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President’s Report – How Do We Stack Up

We get it! Our membership expects us to process their almond production on a timely basis, at the lowest cost and of the highest quality possible when we deliver your almond production to your packer.  This is and has always been our focus and we strive to perform on each of these critical components along with our dedicated Board of Directors and staff.  Timeliness and achieving high standards on quality are monitored constantly and I might say doggedly. In regards to the cost of hulling, how do we rate? This is probably the most important factor in determining your desire to be a member.  We can illustrate this situation quite easily by using the 2016 “Pool” period that concluded in October as a basis of comparison with other shellers in our area.  This analysis should give you some comfort that you chose well when you decided to be part of the largest huller and sheller in the world.

The 2016 fiscal year was by far the most daunting in the thirteen seasons upon which I have been your President & CEO. Earlier in the fall the Association closed the books on the 2016 “Pool Period” with   a partial repayment of the 2 cent Operating Retain assessed as part of the hulling fee on the 2016 crop.  The disbursement was 1.5766 cents per meat equivalent pound.  Therefore, when we settled the “Pool” on October 7, 2017 we actually recorded an Operating Loss of .423 cents per meat equivalent pound, or a little less than a half of 1 cent. Unlike prior years a dividend was not paid out to the membership on the sales of our hulls, shells and hash as revenue fell short of expenses.  This was primarily due to lower commodity prices we receive for our sales of hull and shell, which reflects the unfortunate state of the dairy industry – the primary purchaser of our by-products.  Additionally, the almond shellers experienced a very low hull to meat ratio.  This means there were fewer hulls to sell into the marketplace and those hulls we did sell were valued at historically low levels.  Despite these disappointing industry headwinds we continue to perform significantly better in our cost of hulling than our competition by a wide margin.  Let’s take a look at how our result compares.

Below we have provided a simple spreadsheet that shows how we stacked up against some of our local competition. These values compare the Hulling Fees charged by five of the major competitors in our area on the 2016 crop only.  The Hulling Fees shown are for our competitors largest volume growers that deliver production.  Rates are higher for those with lesser volumes.  All numbers shown below do not include freight and so any freight cost you incur to deliver your harvest needs to be added to all of the values shown below.

 

Sheller

CCAGA

Sheller A

Sheller B Sheller C Sheller D

Sheller E

Hulling Fee 0.423 cents 4.33 cents 4.5 cents 4.0 cents 4.5 cents 5.0 cents

(Net of Trucking)

In this difficult environment it is gratifying to see that we significantly outpaced our competitors by a wide margin of over 3.5 cents per meat equivalent pound.  You indeed have chosen wisely when you became a member of Central California Almond Growers Association. Our competitive advantage is due to the fact that we shell large volume crops, have a very low level of depreciation and carry no long term debt.  This is a compelling story of which you can be exceedingly proud.  It is indeed a pleasure for all of us who work on your behalf to be able to serve you.  Thank you again for your patronage and best wishes for a wonderful holiday season!