THE ORGANIZATION OF THE CALIFORNIA WALNUT GROWERS ASSOCIATION

Pecan Research
BLUEFFORD G. HANCOCK Texas Agricultural Extension Service College Station, Texas One of the oldest and most successful marketing cooperatives to be found in this country is the California Walnut Growers Association. This cooperative is 47 years old---it was organized in 1912. The first year, membership of this organization was composed of 1,164 walnut growers who represented 52 percent of the total walnut production in the state of California. In 1952, there were over 11,000 growers in this cooperative representing over 80 percent of the total production. The California walnut grower’s cooperative is a federation composed of 25 local associations. This organization is owned by its members. The local association controls the central association or cooperative. The cooperative is managed by a Board of Directors composed of 25 members---one from each of the 25 local associations. This agency handles an average of 144 million pounds of walnuts annually. The California Walnut Growers Cooperative operates under a market control program. This program came into being in 1933 as a result of increased production and the existence of a financial depression. The Walnut Growers Association was active in securing the walnut marketing agreement. This program operates under federal and state marketing agreements and is one of the oldest and most successful marketing 56 PROCEEDINGS TEXAS PECAN GROWERS ASSOCIATION control program to be found today. This market control program is administered by a control board of nine members. The association pays an assessment of 1/10 of one cent per pound of walnuts marketed to cover the expense of this walnut control board. This board represents the Secretary of Agriculture of the U. S. Department of Agriculture and sets the market specifications and minimum standards for walnut trading for each season. This board also assists the Secretary of Agriculture in setting the percent of the current walnut crop that will be sold and the percent that will be declared surplus. The walnut grower signs a 15-year contract with the local association to turn over the title of all walnuts that he produces. This contract can be terminated any year without penalty. Title to the walnuts passes to the local association. The local agrees to pay for these walnuts as soon as proceeds are received from the central organization and when it is deemed that financial conditions justify. The local association is authorized to deduct all expenses of processing and handling from the price received for the walnuts. The central and the local organizations have a contract agreement stating that the central will buy the walnuts from each local. The local in turn agrees to sell and deliver all walnuts produced by its members to the central organization. Central agrees to sell all the walnuts and pay the net return to the local association. The central organization is authorized to deduct cost of receiving, handling, packing, processing, storing and advertising in connection with the sale of the walnuts. The Board of Directors tells the central when to pay the local association. The local has the right to withdraw and operate independently if it so desires. The grower-members own both the local and central organization and they have a revolving fund that is set up for capital purposes. In 1952, this revolving fund amounted to $2,360,000.00. It is operated on a 6-year plan and each year 1/6 of the fund is referred back to the locals who in turn pay it to the walnut growers. In selling the walnuts the central organization moves the product directly to wholesale groceries, chain stores, and wholesale produce traders through 125 brokers in the American market. These brokers have definite territories in which to operate and usually operate on the basis of 11 percent of the total in-shell sales. The California Walnut Growers have long been believers in the power of advertising. In 1918 they spent approximately $60,000.00 for national advertising. At the present time, they are spending in PROCEEDINGS TEXAS PECAN GROWERS ASSOCIATION 57 excess of $600,000.00 annually for this purpose. Their primary goals in their advertising program are as follows: 1. To increase total consumption of walnuts. 2. To lengthen the sale period. 3. To make the consuming public "brand conscious" as far as walnuts are concerned. This cooperative has a rigid set of grades and standards. After the walnut grower has harvested his walnut crop and delivered it to the local association, it is weighed and sampled for quality. Each grower's walnuts are run over the grading equipment separate, and the grower is credited with and later receives payment on the basis of the exact quantity of each quality and size of walnuts that he delivered. An inspector from the central organization checks all walnuts packed by the local association. He issues a certificate based on his findings and the pay that the local will receive is based on this certificate. Each walnut is stamped or branded. The central organization operates 46 machines that have the capacity to brand 100 pounds of walnuts per minute at the cost of 1/20 of a cent per pound. Before 1940 practically all of the walnuts sold were sold in burlap bags that would hold 25, 50, or 100 pounds. Now over 2/3 of the in-shell walnuts are moved in one pound cellophane packages. There has also been a great shift in the trend in the shelling of walnuts. From 1915 to 1926 only culls and light walnuts were shelled. From 1926 to 1932 not over 2,000,000 pounds per year were shelled. Starting with the market control program in 1933, the culls and light walnuts were shelled and some orchard run walnuts were also shelled along with the declared surplus. Since 1947, almost 40 percent of the walnut crop has been shelled. Many factors have played a part in the growth and success of the California Walnut Growers Association. The following are some of the most important factors: 1. Good management. 2. An efficient processing and marketing program with a rigid set of grades and standards. 3. An expanding national advertising program. 4. The development of consumer-sized packages and a branding system.