Sales improvement can’t come soon enough for Southern produce companies - The Packer

Sales improvement can’t come soon enough for Southern produce companies

06/30/2011 02:16:00 PM
Dan Gailbraith

Kentucky’s and Tennessee’s economies continue to struggle, though the numbers show some improvement over the past year.

As of May, both states continued to have unemployment rates higher than the national average of 9.1%, according to statistics from the U.S. Department of Labor.

While higher unemployment rates typically mean restaurants lose customers — which, in turn, affects produce suppliers — and some Kentucky and Tennessee produce companies that focus on the foodservice industry said sales were lower, they’ve still found ways to build their customer bases.

Frank A. Campisano & Sons Fruit Co., Louisville, Ky., sells to restaurants and retailers and has lost business in the past two to three years, said Frank Campisano Jr., president.

Some lost sales were due to the advance of broadline distributors that sell fresh produce and nonperishables, and that can load multiple product lines on a single truck. Those big-volume companies typically sell produce at lower prices than Campisano & Sons can offer.

Campisano competes by offering good service, but not by trying to meet broadliners’ lower price points, Campisano said. He educates customers about the need to buy based on quality and service instead of price.

Some buyers in Tennessee and Kentucky are looking for local produce in an attempt to cut costs. With no freight charges, distributors sometimes can afford to sell local items for less.

The Kentucky Department of Agriculture’s Kentucky Proud Restaurant Rewards program helps promote local produce and other local products by offering rebates to restaurateurs and foodservice buyers when they purchase Kentucky-grown produce.

The Pick Tennessee Products program also promotes local product, particularly the locally famous Grainger County tomato.

One trend Kyle Holmberg, marketing specialist, Tennessee Department of Agriculture, Nashville, has noticed in Tennessee is a growth in farmers markets and community-supported agriculture as avenues for local produce sales.

Sales of local produce at those venues don’t appear to have changed the overall grocery market much, however, Holmberg said. The majority of consumers still shop at supermarkets in search of inexpensive produce.

“There’s a big enough switchover (to local) that we see (farmers) markets popping up,” Holmberg said.

There is “exponential growth” in the number of farmers markets in the state, likely due to grants from the department of agriculture, said Annette Wszelaki, vegetable extension specialist, University of Tennessee, Knoxville.

The agriculture enhancement grants help pay for items such as equipment, facilities, certification and audits, Wszelaki said.

In the Knoxville area, there are at least four farmers markets, with more located in almost every county, Wszelaki said.

Lee Pittman, owner and president, Dixie Produce Inc., Chattanooga, Tenn., said there are fewer independent operators in the foodservice and retail sectors in Tennessee.

However, Pittman thinks there always will be a segment of consumers who prefer to patronize locally owned restaurants and stores, and he thinks the ones that have survived the past few years of difficult economic times will get stronger.

“I think there’s enough support for them,” Pittman said. “People are looking for them.”

A handful of major supermarket chains, including Walmart, Kroger and Schnucks, now dominate Memphis, said Lee Forcherio, general manager, Orbit Tomato Corp., Memphis, Tenn.

“They’ve pretty much squeezed out the independents,” he said. “Ten years ago, there were probably 10 or 12 independents and little retail produce houses and fruit stands.”

Forcherio said he doesn’t know of any small independent grocers now, although he said there may be some scattered about the Memphis area.

“It’s hard for the independent person to compete with the chains, price-wise,” he said.

Forcherio said he also has seen many small, locally owned restaurants in Memphis go out of business. He said he attributes that to high unemployment rates and consumers’ tighter food budgets.

The most recent metropolitan data from the U.S. Bureau of Labor Statistics showed Memphis’ unemployment rate in April was 10.1%, more than 1% above the national average of 9%.

No restaurant chains appear to be filling the holes left by the local restaurants that have closed in Memphis, Forcherio said. The city already had, and continues to have, many large chain restaurants.

“It seems they’re the ones doing the business,” Forcherio said. “Just the independents are struggling.”

In Nashville, Tenn., some locally owned groceries remain, but not many, Holmberg said. Nashville-based Osborne Foods operates small neighborhood stores under the Apple Market and Bi-Rite banners. Kroger, Publix and Walmart are major retailers in the Nashville market, Holmberg added.

Three Nashville-area Target and Super Target stores offer fresh foods, according to Target’s website.

Campisano services customers within 35 miles of Louisville. Ninety percent of his customers are convenience stores, independent grocery stores, nursing homes, hospitals, schools and universities.

Although Louisville has lost some independent grocery stores, Campisano said the metro area still has several. In addition to competition from chain stores, the remaining independents face competition from convenience stores and big-box stores, such as Sam’s Club.

Adam Watson, produce marketing specialist, Kentucky Department of Agriculture, Frankfort, also said there still were a number of independent stores in Louisville, but he didn’t know how many.

Louisville also has some small supermarket chains that have three or four stores. They differentiate themselves by promoting local products as their niche, Watson said.

He said Louisville also has a high concentration of farmers markets, with more than 20 within the county. The abundance of farmers markets demonstrates that area consumers do pay attention to where they purchase food, Watson said.

“Louisville has a burgeoning local food environment,” he said.

Beans are Kentucky’s biggest crop in terms of acreage, Wszelaki said.

There are 10,000 acres of snap beans grown in Tennessee, and the area along the I-40 corridor between Cookeville and Crossville, Tenn., is the state’s main snap bean production area.

There also are numerous vegetable producers in Bledsoe and Rhea counties and a pocket of growers in Lauderdale County, Wszelaki said.

However, adverse weather this spring has caused some crop damage in Tennessee.

Severe storms, tornadoes, straight-line winds and flooding from April 25-28 led the Federal Emergency Management Agency to declare disaster areas in seventeen counties, including Bledsoe and Rhea.

On April 28, a tornado went through Bledsoe County and one grower, Jackson Farm, Pikeville, Tenn., lost seven tractors. The same day, the University of Tennessee lost several fields of sweet corn to hailstorms.

 “We had to start over,” Wszelaki said. “We won’t have the first corn on the market, but we should still have a market.”

Although Wszelaki says she isn’t sure how much of an effect the storms had on statewide fruit and vegetable production this season, she expects it will be significant because so many counties were affected.

Like Tennessee, Kentucky had heavy rains this spring.

The state’s strawberry yields were down this season, Watson said in June, but most vegetable field crops appear to be in good condition and on schedule.

Kentucky produces a variety of vegetable crops for the fresh market, with peppers, cabbage and tomatoes as its major crops, Watson said.

Because Louisville-based Grow Farms’ growers are spread throughout Kentucky and Tennessee, some fared better than others during the spring storms, said Brian Knott, president.

Overall, Knott expects production to be similar to last year’s with respect to the approximately 20 crops it produced last year.

May was a wet month, but about two weeks of warm weather in late May and early June helped speed the crops’ growth so that they were on schedule as of mid-June, Knott said.

Ideal tomato-growing weather is in the high 80-degree-range, but two weeks of daytime temperatures of 90 degrees and above were good for the crops. After that period, temperatures returned to normal, in the 80s, Knott said.

In mid-June, Grow Farms was harvesting summer squash and zucchini. Cabbage and cucumber harvests were expected to begin in late June, with bell pepper and field tomato harvests expected to begin by early July. Watermelons and sweet corn are expected to be ready in mid-July, Knott said.

In Grainger County, Tenn., east of Knoxville, field tomatoes were running a bit behind in June because the fields were too wet when growers wanted to plant.

At the university’s farm, field tomatoes were about two weeks behind in mid-June, Wszelaki said.

On June 22, Grainger County tomato grower Rhonda Mixon, co-owner of Rutledge, Tenn.-based John Mixon Farms, said her company had just finished harvesting greenhouse tomatoes and was beginning to pick field tomatoes.

Grainger County was hit by strong hailstorms just after the field crops were planted in April. Mixon Farms also had three to four days in June with severe storms, but Mixon said she didn’t know of any damage. The crops looked good, she said.



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