Peach Growers Cling to Association
CCPA assumes greater role in helping industry manage supply, avoid pitfalls
By Pamela J. Karg, Field Editor
Editor's note: this is the second of two articles focusing on bargaining cooperatives. In the Nov. -Dec. 2000 issue, the focus was on the cherry industry's bargaining association.
| Ron Schuler does whatever it takes to ensure that this cling peach growers make another sale. "That's where some bargaining associations fail," he says. "They just want price. But you can't look at just price. You have to make every effort you can to make a sale. If something doesn't work, you have to try something else." |  |
Schuler has led the California Canning Peach Association (CCPA) through a plethora of issues that range from grower-funded supply management plans to negotiating contracts with new owners of the former Tri-Valley Growers canning facilities. He says there is no topic the Association should shy away from if it influences the marketing picture for CCPA members.
"We're active and involved in all aspects of our industry. Why else would I be sending Association employees to an energy seminar? Because it impacts all of us and we need to know about it," Schuler says.
That total immersion has made CCPA the longest-lived cooperative bargaining association in the nation. It also has earned Schuler respect within California agricultural circles.
"He is the dean of California bargaining associations," says Vaughn Koligian, chief executive officer of the Raisin Bargaining Association in California.
Yet longevity and admiration don't add up to much in the face of market share erosion due to cheap imports, food industry concentration, a processor bankruptcy and a farm policy that offers little for specialty crops such as peaches. Something has to change, peach growers say. And, as it has always done, CCPA is doing everything it can to make sure it does.
A home and a price
Growers founded CCPA in 1922 with a $30,000 loan from A.P. Giannini of the Bank of Italy (which eventually became Bank of America). Local, disparate groups of peach growers came together under two ideals: a home for every grower's peaches and a fair price for the fruit.
Unlike freestone peaches that could be sold fresh, dried or canned, cling peaches had only one use: canning. As a result, the California cling peach industry grew up with the idea that it was captive to canners.
"By 1901, more cling than freestone peaches were canned in California for the first time," writes Frank Van Konynenburg, a retired CCPA director and past chairman of the board. He wrote "A Home and A Price: 75 Years of History with the California Canning Peach Association" in 1997. "That same year, California Fruit Canners' Association-Del Monte offered five-year term contracts to cling growers at $20 per ton. A number of growers signed up to ensure a home and take some risk out of growing clings having an assured home with a canner every year was much more of a necessity, "Van Konynenburg adds.
Rapid inflation caused by World War I saw long-term contract growers receive $2 5 a ton while non-contract growers earned up to the astronomical price of $110 a ton. Through county Farm Bureaus, growers organized local pools. However, canners told tales of postwar economic depression woes.
Undaunted, growers realized they needed something larger than a county group. Before the end of January 1922, CCPA organized and hired Ambert Dal Poggetto as its manager. By spring, 760 growers representing 25 percent of cling growers and tonnage in California were CCPA members. Thanks to the February 1922 passage of the Capper-Volstead Act, the association operated without threat of anti-trust battles.
Canning peaches today
In the 1927 annual report, CCPA leaders noted that, "Despite a contrary belief among growers, the growers' interest does not cease until the final product is consumed." Through the decades, CCPA has learned valuable lessons like this and they mold its programs, policies and attitudes today. This past summer, Tri Valley Growers announced it was filing for Chapter 11 bankruptcy protection and reorganization. CCPA growers were among several farm groups to feel the chilling after-shocks of a lost market on top of world trade issues that were rearing their ugly heads.
"TVG announced it could only take 85 percent of the 2000 crop, so we needed to do something to take care of the other 15 percent, or about 30,000 tons of peaches," Schuler explains. "If that production had come onto the open market at the same time we were trying to negotiate a price with Del Monte, we wouldn't have had a strong market," he stresses.
As it had done a few other times in its history, CCPA offered members a chance to pull out trees and to receive money to do so. Other commodity groups have had similar production reduction programs.
However, the CCPA plan is unique because producers fund it entirely.
"It wasn't as equitable to everyone as it could have been, "Schuler explains. "There were growers with extra-earlies (early ripenning peach varieties) who weren't allowed to participate due to timing. But, as it turns out, we got 11,000 acres out and we accomplished our goal of reducing oversupply, which helped sustain prices."
Small, specialty market
The canning peach industry is not a large agricultural sector compared to dairy or corn. Producers voted out a state Joint Marketing Order in 1996. There are no government programs and no volume control provisions, though a peach marketing board is in place to promote the California-grown fruit.
Peach growers have taken a decidedly independent path. Yet, pitfalls abound, and Schuler believes the next Farm Bill needs to address small, specialty farm crops, such as peaches.
"There was $28 billion paid to farmers last year by the government, but less than 3 percent went to California farmers while over 50 percent of our nation's fruits and vegetables come from farms here," Schuler points out. "Somewhere along the line, we have to realize that we can't continue like this. It's getting increasingly difficult for our farmers to compete."
A major portion of the competition comes from the Greek peach industry. Those growers are over-producing low-quality fruit that is flooding the U.S. marketplace at low prices, Schuler charges.
"We're trying to work with them so they understand what could potentially happen to everyone's market if they continue on this path," Schuler says. One option U.S. growers have suggested to their Greek counterparts are green drops. Producers agree to pull down a certain amount of fruit in exchange for some partial payment. In the process, supplies shrink and prices may rise as long as consumption holds. "It's been hard to convince them that this could work just as it has for CCPA in the past," Schuler adds.
Meanwhile, higher quality standards are in place for American fruit. U.S. cling peach growers also face competition from within: consolidation in the food industry and rising production costs, which includes another jump in the minimum wage.
Rising costs, more consolidation
"Sixty-eight percent of peach costs are labor," Schuler says. Processors have been reluctant to buy machine-harvested fruit over charges of inferior quality. But a recent increase in the California minimum wage has growers and processors taking a second look.
"A few in the past have done a poor job with machine-harvesting. So, we're working between processors and growers to set up strict rules on how to do it without sacrificing quality. We'll have padding requirements on the machines to minimize bruising. We're working on quality criteria for when that fruit gets to the plant. We need varieties that can hold up to machine harvesting. There will be a price differential in place," he explains.
The other major production cost for the entire California agricultural system is energy. Natural gas and electrical costs are rising, and rolling blackouts are plaguing the state. "We need to be aware of both the processor side as well as the producer side of every issue. Knowing both sides is key," Schuler says.
To that end, members need to hear from the marketing side of their business. This year's annual meeting keynote speaker was Bob Piccinini, chairman and chief executive officer of SaveMart Supermarkets.
"If we don't hear what our customers want or follow processor guidelines, we cannot achieve a reasonable price. We need to hear what our customers are going through sowe know how to respond and we know what's possible," Schuler says.
Growers at the meeting heard that the food industry continues to consolidate. Fewer, yet larger, customers want the highest quality fruit at the lowest possible price. The food chain is squeezing out more costs. Consumers are spending a greater share of their food dollar at fast-food restaurants.
As a result, supermarkets need quick, nutritious foods for harried consumers who would rather drive-thru to pick up supper in a bag than check out at the express lane with 10 items or less. Producers were encouraged to continue new product testing and new packaging designs.
"We've always got to be looking for that next sale, "Schuler adds. "The Association has to do whatever it can to make sure we get people to cat some golden sunshine - cling peaches in a can."
