OVERVIEW
The Fancy Food Show in New York was held June 29 thru July1st. Almost to a one, all of the packers represented, no matter which country, we are complaining about high costs. Be prepared to receive another round of price increases as these overseas packers pass their increased costs on to the importer, and then on to the distributor, who in turn passes the increases on to the operator. The cause is not so much related to a given crop condition, but more to what you have been hearing on the news every day: oil prices and the weak US dollar.
Overseas packers are complaining about the increased costs of tin plate, corrugated boxes, plastic jars, energy to run the factories, increased labor costs, and fuel to power the truck to take the containers to the port for shipping. The farmers are complaining too about the increase in fuel to run their tractors, increased fertilizer, increase labor cost, etc, etc, etc.
Remember back in October 2007 when I address the then stupid price of a barrel of crude oil at $85.00 and predicted that it would rise to the very stupid price of $100.00 a barrel. Well, today’ incredible price of $142.00 a barrel is beyond stupid. Or is it? We are just one hurricane, one international crisis, one incident away from $200 a barrel. Americans are paying $4.25 a gallon for gas which is a bargain when compared to other countries. Our gasoline is cheap compared to Europe where Spain is at $8.77, France and Germany at $10.00 and Italy at $12.00 per gallon. A friend of mine just returned from a golfing trip to Scotland and reported gasoline selling for $14.00 a gallon. Ouch!
The transportation industry is reeling under the burden of high diesel fuel. Truckers in Europe are protesting and begging for relief. The cost to move a container from a factory to a port in Europe is beyond the word for “expensive”. This high fuel costs are effecting transportation in the USA. The industry is already reportedly 42,000 trucks short. Independent drivers are parking their rigs, not taking loads, because they can’t afford the cost of fuel. It is virtually impossible to find a trucker that will take more than three stops on a truck. Most want only two stops, and these have to be made in the same day.
MUSHROOMS
The crop in China is over and it was excellent resulting in a more stable market. Pricing has declined from last year and is expected to remain steady with ample supply to fill the market’s needs. Like always we would like to caution you to compare drained weights. They can range from the standard net drain weight of 68 ounces per can down to a 62 ounce. There are reports of some transactions for 58 ounce at a lower case price. It will always cost more per ounce when buying a lower drained weight because the packaging, labor, energy and handling costs still remain the same.
RIPE OLIVES
The Spanish crop produced enough ripe olives to meet market needs, but at very high prices. Of all the producing countries, Spain has the greatest number of olive trees and the highest costs. As a result, Spain has priced itself out of the market. Their sales have been captured by Argentina, Morocco, and Egypt. These usurper olive producing countries have a superior product compared to the Spanish Hojiblanca and much lower labor costs.
GREEN OLIVES:
The Spanish crop was ample but with average size smaller. As with the ripe olives, the Spanish green olive sales have been taken over by other countries, mostly Argentina. Green olives are hand picked, normally three at a time from a tree, resulting in high labor costs in Spain. Argentina has been suffering from a crop shortage of approximately 35%. This, coupled with the farmers striking against the government’s extra export tax on foodstuffs have cause major delays in shipments from Argentina. There currently is a sever shortage of sliced green olives, sliced salad olives, and broken salad olives.
PEPPERONCINI
Packers in Greece and Turkey announce a $3.50 price increase during the Fancy Food Show. The increase was not so much a result of a poor pepper crop as it was due to the increase of PET plastic (oil), energy costs, weak dollar, etc.
ARTICOKES:
Peru is basically sold out of their new crop. The Peruvian packers took a $5.00 increase for this crop’s production. Chile, also short on product, followed suite with a $5.00 increase. Spain has a short crop with questionable quality and very high prices. Spain’s artichoke sales have suffered resulting in several artichoke packers closing. That leaves Morocco, Egypt, and entering into the foray is China with limited production. You will see some tightening of supply with related firmness in pricing.
WHEAT:
Despite the terrible flooding in the mid-west, the US will plant more wheat acres this year. Wheat futures are declining. While bad weather could put a crimp on the total end production, at this point we should see some relief on some domestic wheat products.
The European wheat crop looks very good. We should see a much welcomed price reduction for pasta in the fall as the new crop is processed into pasta. Let us hope that the pending price relief isn’t wasted with an increase in other production and transportation costs and with a weaker dollar.
Patrick M. Redfern
404-358.4965
