By Lynda Kiernan
Consolidation continues apace in the fruit industry of the U.S. Pacific Northwest. Washington State-based fruit grower, packer, and shipper CMI Orchards announced a new strategic partnership with Yakima Fruit and Cold Storage.
“This partnership will greatly increase CMI’s ability to service our customer base with fruit on a year-round basis,” said Bob Mast, president, CMI. “We are excited to have additional premium fruit to offer our customers and to continue to supply the highest quality fruit that we can, serving the needs of the market.”
CMI Orchards is owned by four independently owned family farming and picking companies in Central Washington State, and is one of the state’s largest packers and shippers of premium apples, pears, and cherries.
This partnership will expand CMI’s offerings by 3 million boxes of high-quality apples to its diverse sales portfolio, and will bring with its packing facilities and high-density acreage that will boost volume and foster significant growth for both companies.
“With this partnership comes tremendous opportunity to increase our daily shipping capacity with the expansion of packing facilities and high-density acreage,” said Mast. “This added volume will enable significant growth for both companies and provides a robust portfolio to carry CMI and Yakima Fruit into the future.”
The deal not only increased volumes for CMI, but added new apple varieties including Honeycrisp, Granny Smith, Cosmic Crisp®, Red Delicious, Pink Lady®, Gala, Fuji, and Golden Delicious apples to its roster.
“Yakima Fruit has a highly desirable manifest that we are excited to add to our offerings, including exceptional early Honeycrisp among other key varieties,” said Mast, who said the partnership was executed on March 20.
Yakima also brings undeveloped acreage, giving CMI a window for strategic future planting.
Mast said, “CMI is thrilled with the opportunity this blank slate provides and is eager to look into early cherry varieties, licensed branded apples and cherries, as well as high flavor, high quality core apple varietals.”
Achieving scale and growth through partnerships began for CMI in 2018 when it added Pine Canyon Growers as a grower, packer, and shipper, said Mast.
“Pine Canyon Growers has been a fantastic addition to our manifest, and now our progress has enabled us to team up with another great partner in Yakima Fruit,” he said.
Ripe for Consolidation
As far back as the end of December 2017, industry watchers were noting that the Washington State tree fruit sector was set for a shift toward consolidation. With an oversupply of both cherries and apples, and crowded with too many packing houses, Michael Butler, CEO of Cascadia Capital in Seattle, said that the tree fruit industry was bound to see a higher level of consolidation over the coming 24 months, as packing houses were running below capacity.
Butler went on to note that mid-sized fruit companies with orchards smaller than 1,500 acres that are not vertically integrated, and are running at or below 30 percent capacity, are at the highest risk of being swept up through consolidation, reported Capital Press.
“They all have potential but there’s not room for all of them,” he said.
In January 2019, North Carolina-based ag investment firm International Farming Corporation (IFC) acquired three Washington State tree fruit companies: Legacy Fruit Packers, Valley Fruit, and Larson Fruit – owned by the Larson and Verbrugge families – and combined to create a single company called Columbia River Orchards.
Included in the deal were 4,000 acres of orchards, two packing facilities with the capacity for four million boxes of fruit per year, and interests in the Sage Fruit marketing company located in Yakima, Washington, and Pacific Coast Cherry Packers in Wapato, Washington.
Only months later, in April, Clearview Capital Fund III portfolio company Wilson Orchard & Vineyard Supply (Wilson) merged with Oregon Vineyard Supply (OVS) to operate under the new name, OVS.
The merger brought together two companies that are highly complementary, but have minimal overlap, leaving the combined OVS to launch from a position of strength.
“…OVS offers valuable agronomic solutions that we haven’t offered before. And its vineyard management division, Results Partners, is very highly regarded,” said Joe Perry, CEO, Wilson at the time. “On the other hand, OVS hasn’t offered irrigation products and solutions before so that is an offering we will be able to deliver to their customers. Our overlap is minimal but our opportunities are plenty.”
For Yakima, company President Mike Wilcox said that there were numerous sales and marketing teams for Yakima to partner with, but CMI brings points of difference in its ability to drive sales.
“CMI has proven time and time again they are innovation leaders, paving the way with many of the top-selling branded apple varieties in the U.S.A.,” said Wilcox.
“Having a strong core manifest is equally important, which is the value that Yakima Fruit adds to this partnership, as you have to be able to take care of customers’ everyday needs as well as bring something new and exciting to the table to keep apples exciting,” he said.
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.