MARKET REPORT - MAR. 25TH, 2016
We just don’t do that to small producersI guess it's time, now that the most impressive El Nino event is winding down, to see what impact it had on California. And in case you've forgotten, it's the warming of the ocean at the equator off the coast of Peru and Ecuador that is strong enough to change ocean currents and weather patterns globally. This was the strongest El Nino recorded, with ocean temps at the peak back a few weeks ago of 3.4C above normal across a vast swath of the central Pacific. One thing we know for sure is that it amplified global warming during January and February.When people discuss climate change, they have, for the last 25 years, said that if the global temperature goes up 2C, that is the tipping point at which bad stuff really starts to happen. Well, we hit that in February for the first time at 2.1C above normal, with El Nino’s help.
We had a bizarre winter across Canada, with thousands of record-breaking high temperatures, but that is normal for an El Nino winter, which happens every few years - although there has only been 3 this strong in the last 20 years, but more germane, is how has El Nino affected California, because everyone had their fingers crossed that El Nino would produce copious snow in the Sierra's and rain in drought-stricken areas. It didn't. The impacts didn't really kick in until January, and although there has been lots of rain in the past month or so, the totals are down from average, and the Sierra snowpack that feeds irrigation systems is a little below average. Basically that means that there hasn't been a net benefit, so farmers will be right back where they were a year ago. Water allocations for farms who pull water from irrigation systems have been slashed to 0% from 5% in some districts.95% of the growing areas in California are currently listed as being in at least severe drought, down from 99% in September, and of that area, 55% is currently in the more serious exceptional drought, down from 72% back in September.I always find it amusing that despite this incredible crisis, one of the largest crops is Bermuda lawns and golf courses, which always get watered, and next is natural gas fracking, where 22% of California’s fresh water goes into the ground to steam out gas, and then that water is contaminated and lost forever.That being said, one of the tragedies that has unfolded across California is a huge labour shortage. Migrant workers don't hang around if there isn't enough work, especially when they live in towns that literally have no water, or where you get an allocation of a few gallons a day. Couple that with Obama's deportations of 5 million Mexicans over the last 7 years and the mass migration of big-ag into central Mexico, (where there are also labour shortages.) For a lot of Mexican workers, it is now more financially viable for them to go back home if they don’t have roots stateside.Instead of my ramblings, maybe news is better coming from someone with boots on the ground. What follows is from a large conventional producer, and his blogged notes about the current situation, and he was obviously pissed off when he published this a few weeks ago."If there is a normal set this season, labor intensive South Valley cherries will prove difficult at best. Based on current labor conditions, I expect 30% of the south valley crop won’t be harvested in time this year. Water, Weather and labor issues effecting growers will have a long lasting effect on the financial viability and the decisions of cherry growers this far South. Two of the big Lamont & Arvin growers cut trees are are into grapes and another large Lodi/Stockton cherry grower is knocking down 500ac of cherries in the Wasco-Shafter area. We spent the better part of last week in Sacramento meeting with legislatures and lobbyists. No good news to report. Yesterday, the news came out that despite heavy rainfall and snow pack, there will be less delta pumping to water districts on the west-side compared to last year. It’s not a coincidence that Paramount/Wonderful announced last week it will knock out 10k ac of almonds this spring. When the Driscoll’s of the world say no to any new CA land development, the writing is on the wall. Talking to the veg guys at the food show last week, it’s very scary… no one is really looking for any new customer development in the Salinas Valley. The days of planting extra (insurance / open market row crops) are gone and the new norm is resource farming and maybe moving operations south of the border. This mentally is heading our way over the next five years. P.S. it’s time to get mad as hell, it’s time our entire industry comes together – if you buy/sell CA produce you’re livelihood is on the line… the CA water board’s decision yesterday on Delta pumping through the end of June is sheer insanity in the wake of the worst drought in California’s history…"And now, something completely different – a short talk about grapefruit. Our largest Pragor grapefruit grower, inland from Ixtapa (for those who know your Mexican resorts), is producing huge grapefruit. On an average order, at this point in time, he is hard-pressed to squeeze out more than a few pallets of smaller fruit – the majority is 27/32/35’s. We can’t say No to the big fruit, because we have contracted this Fair Trade product, and we just don’t do that to small producers. What you also may not know is that 40% of what he harvests is blemished in some way – usually from shoulder bruising where two fruits grew up side by side and rub against each other. Those “culls” go to the local and Mexico City markets for pitiful dollars (pitiful pesos, actually.) So, besides discounting pricing on the large grapefruit, so your price for each piece of fruit is the same as the smaller ones – which is a sweet deal for you and your customers, we are also now bringing in his “uglies”, where we can get him 3 or 4 times as much money as he currently gets from the coyotes who swoop in on packing days in their pickup trucks, and still meet the minimum price guidelines for Fairtrade Organic Grapefruit from Mexico. So this week, to our slowly growing line of REBEL branded products, you will see a listing for 7X5# Rebel Fairtrade Grapefruit. Why 7 X 5# - well, it’s because we’re packing them here, and that’s how many bags fit in our cardboard potato boxes we use for re-packing.That’s all – just wanted to fill you in on the grapefruit thing.Happy weekend.