2014 Field Price Update Newsletter
October 10, 2014
~ ~ ~ ~ ~ ~ ~ ~ ~ ~
FOR IMMEDIATE RELEASE
The Raisin Bargaining Association (RBA) Board of Directors met and voted to offer the 2014 harvest of Natural Seedless raisins on a sliding scale basis to their signatory packers. The scale takes into consideration several factors that the raisin industry is facing this season. The greatest being the severe reduction in raisin-grape yields this season. Growers are experiencing between 10% and 40% smaller crops from last year. The dry and very cold winter apparently damaged vineyards and the ongoing drought condition seems to have compounded the problem. The large amount of raisin-grape acres removed from production over the past year with the lack of winery interest to crush raisin grapes this season has made it difficult to determine how small the 2014 Natural Seedless raisin crop may be which is why the RBA Board chose to institute a sliding scale system. A potentially large dried-grape harvest in Turkey that has impacted the European market with unsustainable short-term pricing was seriously considered to arrive at the prices offered in the sliding scale.
The sliding scale will be determined by deliveries documented at the Raisin Administrative Committee (RAC) for the fiscal year ending July 31, 2015. The RBA Board felt this to be a fair method for determining the true value of this year’s harvest. The scale would be determined as follows:
Deliveries of 285,000 tons or less, will be a price of $1,950
Deliveries of 285,001 tons to 295,000 tons, will be a price of $1,900
Deliveries of 295,001 tons to 305,000 tons, will be a price of $1,850
Deliveries of 305,001 tons to 315,000 tons, will be a price of $1,800
Deliveries of more than 315,000 tons, will be a price of $1,750
The sliding scale price will be the fully agreed upon announced field price per ton, which will include the following payments of:
Moisture incentive @ 10% $80
Maturity incentive @ 75% B grade $50
Container rental $21
Transportation (minimum) $15
RAC Assessment $14
USDA Inspection $13
An agreement between the RBA and sixty percent (60%) of its signatory packers can trigger a final announced price agreement at any time prior to July 31, 2015.
Because the final price in this agreement would not be determined until July 31, 2015, growers will be paid in the following manner. Packer shall make an “initial payment” of $1,400 per ton for all deliveries within fifteen (15) days of a grower’s final delivery of meeting raisins. A “second payment” of $350 per ton for all deliveries shall be paid on or before February 28, 2015 which will pay growers the minimum price on the 2014 sliding scale. A “final payment” shall consist of the announced field price for all deliveries, less the initial and second payments. The final payment shall be paid on or before August 31, 2015 unless final deliveries exceed 315,000 tons which would make this payment unnecessary.
The raisin harvest is fairly well complete. As indicated, raisin-grape yield has been significantly reduced by a dry and extremely cold winter. Growers were forced to irrigate their fields by pumping from the underground and many wells went dry during the summer. This unexpected capital expense will factor into the decision-making process of whether growers remain in the raisin-grape industry or continue to remove acres in favor of alternatives such as nut and citrus crops. The harvest season was significantly earlier than normal which allowed the limited labor to be utilized in an efficient manner. The very limited production of 2014 California raisins will continue to be the highest quality in the world.
Packers will have until Friday, October 31, 2014 to accept this offer.
RADIO AND NEWSPAPER ADS
The RBA Board of Directors has been making every effort to educate independent raisin producers of their impact on price negotiations. Radio advertisements were on the air for the past month and two Fresno Bee advertisements were placed to urge independents to hold their fruit or place it Memorandum Storage until a field price is reached by the RBA with the packers on the 2014 Natural Seedless raisin crop. RBA members are a critical component in reaching the independent raisin grower as well. Talk to you neighbors if they are not RBA members and encourage them to join the Association to assist in establishing the best price annually. You may prefer to simply call the RBA office at (559) 221-1925 and give us a referral to contact about membership. Just give us a name and we will make sure they are contacted about joining. Larger membership is the best way to expedite the pricing process.
RENEWABLE ENERGY EXPO
The Raisin Bargaining Association is a co-sponsor for the 2014 Agricultural Renewable Energy Conference & Expo to be held on Wednesday, November 12, 2014 at the Fresno Hotel & Conference Center located at 1055 Van Ness Avenue, Fresno, CA 93721. The one-day event will begin at 8:00AM and continue until 4:00PM and provide a wide array of renewable energy opportunities for agriculturalists. Registration forms are included in this mailer and the event is
being hosted by the Agricultural Energy Consumers Association and Western Agricultural Processors Association. This sounds like a tremendous opportunity to learn the latest renewable energy technology available for your farming operations.
KERMAN LIONS CLUB AG EXPO
Once again the Raisin Bargaining Association is a major sponsor of the Kerman Lions Club Ag Expo to be held on Thursday, October 30, 2014 from 7:00AM to 5:30PM at the Kerman Community Center on 15101 W. Kearney Blvd., Kerman, CA 93620. There will be plenty of industry exhibits and a loaded agenda of grape and nut industry topics provided throughout the day. Growers and PCA’s will get valuable continuing education credits to keep current with their licensing requirements. Lunch and beverages will be provided free to all attendees.
SUCCESSION PLANNING WORKSHOPS
The Fresno County Farm Bureau in conjunction with Nationwide Insurance is offering “Land as your Legacy” succession planning workshops on Tuesday, October 28, 2014 at the Fresno County Farm Bureau Office at 1274 W. Hedges Avenue in Fresno. Two workshops will be given. The first workshop will take place at noon; lunch will be provided. The second seminar will begin at 6:00PM; dinner will be provided. Both sessions will cover the same content.
Transition plans ensure your wishes are honored and minimizes legal difficulties and confusion for your family as your operation shifts to the next generation. The workshop will provide participants with information about the benefits of having a transition plan for a farm and the steps needed to put the plan in place. There is no obligation for this important information. Contact the Fresno County Farm Bureau at (559) 237-0263 or email@example.com by October 24, 2014 to reserve a seat.
2014 WATER BOND
As we reported in a previous newsletter, the State Assembly and Senate voted overwhelmingly to place an amended version of the Water Bond proposition on the November 4, 2014 ballot. The 2014 Water Bond, known as Proposition 1, was a bi-partisan effort to provide voters with a mechanism to deal with funding future water projects. Proposition 1 provides a continuous appropriation of $2.7 billion to provide additional statewide water storage for projects such as Temperance Flats reservoir. Additional statewide water storage is critical to any program for water sustainability in the future. We encourage passage of Proposition 1, the Water Bond Proposition. Please make every effort to vote on Election Day, November 4, 2014.
Harvest 2014 Update Newsletter
~ ~ ~ ~ ~ ~ ~ ~ ~ ~
The California raisin harvest is coming to an end and it appears the 2014 crop will be significantly smaller than last year. The reduction in this year’s raisin-grape yield is being reported as anywhere from 10% to over 30% below last season. Allied Grape Growers is reporting their Thompson Seedless grape yields averaging 7.5 tons per acre compared to more than 10 tons per acre last season.
We cannot ignore the lack of interest by the wineries to purchase this year’s Thompson Seedless grapes for the crush. Unfortunately, this appears to be a phenomena suffered by several varietal grape types in the Central Valley and the impact on the raisin industry, in particular, will depend upon how many acres of raisin-grapes typically picked green will end up being dried. Regardless, this amount will be limited by the very low yield and significant acreage removals over the past several years.
We are also aware that Turkey, a major exporter of dried-grapes, is predicting a large crop that is similar in size to 2012, which exceeded 340,000 tons (California delivered 311,090 tons of Natural Seedless raisins during that same season). This has created a weak market condition in Europe that will have to be faced by our packers. However, it should be noted that Turkish production is predominantly a Sultana which is dipped in a potassium carbonate solution to enhance the sun-drying process and results in a lighter colored dried-grape.
While the growing methods of the Sultana are steeped in generational tradition, they do not compare to the methods employed by California raisin growers, who operate at a far higher standard, and adhere to the toughest regulatory requirements found anywhere in the world, including strict pesticide application guidelines. For reasons of quality, food safety, and even size (Sultanas being significantly smaller than the average California raisin) Turkish Sultanas are not easily interchangeable unless there is a substantial pricing difference between the two products.
The California raisin industry has marketed 100% of the crop for the past 4 years. This year will mark the fifth consecutive season without establishing a reserve. During the past four years, our industry averaged 344,224 tons in deliveries and 337,532 tons in sales at an average field price of $1,680 per ton. This means the California raisin industry value averaged more than $575,000,000 annually during the past four years.
We are confident the 2014 crop of Natural Seedless raisins will be much more similar in size to the 2012 crop of 311,090 tons. The 2012 RBA field price was established at $1,900 per ton. The field price negotiation will determine if present conditions warrant a similar value.
INDEPENDENT GROWER MESSAGE
You may have heard the Raisin Bargaining Association radio advertisement running on KMJ580. The message is for independent raisin growers to consider waiting to deliver their 2014 crop of raisins until the RBA has reached agreement on this year’s field price. When RBA growers deliver their crop prior to the price being established, it is placed in Memorandum Storage and not available for the packers to use until the field price is established. The Association will best be able to reach a fair price in the shortest period of time if the independent growers work with the RBA and either hold their fruit or deliver under the terms of Memorandum Storage as well. Naturally, it would be even better if the independent growers became members of the RBA to better support sustainable pricing of California raisins.
ADVANCE ON DELIVERY PROGRAM
As previously mentioned, RBA member raisin deliveries made prior to the establishment of a 2014 field price are placed in Memorandum Storage and not available to packers until a price is reached. Last year the field price was signed on November 22, 2013. We appreciate the importance of cash flow to our membership. The Association has been notified of the following program for RBA growers:
Lion Raisins has announced that it will make a substantial advance payment to contracted RBA growers on 100% of their 2014 deliveries until such time as the RBA price is established in an effort to help growers cover a portion of their immediate costs. The payment will be made within ten days of complete delivery and RBA grower fruit will remain in Memorandum Storage until a field price is established.
REMEMBER TO INSURE YOUR VALUABLE CROP
We want to also remind growers to make sure they have proper insurance coverage. Bins will be stacked and covered, parked in yards, or stored in sheds. It is easy to overlook the fact that your valuable product is not covered for Theft, Fire, and Vandalism unless scheduled and added to an existing farm policy.
Call your insurance agent to add this coverage. Premiums can be pro-rated for the amount of time necessary. When the raisins are delivered to your packer, call your agent to remove the coverage. It is also a good idea to check with your trucker to make sure they carry Cargo Insurance before leaving with your raisins; and for grower-hauled raisins, Transit Coverage should be obtained. These relatively inexpensive items can prevent a costly problem later.
While it is certainly not the intent of the RBA to unnecessarily prolong 2014 price negotiations, we are convinced that this year’s crop has more value than last year’s price. Our efforts will target the best price in the shortest period of time. Hopefully this will allow all growers the ability to continue farming raisin-grapes into the future.
If you missed the Summer 2014 Newsletter, please click here to view that newsletter.