California’s Salinas Valley vegetable shippers had more than enough supply for the start of the deal this year.
However, some say demand-related adjustments in the second half of the season could taper supply for some commodities and create more variable markets.
Buyers had plenty of supply and prices were uncommonly low in late April.
A look at the f.o.b. prices showed that broccoli and romaine lettuce were trading on April 24 as low as single digits per carton. Cauliflower was trading at better than $12 per carton but had traded below that level earlier in April.
Growing conditions have been favorable in the spring, shippers said.
“The spring has been much cooler them normal but has not caused any delay in packing,” said Dave Johnson, co-founder and CEO and president of Salinas, Calif.-based Pacific International Marketing.
Compared with the start of the pandemic, the general psychology of the market is different in April 2021, said Robert Verloop, chief operating officer of Coastline Family Farms Inc., Salinas.
“We’re dealing with much more known issues rather than the unknown,” he said, noting that Coastline and other produce companies have made a lot of adjustments on a day-to-day basis since the pandemic began.
“About a year ago, we would have been having the discussions of how to reduce our acres planted because we just didn’t know what was going to happen to the foodservice industry or retail,” Verloop said.
To some degree that uncertainty is still there but there also are established facts, such as the strong performance of retail and online grocery.
Suppliers still face the challenge of matching supply to demand, he said.
“We’re all planted for the first half of the Salinas season, and we’re really evaluating what we want to do for the second half,” Verloop said.
Beyond acreage reserved for contract sales, Verloop said Coastline also has a little extra acreage for open market and for whole distribution. Still, growers may be cautious.
“With all these moving parts together, it’s hard to want to plant at full capacity,” he said. “We lost significant acreage last March due to the just the shutdown of the foodservice area.”
Despite efforts to pivot to retail, Verloop said the industry suffered much crop loss last year and some oversupply and waste this year.
“The industry loves to talk about (preventing) food loss, and we have a long way to go to make up what we lost last year.”
Verloop said the industry, in general, was over-planted in the spring, though quality has been generally outstanding.
“I think we all anticipated, to some extent, getting back to a more normal pattern,” he said. “And we certainly have not resumed a pre-COVID normal pattern.”
Market conditions may be quite variable in the second half of the season, he said.
Food box bonus
Last year, the U.S. Department of Agriculture’s Food Box Program helped the industry at a time when a large portion of foodservice operators, schools and universities were shut down.
“Obviously, we’re looking forward to the Food Box Program being reinvented and hopefully helping out with that part of it as we continue to go through the next couple of months,” Verloop said.
This year, shippers said, foodservice demand will improve, albeit slower than some expected.
“2020 was one for the books,” Johnson said. “In 2021 we expect things to shift slowly as foodservice picks back up.”
Johnson said he hopes foodservice demand can resume at full force by the end of 2021, but “hopefully sooner.”
Verloop said cauliflower contracts have been expanded this year, and foodservice demand in general is climbing back.
Some foodservice customers also are taking more mixed loads rather than straight loads, limiting their buying while demand improves.
“We’re seeing a variety of different customers not booking the full loads anymore,” he said. “They’re playing it a little bit closer to the vest because their demand is so variable.”
Salinas Valley Shipping Point Prices
Cauliflower ($ per carton) size 12s
3/20/2021 $12.65
3/27/2021 $10
4/3/2021 $8.5
4/10/2021 $6.45
4/17/2021 $6
4/24/2021 $12.65
Source: USDA (low price)
Romaine lettuce ($ per carton) size 24s
4/10/2021 $8.65
4/17/2021 $9
4/24/2021 $7
Source: USDA (low price)
Broccoli ($ per carton) Bunched 14s
3/13/2021 8.45
3/20/2021 8.65
3/27/2021 7.45
4/3/2021 6.45
4/10/2021 6.45
4/17/2021 6.45
4/24/2021 6.45
Source: USDA (low price)
