(June 18, PACKER WEB EXCLUSIVE) Rising production costs continue to weigh heavily on Ohio vegetable producers.
But high fuel costs could actually benefit Ohio.
Westlake, Ohio-based Cabbage Inc. has seen demand for its cored cabbage climb at least partly as a result of higher fuel costs, said David Hille, owner and president. With cored, 20% more usable product can fit on trucks than with conventional produce, Hille said.
Cabbage Inc.âs cored program has grown significantly in recent years and now accounts for close to half of all cabbage sales at the company, Hille said.
The success of cored also can be traced to foodservice demand, Hille said. With cored, restaurateurs like having less waste to dispose of and that they donât need as much labor to prepare the product, he said.
Loren Buurma, co-owner of Buurma Farms Inc., Willard, Ohio, is one Buckeye State grower who believes Ohio could enjoy a freight advantage over the West Coast this summer.
âOur freight is going to be up to the East Coast, but compared with California, itâs just a fraction,â he said. âItâs an opportunity for us.â
High fuel costs have not shrunk Buurma Farmsâ distribution net, Buurma said.
But even if Ohio does get an advantage over California on freight, the overall problem of soaring input costs remains, Buurma said.
âItâs hard to stay up with all the costs,â he said. âTheyâre way out of hand.â
Unless companies have contracts with chains, itâs probably not a great time to aggressively grow vegetable programs, said Jim Klickman, manager of Elmore, Ohio-based Klickman Farms.
âWith inputs being up so much, the risk is too great for speculation,â he said.
Some crops could see cuts this year as a result of high production costs, Klickman said.
âSeed people are saying that sales are down considerably for beans,â Klickman said. âWith the prices (being what they are), I think people are cutting back.â
Some Ohio growers also are finding that soybeans and other grain crops are a more lucrative alternative to fresh-market vegetables, Klickman said.
Kirk Holthouse, general manager of Holthouse Farms of Ohio Inc., Willard, Ohio, agrees with Klickman that itâs not the best time for speculators to take a flier on vegetable farming.
âI canât see people who havenât gotten into it in the past jumping in,â he said. âWith freight rates what they are, itâs going to be an interesting summer.â
Next summer, Holthouse said, could be even more interesting.
âMy suspicion is, next summer there could be big turnover in the number of people growing vegetables,â he said.
Some growers, he said, will take a hard look at how much theyâre paying for diesel, fertilizer and numerous other things and think, âWhy do I need to keep doing this?â
If that happens, Holthouse said, it could benefit the companies that decide to stick it out.
âHopefully, there will be less supply out there, and we can take advantage of it,â he said.
Holthouse agrees Ohio growers could have an edge over West Coast growers this summer because of the high fuel costs.
âIt costs three times more to send a truck to New York City from California than from Ohio,â he said. âWe hope that gives us an advantage.â
Having a relatively small distribution net â 150 to 200 miles â softens the blow of high fuel costs for Michael Farms Inc., Urbana, Ohio, said Todd Michael, vice president.
In addition, the company benefits from the fact that many trucks pick up vegetables from Ohio on backhauls, he said.
Ohio may get a leg up on California because of lower transportation costs when it comes to some vegetables grown in Ohio, said Mark Guess, president of GroCo Farms Inc., Jamestown, Ohio.
But itâs not a guarantee, he said. Take peppers, for instance.
âCalifornia is a big player in peppers, and when they have an oversupply they ship them here no matter what,â he said.
Food safety, fuel and fertilizer costs rank among the big-ticket input costs at Cabbage Inc., Hille said.
Businesses have to work harder than ever to find efficiencies, Hille said.
âWeâre having to become very innovative on controlling costs,â he said.