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January 2002, Volume 8, Number 1

FVH Commodities

California has nine million irrigated acres of farm land; most of the state's 35 million residents live on 5.5 million acres of urban land.

Grapes. California produced 5.9 million tons of grapes in 2001, including 3.1 million tons of wine grapes, two million tons of raisin grapes, and 800,000 tons of table grapes. About 60 percent of the grapes crushed for wine are grown in the San Joaquin Valley, and growers there tend to favor varieties such as Thompson seedless that can be dried into grapes, sold for concentrate (natural sweetner), or crushed into wine.

Growers getting eight tons an acre need to receive $125 to $150 a ton to be viable; in 2001, they did not- prices dipped to $75 a ton, prompting some growers to remove grapes. A recent economic study concluded that there will be short-term problems with oversupply and low prices, but that the California wine industry is in a good position for long-run global competitive advantage.

There were 19.4 million acres of grapes worldwide in 1999, including 2.9 million acres in Spain; 2.3 million in France; 2.2 million in Italy; 1.5 million in Turkey; and 0.9 million in the US. The top five countries had 9.8 million acres, or half the world total. Some 7.4 billion gallons of wine were produced in 1999, more than one gallon for every world resident, led by 1.6 billion gallons in France; 1.5 billion in Italy; 863 million gallons in Spain; 534 million gallons in the US; and 420 million gallons in Argentina. The top five countries produced 4.9 billion gallons, or two-thirds of the total.

Wine consumption was also concentrated. Some 5.9 billion gallons were consumed, including 938 million gallons in France; 824 million gallons in Italy; 553 million gallons in the US; 501 million gallons in Germany; and 396 million gallons in Spain. The top five consuming countries accounted for 3.2 million gallons, or 54 percent of the total. Global consumption averaged one gallon a person, and was 16 gallons a person in France; 14 in Italy; 13 in Portugal; 12 in Croatia; and 11 in Switzerland.

For most labor-intensive commodities, trade has replaced labor as the major issue. However, at Sun-Maid Growers annual meeting in December 2001, a 20-page brochure was distributed to highlight different techniques for dried-on-the-vine harvesting. Under the current hand-harvesting method, growers stop watering their grapes four to six weeks before harvesting. Pickers are paid about $0.25 to cut about 25 pounds of grapes and lay them on a paper tray to dry. Including overhead for the FLC who brings the workers to the vineyard and supervises them, farmers typically spend $800 to $1,000 an acre to hand harvest about eight tons of green grapes, and two tons of raisins.

Pierce's disease, the bacterium Xylella fastidiosa, which clogs the plant's water conductive tissue and chokes off the movement of water and nutrients from the roots to grapevine, is spread by the glassy-winged sharpshooter. In November 2001, Pierce's disease was discovered in vineyards in southern Kern county. Pierce's disease led to the destruction of 1,000 acres of wine grapes in Temecula in the 1990s, and in 2001 was firmly entrenched in southern Kern county, which has 86,000 acres of grapes.

Avocados. The California Avocado Commission in December 2001 challenged the USDA decision to allow the importation of Hass avocados from Mexico. Hass avocados, which turn black as they ripen, are the variety most commonly grown in California and are harvested year-round. USDA allows Mexican avocados to be imported into 31 states for six months a year, October through March. California has 6,000 avocado growers with 60,000 acres, producing a crop worth $263 million in 1999.

Prunes. The US Department of Agriculture plans to pay California farmers $17 million to take thousands of acres of plum trees out of production. Farmers will get $8.50 for every plum tree removed from their orchards. The goal is to remove 20,000 acres of trees from production by June 30, 2002.

The prune industry is trying to deal with a severe oversupply problem. In 2000, the industry was allowed by the Food and Drug Administration to change the name of their product from prune to dried plum. The dried plum label is aimed at a younger target audience.

There are currently 86,000 acres of prune/plum trees in the United States, and they produce about 200,000 tons of prunes a year. Payments to growers recently have ranged from $700 to $800 a ton; the break-even price for most is more than $800 a ton.

Lettuce. Most lettuce grower-packer-shippers produce lettuce year-round, and shift production from Salinas to Yuma, Arizona each November, around Thanksgiving; the workers and equipment return to Salinas in April. According to the United Farm Workers union, 35 to 40 percent of the workers move with the harvest, 25 percent return to homes in Mexico when the lettuce season ends in their area, and the others apply for unemployment insurance benefits.

Monterey county farm sales were a record $2.9 billion in 2000, helped by higher vegetable prices and a record strawberry crop. Most vegetable prices were lower in 2001 than in 2000.

Chiles. New Mexico is the leading producer of chile peppers; they have a farm value of $150 million a year. Most are produced in the Hatch Valley near the Mexican border. Green chiles, which are harvested at the end of summer, are sold fresh or frozen and canned. Red chiles, harvested in fall, are dried and the whole pods are used for seasonings or fashioned into tourist objects.

Tomatoes. Canada's greenhouse tomato industry has boomed since 1995; the 224 million pounds of greenhouse tomatoes that were exported to the US in 2000 were 43 percent of the greenhouse tomatoes imported into the US. US tomato producers complained that Canadians were dumping greenhouse tomatoes, selling them in the US below their cost of production, and the United States Commerce Department imposed tariffs of 24 to 34 percent on imports of Canadian greenhouse tomatoes. Chapter 19 of the NAFTA treaty spells out a procedure for adjudicating disputes over anti-dumping and countervailing duties.

Flowers. The 90-year old Aalsmeer Flower Auction (VBA) in Holland is the world's largest plant and flower auction, handles 19 million flowers and two million plants every day, for annual sales of Euro 1.45 billion; there were 1.7 million roses; 569,000 tulips; and 421,000 chrysanthemums sold in 1999. The VBA has developed futures markers, so that retailers can lock in a supply of flowers at predictable prices. Flowers are auctioned by beginning with a high price, and having buyers press a button when the price drops to the price they will pay.

Supermarkets. The top three supermarket chains- Kroger, Safeway and Albertson's Inc- account for 68 percent of sales in the top 100 U.S. markets where they operate, compared with a seven percent share for Wal-Mart. Wal-Mart moved into food retailing in the mid-1990s, and its 1,060 super-centers were widely expected to take market share away from traditional retailers. So far, Wal-Mart seems to have taken sales from regional, not national, supermarket chains.

Edward Walsh, "USDA plans to pay farmers to prune the prune supply," Washington Post, December 26, 2001.

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