So overnight now the desert operation has become profitable. Now we go up into the San Joaquin Valley, similar situation, actually higher productivity, so higher yields. But because of the transportation costs and some of the other costs associated with the farming in the North that were related to necessary agricultural applications for pests related to the Asian Citrus Psyllid, that also was a high cost structure. So now that has all been divested and now that’s been replaced by farm management services income. And yet, we still keep that supply chain coming through our packinghouse. Now you come down to the California coast, which is where 50% of our total production takes place. And as you know, these lemons are what come out in the seasonally high time of the year when consumptions in the highest in the late spring and the early summer.
And the profitability of the production down here on the coast is actually pretty good. And it’s really because it’s a much lower cost structure driven by higher yields, but also higher pricing typically that we get at that time of the year. So when you put it all together, I think what you’re going to see is you’re going to see even with these challenging prices that we’re receiving that’s driven by just the pervasive oversupply of lemons, that you’ll start seeing our margins start to improve now because of the restructuring of the business.
Eric Larson: Got it. That makes a lot of sense. That’s good insight. So when you kind of factor in the whole thing, are you also seeing an increase in imports on lemons, or is this really a domestic issue that can be solved with sort of the analytic that you just laid out?
Harold Edwards: Well, I think that the greatest challenge is also the greatest opportunity is that when you get pricing down at this level, it kind of creates a moat around the market because it becomes uneconomic for the southern hemisphere shippers to ship into the market at this price because their costs of logistics to get it here makes that prohibitive. So I think it really takes — I think it takes an overall price above $20 a carton to make the import reality, a competitive threat and we’re just not there yet. We want to be there, right, because our domestic fruit can enjoy those economics. But right now, I think that as we look forward, we don’t see any catalysts until the second half of the year to drive pricing up. So we’ll just have to see where we get when we get to the summer — the late spring, early summer. But because it is a smaller crop domestically, we are optimistic that we’ll see higher pricing in the late spring, early summer.
Eric Larson: Got it. Okay. Final question, you guys are just getting — you think now in the next few days just hammered with rain and stuff again, you don’t complain about moisture because when you don’t have it you realize how much you miss it. But are the weather conditions here still going to be such that it is going to be prohibitive for you to harvest, or how are you looking at — I think there’s six to eight inches of rain in some parts of — in mountains right to the East of you in the next few days. So how are you looking at all that?
Harold Edwards: Yes. So we had a — it’s another great question. We had an all hands on deck meeting on that very subject this morning. And I guess the good news is that we have good inventory across all size and grade structures. We do anticipate being delayed in picking for the better part of this week. As you’re pointing out, there’s a lot of rain coming to Central and Northern California. We are ready right now with the crews ready to go here on the coast if we need to go get fruit. But we anticipate being just fine in terms of continuing on with our harvest in District 1. Right now the crop is kind of midway through the season, up in the San Joaquin Valley. And so we think that’ll finish out in a kind of a normal way, even with this weather and this rain, and then transition smoothly into District 2 onto the coast.
