Despite Great Harvest, California Apple Growers Face Challenges

California Apple Growers Face Regulatory Disadvantage

By Patrick Cavanaugh, Farm News Director

 

Many California apple growers are in the midst of harvest season right now. Alex Ott, executive director of the Clovis-based California Apple Commission expects a 3% increase in production across the country. Ott foresees a 1% increase in California this season, where apples stand out because of their freshness.

“California is the fifth largest producer of apples in the United States,” Ott explained. “We are about the third largest exporter of apples in the United States. We like to pick, pack and ship. Unlike other states that like to store fruit and have that fruit around longer, California apple growers like to get in and get out,” Ott said.california-apple-commission-logo California Apple

“We have a small marketing window and we pride ourselves on fresh crops,” Ott elaborated. “So we try to get out of the market no later than December. Sometimes we go as late as January, but the idea is to [quickly] fill that niche window between the Chilean and the Washington state fruit.”

Alex Ott, executive director of the Clovis-based California Apple Commission
Alex Ott, executive director of the Clovis-based California Apple Commission

Yet, the California apple industry faces challenges going forward. Ott stated, “Over the last five years, California apple crop production has decreased by nearly 39%. A lot of that has to do with the changing of the crops. Any time you start to see an uptick in another crop, especially when it is not hand labor-intensive like apples, you will see a migration to those types of crops.”

Transitioning toward less labor-intensive crops may accelerate since Gov. Jerry Brown signed AB 1066. This bill will enable California farm employees to accrue overtime pay after working an 8-hour day, instead of a 10-hour day.

“It’s definitely going to be a challenge for California apple growers,” Ott said, especially given the labor shortage. “So apple production in the state will decrease.”

Ott lamented many countries already produce a lot of these other less labor-intensive crops. AB 1066 definitely puts us at a competitive disadvantage in keeping up with demand. The challenge is how can California apple growers compete with farmers in other state and countries who can do it faster and cheaper?

Record Walnut Crop

New Record Walnut Crop:  575,000 Tons

By Patrick Cavanaugh, Deputy Editor

 

In a recent interview with Dennis Balint, executive director and ceo of the California Walnut Board, Balint discussed the Board’s promotion efforts on what has become another record walnut crop, grown on approximately 300,000 acres in the state.

California Ag Today (CAT): Despite the drought, the valiant walnut growers of California have produced yet another record crop of 575,000 tons, up one percent from 2014’s crop, and crop quality is reported to be excellent. How does that relate to overall supply?

Balint: This increase represents 5,000 additional bearing acres. Last year, the world availability was up about 140,000 tons higher than the previous year. We knew that we could absorb incremental production of 20,000 or 30,000 tons a year; however, 140,000 tons was a bit of a surprise. Couple that with the fact that China’s economy isn’t today what it was a couple of years ago. That has hurt us a bit.Walnut trees

So at any rate, that means we are going to have a record total of availability this year, and I think we are going to see prices moderate. Now, the really good news is the industry had some foresight in approving a huge budget to market the product, so we’ll be having a serious marketing campaign in the 2015-2016-crop year.

CAT: Walnut consuming promotions?

Balint: The board will continue promoting walnuts with print and television campaigns, as well as public relations efforts through Edelman Public Relations. That will continue on two fronts; one is consumer appeal, like recipes, and just raising overall awareness regarding the versatility of walnuts; but second and most importantly, Edelman is in charged with promoting health. Health continues to be a very important card in promoting our product to consumers and health professionals as well.

CAT: It is always good that people think of health when they think of walnuts!

Balint: Yeah they do. It is amazing how that number has changed over the years.

CAT: Is eating more, better?

Balint: You know we have a daily range. When we do studies, researchers will always look at the composition of the product and, depending on what they are expecting, they will adjust accordingly. So we have studies that are based on 1 ounce, 1.5 ounces, and 2 ounces daily. So it really depends on the end points they choose to look at.

We try to never talk about compounds because we like to talk about the whole walnut, but occasionally researchers who are deconstructionists suspect a particular compound. Then we have to analyze it down to the nitty-gritty so somebody can put it in a pill. When that happens on occasion, researchers say, “Well, we really need to feed 2 ounces.” And in some cases, 2 ounces in the short-term works very well. In the long-term, being practical, 1 to 1.5 ounces is good.

CAT: Please go back to the advertising budget. Is it mainly domestic?

Balint: It is all domestic. The export program will remain intact—no changes there. We will still have good programs in a number of countries overseas, but all of the increased production is going into the domestic market.

CAT: Do we need to increase per capita consumption to handle the oversupply issue?

Balint: That is a good question. What we need is the following: We estimate, and we don’t have hard numbers, not much more than one in five households is purchasing and using walnuts on a regular basis. So that leaves a lot of room for growth. Our campaign has been designed to appeal to light and non-users, and not just the core consumer who is already loving walnuts and buying them on a regular basis, to expand our user base.  We are doing so by presenting walnuts as an ingredient in salads, vegetable side dishes, entrees, and of course as a snack. As a matter-of-fact, we are waiting on copy testing results in the next week or two.

CAT: Good. And walnuts make everything better and that’s what it is all about, isn’t it?

Balint: Absolutely. Walnuts are a little added touch that makes food not only more interesting because of the color, texture, and taste, but also because it is healthful. All of our ads are going to have the heart check logo. I want to reemphasize health research will still capture a lot of media on its own. That will continue, ‘no reduction there.

CAT: Are the ads in food or fitness magazines primarily?

Balint: Food magazines, primarily. We have four executions of print ads and two television commercials. We are waiting for the test results for the ads. The copy testing we have done also includes what the experts call rapid eye movement. By observing people’s eyes, we’ll know when consumers like or don’t like a word or a phrase, or think something is plausible or implausible. We will also know where their glance goes, how long it stays there and where it goes next.

This will help us structure the commercial to eliminate some of those “down spots” and focus on things that capture their attention. We will be reaching 95% of adults between the ages of 25 and 54 with this campaign on average 26 times per person over a period of about five months.

CAT: Wow, you are running it on some big television programs?

We’ll be going after different segments. For example, we have scheduled morning television segments like “Live with Kelly & Michael,” “Rachael” with Rachael Rae, and pillar events. A pillar event might be a broadcast on E! Network such as “From the Red Carpet at the Academy Awards” or an event in the sporting world. But that is not a focus. We will also include standard shows like “The Big Bang Theory” and so on.

Television will be in ten key markets, and I don’t have the list in front of me. But we will also continue our aggressive social media program. We have a couple of new ideas that I think will capture people’s interest.California Walnut Commission logo

CAT: Tell us about the campaign with the wrapped truck that looks like a walnut.

Balint: We converted a food truck to look like a walnut by wrapping it with walnut texture and contoured the boxy truck into a rounded walnut shape. So when it is parked in downtown Manhattan or Washington D.C., the truck with those affixed contours makes quite a spectacle.

CAT: So what were you doing with that truck? Did you hand out information?

Balint: We made information available, facilitated games, hosted walnut cracking, and most importantly, served an ice cream sandwich made out of yogurt, walnuts and chocolate graham crackers. We had samples of walnuts as well.

CAT: What is your health research strategy? Are you working with key researchers to compare eating walnuts with not eating any nuts?

Balint: Our health research strategy depends on the target. Remember, walnuts are the only good food source of Omega-3; most nuts have no Omega-3. We like to test the whole walnut in a lot of our studies. Sometimes we will find an indication that one compound is more important than another; but we recently finished a study with 27 scientists for our annual meeting. They look at what we have done, what we are doing, and what we should do next. So it is not just guesswork, it is a carefully thought-out program that focuses on areas of greatest interest to scientists.

One thing I will tell you is one day before the meeting began, we had six key scientists come in for what we call a “brainstorming session.” We asked them to tell us how to make our program better: the way we run our health research program, the way we run the conference and so on. The unanimous opinion of the six in attendance was not to change a thing. They said basically the program is a model for what should happen in health research, because we don’t go into research with a preconceived notion. We don’t go in and say, “Researcher, please raise your hand and provide us with a positive result on this disease.” We follow the science.

CAT: What are your biggest markets abroad?

Balint: China of course is huge. But other very strong markets include Germany, Japan, Korea, Spain and Turkey. China slipped this past year, of course, and we are all scratching our heads because we hear a lot about China. But their economy is a little soft. They had a crackdown on the gray market, which hurt business a little bit because some of the product that goes into China finds its way there through either Hong Kong or Vietnam. So China’s utilization this year was down. It is too early to tell whether they will return or continue at the same pace they experienced in 2014-15. We just don’t know yet.

CAT: Are you promoting the health message in these foreign countries?

Balint: Yes, and it is a really interesting situation. In countries that have a tradition of walnut-use like China, only about 40% of our messaging is health-related because they have known it is healthy for a thousand years. Whereas, in Japan, when a big story breaks accompanied by some television coverage, our sales will spike like you can’t even believe. So, it differs by market.

Here in the U.S., it is very high, as in Germany and Spain. Turkey is building and India as well, but slowly. We have some issues there; India is a market in which they too grow lots of walnuts, but we are slowly but surely making some headway.

The Korean market opened in 1994, but it was 2001 before we had any meaningful number of shipments. You have to be patient with some of these markets to be able to dismantle some of the trade barriers.

CAT: Are there any markets in South America?

Balint: Years ago, in the 90’s, there was an effort in Brazil and Argentina. Now, Chile grows walnuts, Argentina grows some, Brazil still grows a few. The Mercosur* pact down there (a special trading pack between South American countries) is a problem because the Mercosur countries trade duty-free. So we are at a disadvantage. We’re contra-seasonal. Last, but not least, we have a tariff burden. So we tried it for a couple of years, but decided there were better places to invest.

CAT: Well, it’s interesting. We don’t see South America being a big market for almonds or pistachios yet either.

Balint: It’s true; they grow Brazil nuts and, as I said, walnuts. Chile, as a matter-of-fact, is increasing their plantings. As their plantings increase, their initial sales will remain within the South American continent. When they get into the summer, especially late summer, they will sell what they have left into markets like Korea, and if they can, France and Germany. They basically go into our markets and try to sell in advance of our crop.

CAT: How are California growers doing? They are going through another year of drought, and I’m sure you are worried….

Balint: Everyone is, and we are all waiting for the other shoe to drop. Here we are with another record crop, and we know the reason for that. It’s because five or six years ago, somebody planted more walnuts, and they are coming online now. It appears as though we are trying to grow more walnuts in the middle of the drought, though the fact of the matter is those trees went in the ground long before water scarcity became as bad as it currently is.

CAT: Exactly, Fresno County just released their numbers last month and broke a record 7 billion dollars. Kern County and Tulare County broke records as well. In terms of ag value, we are not taking such a hit, mainly due to high nut prices.

Balint: Even before I was in the commodity business, I used to work for a company in Massachusetts called William Underwood Company. They had B&M (Burnham & Morrill Company) Baked Beans, Underwood Deviled Ham and other meat spreads. That is where I learned about commodities.

We had an economist on staff to predict the prices of navy beans, fatback**, sugar, ham hocks, and chicken. I learned it was much easier for the chicken guy year to year; he would just have more chickens to count! The bean people could have more beans. What about the walnut people? If the trees weren’t in the ground, they were not going to get more walnuts.

________________________________

*Mercosur or Mercosul (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, Guarani: Ñemby Ñemuha, Southern Common Market) is a sub-regional bloc. Its full members are Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela. Its associate countries are Chile, Peru, Colombia and Ecuador.

Source: Wikipedia, the free encyclopedia

 

**Fatbackthe fat, usually salted, from the upper part of a side of pork

Source:  Dictionary.com

 

Farmer Kable Munger Expands Operations to Other Countries

Fed up With California, Some Farmers are Relocating to Other Countries

By Patrick Cavanaugh

Kable Munger of Delano-based Monarch Farms is fed up with the man-made drought and over-regulations in California.

“We farm and process about 800 acres of pistachios, and we are one of the owners of Naturipe, which is the world’s largest producer and marketer of blueberries. We’ve always farmed in California until the last five or six years with the water situation, the regulations on water and other regulations, we have been expanding into Mexico and South America because that is where we can do what we want to do as farmers,” said Munger.

“In those countries, people understand that we are doing a service for them and not just taking away,” said Munger.

“Even on the environmental side, people have the misconception that farmers are not taking care of the environment; but in fact, it is just the opposite,” noted Munger. “If we didn’t have all this farming and all these trees, how do we get clean air? And we are good stewards of the water, most of California is using drip irrigation, we are conserving water, we are doing all that is asked of us. The problem, I think is in the urban areas, people don’t understand what we are doing and where the food comes from.”

In the other countries where they operate, “They look at us as providing a service, providing food,” Munger said.

“Here in the states, food’s been fairly cheap and readily available, so I think the public is losing respect for where the food comes from and its value. And also I think that as a country we are losing sight of what food security should be. We should be able to grow our own food. When you go to countries that don’t grow their own food, they understand what that means,” said Munger.

“In these other countries, you don’t have the same regulations, the labor is much cheaper, and it is a much easier place to do business. They understand that we are all stewards of the environment, and they do not think that a fish is more important than humans,” noted Munger.

“When you look at the water in California, over 60% goes to the ocean. There is really not a water shortage; it is all political.”

“We need to build more dams for the times when there is enough rain to capture it. But anytime we start to build a dam, there is some spider or something else in the way. We have to realize that the world existed all these years without someone protecting it, and we need to protect it, and we can do it in a reasonable way. But what the environmentalists are doing right now is not reasonable.”

“If you really look at the U.S., what have we really done in infrastructure since World War II? How man dams have we built? How many freeways have we built? Over time, we do something that will help the economy, but it has all stopped. For example, they say ‘we don’t want you to do this.’ They go to build a project, for example, a solar project, and they stop it because they say the sunrays will hurt the bird’s eyes. There’s nothing we can say to please them.”

”I was in China in a few days ago, and there was this bridge, 19 miles over the ocean, and I asked, ‘when did they start it?’ They answered, ‘Oh, in about one and half years. ‘I asked: ‘Did it take them 18-19 months to get permits, and they said, ‘no, it took us that long to build a bridge over the ocean.”

“We’re in Chile. Twenty years ago, Chile was off the radar. There was hardly anything coming out of Chile. Now Chile is the second largest ag producer, and the largest producer in the off-season, and feeds the world. It is a major exporter. Now Peru, they’ve changed their policies. Now the whole world is flocking to Peru. The public is so comfortable that they do not even realizing how much ground we are losing.”

 

After Tough Negotiation, Raisin Price Decided

Raisin Price Set At $1650  Per Ton

 

More Thompson Seedless Vineyards To Be Pushed

 

The Raisin Bargaining Association (RBA) announced that it has reached agreement with its signatory packers on the 2013-14 Natural Seedless raisin harvest announced field price.  The price will be one thousand six hundred fifty dollars ($1,650.00) per ton or eighty-two and one half cents ($0.825) per pound.  The price is calculated using the following formula:

         Base price                                $1,457.00                      $0.7285

         Moisture @ 10%                             80.00                          .04

         Maturity @ 75%                              50.00                          .025

         Container rental                              21.00                          .0105

         Transportation (minimum)              15.00                           .0075

         RAC assessment                            14.00                          .007

         USDA inspection                            13.00                          .0065

         2013 Announced RBA field price     $1,650.00 per ton  $0.825 per lb.

Raisin growers have sent a strong message to the industry that they prefer selling raisins on a 100% basis now and into the future.  With that in mind, the Board of Directors of the Association worked diligently toward a compromise with their signatory packers to establish a fair price that reflects the additional California raisin production for this season. 

The Raisin Administrative Committee (RAC) recently estimated the 2013 Natural Seedless raisin crop at 348,437 tons in comparison to deliveries of 311,090 tons last year.  The $1,650 per ton price for the 2013 Natural Seedless raisin crop is a 13% reduction to last year but takes into account the additional crop that is estimated for production as well as the challenging market conditions that the industry will be facing.

The agreement calls for growers to be paid in three installments this year as opposed to four installments last season.  65% of the payment will be due fifteen (15) days after completion of delivery, 20% will be due to growers on or before February 28, 2014, and the final 15% will be payable on or before April 30, 2014.

raisin character

In the past, grower reserve raisins generated funds to assist the industry in marketing additional production into world markets.  The effort to sell this year’s additional production without reserve programs and the temporary elimination of state marketing and promotion funding are two reasons why the RAC assessment of fourteen dollars ($14) per ton has been included in the pricing formula.  This will provide an opportunity for the industry to work together through the RAC in support of efforts to market 100% of each year’s crop without reserves.

As reported from the International Dried Grape Producing Countries Conference in October, there continue to be strong indicators that Turkey has a significantly smaller dried grape crop to market this coming season.  California and Turkey are the two largest producers of dried grapes in the world.  It was also reported that South Africa, Chile, and Argentina have suffered tremendous frost damage in their vineyards, which will severely limit their harvest, which begins in January. The ability to take full advantage of what appears to be a tremendous sales opportunity requires an announced field price.

The Raisin Bargaining Association Board of Directors understood the importance of establishing this important benchmark in a timely manner to sell the maximum amount of raisins this year.  However, they are also well aware of the impact it has on the grower community.  Labor, water, and energy costs have significantly increased for growers over the past twelve months further squeezing their bottom line margins.  As agricultural resources in California are depleted, vineyard owners will continue to seek the best utilization of their land. 

California Ag Today editors spoke with Steven Spate, an RBA Grower representative, and a raisin grower. He said: “We are witnessing a large amount of raisin grape vineyards being removed (between 8,000 and 15,000 acres) from production this year in favor of more mechanized and profitable crops such as almonds, walnuts, and citrus.” 

“Time will tell what impact this acreage reduction will have on the future of the California raisin industry but taking the necessary steps to market this year’s crop was extremely important for the Raisin Bargaining Association to accomplish.  We are now counting on the California raisin packers to sell this crop to provide a better future for the remaining growers in our industry,” Spate said.

Spate added that processors thought the price should have been lower, but growers generally thought that shortages in Turkey and other areas should have boosted the price. “But still, there are excess raisins on the market and it has created a downswing in price.

Growers who are pushing out vineyards say that the lower price is only one factor that is in play. Chronic labor shortages are also encouraging growers to plant a less labor-intensive crop.

TREE NUTS, EXCEPT PECANS, REMAIN STRONG IN EXPORTS

Tree Nuts, Still the 800-Pound Gorilla

Crash of the U.S. Pecan Market a Cautionary Tale, Says Rabobank

The export market for U.S. almonds, walnuts, pistachios and pecans continued to grow in 2012, reaching $6 billion dollars and accounting for over 60 percent of U.S. production. In its most recent report, “Riding The Growth Curve – Can U.S. Tree Nut Exports Continue to Defy Gravity?,” Rabobank questions whether this growth will continue. The author of the report, Karen Halliburton Barber, senior analyst, Produce for the Rabobank Food & Agribusiness Research and Advisory Group, says that it should, but that the industry shouldn’t rest on its laurels. “Assuming water limitations will not significantly restrict U.S. production, the U.S. tree nut sector still faces the fundamental uncertainty of when supply and demand will stabilize,” said Barber. “That said, the U.S. tree nut sector is in a good competitive position given its leadership in production and trading history.”In the report, Barber examines the main commodities making up the U.S. tree nut sector:
 
     Almonds – “Here, the U.S. is the 800-pound gorilla and accounts for over 78 percent of total global production. This is where the U.S. is clearly in a good competitive position but needs to beware of the oversupply spiral.”
     
     Pistachios – “Iran is slowing down, but they are not out. Water scarcity and weather have caused declines in production in recent years. However, new growth areas are cropping up and competition may heat up in the medium term.”
     
     Walnuts – “This is the only sector where the U.S. is not the predominant global supplier.  Although China is a net importer because of its large domestic demand,  its share of global production is greater than that of the U.S., providing competition for U.S. walnuts in the Chinese market. An added risk factor is that Chile has begun to compete with the U.S. on quality in key growth markets.”
     
     Pecans – “This segment is the cautionary tale of the report, warning of what could happen if the right factors line up at the same time. In 2012, the U.S. pecan market crashed. Now largely dependent on the global export market, U.S. pecans were hit with competitive pressures from South Africa, while at the same time dealing with lower yields because of weather challenges. The result of these factors was a 50 percent reduction in grower prices for pecans from July 2011 to January 2013.”

The report concludes by noting that the U.S. tree nut sector’s overdependence on the Chinese market poses the greatest challenge. Yet, U.S. producers are poised for growth over the longer term—both in China and globally. The strategy employed by the almond, walnut and pistachio industries of  a more balanced buyer/supplier parity approach can help continue to moderate the risk.