Editor’s Note: Barry Bedwell has long been involved in California specialty agriculture. Before serving in his current position as president of the California Grape & Tree Fruit League, he was president and CEO of Allied Grape Growers, the state’s largest winegrape grower cooperative. Bedwell has a deep, nuanced understanding of the state’s fruit industries. California’s stone fruit industry has been on a roller coaster ride, and American/Western Fruit Grower decided, who better to answer questions about where the industry has been and where it’s headed.
Q: The California peach, plum, and nectarine industry started hitting the skids in the 1990s. What happened? Why didn’t cherry growers have a similar experience?
Bedwell: In short, too much production coupled with too many marketers that led primarily to unsustainable prices for producers. In addition, the eating experience for peaches, plums, and nectarines was not always consistent and to a level that made consumers want to come back and purchase more. The fruit looked wonderful but the taste fell short of expectations. Varieties had been developed to fill certain market niches and gaps during the season so it appeared that timing was more important than other factors such as sweetness. All of these factors, along with other profitable alternatives for growers, meant that acreage was sure to contract.
Cherries, on the other hand, presented an eating experience that consistently met or exceeded expectations. Plus, you were dealing with much less production and a growing demand. Fewer marketers and a tighter time frame for the California season were positives as well.
Q: The peach/plum/nectarine industry’s federal and state marketing orders were largely voted down by growers in late 2010 and early 2011. Why did the growers cease supporting the marketing orders?
Bedwell: In general, small growers continued to support the idea of generic promotion, but larger grower/packer/shippers saw less value as time progressed. At the end of 2010 when the vote was taken in regard to the California marketing order for peaches and nectarines, less than 50% of the eligible producers voted. The majority of those voting did support a continuation of the order. However, in regard to the overall volume of production represented in the voting, such support fell well below the thresholds necessary. Voting analysis seemed to reflect the fact that small growers viewed industry promotion as beneficial, but larger, vertically integrated operations confirmed their feelings that promoting their own operations and products was more cost effective than spending generic dollars given the specific programs of the California Tree Fruit Agreement (CTFA). In retrospect, given the tremendous success of such other efforts in commodity promotion like the California Table Grape Commission, you would have to reasonably dig into the effectiveness of CTFA itself to understand why there was not more support.
Q: There are fewer growers today as well as less peach/plum/nectarine acreage, correct? How would you characterize this industry shake-out?
Bedwell: Approximately a decade ago, most estimates being circulated said that there were about 600 to 700 independent growers of fresh peaches, plums, and nectarines, mostly in Fresno and Tulare counties. Today that estimate is about 200 independent growers. Acreage of peaches, plums, and nectarines 10 years ago was probably close to 90,000. Now that number is thought to be nearer 60,000. Also at one time there were an estimated 70 to 80 entities actively marketing California peaches, plums, and nectarines. That number is now most likely less than half that figure. Just as there has been a continued consolidation in the retail sector with fewer and larger buyers, there is a mirrored situation with stone fruit producers and shippers. However, they still remain multi-generational family operations that have become more efficient and understanding of retailer and consumer demand as time has passed.
Q: How healthy is the industry today?
Bedwell: The industry is reasonably healthy at this time. If you compare it to some other crops such as nuts or table grapes, you would say there is definite room for improvement. On the other hand, if you were to compare it to, say, eight or nine years ago when there were actually prayer sessions hoping to help raise prices, you would have to say we are in mighty fine shape. Therefore it is largely a matter of perspective. Looking ahead, given better, balanced, and more consumer-friendly production coupled with a growing demand for fresh fruit, you have to be optimistic that we are in a sustainable time frame.
Q: How is the industry dealing with a declining labor supply? What if the labor situation were to worsen?
Bedwell: We just recently completed our annual survey of membership of the top 10 issues that we as an association need to address in 2014 (see pg. 35). Once again, immigration reform topped that list. This past season we heard continued reports of a tightening labor supply, and in the absence of reform that trend will undoubtedly continue. Most producers have begun to allocate labor differently by prioritizing practices. One example might be to forgo discretionary cultural practices during harvest because those workers are needed to pick fruit. Growers are finding ways to make due with less, but that can only go so far. In the absence of reform, we would expect that we will have to play a defensive strategy against the continuation of potential E-verify requirements, no-match letters, and I-9 audits. We are worried that eventually we will see actual fruit rot in the fields in the absence of labor and we hope that we do not have to get to that point before consumers realize that their domestic food supply is at risk.
Q: Almond trees use about 3 feet of water annually, though growers of highly productive orchards use more than 4 feet. How do peaches, plums, and nectarines compare in their water use? Can the industry survive an extended drought of, say, three or four more years?
Bedwell: Water use for peaches, plums, and nectarines has been estimated at 3 acre-feet annually. For the majority of the production area, water resources are considered excellent given normal circumstances. However, we find ourselves in a situation that is anything but normal. Usually there is plentiful water from irrigation districts with senior water rights that can be supplemented, if needed, with the pumping of wells. With deliveries from the state and federal water projects at or near zero there will be a substantial amount of groundwater used, thus resulting in a continued lowering of water tables. We are concerned that given the severity of this drought there will be increased attention and possible legislation related to groundwater management.
Q: What are the industry’s prospects for the future in the near term? What are its top assets, and what are its major challenges?
Bedwell: We would rate the prospects for peaches, plums, and nectarines as good to very good in the near term. Production is more balanced and continues to show signs of tightening in the short term. Awareness of the need for quality and consumer acceptance continues to grow. Exports are expanding as evidenced by last year’s opening of the Australian market for California peaches and nectarines. More foreign markets are expected to open as well.
The industry’s top assets are the growers and shippers themselves. In many ways, this segment of the agricultural industry has witnessed the survival of the fittest. The remaining players are now more focused than they ever have been on doing what is right in delivering the best possible product to the consumer. They have better communication and relationships with the demand side. The major challenges are related to labor and water availability and the continued growth of regulations that have a cumulative negative impact of their ability to compete worldwide. Also in the final analysis, it is about getting legislators, and the consumer, to understand the importance of producing food in California for economic, environmental, food safety, and food security reasons.
Q: Crystal ball time: Are hand-picked fruit going to be grown on a wide-scale wholesale basis in the U.S. 25 years from now?
Bedwell: I would have to say that most likely hand-picked fruit will still be a major portion of the industry in two and a half decades. However, there is no doubt that the need to mechanize will be accelerated given the current and future anticipated labor supplies. The U.S. will never be the low-cost producer given the high level of input costs we have, with labor being the most concerning. However, we have been successful because of our culture of innovation and production efficiency. Mechanization is naturally a part of that future and in its absence, the occurrence of hand-picked fruit will most likely mean that it originated from somewhere outside the U.S.
Q: Finally, on a completely different note, if you could have dinner with one person, whether alive today or having passed away, who would it be and why?
Bedwell: Given the extreme dysfunctional nature of politics today, I would love to bring back California Senator Ken Maddy, for whom the Maddy Institute at Fresno State is named, to talk about how he reached out across the aisle to really get things done. There is so much political posturing now without the lack of any meaningful progress that we need to learn how to find those individuals that would truly put policy over politics. Senator Maddy continues to be remembered as one of the best examples of an individual that was not only universally liked by everyone but respected as well. With the divisions we are seeing over water and labor, we could certainly use his advice.