Peach growers see mixed markets for 2017 harvest


Issue Date: July 12, 2017
By Ching Lee
Fresno County farmer Jeff Simonian checks on the ripeness of freestone peaches, which his farm has been harvesting since late May. With weather problems reducing peach crops in states such as Georgia and the Carolinas, California fresh-market peaches have seen increased demand this year.
Photo/Cecilia Parsons
California fresh-market freestone peaches, above, are enjoying greater domestic and international demand this season, while contract prices negotiated so far for cling peaches have dropped from a record high last year.
Photo/Cecilia Parsons

As the 2017 peach harvest accelerates, California farmers who grow fruit for the fresh market enjoy greater demand and higher prices due to production problems in other states, whereas some farmers who grow peaches for processing say they now regret their decision to plant new orchards after signing long-term contracts offered by canneries several years ago.

On the fresh market, a spring freeze in the nation's Southeastern growing region caused crop losses of about 75 percent, which Ian LeMay of the California Fresh Fruit Association said created "a large void in the domestic market."

"We've definitely seen healthy demand for all categories of stonefruit, specifically peaches, this season," he said.

Fresno County grower Jeff Simonian has been harvesting his fresh-market freestone peaches since late May and expects to finish by the second week of September. He described the quality of his crop as "good" in both sweetness and fruit size, but noted that yield in some orchards may be down 20 to 30 percent compared to last year. One theory for the lighter crop, he said, is that years of drought have stressed the trees, despite plentiful rainfall this year.

With states such as Georgia and the Carolinas having trouble with their crops, Simonian said some retailers that typically carry peaches from those states are looking to California for supply.

"There's been excellent demand throughout the country and overseas," he said.

But farmers who grow cling peaches for processing expressed disappointment with the price agreement reached last month with Del Monte Foods, which will pay growers $455 a ton—7 percent lower than last year's price. Price agreements with other processors have not yet been ratified.

Ajayab Dhaddey, field operations manager for the California Canning Peach Association, said the lower price resulted mainly from sluggish sales and more carryover. He noted that quality standards have also gotten tougher this year, which could pose a problem for some growers whose extra-early varieties did not size well due to the June heat spell.

Del Monte spokesman Tim Schramm declined to comment.

Fresno County grower Lance Jackson, who grows both cling and freestone peaches, described the price reduction as a shock, considering the state's three largest canneries were offering 20-year contracts beginning in 2014 that paid growers $500 an acre to plant new orchards.

The planting incentive came in response to continuing decline in cling-peach acreage, as farmers replace peaches with more-profitable crops such as nuts. The first year the incentive was being offered, California cling-peach bearing acreage had dropped below 20,000 for the first time and continued to drop for the next two years. This year, bearing acreage is projected to be 18,500, up from 18,000 in 2016.

"Obviously, there's some health issues with our industry right now," Jackson said. "Price cuts like what took place this year are going to cause guys to either graft their trees or pull them out."

There were early indications a price reduction would occur. The association reported in May that California growers had planted too many new acres, with cling peach-tree sales up 54 percent from last year. Nurseries sold a total of 461,018 trees for 2017 plantings, which are projected to be 2,600 acres—the most in 15 years.

Although growers historically remove about 5 percent of their trees each year, the association noted that with the new plantings, the state would still be faced with more than 21,000 bearing acres by 2020, "which is 4,000 acres more than we need to meet current market demand." The association called on canners "to sharply curtail future plantings."

"The industry's current acreage imbalance must be corrected quickly so that selling prices can return to profitable levels for both growers and processors," the association said.

Sutter County grower Gurnam Pamma took advantage of the planting incentive and planted new trees last year and this year. Had he known prices would drop so quickly, he said, "we would have never planted it."

"Now they're saying there are too many peaches," he said. "If the market stays like it is, I think we're going to plant almonds or walnuts."

The current $455 per-ton price remains higher than what growers earned just a few years ago. For example, the 2014 price was $379 a ton, which was considered profitable at the time. In 2013, the price was $349.

But today, with employment costs rising and the state minimum wage going up to $15 an hour by 2022, growers are "looking at what their other options are," Dhaddey said. Mechanical harvesters are available for cling peaches and some growers have made the investment, he noted, but for the most part, cling peaches are still largely cared for and harvested by hand.

"The cost of labor is getting to a point where you're going to have to get more mechanized," said Blaine Yagi, a grower in Stanislaus County. "But the cannery does not like people to use mechanized harvesters to harvest their peaches."

Dhaddey said that's because machine-harvested fruit is susceptible to bruising and must be processed right away, and processors only have so much capacity each day to handle that type of fruit.

Fresh-market peaches are currently all harvested by hand, but grower Simonian in Fresno County said he's trying to improve other efficiencies, in the field and in the packinghouse, to reduce employment costs.

For example, he's training his trees so they grow shorter and wider. That may reduce the use of ladders, which will improve safety, and his employees will also be able to harvest faster, he said.

LeMay said even though growers have not found "a perfect machine" for harvesting fresh-market peaches, many of them "are entertaining those opportunities" as research continues.

"I don't think you're going to see anything this season, but five, six, seven years down the road, I think you could see more mechanization, both in the orchards and definitely in the packinghouses," he said.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.