EMMETT, Idaho — Lance Phillips is on track for his first profit in the eight seasons he owned Gem Orchards. He thinks that for now he has found just the right size for his operation.
“I have opportunities for expansion,” the Emmett, Idaho producer said. “But I want to make sure: can I market it first? I want to be very careful with expansion. I don’t want to lose my personal touch.
The ideal size of a diversified fruit and berry operation is subjective. But on 32 acres, Gem Orchards finds its sweet spot as the trees reach their peak, the clientele continues to grow, and the operational and regulatory challenges remain manageable. Phillips started with 2.5 acres in September 2015.
“I like the niche,” he said.
The state’s roughly 15,000-acre fruit industry includes a few large companies, about six dozen in the 20- to 60-acre range, and many other small orchards, said Bob Purvis, an arborist and Idaho president. State Horticultural Society.
The latest USDA Agriculture Census found that Idaho fruits, nuts and berries generated sales of $25.12 million from 532 farms.
The industry’s acreage is just under a quarter of the 1917 total, partly due to competition from neighboring Washington State, which dominates national fruit production.
Two of the big players in Idaho are Symms Fruit Ranch, which sits between Caldwell and Marsing, and Henggeler Packing Co. in Fruitland.
“We’re big … compared to some other orchards in Idaho, but small compared to a number of operations in Washington,” said Kelly Henngeler, one of Henggeler Packing’s managers. The company started in 1908 and ships fruit nationwide.
“All small organizations, like us, are trying to find our niche,” he said.
Delivering high-quality fruit, building brand loyalty and ensuring orchard and packing operations meet current needs takes continuous work, Henggeler said.
The family business owns or leases approximately 500 acres. It has a few full-time employees and can have a total crew of more than 100 people depending on the time of year, he said. For the past six years, the company has hired guest workers under the federal H-2A program to supplement its domestic employees.
“The big challenge — and has been for years — is work, for everyone,” said Symms partner Jamie Mertz. These costs increase every year.
The 104-year-old Symms operation has nearly 5,000 acres and sells to major grocery chains and international customers. In-house packing operations add control over what is grown and sold.
The challenges include “a lot of costs,” Mertz said, and “things that everyone is fighting” like supply chain delays.
The right size depends
“The right size is whatever the right size is for you,” Mertz said.
For example, Phillips, the small producer, may charge a higher markup than a wholesaler, he said.
“It’s a niche,” Mertz said.
A much smaller holding than Gem Orchards is the 1.2-acre Purvis Nursery and Orchard northwest of Homedale. Purvis sells fruit, scion, finished trees and rootstocks. Retail and wholesale fruit sales are the main source of income, but the other segments increase the overall viability.
“I straddle the line between backyard fruit grower and commercial,” said Purvis, 75, a retired industry horticulturist from Washington and a statistician with the USDA’s National Agricultural Statistics Service. His lines of business are manageable and he can do most of the work himself.
Williams Fruit Ranch, next to Gem Orchards in Emmett, has downsized over the years, from over 70 fruit acres in 1990 to less than 30 acres today.
At its peak, the orchard had 10 full-time staff and up to 80 employees during harvest.
“It’s manageable in my later years,” said owner-operator Jackie Williams, 82, whose husband, Harold, died in early 2018. “With the economy and labor, I now find myself in a pedestrian orchard.”
“We sell all of our fruit every year,” said Jackie Williams.
A real gem
At Gem Orchards, Phillips is the only full-time employee. His wife, Angie, their three children and up to five seasonal contract workers help him.
“I am small enough to handle all daily activities. … I pay myself by doing the work and making a profit too,” Phillips, 49, said.
Getting bigger can mean additional administrative, regulatory and compliance responsibilities.
Payroll, regulations that can increase with more employees, the cost of a larger facility, and the U.S. Food and Drug Administration’s product safety rule loom as an operation grows . The rule exempts low-income businesses and provides a qualified exemption for others based on income and type of customer.
Back to its roots
Phillips grew up in his family’s orchard near Cashmere, Washington. He earned a degree in horticulture from Central Washington University.
He worked on a farm and orchard his father later purchased near Weiser, Idaho. He farmed with his father and alone while employed by a nursery, a soil and water conservation district, and the USDA Farm Service Agency.
Phillips owns 5 acres. He rents, partners or shares the crops of 27 acres, blended as he expands into peaches and added cherries and other earlier fruit. He owned some of his gear from the start.
Revenue is roughly evenly split between pick-your-own customers and fruit that is picked to be sold on site or at fruit stands, he said. The orchards also grow nectarines, apricots, blackberries and raspberries.
Starting Gem Orchards in September 2015 involved Phillips purchasing 400 cherry trees on 2.5 acres.
The 2016 harvest was particularly strong and “I thought every year couldn’t be this good”, he said. The picking lasted three weeks, which is “good when you have a job” off the farm.
A 2017 frost decimated the cherry crop, so Phillips branched out, planting about 2,500 peach trees on 7 acres.
Harvests were good in 2018 and great in 2019, when “we ended up juicing about 40,000 more pounds of cherry juice than we picked” to sell, he said.
The 2019 cherry juicing effort didn’t succeed on paper but taught him several lessons. The costs of processing, refrigeration, storage, jars and labels consumed any profit, and regulatory compliance took time.
“I spent a lot of hours specializing in minors,” Phillips said.
Also in 2019, he and a neighbor planted 800 dwarf cherry trees on 3 acres. He left the USDA this fall to work full-time in orchards.
During the pivotal 2020 crop year, frost reduced cherry yields. But the peaches, in their fourth season, missed the frost and produced their first harvestable crop. Phillips planted 12 acres of early season cherries, 2.5 acres of nectarines and one acre of thornless blackberries and raspberries.
He also made juice, jelly, and syrup under the state Craft Production Act, which permits production in a home kitchen or other designated location. It applies to foods whose time and temperature are not controlled for safety reasons and which are sold directly to the consumer.
The pick-your-own cherry harvest was cut short by frost in 2020, but the orchard was helped by crop diversification. COVID-19 has fueled demand for outdoor activities and locally produced food, said Phillips, who “learned boxes and wraps” and worked to automate his sprinklers and improve soil health.
Gem Orchards sold its entire 2021 crop, which was normal for cherries and good for peaches, he said. COVID-19 helped demand again, and “I got my name out there, and more people came.” He and his partners also acquired a one-acre mature peach orchard nearby.
As of early September, this year’s crop was its second best for cherries and is shaping up to be “the best lucrative crop Gem has had to date” of any crop, Philips said.
He bought a portable wind turbine for $40,000, which benefited his low-lying fisheries and helped this crop achieve its best yield. He also bought a new tractor and teamed up with neighbors for a sprayer. He added a 3-acre orchard of mature cherry and apricot trees.
An important principle of customer service for Phillips is to “let them take their time. Don’t rush people.
He sometimes thinks of cultivating the orchard in the years to come.
But for now, “it’s just fun,” Phillips said. “I get everyone from canners to people who want a few pounds or want to make smoothies at home.”