California strawberry acreage down but not enough
By all accounts, 2018 was a difficult year for California strawberry growers as excellent production led to periods of below-cost f.o.b. pricing. Collectively, it appeared the industry was expecting a major acreage correction this year, but it does not appear to have materialized.
Instead, California’s acreage report estimates 25,704 acres were planted in the fall for 2019 production. That represents a 1,722-acre drop, which would be about a 6 percent decrease. In addition, the acreage report projects that summer 2019 plantings for fall production will also be down about 6 percent to 6,010 acres. While on its face that would appear to be a significant decline, the fact is California’s acreage dropped by 7 percent from 2017 to 2018 and still production increased and revenues went in the other direction. In 2018, California sent more than 222 million trays of fresh berries to the market, which was a 10 percent increase over 2017 despite the 7 percent drop in total acreage.
“Acreage has decreased but the newer varieties have greater yields so we do not see the same drop in volume,” said Cindy Jewell, vice president of marketing for California Giant Berry Farms in Watsonville, CA. “Of course, weather is always a huge factor.”
She indicated the weather will also play a huge role in determining the profitability of this year’s season as rainy weather typically leads to fluctuating supplies and stronger markets.
Echoing similar sentiments about this year’s deal were two other strawberry shippers. Paul Kawamura of GEM-Pack Berries in Irvine, CA, is also not expecting this year’s drop in acreage to result in fewer berries to sell. He added that in 2018 there were weeks where production was in the neighborhood of 9 million trays, which was just too many berries for the market to absorb. “There still needs to be an acreage reduction,” he opined.
Bob Rigor, director of sales of Colleen Strawberries Inc. in Watsonville, CA, also said there needs to be further reduction in the California acreage for the strawberry deal to be profitable. He noted that weather problems could reduce production and create a strong market for this season, but indicated that the acreage numbers are not sustainable without some issue that reduces overall volume.
Looking at the current situation toward the latter half of January, the marketers said demand for strawberries was strong and with Valentine’s Day on the near horizon, they were hopeful that February would be a good month. Kawamura said warmer, dryer weather was predicted for late January, which should bring the crop on and create promotable supplies for the Valentine’s Day pull, which is typically substantial.
Rigor was hopeful that demand exceeds supply situation that existed in late January would result in a strong February and create momentum for the rest of the season.
Jewel said weather is always key, indicating that typical winter storms could moderate supply and produce some strong markets throughout the next couple of months. She added that the late date for Easter this year (April 21) would work in the industry’s favor. California’s strawberry production tends to peak in the April to May time frame. Easter, followed by Mother’s Day three weeks later, which are both strong sales weekends for strawberries, are expected to coincide with the surge in volume allowing for great promotions and strong movement.
Kawamura said that while there might be an oversupply of strawberries, some ongoing industry trends are helping to move that volume. “We’ve definitely seen a trend toward the larger packs, including both two and four pounders,” he said. “That definitely helps move more volume.”
Jewell said the berry category in general remains strong with sales of the mixed berries — blueberries, blackberries and raspberries — all on the rise. She said strawberries remain the favorite with more than 50 percent of total berry volume but that number is decreasing. As a marketer of all four berry varieties, she said Cal Giant is happy that the category continues to grow, and of course it is consumer choice as to which berry they prefer.