Discovery Ramblings - April 16, 2021
Discovery Ramblings - April 16, 2021
Randy Hooper - Discovery Organics
Remember this headline from 2 weeks ago?
Feds turn off tap in San Joaquin Valley
It’s one thing to get sensational news from the press. It’s another to get an email from a farmer dreading the season in advance. From Dan Kerrigan at Veg Fresh Farms. (When he refers to Westside, that’s the west side of the San Joaquin valley (central valley) that I highlighted a couple of weeks ago.)
Good Morning,
I want to take a moment to update you on the upcoming season in both the Desert and the Westside.
In El Centro we will have very good volume of Organic Cantaloupe, Honeydews, Galia and Mini Seedless starting approximately May 15th to June 25th. We are able to take commitments and if interested give me a call. Growing conditions have been ideal and the crop looks very good.
On the Westside we are facing unprecedented challenges. Initially we believed we were fine with water we have committed even though the price is extremely high.
However, we were dealt unexpected bad news twice in the past month. First they took away our 5% water allocation for 2021 (5% of the normal 100%) and second and most concerning, water deliveries are drastically reduced for the June to October growing season. The reasoning is that the limited water in the reservoirs will be used to cool the rivers in mid summer for environmental purposes and will not be available for agricultural needs. This will leave much of the Westside growing regions in the San Joaquin Valley with little to no water for irrigation (2,100,000 acres). Some districts have more due to senior water rights but the best growing micro climates for melons unfortunately are not in those districts. Some growers will have ground water but that has its challenges as the salinity can affect crop production and quality. We will have limited water for the late June to October time frame as of right now and are hoping that will change. It is still very much of a moving target with more clarity in the next few weeks. We are in contact with our local and national legislators and the WGA is also working on it to plead our case for water deliveries. This will affect the workers in the Valley and the continued success of farming in the region so we hope this will be resolved quickly.
Regards
From Politico:
A disappointing winter has left California's water supplies at half of average levels. Fights over water are perpetual in California, waxing and waning alongside supplies, and memories are fresh of the worst drought in California's recorded history that stretched from 2012-16. The development of a new drought promises to reinflame tensions between farmers, cities and environmentalists, with Newsom caught in the middle.
California is particularly parched because 2020 was not only dry, but extremely hot. Experts think the state is about where it was in 2014, when former Gov. Jerry Brown asked Californians to reduce their water use by 20 percent. "That's grim," said Jeffrey Mount, a senior fellow at the Public Policy Institute of California's Water Policy Center. "The alarm bells are ringing."
State and federal water officials on Tuesday cut the projected amount of water they plan to send farmers and cities, the latest sign that California is entering another concerning dry spell. The new drought comes on the heels of several years of record wildfire seasons, which in turn were fueled by the last drought. It's just the latest climate change-amplified natural disaster to confront Newsom.
Shortness of breath. Those 3 words actually changed civilization just a little more than a year ago. It invoked our flight or fight response. We went into hiding with our huge stash of toilet paper. It was (is) an emergency and we were (are) scared. Weather can also be scary – tornadoes, flash floods, blizzards also kick in our fight or fight response. But climate change and global warming don’t. Because no one really sees a big change and nothing is imminent – there is nothing worth fighting or flighting. I get that. Sadly, it is an emergency, but apparently not an important one. I realize today that indirect and direct subsidies to oil companies is costing me $400 a year in taxes. You too – well I’m not down with that. If big oil can’t compete, then that’s just the way it is. Why should I pay $400 a year when I have an electric car? And as I’ve said before, it is climatic changes that farmers will always feel first while consumers only see higher prices or lack of supply, and no ability to share the farmers pain.
One of the most obvious outcomes of a changing climate is weather pattern changes usually caused by changes in ocean temperatures and how currents are affected by that. And weather is really about rain, or lack of, and most large weather systems form over oceans, with their abundant water. One of the worst impacts we have already started to see is a slower moving jet stream, and the ability of low or high pressure systems to get stuck in place.
You don’t have to look any further than BC and right now to get that.
This is Abbotsford, where according to the above, we should get rain 54% of the days at this time – so basically rain every second day. We are now forecast to have temperatures in the 20-26C range for a week, breaking the longest warm April period (temps over 20C) by several days, and potentially breaking some temperature records. And unless some major storm systems plow through here in the last week of the month, it may also be our driest. Unusual? Yes. Normal? Rarely.
So what we have here is a huge blocking ridge of high pressure stretching across 2/3 of the Pacific at this time.
And here is the model projection for 5 days out. A large and strong high pressure ridge still in place, pushing any weather far away. This is exactly how this is supposed to work for July and August, when Vancouver at least gets a several week run, normally, of nice weather, but it’s happened a bit early by 2 months. And it is these resilient ridges that get stuck, slowing weather and allowing much longer periods of dry, hot weather (or cold weather, or rainy weather.) There are already folks working in fire control offices across BC getting worried as they see the potential for the snowpack to melt much faster and leaving BC wide open to a long fire season.
Enough of that doom and gloom. Here’s some good news for Avocado growers who have taken a beating for the last 4-5 months with some of the worst market pricing for them in many years. (all figures are in USD so multiple X 1.25 to get Canadian reality.)
From the Organic Produce Network:
Organic Avocados Commanding Top Prices
Earlier this week, California organic avocados had an FOB price approaching $70, giving them a very significant price premium over their conventional counterparts.
“Right now, we are seeing a 30-40 percent gap between conventional and organic,” said Patrick Lucy of Del Rey Avocado Company, Fallbrook, CA. “The conventional price on 48s is a very good $48 today, and we are getting $20 more on organic avocados.”
Lucy did say that it appeared the organic price had topped out, but he anticipated that it will remain steady through May as he does not expect a market-changing rise in volume for at least the next six weeks.
“California’s organic crop was hit hard over the Labor Day weekend last year,” Lucy said, speaking of temperatures that spiked above 110 degrees throughout Southern California, which greatly impacted the amount of fruit that remained on the tree for this year’s harvest.
The total California avocado crop this year is expected to be in the 290-million-pound range, nearly 25 percent less than 2020, and Lucy said the organic crop is most likely down by a larger percentage. Organics typically account for about 10 percent of the California avocado crop, but he does not expect the category to reach that ratio this year.
Illustrating the strong demand that currently exists for organic avocados, Lucy said even the smaller 60 size fruit was commanding $58-$62 FOB. He said there will be organic avocados for retailers to sell for the Cinco de Mayo holiday, but he does not expect promotional pricing.
In explaining the current demand-exceeds-supply situation for organics, Lucy said Mexico had a good organic crop, but much of it went to the US market in the October-through-December period. The market, however, was much lower than it is today.
The next change in volume will most likely come with the beginning of organic avocados from Peru in late May, with those shipments most likely peaking in July. “Peru has a lot of young trees with organic fruit. We should see greater volume this season,” Lucy said.
Rob Wedin of Calavo Growers Inc., Santa Paula, CA, agreed that Peruvian organic shipments during June, July, and August will help, but he was reluctant to call that volume “a market changer.” He reasoned that when Mexico is shipping good organic avocado supplies to the US market, it is averaging 1.5 million pounds per week. Peru’s shipments on a weekly basis will be measured in the tens of thousands of pounds, Wedin said, and that volume cannot make up for the decline from Mexico.
The gap between conventional and organic is about a 25-percent premium, and Wedin believes the organic price has reached a level in which there is buyer resistance.
“Peru has a lot of young trees with organic fruit. We should see greater volume this season.” – Patrick Lucy
The Calavo veteran said there are two situations driving organic volume and pricing, which are sometimes at odds with each other. Packers want to have organic fruit as part of their mix, so they are offering a field price that is not always in sync with the FOB sales price, especially on some sizes. “Right now, the field prices are very high, and it is challenging to get that sales price on some of the sizes,” Wedin said. He does expect that the organic FOB price will remain strong throughout the spring and summer.
Gahl Crane of Eco Farms, Temecula, CA, agreed that the organic avocado market is strong, but he said it is not a “crazy market” and predicted that it would remain steady. He sees the current market being in the low to mid-$60s and staying there for the time being. “Supplies are decent, and we have a good market,” he said, adding that some smaller chains have been able to promote organic avocados.
According to Crane, the retail price point for organics has cut into consumer demand a bit. He believes there is currently a good balance between supply and demand. “We have seen an uptick in California volume as we are seeing that about 10 percent of California’s fruit is organic, which is where we want to be.”
Eco Farms will be sourcing organic fruit from Peru in June, July, and August. Crane said Peru appears to have a good crop and is expecting to ship more volume to the US market this year, which should include a greater volume of organic avocados.
The consensus is organic avocados will be available for the coming months in relatively good supply, but don‘t expect promotable FOB pricing.