Winter 2013 Newsletter

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FOR IMMEDIATE RELEASE

The Raisin Bargaining Association (RBA) announces that it has reached agreement with its signatory packers on the 2013-14 Natural Seedless raisin harvest announced field price.  The price will be one thousand six hundred fifty dollars ($1,650.00) per ton or eighty-two and one half cents ($0.825) per pound.  The price is calculated using the following formula: 

            Base price                                            $1,457.00                                $0.7285

            Moisture @ 10%                                         80.00                                     .04

            Maturity @ 75%                                          50.00                                     .025

            Container rental                                          21.00                                    .0105

            Transportation (minimum)                         15.00                                    .0075

            RAC assessment                                        14.00                                    .007

            USDA inspection                                        13.00                                    .0065

            2013 Announced RBA field price      $1,650.00 per ton                 $0.825 per lb. 

Raisin growers have sent a strong message to the RBA that they prefer selling raisins on a 100% basis now and into the future.  With that in mind, the Board of Directors of the Association worked diligently toward a compromise with their signatory packers to establish a fair price that reflects the additional California raisin production for this season.  The Raisin Administrative Committee (RAC) recently estimated the 2013 Natural Seedless raisin crop at 348,437 tons compared to deliveries of 311,090 tons last year.  The $1,650 per ton price for the 2013 Natural Seedless raisin crop is a 13% reduction to last year but takes into account the additional crop that is estimated for production as well as the challenging market conditions that the industry will be facing.

The agreement calls for growers to be paid in three installments this year as opposed to four installments last season.  65% of the payment will be due fifteen (15) days after completion of delivery, 20% will be due to growers on or before February 28, 2014, and the final 15% will be payable on or before April 30, 2014.

In the past, grower reserve raisins generated funds to assist the industry in marketing additional production into world markets.  The effort to sell this year’s additional production without reserve programs and the temporary elimination of state marketing and promotion funding are two reasons why the RAC assessment of fourteen dollars ($14) per ton has been included in the pricing formula.  This will provide an opportunity for the industry to work together through the RAC in support of efforts to market 100% of each year’s crop without reserves.

As reported from the International Dried Grape Producing Countries Conference in October, there continue to be strong indicators that Turkey has a significantly smaller dried grape crop to market this coming season.  California and Turkey are the two largest producers of dried grapes in the world.  It was also reported that South Africa, Chile, and Argentina have suffered tremendous frost damage in their vineyards which will severely limit their harvest which begins in January. The ability to take full advantage of what appears to be a tremendous sales opportunity requires an announced field price.

The Raisin Bargaining Association Board of Directors understood the importance of establishing this important benchmark in a timely manner to sell the maximum amount of raisins this year.  However, they are also well aware of the impact it has on the grower community.  Labor, water, and energy costs have significantly increased for growers over the past twelve months further squeezing their bottom line margins.  As agricultural resources in California are depleted vineyard owners will continue to seek the best utilization of their land.  We are witnessing a large amount of raisin grape vineyards being removed from production this year in favor of more mechanized and profitable crops such as almonds, walnuts, and citrus.  Time will tell what impact this acreage reduction will have on the future of the California raisin industry but taking the necessary steps to market this year’s crop was extremely important for the Raisin Bargaining Association to accomplish.  We are now counting on the California raisin packers to sell this crop to provide a better future for the remaining growers in our industry.

 

2013 PRICING

Last October the RBA announced the 2012 Natural Seedless raisin price of $1,900 per ton based on a RAC crop estimate of less than 290,000 tons.  Grape buyers for the winery and concentrate markets were actively sourcing raisin grapes with pricing that reached a record $325 per green ton.  Our biggest dried grape competitor in the world, Turkey, officially estimated their crop at about an average size of 282,000 metric tons.

It eventually became apparent that the export marketplace was not adjusting to the increased cost of California raisins due to the aggressive pricing of Turkish dried grape products.  Their final deliveries totaled more than 320,000 metric tons which explains the difficult market conditions experienced by California packers to move our less than normal size crop.  However, final deliveries for California Natural Seedless raisins totaled 311,090 tons adding even more pressure to a challenging marketplace. 

With the outlook for a larger raisin grape crop in 2013 and issues with market conditions beyond our control the RBA began price negotiations cautiously.  With the objective grape survey predicting yield increases of 25% and early raisin grape yields definitely larger than last year, a green price for raisin grapes was not established until September at $235 per ton.  Whether there was not adequate storage to buy and crush raisin grapes or simply the 28% reduction in price influenced growers to make raisins, it became clear that plenty of California raisins would be produced this harvest season.

Based on many factors, including the ongoing litigation with Raisin Valley Farms, the RAC voted to make all 2013 harvested raisins 100% free tonnage and forego establishment of any reserve raisins during the year.  Calculated trade demand and potential crop size projected free tonnage percentages of less than 75%.  The RBA supported this industry position with the understanding that the 2013 field price negotiation would likely be an extreme challenge. 

In September, the Association offered a sliding scale price to packers that would be determined by industry deliveries as of July 31, 2014.  Packers unanimously rejected the offer based on the importance of a fixed price for the industry to sell against in the marketplace.  Processors submitted counter proposals to the RBA that were much lower but reflected actual market conditions in their opinion. 

There were rumblings in the international marketplace that Turkey was going to follow its excessively large production in 2012 with a significantly smaller production in 2013.  This was impacting the Sultana dried grape market but the outlook for a large California crop was continuing to pressure the dark raisin market.  The International Dried Grape Producing Countries Conference was attended by representatives from the RAC in October.  The Turkish delegation substantiated the stories of a smaller 2013 production which they officially estimated at 242,000 metric tons.  South Africa, Chile, and Argentina reported significant frost damage in September to their crops that would be harvested in January 2014 as well.  This was information leading to the RBA price offer on October 18th of $1,800 per ton.  Unfortunately, there continued to be market conditions warranting raw product pricing in the $1,500 range. 

With the successful harvest of 2013 California raisins and growers delivering their crops, it became clearer that there would be a much larger crop than what was delivered in 2012.  The RAC established the 2013 crop estimate at 348,437 tons.  Not only was it necessary to increase our sales by 10% for the year but also attempt to firm up market pricing.  That would not happen without a RBA announced field price.  While there are no guarantees that we will sell more raisins or stabilize the marketplace it was apparent that the industry needed to get on with the business of selling this year’s crop which has lead to the negotiated compromise price of $1,650 per ton.

 

APPEALS COURT TO HEAR ORAL ARGUMENTS

The decision of the Supreme Court in the Raisin Valley Farms v. USDA case was the 9th Circuit Court of Appeals had the jurisdiction to rule on “reserve takings” provision of the Federal Raisin Marketing Order rather than having to proceed through the Federal Claims Court.  Oral arguments for the Appeals Court will take place on February 14, 2014 in San Francisco.  Each side will have 20 minutes to make their arguments and hopefully there will be a final determination to this ongoing industry saga.

 

2014 SAN JOAQUIN VALLEY GRAPE SYMPOSIUM

The San Joaquin Valley Grape Symposium will be held on January 8, 2014 at the CPDES Hall in Easton.  This year’s edition will highlight the raisin industry.  Cost for the event will be $15 which will include lunch.  There will be PCA credits available.  For more information and to register on-line, please go to:  http://ucanr.edu/sjvgrapesymposium