Canadians are hearty apple eaters - each jawing through an average of nearly 11 kilograms of the tree fruit every year. But their healthy eating habits have not been enough to stem the financial decline for Ontario apple growers.

The Ontario apple crop has fallen from 730,500 pounds in 1999 to an estimated 352,789 in 2006, a decline of 41 per cent, according to the Ontario Ministry of Agriculture, Food and Rural Affairs.

In the same period, the value of the apple crop fell from $101 million to $65 million, a drop of 35 per cent. The number of acres used for growing apples has also dropped from 35,000 to 17,000, according to the 320-member Ontario Apple Growers (OAG).

"The industry has shrunk," because there has been little or no profit in growing apples," says Adrian Huisman, OAG manager.

Photo courtesy of Jamie Reaume, The Grower

The number of acres Ontario growers use to grow apples, including this orchard in the Georgian Bay area, has been dropping in recent years due to a combination of factors.

Lower-priced imports, rising production costs, the higher Canadian dollar and the absence of a government-assisted replant program in Ontario have slowly eroded the province's 200-year-old industry.

The 20-per-cent increase in the province's minimum wage scheduled for 2010 will accelerate the decline, he warns.

"We're getting hit from a lot of different angles," he says. "The Ontario industry is under threat from Chinese concentrates on the processing side and imports in general."

China, the world's largest apple grower, grew 24.5 million apples in 2006. World apple production for 2006 is expected to be 46.1 million tons, an increase of 11 per cent, according to the U.S. department of Agriculture. In 2005, Canada produced about 450,000 tons of apples, according to Statistics Canada.

Imports of low-priced Chinese juice concentrate drove most Ontario farmers out of apple juice markets.

The worldwide surplus of apples brought more fresh apples into Ontario from overseas and the U.S., and continues to keep Ontario apple prices low.

But the increasing value of the Canadian dollar has had an even worse effect than the Chinese concentrate.

"Looking down the road, it's our cost of production that is going to kill us," he says.

The cost of production has increased during the past decade until apple growing now requires one of the highest capital investments per unit of land in agriculture today, according to Agriculture and Agri-Food Canada.

Huisman warns the decline in Ontario's apple industry may accelerate when the province's minimum wage increases from $8 to $10.25 an hour in 2010.

It will put Ontario apple growers at even greater economic disadvantage to their competitors, he says.

The increase is expected to add another $110 to $130 million a year to labour costs of the Ontario horticultural industry.

"I don't know how our growers are going to recoup that $110-$130 million in additional labour cost. That, right now, is probably the most major blow we have had," he says.

Jim Rickard, chair of the apple growers committee of the Ontario Fruit and Vegetable Growers' Association, echoes Huisman's concern. "The Ontario minimum wage makes the Ontario apple growers less competitive not only on the world market, but also with other Canadian apple producers."

Canadians consumed 11.4 kg of fresh apples and nearly one kg of processed apples per person in 2005, an increase from 10.05 kg, or 10.9 per cent from 2004, according to the Ontario Ministry of Agriculture, Food and Rural Affairs.

Ontario is Canada's largest apple producer, followed by British Columbia and Quebec.

According to Statistics Canada, in 2005 B.C. produced 129,375 tons of apples valued at $36 million, Quebec 86,150 tons valued at $29 million and Ontario 186,000 tons of apples valued at $60 million. Nova Scotia produced 43,400 tons of apples valued at $9.9 million.

To rebuild the Ontario apple industry, the OAG wants a national replant program that would replace older varieties of apples with new varieties more desired by consumers such as Ambrosia or Royal Gala.

While Ontario growers have been introducing new varieties, a government-assisted program would result in much quicker revitalization of the industry. "New trees, new technology, better quality fruit and apples that are more desirable to the consumer," says Rickard.

The Canadian Horticultural Council - a national association representing 20,000 producers of fruit, vegetables, flowers and ornamental plants - proposed a national $100-million replant plan in 2005 that would involve a financial partnership between federal and provincial governments and apple growers, but the plan has not been adopted by governments.

Canada's other apple-growing provinces of B.C., Quebec and Nova Scotia already have their own replant programs, but Ontario does not.

Without a provincial program in place, Ontario's growers are at an economic disadvantage, says Rickard.

The British Columbia replant program has been in place since 1991. More than 60 per cent of B.C.'s tree fruit acreage has been replanted to a higher density with new more marketable fruits.

The new varieties have appealed to consumers and led to increased sales for local growers, according to the B.C. Fruit Growers Association. B.C. produces about 30 per cent of the apples grown in Canada.

Ontario apple growers continue to lobby the provincial and federal governments to support a replant program.

However, neither the federal government nor the Ontario government seem to want to support a national replant program.

"We've had no favourable response. The Ontario government has agreed to participate if there is federal participation in a replant program," says Huisman.

The federal government has said while it would not support a replant program, it would consider another type of support to the apple industry.

"In Ontario, we're not only having to compete with imports, we having to compete with the treasuries in other provinces," says Huisman.

To increase interest and demand for Ontario-grown food products including apples, the Ontario government last month launched its $12.5-million "Buy Ontario" food campaign.

The apple association supports the program because it will benefit all Ontario farm producers, including apple growers, says Huisman.

However, Rickard adds that "there is no loyalty or Canadian emotion" for profit-making retail stores to buy Ontario or Canadian apples over overseas apples, when the same variety of apple from Chile costs 99 cents a pound compared to $1.49 for Ontario apples.

(Charles Wyatt can be reached at wyatt@businessedge.ca)