Retailers Brace for Shortages of California Citrus

AMY SUNG

EXETER, Calif. — Retailers are looking to alternate sources of supply and preparing to face higher product costs in the wake of the Southern California cold snap that destroyed what some observers said could be nearly $1 billion worth of oranges, lemons and other crops.

Industry officials told SN it is clear there will be less product to move into the market due to freezing temperatures that swept through prominent citrus-growing counties such as the San Joaquin Valley region, the Imperial and Coachella Valleys, and Ventura and San Diego counties.

“We estimated about $960 million — just under a billion — worth of fruit that was hanging out there on the trees the week prior to the freeze,” Bob Blakely, director of grower services, California Citrus Mutual, based here, told SN. “We're not giving any estimates yet [of the total losses] because we don't have them, but I'm confident that we're well over 50% in losses at this point.”

A similar freeze in December 1998 destroyed $700 million in produce. A.G. Kawamura, California state secretary of food and agriculture, told the New York Times that losses this year will likely surpass that number.

Dave Kranz, spokesman for the California Farm Federation Bureau, Sacramento, said it was still too early last week to fully assess the damage, however.

“We know there has been significant damage, we know that some farmers will have lost much if not most of their fruit, but it takes a few days for damage to manifest itself in all of these crops,” he said. “We know that there will be less citrus fruit on the market.”

Natural-products retailer Wild Oats Markets said it has been in close contact with its suppliers, monitoring the freeze in California. Because of its emphasis on organics and the relationships it has with growers in other regions, such as Texas, Arizona, Florida and Mexico, Wild Oats will work with those suppliers and expects that most citrus items will stay in stock in its stores, according to Heather Musselman, spokeswoman for the Boulder, Colo.-based chain.

“It's still too early to place any assessments as to the short- or long-term effects the freeze will have on California produce,” Musselman told SN. “Our prices will remain stable, and we will continue to monitor the freeze. We expect to see only slight price fluctuations at this time.”

Neil Cullen, assistant produce buyer, Sprouts Markets, Phoenix, told SN that citrus costs are expected to double once current inventories are depleted.

“Like all other retailers, we will see a significant impact to citrus supply in the near and long term, and a significant impact to strawberry and leafy vegetable crops from Southern California and southwestern Arizona in the near term,” he said.

Lettuce crops in the California and Arizona deserts have been damaged by freezing temperatures as well, he pointed out.

Cullen said consumers will see higher prices on strawberries and affected vegetables until new crops are harvested after growers replant. Supplies will be replenished within a few months for most crops, he said.

He also expects a more limited supply and higher prices for avocados, summer valencias and certain desert vegetables, such as peppers.

Barbara Page, spokeswoman, Price Chopper, Schenectady, N.Y., said consumers could start seeing increased prices from certain vegetable crops that were affected, such as celery and lettuce, as early as this week.

“We don't know what it's going to cost us at this point, but it could be anywhere from double to triple,” she said. “It's going to probably be a substantial increase. It depends on supply and demand and what we can get out of California and what the cost is going to be for us to purchase the product.”

She said Price Chopper plans to buy up as much citrus as it can from California before the supply runs out. Citrus makes up about 8% to 10% of the chain's produce sales, she said.

“We do purchase some from Florida, but the volume is nowhere near what we get from California.”

Strawberries are not as popular this time of year, and the chain sources them from primarily from Florida, she added.

California fresh-market oranges and fresh-market lemons, which make up approximately 95% and 98%, respectively, of the country's supply, will be hardest hit, Kranz said. There could also be a longer impact on valencia oranges from California that would have been harvested in the spring and summer, as well as some impact on mandarins and tangerines.

While a majority of fresh, ready-to-eat oranges come from California, Florida still remains the No. 1 producer of all oranges grown in the U.S., accounting for approximately 80% of U.S. orange yields. However, a majority of that goes to juice.

“We're still experiencing losses,” Blakely said. “It's going to be a big percentage of what the supermarkets could've anticipated having available to them, so the impact of not having that fruit, or having a reduced amount of fruit is certainly going to result in higher prices being paid for that fruit.”

Retailers should expect to pay more for the fruit affected by the weather, but how much of that higher price that is passed onto the consumer is up to the retailer, both Blakely and Kranz said.

“The consumers don't stop wanting oranges just because California doesn't have them, so the additional impact on our industry is that then we have fruit coming in from competing areas cutting into our market share potentially for next year because supermarkets are able to identify other sources that they don't have to go out and seek when they can buy fruit from California,” Blakely told SN.

Blakely also added that Florida, as well as other countries, are in a position to fill some of the citrus supply gaps.

Farmers did, however, take the opportunity to harvest as much fruit as they could in advance, with freeze warnings forecasted.

“I'm told there's probably a seven- to 10-day supply of fruit that was harvested before the freeze,” Kranz said. “That fruit will move through the channel, and it's only after that that people will start to notice the impact in terms of the availability of some of those fruits.”

In the coastal growing regions of Southern California, strawberries are currently being harvested and the fruit that was on the strawberry plants when the freeze hit will mostly be lost. The flowers on the plants have also been affected, meaning strawberry supplies from California will be disrupted for the next couple of weeks, at least.

“The question that we can't answer yet is whether or not the strawberry plants themselves were damaged,” Kranz told SN. “If the plants were not damaged, they'll begin generating new berries within a couple of weeks, but if the plants themselves were hurt, that's going to be a longer-term impact on strawberry production, and that we don't know right now.”

Avocado stems have also been freezing, causing the fruit to prematurely fall from trees, but according to Kranz, it will take seven to 10 days to know how much has been lost.

In addition, harvests of the vegetable crops in the Imperial and Coachella valleys have been delayed, causing a short-term impact on vegetable supplies from those areas, but the long-term impact is difficult to gauge right now, Kranz said.

“Farmers can't harvest when it's too cold, so they're not able to ship as much product to market, and now we're beginning to hear some reports of actual damage to the crops down there as well — lettuce and leafy greens,” Kranz told SN.

Because tree damage has not yet been sustained with the citrus fruits, it is expected that a normal crop will be set next year, Blakely said.

“A lot of times after we have an event like this, if we have a normal spring, we actually see a heavier crop the following year, so we'll be back supplying California citrus next year. Then it will be back to the normal market,” he said.