Strong raisin sales, heightened demand for Thompson seedless grapes for crushing, a late harvest start due to low grape sugar content and a surprising farm worker shortage are combining to create an early harvest time pricing war unlike San Joaquin Valley grape growers have seen for at least a decade.
As grape harvest trucks rumbled to the wineries with their first loads of grapes, clouds loomed overhead the second weekend in September that prompted SJV raisin buyers to increase their offering price for 2011 raisins by a whopping 13 percent, hoping to turn a potential stampede to green harvest at the expense of raisin drying.
Raisin packers have offered $1,700 per ton price for 2011 Natural Thompson Seedless (NTS) raisins on the eve of raisin harvest. This is well above already established $1,500 per ton as part of a two-year bargaining agreement signed last season. The new contract price is the highest price ever offered for a crop not weather impacted. The Raisin Bargaining Association is expected to approve an unusual 11th hour contract price increase this week.
Packers hope it will stem the flow to green. One raisin official estimated 125,000 tons of Thompsons were diverted to green on the weekend of Sept. 9-10 due to the thunderstorms that popped up in the valley. Showers may not have damaged many grapes drying in the field, but they hastened decisions by growers to go green to wineries because low sugar levels in mid-September were increasing the green to dry ratio to five-to-one, the highest level since 1980. It normally takes about 4.5 tons green to make 1 ton of sun-dried raisins.
This high dry ratio is the result of a late crop and slower sugar development. Statewide, California’s grape crop is at least two weeks behind normal. This is exacerbated by the fact raisin growers have mid-September insurance deadlines to begin drying raisins or they nullify their insurance coverage. It’s highly unlikely many raisin growers passed up buying insurance this season with the price of raisins the highest ever.
Wineries are fighting back, sweetening the pot financially to attract more Thompsons to the crushers. As growers started delivering low sugar Thompsons for sparkling wine and similar products, several wineries raised the Thompson price to $265 per ton from the pre-harvest, record price of $250 per ton offer.
This bidding for Thompsons comes with what is turning out to be a surprisingly larger Thompson crop than earlier projected. What was expected be an average crop of about 9.8 tons per acre, is turning out to be an average of 11.25 ton per acre green crop. However, with the low sugar issue, the return per ton for growers will be closer to the money for a 10-ton crop.
The slow developing sugar issue has not impacted the early low-sugar grapes wineries want for sparkling wine programs. However, it could if the weather remains cool and sugars do not develop as needed.
“We have been targeting some of our low sugar Thompsons at 16-18 Brix,” according to Nat DiBuduo, president of Allied Grape Growers, the state’s largest wine grape marketing cooperative.
The higher sugar programs for concentrate and dry white wine made from Thompsons are targeted at 20-21 Brix. “I believe the low sugar program grower is losing some production because the lower the sugar, the lower the weight of the bunches until they hit the optimum Brix and weight. But many growers are interested in getting started and getting the grapes off before they lose weight to mildew, rot and the threat of rain,” DiBuduo said.
The slow developing sugar issue could become “more challenging” as wineries demand more high sugars for wine and concentrate as the season progresses. This could create bottlenecks at the crushers with reds and whites at wineries at the same time.
While the Thompson crop is coming in larger than expected, early wine grapes like Grenache, Sauvignon Blanc and Chardonnay in the central Valley and Pinot Noir in the Clarksburg area and early grapes from the North Coast are coming in short.
“We are way behind on the North Coast, and some crops are off 25 percent or more,” DiBuduo said.
“Labor is becoming an issue everywhere, especially this week and next as the first (Sept. 20) raisin insurance deadline nears,” DiBuduo said. That is when hand-harvested grapes must be down on trays for raisin drying to collect insurance if it rains on them. The insurance deadline for machine-harvested raisins to be down is Sept. 25.
Machine harvest raisins must have cane cuts ahead of harvest. This requires big crews that are becoming hard to find, he said.
“The raisin guys are getting extra anxious because of the lack of labor and those hoping to mechanically harvest have got to get canes cut at least five days in advance of the harvester,” said DiBuduo. The labor shortage has been attributed partly to a prolonged apple harvest in Washington keeping workers there longer.
“Because of the large Thompson crop, some growers are having difficulty getting enough sugar to make quality raisins and get them harvested by the crop insurance deadline. They can pick later as sugars improve, but then you are really at risk. We are getting more calls from raisin growers (wanting to sell to wineries), and we hope to be able to handle a balanced sale so the raisin packers are satisfied and the wineries fulfill their need at the current prices, which have strengthened,” DiBuduo said.
Compounding the year is the fact it has been a heavy powdery mildew season. For the most part, growers have done a good job of controlling it. However, it is seldom a perfect job and missed powdery mildew pockets can lead to pre-harvest botrytis. Those who did not do a good job at controlling mildew will be in even more trouble.
“Berries are splitting due to mildew pressure and growers are applying materials attempting to dry the rot in both raisin and wine grapes,” DiBuduo said.
This year’s feeding frenzy for Thompsons is a result of more than 85,000 acres of Thompson Seedless vineyards being pulled out in the past decade due to low prices and more attractive alternative crops like almonds. Although raisin prices are the highest ever, there is a fear more Thompsons will continue to come out with other crops still more attractive financially in more stable economic commodities than grapes.
This, coupled with strong domestic and export raisin sales, has put raisin packers in a precarious situation of needing more raisins to supply a solid market. For the marketing year just ended, packers shipped about 330,000 tons, including some carryover inventory needed to bid over buys immediately after the crop is dried.
“We have barely enough carry-in inventory to carry us into the new year,” said one major raisin packer. “It is now a truly supply-demand situation.”
The California raisin industry ships roughly 200,000 tons domestically and exports a little over 110,000 tons annually.
Markets are strong because places like Turkey and China have short crops and the value of the dollar is spurring raisins and all agricultural exports.