Gasoline Watch: Rise May Be Over

A second week of double-digit increases at the pump has pushed up Southern California gas prices by about a quarter since the Aug. 6 fire at the Chevron refinery in Richmond, but there are signs that the spike may be over, according to the Automobile Club of Southern California’s Weekend Gas Watch.

The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $4.115 per gallon, which is 15.9 cents more than last week, 38 cents higher than last month, and 40 cents higher than last year. In San Diego, the price is $4.100, 16.1 cents above last week, 39 cents above last month, and 38 cents higher than last year.

On the Central Coast, the average price is $4.132, up 15.1 cents from last week, 34 cents higher than a month ago, and 37 cents above last year. In the Inland Empire, the average per gallon price is $4.090, up 17.1 cents from last week, 40 cents higher than last month, and 39 cents more than last year.

Bakersfield’s average price this week is $4.07

“Southern California gas prices have actually only risen by about two cents since Sunday, and most of the week-to-week increase occurred last Friday and Saturday,” said Auto Club spokesperson Jeffrey Spring. “With the refinery still partially open, it appears that wholesale gasoline buyers feel that for now, they have captured most of the cost increase that will result from the fire.”

Some of the best prices in the state are in the Central Valley with a Shafter ARCO at $3.69 today, Amigos Minimart in Avenal at $3.74 and ARCO in Delano at $3.79. Best price in Fresno is $3.85 at Costco; Visalia $3.99 at Houston Ave Market; San Luis Obispo at Costco $4.06.

Spot market gasoline market for LA is down over a dime from earlier this week signaling lower prices ahead.

Dairy Operators Face “The Big Wipeout”

More dairymen are throwing in the towel this month as the price of feed,their banks,feed suppliers and their checking accounts all tell them the time as come.

Tulare County dairyman and Western United Dairymen president Tom Barcellos expects “double digit bankruptcy filings” by local dairymen in coming weeks as the feed price crunch caused by the Midwest drought hits the credit crunch at home this summer.

“Dairymen are getting out of the business – sending their cows to slaughter as fast as they can” says Barcellos whose family has been milking cows on their ranch near Porterville since the 1940s.

Barcellos ships milk every day to his co-op, Land O Lakes in Tulare,one of the largest milk receiving locations in the nation.”In the past week Land O Lakes has been receiving 1.1 million pounds of milk less every day than a week ago.That’s not the summer heat,which reduced milk volume earlier this summer – that’s due to cow liquidation.”

“People are exiting this business in droves.I would say catastrophic just about describes the situation.” Tulare /Kings Counties is the most productive dairyshed in the US, accounting for about 38% of the milk in California.

Wipeout/Bloodbath

Hanford dairyman Joaquin Contente says “everywhere I go around my area I see vacant dairies or places being put up for sale. These are my neighbors – people who have been in the business a long time, some three generations. Now they just want out. It’s the big wipeout.”

Fresno bankruptcy attorney Riley Walter agrees.”This is just a bloodbath. In the past 18 months I have been worked on 58 dairy  bankruptcies.Remember that does not tell you the whole story when you include going into receivership with your bank or voluntary dissolution”, a sale or auction for example.”These are all ways dairymen are getting out.” Add to this that the pace of filings” has increased dramatically in the past few weeks” says Walter who has been doing this “for a very long time.”

The typically volatile dairy business was made worse this Spring with a surge in production resulting in a glut of milk that further lowered prices. At Land O Lakes-Tulare they retired 17 dairies in April to try to right-size the milk supply.

Now the issue is feed costs that have surged this summer taking not just corn but soybeans, other grains and hay up to to levels not seen ever. ”There is not enough money from their milk check to pay the feed  costs” exclaims California Dairies Inc. CEO Andre Mikhalevsky.

Corn’s Impact…It Sucks

USDA says this week that corn prices on the cash market have soared and the season average price for 2012/13 is now projected at $7.50 – $8.90 per bushel, a substantial increase from July’s forecast $5.40 – $6.40 per bushel.

Back in 2009 banks and feed companies would back dairymen up, carry them for a while to tide them over. Dairymen had equity but in many cases after the tough years of 2009/2010 – that’s not true any more explains Barcellos. They still owe money and banks and feed companies can’t wait any more this time.

In a domino effect that leaves the lender – whether in the feed, supply or finance business – holding the bag on some of this debt.

“I am doing OK because I grow most of my own feed” adds Barcellos “but I also supply some of my neighbors and I hope I get paid.”

In the relatively small business community local feed companies are being forced to say no to long time customers. “I would say this is the worse I have ever seen it with dairymen going out of business, farms on COD and lots of bankruptcies.I don’t know what to tell you except it just sucks” laments Visalia grain dealer Kevin Kruse.

Attorney Riley Walter says from the feed companies point of view the super volatility of the corn market is making their business more risky.”I had a feed guy tell me what they have to face.They call Omaha and order a 100 unit train of corn and the guy says wire me $4 million. By the time the corn is shipped and sold here the local grain company is waiting 70 days before he even starts to collect.Even if he is sympathetic to the plight of his dairyman customer,he has a lot tied up.”

Driving around the backroads of Tulare County”you definitely see depopulated dairies “says UC farm advisor Jim Sullins. “It’s mostly the little guys who can no longer hang on.”

Others says what has changed is that “it’s the big guys going out now.”

A prominent multi-location dairy operator Alvin Souza of Tulare, filed for bankruptcy this Spring making news because he employed nearly 200 workers.

Sources says four prominent dairymen declared bankruptcy just last week but their names cant be verified. Yesterday, an auction of an 1800 cow Hilmar dairy took place because the farmer “had no feed and no money to buy it” says a knowledge source.

Sullins puts some of the blame for high corn prices on the mandate to make ethanol,a refrain heard across the dairy belt. Some 156 House of Representatives members wrote EPA’s Lisa Jackson recently to reduce or eliminate the fuel ethanol mandate while corn supplies are tight.

Western United Dairymen executive director Mike Marsh says in the tough 2009/10 period about 20% of existing dairies in the state went out of business.”We cant afford to lose more – endangering the infrastructure of the industry that is a $63 billion business in the state.”
WUD has filed a petition for emergency relief from CDFA Aug 6 including a a fifty cent per hundredweight increase on all classes of milk. In addition, WUD proposes a permanent exemption from the whey component on the first million pounds of bulk milk produced monthly. Marsh says he is waiting for a reply from state ag secretary Ross.”We can’t wait until September for a hearing“ argues Marsh.

In a letter to Ross, Joe Augusto, president of the California Dairy Campaign (CDC), urged CDFA to schedule the emergency hearing, saying the previous decision failed to address the immediate needs of dairy producers. “The fact that the 4b formula undervalues milk has led to a loss in revenue of more than $200,000 for the average 1,000-head dairy in our state over the last 12 months.”

“Already this year, more than 65 dairies have closed their doors due to the fact that dairy producer prices do not cover historically high production costs,” he continued. “In 2009, the worst year many can recall, 100 dairies
closed their doors. If closures continue at this rapid pace, 2012 will take an even greater toll on dairy producers if action is not taken by CDFA to restore fairness and equity to our dairy pricing system. Dairy producers are unable to pass on the record high feed costs that have resulted from the nationwide drought so it is critical that CDFA take emergency action to raise the price of all classes of milk to prevent more dairies from closing.”

Reis Soares, Soares Dairy, Chowchilla, Calif. also wrote in support of the petition, pleading for CDFA to consider WUD’s petition for an emergency hearing.

“I am a first-generation dairy producer and have been dairying for 28 years,” he wrote. “Dairying in 2009 was about as devastating as I could have ever imagined until 2012. I don’t have to tell you what has happened to our grain/feed costs, as you are fully aware of the nation’s worst drought in decades. In 2009 I borrowed on our farm in order to be able to feed our cattle. I refinanced our farm for more than what I originally paid for it just to stay in business. I guess you can say I bought our farm twice now. The equity of our farm is gone; the equity in our cattle is gone; so we have nothing left to borrow on.

Cow Culling Up

According to USDA/AMS, weekly estimated dairy cow slaughter turned substantially upward in July. Higher apparent culling, combined with higher feed prices, leads to a reduced 2012 herd size estimate of 9,215 thousand head in August.

While herd size is expected to be slightly higher on a year-over-year basis compared to 2011, the U.S. dairy herd is forecast to contract to 9,110 thousand head in 2013 says USDA.

This week the lower milk volumes were being felt in the market and milk prices on the CME soared to near $20 per cwt for October.But the lag time for California dairymen to get the relief may be too long for some – 60 to 90 days by some estimates.” We used to think if we could get $15 milk we would be OK.Now we don’t know if $20 milk will pay the feed costs worries Marsh, with some predictions of $9 to$12 corn.

Banner Year For U.S. Wind Industry/ California Reaches 5% Wind Contribution / Tax Extension Supported

This week the Energy Department and Lawrence Berkeley National Laboratory released a new report highlighting strong growth in America’s wind energy market in 2011 and underscoring the importance of continued policy support and clean energy tax credits to ensure that the U.S. remains a leading producer and manufacturer in this booming global industry.
The report says “President Obama has made clear, we need an all-of-the-above approach to American energy and the U.S. wind industry is a critical part of this strategy. In fact, wind energy contributed 32% of all new U.S. electric capacity additions last year, representing $14 billion in new investment.”
In the United States, domestic clean energy production and manufacturing competitiveness work hand-in-hand. The report finds total U.S. wind power capacity grew to 47,000 megawatts by the end of 2011 and has since grown to 50,000 megawatts, enough to power 12 million homes annually—as many homes as in the entire state of California. And as wind energy capacity has grown, more and more wind turbines and components like towers, blades, gears, and generators are “Made in America.” Nearly 70% of all of the equipment installed at U.S. wind farms last year came from domestic manufacturers, doubling from 35% in 2005.
Among their findings is that California added the most wind capacity in 2011 at 921 MW for a cumulative total of nearly 4000 MW installed. Texas has more than 10,000 MW.
With the addition of 921 Megawatts (MW) of wind energy projects installed across California in 2011 – bringing the state’s total wind generation capacity to 3,927 MW – wind energy now accounts for 5% of California’s total electricity needs according to the California Wind Energy Association (CalWEA). The 921 MW built in 2011 is enough electricity to power more than 400,000 households.
“The total amount of wind energy installations in 2011 created a banner year for wind generation in California and is helping to drive California closer to reaching its goal of 33% renewable energy,” said Nancy Rader, CalWEA’s Executive Director. “There are a number of
projects on the drawing board that will continue wind capacity’s growth in 2012, but we need Congress to extend the wind energy production tax credit very soon to keep up that momentum. The investments companies are making in California to develop wind energy
projects is a boon for cleaner air and greener energy, and also for creating jobs and retooling manufacturing here and across the country.”

Most In Kern

Of the 921 MW of wind capacity built in 2011, almost 700 MW of added capacity came from the Tehachapi area of Kern County, with large new projects also installed in Solano, Contra Costa and Riverside Counties.
This year will see even more growth, with several additional projects totaling in excess of 1,600 MW of wind generation capacity slated for Kern, Solano, Riverside, Imperial and San Diego Counties in 2012, which is expected to create more than 1,000 new construction jobs, in addition to permanent and indirect jobs.More than half of that is being built in Kern.

Overall, cumulative installed wind capacity in the U.S. grew 17% from 2010, and now totals 46,919 MW. Over 100 wind projects are currently under construction across 31 states and Puerto Rico. Almost 3,500 MWs of new projects broke ground during 4Q 2011 and the year
ended with 8,320 MWs under construction.

This summer, Energy Department leaders have traveled across the country and seen firsthand how American workers and businesses are helping maintain U.S. leadership in the growing wind energy industry. In Iowa, Keystone Electrical Manufacturing Company has seen orders from the wind industry grow from almost nothing a decade ago to nearly 22% of gross sales, while, at ACCIONA Windpower’s West Branch assembly plant more than 100 workers are making wind turbines to sell here in the U.S. and around the world. Near Minneapolis, the International Brotherhood of Electrical Workers Local 343 Union facility features a 60-foot turbine tower to help train union members for new construction, installation, and maintenance jobs.
In addition to strong gains in domestic wind manufacturing and capacity, the report finds that as wind technology improves, costs are coming down. Technological innovations are helping make longer and lighter wind turbine blades, while improving turbine performance and increasing the efficiency of power generation. At the same time, wind project capital and maintenance costs have continued to decline. Smart investments are paying dividends across the U.S. wind industry. From Des Moines to Amarillo to Denver, the American clean energy economy is hard at work—creating jobs right now and ensuring our global competitiveness in the clean energy technologies of the future. We can’t afford to break this momentum.
“This is why the Obama Administration is calling for the extension of the production tax credit (PTC). Our continued support of clean energy policies like the PTC are mission critical for America’s thriving, competitive wind industry—and shows, more than ever, the promise to create the high-paying American jobs and nationwide economic growth our country needs” says DOE.

Last week both the Senate and Congress indicated some willingness to extend the tax credit in the lame duck session of Congress this year. Extension of critical tax relief to save 37,000 jobs in wind energy and continue growing U.S. manufacturing advanced in the Senate Finance Committee today with strong bipartisan support.
By an overwhelming bipartisan margin of 19-5, a Senate committee passed an extenders package that included an extension of the wind energy Production Tax Credit (PTC). On critical amendment votes, all the Democratic members and GOP Sens. Chuck Grassley (R-IA) and Pat Roberts (R-KS) supported the extension of the PTC.

Governor Brown Launches Climate Change: Just The Facts Website to Refute Global Warming Deniers

STATELINE, NV – Governor Edmund G. Brown Jr. today used the occasion of the annual Tahoe Summit to launch a new website, Climate Change: Just The Facts, that documents the dangerous effects of global warming and calls on those who still deny its existence to “wake up and honestly face the facts.”
“Global warming’s impact on Lake Tahoe is well documented. It is just one example of how, after decades of pumping greenhouse gases into the atmosphere, humanity is getting dangerously close to the point of no return,” said Governor Brown. “Those who still deny global warming’s existence should wake up and honestly face the facts.”

The impacts of climate change are clear and global.

• America is seeing dramatic increases in food prices as a direct result of the worst drought in a half century. According to the National Center for Atmospheric Research, the percentage of the Earth’s surface suffering drought has more than doubled since the 1970s.

• Last year, Arctic sea ice was at the lowest level ever recorded. Satellite images show that Arctic summer sea ice has decreased nearly nine percent per decade since 1979.

• Last week a study published in the Proceedings of the National Academy of Sciences showed that events like the Russian heat wave of 2010 and the European heat wave of 2003 would likely not have happened without global warming caused by greenhouse gases.

Global warming’s impact on Lake Tahoe is well documented.

• In 2010, scientists at NASA’s Jet Propulsion Laboratory confirmed that over the last 25 years, the world’s largest lakes, including Lake Tahoe, have been steadily warming, some by as much as four degrees Fahrenheit. This is seven times faster than air temperatures have risen over the same period in some cases.

• That same year, researchers at UC Davis studied the impacts of climate change on the Lake Tahoe basin and concluded that there will be a continuing shift from snowfall to rain, earlier snowmelt and more runoff; an increase in drought severity, especially toward the end of the century; and a dramatic increase in flood magnitude in the middle third of the century.

• In 2008, a UC Davis study predicted that climate change will irreversibly alter water circulation in Lake Tahoe, radically changing the conditions for plants and fish in the lake.

• In 2005, researchers found that Lake Tahoe is warming at almost twice the rate of the world’s oceans because of global climate change.

Despite overwhelming evidence to the contrary there are still recalcitrant skeptics who ignore the findings of climate scientists and assert that global warming is not a problem.

The Climate Change: Just The Facts website debunks the claims of deniers and documents the serious impact of climate change on California – its economy, environment and public health. The site details:

• How rising global temperatures have far-reaching consequences for Californians, including sea level rise, more frequent and hotter heat waves, a declining water supply and large, intense wildfires.

• How every major scientific organization in the United States with relevant expertise has confirmed the Intergovernmental Panel on Climate Change’s finding that there is a 90 percent probability human activities are causing global warming.

• California’s groundbreaking efforts to reduce greenhouse gas emissions and prepare for the unavoidable effects of global warming which are now irreversible.

Governor Brown has pressed for increasing investment in renewable energy, efficiency and reduced dependency on fossil fuels. Last year, he signed legislation to increase California’s use of renewable energy to 33 percent by 2020.

A link to the website can be found here: http://www.opr.ca.gov/climatechangefacts.

Tesoro Buys Arco Brand From BP / Carson Refinery

SAN ANTONIO – August 13, 2012 – Tesoro Corporation (NYSE:TSO) announced today that its Board of Directors has approved agreements for the Company to purchase BP’s integrated Southern California refining and marketing business including 800 ARCO stations.. The purchase price of BP’s assets is $1,175 million, plus the value of inventory at the time of closing.

Tesoro already owns 250 ARCO stations they bought earlier this year and in the past five years acquired the Shell refinery in LA and 250 Shell stations  and in 2007 the bought the USA brand in California. They would now be the state’s biggest refiner.

The Tesoro news release says “At current prices, the inventory is valued at approximately $1,300 million. The transaction is subject to regulatory approval and is expected to close before mid-2013.  The purchase price is expected to be financed initially through a combination of cash and debt with proceeds from the subsequent sale of the associated logistics assets to Tesoro Logistics LP (NYSE:  TLLP) generating an estimated $1 billion of cash proceeds in the first year.  Earnings per share accretion is expected to be about 24% in each of the first and second year of operations.
“This transaction is a unique opportunity for Tesoro to combine the best aspects of two West Coast refining and marketing businesses resulting in a more efficient integrated refining, marketing and logistics system,” said Greg Goff, President and CEO.  “Given Tesoro’s existing operations on the West Coast and our understanding of the complexities and challenges of operating in California, we are well positioned to generate significant operational efficiencies, increase our ability to satisfy market demand and reduce stationary source air emissions.”
BP’s Southern California Refining and Marketing Business 
The Carson refinery, located south of Los Angeles and adjacent to Tesoro’s 97 mbpd Wilmington refinery, is a 266 mbpd high conversion refinery with a Nelson complexity of 13.3. The refinery has a track record of safe and reliable operations and, according to Solomon Associates benchmarking, is ranked in the top quartile of U.S. refineries on a utilization and energy efficiency basis.
The combination with Tesoro’s current West Coast system is expected to drive significant operational synergies through the integrated supply of crude oil, enhanced optimization of intermediate feedstocks and product distribution costs, improvements in light product yield and reductions in manufacturing costs and stationary source air emissions. The combined and reconfigured operations are expected to drive annual synergies of approximately $250 million with an additional capital investment of approximately $225 million.

ARCO Brand
The transaction also includes about 800 dealer operated retail stations in Southern California, Nevada and Arizona. These high volume retail stations, averaging over 245,000 gallons per month, ensure ratable off-take for refinery gasoline production. Tesoro will also be acquiring the well-established ARCO® brand and associated registered trademarks, as well as a master franchisee license for the ampm®convenience store brand.
In addition, the purchase price includes an integrated logistics system with an estimated master limited partnership value of about $1 billion. The assets include three marine terminals; four land storage terminals; over a hundred miles of pipelines, including connected access to the Los Angeles International Airport; and four product marketing terminals, providing extensive regional product distribution capabilities. The Company intends to offer these assets to Tesoro Logistics LP in multiple transactions over the first twelve months post closing, driving a step-change in TLLP’s enterprise value.
Finally, the transaction also includes two complementary assets which are located near the Carson refinery. The first is a 51% ownership in the 400 megawatt gas supplied Watson cogeneration (cogen) facility. This company-operated cogen, the largest in California, provides reliable electricity to the Carson refinery and sells excess electricity to the local utility grid. The second is a 350,000 metric ton per year anode coke calcining operation. This asset upgrades coke from the Carson refinery into valuable calcined anode-grade coke for the aluminum industry. These assets are expected to provide additional cash flow and drive earnings diversification for Tesoro.
“This is an exciting opportunity for Tesoro to drive significant shareholder value and is well aligned with our strategic priorities,” said Goff. “Excluding the value of inventory and after the sale of the logistics assets to TLLP, the Company will have paid about $175 million to purchase a 266 mbpd high complexity refinery in Southern California, a fully integrated retail marketing network, including the ARCO® brand, and a pair of high-value complementary integrated assets.”      .
Tesoro Corporation, a Fortune 150 company, is an independent refiner and marketer of petroleum products.  Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of approximately 675,000 barrels per day.

Tesoro’s retail-marketing system includes over 1,375 branded retail stations, of which nearly 590 are company operated under the Tesoro®, Shell® and USA Gasoline(TM) brands.

Ag Briefs: Tree Fruit / Olives /Processing Tomatoes

Big Year For Olives

The 2012 California olive crop forecast is 180,000 tons, up 153
percent from last year’s crop of 71,200 tons. Bearing acreage is
estimated at 44,000 for a yield of 4.09 tons per acre. Of the total
production, an estimated 94,000 tons will be utilized for canning,
and the remaining 86,000 tons are expected to be harvested for oil
or specialty products.

The California Olive crop outlook is looking positive. Growers are
anticipating a good crop, especially after last year’s poor crop.
Weather conditions during the bloom period were generally good.
In the north, there was a good set. Producers thinned their crop to
allow the remaining fruit to grow bigger. In the south, there was an
initial good fruit set, but after Easter, extreme weather events
resulted in some false bloom. This decreased the set slightly, but
will permit the fruit to grow larger.

The Manzanillo and Sevillano olive varieties are expected to
produce 47 percent and 9 percent of the total olive crop,
respectively. The remaining 44 percent is expected to come from
all other varieties.

World Processing Tomato Crop Down

A California tomato grower report says world processing tomato crop is expected to be 2.4 metric tons lower than last year even as demand for the product per capita increases.

While the California processing tomato crop is up 6% from last year at 11.7 mm metic tons China is down 26%,Portugal down 11% Spain down 19% and Italy is down 12% this year. While some areas problems are  weather relate Europe’s finances appear to be a factor too.

The world’s farmers are producing 35.2 metric tons withCalifornia suppling almost third of that. On source says the world could use 40 mm metic tons.

Almost all US tonnage come form California with Fresno County at the top based on  contracted planted acreage for 2011 with
92,000 acres. Yolo, Kings, San Joaquin, and Merced County make up the remaining top five counties for contracted planted acreage, respectively. These counties make up 77 percent of the 2011 total
contracted planted acreage for California says USDA.

USDA says growers contract with processors to process red-ripe tomatoes. Although many firms manufacture pulp-based products, such as stewed and diced tomatoes, most initial processing is by firms that manufacture tomato paste, a raw ingredient. Paste is manufactured and packed in bulk containers- large bags set into boxes and barrels-and stored for use up to 18 months later. This raw ingredient is distributed under contract or sold to remanufacturing firms that add water, spices, etc. to make retail and foodservice packs of soups, sauces, catsup, and paste.
Americans consume three-fourths of their tomatoes in processed form. U.S. consumption of processed tomatoes began a steady climb that accelerated in the late 1980s with the rising popularity of pizza, pasta, and salsa. ERS estimates suggest the largest processed use of tomatoes is in sauces (35 percent), followed by paste (18 percent), canned whole tomato products (17 percent), and catsup and juice (each about 15 percent). ERS estimates suggest that about one-third of all processed-tomato products are purchased away from home at various foodservice outlets (pizza parlors, for example).

Lower Tree Fruit Volume Boosts Late Summer Prices.
With the California back-of-the-napkin tree fruit estimate now below 40 million cartons, farms are not getting that late season drop in prices say observers. Storms took their toll on the crop this Spring and farmers have reduced their acreage after years of oversupply that persistently hurt prices. For many years, 50 million cartons was the norm, says Wayne Brandt of Brandt Farms in Reedley, he tells the Produce News.
The latest USDA market report shows nectarines, peaches and plums selling for  $16 to 18  a carton, a profitable margin for most growers.In the depth of the recession and overproduction – cartons  sold for as little a $10,not covering the picking costs, growers said.
Also a plus,continued export demand for California fruit.
A June USDA report said “ Mid-April hailstorms are partly behind the anticipated lower production in California this year. While some California peach growers were more heavily impacted by the hailstorms than others, some fruit loss due to the hailstorms would have occurred anyway during the usual fruit thinning stage. Others also attribute part of the production decline in California to reduced bearing acreage over the last 5 years, the result of removing less performing acreage or switching to other more profitable crops such as citrus, almonds, and walnuts. California is the dominant producer of peaches across the country, accounting for about half of the fresh market crop,
California produces almost all the the nectarines and plums.

E. & J. Gallo Winery Announces Intention to Purchase Central Coast Winery and Crush Facility

Company Buying Courtside Cellars to Meet Growing Demand

MODESTO, Calif. E. & J. Gallo Winery (Gallo) announced this week the intention to purchase Courtside Cellars in San Miguel, California. The twelve-year-old winery will support the company’s continued growth in California’s Central Coast. The purchase includes 34 acres of land and a winery capable of crushing 60,000 tons of grapes.

According to Roger Nabedian, Senior Vice President and General Manager of Gallo’s Premium Wine Division, “We’ve been expanding our presence in the Central Coast over the past few years and consider the region to be a key part of our premium wine strategy moving forward. We are excited to have this highly capable winery to support our Bridlewood and Edna Valley Vineyards businesses.”

Earlier this year, Gallo purchased more than 300 acres of vineyards in Monterey County. Last year, the company purchased Edna Valley Vineyards which produces one of the best-selling Chardonnay brands in the U.S. In 2004, Gallo purchased Bridlewood Estate Winery located in the Santa Ynez Valley of Santa Barbara County.

Bob Schiebelhut, of Courtside Cellars, said, “We will be keeping our San Luis Obispo Facility where we will focus our efforts on building our Tolosa Winery brand into one of the finest Pinot Noir and Chardonnay estates, as well as continue to offer custom wine services.”

San Francisco based Demeter Group was the exclusive financial advisor on the deal which is expected to close next week. The purchase price was not disclosed.

About E. & J. Gallo Winery
Established in 1933 in Modesto, California, by Ernest and Julio Gallo, E. & J. Gallo Winery has become the world’s largest winery and the foremost winery in the art of grape growing, winemaking, distribution and marketing of wines. With seven wineries strategically located in California’s wine regions and access to grapes from vineyards in all of the premier grape-growing areas of the state, Gallo produces wines in every category, to suit every taste. Gallo imports wines from eight of the major wine growing countries in the world. Some of the brands in Gallo’s wine portfolio include Gallo Family Vineyards, Barefoot Cellars, Louis M. Martini, MacMurray Ranch, Bridlewood, Mirassou Vineyards, Frei Brothers, DaVinci, Martin Codax, Don Miguel Gascon, Ecco Domani, McWilliam’s Hanwood Estate, and William Hill Estate. Recently, the Winery has expanded its portfolio to include distilled spirits with the introduction of New Amsterdam Gin and Familia Camarena Tequila.

UC Corn Crop Lower / California Raisin Crop To Fall 13%

Growers Expect to Produce 13 Percent Less Corn than Last Year
Washington, Aug. 10, 2012 – Affected by one of the worst droughts on record, U.S. corn growers are forecast to harvest 87.4 million acres in 2012, down 2 percent from June estimates, according to the Crop Production report released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service.
The lower estimates “was about what was expected” say grain buyer for JD Heiskell Josh Dejung of Tulare. Investors had bid up corn to 8.35 a bushel, with fears of $9 corn looming, before the USDA announcement but afterwards the price  for September corn fell 14 cents after as did December corn that fell to $8.10 a bushel.
USDA says the 2012 growing season began on a very optimistic note for growers, with the fastest corn planting pace on record. The growers’ optimism waned, however, when the warm spring was followed by a very dry summer, developing into a drought throughout most of the Corn Belt states. Despite planting the largest number of acres to corn in the past 75 years, growers are forecast to produce 10.8 billion bushels in 2012, down 13 percent from 2011. Based on conditions as of August 1, corn yields are expected to average 123.4 bushels per acre, down 23.8 bushels from last year.
Just as with corn producers, soybean growers are greatly affected by the drought conditions in the United States. This year’s soybean production is forecast at 2.69 billion bushels, down 12 percent from 2011. Soybean yield is expected to average 36.1 bushels per acre, down 5.4 bushels from the 2011 crop.
In contrast to corn and soybeans, all wheat production remains largely unaffected by the drought and is forecast at 2.27 billion bushels, up 13 percent from 2011. Based on August 1 conditions, the yield for all wheat is forecast at 46.5 bushes per acre, up 0.9 bushel from last month, and up 2.8 bushels up from last year. Harvest in the 18 major producing states was 85 percent complete by July 29.

RAISIN CROP DOWN 13.4 Percent
USDA says the California raisin-type variety grape forecast is 1,900 million tons, down 13.4 percent from the 2011 final production. Based on the
objective measurement survey, bunches per vine totaled 29.1 compared to 38.7 recorded in 2011. Acreage of bearing age is 205,000.
The 2012 California raisin-type grape crop is shaping up to be the smallest crop since 2006. Some growers reported spring frost
damage. Dry, warm summer weather conditions have been good for crop development. Mildew pressure was low. The crop is a few
days ahead of normal, and significantly ahead of last year’s delayed crop. The forecast is based on the results of the Raisin Grape
Objective Measurement (O.M.) Survey conducted in July. The Raisin Administrative Committee provided funding for the 2012 Raisin

 

USDA says California’s Total Farm Production Expenditures totaled
$31.2 billion in 2011, up 3.2 percent from the 2010 estimate of
$30.2 billion. California had the largest percentage of the U.S.
total at 9.8 percent.
Expense items showing the largest increases from the previous year were: Feed, up $640 million;Fertilizer, Lime and Soil Conditioners, up $290 million; and Livestock, Poultry and Related Expenses, up $220 million;The three largest decreases occurred in: Labor, down $390
million from 2010; Interest, down $260 million; and Farm
Services, down $240 million.

Expenditures per California farm averaged $382,699 in 2011,
compared with $369,767 in 2010. On average, California
producers spent the most per farm on Labor at $93,620, Farm
Services at $66,871 and Feed at $62,209.

The Big Squeeze: Valley Juice Makers Adding Capacity

pomegranates are big money

If you want to compete in the increasingly crowded,health-conscious juice business,you better consider setting up shop near the source,in the US fruit basket called the San Joaquin Valley.
That’s what some of the biggest food makers in the world are doing,expanding existing operations,starting up new plants, joint venturing and buying into what has become a $27 billion industry.
For farmers this is good news, selling a piece of fruit that otherwise had a shelf life of a few weeks ,sometimes taking former culls,or what was cattle feed or a waste product – now transformed into premium priced juice or other byproduct in high demand.
It started with those Santa Cruz hippie-types led by Greg Steltenpohl  in 1980 who juiced fruit out of the back of their VW van and named their smoothie Odwalla for a character in a poem with the lofty goal to “help humans break free from the dull mass of over-processed foods so prevalent today.”
Amen,brother.
Odwalla now is no back yard operation.Owned by beverage giant Coca-Cola they supply the nation with refrigerated fruit smoothies from one production plant in Dinuba California, the tree fruit and grape capital of the state.
This month Odwalla announced more organic offerings with three new flavors – each with USDA seal and ”not from concentrate, gluten-free, vegan, and contain an excellent source of antioxidant Vitamin A” the company announced a few days ago.
Today,it is not just fruit smoothies that are big business anymore. Hip new drinks or ancient comebacks like pomegranate juice and teas are now manufactured a few miles down the road in Del Rey in Fresno County and supplied to the world by POM Wonderful,owned by LA billionaire Stewart Resnick. Here too, expansion is the word with a planned 7 fold increase in water thru-put being permitted this month by the Central Valley Regional Water Quality Control Board(CVRWQCB).
Acreage of pomegranates has more than tripled in Fresno County in the past 6 years.Next door in Tulare County 500 more acres of the trees were added in the past year helping supply POM, now a reported $165 million business. When the Del Rey plant is out of season it makes tea.The company won’t reveal details of its expansion plans other than what can be gleaned from the permit as of yet.
Seeds Have Value
As part of their expansion, Pom has plans to build a new 37,180sf (aril)seed processing building because of the increasing value of these seeds as a product instead of a waste problem. The company packages the arils marketed for both their sweetness and tart flavor for”all your favorite dishes. POM POMS Fresh Arils are loaded with vitamins, potassium and they’re known for their powerful antioxidants known as polyphenols.“ Chocolate covered arils are sold now at gourmet stores.
Resnick has not been shy about making health claims for pomegranate products getting POM in some hot water with a judge recently but the issues are still being resolved.
Besides the improvements at the Del Rey plant we have mentioned the company is finishing up construction of a new dining hall and gym as well as guard station and entrance gate for employees and just received the OK to put in a private air strip next to the plant.
New Juice Plant
In nearby Kern County, Resnick’s company Paramount Citrus and partner in the ‘Cutie’ brand of tangerines, Sun Pacific are in a legal tussle over who owns the Cuties label for the new fruit juice business that just started up this year. That start-up,Califia Farms, makes not just tangerine juice but now almond milk and cocoanut water expanding their reach in the health-oriented natural drinks sector.
Guess who is helping make this launch? That hippy-type who started Odwalla more than 30 years ago.
Here is how Sun Pacific is marketing their product these days.
“Odwalla founder Greg Steltenpohl has teamed with farming visionary Sun Pacific to bring you Cuties Juice™. Cuties Juice™ comes straight from the best source – Nature! We juice and blend our fruit at our Eco-Friendly juice plant in California and put it in a bottle so Cuties® can be enjoyed year-round. No need to add funny stuff, because we use the best that Nature has to offer. You got it – Cuties Juice™ has NO sugar, NO dyes, NO preservatives, or any other sneaky stuff. Our 100% Tangerine Juice is never from concentrate and our Cuties® Smoothies are 100% Juice.”

With sodas now being blamed in part for the nation’s big waistlines, Coke should have good reason to emphasize its healthier offerings like Odwalla juices. Cocoa Cola has been competing with bottled waters, flavored waters, sports drinks and teas helping to send per capita soda consumption down 17 percent since 1998, according to  Beverage Digest.
Tulare County Joint Venture

Not to be left behind, earlier this year – two of the larger orange juice processors – Sunkist and Ventura Coastal formed a new joint venture with two plant sites,one north of Visalia and one in Tipton – both undergoing expansion and adding silos as we speak.
In a deal announced this winter, Sunkist Growers and Ventura Coastal joined forces, uniting their long-time juice processing operations in a 50%/50% joint venture, headed by William Borgers, CEO of Ventura Coastal.

“The two processing facilities are extremely complimentary,” said Borgers. “Both Sunkist and Ventura Coastal bring a steady supply of products grade fruit, a skilled group of employees, state-of-the-art processing equipment and high quality products into the new company.”

“We believe the efficiencies achieved will better serve both our customers and growers,” added Sunkist President & CEO Russ Hanlin. ”

Enter Starbucks

Now Starbucks too, wants into the juice business buying a San Bernardino company last year, Evolution Fresh. Starbucks has launched their first juice bar at a Starbucks outlet on the West Coast this summer and will open in the Bay Area this fall.The juice bar will sell bottled Evolution Fresh fruit and vegetable juices, smoothies and food. Sometimes people have a smoothy to refresh or as a meal replacement or even to cleanse their diet. The juice brand will compete with rival Jamba Juice and even McDonald’s who is now in the juice biz as well.
Evolution Fresh says they cold press and squeeze the juices to retain more of the flavors, vitamins and nutrients of raw fruit and vegetables through the use of an innovative technology called High Pressure Processing (HPP), “which allows us to safely process juice without the use of heat.”
In Kern County Bolthouse Farms was recently purchased by Campbell Soup for $1.55 billion to help the firm move beyond  their line of V8 juice into refrigerated juices. Bolthouse is a major player in carrots and vegetable juices as well as other blends.
Going Year Round
Also in Kern County the CRWQCB is working on a permit for another major juice company expansion at the Spicer City Juice processing plant at 23145 Lerdo Highway between Buttonwillow and Lost Hills in Kern County. The plant seasonally produces fruit juice concentrate from pomegranates. The proposed expansion would allow the plant to process juice from other fruits and operate most of the year, increasing wastewater flows from under 0.1 million gallons per year to as much as 6.7 million gallons per year. The associated wastewater discharge would be to unlined ponds prior to reuse for irrigation of about 2,200 acres of crops. The juice company is owned by SunnyGemLLC that includes Sandridge Partners and McCarthy Farms.

Navy Base Growth Spurs 184 Unit Residential Project In Lemoore

Expecting growth to continue at NAS Lemoore,developers appear to  betting that demand for residential units – both single family and multi-family, will more than keep pace in the community of Lemoore, some 7 miles away from the base.

“It’s important that our Navy folks don’t have to travel so far to get to their job”, says the city’s top planner Holly Smyth, noting that currently many are commuting from Visalia to get to work because of a lack of home choices in Lemoore.

The latest evidence is a permit application from Fresno-based Montrio Capital Partners to build a 184 unit gated multi-family apartment
community near Highway 41 and 19 1/2 Ave. The big complex, already approved by city council, is expected to get its final design approval at an October planning commission meeting and move to construction.

“They were going to build in two phases but now they want to build the whole thing starting this fall.” Demand for apartment space is driven in part by the fact that ”so many people lost their home in the downturn but still need a place to live.”

Smyth says the additional units help Lemoore “since more rooftops and population helps us attract more businesses and services to town.”
Another big plus – this project is not a subsidized residential complex meaning the city will see its share of tax revenue from the $20 million project.

Smyth says the city and base have “a symbiotic relationship” since  the base can not serve all the needs of the enlisted and private people who work there and their families.

As the base prepares for the possible deployment of the JSF-35  fighter squadrons, the Navy has insisted the city not continue to sprawl west of Highway 41 but they have no problem with new development east of the highway – where this development is planned.

Rolling Back Impact Fees

While some subdivisions have been idled in Lemoore in recent years Smyth says the city now has three reborn subdivisions being built this year in town in a surprising rebound from the housing crash.The city rolled back impact fees helping some foreclosed projects to come back to life.
These subdivisions include a 50 home subdivision bought up by Walthen Castanos and a second 81 home project, now being pursued by the same company. In addition, Lennar and Woodard Homes now have active projects in town. Smaller firms Daily Homes and Raven Homes continue to build here too.” Now people have real choice in Lemoore” notes Smyth. About 10% of the home inventory in town are rentals.

Watching Growth

A report highlights the importance of the military base to the area as the city urges the Navy to homebase the new JSF-35 stealth fighter squadron in Lemoore, the largest US navy base on the West Coast.

“In fiscal year 2008, NAS Lemoore contributed $654 million to the regional economy, it generated $75 million in federal, state and local tax revenue, and it supported more than 4,540 jobs in Kings County and the surrounding area. We realize that the continued success of NAS Lemoore will have a significant economic effect on our community for many years to come and that is why we stand firm in our commitment to support it.” said Mayor Willard Rodarmel at a packed city hearing last year.

News of growth at the base also includes the deployment of a three helicopter, Search and Rescue squadron adding 30 active personnel beginning this October. Last year, a North Carolina squadron was transferred here and the Navy is expected to transfer two more East Coast squadrons between 2012 and 2015. Every squadron adds about 500 new residents that include family members.

The big prize remains the Navy’s pending decision on where to base the West Coast home for the JSF-35 fighters that will replace the current Navy planes – the older F/A-18C Hornets and Super Hornet aircraft that fly off aircraft carriers. The Navy is expected to release their choice in the competition between Lemoore and El Centro this fall.

Besides active personnel and private contractors,retired Navy families continue to enjoy living in the Lemoore area, says Smyth.”About 50% of the people who live here are related or have close ties to the base.”

The increasing population here, now over 25,000, has led to improvements in the city’s Downtown including the addition of a 10 screen movie theatre,educational improvements including the expansion of West Hills Community College also helping the local economy provide a stable and well educated labor force.”Its the best of small town living with all the modern conveniences” gushes a chamber advertisement.