YAKIMA, Wash. – The nation's apple growers, who have been fighting flat prices for years, are optimistic about the future now that the world's largest fast-food chain has become their biggest foodservice customer.
McDonald's Corp. (MCD) is preparing to roll out a new fruit and walnut salad, the second menu item with apples the fast-food giant has introduced in the past year as it moves toward providing healthier fare. The shift couldn't have come at a better time for the U.S. apple industry.
"Obviously, it's a big boon," said Dave Carlson, president of the Washington Apple Commission (search). "If we get several other fast-food chains involved as well, it could certainly turn into being a significant factor in the industry."
The United States is the world's second-largest apple producer behind China. More than half of all U.S. apples come from Washington state, where they are the state's most valuable agricultural commodity, valued at about $1.15 billion in yearly sales.
But an oversupply has resulted in flat prices, and the industry has lost an estimated $1.7 billion in the past five years, according to the U.S. Apple Association.
In addition, apple growers have endured several trade setbacks.
Taiwan banned imports of U.S. apples for about four months after finding a codling moth larva in a shipment, effectively closing the third-largest export market for U.S. growers. Taiwan dropped the ban Wednesday.
The United States also has been battling a tariff imposed in Mexico after growers there accused U.S. producers of dumping, or unfairly selling apples there at levels below the sales prices for apples in the U.S. market. Mexico is the country's second-largest export market behind Canada.
U.S. growers have tried to diversify their orchards, planting new varieties such as Pink Lady and Cameo, to entice consumers and reinvigorate the industry.
Getting the fast-food industry to bite is just another step in the process, Carlson said.
Last June, McDonald's began offering apple slices with a caramel dipping sauce. A new salad, featuring apples, walnuts and grapes, is scheduled to be released in May.
McDonald's expects to purchase about 54 million pounds of apples each year for the two menu items, said Mark Lepine, McDonald's director of food innovation and development. Key to developing the products has been ensuring the apples stay fresh.
The apple slices are dipped in a solution of calcium ascorbate to retain color, crispness and flavor.
"With apples, there's the ability for them to hold up. A lot of other fruits do not have the type of shelf life and consistency that we like to see represent our brand," Lepine said.
It's that very brand that can provide great highs — and steep lows — for American producers. Nothing showed that more than when McDonald's ended the era of the super-size value meal, which came as a blow to the nation's potato industry that relies heavily on McDonald's and other fast-food chains to purchase cut potatoes for fries.
But the trend toward healthier fare isn't limited to McDonald's.
Crunch Pak, a private company in Cashmere, Wash., owned by growers and a fruit marketing company, has been contacted by a number of foodservice companies about developing new products, said Tony Freytag, director of marketing.
The company already provides diced apples to Arby's for a salad and a chicken salad sandwich.
"We've created another market that really did not exist five years ago, and now it's finding a new niche," Freytag said.
McDonald's will be instrumental in the process, he said.
"Processors such as ours can struggle for years, or work at it for years, getting the word out. With the advertising budget that the McDonald's, the Arby's, others can bring to the table, it can raise the awareness of sliced apples overnight, which is what we've seen," he said.
The fresh-cut market certainly has given consumers a whole new convenience, said Ned Rawn, director of the fresh slice division for Tree Top (search), a cooperative of 1,750 growers in Washington, Oregon and Idaho and one of several processors serving McDonald's.
"I don't see this being a flash in the pan," he said. "This is going to become a long-term part of the menu."
Whether the Golden Arches will continue to bear fruit for the apple industry remains to be seen, but no one disputes the impact McDonald's can have on the nation's producers.
"I think for the produce industry in general, just like with apples, it will increase overall consumption," said Wendy Davis, director of communications and consumer health for the U.S. Apple Association. "This just emphasizes the importance of having salads and other menu options, and it emphasizes the importance of McDonald's to American agriculture."