Wonderful Company threatens legal action over Terra Bella facility sought after by rival Touchstone Pistachios
TULARE COUNTY – What is expected to be one of the largest California pistachio crops this fall has stimulated the competitive juices of rival growers in the Central Valley over the past six months. Now we see it spilling over to Tulare County.
The world’s largest pistachio handler, The Wonderful Company, owned by Los Angeles-based Stewart Resnick, already grows or processes about half the state volume of the valuable nut. Resnick, considered the state’s richest farmer, is also top grower of citrus, pomegranates and almonds and owns Fiji Water, Justin Vineyards and the flower delivery company Teleflora.
Last year one of the largest of 800 pistachio growers allied with Wonderful announced they would build their own processing facility in western Fresno County.
Fresno’s well-known Assemi family sought a permit to build one of the world’s largest processing plants near Interstate 5. The future plant boasts 240 one-million-pound storage silos, according to one source. The family will rebrand their company as Touchstone Pistachios.
That sprawling facility did not get built in time to handle the big 2020 crop coming this September after Wonderful Co. filed suit claiming Fresno County had not followed the state’s environmental review process in the permitting process. Rudy Placentia with Touchstone said the plant is not expected to operate until 2021 but that he could not comment any further.
The three Assemi Brothers have 15 Central Valley pistachio farms that had been supplying Wonderful since 2004 growing their nut volume to around 30 million pounds annually. The company’s founder, Dairus Assemi, immigrated from Iran to the US in the 1970s joining his brothers Farid and Farshid starting a number of successful enterprises in the region including Granville Homes. Darius is also the publisher of GV Wire.
Not unlike Resnick’s success in multiple fields, the Assemi family is also known for generosity as well as business acumen. Like Resnick —they are also tough competitors.
The Wonderful Company, formerly Paramount Farms, owns about 30,000 acres of pistachios but has attracted enough growers to handle about half the state crop. The balance comes from small and large growers that are part of the Wonderful cooperative, based in Lost Hills.
Resnick owns just 10% of the state’s pistachio groves themselves. There are 300,000 acres of pistachios grown in California with new groves coming into production each year. About 98% of the US crop comes from the Golden State.
To thwart their new competitor Wonderful convinced Fresno County and the Assemis to redo the permitting for the new Touchstone plant with a settlement announced in January of this year. The Assemis had to place $250,000 in an escrow account to cover any expense the county might have in extending the review process.
A handful of family-owned operations, around 10, supply about 95 percent of the state’s pistachio crop, says Bob Klein, general manager of the Administrative Committee for Pistachios. The number two handler is Terra Bella-based Setton Farms. Well known pistachio operators you may have heard of include Nichols Farms in Hanford, Horizon Nut in Tulare and Kennan Farms in Kettleman City.
The relationship between Resnick and the Assemis was apparently much better in the past. The LA Times reported that “The Assemis and Resnicks have a history dating back at least to 2014, and in the past it appears to have been close. The family received several loans from the Resnicks’ charitable foundation apparently at low interest rates starting as early as 2014, according to foundation records. In 2016, the latest year reported by the foundation, the Assemis owed about $35 million on a $45-million loan originated in August 2016.”
But in 2018 the Assemi brothers filed a lawsuit against Wonderful Pistachios for breaching its contract and withholding money due for that years’ crop.
When the Assemi family advised Resnick they would split off from Wonderful, the family alleges in legal filings that Resnick said, “I am going to war with you …”
Now it looks like the battle will be waged in southern Tulare County.
Battlefield moves to Tulare County
Left with fewer options to process this year’s crop, the Assemi Brothers recently made a deal to purchase or merge with a family-owned pistachio grower and processor in Tulare County, according to reliable sources.
The merger would allegedly involve Terra Bella-based ARO Pistachios, Inc. which has been expanding its facility in the past few years, including adding a $3.3 million dryer and four new silos in 2018 and got a permit from Tulare County for three more silos last month.
In a series of events similar to Fresno County, Wonderful Company lawyers are complaining to Tulare County about the CEQA process in permitting the latest three new silos.
Tulare County received a letter a few weeks ago suggesting the permitting of the ARO silos was not done correctly. Tulare County Economic Development Manager Mike Washam disputes this. “We’ve done everything above board and properly,” said Washam, pointing to a closed-door legal matter that was heard by the Tulare County Board of Supervisors on June 16.
The supervisor’s agenda item reads “Conference With Legal Counsel – Anticipated Litigation. Threat of litigation against the County expressed in a letter dated May 20, 2020 from Latham & Watkins LLP on behalf of the Wonderful Company concerning the ARO Pistachio Inc. processing facility at 19570 Avenue 88, Terra Bella, CA.”
ARO is owned by grower Dr. Mehdi Brandi and his son and CEO Adam Orandi. Dr. Brandi is a pistachio pioneer who grows many Iranian varieties of pistachios brought from the old country in the 1970s. Iran is the second largest producer of pistachios behind the U.S. Orandi did not respond to calls for comment.
Another note. Klein says the 2020 crop does not look as large as earlier predicted a few months ago at 1.2 billion pounds. Due to lack of chill hours and bloom issues the bet now is about 950 million pounds. That would be slightly lower than the last “on” year when it came in at 984 million pounds.
Pistachios have been a part of California’s diverse plantings since 1929, when the Chico New Plant Introduction Station sent William E. Whitehouse, a deciduous tree researcher to Iran to collect pistachio seeds for planting. The seed he brought back is the mother of all the pistachio trees now grown in California.
Competition between Iran and US-grown nuts is fierce but varies by year, says Bob Klein in that Iran has water problems and is not good at supplying the world’s largest market, China, with enough supply in the high demand weeks of Chinese New Year coming just a few months after the nut comes off the trees.
Competition heated up back in 1979 when Iranian college students stormed the American Embassy in Tehran, taking dozens of hostages. There has been tension since resulting in sales benefits for the US pistachio industry who pushed for a retaliatory trade war against Iranian-grown pistachios. As a result California’s new born pistachio industry exploded. It still is and there remains strong sentiment here to keep trade restrictions in place.
The first commercial crop of 1.5 million pounds of “Kerman” pistachios was harvested in California in 1976. Once established, California pistachio production increased rapidly from 1,700 acres in 1977 to 178,000 acres in 2012 and 300,000 acres today. The size of the California crop has doubled since 2014, setting the stage for what is happening among the big players.
One ag economist predicts California pistachio production could exceed 1.4 billion pounds by 2026, given trees planted over the past five years, a conservative projection for new planting in the next three years, normal weather patterns, and no major interruptions to water supplies. The crop alternates in a “on and off” year pattern with significant production swings.