Vincent Anderson: When I look at just how many overseas growing regions have yet another year of poor production, I can definitely understand where your price expectations are coming from as we move through the balance of this year. But what I’m still trying to wrap my head around is just the recent pressure we’ve seen. So I guess a two-parter then. On the demand side, how have Asian exports been looking, particularly since apparently China told everyone to start drinking lemon water? And then on the supply side, how much of this pressure maybe is being caused by unseasonable Mexican imports into the U.S. and what on earth is causing that? Because I can’t remember the last time I saw this kind of volume from them this early in the year.
Harold Edwards: Yes. So we continue to hope that it’s the first part of your analysis, which is that it’s demand pickup, but that’s what’s moving more slowly than supply pickup. There was just an awful lot of young plantings across each of the districts. And that’s really what’s driving the oversupply domestically. And then when you layer into that the massive amount of plantings out of Argentina and some of the other southern hemisphere suppliers, that’s what’s really exacerbated the entire situation. What’s caused the sort of the malaise in the market and the softer pricing now is, remember last year, we were really proud of our fresh utilization rates and our ability to move fruit fresh for higher returns back to the growers.
Our primary competitor really underperformed. And so they’ve kind of took the gloves off this year and said, all right, we’re not going to let that happen again. And so there’s a lot more chasing price down to try to hang on to share. And if you looked across all of the — so we’re a member of what’s called CALGA, the California/Arizona Lemon Growers Association, which is a consortium of all of the shippers. I think it represents almost 90% of the domestic supply of U.S. lemon production. Limoneira’s pricing is right at the top of the list right now. And we try to remain as disciplined as we can as we go about doing that. Typically what happens though is when coolers get full, and you can imagine how this works, when coolers get full and fruit has a hard time moving, competition typically will use price to move fruit.
And that’s what’s exacerbating the pricing problem in the marketplace.
Vincent Anderson: Okay, that’s very helpful. And then as I just kind of speculate on the potential deployment of your capital beyond deleveraging, it sounded like maybe there were some citrus assets in Europe that might be looking for a new home. I’m just wondering if it makes any sense to make an investment in that market from a packing and brokering perspective, especially if there’s a way in which you can have it become another like valve for your South American fruit, or if that’s not really a high return market in your mind?
Harold Edwards: Well, I think that’s a really astute observation. And it is actually something we’ve been studying and have been thinking about. The biggest winner in that equation would be Argentina, because a lot of that Argentina fruit can find its way into the European markets competitively. The U.S. fruit, because of logistics, it’s pretty tough. Foreign exchange doesn’t help that as well. So that’s really less of an opportunity for us at this point. I think we see pretty — and our Board will help us with this in our upcoming strategic planning session, but we see really interesting opportunities to invest in our supply chain through automation and enhanced capabilities through storage and capacity improvement to take advantage of the supply chains that we have, but to drive cost out of the business.
