Link to article in the Wenatchee World

Where money once grew on trees: Regulations, labor costs squeezing small Wenatchee orchards

By Renee Diaz, Wenatchee World

August 29, 2025

In Wenatchee, orchards once stretched from the Columbia River to Saddle Rock. Flash forward to August 2025, the landscape of the “Apple Capital” looks completely different. For generations, Wenatchee’s economy has revolved around tree fruit. Today, farmers are struggling to keep their farms open, and point to high labor costs, government regulations, and market pressures for reshaping the industry and forcing many to consolidate operations or sell off land and end production.

Across Chelan, Grant, and Douglas counties, about 368 farms closed from 2017 to 2022, according to the Census of Agriculture. Statewide, about 3,717 farms shut down in that same time frame.

Farmers say costs weighing them down

Blaine Smith, a third-generation grower based in Monitor, described the pressures firsthand. He said the cost of labor has gotten too high, and struggles to find local domestic workers in the area.

“If I don’t get my fruit picked, I lose $2 million,” Smith said. “Right now, by using the H-2A program, I’m losing $200,000 instead of $2 million. It basically takes any profit I might have and turns it into a negative.”

The federal H-2A guest worker program, which allows farmers to hire temporary foreign labor, has become both a lifeline and a burden. Smith said growers must provide free housing, utilities, transportation, and other benefits, while paying hourly wages. Currently, Washington is one of the top states that uses the most H-2A labor, following Florida, Georgia, and California.

“I have to provide housing for 18 people at about $2,000 per person,” Smith explained. “I’m paying for their insurance, their vehicles, their fuel, their water, power, and garbage, all of it free to them. There’s no other business in the United States required by law to do that.”

The Adverse Effect Wage Rates (AEWR), sets the minimum hourly pay for the program has risen significantly in Washington over the years. In 2018, the rate was at $14.12 per hour, and by 2024, it increased to $19.82 per hour, a 36% rise in six years. This rate is higher than Washington’s minimum wage of $16.66 per hour and the national minimum wage of $7.25 per hour. 

Smith, hoping to keep the orchards in the family, has sold parcels of his land in Cashmere to cover debts, first 8.5 acres three years ago, and now another 17 acres. “We’d love to keep farming it, but we need to pay bills,” he said. “We’re selling what’s most convenient for development. That’s the only way we can survive right now.”

According to the USDA, 23% of U.S farms held debt in 2022.

State environmental regulations have also added costs. The Washington Department of Ecology classifies orchard soils as contaminated due to decades-old lead-arsenate sprays. Clean up is required if the soil has above 20 parts per million arsenic or 250 ppm for lead.

The department has these guidelines because arsenic and lead are toxic metals, and exposure can increase the risk of certain health problems.

Smith said that another large expense farmers have to take on is that it later becomes a challenge to sell the property. According to Homeguide, a referral company that connects homeowners with home service professionals, removing dirt costs about $140 to $180 per ton, including dumping fees. Clearing fill dirt runs $140 to $230 per cubic yard, while hauling it away can cost $1,400 to $2,300 per truckload. Simply dumping soil at a landfill costs $30 to $50 per ton.

“Nobody’s ever died from eating arsenic in the soil,” he said. “People don’t eat soil. But now developers are required to haul in a foot of clean dirt to cover this ground, and that cost gets pushed back on us. Farmers can’t sell land for what it’s worth because of regulations that make no sense.”

Smith’s struggle is echoed across the region. Enrique Gastelum, CEO of the Washington Farm Labor Association, said small farms are disappearing as labor costs and regulatory pressures push the industry toward consolidation.

“We’re losing the family farm,” Gastelum said. “We are now corporate farming, and that’s only going to continue as the cash bleeding continues with our industry and people can’t sustain.”

Labor costs, once about 40% of expenses in the mid-2010s, now approach 90% for some growers, Gastelum said.

“There’s no room for gas, water, fertilizers — you’re upside down,” Gastelum said. He added that overtime rules and other labor policies, while intended to help workers, have unintentionally hurt small farms.

In 2021, Washington state adopted a new law that would allow overtime pay for all agricultural workers who work more than 40 40-hours under state and federal wage laws. Labor advocates argue that farmworkers should have access to overtime just like any other employee. Gastelum says that agriculture can’t be limited to that timeline.

“Mother Nature doesn’t stop … There’s no ability for the farmer to say, ‘We’ll pick it up a week from now,’”

Farmers like Smith are unable to raise prices to cover costs. He said since this new law, paying his workers has been difficult. According to the Washington Policy Center, farmers are at a disadvantage in the marketplace. Most times, farmers do not set prices; they sell tree fruit and other crops at what the market sets, even when costs in production rise.

“Farmers are price takers … They are not an industry that gets to pass any of this on,” Gastelum said. Meanwhile, larger farms have more leverage with retailers and packing houses, squeezing small growers further. “When you’re larger, you have more selling power … Small growers are going out of business,” he said.

Wenatchee's tree fruit past

The economic pressures compound a long history of agricultural development in the Wenatchee Valley. Chris Rader, a historian and writer for the Wenatchee Valley Museum & Cultural Center, said the valley’s success began with its climate and soil.

“The reason why it grew and thrives was because it was such a great place to grow tree fruit,” she said. “It had wonderful soil, sunny days and cool nights. Perfect climate, perfect soil, water especially once the Wenatchee Reclamation District Ditch came in.”

Orchards sprang up along the valley, including Leavenworth, Dryden, Cashmere, Wenatchee, and East Wenatchee, helped by irrigation projects and the Great Northern Railway, which opened national markets. “The Great Northern Railway had a dedicated car for the Wenatchee Valley,” Rader said. “They would outfit it with the fanciest apples displayed under glass and brochures that read, ‘Where money grows on trees.’”

By the early 20th century, Wenatchee was widely known as the “apple capital of the world.” Tree fruit dominated the economy for decades, providing steady employment and shaping the community’s identity. “Places that I would walk along would be all orchards … now it’s housing, apartments, small houses,” Rader said. “A newcomer to Wenatchee might not even guess that it used to be an orchard.”

The need for housing

According to a City of Wenatchee Housing Market Study, there is a housing shortage, there is a shortage of ownership housing supply. By the year 2046, the Wenatchee urban area will need to add 241 net housing units each year to match the city’s growth. According to the U.S. Census, Wenatchee and East Wenatchee were one of the top three metro areas in Washington for growth with a population increase of 2.3% from 2020 to 2023.

Rader said the town has changed drastically since she moved here in the 1970s. She once picked pears in local orchards, but many of the paths she used to walk, once lined with fruit trees, are now businesses or housing, and few orchards remain.

There are orchards still on the outskirts

Today, many orchards remain on the outskirts of the valley, but the economic and regulatory environment has made operations expensive for small and medium growers. Rising input costs, labor shortages, and stricter environmental rules are forcing farms to consolidate or sell to developers and out-of-state investors.

Brady Karstetter, another local grower in Grant County, said the landscape is shifting fast. “Our competition is banks and investment funds,” he said. “When a family farm buys ground, they’re trying their hardest to pass it down to the next generation. They care for it like it’s a person. But an investment firm just treats it like an asset, riding it for the tax benefits, flip it when the numbers look good. No one wins there.”

Karstetter said farming is a rewarding lifestyle, but farmers are becoming a dying breed. He loves being outside, watching the tangible progress of his work each day, and he says Washington growers have a special talent for delivering high-quality produce to local stores. But while consumers are paying more for Washington apples, farmers aren’t seeing that return.

“If you’ve got an option at the grocery store to buy from Chile or buy from Washington, buy the Washington apple,” he says. “I know people like cheap — but do you want your food grown in your backyard by someone you can talk to, or by a corporation on the other side of the world? People are gonna have to decide that, and soon.”

It’s a choice, Karstetter says, that will help determine whether farming in Washington remains a way of life — or becomes just another industry run from somewhere far away.

Reneé Diaz may be contacted at Renee.diaz@wenatcheeworld.com. Collaborative reporting by The Wenatchee World, NWPB and Murrow College of Communication Newsroom Fellowship.