High input costs still dog industry - The Packer

High input costs still dog industry

03/31/2010 11:21:56 AM
Andy Nelson

But Piazza doubts if the answer to soaring costs can be found by politicians in Washington, D.C.

“I personally am not impressed with their business skills,” he said. “I believe you should let the free market run itself. If they manipulate it, costs usually go up.”

Health costs also are weighing heavily on Mutual Produce Inc., which feels some input costs more than others because it’s one of the few union houses on the New England Produce Center, said Tom Ciovacco, co-owner.

“Insurance costs are going up by percentages that are ridiculous,” he said.

When asked for a ballpark estimate on what those increases might be, Ciovacco confesses to blissful ignorance.

“I don’t even want to find out,” he said.

Boston wholesalers will also likely have to figure out how to pass on, or absorb, the higher costs associated with retrofitting inbound trucks from California, where new requirements on refrigeration have been put in place, Piazza said.

Input costs have reached a kind of equilibrium, said Ken Cavallaro, treasurer of Chelsea-based John Cerasuolo Inc.

“They haven’t come up from last year,” he said. “Things have stabi-lized.”

Not all wholesalers think trucks have been easy to come by.

“Availability is tight,” said Peter John Condakes, president of Peter Condakes Co. Inc. “It seems like they’re always crying that they’re tight. Or they have al sorts of trucks available in places where there’s not product.”

Freight costs also are high, he said.

“Freight is historically higher than in the past, and I don’t expect it to get any better,” Condakes said.

Another input cost that continues to weigh heavily on Peter Condakes Co. Inc. is food safety, Condakes said.

Being on the cutting edge of food safety is no longer an option, he said. Customers expect it now. And it’s not enough just to take care of your own business, Condakes. Retailers and foodservice purveyors now expect distributors to make sure their suppliers also are up to speed.

“It’s not an easy task,” he said.

And the burden is felt even more by those in the industry who do their due diligence, in contrast with those who don’t, he said.

“It’s hard, when you have competitors who don’t do it,” Condakes said. “It’s amazing to me that they’re still in business.”

Ensuring good food safety practices can be difficult to accomplish in a terminal market environment, Condakes said.

And what makes it even more difficult is when customers demand stringent food safety compliance, then turn around and ask distributors to jump on the “locally grown” bandwagon, Condakes said.



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