Investigating California's Nut And Fruit Industry: Challenges And Opportunities Essay.

Your task is to investigate, assess and provide recommendations for this situation by conducting in-depth research via popular media academic articles.

Background

California has accounted for around sixty five percent of the nut and non-citrus fruit production in the United States. This industry also occupies around seventy three percent of the national value. According to Lawrence, Travadon and Baumgartner (2015) California has continued being in the first position of the agricultural commodities exporters since 2012. The nuts and fruits have accounted over around fifty percent of the agricultural exports value in the United States. The most popular amongst the exported fruits are almonds, pecans, and walnuts. It should also be noted that the per capita consumption of these tree nuts and fruits is the third largest after dairy products being the first and vegetables being second. The value of nut production in the United States has been emerging gradually with the walnuts, almonds, pecans and pistachios. The industry is growing more on a global scale and it is important to save this industry from the elaborate and large scale theft. Therefore, this report will discuss the internal and external environment of this industry an the possible capabilities and resources of the organization.

The Agricultural network of California states that California has accounted for around forty five percent of the nut and fruit production in the country. The most popular nuts in the industry are almonds, pistachios, macadamias, walnuts etc. The production of almonds is a pride for the state as nearly all the almonds that the produced in US, are grown in California. This product is the third leading product in the state as well. Aradhya, Preece and Kluepfel (2014) indicate that around eighty percent of the produced almonds come from California. In addition to that, for the last thirty years, production of pistachios has also developed commercially. The pistachio orchards tend to flourish specifically in the central Californian weather. Therefore, there are few leading global brands that exports pistachios to all around the world. The cultivation of walnuts has first started in 1700s. As stated by Barrows and Frost (2014), the walnuts production of California accounts for around 100 percent production of the United States.  The macadamias production is also booming in California, even though Hawaii is one of the leading states in the production. There are several small macadamias orchards in Southern California. However, in recent times a crime ring seemed to have developed who are taking off huge amounts of nuts in California, where some of them costs more than half million by hacking the websites. Therefore the agricultural processors are taking effective steps that can stop the theft.

PESTLE analysis

The political situation in USA is quite stable for the businesses to lead in the country. The political procedures of the country are a little different than other democracies, but the political system enhances the global business scenario within the country. The Californian nut industry is flourishing due to this reason. The government encourages the companies as the production of fruit and nut is related with a sense of pride for the country. The government of the state has also declared pecan, almond, pistachio and walnut as the official state nut of California by signing the declaration into the legislation (Harris et al. 2016). With the recent theft issue, the government and the local authorizes are taking adequate actions. The processors of nuts and the law enforcement officers are also jointly taking initiatives for preventing the theft.

As stated by Smith (2016), California is accountable for around sixty five percent of the nut and non-citrus fruit production for U.S. which is also around seventy three percent of the national value of the country. The entire value of the nuts and fruit industry was $18.7 billion in the year 2012, which has always shown a steady growth in each financial year since then. In addition to that, the researchers state that, California has maintained the first position amongst the exporters of the agricultural commodities in America. It should also be noted that the tree nuts are the primary agricultural commodity for California as well. The pistachios of California are also responsible for around 98% of the supply to the nation. Harris et al. (2016) also shows that the walnuts of Australia roughly make up three fourth of the entire world inventory of nuts.

Nuts are mostly sold as either mixes or single varieties. The fruit and nut industry of California is growing its demand for nearly a decade. With the rising process, the organizations in this industry are devoting more lands to the productions which eventually are leading to more products and the processors, developers and exporters are now earning in billions. However the recent issue of theft by the international crime rings has led to a great loss of more than millions of dollars.

With the rising demands for the nuts, the technological innovations have also taken place to make the processing timing shorter. The technological advancements for the past few decades have immensely helped the industry to boost the nut industry to its existing position (Robbins 2014). The technological advancements also contributed to lessen the requirements for manual labor and table pickers. In today’s time, there are multiple x-ray machines, electronic sorters, laser technology and metal detectors for the processing phase. The technology of water-thrifty also helped the industry to boost its average yields.

Five Forces Analysis

The primary legal issue of the industry is the recent theft of billions dollars of nuts by the international crime ring. In the previous times, the petty thefts were quite common in this industry, but recently the larger amount of thefts has increased to a great extent. Therefore the state has also banned the nut selling before completing the harvesting for the purpose of discouraging the black market sales (Bada et al. 2015). However, the international crime ring that is responsible for the theft had hacked the website for planning the incident. One of the state lawmakers has also introduced a bill for funding the taskforce for all over the state that that prevent these cargo thefts.

A major issue with the production of almonds and other nuts is that the production procedure sucks a huge amount of water on an annual basis. Marvinney, Kendall and Brodt (2014) have also indicated that the amount of water California uses in one year is almost similar to the water usage of Los Angeles in three years. Therefore this issue has hampered the production to some extent. 

The new entrances in the nut industry in California mostly includes purchasing of the appropriate lands which is very much necessary for growing the crops and trees, provision of the working capital for sustaining the operations etc. The obstructions to the new entries are not actually high for this industry as there are huge requirements for the business such as technologically advanced machineries, harvesters etc, which are comparatively expensive than any other agricultural industry (Smith 2016).

In this industry, the fertilizer products are mostly produced and supplied by bigger chemical companies. There are higher demands of these products which lets the chemical companies to control its prices that are mostly dependent on the price of the inputs in the production process. However, the international shortage of the phosphate has led to an increased price. However there are several alternatives for these chemicals which are used by the companies in place of the chemical fertilizers.

The buyers in the nut industry are mostly divided in three different groups, the food processing organizations, grocery retailers and the wholesalers. The grocery retailers are mostly the large companies that buy the packaged and market ready nuts. The wholesalers tend to resell the products to different small retailers who cannot buy nuts directly from the companies due to less finance (Lawrence, Travadon and Baumgartner 2015). The food processing organizations also buy larger quantities of products for making other food products such as chocolates.

The companies in the nut industry do not really have substitutes for the nuts that are used as a special ingredient for few food products. However, as an independent food product, fruits can be considered as an alternative for nuts. Fruit is also available at a cheaper rate, however fresh fruits can get spoiled easily. Therefore the overall there are fewer substitutes in the market.

Even though there are large companies in the industry, but this industry is full of small organizations. There is a constant lack of diversity, therefore the degree of rivalry can be considered as a moderate one.

There are several large companies in the nut industry in California, such as Blue Diamond Growers, Waterford Nut Company, Chico Nut Company, Mariani Nut Company and Pearl Crop. These companies have sufficient resources and financial capabilities for preventing theft within the industry. These companies should take effective steps so that the local authorities and the government of California can take adequate measures for prevention.

For the prevention of large scale theft, the companies should strengthen their protection and security system. Most of the protection and security systems tend to focus on basic hazards. For instance, in a retail store the security system will be focused more on finding whether somebody is shoplifting or any employee is being dishonest. However, for preventing a large scale theft like it happened in the Californian nut industry in the past time, the security system needs to be more protected and ensure that no data can be hacked from the database. Other than that, not only the online security, the companies should also make sure that there is enough physical security for protecting the products. Therefore the companies should have sufficient human resources along with a strong online security.

For preventing the large scale thefts in the companies, they may take few effective steps, such as:

• The companies should observe and listen to the employees so that the management can identify the potential risks. The management should be involved with the employees so that they can know if there is any change of attitude.
• All the employees in the organization should know the fraud risk policy. The policies may involve the kinds of potential fraud and its consequences, so that the employees know how to prevent the fraud along with what outcomes can be if someone is not loyal to the company.
• The online security system should be strengthened. Therefore the crime gangs do not get the necessary information for the supply and distribution chain.
• More physical human resources should be included in the workforce. 

Reference list 

Aradhya, M.K., Preece, J. and Kluepfel, D.A., 2014, April. Genetic Conservation, Characterization and Utilization of Wild Relatives of Fruit and Nut Crops at the USDA Germplasm Repository in Davis, California. In II International Symposium on Wild Relatives of Subtropical and Temperate Fruit and Nut Crops 1074 (pp. 95-104).

Bada, S.O., Falcon, R.M.S., Falcon, L.M. and Makhula, M.J., 2015. Thermogravimetric investigation of macadamia nut shell, coal, and anthracite in different combustion atmospheres. Journal of the Southern African Institute of Mining and Metallurgy, 115(8), pp.741-746.

Barrows, F.T. and Frost, J.B., 2014. Evaluation of the nutritional quality of co-products from the nut industry, algae and an invertebrate meal for rainbow trout, Oncorhynchus mykiss. Aquaculture, 434, pp.315-324.

Beck, J.J. and Higbee, B.S., 2013. Volatile natural products for monitoring the California tree nut insect pest Amyelois transitella. In Pest Management with Natural Products (pp. 59-72). American Chemical Society.

Danielle Garcia, C. (2017). Nuts, by the truckload, make appetizing targets for thieves. CNN. Retrieved 14 October 2017, from https://edition.cnn.com/2016/07/31/us/nut-thefts-california/index.html

Davidson, G.R., Frelka, J.C., Yang, M., Jones, T.M. and Harris, L.J., 2015. Prevalence of Escherichia coli O157: H7 and Salmonella on inshell California walnuts. Journal of food protection, 78(8), pp.1547-1553.

Frelka, J.C. and Harris, L.J., 2014. Nuts and nut pastes. In The microbiological safety of low water activity foods and spices (pp. 213-244). Springer New York.

Harris, L.J., Lieberman, V., Mashiana, R.P., Atwill, E., Yang, M., Chandler, J.C., Bisha, B. and Jones, T., 2016. Prevalence and amounts of Salmonella found on raw California inshell pistachios. Journal of food protection, 79(8), pp.1304-1315.

Hess, E.D., Hess, E.D., Glinska, G., Glinska, G., Hess, E.D. and Hess, E.D., 2017. Mellace Family Brands, Inc.: Building a Socially Responsible Enterprise. Darden Business Publishing Cases, pp.1-10.

How international gangs pose as truckers to steal nuts worth millions. (2017). Mail Online. Retrieved 14 October 2017, from https://www.dailymail.co.uk/news/article-3539168/Thieves-targeting-California-almonds-walnuts.html

McNeil, D., 2014. Market chain insights created by empirical modelling of inputs to the UK nut market. British Food Journal, 116(12), pp.1960-1975.

Lawrence, D.P., Travadon, R. and Baumgartner, K., 2015. Diversity of Diaporthe species associated with wood cankers of fruit and nut crops in northern California. Mycologia, 107(5), pp.926-940.

Marvinney, E., Kendall, A. and Brodt, S., 2014, October. A comparative assessment of greenhouse gas emissions in California almond, pistachio, and walnut production. In Proceedings of the 9th International Conference LCA of Food San Francisco, San Francisco, CA, USA (pp. 8-10).

McNeil, D.L. and Felgate, M.K., 2014. Analysis of UK walnut market import purchase behaviour. British Food Journal, 116(3), pp.405-418.

Nishikawa, K., 2016. The End of an Era: California's First Attempt to Manage Its Groundwater Resources Through Its Sustainable Groundwater Management Act and Its Impact on Almond Farmers. Environmental Claims Journal, 28(3), pp.206-222.

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Smith, S., 2016. The EU almond industry. Agricultural Commodities, 6(3), p.112.

Venkitasamy, C., Brandl, M.T., Wang, B., McHugh, T.H., Zhang, R. and Pan, Z., 2017. Drying and decontamination of raw pistachios with sequential infrared drying, tempering and hot air drying. International Journal of Food Microbiology, 246, pp.85-91.