US – Prima Wawona, the largest stone fruit producer in California’s Central Valley, has filed for Chapter 11 bankruptcy protection hoping to facilitate the sale of the company.
The company, owned by private equity firm Paine Schwartz Partners, has about USD 679 million in debt, and plans to sell its business in bankruptcy, according to the court documents.
They stated in the filing that significant headwinds, including increased costs and weather-related impacts had combined to make their existing capital structure unsustainable.
If no buyer emerges, the company asserts, Prima will pivot to a debt restructuring or a liquidation of its business.
Prima farms was formed from a 2019 merger of Gerawan Farming Inc. and Wawona Packing Company.
It has a variety of fruit trees including peaches, nectarines, plums, and apricots on its 18,000 acres in California’s San Joaquin Valley.
They recorded in their end of year report that it had over USD 300 million in sales revenue in 2022, with 60% of that coming from the sale of peaches.
The harsh climatic conditions have not only affected Prima Farms but have also hindered the recovery of the US fresh produce industry in 2023.
According to USDA’s National Agricultural Statistics Service (NASS), peach, tart cherry, and cranberry production are expected to decrease while almond, apple, apricot, grape, pear, sweet cherry, and walnut production are expected to increase.
Good spring weather in 2023 in the Pacific Northwest was a major reason for the increased production of apples and sweet cherries.
Whereas winter and spring rainfall in California helped drought conditions, a cool spring lowered yield for some earlier blooming crops.
Extreme weather events such as flooding have also impacted specific crops such as berries, lettuce, green leafy vegetables, tomatoes.
In another survey conducted by ProducePay, unpredictable weather has emerged as one of the most significant challenges in the globe this year.
In the Panama Canal, for instance, floods and droughts have disrupted transportation routes affecting the shipment of thousands of tons of products.
The survey further highlights how the costs of agricultural inputs have consistently increased since the onset of the pandemic.
“Investment in technologies and sustainable practices, such as precision agriculture and process automation, is essential to optimize input usage and reduce costs,” recommends the report.
Finally, another challenge affecting the fresh produce industry discussed in the report is Labor cost and accessibility.
In Mexico, for instance, a shortage of 65,000 workers in the berry-producing regions has limited these products’ growth and export potential.
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