The Problem with Raisins

Today I'm calling nurseries.  I'm asking questions about clementine varieties, avocados, and other alternatives that are good crops for our area.  I'm asking these questions so I can make a master plan to pull out all of our raisin acreage over the next 10 years.  It's a sad thing; some of these vines were planted by my great grandfather, they've lasted a long time, they've been through a lot  and it is no fault of their own that they are going to be replaced.  No. That fault is the packers. 

This week, the rumors started.  They do it every year, the packers say that they are going to get together and pay bottom price for raisins.  They say they are competing with Turkey or Iran and that they just can't pay more.  So this year, I decided to do my own research.  This is the USDA Raisins: World Markets and Trade report.  Here's a fun fact, the USA consumed over 200,000 tons of raisins last year, the report doesn't say how much the USA imported last year, but the last named country on the report is Mexico importing 17,000 tons, so it must be less than that.  That means that our California Raisins control over 90% of the second largest raisin consuming market in the world.  It also means that since we as a country produced 340,000 tons last year, about 60% was bought at USA prices and shipped domestic.  You can buy raisins here for $2.38 a lb, it's the generic brand, nothing fancy. That means they are selling for $4,760 a ton.  They bought the raisins for $1500 a ton if you did not get quality bonuses of course the grower carried the USDA fee for inspection and paid for any recondition etc.  but lets go with that.  This leads me to my final statistic in this article before I get to my real point.  Just the US sales last year for a raisin packer should have looked like this

Cost per ton$1500
Cost per ton to process$600
Gross Profit per ton$4,760
Net profit per ton$2,660
Tons Sold US200,000
US Profit$532,000,000
Cost of all raisins left over$210,000,000
Net profit if they did not sell another raisin$322,000,000

Pretty easy math right?  2+2 = raisin growers are getting screwed over.

Here's the thing, as a raisin grower I take 100% of the risk for the raisin packer.  Not only do I grow the crop and take all the risk of pest infestation and weather but when that is all done I lay everything down on a paper tray and PRAY that it doesn't rain.  Sometimes it does.  After all of that, after the packer knows exactly how many raisins were produced, price negotiations between the packer and the RBA begin.. except the RBA can't do anything to raise the price, they can't sell the raisins to anyone but the packer and their farmers are carrying the years expense of growing and harvesting the crop and they need money to pay their creditors back.  Last year I did not get paid in full until April and I delivered the product in September.

So the packer is in a position where they are guaranteed a profit, carry none of the risk, and their growers basically finance their operation.  Yet, they still lean out the window of their Maserati and tell people they are going to try to get away with only paying .50 cents a pound for raisins this year.  Jokes on them, I hope the RBA is going to ask for twice that and then just send it straight to arbitration this year.. doesn't matter, if they don't shape up there won't be raisins to sell in 10 years.