Issue link: http://read.dmtmag.com/i/366055
O ver the years, Jay Grandy has negotiated long and hard with Pacifi c Northwest pear proces- sors over the prices that they would pay grow- ers, but this year Del Monte Foods announced it would voluntarily pay almost $30 a ton more this season than it had committed to. "This is defi nitely unprecedented," said Grandy, who has managed the Washington-Oregon Canning Pear Association since 1998 and has been involved in the pro- cessed pear industry for 30 years. "Certainly, it hasn't happened in that time period." But Grandy wasn't totally surprised when Del Monte announced the move last December. Growers had long com- plained that returns for growing processing pears barely covered costs. Between 1990 and 2010, the negotiated price for No. 1 grade pears hovered for the most part between $200 and $250 a ton. For the past few years, it's been around $260 a ton, and for 2014 it would have been $272 a ton (see "Pro- cessing pear tonnage and prices"). "The growers have spo- ken loud and clear over the years that they can't get by on what Del Monte was paying," Grandy said. "They've been looking at the attractiveness of apples and cherries and seeing that they would be better off to plant those varieties than put more Bartletts in the ground. "It's a matter of com- petitive returns from other opportunities," he added. "A lot of growers have told them where they were at—$272 a ton—is just not enough to keep worrying about Bartletts." Another factor is that Del Monte bought the fruit- processing plant of Snokist Growers two years ago, which increased its capacity, Grandy said. "They've got to run tons to make it pay, so the real issue is getting growers to continue to deliver those Bartletts for processing. They're worried that growers are going to pull out old Bartlett orchards and not replace them." Smaller crop Also coming into play is a smaller total Bartlett crop and a trend for a higher percentage to go to the fresh market. Last season, the Northwest produced 233,000 tons of Bartletts, with 115,000 going to canners. This year's crop was estimated at 225,000 tons or less. Northwest canners sometimes haul pears from Cali- fornia for processing, but California also has a short crop this year (150,000 tons, down from 168,000 tons in 2013), and prices there are higher, too. (See "Pears shine bright in Golden Sate" on page 24.) "They're not going to bring them up here," Grandy said. "There are too many good opportunities for the growers down there." The Canning Pear Association used to negotiate annu- ally with the Northwest pear processers but switched to multiyear agreements. The last contract was signed in 2012 to cover the years 2012 ($260 a ton), 2013 ($266 a ton), and 2014 ($272 a ton). Grandy said he had been discussing the situation with his board and was going to try to reopen the negotiations for the 2014 crop when Del Monte announced it would pay $300 a ton. "The incentive was there for Del Monte to have to do something to get tonnage, so I was sort of, but not totally, surprised." There are now three Northwest pear canners: Del Monte, based in Yakima; Northwest Packing Company, based in Vancouver, Washington; and Seneca Foods Cor- poration. Both Northwest and Seneca announced they would match Del Monte's price. The contract price for second-grade pears is 62 per- cent of the number-one grade price, so that will increase to $186 this year. Seneca and Northwest, which used to treat number-two grade pears as culls (with a return to the grower of $1 a ton), will pay the same as Del Monte for number-two grade. But, with number twos typically making up 3 to 4 percent of the crop, that won't have a major impact on grower returns, Grandy said. In 2015, the association will negotiate with the processors for the upcoming crops. "Growers are in a more favorable position than they've been in a long time," Grandy said. "I'm optimistic that we're going to change the price upward, but I don't have any idea how far it will go." These will be the fi rst negotiations that Seneca Foods has been involved in, because the New York-based com- pany didn't have a processing plant in the Northwest when the last contract was negotiated in 2012. Two years ago, Seneca bought the Sunnyside plant of Independent Foods, which never negotiated because it used a different payment method, similar to the one used for fresh fruit. Growers received what the fruit sold for, less charges for processing. Grandy said The Food Institute is no longer publishing 18 SEPTEMBER 2014 GOOD FRUIT GROWER www.goodfruit.com Pears Processed Processing pear tonnage and prices The volume of pears going to the fresh market has increased while the volume of processing pears has declined. Total production has been fairly stable. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 150,000 TONS 100,000 50,000 PROCE SSE D FRE SH Processed pear prices 2004-2014 Estimated SOURCE: Washington-Oregon Canning Pear Association $300 per ton $275 $250 $225 $200 $210 PER TON $300 PER TON 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Estimated Northwest processors need to secure tonnage. by Geraldine Warner Processors pay more for pears