Tags
Act of God, Exports, Florida, Force Majeure, freeze damage, Imports, Mexico, produce, Sysco
Food inflation driven by freezing weather in Florida during December and in Mexico during February, is hitting the US supermarkets in the coming day’s. Sysco sent out an alert that announced an “Act of God”, to address their contracted supply issues.
The cold of the Superbowl weekend in Texas, has had a more lasting impact than on just the game plans for lots of travelers. The deep cold sank into the produce fields of northern Mexico, destroying fresh produce crops. This is the biggest page 16 story, about to hit a headline, that you have seen in a while. Your restaurants will be low on fresh produces for weeks. They will have to raise prices significantly or cut the produce out of the menu.
On Feb. 8, the U.S. Department of Agriculture reported prices of $22.95-24.95 for two-layer cartons of 4×4, 5×5 and 5×6 vine-ripe field-grown tomatoes from Mexico, up from $6.95-9.95 the week before and $5.95-7.95 the year before.
This cold storm has brought to the food growing region the coldest temps in 50 years. This has caused damaged to most of the fresh produce available to US supermarkets in the winter spring season. This is going to impact the price you pay at the Supermarket anywhere in the North American continent.
This event will add to the worlds food supply issues already impacted by fires in Russia, rains in Australia, droughts in China, and now freezing temperatures in Florida & Mexico. Here are some quotes on the topic
“The last time there was a freeze of this severity was 1957,” said Jerry Wagner, director of sales and marketing for Nogales, Ariz.-based Farmer’s Best. “It’s still too early to tell, but there’s a lot of damage.”
“It’s been a rough day,” said Lee Anne Oxford, marketing director for Raleigh, N.C.-based grower-shipper L&M Cos. Inc. “Right now we have all of our growers out in various fields. We’re expecting to regroup over the weekend and hopefully know where we stand by Sunday.”
“The early reports are still coming in but most are showing losses of crops in the range of 80 to 100%. Even shade house product was hit by the extremely cold temps. It will take 7-10 days to have a clearer picture from growers and field supervisors, but these growing regions haven’t had cold like this in over half a century.”
“Florida normally is a major supplier for these items as well but they have already been struck with severe freeze damage in December and January and up until now have had to purchase product out of Mexico to fill their commitments, that is no longer an option.” Via Sysco Alert
“Supplies of tomatoes, peppers, cucumbers and other vegetables from Mexico will be severely limited until at least March following an early February freeze.”
This event will push up the price of produce in the US for the next few months. The bigger question is if the US wheat crop was damaged by the cold weather before the heavy snow fell to blanket it.
H/T Wattsupwiththat
Links of Interest to Article
Good post, and good coverage. Relatedly, what are you seeing in Williamette Valley or other OR farmland pricing? My cursory look reveals that upward pressure on farmland is met by continued downward pressure in residential. But would be interested in your thoughts. imo, Oregon lies at the nexus of many of these issues, with Potash and Wheat exports from PDX but also the great inventory of fertile land.
Best,
G
Gregor,
Oregon is honestly blessed. We have a small population and a large land mass.
This has been a very dry winter for the southern valleys. On the Coast we usually get 80-120 inches of rain. We have basically been dry for a month of the wettest season. I would guess we are in the 20-40 total inches category since July 1st.
One of my old partners still lives in the valleys of Oregon’s farm land. He says that the large operations are holding their own. No visible price decay. The small land that could be converted into a small family farm is now dropping slowly. The city overbuild has been gutted a long time ago.
The CFO of a 30k citizen city locally says that the number of abandoned units has doubled inside the city limits in the last year. He had 100 empty houses, now 200. These are water accounts that have been turned off and not reactivated, with an outstanding debt.
I am keeping my eye on Oregon Vineyards. They have spent the last 20 years building them quietly all over the green portion of the state. Its a spread out future Napa Valley.
Speaking of Napa, the last 30 years has seen a lot of margin able land planted by celebrities, retired rich people, and hobbyist. These places are getting squeezed really hard. There is going to be bargains in the region for a properly capitalized small operation.
There is going to be a lot of consolidation of these properties. Definitely something to watch. A small vineyard is a great way to ride out a bad decade, if you start out with a working farm to start, and have the capital to wait for the economic turn.
I wonder what will happen to North Korea. btw someone posted under “clara”, too. I am Clara from Germany. Hope you’re fine, Jack.
http://www.bloomberg.com/news/2011-02-11/north-korea-reports-foot-and-mouth-outbreak-amid-food-shortages.html
http://english.chosun.com/site/data/html_dir/2011/02/10/2011021000980.html
http://www.telegraph.co.uk/news/worldnews/asia/northkorea/8317726/Starving-North-Korea-sends-out-SOS-for-food-aid.html
Hi Clara,
That is an interesting point. If China starts to hurt for food, what happens to their neighbors. The food events are happening world wide now. North Korea, in geopolitical terms, might need the further motivation the lack of food brings, to institute a change in regime.
It’s time people remember that “Just In Time” is based on the commodity ALWAYS being available. Consumable resources do not always have to be available, as we will see in the case of tomato’s on burgers in the US, or salad bars that will be put in storage for a while in places.
Here is an article on the produce story today… http://www.kgw.com/news/local/Produce-prices-skyrocket-overnight-115985429.html
Best,
Jack
Clara FYI, if you use the same email address each time you post here, your messages will auto post, instead of being held for moderation. WP only moderates the first message from an email address.
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