“The Future of Ag Will Depend on Technology”

Robert Kershaw, CEO of major grower-marketer Superfresh Growers, puts forward his views on what lies ahead for the produce industry.

by Edward Vernon

Superfresh Growers, based in Yakima, WA, has been farming for over a century and is a major name in the apple, pear, cherry and blueberry industries. The company was founded by the Kershaw family, who migrated to the Pacific Northwest in the mid-1800s and is currently headed by fifth-generation owner Robert Kershaw.

Having studied economics at the University of Colorado, he began working at the company in the early ‘90s and has overseen tremendous growth during his tenure of more than three decades. More recently, Superfresh Growers began marketing blueberries and kiwi berries, aiming to also become a market leader in both categories. It has also significantly expanded its cherry packing capacity, and is the sole grower-marketer of the Autumn Glory apple.

Kershaw recently sat down with Vision Magazine to discuss a range of topics, including the company’s strong focus on sustainability, the future he sees for the apple and cherry industries, the severe challenges of rising wage costs, and recommendations for the U.S. supermarket sector.

The following interview has been edited for clarity and brevity.

What memories do you have of growing up around agriculture?

When I was 12 years old my dad dropped me off in the orchard and said, “Go pick up smudge pots,” which are these really heavy pieces of metal that you use to heat up the orchard in the springtime. So my first job was to do the most miserable job — the one that no one else would do. That was my entry into the apple orchard industry.

That sounds like a tough start. Did you enjoy working in the orchard?

It was interesting. I really enjoyed it and also running crews. I did a lot of that when I was in high school and college. But to be honest, when I went to college, I wasn’t sure I was going to come back to the family business. My dad was very supportive of me doing what I wanted to do, and when I graduated from college in 1991 most of my friends were going to work for Microsoft and a few other big companies that had just had IPOs. So I had a lot of choices, but I wanted to come back. I just wasn’t sure if I wanted to only work on farms. In the end, I started working on the sales and marketing side.

I always loved building things where there were no directions. As a kid I would love to play in the backyard, building and designing things, and just using my creativity. And quite frankly, that’s how we’ve built this business — there’s no manual. Back when I started there were three employees in our business office. Now, there are hundreds. So I’ve been able to play in the mud for the past 30 years or so.

How would you characterize the growth of Superfresh Growers during your tenure?

That’s a tough one. I’ll always credit luck, and besides that, simply saying yes when others were afraid to say yes. Or maybe other people stepped back — and we were still standing there.
When I got out of college, you basically had to make two choices in the produce industry. You had to get bigger, or you had to get out of business, there was almost no other option. That was especially true in the late 90s with all the retail consolidation. You had to create partnerships and grow in any possible way to create scale. Thirty years ago I think we had half of a 1% share of the market, and today we’re at about 15%.

In business, you have to look at everything anew, and you cannot get stuck in the past or your past successes. You have to look at every day as if it were your first day. And at the end of the day, you have to listen to the consumer. If we’re really listening to the consumer, the decisions are pretty easy.

Sustainability seems heavily ingrained in the company. How did that come about?

It’s interesting because the term ‘sustainability’ is used so frequently that it has almost become cliché. But for our company, sustainability is much more than a buzzword — it’s a core pillar of our philosophy. Our decision-making process is guided by a generational perspective. In agriculture, cycles can be extremely long, with both highs and lows. To be genuinely successful in this field, we think it’s essential to take a generational view of things. It’s challenging to predict the next year or two, but over a 30-year period, it’s safe to say that agriculture will remain vital.

All our decisions are not based on immediate gains, but rather on how they will benefit future generations. This perspective might seem unusual because many people are more concerned with immediate results. But this forward-thinking approach has been ingrained in us for a long time. It’s how my father and uncle, my cousin and sister, and I approach our business. We view ourselves as stewards of the enterprise.

With this mindset, we would never make decisions that could harm our land, environment, reputation or brand, or change the way we treat people. Everything revolves around the core principle that we’re not doing this for ourselves; we’re doing it for the next generation, and the one after that. Business and life become easier when you adopt this perspective. It becomes your guiding principle, your ‘true north,’ always leading the way.

Cherry orchards overlooking the Columbia River in central Washington

What major industry trends are you seeing in automation and technology?

In regard to labor sustainability, it’s clear that the future of agriculture, particularly on the West Coast, will be dependent on technological solutions. But the issue of labor shortages isn’t limited to a specific region — it’s a global concern.

Technological breakthroughs are becoming more commonplace, especially on packing lines. With enough investment, businesses can significantly improve efficiency in these areas. Orchards are a more complex scenario, but there are promising advancements in autonomous tractors, and the prospect of robotic harvesting is on the horizon — though they are not there yet.
Predicting the next two or three years is hard, but I anticipate that a decade from now, most processes will be automated. This transition could be beneficial in addressing labor shortages — rather than eliminating jobs, it could elevate them. The workforce may shift from manual laborers to more specialized, technically trained individuals who manage and operate these automated systems.

I guess the soaring labor costs would further drive that transition.

That’s right. The high labor costs on the entire West Coast mean that our industry will only survive with technological solutions or improved immigration policies. It’s unfortunate to see the stark differences in wages across the globe. Our aim is not just to survive through technology, but ideally to contribute to better conditions for workers worldwide. It’s heart-wrenching when we see workers come from Mexico through the H-2A program, and they break down when receiving their first paycheck because it’s so much more than what they could make in Mexico.

It’s a challenging situation because we wish there was a way to raise the standard of living for all people. If we can’t find a solution to this global labor imbalance, then our only recourse will be to increasingly rely on technology.

There’s been a lot of buzz in the apple industry about automated harvesters. Have you been trialing any of those? And when do you see those becoming a widespread reality?

We’ve been exploring these technologies, but the primary issue is that most of them are venture capital-based and often run out of funding before reaching their full potential. My plea to the world would be for a large corporation, like Google, to invest significantly in these technological solutions. I think the only viable way forward for specialty crops like ours, is for major manufacturers like John Deere to fully commit and see these projects through to completion. It’s clear that the solution will require a substantial agricultural machinery company with a long-term vision and deep pockets to recognize the opportunity and follow it through to the end.

Aside from technological aspects, what major trends do you see in the North American produce industry?

Varietal breeding across all produce categories — be it apples, pears, cherries or blueberries — has led to improved flavors and product quality. This has greatly enhanced the consumer experience. But this constant improvement also fuels competition for consumption, since every produce item is constantly improving.

For instance, if the apple industry hadn’t developed so many flavorful varieties over the past couple of decades, it would not have been able to compete with other produce and food items. After all, food is interchangeable, and people can only consume so much.

The current times are exciting for consumers as they are constantly presented with new and improved options. But on the other hand, producers have to stay on the cutting edge of development to avoid falling behind. The shared objective is to produce a better product to please consumers and drive repeat purchases. But all this will inevitably create winners and losers — those who fail to innovate and stay competitive risk being left out of the game.

What do you think will be some key dynamics that shape the future of the apple industry?

The key aspect is striking a balance between the highest and best use of where they’re grown and the cost of transportation. If ocean freight remains cheap and the population in places like India continues to grow, we may see shifts in the dynamics of apple production and distribution.

Let’s consider for a moment a hypothetical scenario: a world with zero tariffs. In such a world, apples would be produced in areas most efficient for growth relative to their quality, and then shipped globally in a frictionless economy. If this were to happen, Washington could potentially grow two to three times its current apple volume, feeding countries like India, China and Indonesia.

Ocean freight is so cost-effective that we can ship apples to the south of India cheaper than an Indian apple grower can transport them from the north to the south of their own country. Ocean freight has effectively shrunk the globe, changing the dynamics of apple distribution. It’s now a battle between logistical convenience and growing efficiency. If freight rates increased significantly, we’d likely see a shift toward more local, less efficient production, which would still be preferable to high shipping costs.

Over recent years there have been a handful of apple varieties that have exploded in popularity. What impact do you see these dynamics having on the industry?

Many growers think the process of varietal selection is more complicated than it really is. Retailers and customers around the world act as conduits to the consumer. They can introduce a new product, but ultimately, it’s the consumer who decides whether to buy it or not. Despite marketing and advertising efforts, the most effective strategy is positioning on the store shelf. Retailers present the product, and consumers may try it. If they enjoy it, they’ll buy more; if they don’t, they won’t.

This is the challenge of breeding: there are many opportunities for new products, but nine out of ten will fail. It’s very hard for something new to get established and maintain dominance. With increased breeding, there will be more successes, but also more failures. If more than one in ten were successful over the long term, it would be a miracle.

So, we’re likely to see more failures, but also some big winners. Ultimately, the real winner is the consumer. Without retailers willing to help us try new things, breeding programs wouldn’t even work. We need partners who are willing to take a chance and try new products. Both growers and customers are searching for that incredible item that boosts sales.

What future do you see for counter-seasonal apple imports into the United States?

When it comes to apples, there’s really no room for Southern Hemisphere imports. Most of our major retail partners plan 12 months in advance with us. Very few North American retailers focus on anything other than Washington apples for many reasons, such as supporting local U.S. growers, and because Washington provides better quality. Imports are usually only considered if we foresee a potential shortage of a specific item. I think there is a role for apple exports from the Southern Hemisphere, but not here in the United States.

What major trends are you seeing in the U.S. cherry industry?

Cherries are different from apples in that they’re only grown in very specific areas around the globe. Anyone who tries a cherry for the first time is usually hooked for life, and there are still so many people worldwide who have never eaten a cherry. Every year, we see consumption increasing in various markets around the world that we ship to. For example, Korea had never bought cherries before, but now it’s one of the best cherry markets in the world. Similarly, Vietnam didn’t buy cherries, but now it’s a great market. We witness this pattern of introduction followed by a consumption explosion in every new market.

The cherry industry is complex and not easy, but I see long-term potential for expansion, especially as the global middle class accumulates more wealth, given that cherries are a luxury item. I see potential for growth to be substantial. I also foresee the industry becoming less regionalized, with possible opportunities for production in places like Chile or other markets worldwide. Currently, we only produce in the Northwest, but the future might hold different scenarios.

Do you see the U.S. Northwest cherry industry rising in production over the coming years?

Production volume has remained fairly stable recently. There was rapid growth about a decade ago, but it has leveled off over the past ten years. Our main limiting factor is labor. If we ever have a technological breakthrough that could reduce labor costs or lower costs in general, I could see the industry expanding significantly. But it’s an economic decision at the end of the day. If the costs are too high, making money becomes difficult, thus discouraging expansion.

Growers need to make a profit at the farm level, and with costs increasing as much as they have, people are more hesitant to expand too quickly. However, if there were some kind of technological breakthrough leading to lower costs, the climate in Washington is so well-suited for cherries that we could effectively feed the world.

What future do you see for imports of Chilean cherries into the U.S. during the Northern Hemisphere winter?

Chile is in a wonderful situation where they’re able to ship to China just before Chinese New Year. I think there’s also a substantial future for Chilean cherries in the United States during the winter. The year-round availability of cherries, similar to what happened with blueberries, could potentially increase overall cherry consumption. Though it may slightly lessen the excitement associated with the fruit’s seasonal nature, I think the overall consumption would increase if cherries were available year-round.

What do you think will be the impact of the huge rise in cost pressures across the board for the U.S. produce industry?

Most of the increase in labor costs is a result of government-induced regulation rather than natural economic forces. The primary cause of this rise is the government’s arbitrary decision regarding the H-2A program’s adverse wage, which has significantly increased labor costs. Unfortunately, this is not reflective of economic reality, but rather a result of how the government is calculating the wages for the H-2A program. Over the past four years, labor costs have surged by about 50%, far exceeding national averages. This situation needs to be addressed at the governmental level.

We are committed to paying fair wages, but if the government doesn’t address this issue, it could put the entire West Coast food industry out of business. The situation is that severe. If the government doesn’t rectify what it’s doing with H-2A wages, it could potentially lead to widespread food shortages in the United States.

Amid these rising costs, do you see the future of the industry as being the survival of the most efficient?

The agricultural industry has been a survival of the most efficient for the past century. The ones who are still standing today are truly the best in the business. But even the most efficient and successful can’t fight against government policies. The current wages set by the government for the H-2A program are putting immense pressure on everyone in the industry. In essence, it’s wreaking havoc on the entire sector.

If you consider the increased costs of inputs for growing apples, pears or cherries over the past decade, all other costs have risen in line with U.S. inflation rates. However, labor costs have skyrocketed, doubling or even tripling in some instances. Labor has gone from representing about 50% of the input costs to approximately 70%. If a technological solution were to be found, it could certainly level the playing field. However, the main issue lies in the H-2A Adverse Effect Wage Rates (AEWR). This is the rate set by the government that employers are required to pay, and its calculation method has proven to be, for lack of a better term, corrupt.

It’s absolutely mind-boggling how they are arriving at the wage formula. It’s such a significant issue that legal actions are already underway by growers against the government. Lawsuits have been filed against both the federal government and the Washington State government. This issue is going to come to a head soon, and unfortunately, the ones who are suffering the most are the consumers. Everyone is complaining about food inflation, but its primary cause can be traced back to the H-2A AEWR.

Are there any changes you would like to see from the retail side that you think would help the U.S. produce growers and distributors?

There seems to be a split attitude in the industry about this, but I would say that the most successful retailers today, and likely in the future, are those that prioritize collaboration.
We’re seeing an increased level of collaboration among some of the world’s top companies, more than I’ve ever observed before. This collaboration is beneficial for all involved. The more you collaborate in your planning processes, the fresher and better the product will be for the consumer. Effective planning is crucial.

The world’s best retailers are currently not only collaborating for the immediate 12 months, but they’re also looking five and ten years ahead. They are collaborating on long-term strategies, considering factors such as consumption patterns, population growth and other high-level factors. I think that the winners will be those that can foster strong collaboration with producers. If a retailer continues to hold onto an old-school mentality of being combative, it may work short term, but it won’t bring success in the long run.

The good news is that I’ve noticed more collaboration now than I have ever seen in my 30 years in the industry. More than 50% of customers globally are adopting this approach. I’m confident that the other 50% will also start to collaborate more. Ultimately, this increased collaboration will be better for everyone involved — the growers, the consumers, and the industry as a whole. By lowering our guard, trusting each other and working together, we can better tackle the challenge of feeding the world.

What excites you most about the future?

I’m always excited about the future. With a long-term, generational perspective, it’s easy to remain enthusiastic because we’re part of a fantastic industry. Looking a hundred years down the road, people will always want to consume high-quality products. With the growth of the global middle class and increasing international collaboration, the world is becoming smaller.
So, I’m incredibly optimistic about the long term. In the short term, of course, there are always challenges to overcome, but I am firmly convinced that the future will be amazing.