Calif. tree fruit industry buoyed by good year
by Tim Linden | August 13, 2009
Helped by both prudent growers and Mother Nature, the California summer fruit industry is experiencing a profitable summer for the first time in several years.
In mid-August, the Federal State Market News Service was reporting an $18- $20 market on plums and $16-$17 f.o.b. on nectarines. Peaches were lagging behind in the $10-$11 range, which is still much better than the single digits that characterized the market for peaches, as well as the other two categories, for most of the last several summers.
With about 75 percent of the combined peach, nectarine and plum crops harvested and sold, shippers were saying that they have made money so far, and the final two months of the season are also expected to bring black ink. Dave Parker, director of marketing for SGS LLC in Traver, CA, agreed that for most growers and shippers, this is a season to get healthy financially. He said that demand has actually outstripped supply for both nectarines and plums for much of the year, keeping prices far above the average for the past five years.
The situation is a bit different for California peaches, which have to compete against all the local deals around the country, but Mr. Parker said that movement has been pretty good, and "we expect demand to increase in the next couple of weeks. We are just starting to see some of the other deals around the country start to lose volume."
He added that while the total California summer fruit industry had shipped about 75 percent of its volume by August, "we [at SGS] still have 50 percent of our volume left."
A good portion of the firm's acreage is in a high-altitude region in the southern part of the San Joaquin Valley, which has production well into October. Mr. Parker expects good markets for the rest of the year, and he said that there should be adequate supplies to justify promotions. "We will have promotable supplies for our customers," he said.
Wayne Brandt, chairman of the board of Brandt-DF LLC in Reedley, CA, said that the decrease in supplies has helped create a good market. He added that certainly for most growers, "at the end of the year, it will be better than last year. But because of packages-per-acre decreases, it won't be quite as good as they hope."
Last year, California produced more than 58 million cartons of peaches, plums and nectarines, which wasn't a record but was close to it. It proved to be an amount very difficult to move. This year's preseason total volume had been estimated at about 48.5 million packages, or about 10 million cartons fewer, as quite a few acres were pulled out of production because of the red ink experienced the last few years.
And Mr. Brandt said that heavy culling has taken its toll on that number. He predicted a final volume of 43 million to 45 million packages.
Mr. Parker said that by this time last year, most cold-storage facilities were overflowing with product and sales were lagging far behind supplies. That is not going to be the case this year, he said.
In fact, Mr. Brandt said that supplies have had trouble keeping up with demand. "We are hoping that during the next several weeks, nectarine supplies catch up with demand," he said.
Mr. Parker said that this year's experience "proves that supply and demand really works." With lower supplies this year, the industry has seen increased demand, as would be expected if that well-worn economic theory is accurate. This bodes well for the California tree fruit industry because the majority of this year's decreased volume is believed to be due to a decrease in acreage, which would seem to point to healthy prices for the near future.
Taking into account this year's short supplies and increased demand, Mr. Brandt said that the industry would not have had difficulty moving a crop in the range of 50 million cartons.
Mr. Parker said that retailers responded very well this year and did offer promotions throughout the summer.