Importers expect higher demand for good crop

01/29/2010 11:04:52 AM
Jim Offner

As importers bring in their usual assortment of melons from Mexico and Central America, they say they’d settle for a little less drama — if an equal outcome — in the market this season than they endured a year ago.

“Volume wise and growing condition wise, it would have been exceptional. Market wise, it’s not exceptional,” said Lou Kertesz, vice president of Fresh Quest Produce Inc., Pompano Beach, Fla., which brings mainly cantaloupes and honeydews to U.S. markets from Guatemala, Honduras and Costa Rica from November through May.

Prices were low before Christmas, but they started to increase thereafter, Kertesz said.

“But, we’ve had markets that were below double digits, which are well below break-even,” he said.

The recession had something to do with that, he added.

“A lot of that had to do with lack of demand,” he said. “We felt retail pricing generally has been a little high. Movement, compared to volumes, it wasn’t an oversupply. Nobody was taking more volume than was necessary.”

Inconsistency wasn’t the story with all shippers last year, though. Brent Harrison, president of Nogales, Ariz.-based Al Harrison Co. Distributors, said the markets were good from start to finish.

“Last year, we enjoyed a good market throughout the import program,” he said.

Prices peaked at the 40-cent-per-pound level, which was phenomenal, according to Harrison.

“I think it was a lack of melons from Central America, which gave us a window,” he said. “There were light supplies out of southern Mexico, between Jalisco and Colima.”

This year, the company’s watermelons and honeydews out of Mexico have been on schedule.

In fact, things may be looking up this season, Harrison said.

“Our production is probably going to be up 80%,” he said. “One grower almost doubled his acreage. He’s got six phases and approximately 500 acres.”

As of Jan. 6, prices were in the 20s, but they were expected to move up as the season progressed, Harrison said.

“I think we’ll start to see some better prices in the next couple of weeks,” he said.

Demand started to accelerate around Christmas, Kertesz said.

“But as the demand increases, the volume will shrink,” he said.

Lighter supplies were anticipated toward the end of January, as a result, he said.

“Guatemala finishes its first cycle, so we have one area in Honduras growing, so we expect the market to increase to be moveable at retail level and break even, cost-wise,” he said.

The break-even point can vary, depending, in part, on strategy, and also on luck, Kertesz said.

“We’re able to cut costs a little here and there,” he said.

“With the fuel stabilizing, we have more consistency, as far as pricing with the fuel. But generally, it’s in the low double-digit figures.”

Michael Warren, president of Pompano Beach, Fla.-based Central American Produce, agreed the market improved toward the end of 2009.

“Currently, the outlook is a bit stronger than how it began,” he said.

“The outlook is looking pretty good. Fruit is being bought up and moving at a decent rate. Prices were slightly lower than last year, but we figure it’s good that consumers are getting fruit they can afford.”

Growing conditions in Guatemala and Honduras had been acceptable, Warren said.

“Weather-wise, it’s been excellent and we’re getting the quality and yields from it,” he said.

Things were a bit different a year earlier, Warren added.

“Last year, everything went well, but production was a bit off due to the weather,” he said. “The major difference is better land preparation and better quality melons.”

Optimism was high for the upcoming Mexican watermelon season, said Nick Rendon, division sales manager of the Rio Rico, Ariz., office of the Los Angeles-based Giumarra Cos.

“The outlook so far looks good,” said Rendon, whose company brings in melons from Colima.

Rendon said he hoped the upcoming deal would be smoother than last year’s.

“Prices in the beginning of the deal and winter were just outstanding, but as spring got here, it got pretty ugly,” he said. “Prices were too high.”

Ladera Ranch, Calif.-based Dulcinea Farms LLC also reported an up-and-down season a year ago.

“Probably the same as everyone — 2009 was certainly an interesting year,” said John McGuigan, vice president of sales and marketing. “But, all in all, we had a very solid year at Dulcinea.”

The economy probably had something to do with the rough ride, McGuigan said.

“I think what we found was — and it wasn’t just at Dulcinea, but across the industry — one of the challenges a high-quality differentiated marketer faced was a lot of consumers were trading down from a mini PureHeart to a full-size seedless watermelon that a lot of retailers were selling aggressively,” he said.

“But that wasn’t the only area — we saw bagged salads lose to the head lettuce and specialty items lose to core items.”

Allison Moore, spokeswoman for the Nogales-based Fresh Produce Association of the Americas, said a no-news-is-good-news scenario applies.

“I’m not hearing people saying the world is ending or it’s the most terrific ever. I don’t think people are really alarmed about anything, at this point,” she said.



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