Prune Farmers Requests State Conciliation

YUBA CITY, CA, December 14, 2007 – The Prune Bargaining Association has requested that the Department of Food and Agriculture convene a multi-party conciliation with each of the 14 commercial buyers of members’ products to resolve price and contract terms for th 2007 crop. Because of the crop and market difficulties faced by growers and processors, negotiations have dragged on well past harvest and the beginning of the market year. At issue is the establishment of uniform prices and terms of trade for prune farmers through negotiated contracts with processors.

While the association has reached a price agreement in principal with 11 processors on prices and terms of trade, 7 of those processors have not yet signed written contracts. Since farmers are already facing bills on production inputs for next year’s crop, and processors need to know their raw product price for marketing, the Association has asked the California Secretary of Agriculture to order conciliation to bring the negotiations to a timely conclusion so that orderly marketing may take place.

Complex crop and market conditions have caused financial stress for farmers and processors, making negotiations difficult. “This has been one of the toughest years yet to reach an agreement,” explains PBA General Manager, Greg Thompson. “2007 represents the third year out of four where many farmers suffered heavy crop losses. 2006, on the other hand, was a bumper crop that strained processors financially, and led to price cutting at the trade level.”

According to Thompson, the negotiated farm price in 2006 decreased by $140 per ton or 20% from 2005 as part of a two-year price agreement established by the Association, yet processors reported decreases of 30% or more on some trade prices. “Most farmers were satisfied with the field price in 2006, but processors were not,” says Thompson. “The two year price agreement worked out well for farmers because it stabilized prices at profitable levels, if you had a crop, but with 3 years out of 4 being crop disasters, most growers are concerned about the future.” The average cash farm price reported by processors in 2006 was $1,390 per ton, down from $1470 in 2005.

The industry has suffered from erratic supply since a bumper crop in 2003. In 2004 farmers produced the shortest crop since 1917. In 2005, the crop was short again, and supplies were extremely tight since inventory had been largely exhausted. In order to help stabilize grower prices and improve marketing, the Association established a two-year price agreement with 8 packers representing approximately 70% of the commercial tonnage for 2005. Negotiations with 4 other packers resulted in an impasse and they did not sign the twoyear price agreement.

Documents filed with the Secretary of Agriculture state some packers did not sign a written price agreement on the 2005 and 2006 crops and did not comply with its terms. The Association feels it has no option but to require written contracts from all packers buying or receiving prunes from PBA members in order to establish uniform pricing. “Growers become members of an agricultural bargaining cooperative for the purpose of jointly marketing their production,” explains Keith Larrabee, a prune grower and Association president. “Their rights to collectively bargain are protected by state law. Written contracts are necessary to protect those rights.”

Association officials say that an agreement on 2007 will provide a common starting point to address important marketing issues. “With global trade and consolidation the prune market is limited to a small number of buyers,” explains Larrabee. “Even one isolated low price sale made for cash flow needs can have a negative impact on the market. Our processors need staying power. At the same time more prunes are now exported from South America than from California so we are facing increased competition.”

The Association hopes that processors will also see the conciliation process as a vehicle to bring about change in the industry to address the challenge of the global market and the new circumstances that growers and packers face. “We need to address these industry issues with our packers in order to bargain effectively for our members, and just as importantly, to serve our packers in a way that strengthens our industry as a whole,” says Thompson. “It is in this spirit and with these objectives in mind that we are asking all of our packers to participate in this conciliation process.”

The Prune Bargaining Association was formed in 1968 as a grower-owned cooperative to improve the economy of the California prune industry, encourage the production of a quality product and provide a forum for growers to exchange ideas regarding the industry. The PBA establishes the industry’s raw product price for prunes.