(Dec. 27) Faced with an impasse at the negotiating table, California’s Prune Bargaining Association, Yuba City, has asked the California Department of Food and Agriculture to intervene in price talks with processors.
The goal, according to association general manager Greg Thompson, is to establish some economic stability for the entire industry.
“Each step in the food chain needs to be profitable: the grower, the processor, the distributor and the retailer,” he said.
Recent years have been a wild rollercoaster ride for California’s prune growers and processors. The low prices of 2003 — the result of a bumper crop — were followed by two dismal production years, Thompson said. So dismal was production in those years that processors were forced to import fruit from South America.
The fluctuating production has been a roadblock to negotiations between the association and processors. A tentative price structure for the 2007 crop has been reached with eleven processors. But only four of the processors have signed contracts, Thompson said, even as growers are beginning to incur costs as they prepare for the 2008 growing season.
Under California law, the department of food and agriculture may appoint a third party mediator if it concludes conciliation will provide a benefit for the parties to reach an agreement. The agency had until Dec. 28 to reach a decision.
Compounding the industry problems caused by the unpredictable volume of California prunes, Thompson said, was the free trade agreement reached between Chile and the European Union.
“We’ve gone from an 80% market share in Germany down to about 40%, although we’ve regained a little bit of that in the past year,” he said.
According to the department of food and agriculture, California is the nation’s largest producer of prunes. The crop ranked 18th in California commodity exports in 2005, the last year for which statistics are available.
Another segment of the prune industry has also been affected by South American imports.
“There is prune concentrate that’s been coming in that’s been causing processors competitive pressure,” Thompson said.
Following the 2004 season, the association and most processors agreed on a two-year price structure. It was a sliding scale based on variety, size and quality.
A bumper crop in 2006 served to make processors more cautious. The average cash farm price reported by processors in 2006 was $1,390 per ton.
“It led to a serious cash flow crunch for independent processors,” Thompson said. “The crop cost them about $65 million in 2005, but the purchase price climbed to more than $130 million in 2006.”