The 6,000 members of Sunkist Growers were warned Tuesday that they may have to refund as much as $1.5 million to the citrus cooperative because its sales to the severely depressed orange juice market fell more than 30% below expectations last year.
But that sum pales before the record $619 million that members previously were paid for the 1985 crop, Sunkist President Russell L. Hanlin said.
And while 1986 will not match that record, Hanlin said, "we will nevertheless have a good year."
Sherman Oaks-based Sunkist expects sales to top $800 million for the second straight year, though falling about $36 million short of 1985's record $837 million, Hanlin told Sunkist's Ventura County members at their annual midyear meeting at Camarillo Grove Park.
That would result in members dividing about $580 million, compared to last year's $619 million, which he attributed to "extraordinary prices we should not reasonably expect to duplicate."
Proceeds from the sale of oranges for processing into juice and other products confirmed Hanlin's prediction at Sunkist's annual meeting in February that advance payments calculated at 70% of expected revenue from that market might be overly optimistic.
"The world oversupply of orange juice, which resulted in last year's price collapse, appears to be correcting," he said, adding that "a reasonable supply balance" is unlikely to be reached for about another year.
Exports to Japan
The effect of the juice price collapse was minimized, however, because California's orange crop--in contrast to that of Florida--is grown primarily to be sold as fresh fruit.
"In a good year, 'products' accounts for 6% of Sunkist's return to members," Hanlin said. Meanwhile, export sales of fresh citrus are enjoying "a superb year--particularly in Japan," Hanlin said in an interview before the meeting. Sunkist's share of that market increased 10%, he said, and prices continue to average about $2 a carton above domestic prices.
"Because of relatively weak crop conditions in (the San Joaquin Valley this year), a disproportionate share of export sales has been enjoyed by you here in Southern California," he told the Ventura County growers. "As a result, your comparative returns should be quite good."
Hanlin expressed "deep concern" that the recent detection of Fuller rose weevil eggs on California citrus shipped to Japan could have "calamitous consequences" on future sales if that country orders widespread fumigation with methol bromide, which seriously harms the fruit's appearance and quality.
"We must drastically reduce the presence of rose weevil eggs from our fruit or eventually suffer calamitous consequences," he said.
"We simply haven't much time left before the other shoe drops," Hanlin said.