California growers supplying fruit for processing are facing uncertainty following Del Monte Foods' decision to close its cannery in Modesto, the company's last remaining processing facility in the state. The Walnut Creek-based company filed for bankruptcy in July, citing debt linked to a previous acquisition and long-term fruit purchase commitments made during the pandemic.
After a court-supervised bidding process, Del Monte auctioned several assets, but no buyer acquired the Modesto plant. "As a result, Del Monte Foods has made the difficult decision to begin an orderly wind-down of operations at the facility," the company said. The closure is expected to affect around 600 permanent employees and 1,200 seasonal workers.
The decision ends Del Monte's role as a processor of California-grown fruits and vegetables and leaves growers without a major outlet. "Growers are very upset about the situation," said Ranjit Davit, a cling peach grower and chair of the California Canning Peach Association.
Cling peaches are among the most affected crops, as they are grown exclusively for processing. Del Monte previously contracted about 35 per cent of California's cling peach volume, while Pacific Coast Producers accounted for roughly 60 per cent. Smaller processors handled the balance.
"It's pretty devastating," said Richard Lial, a cling peach grower in San Joaquin County. Lial planted new orchards under a long-term Del Monte contract after removing an almond orchard. "It's horrible," he said, noting that he is now left without a buyer.
Cling peach orchards are typically planted under 20-year contracts, matching the lifespan of the trees. Establishment costs run into several thousand U.S. dollars per hectare, and it can take close to a decade to recover the investment. Some growers say the closure could result in complete losses if alternative outlets are not secured.
Pear growers are also monitoring developments. Chris Zanobini, executive director of the California Pear Advisory Board, said growers are "concerned about whether they'll be able to sell the fruit they grow," noting that Del Monte purchased more than 40 per cent of California's cannery pear volume last year.
Attention has turned to Pacific Coast Producers, which acquired some Del Monte assets, including unsold inventory, and plans to license certain shelf-stable brands. "We intend to market and sell the Del Monte brand going forward for shelf-stable fruits," said PCP vice president Mona Shulman. She added that the cooperative plans to contract additional fruit this year, but cannot replace Del Monte's full production volume.
Contracts offered by PCP may be shorter term. "To protect our company and not overcommit, it is likely a 20-year contract may not be the initial offering," Shulman said.
Source: California Farm Bureau / TurlockJournal
