Peach growers in Valley, China fight for market share

January 31, 2011 

California growers have been undisputed kings of the cling-peach industry for decades.

From Yuba City to Kingsburg, second- and third-generation farmers have steadily supplied the nation's makers of canned peaches, fruit cocktail and other processed peach products.

But now that dominance is being challenged by China -- a country with a history of squeezing U.S. farmers out of their own markets. And California's $158 million cling-peach industry worries it may be next.

In the last decade, lower-priced Chinese canned-peach imports to the U.S. grew from just 43,000 cases to more than 2.2 million last year. A case holds two dozen 29-ounce cans.

Chinese peaches now represent 12% of the 16 million cases consumed in the U.S. That has taken a bite out of the market share for California growers, who produce virtually all of the U.S.-grown cling peaches.

"It has been an overwhelming wave," said J.D. Allen, manager of the California Cling Peach Board in Dinuba. "And there is a lot of angst in our industry right now."

The industry knows China is a formidable challenger. The country captured the apple-juice concentrate market, once led by Washington state, and now supplies most of the processed garlic used in the U.S.

Lower-priced Chinese garlic was one of the factors that contributed to the shuttering of the De Francesco & Sons dehydrating plant near Firebaugh in 2006.

Cheap labor, government support and lower production costs provide China with an advantage over U.S. farmers.

Allen said Chinese peaches arrive in the U.S. at roughly half the cost of California peaches, making them attractive to food makers and processors.

A marketplace battle

To fight back, peach farmers and industry leaders are experimenting with labor-saving devices, launching a national promotional campaign and using social-media sites to appeal to an increasingly food-safety conscious consumer.

"Our growers produce the finest cling peaches in the world, and by increasing awareness of our product and the threat posed by imports, we aim to keep it that way for generations to come," said Ginny Hair, manager of domestic promotions for the California Cling Peach Board.

To trim costs, farmers are testing mechanical fruit-thinning equipment that knocks blossoms off the tree. Trees with fewer blossoms produce bigger fruit.

Roger Duncan, a University of California pomologist in Modesto, is working with the German-made equipment, which would cut down on the costly hand-thinning that is done each spring.

Duncan's system doesn't completely replace the hand thinning, but it can reduce the cost -- estimated at about $1,000 an acre -- by 25% to 30%.

"I am optimistic that growers will take a look at this," Duncan said. "Because it is going to be difficult to compete against a country that can produce a product cheaper than we can."

It doesn't help that California had large crops in 2009 and 2010. An oversupply of fruit caused the growers' price to fall 10% last year and forced them to tear out more than 1,000 acres of peach trees.

And another 1,000 acres have no guaranteed market because they are not covered by any contract with the state's cling-peach processors this year, said Rich Hudgins, president of the California Canning Peach Association in Sacramento, whose group represents 500 California cling-peach growers.

While a buyer may still be found for the fruit grown on those acres, a lack of contract means so far no one is interested.

"If we didn't have those cases of Chinese peaches, we wouldn't have this problem," Hudgins said.

Farmers and industry leaders are not the only ones concerned.

Bill Smittcamp, president of Wawona Frozen Foods in Clovis, said that a few of the food makers to whom he supplies cling peaches have reminded him that there are cheaper alternatives.

"It's like they are holding that Chinese canned cling peach over my head when it comes to price," Smittcamp said. "And that is the advantage they have right now."

Sounding the alarm

Peach industry officials are educating consumers about their plight. They are using social networking sites and websites -- calclingpeach.com -- to spotlight California cling-peach growers and encourage consumers to buy U.S.-canned peaches.

"We need to educate consumers that they should be looking for peaches from the U.S.," said Harry Berberian, a third-generation grower in the Reedley area. "There are a lot of us who have been growing cling peaches for a long time. It's in our blood. And we are going to keep going as long as we can, but it is not going to be easy."

Hudgins hopes consumers will respond to the industry's appeal to only buy U.S. peaches.

"Consumers have a different frame of mind about the foods they eat," Hudgins said. "Buying local has become a big buzz word right now and we think that this is a way for them to also buy local."

For consumers, it isn't always easy to tell where peaches come from. Under federal law, foreign food products don't have to be identified on the label if they have been substantially changed, such as when they are used as an ingredient. For example, peaches in yogurt don't have to be identified as foreign-grown. But whole or sliced peaches in a can do.

Kingsburg cling-peach farmer Karri Hammerstrom recently posted a blog item on an agriculture advocacy website -- knowacaliforniafarmer.com -- urging people to avoid Chinese peaches, saying they may not be made with the same food safety standards as those in California.

"As a mother, I have a real concern about where my food comes from, and I know that we have high standards for food safety in the U.S.," Hammerstrom said. "And as a grower, I know that we have the best testing and the best quality in the world. No one can do it better than we can."

The reporter can be reached at brodriguez@fresnobee.com or (559) 441-6327.

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