California’s 3,000 raisin producers are undoubtedly the happiest of the lot of more than 8,000 grape growers statewide.

Barring a catastrophic weather disaster or a total collapse of traditional raisin markets, survivors of one of the raisin industry’s most challenging decades are assured of at least back-to-back profitable years and likely at least a third.

Three years of prosperity are rare.

California’s 600 table grape growers have certainly been successful over time. Last year they shipped almost 100 million boxes of fresh market grapes worldwide. However, table grape prices are spot market vulnerable.

California’s 4,500 wine grape growers are optimistic that 2011 will be an economic turnaround season for them after almost a decade of uncertainties. However, optimism has turned to despair more than once in the recent past. Price offerings this year for San Joaquin Valley lower priced wine grapes are reflecting an escape from economic malaise. Unfortunately, the same cannot be said for premium wine grape producing area. There remains uncertainty on the higher end of the scale.

Raisins, though, are coming off a near historic 2010 with equally promising 2011 and 2012 seasons ahead.

Raisins have been part of California’s viticultural history since the late 1800s and part of the American diet just as long. Raisins were elevated to American iconic status with the famous Dancing Raisins a decade ago.

California raisin producers are bunched together within a 100-mile radius of Fresno, Calif. This interwoven group of growers enjoyed one of its best years ever last season, receiving not only $1,500 per ton from raisin packers for their dried crop, but it was all up front money with 100 percent 'free tonnage.' Similar unprecedented results are expected this season with hopes of a three-peat in 2012.

The Raisin Bargaining Association (RBA) negotiated a $1,500 per ton, two-year contract with packers last year. The bargaining association that represents roughly one-third of the industry’s growers is looking for a “modest” field price increase in 2012. The other two-thirds of the industry are split between independent packers and another piece of Americana, the raisin cooperative Sun-Maid Growers of California.

The RBA’s negotiated price is the price setter for the industry each season.

RBA president and Caruthers, Calif., third-generation raisin grower Monte Schutz expects another 100 percent free tonnage crop this season. He has never seen back-to-back full crop payment years in his 30 years of producing raisins. The $1,500 price is not a record, but it is exceeded only by a $1,600 price more than 30 years ago when the majority of the crop was ruined by rain.

Free tonnage

The raisin industry is governed by a volume control federal marketing order. Each year directors of the Raisin Administrative Committee estimate production and compare it to anticipated sales. This sales projection is translated by the percentage of the field price growers receive from packers upon delivery of their crop. This is called free tonnage. For example, if the crop is estimated at 100,000 tons and the RAC estimates domestic sales will be 75,000 tons, then the free tonnage would be 75 percent. The remainder of the crop would be put into a reserve pool and sold to packers at prices typically below the field price. These raisins could be used for the federal school lunch program or into subsidizing export raisin sales.

The free tonnage figure is critical each year because that is the money growers receive when harvest is completed. Hopefully, it is enough to pay production costs and guarantee a profit for the year. For example, if the free tonnage is 75 percent on a $1,500 field price, a grower would receive $1,275 per ton upon delivery. If the free tonnage is 100 percent, that would represent an additional $225 ton or $450 per acre upon delivery on a typical 2-ton crop.

This volume control mechanism has provided stability to the raisin industry, which for years has been victimized by the vagrancies of the wine grape and concentrate industry, according to marketing order supporters.

“The raisin industry is subject to whatever other people decide not to do,” explains RBA Chief Executive Officer Glen Goto.

The quandary revolves around the price wineries pay for Thompson seedless grapes for concentrate or wine. If the fresh green price is high enough, many growers will harvest grapes for delivery to wineries. If not, the option is to dry the grapes for raisins.

“The raisin industry really has no control over production when growers can say, ‘If the winery price is not good enough, we can always make raisins,’” said Schutz. This decision is often made just ahead of fall harvest. This uncertainty, Goto and Schutz contend, is why the marketing order is important to the industry.

Although the marketing order has provided some stability, it has not saved thousands of growers and vineyards.

Raisin acreage decline

Raisin acreage and the number of raisin producers has declined dramatically over the past decade, due to the inherent uncertainty of both the raisin and wine markets and the availability of more profitable and economically settled crops like almonds and pistachios. Raisin grape acreage has dropped by almost 100,000 acres in the past 10 years. It’s now a little more than 200,000 acres and is still falling by 2 percent to 4 percent per year, according to Goto. This reflects growers who tear out vineyards and do not replace them with more vines.

“It is much more expensive to plant a vineyard than an orchard,” said Goto, adding that almonds and pistachios have been consistently more profitable than raisin grapes for several years. Not counting land costs, a grower can easily spend $10,000 per acre or more to establish a trellised vineyard versus $6,000 to $7,000 for an almond orchard. The difference is basically the cost of hardware to put in a vineyard.

Schutz farms 350 acres of raisins — all Thompson seedless. He grew up working his family’s vineyards. These are good times for him and his fellow raisin producers.

At current prices, Schutz is able to continuing farming without incurring new debt. Good raisin returns also allow him to look at new equipment, repairing or replacing stakes and end posts and replacing trellising wire. He can also incorporate compost and other soil amendments over the winter.

“The price of raisins has been a very positive thing for the community. Our local tractor dealer is very busy, and that is good. Farmers can afford to buy things they have not been able to for several years,” he said. He added that growers were able to afford compost or other soil amendments last winter.

Surviving for Schutz has been a matter of cutting costs. One of the biggest cuts has come in harvesting expense. Goto said Schutz was one of the earliest to mechanically harvest onto a continuous paper tray for drying.

Harvesting expense

“In 2003 labor costs shot up because we had a labor shortage,” Goto said. “That is when Monte and other growers really started looking at machine harvest.” Today, Schutz and Goto estimated 30 percent to 40 percent of the valley’s raisin crop is mechanically harvested.

“Frankly, I should have done it a year earlier,” he said.

It takes about 20 people to mechanically harvest 20 acres. That includes 15 to cut canes and four to mechanically harvest and mechanically pick up the dried raisins. Schutz says it takes 40 to 45 people to hand harvest the same acreage.

That alone saves at least $300 per acre.

Schutz machine-harvests about 75 percent of his acreage. The rest is still hand harvested and laid on individual paper trays to dry and later rolled and boxed by hand. Production in some blocks is not high enough to justify machine harvesting. Plus, Schutz’ does not want to put his entire crop in peril in case of mechanical failure.

The switch to machines has also lessened the labor need Valley-wide at harvest time. Goto said when the industry was 100 percent hand-harvested, it would take 40,000 to 50,000 laborers over a two month period to harvest, lay and gather up the valley’s dried raisins. That has been reduced to a stable 20,000 to 30,000 workforce at the height of the late summer and early fall harvest season.

Schutz’ vines are in 12-foot rows with 7 feet between vines. They’re trellised with 18-inch crossarms. He has been using drip irrigation since the 1980s.

Sun-drying raisins is all about watching the calendar. Schutz wants his field dried crop out of the weather by Sept. 22. Ideally, he wants to begin harvest at 19 Brix. However, “In reality, you look at when you want the raisins ready to pick up and back it up 30 days or so and start picking.”

Mechanical harvesting

The first step in mechanically harvesting grapes for raisins is cutting canes. Ideally, Schutz wants to cut canes 14 days before he plans to machine harvest. The minimum is 10 days.

This cane cutting begins the dehydration process on the vine before the machine gathers the grapes to finish drying on continuous paper trays unrolled between the vine rows.

“The longer the grapes can dry on the vine, the better the shatter will be when they are harvested by the machine. There is also much less juicing at harvest the longer they are on the vine,” Schutz said.

Shatter is when the drying grapes separate from the stems. The more shatter, the easier it is to clean the raisins before boxing and shipment to the processor.

The dry down ratio to produce raisins is about 4 tons green to 1 ton dry.

Schutz averages about 2.3 tons of raisins per acre. He says his farming area is located among the industry’s higher producing regions.

Goto and Schutz said the RBA will likely ask for a field price of about $1,600 per ton for the 2012 crop to cover increased production costs, primarily related to higher energy and fertilizer costs.

“Raisin sales continue to be good, and we do not anticipate a burdensome carryover from the 2010 crop into 2011, even though the 2010 crop came in a little bigger than was initially forecast,” Goto said.

The final 2010 crop on Aug. 1 should weigh in at about 330,000 tons. Goto does not expect the carry over to be above 100,000 tons. This compares to about 90,000 tons carried into the 2010 season. These raisins are used to carry the industry from Aug. 1 until the new crop is processed in the fall.

“We are not swimming in raisins,” said Schutz, who is also vice chairman of the Raisin Administrative Committee. “The historical average carryover is about 120,000 tons.”

It is going to take a hefty price from wineries to convince growers to go green. Wineries have been shopping a $250 per ton green price.

“They may be shopping, but I have not heard of any buying,” said Nat DiBuduo, president of Allied Grape Growers, the state’s largest wine grape marketing cooperative. Last year Allied released many of its growers from harvesting green to make raisins when Thompson green prices fell short of matching the profit potential for raisins.

“We have indications that the Thompson price will need to be close to that $250 or more before the Thompson grower will not make raisins. There still seems to be plenty of demand for Thompson seedless,” he added.

The next step in the production process is counting bunches to get an idea of the potential crop size.

“We’ll do those in a couple of weeks,” said Goto. That will provide more insight into this year’s crop size. The crop has been slowed by cold spring weather. However, the irrigation water supply outlook from wells and surface deliveries has been bolstered by above average rainfall from the cold, wet weather.

Overall, the Thompson seedless/raisin industry is perhaps as healthy as it has been in a couple of decades.

Marketing order value

However, the industry is not without issues. One of them is the value of the marketing order. In recent years, several commodity marketing orders have been dissolved, most notably citrus’ pro rate system, the tree fruit agreement and pistachios. The raisin industry several years ago dissolved its joint grower/processor marketing promotion commission. It has since been replaced by a similar commission funded solely by growers.

Goto acknowledged that there are some who contend now that the supply and demand of raisins is balanced, the RAC is no longer needed.

“I think that is pretty short sighted. We need to have this tool at the ready,” said Goto. He noted that the almond industry, one of the most financially lucrative crops in the state, still has its volume control order. It just has not been used with the remarkable sales of California almonds worldwide.

“We are looking at the RAC to see if changes are needed to modernize it," Goto said.