples enjoy thanks to the Buy Local movement, and by the runaway success of a new variety, the Honeycrisp. Discovered at the University of Minnesota in the ’70s, it was released to market in the U.S. in the ’90s, becoming a foodie sensation, then a popular one as demand spread through word of mouth. Now grown and sold across Canada, our climate and soil having proven particularly good hosts, the Honeycrisp helped offer a wake-up call to a sleepy industry, offering the ambitious among the farmers an opportunity for growth. Says Mary Lou Power, president of the Nova Scotia Fruit Growers’ board of directors, “The industry hadn’t seen the need to change – or the apple hadn’t come along that changed it.”

The Botdens and Global Fruit are hoping that the Red Prince can become a similar sensation in Canada. Crisp, sweet and juicy, with rich red skin, it eats better after a few months of storage, when its tangy acids have had a chance to recede, than it does off the tree at harvest time in the autumn. Its first widespread introduction into the Ontario marketplace happened at the start of February, a time when most other apples on the shelves here are imports. The Red Prince’s unusual prime season gives it a niche in an otherwise overcrowded market.

The history of the Red Prince offers a glimpse of Canada’s potential apple-growing future. A young apple variety (or cultivar, as they’re called in the industry), it was discovered in 1994 at the Princen Bros. Orchard near Weert, a town of fewer than 50,000 in the southeastern Netherlands. In a field of green and yellow fruit, the orchard’s owner happened on one tree laden with red, the accidental product of a crossing of a Jonathan and a Golden Delicious. This kind of randomization is commonplace; because every apple seed is genetically different – even those from the same apple – if you plant two seeds, you’ll get two trees that bear unique fruit. Established varieties of apple are grown from branches of existing trees that are grafted onto existing rootstock. But private and public researchers worldwide have developed and discarded tens of thousands of new varieties looking for new kinds of marketable apples. To stumble on a marketable new cultivar in the wild is a bit like winning the lottery.

Princen Bros. Orchard filed for and was granted the patent for the new apple under the Dutch legislation protecting the rights of breeders of new plants, giving them exclusive control over the variety. (Similar legislation to protect breeders has existed in one form or another in the U.S. since the 1930s, and in Europe since the ’60s; Canada’s Plant Breeders’ Rights Act came into effect in 1990.) To produce Red Prince trees for Dutch growers, the orchard hired the Botdens’ nursery, and the couple saw first-hand the variety’s success in the Dutch marketplace. The Botdens saw an opportunity.

They negotiated with Princen for the exclusive rights to grow the Red Prince in a new territory. After considering Poland, with its burgeoning apple market, the Botdens opted instead for the quality of life Canada offered – though Princen took some convincing of the Canadian marketplace’s merits. “He was a little bit hesitant,” Botden says. “He knew there weren’t a lot of apple trees grown in Ontario, and that the industry was in decline.”

The Botdens aren’t the only Canadian growers looking to a club model to help reverse that decline. The Annapolis Valley’s Scotian Gold Cooperative and Quebec’s Stevenson Orchards have joined forces with 43 American growers in a collective venture called Next Big Thing, the results of which Canadian shoppers should start seeing in the next two fall harvests. The club has the exclusive rights to grow the SweeTango, a new offshoot of the Honeycrisp that’s “both sweet and tart with hints of fall spices,” and its Canadian members think their model represents the future of the industry.

“The apple business is a commodity-based market,” says Dave Parrish, Scotian Gold’s vice-president for produce sales. “You’re selling a piece of fruit that everybody else has, so there are very limited variables that allow you to sell your product, except the price. With club varieties, the whole concept is to control the supply a little bit so that you’re able to get the pricing out of the marketplace that you really should be getting. It’s a much more structured environment.”

If the potential rewards are higher – according to Leslie Huffman, an apple specialist with the Ontario Ministry of Agriculture, Food, and Rural Affairs, growers can earn almost eight times as much for a premium new apple like the Honeycrisp than for a traditional variety – the risks are also much steeper.

“Typically, we start growing an apple when we know there’s a demand for it. But the Red Prince was grown before there was a demand for it,” says Kevin Martin. The president of Waterloo-based Martin’s Family Fruit Farm, which packs and distributes the Red Prince in Canada, can’t recall a precedent for a grower in this country taking such a risk on an unproven apple. “We’ve always more taken the approach of, let’s see what works other places, and then if we can grow it here, we’ll do it here as well. Other apple-growing regions of the world need to export their apples, so it’s more important that they have a competitive advantage, that they’re offering something new. We’re sitting in our market. We can afford to grow just what we know we’re going to be able to sell.” There might be 10,000 apple varieties in the world, but Canadian growers have always stuck to a couple dozen, of which a few principals drive most of the profit.

The up-front costs can be substantial, especially for a product with such a long lag to market. Huffman estimates a non-club variety can cost a grower $10,000 to $15,000 per acre just to bring to market. Club varieties heap costs on top of that. Scotian Gold pays royalty fees up front to the Minnesota-based patent holders for each SweeTango tree they plant; they pay a recurring fee toward the marketing of the brand; they pay a fee for each bin of the apples they sell; and they are expected to sell a certain quota of apples, and generate a certain volume of royalties. “It’s a huge risk,” Parrish says, “but we’re hoping that the benefits outweigh the risks. If you’re able to grow a piece of fruit that consumers really like, then you’re all set, because then you can build on that market.” He expects managed varieties to inundate the Canadian marketplace over the next five to six years, premium apples at premium prices. But growers will have to convince retailers to find valuable shelf space for them, and convince consumers that their apple is worth paying extra. Says Parrish, “There’s probably going to be more losers than there will be winners.”

While the Botdens say their deal for the Red Prince is less structured and onerous than that governing SweeTango, they’re still literally betting the farm on the apple’s success, so they’ve ponied up for one additional cost: a high-profile advertising campaign in Ontario, unlike anything the industry’s seen. Rather than promoting Ontario apples, or apples in general, it’s promoting a specific apple, the Red Prince. There are in-store promotions and giveaways, a social media campaign, and publicity stunts. A man dressed in princely garb has been wandering the streets of Toronto with a team of assistants, handing out apples to commuters and shoppers.

Meanwhile, back in Thornbury, the Botdens are trying to mitigate the risks by finding efficiencies, innovating to cut costs. Their trees are placed precisely with GPS assistance. While a traditional low-density apple orchard might feature 600 trees per acre, the Botdens fit twice that number into the same space. High-density orchards are common in Europe and other apple-producing markets, but have only slowly made their way into Canada. Elsewhere on the Botdens’ spread, a workshop houses a team of five skilled workers. Global Fruit keeps them on the payroll to design and maintain equipment custom-made for their high-density operation, with an eye toward cost savings through efficiencies. A unique “tunnel sprayer” sprays chemicals on two rows of trees at once, and recycles overspray, which they claim reduces pesticide use (and dollars spent) by 75%. A drip irrigation system both conserves water and makes a more efficient fertilizer delivery system. Pickers are assisted by machines, resulting in less handling of the apples, less bruising, and almost doubling the rate at which they gather the fruit.

Consider it making up for lost time. The couple planted their Red Prince trees in a nursery in 2001. Three years later, they transplanted those young trees to their orchard. It took another three years before they picked their first apple, and another few before they were producing enough apples to start testing the market. Only now do they have enough product to enter the marketplace. “After 10 years,” Marius Botden says with a laugh. “Finally, huh?” Not a business for the impatient, and unlike years past, not one for the risk-averse.