That looks like a fungal infection, I'm not sure on the type, since there are several. Check your local extension agent to see if they can determine exactly which fungus is causing this. Many of these disease are treatable, but require the use of a fungicide. The extension agent should be able to help you with the right choice to control this problem. Please, do use great care, wear proper clothing, gloves and I always use a mask. i have to fight periodic fungus on my mature black walnuts. And I use a paint brush, not a sprayer.
It looks like a type of lichen. It's not harmful unless it gets abundant (then it blocks beneficial light from getting to the tree). If you prefer not to have it, wait until after harvest (but before the leaves are all gone) and spray your trees with a copper based fungicide (or a lime sulphur). That should do the trick! But I wouldn't fret about it unless your trees start looking sickly.
It's hard to tell without a closer photo, but I agree with Leah that it looks like another type of lichen, and is probably nothing to be concerned about. Keep an eye on it to see if it becomes more of an issue.
It depends on weather it's fuzzy like a lichen or more gooey like a tree stump slime mold.http://www.colostate.edu/Depts/CoopExt/4DMG/Pests/slime.htm It says in this article that it comes in many different forms and colors and is harmless to the tree, humans, animals, but an indication of high humidity. It says not to use chemical treatment to rid it, that it won't work and it's more harmful than good. It says that you can adjust the level of moister by watering less frequently or pulling away some of the mulch that holds in the moisture where molds, fungus, etc. like to grow. Btw, lichens are harmless, as well.
I too agree with Leah as I definitely know the white/silver growth is Lichen, Lichen only grows where air quality is excellent and there is no air pollution present and to me the orange coloured growth is either a lichen or moss but more than likely a lichen.
I also vote lichen. Lichens are comprised of a symbiotic relationship of algae and fungi. The fungi help with water retention, and the algae provide the photosynthetic food energy. Here in the rockies we see more of the "orange" kind of lichen on rocks...up in some of the highter elevations 9 to 10 thousand feet. the predominant form of lichen is stringy and can be found on branch tips.
Southern folks think they look a lot like "spanish moss" (Tillandsia usneiodes) which is a flowerling plant ...and not a moss at all.
Thanks, everyone! I appreciate the quick responses. I'm glad I won't have to dig up the trees.
My husband is an old orchardist from Leavenworth / Wenachee, WA area. Showed him the picture and he said "rust" without even batting an eye. He says your water probably has high levels of iron in it. Nothing to worry about, won't hurt the trees.
Cedar apple rust and it has nothing to do with iron on the water. Usually it is on leaves and fruit, but could be opportunistic in your area or conditions. It's a sick little relationship between cedar and apple trees. Here's the technical info from Cornell U.. http://www.nysipm.cornell.edu/factsheets/treefruit/diseases/car/car.asp
I had cedar apple rust on my apple tree. I put a sample in a ziplock baggie and then put it in a second baggie. I took it to my local university extension and they told me what it was. I lost my apple tree.