A new processor-grower contract gives Pacific Northwest pear growers strong incentive to grow Bartletts for canning instead of the fresh market.
The contract was not only agreed to early, but at record high prices.
Jay Grandy, manager of the Washington-Oregon Canning Pear Association, announced the three-year contract in late February during the Pear Association’s annual meeting in Yakima.
The Pear Association was organized in the early 1950s to help stabilize the canning pear industry and return a fair price to growers. Bartlett is unique in its dual purposes—it’s the only pear variety that’s canned, and it also is sold fresh.
“It’s somewhat unprecedented to have the agreement this early in February and not late May or June,” said Grandy.
Grower prices for No. 1 grade Bartletts will be $320 per ton in 2015, $340 in 2016, and $360 in 2017. Growers are paid according to grade of fruit, which is simplified into one grading structure under the new contract. Fruit are graded by size; growers will be rewarded a 5 percent premium from the base price ($320 in 2015) for fruit grading No. 1A, the largest size. Grade No. 2, the smallest size, will receive a 38 percent discount from the base price.
Grandy said two of the three Northwest processors—Del Monte Foods, with a plant in Yakima, Washington, and Northwest Packing (The Neil Jones Food Company) of Vancouver, Washington—have agreed to the contract. The third processor, Seneca Foods, headquartered in New York, with a plant in Sunnyside, Washington, has not signed the contract.
The Pear Association board of directors chairman, David Garcia of Diamond Fruit Growers in Hood River, Oregon, said the board’s understanding is that Seneca is willing to go along with the negotiated prices but does not plan to sign a contract. Seneca did not return calls for comment.
“There’s not really a concern that the third processor didn’t sign because the other two processors are very interested in more tonnage,” Garcia said.
More going fresh
For the last 15 years, there’s been a shift in Northwest pear production from processing to fresh. In 2000, around 65,000 tons of Bartletts were grown for the fresh market; by 2014, the fresh volume had increased to 115,000 tons.
Conversely, in the same period, tonnage of Northwest Bartletts sent to canneries declined from 180,000 tons in 2001 to less than 120,000 tons last year.
Grower prices in the new contract reflect the shortage of fruit grown for processing and the canners’ need for more pears. Canned pear products are at their lowest inventory in years, and there’s been no carryover of late. As a result of the strong fresh market, processors have had to significantly increase their prices to growers to attract tonnage needed to keep plants running and help keep overhead costs down.
In past years, contracted prices annually increased around $6 per ton each year. But in 2014, all three Northwest canners (Del Monte, Northwest Packing, and Seneca) voluntarily increased grower prices to $300 per ton for No. 1 grade, up significantly from the Pear Association’s contract price of $272 the previous year.
The recently completed pear contract was Grandy’s last. He plans to retire later this year after compiling industry statistics one last time and helping the board finalize its future.
Grandy has been manager at the bargaining association since 1996 and instituted the first multi-year contract with a variable pricing system in 1998. Known as a numbers guy, he annually produced charts and tables to show canned pear supply and demand, costs of production, and production trends to help growers better understand both sides of the industry.
From 1984 to 1996 he managed Snokist Growers, a processing cooperative in Yakima, which later gave him unique perspective as Pear Association manager and helped him bring canners and growers together.
Through the years, he has served on the boards of the Pacific Coast Canned Pear Service, Pear Bureau Northwest, Washington State Fruit Commission, and regional and national food processor groups. Grandy received the Silver Pear Award from the Washington State Horticultural Association in 2005.
In addition to his Pear Association duties, Grandy teaches in the business department at Yakima Valley Community College and prepares income taxes for clients.
A few years ago, when the number of Northwest pear processors shrank from five to three, it was Grandy who initiated discussion about the future of the Pear Association and whether it had outlived its life.
The outcome of member discussions was reaffirmation of the value and important role of the Pear Association, says Garcia. “But it also was an example of Grandy’s humbleness,” he said. “Jay is well respected by the processors because of his knowledge of the processing industry from his time at Snokist. He knows cannery operations and can talk at their level.”
But Grandy also has the respect of growers, Garcia added. “He’s been a strong advocate for the grower and is very level headed. He found the middle ground between growers and processors. In negotiating, growers always want the sky, but Jay knew how to bring their expectations down to reasonable levels.”
Grandy, armed with industry statistics, knew what farmers were going through and what acreage was being pulled out or replanted, said Garcia. “He always came in with facts and production trends, which helped us make better decisions.”
In the coming months, the board will decide if association administrative duties will be done by an outside entity and negotiating done by a grower committee or if staff should be hired.
With a contract that’s good for three years, the Association doesn’t have to take any immediate action. •
Who buys canned pears?
Food service is the biggest market for Northwest canned pears. About 80 percent of canned pears produced in Washington and Oregon end up in the food service segment, according to Rich Baldoz, Northwest sales representative for Pacific Coast Producers. PCP is a grower cooperative, headquartered in Lodi, California, that has an alliance with Del Monte’s Yakima plant.
Retail consumers of canned fruit are a diminishing group, says Baldoz. “Most consumers are eating fresh—fresh product has all the buzz, even though canned pears are just as good.”
Canned pears compete against 40 different fruit products, according to Baldoz. “Any fruit that appears on a menu is a competitor, which is why growers fund a marketing and promotion program called the Pacific Northwest Canned Pear Service.”
Within the food service segment, the U.S. Department of Agriculture is one of the largest buyers of canned pears. About 40 percent of canned pears are served through the national school lunch program.
The health care food service segment (hospitals, senior living) buys about 25 percent of the canned pear supply, community mass feeders (colleges, prisons, daycare) represent 20 percent of the buyers, and restaurants, hotels, and casinos represent 15 percent.
“The school lunch program is massive,” he said. “It’s very competitive, and everyone wants a piece of it.”
With such low inventories of canned pear products, wholesale prices for canned pears are now significantly higher than other canned fruit products. A case of #10 size canned pears sells for up to $31 f.o.b. compared to the same product that sold for $19 per case four years ago. Applesauce and tropical mix fruit products sell for about 35 and 25 percent less than canned pears, respectively.