Tri-Valley Growers, one of the nation's largest canned fruit and tomato processors, filed for bankruptcy in July, and now a group of growers proposes to buy Tri-Valley's olive processing plant in Madera, Calif.
Adin Hester, president of the Olive Growers Council of California is helping to facilitate the purchase the plant with California Olive Growers (COG), organized as a California cooperative last spring. Membership requires a signed agreement and a minimum equity contribution of $2,000.
Getting growers on board has been a slow process, Hester admits. Approximately 20 large and small growers, a small fraction of the more than 1,000 olive growers in the state, have joined.
"Growers just don't have a lot of extra cash in their pocket. It's still a little bit short of what we need to execute one of the USDA loan guarantees." In order to qualify for a business industrial loan from USDA, growers must put up 20 percent of the purchase price.
Before Tri-Valley filed for bankruptcy it was asking $5.5 million dollars for the Madera plant, but Hester says he is not certain of the price after the filing.
Fred MacFarland, spokesman for Tri-Valley Growers, says because the company is still in bankruptcy proceedings, several things will have to be routed through the bankruptcy court. "I'm not certain that the Madera plant is one of them, but it does complicate all of the transactions that are involved in Tri-Valley."
MacFarland is encouraged that Tri-Valley will be able to emerge from Chapter 11. However, he cautions, "It is still premature to get an absolute sense of all the dynamics and the developments that will take place between now and then."
Environmental concerns Hester says a waste-water pond that leaked brine is another stumbling block to the sale. "What we're trying to do now is get our arms around the environmental concerns and figure out exactly what comes with the package. If we can somehow, in some way relieve the Tri-Valley organization of some of that liability, they may be more open to some very reasonable negotiations."
Jim Spagnole, acting communications director for Cal-EPA, says, "Regardless of whether the Oberti plant sells as a separate asset or it's part of a workout, the water quality issues emanating from the long history of the Oberti plant and the ground water problem will have to be addressed.
"We're willing to work with people either in a workout or on the sale of an asset, but we need to ensure that there's remediation of the contaminated water supply," he insists.
For many growers, according to Hester, the folding of the Lindsay Co-op still leaves a bitter taste. "They just don't trust anybody anymore. I feel sorry for them, because you've got to look to the future. You can't look at the past and then decide where you're going to go with your business. I think they've got to be proactive."
Lloyd Carlson, a Sevillano olive grower in Corning, supports the COG purchase of the Madera plant. He wanted the security of knowing he'd have a home for his olives 10 years in the future.
Carlson was a member the Lindsay Co-op and lost approximately $20,000 when it went bankrupt. He hasn't forgotten what happened with Lindsay, but he's confident the COG will run the operation efficiently. "I think we'll get it. We've got three or four large growers who are interested in it."
Rather than hire an executive staff, Hester explains COG will hire a management firm at a fixed rate. "If they want to make some profits, they've got to generate profits."
COG plans to provide black ripe olives to frozen processors for food service. They hope this new outlet will provide the cash flow to pay the bills while they rebuild the business.
"I see tremendous expansion," says Hester. "The beauty of it - in addition to providing a product to the trade that eliminates brining, canning, and costly freight charges - is that foreign producers won't be able to compete with it," Hester says.
Baseline price The baseline price for members in the new co-op will be the negotiated price the independents pay, plus an additional $25 a ton. Profits over and above that will be shared with the growers.
Hester says it's critical that other olive plants come into operation to create balance within the industry. "Sometimes growers have to look beyond the farm gate to see what they can do to help the industry. Wouldn't it be wonderful if all 1,000 or 1,200 olive growers would come to the table and say here's my contribution?"
While sympathetic with the misfortunes of the Lindsay and Tri-Valley operations, he urges growers to remember: "The important point is that a lot of good, successful co-ops are out there operating."