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Almond Surplus Hurts Co-Op : Growers' Membership Cut Off, But Sales Increase

October 29, 1985|Associated Press

SACRAMENTO — Faced with unprecedented surpluses, California's huge almond growers cooperative has stopped accepting new members.

The cutoff of memberships followed a record 1984 almond crop of 587 million pounds, a level that leaders of the California Almond Growers Exchange had not thought would be reached until 1991.

"We wanted to send a message to growers that the almond industry has more than enough supply and it would be a mistake to plant new acreage," said Steve Easter, vice president of the cooperative.

Represents Growers

With 5,800 members, the exchange represents three of every four almond growers in California and, under the Blue Diamond label, processes 60% of the almonds produced in California--the nation's commercial supplier.

California almond acreage has increased rapidly, and the cooperative had managed to keep its sales in pace using aggressive marketing in the United States and abroad.

But the 1984 crop--followed by what is expected to be the second biggest crop ever this year--hit the world market at a time when the strong dollar made it harder to sell abroad, cooperative officials said.

"We'd be all right now if we hadn't produced 100 million pounds extra (last year). It's still hanging over the market," Easter said during a tour of the Blue Diamond processing plant at Sacramento.

Despite that surplus and the drag of the strong dollar, the cooperative has continued to increase sales both in the United States and abroad.

Domestic sales rose 40% in July and August, the first two months of the group's fiscal year, and exports were up 127%, said Roger Baccigaluppi, the cooperative's president.

Partly as a result of sharp price cuts, the cooperative has increased sales 141% to Japan, 114% to West Germany and sixfold to the Soviet Union, a relatively new market that has just pushed ahead of Japan as the No. 2 foreign Blue Diamond consumer behind West Germany.

Decided to Cut Prices

The cooperative decided to cut prices because "it's better to ship almonds than store them," Baccigaluppi said. "But this can't last forever. People don't realize how terrible the problem is in agriculture."

Slashing prices is helping ease the surplus, but the revenue does not cover farmers' growing and harvesting costs, the cooperative's officials said.

Wholesale prices have declined from $1.90 per pound in 1981 to around $1.10 now, which Baccigaluppi said probably did not entirely offset the price premium on U.S. exports caused by the strong dollar.

Growers will get about 65 cents per pound but would have received less without recent increases in exports.

Because of the price squeeze, Baccigaluppi estimated that 20% of California's almond growers will go out of business.

"We're talking about people who have devoted their whole lives to this thing, and they're gone and it's not their fault," he said. "It's the government. The problem we have in the whole agricultural economy is the strong dollar, and that's not their (the farmers') fault."

Fears Protectionism

His biggest fear is that instead of concentrating on bringing down the dollar, government leaders will try to protect American manufacturers and farmers from foreign competition.

The Reagan Administration has worked with foreign governments in recent weeks to bring down the dollar, and it is trying to head off trade protectionist measures in Congress.

"I worry that Congress will do some quick-fix things, and we'll have a disaster," Baccigaluppi said. "All we have to do is do a couple of wrong moves, and our partners do a couple of wrong moves and there's no world trade."

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