By pulling out 8,000 acres of vines, the California raisin industry has applied a tourniquet to its red-ink hemorrhaging, but the patient isn't out of danger yet.
Veteran Selma grower Richard Garabedian, the new president of the Raisin Administrative Committee (RAC), says the pullout is a step in the right direction, but more needs to be done.
Raisin growers, aiming at reducing the crop in 2003 and beyond, have agreed to voluntarily remove the acreage, with its potential production of about three tons per acre, to offset 25,000 tons of excess reserve supplies.
As an incentive, participating growers are allowed to remove production of 1.5 tons for each ton they produced in 2001. Participants receive a certificate for reserve tonnage representing this year's production of the removed vines. Certificates can then be sold to packers.
Removal is allowed only on an entire production-unit basis, not poor-production portions of vineyards. Vines were to be chain sawed at the base by July 31 and completely removed by Aug. 31. If applications exceeded 8,000 acres, participants were to be determined by a lottery.
The RAC, the federal marketing order administering free and reserve raisin tonnage and export, consists of 47 members and 47 alternates representing districts from Merced to Arvin.
Some 5,000 Thompson Seedless growers make up the industry, although all of them do not make raisins every year. In 2000-2001 the industry was valued at more than $448 million, and the average production over the past 10 years has been 344,000 tons.
After USDA approved the RAC-recommended pullout program, Garabedian said, “It's a step in the right direction. If we do nothing, we will get nothing. We are trying to come out of a bad situation and make it better.”
The Fowler native continues his family's raisin operation started in 1912. Today he farms 150 acres of Thompson Seedless for conventional, tray-dried production. On the ranch practically his entire life, he's seen both good and bad times.
Active with the Raisin Bargaining Association since it was established in 1967, he served as its president and acting manager 1986-88. The following year took the reins of chairman of the RAC for the 1989-1990 term.
“It was a cake-walk in those days with everything running smoothly and demand for raisins and prices up. This time I inherited more problems as chairman than I expected.”
Caught up in a whirl of day and evening meetings and telephone calls as the pullout program was put in place, he worked on his ranch only two days of his first 25 in office.
Garabedian says he is convinced these are the worst times for raisin growers since the Great Depression. “During the 1990s, things were fairly smooth for us. It's the last two years that have been so bad. During the depression everything — I'm talking about costs and prices — was cheap, but now our costs are sky high and we are losing money with the prices we get.”
In a nutshell, the raisin industry's grief springs from returns well below the estimated $800 many say it costs to produce a ton of tray-dried raisins.
The 2000-2001 free-tonnage price reached last season after arbitration was about $880 a ton for 53 percent of the 433,000-ton crop. The remainder, or 47 percent, went into RAC's reserve program and sold at lower, blended prices to accommodate the export market. The over-all weighted average return to growers was about $550 a ton.
In contrast, the 1999-2000 season's free-tonnage price, for 85 percent of that 300,000-ton crop, was $1,425, for a weighted average of $1,211 to growers. (For reference, during Garabedian's earlier “cake-walk” RAC chairmanship, weighted average returns were upwards of $900 a ton.)
“I'd like to see our free tonnage go back to 75 to 80 percent, instead of what we have now, so that our farmers could make a decent living like others in America. They shouldn't be penalized just because they grow food,” he said.
The industry is nervous about the current crop, estimated at perhaps more than 400,000 tons. But only harvesttime will tell, Garabedian cautions. “You can't go by bunch-counts alone. If we have too many bunches, the crop won't mature and we'll have low sugar and low weight.”
The removal of vines will help, he said, but it's only part of the solution. “We in the industry can control only the supply side, and there also has to be a better job of marketing the crop.”
At the same time, he admits growers are too strapped financially to do much promotion now. Before the California Raisin Advisory Board, known for its “Dancing Raisins” campaigns, was discontinued in 1994, the crop was actively promoted.
“At least in those days we were holding the line at sales of 335,000 to 350,000 tons a year. If you don't advertise, you aren't going to sell. People buy just so much, and they tend to buy what they see advertised on television.”
He worries that many growers this year are forced to cut back on their pesticide spraying and other inputs. “I feel sorry for anyone who bought a ranch in the last 10 years or so and is in financial difficulty. It's hard to get by, even when you own the place. I don't know of any raisin grower who has made any money the last two years.”
Even though returns to growers are depressed, prices of raisins at retail remain high, Garabedian complains.
Now specialty crop
He said he informed USDA officials in Washington, D.C. in June that during World War II raisins were a strategic crop used for army field rations. “The government made our industry grow the crop, even when wineries were paying three times as much. Some growers refused and served jail sentences. But now raisins are considered a specialty crop.”
Today, federal government purchases of raisins are limited to the school lunch program while California specialty crops draw little attention in farm program legislation.
He is chafed by U.S. support of Third World countries that compete in our markets and pay only a fraction of the labor costs that California producers pay or set high duties to exclude imports of California products.
Another obstacle is the versatility of the Thompson variety. “Everyone looks to the raisin side to make up for the other competition their grapes face. When growers can't make it from the winery, they lay raisins,” he said. Winery offers of $75 a ton for Thompsons last year forced many to dry their crop.
“Raisins are the last resort, and growers, unfortunately, end up hoping for rain or some other disaster to decrease the crop and raise the price,” Garabedian said.
He said he is uneasy about a program to pull vines without a moratorium on replanting. Well-heeled professionals who are part-time farmers, he fears, can write off farm losses against their basic income, replant dried-on-the-vine (DOV) vineyards for higher production, and defeat the purpose of the pullout.
“Ninety-nine percent of the full-time raisin growers won't plant back with a raisin variety and will try some other crop instead, but I'm afraid the other 1 to 2 percent might take out a two-ton (per acre) vineyard and replace it with a new DOV vineyard that might produce four tons. We'll just have to wait and see how many acres go back in,” he said.
Although its extensive overhead trellising is more costly than conventional designs, DOV production can double production with much lower harvesting costs than those of tray-dried vineyards. Research and development are under way on conversion of existing vineyards to DOV pruning and mechanical harvesting.
“I don't think DOV will be the answer for our industry,” says Garabedian. “DOV raisins taste different, don't store as well, and don't get that harder surface of tray-dried fruit. Sure, it may get more tonnage, but if the product doesn't store or pack well, I don't know what good it is.”
The RAC did seek a moratorium on replanting to raisin varieties as a part of the pullout program, but USDA ruled it was too late this season for a moratorium, which would need a referendum among the industry.
Also considered this year was a proposal to hold 20 percent of a raisin farmer's crop from the market, either by not harvesting it or selling for cattle feed or ethanol. It too was shelved because of the referendum requirement.
The pullout program augments the industry's existing Raisin Diversion Program intended to reduce surplus supplies. Participating growers spur-prune or take other measures to prevent production for that season. Participants then receive certificates that are redeemable by packers.