We have examined reserve pool prices and quantities for the years 1992 through 2001 to determine when the opportunity of selling raisins for etha­nol production might have generated greater net revenues for raisin grow­ers. We work with the assumption that 5000 t of raisins will be sold from the reserve pool every month (M. Pello, personal communication, 3/6/03). At this rate, the expected reserve pool of 60,000 t would be sold within 1 yr. The raisin marketing order requires that all raisins in the reserve pool be sold or discharged from the pool within 18 mo. This characteristic of the marketing order provides an economic incentive for developing viable market alterna­tives, particularly in years when production greatly exceeds the amount of raisins that can be sold in the food market. In addition, food market prices can be influenced substantially by large annual harvests and by maintaining large, nonmarketable reserve pools.

Based on an ethanol price of $1.20/gal, the fixed and variable ethanol production costs of $0.529/gal (this includes the credit of $0.06/gal for the coproduct), and an ethanol yield of 98 gal/t of raisins, we determined that ethanol producers could afford to pay up to $66/t of raisins sold for use in producing ethanol. Hence, the empirical information we use includes the following: PF is the price of raisins in the food marked; PE is the price of raisins for ethanol production, $66/t; and c is the storage cost, $11.00/t, per month.

+ The average prices of raisins sold from reserves ($/t) during the years considered in this analysis are as follows: 1991: $238; 1992: $281; 1993: $192; 1994: $152; 1995: $432; 1996: zero; 1997: $357; 1998: none; 1999: zero; 2000: $250. In 1996 and 1999, farmers received no credit for raisins sold from reserves, while in 1998, the crop was reduced by weather con­ditions, and no raisins were held in reserve (M. Pello, personal communication, 3/6/03).

We determined the month, m, according to Eq. 3, in which c = $11/t, per month, PE = $66/t, and QFm = 5,000 t/mo. We determined the return to raisins in the ethanol market based on a price of $1.20/gal ethanol, associ­ated ethanol production costs of $0.529, and an ethanol yield from raisins of 98 gal/t.

Results of Analysis

Based on the net revenue maximizing strategy, we conclude that between 1992 and 2001, the raisin industry would have benefited from an ethanol industry in 6 out of 10 yr. The additional net revenue in the ben­eficial years ranges from $0.689 million dollars in 1992 to $6.686 million in 2000 (Table 5). Preliminary market information from the 2002 harvest suggests that similar benefits might have been generated in that year.