Growers review season and success of co-op at California Citrus Showcase
Growers review season and success of co-op at California Citrus Showcase
VISALIA, CA " It has been a little more than two years since California citrus growers, fed up with losing money year after year, banded together in a voluntary cooperative called the California Citrus Growers Association, with the objective of returning their industry to profitability.
Last year, the industry enjoyed its most profitable Navel season in recent memory, and so far, in spite of a record on-tree crop " estimated at 92 million 37.5 pound cartons " the 2004-05 Navel season is on track to be another profitable year, according to four directors of CCGA who participated in a panel discussion during the 2005 California Citrus Showcase held here March 10.
While various factors have contributed to the improvement in the bottom line for growers over the past two seasons, the panel participants were in agreement that the activities of the association and the industry unity represented by the organization have been a major factors in the improved profitability. The cooperative represents 85-90 percent of the industry volume.
Participating in the panel discussion were Jeff Gargiulo, CEO of Sunkist Growers Inc.; Berne Evans, CEO of Sun Pacific and partner in a large farming operation; Mike George, a grower and general manager of Suntreat Growers; and David Roberts, a grower. The panel was moderated by Joel Nelsen, president of California Citrus Mutual, which hosted the event. Roughly 500 people, primarily citrus growers, were in attendance.
According to Mr. George, per-acre returns this year are running about $300 ahead of the five-year average for the industry. "We?ve got a bigger [on-tree] crop? than last year, he said, but "f.o.b.s are higher."
A moderate 74 million-carton crop size last year undoubtedly helped give market prices a boost. Yet this year, the larger crop notwithstanding, prices have been even better.
That is largely a consequence of industry discipline in not picking fruit faster than the market can take it, the panelists said. Citrus, unlike many fruits, can be stored on the tree for extended periods of time, allowing for better volume management.
But some growers are pressing to have their packers pick their fruit quickly while there is profit to be had.
?There have certainly been challenges," said Mr. Gargiulo. "But the reality is the demand for citrus is relatively constant." If the fruit is harvested too quickly, the market will be flooded and prices will drop, but that does not mean a greater volume of oranges will be sold, he said. "Just because you grow them? does not mean "you can pick them all and sell them all in any given week. It is a different dynamic? than the industry experienced up until 10 or 15 years ago, he said.
By the season?s end, it may be that not all of the fruit has been harvested or that not everything harvested will be packed.
The association can restrict its members from shipping certain sizes or grades as needed for volume control, and it has established a trigger price that will cause elimination of certain grades and sizes to kick in automatically. So far this year no restrictions have been imposed.
With the record on-tree crop this year, "there is going to be elimination? at some point during the season, Mr. George said. "But I think the bottom line for the grower is how much do we make per acre, not just how many are we going to pack."
Mr. Evans of Sun Pacific concurred. "We have way too big a crop. Some of the fruit has to go."
Determining the best ways and the best times for the association to utilize its available remedies when markets fall is a learning process, Mr. Gargiulo said. "This is new." But members agree that they "want to get the best fruit out there? on the market, he said.
Historically, the California citrus industry "does not deal well with a large crop," said Mr. Roberts. "The only way we can be successful as growers is to hang together."
Last year, the industry enjoyed its most profitable Navel season in recent memory, and so far, in spite of a record on-tree crop " estimated at 92 million 37.5 pound cartons " the 2004-05 Navel season is on track to be another profitable year, according to four directors of CCGA who participated in a panel discussion during the 2005 California Citrus Showcase held here March 10.
While various factors have contributed to the improvement in the bottom line for growers over the past two seasons, the panel participants were in agreement that the activities of the association and the industry unity represented by the organization have been a major factors in the improved profitability. The cooperative represents 85-90 percent of the industry volume.
Participating in the panel discussion were Jeff Gargiulo, CEO of Sunkist Growers Inc.; Berne Evans, CEO of Sun Pacific and partner in a large farming operation; Mike George, a grower and general manager of Suntreat Growers; and David Roberts, a grower. The panel was moderated by Joel Nelsen, president of California Citrus Mutual, which hosted the event. Roughly 500 people, primarily citrus growers, were in attendance.
According to Mr. George, per-acre returns this year are running about $300 ahead of the five-year average for the industry. "We?ve got a bigger [on-tree] crop? than last year, he said, but "f.o.b.s are higher."
A moderate 74 million-carton crop size last year undoubtedly helped give market prices a boost. Yet this year, the larger crop notwithstanding, prices have been even better.
That is largely a consequence of industry discipline in not picking fruit faster than the market can take it, the panelists said. Citrus, unlike many fruits, can be stored on the tree for extended periods of time, allowing for better volume management.
But some growers are pressing to have their packers pick their fruit quickly while there is profit to be had.
?There have certainly been challenges," said Mr. Gargiulo. "But the reality is the demand for citrus is relatively constant." If the fruit is harvested too quickly, the market will be flooded and prices will drop, but that does not mean a greater volume of oranges will be sold, he said. "Just because you grow them? does not mean "you can pick them all and sell them all in any given week. It is a different dynamic? than the industry experienced up until 10 or 15 years ago, he said.
By the season?s end, it may be that not all of the fruit has been harvested or that not everything harvested will be packed.
The association can restrict its members from shipping certain sizes or grades as needed for volume control, and it has established a trigger price that will cause elimination of certain grades and sizes to kick in automatically. So far this year no restrictions have been imposed.
With the record on-tree crop this year, "there is going to be elimination? at some point during the season, Mr. George said. "But I think the bottom line for the grower is how much do we make per acre, not just how many are we going to pack."
Mr. Evans of Sun Pacific concurred. "We have way too big a crop. Some of the fruit has to go."
Determining the best ways and the best times for the association to utilize its available remedies when markets fall is a learning process, Mr. Gargiulo said. "This is new." But members agree that they "want to get the best fruit out there? on the market, he said.
Historically, the California citrus industry "does not deal well with a large crop," said Mr. Roberts. "The only way we can be successful as growers is to hang together."
