Sunkist Growers hold 103rd annual meeting.

VISALIA, Calif.--(BUSINESS WIRE)--Feb. 7, 1997--"I am proud to inform you that your cooperative remains in superb financial condition," Sunkist Growers President Russell L. Hanlin told the more than 1,200 Sunkist growers and guests gathered for their 103rd annual meeting Feb. 7 at the Visalia Convention Center.

"We retain the highest formal credit ratings of any agricultural company in America. During 1996, we improved member equity by $5 million, and in the past two years reduced debt by almost 80 percent."

For the fifth consecutive year, total revenues for Sunkist Growers, the oldest and largest citrus marketing cooperative in the world, exceeded $1 billion. However, the total revenues for 1996 -- $1.25 billion -- were $70 million beneath the all-time record set in 1995.

This decline, Hanlin told the growers, "resulted from just two factors. Fresh fruit shipments were down 3 million cartons due to unavailability of fruit suitable for export. And we discontinued the direct manufacturing and marketing of consumer juice products which previously generated substantial sales -- but even more substantial costs."

Returns to its more than 6,500 California and Arizona citrus grower members reached $773 million, 4 percent lower than in 1995 but 7 percent higher than in 1994. "Given the circumstances we encountered in 1996, those results are remarkable," Hanlin said.

All the fresh fruit decline, both in volume and revenue, was experienced in Sunkist's export markets. The unusually warm winter robbed the fruit of the vitality necessary for the long trip overseas. Orders for more than 2 million cartons of navels and valencias went unfilled for lack of strong shippable fruit.

When Sunkist could not supply its highest-value markets -- export -- it had to find markets for short-shelf-life fruit closer to home. "What was accomplished in the domestic market to salvage the situation was unprecedented, and averted a potential disaster," said Hanlin.

Although lemon shipments were higher than in the previous year, prices declined slightly. On balance, both 1995 and 1996 yielded near record returns for lemon growers.

Summer grapefruit results were strong. The fruit had the shape, size, color and taste to maintain marketing demand. Winter grapefruit, however, continued to face intense competition from Florida and Texas. Despite Florida's overwhelming volume, Sunkist's prices consistently topped those earned by Southeastern fruit. In export markets, grapefruit revenue declined 40 percent in the face of huge volumes from other growing regions.

It was a record year for shipments of seasonal specialties with a 17 percent increase in volume. Earnings varied by variety.

During 1996, the processed products division completed its massive reorganization. By Nov. 1, 1996, it was operating with an annual fixed overhead less than half the amount of just two years ago. The division has been successfully transformed into an efficient basic processor and marketer of industrial quantities of juices, flavoring oils and peel products.

Sunkist will now rely entirely on ingredient supply and trademark license agreements to carry the Sunkist brand into the world of processed consumer products.

Since Sunkist no longer directly sells consumer juice products, sales from processing were down $30 million in 1996. "Sales without profits," said Hanlin, "will not be missed. Earnings of $46 million in processed products business in 1996 doubles the amount earned in 1995. Our processed products business is on the right track, its future focused on minimizing cost and maximizing value."

In closing, Hanlin took a look at the future. "In former years," he said, "a relatively modest production of early maturing navel oranges obtained premium prices. But large new plantings have changed that. Now, the early market is likely to be very competitive and oversupplied. The ability of navel growers, packinghouses and marketers to exercise restraint and discipline in November and December will likely determine whether navel growers will proser in the future.

"In an era without marketing orders, where there are no rules, there has been a proliferation of sellers of small quantities of oranges who promise growers an early harvest. Such sellers cannot be price leaders. They just keep cutting the price until a sale is made. Their promise disregards market demand and increases the tendency toward oversupply.

"The 50 or more such sellers now fragmenting the market have an adverse effect on everyone's ability to obtain decent earnings.

"Sunkist secures better prices than the competition. But the market dictates that we must sell in a range relative to the common denominator. Therefore, if prices are to rise, fragmentation must be diminished. The only logical way for that to be accomplished is for more growers to join Sunkist.

"If Sunkist can increase its membership and if, together, we can exercise patience and restraint, the prospects for the future are remarkably bright," Hanlin concluded.

Sunkist Growers is a 103-year-old citrus marketing cooperative owned by more than 6,500 grower-members in California, most of whom are small family farmers.

CONTACT: Sunkist Growers

Claire H. Peters, 818/379-7455