The root of the crisis: Martinelli’s contract cuts are just the latest blow to California apple farmers

Freedom Boulevard, the agricultural thoroughfare that connects rural Corralitos with the city of Watsonville, is ground zero for a shifting apple industry. 

On one end, acres of apple trees recently shaded what is now a blank slate of upturned dirt. Down the street, Bruce Rider & Sons, Santa Cruz County’s last apple-packing house, is surrounded by wine grapes. In the mid-1900s, when the Pajaro Valley’s apple industry was at its zenith, it was centrally located for nearby farms to easily bring their harvest. It closed more than a decade ago.

Horticulturist and farmer Jim Rider’s father founded the packing house and grew organic apples for the fresh market. Across the street, his grandfather and uncles opened a juice press, H.A. Rider & Sons. It’s still in business – the last in the area fulfilling custom orders. 

Earlier this year, S. Martinelli & Co. canceled contracts with some local growers, shocking farmers who had sold apples to the Watsonville juice company for decades and, in some cases, generations. But to Jim Rider, the move was less a sudden rupture than the latest blow to a regional apple industry that has been shrinking for years. Pressured by cheaper fruit from Washington state, changing consumer tastes and the higher returns of berries and vegetables, many Pajaro Valley growers had already been hanging on by a thread. By continuing to buy local apples for its sparkling cider, Rider believes Martinelli’s might have prolonged the life of an industry that otherwise would have faded long ago.

By the time Bruce Rider & Sons closed, there were still nearly 2,000 acres of apple trees in the valley. But there weren’t enough fresh market apples – the ones sold to grocery stores – to sustain a packing house, Rider said. The local apple industry had become a vestige of what it was half a century earlier, with a handful of generational farmers stewarding often historic orchards.

“It didn’t make financial sense, frankly. The ground is more valuable for other crops,” he said. The area’s cool coastal climate gives it an advantage over the rest of the county, lengthening the growing season for berries and vegetables when it’s too hot to grow them elsewhere. “Some of these crops can generate a lot more revenue than apples, particularly when you look at apples being sold for juice.” 

Over the past 10 years, the economics for growers locally and throughout the state have become more difficult. Cheap, visually pristine fruit from Washington is crushing California farmers, aided by technologies that allow sellers to store apples for months and sell them long after harvest. 

In the Pajaro Valley, few farmers undertook the time-consuming and expensive process of grafting new varieties onto older trees, a choice that pushed the region out of the fresh market.

“No one really converted into more modern varieties. We and a few other people grew Fujis, galas and some other things, but not sufficient volume to really represent a true industry here,” said Rider.

Over time, these factors drove many farmers to sell their land for other endeavors. Those who remained largely continued to grow Newtown Pippins, an heirloom variety with a satisfying crunch and sweet-tart flavor sought after by Martinelli’s as a key ingredient in its sparkling cider. Local farmers leaned heavily on Martinelli’s, often selling their entire crop. 

Now, faced with the choice of growing apples in a strained market or replanting with more stable, lucrative crops, many growers and landowners are choosing the latter, and ripping their orchards out at the roots.

Other farmers are considering options to keep their trees in the ground, including earning income from u-picks and events, or following independent models with multiple income streams, such as Pajaro Valley family farms Prevedelli Farms, an organic apple, berry and vegetable grower, and apple and berry farm Gizdich Ranch, well-known for its line of pies available at regional grocery stores. One farmer is hoping to partner with area school districts to supply apples for the region’s students. In Santa Rosa, a new processing facility aims to support organic growers and take up a portion of the mantle left by Manzana Products, which will leave Sebastopol, California, for Yakima, Washington, after 104 years in September. 

Any future for apples in the Pajaro Valley will likely depend on more modern apple varieties —  and on whether growers can afford to plant them. 

“What’s here now is mostly older orchards, the kind of things that would have been pushed out years ago in Washington,” said Rider. “Orchards are removed on a regular basis everywhere they are grown. The difference here is that it just doesn’t make sense to plant new orchards.”

Plant breeding leaves Pippins behind

Pajaro Valley farmers once sold Newtown Pippins to grocery stores. But as breeders developed apples that shipped better, stored longer and looked more appealing on store shelves, the Newtown Pippin steadily lost its place in the fresh market.  

Over time, consumer tastes shifted from Granny Smiths and Red Delicious to Fujis, Galas and Honeycrisp, and more recently, newer varieties such as Cosmic Crisp, Ambrosia and Pink Lady. 

Washington leads the U.S. apple market, producing a crop worth about $1.9 billion. The California apple industry is valued at about $104 million, with orchards scattered throughout Northern California, particularly the Central Valley. In Santa Cruz County, where apples are grown mostly in the southern agriculture area, the crop brought in $13 million in 2024.  

About a decade ago, large companies in Washington chased consumer interest in new varieties by planting thousands of trees per acre to increase yield, and purchasing land to increase operations. It bloated the supply and left hardly any small growers in the state, said Corralitos farmer Bill Denevan. 

“Growers in Washington are victims of their own success and their own understanding of modern fruit growing technology,” said Denevan, who spent 27 years as a field representative for Viva Tierra Organic, the leading importer of organic apples and pears from South America, inspecting orchards in Chile and Washington. 

In addition to driving out smaller producers, the overabundance and commercial consolidation of the market is also making apples taste worse. 

Apples should hit certain markers for crunchiness and flavor, but the U.S. industry grades appearance and size, with four grades: Extra Fancy, Fancy, No. 1 and Utility. Grocery store chains like Whole Foods Market and Sprouts Farmers Market exclusively purchase Extra Fancy apples, which means only the most flawless fruit makes it to most markets. 

Because the industry optimizes for appearance, the simple act of buying an apple in the grocery store sets off a butterfly effect of economic ripples that makes fruit less delicious. It supports a status quo of a visually flawless product, further marginalizing small farms in California that struggle to compete against the Washington industry. 

“There’s an abundance of cosmetically perfect fruit,” said Denevan. Only the top 20 to 25% of apples achieve an Extra Fancy grade, he estimated, and the rest are sold to the processed market for apple juice, apple juice concentrate and products such as slices for apple pie. 

In the Pajaro Valley, farmers struggle to grow Extra Fancy-grade apples because moisture from coastal fog can cause blemishes like russet – so called because of its similarity to the skin of a potato. The discoloring is harmless, but downgrades the fruit. 

Denevan owned a packing shed in Happy Valley for six years, where he packed Pippins, Macintosh apples and other fruits and vegetables for the fresh market. “I found that at first people didn’t mind the russet on the top,” he said of his apples. Then he saw customers favor flawless Washington apples, grown in an inland desert with a dry climate that helped prevent russet. “So I started turning my apples on their side, so people couldn’t see the russet on the top,” he said. 

Eventually, the buyers figured out his ruse. It was a shame, because to him, few apples can compete when it comes to taste: “A good Pippin is totally unique. There’s nothing like it as far as flavor, but people buy with their eyes.”

If Martinelli’s replaces Newtown Pippins with other varieties from Washington, it will likely change the flavor of the juice, said Denevan. But the prices of fresh market seconds from Washington compared to cider apples from the Pajaro Valley, at $135 per ton compared to $406, respectively, according to data from 2024, might be too much for Martinelli’s to resist.

In an email to Lookout in June, the company wouldn’t share its sourcing practices or share its reasons for canceling local contracts. “As a business, we are constantly evolving to ensure that only the highest quality fruit bears the name Martinelli’s, including the planting of 250 local acres of apples over the past decade,” wrote Martinelli’s President and CEO Gun Ruder. “Rest assured, our long-term commitment to growing and sourcing apples in the Pajaro Valley continues.”

Denevan, who has sold organic apples to Martinelli’s for years, believes the decision is motivated by “corporate greed.” “Martinelli is betraying the whole industry here,” he said. “They’re saying, ‘We can get apples for half the price in Yakima, and to heck with their history.’”

The irony is that apple juice as a commodity is on the rise. An industry analysis released in October 2025 reported that the apple juice market is “experiencing robust growth,” driven by health trends and the belief that apple juice is a wholesome beverage option. The market is expected to grow from $3.8 billion to $5.25 billion by 2032, particularly 100% juice, cold-pressed juice and organic juice. Martinelli’s, along with Tree Top, Inc. and Mott’s, is named as a major player. 

Farmers markets offer the best fruit experience for consumers, said Denevan, but they’re not a viable option for many farmers growing at scale. “It’s really financially not feasible for middle-sized and larger growers,” he said, because direct-to-consumer sales take too much time. Although it’s “breaking his heart” to consider tearing out trees he has nurtured for years, he sees few options for apple farmers. 

“We could sell to schools and farmers markets, but there’s too many apples to do that around here,” said Denevan. “We’re just gonna have to tear them all out and grow something else.” 

Long-term refrigeration crushes California’s edge

Apple growers in the Golden State used to have an edge over Washington – warm weather. Harvest in California started about a month earlier, so farmers could start selling apples in late summer, before apples in the Pacific Northwest ripened in the fall. 

But over the years, storage technology shortened that gap, and eight years ago it closed forever. New technologies that can extend the shelf life of apples for more than a year made California’s slim seasonal advantage irrelevant. 

Packing houses long used refrigeration in low-oxygen environments to delay decay, which allowed them to sell apples to grocery stores long after harvest had ended. In 2017, AgroFresh Solutions, a global ag-tech company, premiered SmartFresh, a technology that allows packing houses to hold fruit in nearly perfect condition for months. Washington approved it the following year.

SmartFresh stymies fruit’s natural production of ethylene, the hormone that encourages ripening, by storing it with 1-methylcyclopropene (1-MCP), a synthetic molecule that blocks the hormone receptors. The appearance and texture of apples and other fruits stored with 1-MCP will remain virtually unchanged for more than a year. SmartFresh is flavorless, harmless and leaves no detectable residue although, as a synthetic chemical, it’s not approved for organic use. 

The wide use of SmartFresh by Washington growers compounded the issue of overabundance, said Jeff Colombini, the chairman of the California Apple Commission’s board of directors.

“When all these apples in Washington are treated with SmartFresh, and they start to harvest, they still have apples in cold storage from the prior year. They feverishly try to offload before their next harvest, and so they’re selling at bargain basement prices,” said Colombini. “We lost a lot of retail because many retailers are strictly price buyers.”

Colombini, who grows Fuji, Gala, Granny Smith and Pink Lady apples for the fresh market in Stockton, said he shrank his operations due to price pressure from Washington. Every year, he gets a lower price for his apples than the year before from his local packing house, which acts like a broker to sell apples to buyers such as grocery stores and companies like Martinelli’s. 

“Over the last four or five years it’s become more difficult to be profitable growing apples, because prices have been coming down, but our costs keep going up between about 5% a year,” he said. “We’re getting squeezed out. I don’t anticipate anybody planting apples in California in the near future.”

A future for California apples?

As Manzana Products, the last packing house in Sebastopol, prepared to move from Northern California to Washington, organic apple farmer Brooke Hazen and Merrilee Olson, a preservationist and food producer, decided to take action. In June, they announced plans to open Gold Ridge Organic Farms Apple Press, a 20,000-square-foot regional press and packing house in Santa Rosa that will serve farmers in Northern California and the Pajaro Valley. 

“Santa Cruz and Sonoma County share the same problems and the same high-quality, undervalued apples, so we feel a kindred connection with them,” said Hazen. “When we heard about what was happening down there, we thought this would seamlessly fit together with what we’re doing here in Sonoma County.”

They aim to fully open by harvest 2027, although they could start pressing apples into juice as soon as this winter, said Olson. 

“Our goal is to support as many farmers as we possibly can,” said Olson, through two main services. They plan to press juice for a line of apple beverages, and to buy and package fresh apples for market, with a focus on heritage varieties like Pippin and Gravenstein. Olson and Hazen believe there is a market for these apples, and are discussing the easiest way to get them into grocery stores with retailers like Whole Foods. 

The fresh market price is higher for farmers, and Olson thinks customers will appreciate the flavors. “We’ve got to create a more vibrant market for our incredible North Coast apples,” she said. “Washington state can undercut us on price, but they can’t exceed us on quality.” 

The key to supporting small farms in California is by providing local infrastructure that’s the right size, said Olson. “The reason Martinelli’s and Manzana pulled out is because they’ve become these gargantuan companies that are obligated, whether to shareholders or private investors, to maximize every single penny,” she said. “When you have a smaller right-size processing venture like ours, whose mission is to support the farmers, you’ve got a very different beast.”

Only certified organic growers will be able to use the press, leaving out the majority of Pajaro Valley farmers. There are about 212 acres of organic apples in Santa Cruz County, representing about 15% of total production acreage. Obtaining an organic certification can take around three years. 

Hazen believes that if the industry wants to be sustainable, it needs to farm sustainably. “It’s going to encourage people to give up those attachments they have to a synthetic chemical operation,” he said, “because they won’t really have any other option but to go organic.” 

In Watsonville, Rider, a third-generation apple farmer, said a course correction in the industry is inevitable. While these fluctuations can be painful, they aren’t uncommon in agriculture. Farmers in California ripped out tens of thousands of acres of almonds to combat oversupply and, after five years, are reaching stability. The wine industry is facing a similar challenge. Between October 2024 and November 2025, vintners ripped out nearly 40,000 acres of grapevines throughout the state – about 7% of its total acreage. 

“That’s the story of agriculture. When you don’t make money, you remove the acreage,” said Rider. He believes that eventually, the situation could turn around, and maybe that would make it more favorable for farmers in Santa Cruz County – but they won’t get there without Martinelli’s support. 

“It’s going to take a commitment from Martinelli’s to pay substantially more money to keep these orchards in this valley, and it’d be hard to blame them if they weren’t willing to do that, or are even capable of it. Most companies can’t spend more money than their competitors and stay in business,” said Rider.

Regardless of how the market flows, he believes there will always be apples in Pajaro Valley. “There are people out there who will keep growing apples, even when they could rent the orchard out and make more money,” said Rider. “That’s what comes with lots of history, people doing it their whole lives, and not wanting to see it go away.”

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