What is in this article?:
- $1,500 raisin field price record announced.
- It has taken a decade of economic disarray for the raisin industry to finally reach a supply and demand balance — for at least one year.
- 75,000 acres of Thompsons have been replaced.
- RAC declares 100 percent free tonnage.
Gallo: lowball shock
Gallo shocked the industry this year when it announced a $190 per ton price for 2010 Thompsons. Most growers were expecting more because Thompson supplies were short. However, the raisin industry was happy about the price because it created a much needed bigger supply for raisins this season to meet growing export demand. Most believe Gallo knew raisin packers wanted more raisins and used that to lowball green prices. Left in the cold were growers who could not make raisins because their vineyards would not accommodate raisin drying.
Bulldozers started ripping out SJV vineyards about 10 years ago because of continued uncertainty in the raisin and wine industry. More than 100,000 acres of vines have been removed the past 10 years, most obviously Thompsons. Many believe more older vineyards will continue to be taken out, perhaps at a slower pace. Raisin industry leaders hope this year’s price and 100 percent free tonnage will slow the process down and possibly encourage more dried fruit from raisin adaptable vineyards that still go to the winery.
Another factor in this year’s record price and 100 percent free tonnage is that world raisin supplies have fallen dramatically, creating growing markets for California raisins.
California raisins compete in the world market with Turkey, Australia, Chile, Greece, Iran, Mexico, and South Africa.
Global production from those countries has fallen from 1,104 metric tons in 2008 to 1,040 tons this year. This supply is expected to continue declining in 2011.
U.S. export sales have increased almost 50 percent in four years. This reached a record 152,000 tons for the 2010 fiscal year. To put that in perspective, the 2010 Valley raisin crop is estimated at 293,000 tons. Only four crops since 1982 have been smaller.
Glen Goto, RBA chief executive officer, said the $1,500 price will help surviving growers offset expenses that have been absorbed over the past several seasons and will provide incentive to keep vineyards in the ground to produce raisins.
The RBA agreed to allow its signatory packers the following schedule for payment to its growers to get the field price it wanted. Upon complete delivery of a grower’s fruit, packers will pay 65 percent of the field price within 15 days; 20 percent more on or before Feb. 28, 2011. The final payment will be due on or before April 30. Goto said the payment schedule was “an important compromise to prevent any possibility of a protracted price negotiation.”
The $1,500 free ton field price is “subject to renegotiation” should the crop production drop below 240,000 tons due to any significant weather or market related disaster affecting the harvest.
The instability of the raisin industry has been costly to many producers. Central Valley raisin growers are typically small, family farms, often 40 acres of less. Many of those producers are out of farming.
Other raisin producers have survived the tumultuous decade by converting from hand-harvesting to some form of mechanical harvesting to lay raisins on continuous trays for drying. This dramatically cuts labor costs.
Many have also converted to arbor-type trellising for dried-on-the vine (DOV) mechanically harvested raisins or planted new DOV vineyards. This not only reduces labor, and also produces much higher yields.
There will always be a demand for green Thompson seedless grapes and that will always have an impact on raisin production. But for one year, raisin growers can pay their bills and maybe have a little left over.