MAKING A DIFFERENCE

The Prune Industry

California produces approximately 98% of the nation's supply of prunes and close to 70% of the world's supply. The majority of the prunes raised are of the Prune d'Agen variety, or more commonly referred to as Standard French Prunes. Prunes are a hardy tree and with proper care, can produce a good crop for as long as 25 years.

The farm gate value of the California prune crop is roughly $160 million dollars each year, and 40% of this revenue comes from export sales. This is not surprising since California produces nearly 70% of the world's supply of prunes.

There are approximately 1200 prune growers in California, growing between 180,000 and 200,000 tons of dried prunes per year with over half of these growers belonging to Sunsweet Growers Inc., a grower processing and marketing cooperative. There are approximately 20 independent processors, but a handful of them market the majority of the independent tonnage. These large proprietary independent firms each handle 10,000 to 20,000 tons of dry prunes or 5% to 10% of the average state crop per year.

The mechanization of the prune industry has brought about major changes in the way prunes move from growers' orchard to packers' warehouses. In the early days, prunes were hand picked into grower owned field lugs and dried at grower dry yards. After harvest, growers stacked the dried prunes in their own barns and buyers would visit each grower to make an offer on the dried fruit. With the advent of picking frames and large dehydrators, prunes are now picked directly into the buyer's harvest bins and transported to packer dehydrators. Over the years, fewer and fewer growers had the option of holding fruit on their premises to bargain with packer buyers. As a result, many growers found themselves in the unfortunate position of not being able to sell their fruit for a price that would cover their costs. Increasing production and declining sales resulted in unstable prices for the grower.

Role of the Prune Bargaining Association

During the 1960s, after several years of declining prices, California prune growers recognized the serious need for a vehicle to allow them a voice in determining fair prices for their prunes. This was not an easy beginning as reluctant growers feared offending the prune packers, or the 'hand that fed them' As growers slowly became more organized, they were convinced that the industry did in fact need a grower association strong enough to obtain a minimum and uniform field price. In 1968 they formed the Prune Bargaining Association with the purpose of improving the economic health of the California prune industry, encouraging production of a quality product, and rendering services to members.

Over the years, the PBA has come to be known as the price setter for the industry. Although the original intent was to obtain field prices for grower-members only, the PBA price soon became the industry standard for all independent growers and is the basis of inter-handler transfers. The PBA has a strong voice in the prune industry and members take an active interest in their industry. Most of the independent grower representatives who hold seats on both the Prune Marketing Committee (PMC) and the California Dried Plum Board (CDPB) are also members of PBA.

The Prune Bargaining Association negotiates directly with each packer who buys independent tonnage (tonnage other than that in the co-op, Sunsweet Growers Inc.). Negotiations generally begin in earnest in July following the release of the crop estimate and marketing policy report from the Prune Marketing Committee. Anti-trust provisions prevent packers from discussing grower pricing, but as a cooperative bargaining association, PBA is exempted from these provision under the authority of the Capper-Volstad Act.

Prune packers, in addition to growers, have come to realize the importance of this function in promoting the orderly marketing of California's prune crop and since 1987, packers have agreed to help support the PBA by paying a handler fee to the Association based on all independent tonnage that they process.

In 1987 an important change took place - during that record crop year, the PBA and major packers reached a price agreement before harvest. Previous to this, agreement had not been reached until well after harvest and a major portion of the crop had been received by packers. This early price establishment and a modest field price increase put a strong floor under the wholesale market, and despite a record crop, the market remained strong and sales increased. Early price establishment prevented a price collapse that could have easily resulted from the 230,000 ton crop.

Since that time, packers and growers alike have recognized the benefits of achieving an early price agreement. In 1989, growers witnessed another record crop of over 225,000 tons and a record supply of 280,000 tons, nearly double average trade demand. Yet price establishment before harvest firmed markets and provided growers with price increases. While other industries have faltered under record crops, the prune industry turned in its strongest year ever and shipped a record equivalent of 180,000 tons of natural condition prunes.

PBA growers are justifiably proud of the leadership role that their association has taken. The PBA has built a strong working relationship with independent prune packers and recognizes the benefits of the partnership between the grower and packer community. The PBA has been instrumental in pricing prunes to reflect market demand to ensure that steadily advancing prices will continue to build markets and buyer confidence.