Summer 2014 Newsletter
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2014 GRAPE OUTLOOK
The 2014 California Raisin harvest is quickly approaching. With fewer bunches and the recently documented frost damage and “delayed growth” from the past cold and dry winter it appears that the green yield per acre will definitely be less than it was last year. Based on those two factors it is likely 10-20% fewer raisin grapes per acre will be harvested this season.
Obviously we have witnessed a significant amount of raisin grape acres being removed after our last harvest. The National Agricultural Statistics Service has estimated raisin grape acreage at 200,000 acres for the 2013 harvest. With estimates of 5,000 to 10,000 acres of raisin grape removals since last harvest there is only about 190,000 acres of raisin grapes to be picked this year.
We certainly don’t need to remind growers how much expenses have increased just in the past year. Not only the typical chemical, fertilizer, fuel and energy costs have gone up but the minimum wage was increased as of July also. This year’s wild card has been the water situation. Whether you were fortunate enough to get a couple of irrigations with surface water you still needed to pump some groundwater and there were more growers that had to pump groundwater for all their irrigation needs. This has meant even more energy costs than normal and heaven forbid your pump or well had any problems. The cost of doing business this year was already significantly higher and any growers dealing with water issues have been further challenged.
The California Raisin packers should be congratulated for the successful marketing season during the first eleven months of the fiscal year. Raisin Administrative Committee (RAC) reporting for the period show Natural Seedless raisin shipments higher by 18% from the prior year. Domestic movement has seen an increase of 9% to 183,808 packed tons and export shipments are higher by a whopping 32% to 131,440 packed tons. Total shipments of 315,247 packed tons for the first eleven months already exceed the ten year average of what we normally sell in the entire year by nearly 10,000 packed tons.
If we lived in a vacuum and only had these factors to determine the 2014 Natural Seedless raisin field price, a case could probably be made for the price to reach record levels. However, the Board of Directors of the RBA realize that we operate in a global economy and there are other factors to be considered before a price can be offered. That is why the Association reluctantly dropped the Natural Seedless raisin field price last year. It was the responsible thing to do for the good of the industry at the time and time has proven us right.
Early reports from Southern Hemisphere dried grape producers indicate normal or smaller crops are being harvested this year. However until the world supply situation becomes clearer and further information becomes available, the smaller crop and reduced acreage of California raisin grapes should make them worth up to 15% more valuable than last year’s pricing.
RBA SUPPORTS RAC ASSESSMENT INCREASE
The Raisin Bargaining Association representatives along with a majority of the independent packers and producers voted to increase the handler assessment of the RAC by $6 per ton to beef up current export promotion programs and execute strategies for selling California Raisins into prime developing countries such as China. There is potential for a Chinese marketplace that would rival the market we have developed in Japan where we sell 25,000 to 35,000 tons annually with a market share of 90%. The handler assessment would be increased to a total of $20 per ton and raise roughly $7M in revenue annually for the RAC which administers the Federal Marketing Order for California Raisins.
RBA INDIVIDUAL AGREEMENTS
Packers currently signatory to the Raisin Bargaining Association will soon be out signing members to a 2014 Individual Agreement for delivery. We wish to remind all RBA members that the Individual Agreement they sign is only validated when the RBA and Signatory Packer execute a Memorandum of Understanding (MOU) for the 2014 crop. Until that time occurs, the packer must place any RBA member delivered fruit in Memorandum Storage and is subject to removal of that fruit if an agreement cannot be reached. We recommend, if at all possible, members hold their deliveries until an agreement is met with their packer to avoid this possibility.
It appears that the market for California Organic Raisins has returned. After a few seasons of apparently excess supply, it seems the demand curve has increased significantly. Growers are reporting offers of a $500 per ton incentive (over the RBA field price) for organic raisins delivered on a two-year agreement.
REVOLVING FUND PAYMENTS
On July 15, 2014, the Raisin Bargaining Association mailed 2013 harvest revolving fund checks to the membership. This 1% payment was deducted from your 2013 packer proceeds. If you delivered Natural Seedless or Zante Currant raisins last year you should have received your check in the mail. If you have not received or have any questions regarding your payment, please call the RBA office at (559) 221-1925.
NINTH CIRCUIT COURT DECIDES IN FAVOR OF USDA/RAC
On May 9, 2014 the Ninth Circuit Court of Appeals issued a decision on the Raisin Valley Farms/Marvin Horne (RVF/MH) case that was remanded to them by the Supreme Court. Once again the Court ruled in favor of the industry to hold RVF/MH responsible for the reserve raisins it did not put aside in crop years 2002 and 2003. The Ninth Court ruled that the “Marketing Order’s reserve requirements- and the provisions permitting the Secretary to penalize the Hornes for failing to comply with those requirements- do not constitute a taking under the Fifth Amendment.” Raisin Valley Farms/Marvin Horne may appeal this decision back to the Ninth Circuit or again to the Supreme Court. We will keep you posted on future developments.