Podcast: Real Success with Nate Kaeding

Paul Rasch
Paul Rasch

Paul Rasch is the owner and “Chief Apple Officer” of Wilson’s Apple Orchard and Farm on the outskirts of Iowa City. I talk to Paul about his experience being born into an apple-growing family, what he learned starting the first commercial apple juice company in China, and why Iowa was the place he wanted to put down tree roots when he returned to America. Paul also shares his thoughts on the ins and outs of their negotiations to purchase Wilson’s Apple Orchard, why sustainability is key to their future success, and Paul shares some insight into the future of their blossoming company.

I learned a lot, and I think you will too.

Listen to the podcast:

Read the transcript:

NK: What was it like growing up in Michigan as part of an apple-farming family? 

PR: I grew up in a Michigan area called The Fruit Ridge, which is a pretty big apple area. I’m the fourth generation of my family being in the apple business. We were sort of forced into child labor from the age of six, and then we had to work until we were 16. 

The day I turned 16, I just got out of there. I was done with apples forever, you know, but I eventually got roped back into it. But growing up, I was in the commercial apple business, which means large scale production agriculture. Of course, large scale fruit farming, especially in those days, was not what it is today, but it was selling relatively low margin fruit at high scale. There’s a lot of labor involved in fruit farming. 

I decided I was going to be an electronics engineer at the age of 16 and went off to pursue that, and ended up eventually getting sucked back into the business. My brother’s the only one that has really broken out of that mold. He runs a “You-Pick” cherry and apple operation, but everybody else is still in the big time, you know, 800-1200-acre kind of fruit farm.

Rapid Creek Cidery was added to Wilson’s Orchard & Farm to diversify the business. CREDIT WILSONSORCHARD.COM

You and your family went to China for 13 years. What took you overseas to China and then what brought you back here to the United States?

Growing up, my nickname was “Cruise” because I was always traveling. I just have always loved to travel. So, after my ill-fated pursuit of electronic engineering, I ended up back in the apple business briefly, then went back to college and ended up in India for a couple of years. As fate would have it, I ended up in Nepal in a fruit operation. I really liked it. That’s what kind of lured me back into the idea of going back into the business. Long story short, after college, I was working at one of the largest fruit farms in the United States at that time with my dad.

In the early ‘90s, fruit farming saw what row crops saw in the ‘80s: low consumer prices, high input costs, the over-leveraging of farm land. We lost about 30% of the apple farms in the U.S. during the early part of the ’90’s just because the business model didn’t work, and the technology was evolving very quickly and becoming a lot more expensive to stay in the game. That led us to sell that big fruit operation. 

My dad was kind of a smart guy. He never went to high school, but he always said, “If you wake up in the morning, and don’t want to go to work, go back to bed or find something else to do.” So, I told him, “I’m not having any fun. This industrial farming with no money is not the way to go.” He said, “Well, let’s find something else to do.” 

As fate would have it, I had a roommate in college from China whose aunt was involved in the research side of the fruit farming thing. She said, “you need to get your family over here and look at apples because they’re growing apples like crazy in China.” I said “there’s no way apples are growing over in China.” Eventually he convinced me, we went over there, and we spent the better part of two weeks on a train riding around China. We never lost sight of an apple tree.

They were all about a meter tall. Newly planted. There’s a great book by the way called “How the Farmers Changed China.” It goes into great lengths on how the first people that really made money when China opened up were the farmers. That was because Chinese people were used to actually paying a fair bit of their income for food. It was a communist system, but food, especially fruit, was very expensive. So these fruit farmers, when they got a chance to grow what they wanted, started planting apple trees and peach trees and strawberries, which is why China’s the largest apple producer. We’re not even close at number two. We’re probably 20% of what they grow.

Well, we went originally thinking we would get into growing fruit. But then, when we got there, we were finding that a large farm in China was an acre. I mean, huge was two acres. A big part of our original and very naive model was that we would grow some of our own fruit and buy in other fruit while we found our number one. It was extremely difficult at that time in the early ‘90s for a foreigner to own or even rent land. There was a great market for apples and the quality was really crappy, so we thought we could add a lot of value there. But the cards were stacked against us for making a go of it on that model.

I went over in 1992 and we eventually moved in 1993, and in that time we started to see the overproduction already starting and prices were pretty cheap for apples. There was no fruit juice on the market, zero, zilch. So, we launched the first commercial juice company in China and went on to build a brand in the major markets. We ended up with a couple factories and really just kind of went with the flow. In the early days in China, it was very easy. People were used to high prices. So, it all went in our favor until the Chinese people learned how to do what we were doing.

We lived over there for 13 years and I was involved for another two. We sold it to Del Monte in 2004. 

What sort of lessons did you learn going from a large international operation to now a small, local endeavor?

The softball answer to that I think is your people matter most just because it’s so incredibly important. When you’re in China, you’re at the mercy of your best people. A foreigner in a foreign land is going to have to depend on local people and you can really get it wrong. I think the need to be smart with capital was an acute problem in China. The best performers in China for foreign companies lost hundreds of millions before they landed on a strong enough brand to really reign over there. We were not highly capitalized enough, which is why we ended up selling it to Del Monte. It was a distinct disadvantage to not be local. You had no access to working capital. 

You and your family moved back to the United States around 2006. How did you land in Iowa as a destination?

We went over to China in 1993 for two years, and every two years it was another two years. But eventually the kids were getting ready to go to college soon, and we knew they were going to go to college in the U.S.A. So we got serious, especially once we sold the company, and we got a map of the United States and we said, “We’re not going to do the East Coast. We’re not going to do the West Coast.” I was born in Michigan. My wife’s from Kansas. She didn’t want to live in Michigan. I sure as heck didn’t want to live in Kansas. But we wanted to be in the Midwest in a university town. So, we would spend the summers camped out in one Midwestern university town. Madison, Boulder, Lawrence or wherever. 

Iowa City was actually the last one on our sort of litany of chosen places. This sounds sort of goofy, but it is true: On day two, I looked at my wife and she looked at me. She said, “This is it. This is us. Iowa City.” It’s approachable. It’s an interesting enough town. There’s stuff to do here. We really loved the library. I mean, the Iowa City Public Library probably drew us to this town more than anything, It was so well done. 

One of the librarians said, “Man, if you know the apple business, you really have to go out to Wilson’s. And so we came out here and it turned out they were looking to sell. Well, I should say 50% of that partnership was very interested to sell. Joyce was ready to get on with her life. Chug (Robert) Wilson and his brother Tug — their dad started that business. I think Chug was in his late 50s when he retired out of that business, and he had a passion for growing apples. So, he bought a farm over a small lot, eventually outgrew that, was looking around, and found this farm. He just started grafting and planting apple trees, but had no experience at all in the apple business. He just liked good apples. My dad always said the best farmers were the ones that didn’t grow up on a farm because they try new things. They don’t know that you can’t do something. So, Chug did something that seems remarkably simple. He planted a bunch of trees — over 130 varieties — and waited until they fruited, tasted them, and simply said, “Yeah, I want this apple,” or “I don’t want that apple.” 

So how did you finally get the deal done with Chug?

Oh my God. It took forever. We had it on paper three different times, and each time Chug would eventually find some reason that it wouldn’t work. At that time, it was making money only because they didn’t pay themselves anything. I mean, it was a retirement project for them. It was a labor of love for him. We ended up buying another farm in Johnson County. Chug and Joyce helped us. They talked us through what variety sold well and whatnot. We planted an orchard there in 2007 over on Lake Macbride. 

In 2008, Chug had a bunch of medical issues and he called me and said, “Ok, now I’m really ready to sell.” I said, “Well, I’ve got an orchard now, Chug. I’ll lease it from you, but I don’t want to buy another orchard.” And he said, “No, that won’t do.” He had another deal in the process when the flood came. I don’t know what all happened, but long story short: In 2008, he called me in August and said, “Look, I’ll rent it to you.” Like he said, I rented it with an option to buy. It was overgrown and the apples were really not very pretty. It was pretty much just me on the farm side and we had some other folks involved on a part-time basis. But the main thing was that we inherited a really interesting team that worked for Chug and Joyce. So, we just basically got out of their way and focused on doing what we could to make the farm successful.

We purchased the land after one season. Having grown up in the commercial apple business, I knew that if there was a little ding on it, nobody was going to buy it. But the thing that sold me on the property was that these apples had way more than a little ding on them. They had bug problems. They had disease problems. But people were just crazy about it. Our biggest concern about planting a new orchard is that it was going to be five years before people discovered us. Here, they were already mature and producing and everybody was in love with it. It has always been a great brand. 

So what was your original vision for Wilson’s when you took over?

My grand vision at the beginning was sort of a semi-retirement thing. But a bigger vision came out. I spent a lot of time in the alternative farming world reading people like Wendell Berry and Wes Jackson and people like that. 

Regenerative farming. That has had a huge impact on me and on our kids. For us, a big part of that vision is about helping to bring about good change in farming. You have to make money in order to do anything. But having said that, I think a big part of our vision and an evolving part of our vision is really about how we become a force for good.

The original idea around 2016 to build this facility with events downstairs and a restaurant upstairs, that was more because it was low hanging fruit. So many people wanted to come out here and get married. It’s a beautiful property. We had lots of potential. We were starting to get into the hard cider game and we thought, well, if we’re going to do an event center, we may as well do a tasting room. If we’re going to do a tasting room, we may as well do food.

When our son, Jacob, got involved in 2019, he really helped focus it in more of a strategic fashion. Of course, we all wanted him in the business and his ideas were different coming out of the hospitality and tourism business. He saw what people were really attracted to and he sees everything through the idea of the hospitality sector. What sort of crops bring people out? What are people interested in? What sort of experiences are people interested in? So, last year we did outdoor ice skating, we’ve done tulips, we  added raspberries and blueberries to fill out our fruit schedule. Then couple that with food and drink. That’s kind of our recipe right now.

What does real success look like in the future for Wilson’s?

I think success for us obviously starts with financial stability and relevance. But really, more than anything, I think if it helped initiate the discussion and helped encourage other people to do the same sorts of things so that it helped contribute to a different sort of agriculture, that would be the biggest success story.

Hear more about Paul’s journey, including the unique steps they took to survive through the COVID-19 pandemic in the full audio episode of Real Success with Nate Kaeding, Episode 42 with Paul Rasch. The podcast episode is available now at corridorbusiness.com or wherever you listen to podcasts.