Association Announces New Field Price Schedule and Methods for the California Prune Crop
YUBA CITY, CA January 25, 2016–Facing a potential unprecedented downward swing in field prices, California’s prune farmers have taken steps to address market forces and move the industry towards sustainable profitability for U.S. growers, establishing a new price recommendation for its members and proposing new industry procedures to address competitive pressures.
According to the Prune Bargaining Association (PBA), the price recommendation provides a modest decrease on large fruit where supply is balanced or limited and sharply reduces prices on small prunes where supply and demand are out of balance. “The new price schedule reflects changes in the global market for prunes while recognizing the limited availability of the best quality and sized prunes for pitting,” says Greg Thompson, PBA General Manager.
California prunes are produced mainly by small to medium size family owned farms in the central valleys of California. These family farmers have long been leaders in world prune production, however, increasing labor, regulatory, and input costs, and the rapid rise in demand for tree nuts from Asian markets have seriously eroded the prune acreage base in California. “We believe that California Prune farmers need to push back against forces that threaten to further shrink their industry,” says Thompson.
Members of the Association met this past week to discuss the many challenges to maintaining profitability while meeting the highest quality, food safety, and environmental standards in the world. “California is the leader in the world for agricultural excellence and environmental sustainability,” explained PBA President Ranvir Singh. “Yet our processors face overseas tariffs that our competitors don’t face, and pressure from cheap imported product that doesn’t begin to compare to our quality, our standards, or our food safety.”
In addition to the new price schedule for the 2015 crop, the Association plans to put forward changes for the 2016 crop on how the industry measures size and quality and how the grower price is calculated from those criteria. “The old methods are outdated and overly complicated, frustrating growers and encouraging fragmentation, while putting California at a competitive disadvantage in the global market place,” explains Thompson. “We don’t want our consumers to end up with inferior imported product because we failed to take action to adapt our business practices to current conditions and bring vitality back into our industry.”
According to the Association, efforts of PBA and its members helped to establish a new price benchmark in 2014 for growers that stemmed the tide of prune orchard loss. “Unfortunately, big crops in South America and economic downturns in Russia, China and Brazil has hurt the overall export market for prunes and resulted in a much bigger gap in trade prices for the dried plum fruit grown in South American and California Prunes grown and package here,” says Thompson. “We plan to take steps to overcome the challenge.”
The Prune Bargaining Association was formed in 1968 as a grower-owned cooperative to improve the economy of the California prune industry, encourage the production of a quality product and provide a forum for growers to exchange ideas regarding the industry. The PBA negotiates with prune buyers to establish the industry’s raw product price for prunes.
Strongest El Nino Since the 1950’s threatens Global Prune Production
YUBA CITY, CA October 26, 2015–Effects of the 2015/16 El Nino are already being felt in both the northern and southern hemispheres with record breaking hurricane winds hitting Mexico, torrential rains causing severe flooding in Southern California, and ongoing rain and cloudy weather in Chile during the spring growing season. While the rain is a welcome relief to drought in both Chile and California, the ongoing rainy weather pattern threatens the developing prune crop in Chile. The forecast for a strong El Nino year casts doubt on the 2016 crop in California. California and Chile together account for 80 percent of the world's dried prune production.
Scientists are comparing the current El Nino with the record breaking 1997/1998 event that resulted in severe weather and flooding in many areas of the U.S. In that season, the California prune crop was initially estimated at 170,000 tons. However, excessive rain and gloomy skies that lasted into the summer months took their toll and final production amounted to only 102,000 tons. Prune growers in Chile are currently concerned about the same kind of thing happening to their crop according to recent visitors to the prune growing regions.
Warm and wet conditions increase the likelihood of disease problems in fruit production. The University of California provides integrated pest management guidelines for 8 different bacterial or fungal diseases of prune trees and 25 different insect and mite pests. "Results from El Nino are hard to predict," says Greg Thompson, General Manager of the Prune Bargaining Association. "Rain is needed, but too much rain and cloudy weather can result in heavy crop loss from both the lack of sunshine and increased disease and pest pressure."
Prune production tends to vary widely from year to year. South American producers experienced good conditions in 2014/15 with total production from Chile and Argentina amounting to 123,000 short tons compared to only 84,000 short tons in the previous year. "Unfortunately several key markets for South American producers are in an economic slump," explains Thompson. "The increased supply and lower demand has resulted in lower prices to South American growers. With lower prices, growers tend to cut back on cultural inputs—which could lead to disaster in a wet and warm growing season."
Heat and Drought in the Northern Hemisphere takes toll on World Prune Supply
YUBA CITY, CA September 1, 2015 – High summer time temperatures and lack of rain have been blamed for a reduction in prune crops in both California and France, which together account for nearly 60% of the world prune production. And despite slowing of sales in several key international markets, the world supply of dried prunes will remain at their lowest levels since 2005.
According to figures from the International Prune Association (IPA) this year's supply will barely surpass last year's short supply of only 301,000 metric tons worldwide. The IPA forecasts world supply at 306,000 mT for the 2015-16 market year, down from a peak level of nearly 400,000 mT just 5 years ago.
And the total supply in 2015 may be somewhat less than the IPA forecast. "Harvest is now near completion in both California and France and crops did not pick out as heavy as expected," explains Greg Thompson, General Manager of the Prune Bargaining Association (PBA). "High summer temperatures and drought caused a heavier than normal fruit loss prior to harvest. France now expects a crop of 30 to 32,000 mT compared to an earlier estimate of 36,000 mT, and California growers report lower yields due to some of heaviest fruit drop seen in recent years."
While lowering returns for growers, lower than expected yields may help offset lower sales due to sharply higher price levels and economic difficulties in some key international markets. A drop in supply in 2014 caused grower prices to climb by more than 30% from the 2013 crop according to the PBA. "Average prices paid to growers in California have gone from $1,300 per ton in 2012 to roughly $2,600 in 2014," explains Ranvir Singh, Chairman of the CDPB and President of the Prune Bargaining Association. "The increases were a necessary correction to prices depressed by a global glut of prunes that caused a 25% decline in prune acreage since 2010."
Industry members are hopeful that recently discovered health benefits of prunes will help consumers appreciate the value of dried prunes so demand increases and prune acreage stabilizes. "Since it takes 3 pounds of fresh prune plums to make one pound of dried fruit, prunes are more costly to grow than many other orchard crops," explains Thompson. "Competition for limited water and good orchard ground has seen many prune orchards removed to make way for other orchard crops."
The bargaining association maintains that the higher grower price levels seen last year are necessary to keep prune trees in the ground. "Lower costs and higher returns will make other orchard crops more attractive to growers if prune prices fall again," says Thompson. For consumers, however, prunes remain a great value as their concentrated nutrition has been shown to reverse bone loss and provide pre and pro-biotic benefits to digestion as well as improving absorption of nutrients by slowing the passage of food through the digestive tract. Science and economics suggests that eating more prunes will help keep the supply up and lead to improved health.
As a cooperative, PBA provided services to its members to jointly market members' prunes for
the past 3 years. The agreement provided that PBA act as the agent on behalf of the member
without taking title, and handled the logistics to find buyers, pack and ship prunes to buyers, and
provide the means to transfer title from the growers to the buyer. The PBA acted as the handler of
record, paying marketing order assessments and packing and shipping costs, collecting payments
from buyers, and distributing net proceeds to the growers.
This trial into direct marketing has been successful and has provided benefits to the PBA and its members in the form of better returns and increased knowledge of the market. Growers involved in the program wish to continue, however, the initial program was a temporary solution for our members who could not find a suitable buyer for their crops. With the supply balance having swung in the opposite direction, continuing the program through PBA may compromise its ability to negotiate with packers, as packers could see the PBA as a competitor if the we continue to market prunes directly.
For this reason, an organizing committee of PBA board members met on July 25, 2013 and formally incorporated a new organization. Articles, bylaws, membership, and marketing agreements were drafted and reviewed. The marketing agreement will provide for similar structure as before: the new cooperative will act as an agent only - title and risk remain with the grower until sold to buyer.
The California Prune Growers Marketing Association (CPGMA) establishes a permanent and ongoing direct market program for PBA members and their prune and nut crops. The new organization will be owned and operated by and for California Prune Growers and is a separate and stand alone legal entity from the PBA. The CPGMA will make direct sales from growers to buyers utilizing risk management strategies to improve returns and profitability. It will build on the success and support of the customer base established over past 3 years as well as help to expand markets and explore new opportunities for the benefit of growers. Growers must be a member of PBA to join.
The CPGMA will provide an alternative market channel for PBA members, providing market access, transparency, and trends in real time. As a separate entity it provides self-direction for growers in the marketing program, and the necessary structure to secure bank financing. For further information, or if you would like to become a member of the new organization, please contact Greg Thompson at 530-674-5636 office, or 530-713-9909 cell.