How growing and marketing apples turned industrial

It’s apple season. A few years ago John Seabrook wrote a great history of the growing, distribution, and marketing of apples. It features the new breed SweeTango, which is nearly an industrial product which enjoys many IP protections and a sophisticated multi-national distribution strategy. The piece features lots of reporting and plenty of Red Delicious bashing, while the best part is about how new breeds are discovered. Here are some excerpts.

The history of apples in America…

Malus pumila, of the family Rosaceae and the tribe Pyreae, was domesticated some four thousand years ago, in the fruit forests of what is now southeastern Kazakhstan, near the city of Almaty. Frank Browning, the author of “Apples,” reports seeing apple trees growing up through cracks in the pavement there. The wild horses of the nearby steppe liked to eat apples, and could cover long distances, carrying the seeds in their guts. Apples travelled westward along trade routes, and show up in Persia around the time of Alexander the Great, and in Europe not long after; the Romans cultivated them widely. (The apple in the Garden of Eden was most likely a pomegranate, or possibly an orange.) The species came to the New World with the first European settlers, in the form of seeds, and the pioneers, as they pushed westward, took apples with them.

As the industry moved away from cider-making and toward table fruit, some of these apples were named, propagated by cloning—the method of grafting a piece of one tree onto the trunk of another, which produces fruit that is an exact genetic copy of the first tree’s—and promoted like pop stars. The Northeast had Jonathan, Esopus Spitzenburg, and Blue Pearmain (Thoreau’s favorite); the South claimed Winesap, Sally Gray, and Disharoon; the Midwest boasted Hawkeye and Detroit Red; and from the West came the Gravenstein and the Yellow Newtown Pippin. Their flavors were shaped by their respective climates—the shorter the growing season the tarter the apples tended to be.

In the twenties and thirties, refrigerated railcars allowed growers to transport apples over great distances, and, thanks to cold-storage warehouses, wholesalers and retailers could keep them for long periods of time. As regional markets gave way to supermarket chains, the number of available apple varieties shrank, and those which endured shed their regional associations. By the nineteen-sixties, most supermarkets carried three types of apple: McIntosh, a small, tart apple that John McIntosh had found growing on his farm in Ontario, Canada, in 1811; Red Delicious, originally the Hawkeye, a sweet apple discovered on a farm in Iowa in the eighteen-seventies; and Golden Delicious, found in a hay field in West Virginia in the eighteen-nineties. Apple breeders tweaked these apples, to enhance their industrial potential—they had to be durable, long-lasting, and attractive—generally at the expense of texture and taste (unlike many fruits, apples can look wonderful and taste terrible, and so they lend themselves to horticultural sleight of hand).

In the United States, apple production happens mainly in the shoulders of the nation—Washington State is the largest producer, and New York is the next largest. Not surprisingly, each of those states has a breeding program, at Washington State University and at Cornell. Minnesota is twenty-third among the twenty-nine apple-growing states, in volume of production; up through the eighteen-fifties almost no apples grew there, because it was too cold. Its breeding program was born not of abundance but of necessity. “I wouldn’t live in Minnesota,” Horace Greeley once said, while visiting the state, “because you can’t grow apples here.” That remark inspired a cantankerous apple breeder named Peter Gideon to prove Greeley wrong with an apple he named Wealthy, after his wife. The success of the Wealthy apple, introduced in 1861 and still grown in heritage orchards around the country, was the inspiration for the university’s apple-breeding program, in 1878, which was followed by the founding of the Minnesota Agricultural Experiment Station, where Bedford works. The station was built with funds authorized by the Hatch Act of 1887, which provided research-and-development money to land-grant universities for the promotion of agriculture.

How the apple market took off…

When Bedford assumed control of the apple-breeding program, in the early eighties, the U.S. apple industry was poised for a profound transformation. Something like the pre-industrial world of apples, where an apple lover had the choice of many varieties, was returning, not through heirlooms but through new breeds of super apples from other countries. Instead of standing mostly for places and people, the new apples would stand for images, sounds, and ideas—Royal Gala, Pink Lady, Jazz. This transformation had begun in 1975, when a Washington grower named Grady Auvil introduced a tart, green, hard-fleshed apple originally from Australia that Maria Ann Smith, a farmer’s wife, had discovered growing on the family’s compost pile in New South Wales, in the eighteen-sixties. The Granny Smith apple was widely propagated in New Zealand, became famous in the United Kingdom in the nineteen-sixties as the logo on the Beatles’ Apple Records, and, on arriving in the United States, expanded the pantheon of supermarket apples to four, demonstrating to apple breeders everywhere that U.S. consumers would respond favorably to a new apple. In the early seventies, President Nixon had imposed price freezes on all foods except fresh produce. Grocery retailers, looking to increase profits, expanded their produce sections. After controls were lifted, they continued to seek out new varieties of fruits and vegetables that could be marketed at a premium.

In the eighties, the Fuji, a large, sweet apple that was originally bred in Japan, was brought to the U.S., and quickly caught on. That decade, Braeburn and Gala apples, both from New Zealand, were also introduced to the U.S., to great acclaim; the Gala is now one of the most popular apples in many parts of the country. To Bedford these successes demonstrated that “if the consumer is given choices, and if they realize, by eating some of these apples, how good an apple can be, then the market can’t keep supplying lousy apples, because the consumer is not going to tolerate that.” The other thing the new apples proved, Bedford added, was that “an apple doesn’t have to look that good. The original Fuji was an ugly apple. It showed that if the flavor was pleasing, the customer could get past the appearance.” Meanwhile, Red Delicious began to decline. Washington produced roughly sixty million bushels in 1995; the state produces a little more than half that much now. In 2002, Congress spent ninety-two million dollars to assist struggling apple growers.

How new breeds are discovered…

Bedford’s apple laboratory, a thirty-acre parcel of rolling land about thirty miles west of Minneapolis, is planted with about twenty thousand apple trees. In May, during blossom time, Bedford and his student assistants make crosses between promising varieties: taking pollen from one variety and swabbing it onto the stamen of another, and then bagging those flowers to keep pollen from other trees out. Although the apple that grows on that branch will be true to the mother tree’s DNA, the seeds will be heterozygous, combining equal and unique parts of both parents’ genes so that every seed is distinct—another thing apple trees and humans have in common. Bedford hopes to get the best characteristics of both parents into the offspring, while producing an apple with an identity all its own. “Some apples look great but don’t pass those traits on,” he told me, “while others are not so great-looking but make good parents.” Each one of the three to five thousand seeds that result from a season of crosses will be unlike all the others and will produce a different tree. Bedford plants the seeds in a greenhouse, and grafts the budding trees onto outdoor rootstock the following summer. In about five years, he will have four thousand or so brand-new apples to taste.

In the fall, during the apple harvest, Bedford tastes apples from blossom times past, up to five hundred apples a day, in the hope of finding that one apple in ten thousand that will be released as a commercial variety. I spent an afternoon with him in early September, walking through long rows of young trees, and tasting apples of every imaginable size, shape, hue, and flavor, from musky melonlike apples to bright lemony apples and apples that tasted like licorice. “We don’t actually swallow, and we don’t really even have time to spit,” Bedford explained. “You just kind of hold a bit in your mouth for a while, until you get the flavor, and then let it fall out.”

If a tree produces exceptionally good apples for several years in a row, it achieves élite status and is awarded a number. Four clones are made from the mother tree’s wood, and those trees are grown in another orchard on the property, under commercial conditions. To evaluate the élite trees, Bedford carries a field notebook with twenty categories on a page, which, in addition to the “organoleptics”—all the sensory stuff, like flavor, texture, and color—include tree size, shape, and yield. He scores each category from one to nine. He generally continues these yearly evaluations for a decade or longer, in order to subject the trees to a representative range of extreme summers and winters and drought and flood, and in the hope of ferreting out all the quirks that apple trees are heir to. Some are wild in their youth but eventually settle down, while others bear fruit every other year; some bear smaller fruits as the trees age, while others drop their apples before they’re ripe.

Finally, a truly outstanding apple is named, the tree is patented, and clones are released to nurseries, where thousands of copies of the trees are made and sold to growers, for which the university collects a royalty of around a dollar per tree during the life of the patent. Large color posters of the five apples released during Bedford’s time at the agricultural station decorate his office, their swollen flesh glistening with beads of moisture, like centerfold pinups in a mechanic’s shop.

As we walked the rows, Bedford carried a can of orange spray paint. If an apple wasn’t reasonably tasty—and only two of the scores of varieties we tasted made the grade—and if he determined the apple to be fully ripe (which he did by cutting it open with a long-bladed knife and spraying iodine on the flesh; the starch in an unripe apple will turn black) then he coldly marked the tree for extermination by spraying orange paint on its trunk. That day, I watched him terminate dozens of unique hybrids whose like the world will never see again, and by the end of the day I had a newfound respect for the breeder as the godlike master of his domain, the ultimate arbiter of life and death in the orchard.

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Peter Thiel on what it means to bet on China and Alibaba

Peter Thiel is fond of a rhetorical device: “What seems like X should really be understand as ~X’” An example: “You have to think of companies like Microsoft or Oracle or Hewlett-Packard as fundamentally bets against technology.”

Here’s the trick applied to understand what it means to invest in Alibaba. Is Alibaba the next great technology company, or is it really something else?

Thiel touched on this in a talk at the American Enterprise Institute with James Glassman.

China thinks of the internet in a way that’s very different from the U.S. They think of information technology as something less important than we do economically, and more important politically.

And so these companies are fundamentally political investments. They’re protected by the government. They won’t face competition from Western companies.

So an investment in Alibaba is fundamentally a bet that Jack Ma will stay in the good graces of the Chinese Communist Party. I suspect that that’s a good bet…

Relatedly, here are his more general thoughts on China, via his essay published (in 2008) for Hoover’s Policy Review. Is a bet on China a bet on successful globalization, or is it really something else?

One intermediate possibility is that the China of 2014 will be like the internet of 2007 — much larger, but with winners very different from the ones that investors today expect. The largest New Economy business is Google, a company that scarcely registered in early 2000. Might it also turn out that the greatest Chinese companies of 2014 will be concerns that are private and tightly controlled businesses today, rather than the high-profile and money-losing companies that have been floated by the Chinese state?

At the very least, outsiders need to understand that China is controlled for the benefit of insiders. The insiders know when to sell, and so one would expect the businesses that have been made available to the outside world systematically to underperform those ventures still controlled by card-carrying members of the Chinese Communist Party. “China” will underperform China, and a “China” bubble exists to the extent that investors underestimate the degree of this underperformance.

This limitation also may be framed in terms of globalization. In important respects, “China” as a financial economy is sustained by the absence of globalization — in particular, by the enormous amounts of capital trapped within China’s borders that must either suffer slow death from inflation (now running higher than Chinese bank deposit rates) or brave the acute sense of vertigo of the elevated stock market. Because the free convertibility of the renminbi would dampen equity speculation, a long “China” position is not a forecast that financial globalization will succeed, but rather a bet that its internal contradictions will persist.