Local produce creates challenges, Rabobanks says - The Packer

Local produce creates challenges, Rabobanks says

02/14/2013 12:50:00 PM
Vicky Boyd

Karen Halliburton BarberKaren Halliburton BarberTULARE, Calif. — During the past decade, the demand for locally grown produce has grown to the point where it’s now mainstream and is similar to the organic sector.

The trend created opportunities for many smaller, regional grower-packers, but also cut into the summer sales of some large California grower-packers by as much as 15%.

Those are two of the findings of a report released Feb. 14 by Rabobank’s Food & Agribusiness Research and Advisory group.

Titled “Local Foods: Shifting the Balance of Opportunity for Regional U.S. Produce,” it looks at how consumer demand for local produce has affected both regional and California production, and shifting retail perspectives.

“(Local produce) has reached critical mass,” said Karen Halliburton Barber, assistant vice president, senior agricultural analyst and report author. “It’s been going on for five to seven years in terms of being more of a mainstream trend.”

Nevertheless, she said local produce has room to grow for at least the next five years.

A challenge in writing the report was defining “local,” she said.

Sacramento, Calif.-based Raley’s, for example, considers local anything grown within a 50-mile radius of their stores. Whole Foods defines local as anything within a seven-hour truck ride.

The buy local movement grew out of farmers markets and roadside stands as consumers wanted to connect with farmers and sought fresher, tastier produce that had logged fewer food miles.

In response, regional production exploded in several areas, including Oregon, Washington, Michigan, the Ohio Valley, Georgia, Florida, Wisconsin, New York, New Jersey and the Carolinas.

Much of the growth has come at the expense of the California summer produce season, where growers already had reduced acreage of some items, such as lettuce and broccoli, to counter seasonal production elsewhere in the U.S.

The effects vary among California operations.

“It’s not affecting everyone the same,” Barber said. “Some are not affected at all. Others maybe 10%. Still others, 15% of their annual sales were lost during the summer.”

Many California grower-packer-shippers banked on their hard-won reputation for consistent high quality and safety, which distinguished their produce nationally, she said.

Some already are seeing a need to adapt and have worked with producers in other regions so they can ship from multiple areas and offer retailers more local products, Barber said.

Many retailers saw the buy local trend as an opportunity and began sourcing seasonally available produce within a closer proximity, she said.

They also saw it as a way to reduce transportation costs and possibly reduce their carbon footprint.

Some retailers have seen sales of locally grown produce increase by 50% during the past seven years, she said.

Even Walmart has gotten onboard and has set a goal of sourcing 9% of its overall produce locally by 2015, she said.

Many retailers also have used local produce to enhance their market position.

“They may already have ownership of that region, but they’ve used the trend to make that connection to the consumer stronger,” she said.

But with the growth of the buy local movement also have come challenges.

Some smaller growers may have more difficulty meeting food safety requirements and they may not have the same distribution and logistics capabilities of larger-scale grower-packer-shippers, Barber said.



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