Retailers Hike Prices Of California Produce

AMY SUNG

EXETER, Calif. — The freeze in California that damaged and destroyed more than $1 billion worth of crops is having a chilling effect on fresh produce prices.

Retailers said they are passing along hefty increases for California-grown produce to consumers.

“When the freeze happened, we had California navel oranges on sale for 39 cents per pound,” said Vince Ottolino, produce buyer for Caputo's Fresh Market, Elmwood Park, Ill.

“Now, they've gone up about three times more.”

Because market prices for citrus have gone up, Caputo's passed the increase on to consumers. Shoppers in turn have cut back on citrus purchases, choosing less expensive fruits instead, Ottolino said.

“We've already informed our customers with signs up in stores saying, ‘In regards to the freeze, we will do our best to continue to bring you quality produce. However, pricing will be dictated to us based upon availability,’” said Dale Ohman, the retailer's marketing director.

Ingles Markets, Asheville, N.C., has also seen pressures on citrus and produce across the board, noted Ronald Freeman, chief financial officer, in a conference call discussing the company's results for the first fiscal quarter.

“We will probably have to increase some prices, but so far we have absorbed some of the increases and taken lower margins,” he said during the call.

According to a survey conducted by the California Farm Bureau Federation, Sacramento, county agricultural commissioners who responded estimated that total crop damage has climbed to $1.24 billion, with new damage estimates still coming in, said CFBF spokesman Dave Kranz.

“All these numbers are really preliminary,” Kranz said. “We expect that the actual damage totals will rise from here. We haven't talked to every county in California, but we started with counties where a state of emergency was declared and counties where damage had been reported. We don't claim that this is a comprehensive survey, but we think it's the best number that's available so far on what the county agricultural commissioners have reported.”

Price Chopper, Schenectady, N.Y., has experienced increases from 25% to 50% in free-on-board (FOB) prices for navel oranges, honey tangerines and lemons, said Mark Vanderlinden, vice president of produce for the chain.

“We absorbed approximately one-third of this cost increase,” he said. “We are sourcing citrus from South America, Spain and Morocco to offset the shortage of California and Arizona citrus.”

Lemons are in good shape, but not much is left of the tangerines, said Joel Nelson, president of California Citrus Mutual. Retailers continue to see increased prices. Ottolino told SN his company's prices for lemons increased from 10% to 20%.

“Lemons were really high before the frost anyway, so they increased a little bit, but not as much as the oranges,” he said.

Broccoli, cauliflower, lettuce and leafy greens, avocados, strawberries and artichokes were also affected. Prices for lettuce, romaine and cauliflower increased by 40% to 50% at Caputo's, though Ottolino noted prices for those items as well as strawberries are starting to come down with the arrival of warmer weather in California.

The situation was similar for those items at Price Chopper. The retailer was able to satisfy demand by bringing in berries, a few vegetables and leafy greens from Florida, said Vanderlinden.

“People are going towards other fruits that cost less, such as apples, pears and other fruits,” said Ottolino. “So we've seen an increase in sales for those items, but a decrease for oranges.”

Although avocado supplies were down 25%, industry officials made sure there was enough fruit to satisfy American football fans. The California Avocado Commission said all commitments would be fulfilled because many of the avocados on the market at this time of year come from countries such as Mexico and Chile, Kranz said. Avocado consumption traditionally spikes on Super Bowl Sunday.

The citrus loss alone is estimated at $800 million, compared to the $700 million in weather-related damage reported in 1998. The increase in value and acreage of the crops since 1998 accounts for the difference, said Nelson of California Citrus Mutual.

Wholesale prices are starting to come down, he said.

“We were able to slow down the urge to pick and move fruit, so that we're only moving that good-quality fruit, and the market's dropped to between $20 and $22 per 40-pound carton,” he said, adding that prices peaked at $28 to $30. “It started softening on Jan. 27-28, and today everybody seems to be focusing on that $20 to $22 level, and it should stay there for a while. We've got good fruit to move; we just don't have as much of it. So we'll keep the weekly volumes going. The season will just end sooner.”

About six to eight weeks' worth of good-quality fruit remains on the trees, and damaged fruit that could be salvaged went to juice, Nelson told SN.

Citrus and avocados will suffer long-term, industry observers said.

“We've suffered a loss, there's no question about it,” Nelson said of citrus. “We're back in business, though. We just won't be in business as long as normal.”