The tightening credit market caused by the recession, coupled with rising and yet uncertain input costs, is making it difficult for growers and suppliers in New Jersey to gauge how profitable the impending season will be.
“There was high fluctuation of prices last year. That is on their minds as they enter the growing season,” said Ben Casella, field representative for the New Jersey Farm Bureau, Trenton, N.J. “It’s the unknown of what’s down the road that can factor into it, and basically input costs — where does the fuel go for this summer, and how that factors into everything else.”
Bill Nardelli, president of Nardelli Bros. Inc., Cedarville, N.J., said with the economy struggling to re-start, many in the produce industry in New Jersey are carrying smaller inventories.
“They don’t want warehouses full of product,” he said. “It’s a big plus for us because we offer every day deliver.”
Peter Bylone, general manager of the Vineland Cooperative Produce Auction Association Inc., Vineland, N.J., said the economic downturn is obviously hurting customers’ ability to pay as promptly as in years past.
“I see with the economic downturn — not my local buyers — but the people they deal with are getting longer with paying, which is going to eventually affect me as well unless it turns around,” he said. “If the economy doesn’t start turning around… it may affect the farmers here.”
“The number one fear of us here at Eastern Fresh is getting paid,” agreed Tom Sheppard, president of Eastern Fresh Growers Inc., Cedarville, N.J. “Customers that used to pay in 10 days take two weeks. We have to wait a little bit. There’s a trickle-down effect.”
Sheppard said he tries to monitor the credit ratings of customers, but last year he said almost everybody paid a little slower than they had in the past.
“It’s just trying to find out where the markets are going to be,” said Sam Pipitone, president of F&S Produce Co., Rosenhayn, N.J.
“And as far as our growers, it’s trying to be concerned about what the commodity prices are going to be this year and making sure they have a full arsenal of material so if one commodity isn’t quite as profitable, the other one may have a better shot at becoming a commodity that is in demand.”
For several New Jersey growers, the economic downturn is not having a big impact on the sales of most core items as consumer cutbacks pertain to higher priced specialties.
“For the items that we sell, we’re meat and potato items — the higher priced items are suffering,” Nardelli said. “For cabbage consumption, for leafy greens and the staples in the produce departments, they seem to be moving OK.”
Nardelli noted that one change he observed was more buying of bulk items rather than bagged or processed items.
“Consumers are looking for a deal, something that can stretch the dollar,” he said. “Even the thought of a chopped salad is fast and it’s easy. They get more bang for the buck with a head of lettuce or a head of romaine.”
Nonetheless, Nardelli said he has noticed consumers beginning to open up in the economy more by visiting malls and New Jersey seaside resorts by the shore.
“The mid-range restaurants are doing OK, not the high-end ones,” he said. “We feel what’s going to take place is we’re not going to have the double-digit items. We may have to learn how to make money on an $8 commodity and pay our bills.”
Despite uncertainties regarding input prices, credit lock-ups and an unpredictable customer market, some suppliers are approaching the season with full force.
“We’re looking forward to getting it out there and demonstrating and making new customers,” said Chris Cunnane, national sales director for Santa Sweets, Procacci Bros. Sales Corp., Philadelphia. “You have the economy, but you still have the focus on healthy eating. The economic climate is starting to turn around a little bit, confidence is growing, and people still want to eat healthily.”