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The WestMark Group. 2. Objectives. Driving factors - Table grapes and stone fruitProduction situation - California and ChileBearing acreage trendsProduction trendsImport/export marketsSelected variety trends - California and ChileOutlook. The WestMark Group. 3. Driving Factors. Pace of cha
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1. The Outlook for Table Grapes and Stone FruitAgribusiness Management Conference Fresno, California
October 31, 2002
2. The WestMark Group 2 Objectives Driving factors - Table grapes and stone fruit
Production situation - California and Chile
Bearing acreage trends
Production trends
Import/export markets
Selected variety trends - California and Chile
Outlook
3. The WestMark Group 3 Driving Factors Pace of change - Global business environment
Need for product differentiation - Avoid commoditization
Consumer preference(s) - Variety, taste, appearance
Retail consolidation = Greater buyer power
Tough foreign competition (Chile, Mexico, China)
4. Bearing Acreage TrendsSource: CDFA; California Table Grape Commission
5. The WestMark Group 5 CaliforniaTable Grape Bearing Acreage Source: CDFA
6. The WestMark Group 6 Bearing acreage summary Modest growth in stone fruit except plums over past decade
Table grape acreage grew at a slower pace than stone fruit over past 10 years
California stone fruit acreage - Flat past 5 years - + 112,000 acres
Table grape bearing acreage increased 10% over past 5 years - + 87,000 acres
7. The WestMark Group 7 Tree Fruit Production (boxes)Source: California Tree Fruit Agreement
8. The WestMark Group 8 California Table Grape Production(21# Cartons) Source: Calif. Table Grape Commission
9. The WestMark Group 9 Chilean Table Grape Production(000s of boxes) Source: Eximfruit
10. The WestMark Group 10 Production Issues GWSS remains a threat to table grapes
Weather problems and soft prices plagued the 2001 table grape crop in Calif.
Price volatility is a significant factor
Significant increases in costs
Energy
Workmens compensation insurance
Labor - Mandatory mediation law
11. The WestMark Group 11 U. S. Table Grape SupplySource: California Table Grape Commission
12. The WestMark Group 12 Import/Export Issues Chilean imports continue to be a major factor in the U. S. market (Chile supplies about 33% of total U. S. market)
Total 2001-02 Chilean shipments to U. S. were about 15% higher than prior year
Early season Chilean prices were strong
End of season Chilean prices weaker due to weather problems and large supplies
Mexican table grape imports are a growing competitive factor for Coachella growers
13. The WestMark Group 13 Import/Export Issues (cont.) Port labor strike significantly interrupted table grape exports (Asia is a significant market)
Impact of West Coast port has not been fully quantified
Mainland China supplying some Red Globes to Hong Kong (depressing price effect despite lower qualities)
14. The WestMark Group 14 Selected Variety Trends - Calif.21# CartonsSource: CDFA; California Table Grape Commission
15. The WestMark Group 15 Selected Variety Trends - Chile 000s of 8.2k boxes; Source: Eximfruit
16. The WestMark Group 16 Outlook American eating habits boost fresh fruit
Increased emphasis on health
5 a day
Per capital consumption of fresh fruit and vegetables has increased 20% since 1970
Domestic table grapes movement and prices have been sluggish since late July
West Coast port shutdown have disrupted key exports to the Far East - Full impact not quantified
Unseasonably large supplies of table grapes in storage
17. The WestMark Group 17 Outlook (cont.) Price differentials between large, vertically integrated producers and small producers are widening (marketing power, relationship with major retailers)
Small producers with high quality can achieve good returns if they develop strategic alliances with large organizations that possess marketing power
China represents an increasing competitive threat for some export varieties
18. The WestMark Group 18 Outlook (cont.) Outlook for some varieties is gloomy (Red Globes)
Plantings to match production to demand and timing
Stone fruit - later varieties = higher production
Table grapes - Crimson - Late season red seedless (has substantially replaced ruby seedless)
19. The WestMark Group 19 Outlook (cont.) Liquidity, good capitalization, and lack of significant dependence on borrowed capital is critical
Quality, marketing power, vertical integration, use of technology, and excellent management are keys to success
20. Thank You! Mark W. Burrell
Managing Partner
The WestMark Group
Bakersfield, Calif.