California table grape growers need $30/box to break even

The California table grape scene is devastating. “While some growers are impacted more than others by losses due to Hurricane Hilary, there is not a single grower in the San Joaquin Valley that wasn’t impacted,” says Ira Greenstein with Direct Source Marketing. “Perhaps a very small percentage of fruit was covered, but it’s not enough to make a difference.” The loss is expected to be significantly higher than the early projection of 25 million boxes. “There will be companies that won’t survive,” Greenstein shared. As a result of the losses, the price for table grapes has gone up from $18/box to $34/box in the past three weeks.

High labor costs

“The high price is needed for growers to just break even,” commented Greenstein. “They are spending about two to three times more on labor to clean the fruit. Looking at the bunches, identifying the bad fruit, cleaning up the bunches, etc. It takes about two to three times longer to harvest and field pack,” he said. A combination of high labor costs and lower packout rates has resulted in a shift in the break-even price from $20/box to $30/box. Even after all the effort of cleaning up, shelf-life has been compromised and there is still a chance for the fruit to get rejected. As a result, some growers have decided to walk away from their blocks completely.

With an estimated 35 to 40 percent of the crop being lost, the natural reaction is for prices to go up. “However, this is a difficult process as retailers already have marketing plans in place. Traditionally, September and October are the best months for promotions as both production and quality peak during this time,” according to Greenstein. Retailer contracts will vary between $18 and $22 FOB, but growers can’t honor these contracts and they declare force majeure. “In order to stay supplied, retailers will have to pay more for the fruit.” As a result, $1.99/lb. promotions are gone and are being replaced by $2.99 and $3.99 daily retail pricing.