Citrus sales suffer as ports remain slow


Issue Date: February 11, 2015
By Ching Lee
Kevin Severns, general manager of Orange Cove-Sanger Citrus Association, stands inside an empty packinghouse early in the afternoon last week. The plant should be running full force this time of year, but a slowdown at West Coast ports has cut the operation’s hours during its busiest export season.
Photo/Cecilia Parsons
Kevin Severns, general manager of Orange Cove-Sanger Citrus Association in Fresno County, shows a bin of oranges picked last week that’s ready for export, but with delays at West Coast ports, some fruit will have to stay on the trees longer.
Photo/Cecilia Parsons

What should be a bustling time in California citrus groves and packinghouses has ground to a halt in many cases, with pickers not harvesting much fruit and packing facilities sitting idle.

Contract negotiations between West Coast dockworkers and shippers have dragged into their ninth month, and California agricultural exporters say delays at West Coast ports have gotten worse—with severe impacts to citrus growers and packers, who are at the height of their exporting season.

Kevin Severns, general manager of Orange Cove-Sanger Citrus Association, a grower cooperative citrus packinghouse in Fresno County, said his facility should be packing 15 to 20 loads a week for export mainly to Southeast Asia, China, Japan and Korea, but it is doing only two to three loads. As a result, he's had to reduce his workers' hours, where normally the plant would be running 12 hours a day, five and a half days a week this time of year.

"We're not going to be aggressive in trying to ship when we know there's a potential for some of our containers to just wind up sitting," he said.

California ports are so backed up now that not only are exporters unable to get their cargo loaded onto ships, but they also can't get their fruit back to move it to domestic markets, with containers of fruit sitting at the ports spoiling, said Joel Nelsen, president of California Citrus Mutual.

The problem, he said, appears to be a lack of workers at the ports to move the containers, identify where the fruit is and then load it back onto trucks to be sent back to the packinghouse. Ships that are left sitting at anchor can no longer wait, he added, so they're going to where they can load up and then head out.

"So all of these agreements that were reached between customers and between shipping lines are pretty much out the window," Nelsen said.

Those agreements will need to be resolved between buyers and sellers—and it will be difficult to do if cash has already changed hands, he said. Losing a container of fruit and the revenue for it would be a big hit for affected growers, he added.

Nelsen estimated that at this point in the season, the state's citrus sector has lost about 25 percent of its export opportunity, with volumes increasing as more fruit is harvested. The state historically exports 25 percent of its fresh tonnage. Meanwhile, offshore competition is beginning to fill the void, he said, with reports that fruit from as far away as Egypt is making inroads into markets such as Korea.

The port problems also come just as China—a top citrus export destination worth $30 million for the state—reopened its market last August to California citrus. China banned California citrus in 2013 after finding brown rot in some shipments. The state exported $899 million worth of citrus products in 2012, according to the University of California Agricultural Issues Center.

Keith Watkins, farm manager for Bee Sweet Citrus, a grower, packer and shipper in Fresno County, said with harvest slowing and the fruit staying on the trees longer, quality begins to drop, resulting in lower returns to growers.

"Once the fruit gets soft, you can't export it and it goes to the domestic markets, but there's only a certain amount that the domestic market could take," he said.

Normally, the company is exporting more than 30 percent of its volume at this time, but it is now shipping less than 10 percent, he noted.

Warmer weather this winter, particularly in recent days, has accelerated fruit maturity, Fresno County citrus grower Keith Nilmeier said, and that will make it more difficult for growers to keep the fruit on the trees longer.

Growers typically try to hold a certain amount of fruit on the trees by using a growth regulator that slows the acceleration of rind maturity, so that they could pick through the month of April and have fruit going to market at different times, Nilmeier said. But Severns noted this year's crop doesn't have the normal holding quality because it endured a long, hot summer last year and in some areas the trees were stressed for water.

"If that fruit doesn't ship export, it simply forces its way onto the domestic market," and that could lead to a drop in prices, Severns said.

Nilmeier said his production this year has been manageable, as the citrus crop is not too big, "but if (the port slowdown) continues on for another month or six weeks, it could be more of a problem."

Watkins said he's heard of other packinghouses trying to reroute their cargo in order to bypass West Coast ports, but few options remain and none appears to make economic sense at this point.

Jock O'Connell, an international trade economist based in Sacramento, recommended that California agricultural exporters consider the current port congestion problems as a long-term issue that won't necessarily end with a contract resolution between the International Longshore and Warehouse Union and the Pacific Maritime Association.

He said while the union has engaged in some "disruptive practices" that have contributed to the gridlock, he noted hearing complaints about congestion at ports starting about a year ago. Importers reported seeing the problems first, he said, noting that major importers are now building into their orders a longer lead time in expectation that it would take them longer to get goods into this country from overseas.

"There is a definite sentiment now that West Coast ports are a problem," he said.

The growing trend of shipping lines using bigger vessels that are unloading more containers at these ports has been a factor in the congestion, O'Connell said. A shortage of chassis used for hauling containers has also plagued ports, after a decision by ocean carriers to divest their chassis to equipment-leasing companies. But these problems are not particular to West Coast ports, he added.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.