Californian Raisin Prices Soar on Strong Demand and a Decline in Production

raisins Sasajo/Adobe Stock

Spend Matters welcomes this guest post from Jara Zicha, market analyst at Mintec.

Prices for Californian raisins have soared in recent months. Up by about 50% since April, prices have increased from just below $0.90/lb to $1.30/lb for product delivered to Europe. Current prices are 20% above the 5-year average, but most important, Californian raisins are trading at a significant premium to Turkish raisins and sultanas.

Turkish prices have also risen since April, buoyed by soaring prices in the US, but at a much slower rate, by only 25%. Californian raisins usually trade at a premium to Turkish produce, but this year, following the harvest, the price difference between the two origins increased rapidly.

Production in California has been on a steady decline over the past several years due to farmers moving to more profitable crops such as almonds, pistachios or various fruits. Acreage has fallen 30% over the past decade. This year’s output is estimated at 275,000 tonnes, the lowest tonnage since 2004/2005. Additionally, California struggles with droughts, and this year’s hot summer certainly did not help the crop.

But how do the Californian exporters manage to maintain their high margin over their Turkish rivals? The answer is simple: Californian raisins are a globally recognised standard within the dried fruit industry. Traditionally, California has been very good in how it advertises its dried grapes to the rest of the world and importers are willing to pay the premium. As long as the origin of the raisins on the packaging says California, consumers are willing to splash that bit of extra cash. Retailers are well aware of this, and despite the recent hike in Californian prices, they are unwilling to change the way they procure their product by switching to cheaper Turkish raisins.

Of course, the question remains, will this last? In the short term, procurement strategy will not likely change for major global retailers and neither will consumer preferences. In the longer term, California is unlikely to maintain inflated price premium over their main rivals. Farmers in California will eventually have to compete with cheaper producers from Turkey, South Africa, Chile or Iran.

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Voices (2)

  1. Cliff:

    At the present (December 22nd, 2017), California raisins are trading well above $1.30/lb. as prices are now approaching $1.70/lb.. The 2017 crop is off by 30+% volume compared to the same receiving period last year. Raisin vines continue to be pulled out and it is expected this year more acres will be removed compared to any single year in the last 10. Demand for California raisins exceed supply and this will more than likely continue until the 2020 crop. I predict California raisins will trade between $1.50/lb. and $2.00/lb. FOB Exworks for the next several years.

  2. Bryan Arabian:

    The California raisin grower is barely making any money (if any) at the current “inflated” price. Honestly, the price is not inflated but still below where it should be. Turkey will always try to be lower than Ca because 1. they are not a premium raisin and 2. the costs to grow is significantly lower and have room to sell lower. It comes to this…. If you want a California raisin it’s time that the market catches up and pays for it. It has gotten away with a cheap price (below production cost) for at least a decade or more.

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