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CAC Annual Report 2018 CALIFORNIA AVOCADO COMMISSION 2018 ANNUAL REPORT TABLE OF CONTENTS CHAIRMAN’S MESSAGE . 3 BOARD OF DIRECTORS . 5 PRESIDENT’S LETTER . 7 2018 MARKETING HIGHLIGHTS AT A GLANCE . 10 AUDITED FINANCIAL STATEMENTS . 11 Independent Auditor’s Report . 13 Management’s Discussion and Analysis . 16 Basic Financial Statements . 21 Supplementary Information . 36 INDUSTRY STATISTICAL DATA . 43 2 CALIFORNIA AVOCADO COMMISSION CHAIRMAN’S MESSAGE alifornia avocado growers are a chains — for transparency. CAC devel- resilient bunch. Despite a season oped an expansive sustainability profile of plagued with drought, epic fires, California avocado cultural management Cfloods, freeze events and extreme heat practices to share with constituents. To coupled with high winds we harvested 338 prepare California avocado growers for million pounds of premium California the implementation of the Food Safety avocados and secured an average price of Modernization Act Produce Safety Rule, $1.13 per pound. Our resiliency is the re- CAC updated its Food Safety manual to sult of decades of hard work, collaboration align with Primus’ GFS audit, hosted Pro- and proactive preparation. There’s very duce Safety Alliance training sessions and little we haven’t encountered — and we conducted on-farm readiness reviews with learn from the challenges that face us. the Food and Drug Administration and Our resiliency is also due, in no the California Department of Food and John Lamb small part, to the experience and ex- Agriculture. Chairman perimentation of our Industry Affairs and Production Research teams. IndustrY Affairs. This year, COMMISSION BOARD — STRATEGIC PRIORITIES: as labor shortages continued to intensify, the California Avocado Commission Quality improvement (CAC) continued to advocate for sensible Add dimension to brand and targets legislative options for agricultural guest worker programs and provided growers Pursue domestic and global premium market with critical updates about immigration opportunities legislation and workplace enforcement Improve industry alignment with focus on actions by Immigration and Customs enhancing quality and availability of information Enforcement. To strengthen our position in the Strengthen partnerships on issues market, the Commission expanded sus- tainability and food safety initiatives to Conduct effective production research and share meet increasing demands — by consum- the knowledge generated ers, legislators, retailers and foodservice 2018 ANNUAL REPORT 3 In response to the increased frequen- addressing the impact of these policies on cy of wildfires in the state, CAC partnered California avocado growers. with Southern California Edison concern- On the international front, Industry ing fire prevention initiatives — the Public Affairs successfully pressed for Canada’s Safety Power Shutoff protocol and vegeta- Light Brown Apple Moth quarantine tion management — in order to effec- requirements on California avocado ship- tively aid in preserving public safety while ments to be removed. Development of Asian markets also was a critical focus this year. CAC secured $123,000 of Foreign Agricultural Services Market Access Pro- motion funding for limited promotional activities in Japan, explored market oppor- tunities in Thailand and India, and utilized the Commission’s marketing dollars for retail promotions in Korea. To counter- act delays in accessing Chinese markets caused by tariffs and stalled trade negotia- tions, Commission staff worked ceaselessly to maintain existent contacts and keep the process moving. The Commission also secured inclusion of GEM as an insurable variety covered by federal crop insurance and advocated for a project to update GEM The Commission hosted Produce Safety Rule training sessions for growers to prepare them maturity release dates. for on-site audits. Production ResearcH. This year, several CAC-funded research projects reached conclusion providing valuable insights for growers. • Findings indicated that ProGibb LV Plus® plant growth regulator, when applied at the cauliflower stage of inflorescence, significantly increased total yield and fruit size and thus could result in substantial increases in net dollar returned per acre for the grower • The high density avocado production study — which examined impacts on production, cost of labor, water usage and pruning best practices — deter- mined this method is a viable way for Hass and Lamb Hass growers to increase income per acre especially in The Commission hosted Food and Drug Administration and California Department of regions with high water costs Food and Agriculture personnel to showcase California avocado growers’ commitment to food safety. 4 CALIFORNIA AVOCADO COMMISSION • Research indicated that the Shot Hole Borer – Fusarium dieback pest- disease complex causes less damage to avocado trees than native vegeta- tion and that pruning and sanitation practices can effectively control the pest-disease vector • The Pine Tree Ranch soil moisture sensor trial calibrated the “sweet spot” depth at which avocado trees take up water and noted the efficacy of sen- sors based on cost and how user-friendly the technology is Board • The Online Avocado Decision Support Tool — a user-friendly website of housing digital tools to help growers make grove-specific decisions about Directors fertilizers — was launched District 1 Member/Jessica Hunter-Secretary Member/ Ryan Rochefort Alternate/Michael Perricone District 2 Member/Leo McGuire Member/ Ohannes Karaoghlanian Alternate/Bob Schaar District 3 Member/ John Lamb Member/ Robert Grether-Treasurer Alternate/John Lloyd-Butler District 4 Member/ Ed McFadden Member/ Jason Cole Alternate/Bryce Bannatyne Jr. District 5 Member/Rick Shade-Chairman Member/ Tyler Cobb-Vice Chair Alternate/Randy Douglas Handlers Member/Egidio “Gene” Carbone Member/Gary Caloroso Alternate/Vacant Seat Public Member Nina Ames To contact a CAC representative, please visit: The Commission shared results from the first year of its soil moisture sensor study, which CaliforniaAvocadoGrowers.com/Commission/your-representatives is being conducted at its Pine Tree Ranch demonstration grove. 2018 ANNUAL REPORT 5 As massive wildfires, and then mud- about new grove mapping technologies, slides, swept through California avocado fruit set, trellising techniques and laurel growing regions, the Commission com- wilt. While in South Africa, Dr. Timothy piled and distributed fire recovery best Spann toured the Allesbeste Boerdery, practices and timely information about Kwekery and Padstal farming operations federal aid disaster programs. to examine firsthand contemporary micro Collaboration has long been a strong cloning techniques, high density groves suit of the Production Research team and mechanical hedging and pruning. He also visited Westfalia Fruit and Westfalia Technological Services to explore their phytophthora root rot research projects, rootstock selection process, the efficacy of using shade netting and the possibility of utilizing the Maluma variety and phytophtho- ra-tolerant Bounty rootstock in California. Our continued success will lie as much in our experi- ence, as it does in our ability to experiment. As growers, we must continue to blend tried- and-true cultural management practices, cutting-edge technolo- gies and evolving strategies. As an organization, we will continue to streamline our structure and Dr. Timothy Spann, CAC research director, attended the Avocado Brainstorming meeting in South Af- prepare for a transition to new rica where he met with leading industry researchers and toured local packinghouses and research groves to learn about the latest advances in avocado cultural management and technologies. leadership. Our new board is a strong example. Balanced and diversified with members rep- and this year was no different. CAC as- resenting the older and younger genera- sembled avocado branch canker experts tions of growers — it can build off our for grove tours and ideation sessions in storied past to construct a secure future. which experts shared their expertise and And through it all, the Commission will brainstormed means of combatting the continue to support our vision to grow the increase in occurrence and severity of the most desired avocado in the world by foster- disease. The Commission also traveled ing a vibrant industry — collecting data, farther abroad to the Avocado Brain- conducting research, collaborating abroad, storming meeting held in South Africa crafting marketing programs, advocating where some of the industry’s most notable on our behalf and seeking opportunities to researchers shared the latest information advance our position in the market. 6 CALIFORNIA AVOCADO COMMISSION PRESIDENT’S LETTER ike California avocado growers, the Commission’s “premium positioning” mar- Commission is firmly rooted in the keting strategies and future direction. present — but refuses to be limited In recent years, the California Avo- Lby it. We value experience gleaned from cado Commission has increasingly shifted the past, while working diligently to ex- marketing funds from traditional, broad- plore new ideas that will pave sustainable reaching media to targeted digital online paths for the future. vehicles. While the amount of internal data As our industry has changed — with the Commission can collect in the form imported avocados dominating the of media impressions, clicks, likes, shares, market, labor shortages compounded by comments and visits has greatly expanded legislative standstills, more intense and in
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