More than 5 million boxes of stone fruit were left on trees this season in one of the worst economic seasons in decades for California fresh market, plum, peach and nectarine growers.

And what was harvested was hardly worth picking for most of the season as grower returns were less than the cost of production. What made it even more painful were supermarket prices a much as a hundredfold higher than the field prices.

According to Berry Bedwell, president of the California Grape and Tree Fruit League, the cost of return for 2004 fruit was just 10 to 15 cents per pound in 1989 dollars adjusted for inflation.

When supermarkets were selling California fresh fruit for $1.50 to $1.99 per pound in July, growers were getting 20 cents per pound for their crop. The purchase price for fruit fell from 30 percent of the retail cost to just 20 percent.

Bedwell told the recent annual meeting of Western Plant Health Association that the slide that began in 2000 may have hit bottom economically for growers, not unlike the San Joaquin Valley grape industry in 2002.

It took the removal of 100,000 acre of vines to turn the San Joaquin Valley grape business around and Bedwell said the economic trough for fruit growers also will likely result in significant acreage pull-out. There are about 100,000 acres of fresh fruit peaches, nectarines and plums in the state. He offered no percentage pullout.

New crop

Most tree fruit growers regularly pull out a certain percentage of their orchards to switch varieties or replace older orchards. The next round of pullouts for many growers will not be for replacements. It will be for a new crop and that likely will almonds or other tree nut crops if their is an orchard in their future.

"The almond industry has done a great job of growing demand," said Bedwell. That is something the tree fruit industry has not done with a largely static demand of about 60 million boxes annually of peaches, plums and nectarines, according to Bedwell.

Many existing almond growers believe the same malady that drove stone fruit and wine grapes to the bottom of the well — "chasing a market until it’s gone" — could eventually infect the almond industry.

Nevertheless, too many tree fruit producers saw too much red ink this year to stay fully encased in tree fruit.

Tree fruit growers were hammered from all sides this year. Going into the season the crop estimate was 59 million boxes, near historical average. Acreage has little impact on the overall crop because growers thin to meet anticipated markets, noted Bedwell.

Early spring bloom and hot weather reduced the fruit size and the crop. Prices dropped with small fruit sizes to the point growers were getting only $3 to $5 per box for fruit and it made it not worth picking.

Adding to the problem were phytosanitary/political problems with the Mexican market. This reduced what was expected to be a 2.3-million-box market by 50 percent.

Bottom line is California tree fruit shipments will total no more than 50 million boxes for 2004, said Bedwell.

Charge collusion

With such a huge spread between farm gate prices and supermarket shelves, growers are screaming collusion and price fixing. Bedwell said a recent USDA study found no evidence of that. He said the prices at retail reflected what retailers call "program buying.

"It really does not matter what they pay for a box of fruit," said Bedwell. Program buying, he said, is how many boxes of particular varieties are to be sold at set retail prices.

He does not expect that to change in the future, nor does he envision retail and packer/shipper consolidations to reverse the trend of fewer buyers and fewer sellers.

"The power of the retail chains like Wal-Mart and box stores like Costco makes it very difficult to market fruit profitably," said Bedwell.

And with the consolidation of packer/shippers, smaller growers are finding it more difficult to market their crops.

While the tree fruit industry may have hit rock bottom, the table grape is having a good 2004.

On a scale of 1 to 10, Bedwell says the tree fruit year has been a 3 while the table grape deal has been a "7 or 8."

Forty percent of the Grape and Tree Fruit League’s members are tree fruit producers and a similar percentage are California table grape growers. The remainder grows apples, pears and cherries.

The 2004 table grape crop estimate early on was 85 million boxes. The 2003 crop was 77 million boxes, and the 2002 crop was more than 90 million boxes.

Strong prices and good quality will like push the final 2004 crop close to the 2002 total. Bedwell said it should be between 88 and 90 million boxes.

The San Joaquin Valley wine grape rebound from the pits of 2002 has been like an over-inflated basketball.

Miscalculated

The comeback was so quick that wineries "miscalculated" the supply and demand for grape concentrate and juice this season. The result was grower prices almost three times what they were two years ago.

"The lowest price for concentrate in 2004 was $200 per ton," said Bedwell. In 2002 Thompson seedless concentrate went for $65 per ton. Last year concentrate price averaged $90 per ton. The spread between 2002 and 2004 prices represents an income difference of more than $1,300 per acre for a 10-ton crop.

Unfortunately, not everyone growing grapes three years ago was still around in 2004 to experience that windfall because more than 100,000 acres of grapes had to be pushed out to reduce an oversupply and create a price rebound. Many grape growers are no longer farming or they are now almond growers.

Charles (Two-Buck Chuck) Shaw and other so-called super value wines also aided in the turnaround by using up the surplus wine, said Bedwell.

"Things have definitely bottomed out in the San Joaquin Valley," said Bedwell.

"However, there is still an oversupply of grapes in the Central and North Coast areas. Those are a year or two out before supply and demand are back in balance."

e-mail:hcline@primediabusiness.com