Chapter 11 Bankruptcy Filing : Tri Valley Growers Files Bankruptcy

Tri Valley Growers, for 68 years one of the nation's premiere fruit and vegetable cooperatives, filed for Chapter 11 Bankruptcy on July 10 after accumulating more than $200 million in debts during the past three years. Even though the co-op's financial status has been precarious for several years, the bankruptcy announcement sent shock-waves through California's agriculture industry and could have severe consequences for the co-op's 500 grower members, 11,000 seasonal and year-around employees, businesses that trade with the co-op, and farm dependent business throughout the state.

Tri Valley announced that it plans to idle two of its tomato-processing plants. That move would leave some 500,000 acres of processing tomatoes without a home. With the canned tomato industry in an over-supply situation, much of that crop may have to be disked under. Tri Valley will also process a reduced amount of its members' fruit crops this summer. It will accept only 70 percent of its members' pear crop, 85 percent of their peaches, 33 percent of their tomatoes and 85 percent of their grapes. Growers were also told that they would only receive 70 percent of the payment they had expected for their 1999 crops, and would receive only 60 to 70 percent of the market price for the reduced percentage of their 2000 crop processed by the co-op.

"This will definitely put some growers out of business. It's going to cost many low-income workers their jobs and set off a chain reaction that will hurt farm-related businesses throughout the state," said Robert Hansen, manager of the Suisan Valley Fruit Growers cooperative, a farm supply co-op with many members who ship their fruit to Tri Valley. The impact of so much fruit and tomatoes entering the market "without a home" could cause commodity prices to drop to "fire sale" levels, he warned. The state's cling peach growers association responded with a plan to pay members to pull out some orchards. Industry groups also launched an effort to urge USDA to ease the situation by buying more fruit and tomatoes. At press dead-line for this issue, USDA had just formed a special task force under Deputy Secretary Richard Rominger to study the situation.

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