Discovery Organics | MARKET REPORT – DEC 8TH, 2018
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MARKET REPORT – DEC 8TH, 2018

MARKET REPORT – DEC 8TH, 2018

It’s their time to shine!

There is nothing scarier for any grower than heading into the 2 week buildup for the holidays than there being shortages of lettuce, cauliflower and celery.  It’s their time to shine!

There are big blank spots on lists from major growers in California today, and with periodic (and somewhat rare) rain, and brutally cold temps (for lettuce) 10-15C below normal, this situation isn’t expected to change for some time.  Just expect high pricing through the New Year.  We have our own gap on red and green leaf for the next week from Ecocampos, also from cold weather, but that gap will be short lived.

Expect a strawberry shortage for a week or so as growers in Santa Maria and Oxnard (remember last weeks’ map?) clean up after a couple of inches of rain.

And mushrooms – with the CDN $ so low compared to USD, a lot of mushrooms are going south.  Between high demand, cooler weather and labour issues, expect higher prices and short supply especially on Crimini/Portabello.

Next on my list is my rant about the news!

I’ve always had a love affair with the CBC.  Listen to it driving to and from work.  Listen to their podcasts when travelling, etc.  and I look to them for fair reporting. I also hate CBC.  They make a splash with a story and then do not follow up.

In November they printed 16 headline stories about the romaine warning. They have, since then, run just one story saying the warning was limited to a batch of counties up the coast of California – and not one story saying that Romaine is OK to eat.    Not the first time CBC has done this – it drives me a little nuts.

On Monday, CBC ran a story on national radio news, TV news, website, regional news, warning consumers about a pending 6% increase in the price of fruit and vegetables – even to the point of interviewing people on the street for a reaction.  This story falls under the “sensationalism” category.  Google “CBC vegetables higher” and you will come up with this set of search results to the left.

These are headlines CBC has run nationally in 2015, 2016 and 2017. “Spike” “Hike”  “Rising” “Up” “More” (The SHRUM) words.

The actual report they are quoting is from Dalhousie University in Halifax, who in general are pretty accurate, but do admit in this year’s report that they bombed on their vegetable price prediction for 2018.

Nowhere has CBC run a story that says, “Oops, wrongo reindeer, prices didn’t actually go where we said they were going to go, according to Dahousie researchers”

In actual fact, looking at our own average case selling prices, there was a decrease from 2015 to 2016, an increase of just 2% from 2016 to 2017, and a decrease of over 11% from 2017 to 2018, right up to last week. Farmers in California and Mexico called the 2017-2018 winter and spring export period a ‘bloodbath’ because of over-supply and market prices for months below the cost of production.  Vegetable growers in Imperial and Yuma, with few exceptions were selling green veg in the basement for month after month last spring.  Shadehouse growers in Mexico missed break-even by a mile on tomatoes, bell peppers, zucchini and cucumber.  The glut extended into central California in the spring as well, with strawberries going for peanuts.

Fruit and Vegetable Prices are completely controlled by a supply / demand cycle.

There is no context for this graph – it is showing the price range over a period of 7 years on a variety of commodities that I’m using simply to demonstrate the ups and downs, in this case showing prices tripling and quadrupling at some points of the year, year over year, based entirely on consumer cravings vs. farmer output.

Charts like this, produced by industry associations, are feedstock for producers.  Farmers are always looking for the sweet spot – when they can aim production for the price peaks, and be out of the field, as it were, when prices drop into valleys – those periods when there is more production than demand.  Planting and pruning dates are adjusted for fruit and vegetables hoping for better returns.

In context, right now in early December a freight train of factors is affecting lettuce pricing.  First, a huge pull on green and red (and Iceberg) because of the Romaine warning 2 weeks ago.  Then rain in coastal California, where many growers were just winding up.  (They planted for late harvests in case the first fields in the desert regions weren’t ready, hoping for the sweet spot – didn’t pan out.)  At the same time (last 10 days) unusually cold weather also hit the desert regions.  Demand is about to be huge for all lettuce commodities for the 2 week Christmas pull, forcing growers to pack under-weight and 30 count boxes to meet commitments and holding prices high for the majority of the market.  Because they can get it.  Conventional leaf pricing a year ago was in the $7-$8 (US) range at field in Yuma.  Today we’re seeing prices closing in on $30 US for conventional, with no relief in sight, rain in the forecast for the weekend in the desert and not one day over 20C expected for a week in Yuma.  That is the supply / demand cycle.  (All those staggered plantings will mature at the same time in January, and I’ll bet bottom dollar that prices sags into the basement.)

These were the headlines from CBC on Monday, touting the new Canada Food Price Report from Dalhousie.

“Your grocery bill could rise 3.5% in 2019, study predicts, Vegetable prices are projected to rise by 4-6 per cent, according to the Canada Food Price Report for 2019.” (Isaac Olson/CBC)

Even worse, another network threw this up in the air on Thursday hoping it would stick – based on the same report, and then followed up with the most nonsensical discussion imaginable.

“Prices of your favourite foods could soon skyrocket”

Author Sylvain Charlebois says the problem with the climate cycle is it could mean less moisture in North America and that doesn’t bode well for vegetable farmers. “We procure a lot of vegetable out of Mexico and the US. So we are expecting major producing regions to be affected by El Nino in 2019 which means that we may actually need to pay more for our vegetables, especially in the … winter of 2019-2020,” he says.

Sylvain Charlebois is the lead on the Dalhousie study.  First thing I see in the actual news story is “could soon skyrocket” then the interviewee is quoted saying, “especially in the winter of 2019-2020”.  In my world, “soon” doesn’t mean a year from now.

Now, to the actual point of the study’s author on a 6% veg increase, I disagree entirely.  Over 80% of our fruit and vegetables are imported.  I have visited somewhere around 150-200 farms and orchards in the past 20 years, and our buyers have, in total, likely come close to that number of visits.  From Salmon Arm to southern Chile.  And I have only seen a couple of potato operations here and in PEI that didn’t irrigate.  Drier than normal conditions are a good thing, not bad.  We specifically want green veg grown in places where it doesn’t rain.  The quality is far better and shelf life is far longer.  Every farm we work with has a good water source, and uses drip, spray, pivot, trench or flood irrigation, all depending on where they are and the type of crop.   Looking specifically at Ecocampos – they grow a wide range of crops from October to May and then wind down for the June to September rainy season.  So I don’t buy any research that says a drier winter of 2019-2020 will affect vegetable pricing, then or now.

Specific weather events are the most common reason for price changes for produce, and while some can be charged up to a changing climate, most aren’t.  Subtle changes in temperature or precipitation are responsible for wild price swings – not fires or floods or hail.  A good example is the current lettuce market.  It’s just below normal, temperature wise – no crazy weather pattern, no freeze or wind storms, and demand is far out-stripping supply.

And finally, for us here in Canada, where 80% of our fresh fruit and vegetables are imported, you can look no farther than this currency chart to explain changes.  All imported produce is bought and sold in US dollars.  In the past year we’ve seen a change from 1.23 to 1.34 year over year – that’s an 8% change which should have driven prices higher over the past 12 months, except in this period, in my world, prices dropped 11% compared to 2017.   If the dollar had stayed the same over the year from where it started, vegetable prices, at our end, would have been down 15% or more.

That’s my rant.  Good thing CBC didn’t stop me on the street for an interview!

 

 

 

 

 

 

 

 

 

 

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