What is in this article?:
- Sizing up price prospects for raisin grapes
- In the raisin industry a larger crop usually means more variability in the maturity and quality of the grapes.
It would be easy to interpret the August 12 California Raisin Grape Objective Measurement Report as signaling a likely downturn in the price growers receive for their raisin crop this year. While easy to make, such an interpretation could also be wrong.
Prepared by the USDA’s National Agricultural Statistics Service, that report pertains to California’s two major sources of raisins, Thompson Seedless and Fiesta grapes, as well as other varieties, like Selma Pete, Dovine and Sultana, which are also used to make raisins.
The report projects the 2013 crop of raisin-type grapes to be 25.5 percent larger than last year. Together with this year’s expected record yields, that could produce the largest crop since 2008. Right now the supply of raisins and the demand for them are pretty much in balance. So, based on simple economic principles, a bigger supply without an increase in demand should lead to a lower price.
But, several other factors could mitigate the impact of more raisin-type grapes on the price of raisins, notes Jeff Bitter, vice-president of operations for Allied Grape Growers. The cooperative is the largest single supplier of Thompson Seedless grapes to California crush facilities.
In the raisin industry a larger crop usually means more variability in the maturity and quality of the grapes. “You may have a lot higher green tonnage,” Bitter says. “But, by the time those grapes are dried down, run over the shakers and processed, you tend to lose relatively more tonnage than in a year with a lighter crop when the grapes typically are more uniform in ripeness and quality.”
Also, this year, weather problems are expected to curtail raisin production significantly in Turkey, a major raisin producer. “That could create a hole in the market which California growers could fill with their extra raisins,” Bitter says.
The official estimate, released August 1, projects the 2013 Turkish dried grape crop as coming in 25 percent smaller than last year. If so, production would be only slightly higher than total dried grape exports during in the previous 12 months. Some think this year’s crop may even be smaller than the official figure.
This year’s bunch count in California’s raisin grape vineyards is another factor to consider when weighing the effect of this year’s projected crop size on raisin prices. The objective measurement survey revealed a record total of 47.7 bunches per vine. That compares to 29.1 in 2012.
In its survey, Allied counted 38 bunches per vines. Bunch counts by several other industry groups were in the low 40s, Bitter notes.
“Normally, when we have more bunches per vine, the berries and the bunches are smaller,” he says. “You have to adjust the number of bunches for difference in size and weight. The objective report has done that by estimating crop production will increase by a smaller percentage than the bunch count.”
Then, there’s the weather – in particular 19 straight days in July of 100-degree-plus temperatures in the central San Joaquin Valley, the home of California’s raisin industry.
“That took its toll on bunch development and berry sizing,” Bitter says. “It will mean more substandard raisins that are tiny, immature and less meaty.”
The Raisin Bargaining Association Board of Directors has voted unanimously to support
another season without any regulation of supply managed by the Raisin Administrative Committee. That would be the fourth straight season of 100 percent free tonnage for the industry.
The free tonnage percentage dictates how much money growers receive upon delivery to their packer. Last year, growers were paid the full amount of the record $1,900 per ton field price for their Natural Seedless raisins. The field price is determined by an agreement between the Raisin Bargaining Association and its signatory packers.