Discovery Organics | MARKET REPORT – SEPT 29TH, 2017
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A few things…………..

Transition:  A few local growers, producing with protection in hoop houses and/or greenhouses will continue to provide cucumbers and even zucchini for several weeks – either until hard frosts kill off plants, or they burn-out and quit flowering.  Same deal with tomatoes, with local field beef and cherry crops expected to continue well into October, but volumes are going to be limited on all the above so expect to see a blend of California / Mexico and B.C. in the mix going forward.

Avocado:  Prices have tumbled considerably in the last couple of weeks and there will be a startling change on today’s list.  There are so many factors in play here.  But I will try to explain.  Michoacan is the predominant avocado growing region / state in the world, with production of between 500 and 1,000 full truck loads a week pretty well year-round.  Billions and billions of dollars’ worth exported, not including domestic sales. There are many tiers of control there, from the government agricultural ministries, avocado sales commissions, local and state rules etc.  As well, the entire industry is completely under the thumb of the Knights of Templar and Nexgen cartels, all of them controlling and fixing pricing.  Growers do not get ripped off or under-sell their crops – they all know the daily prices crossing the borders and monitor it on their iPads.

There are two types of orchards, ones certified by USDA to sell into the U.S, with another tier of certification, rules and regulations, for both organic and conventional, and ones not certified USDA who predominantly sell to the domestic market and export to Europe, Japan and Canada.  Most growers carry the USDA certification simply to be in the line-up to sell into the higher priced American market.  Sometimes the difference is negligible – 15% historically, so for many it hasn’t been worth it in the past.  But now, with California production continuing to decline and a market that doesn’t seem to have a limit on growth (currently 20-30% year-over-year growth has been the standard for many years,) prices are now 30% higher for ‘USDA fruit.’

Where we struggle is trying to find producers who don’t have certified USDA orchards, and are willing to sell at lower prices.  Not like anyone is hurting down there, with prices 200-400% higher than they were when we first started working with Pragor back 10 years ago.

One of the reasons avocado prices have spiked over the past month is that the powers that be were testing the water on pricing.  Selling prices are always higher between May 1 and Aug 30 when there is less fruit, but now that production is way up with new crop, it should have never hit current levels.  But it never hurts to jam markets higher and see what the fallout is.  Well, with a wholesale price in the U.S. of well over $100 (US) a lug, restaurants are looking at $2.50 each for fruit, and consumers are looking at $3.99 where they have been used to $1.49, and after a few weeks of suffering, the market has corrected somewhat, and we’ve been able to line up some non-USDA orchards for awhile. Clear as mud, right!

Greens pricing.  You may or may not remember, but pricing on broccoli and cauliflower at this time last year, (and carrying right through into January,) was absolutely the lowest it had been going back many, many years.  Some crop was either tilled in, and most packed and sold well below cost.  For months.  Every growers we work with was wringing their hands, with good growing conditions, and thousands of new acres planted out to meet a perceived bump up in sales as more big-box retailers opened up more rack for key organic items, waiting for the phone to ring.  Unfortunately, with growers not being very communicative about their plans, most grew more of all key organic green veg crops and we know what happened.  This blood-bath across the whole sector burned a lot of fingers, and with all those growers cutting back production, (of course not knowing how much has been cut by every other grower,) in order to avoid a repeat performance of last year, we will see leaner times and higher markets.  We’ve already had several emails from fairly large contractors in essence saying that they will grow far less and not sell broccoli, cauli and others far below production cost again. (They hope.)  You would think that if the pricing is only going to cover part of the production cost, (and none of the harvest and labour costs) they would just walk away from the field, but herein lies the problem – if you don’t provide consistent work for your labour, they will leave.  And when there is already a smaller and smaller labour force each year, (and frankly, more Mexicans leaving than coming,) you are basically screwed if they aren’t working all day, every day. So you harvest and sell at 50% below cost, hoping things will get better ‘next week.’

My point is that what you are seeing right now, with broccoli, and now cauliflower prices screaming upwards, is the beginning of markets that are, and will be under-supplied.  And personally, based on my experience, and talking to enough people in the industry, I will bet bottom-dollar that there will be a rare day this year when you see cheap broccoli or cauliflower.  I hope I’m wrong, and only time will tell.

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