FUROR OVER FRUIT FROM CHILE : Prices : Stability Now--but Wholesalers Are Worried

Supermarket fruit prices remained relatively stable Wednesday despite the controversies surrounding the safety of fresh fruit, but on the wholesale market there were ominous signs of change because of altered supply and demand. Prices of fresh Central American bananas and California-Arizona oranges were sharply higher in wholesale markets on Wednesday while apple prices slumped.

The Federal-State Market News Service in Los Angeles reported that a 40-pound carton of bananas from Central America fetched more than $13, compared to $11-$12 a week earlier. Navel oranges from California and Arizona sold for an average price of $9.50 to $10 per 38-pound box, up from $8.50.

Bananas and navel oranges have commanded relatively strong prices so far this season, said Terry Long of the price-monitoring service. But the voluntary recall of Chilean grapes and other fruits that offer June-in-January shopping for North American consumers can only push the prices of remaining available fresh fruits higher.

Steven Koff, president of the Southern California Grocers Assn., said little change has shown up in retail prices of either fresh produce or canned fruits, but added: “As Day 3 goes by we’re getting a little anxious about how long it will be before the government starts to release fruit that’s already been cleared.”

Even assuming that Chilean fruit returns to supermarket produce departments, however, “there’s the question of consumer confidence, too,” Koff said. “That’s going to have to be restored.”

According to the marketing news service, which is jointly run by the U.S. Department of Agriculture and the California Department of Food and Agriculture, apple prices are showing the effects of reduced demand. Scores of school districts--including Los Angeles Unified and others in New York, Chicago and San Francisco--have removed the fruit and apple products from lunch menus. School officials are concerned that children might be harmed by residues of a chemical, daminozide, which was used on about 5% of the nation’s apple crop to slow ripening and improve crispness and color.

Extra fancy Washington State Red Delicious apples apparently felt the effect of those bans: Crates that sold for up to $20 on March 7 fell to $18-$20 this week “with a few as low as $14 to $16,” Long reported. “Business definitely is slower on apples.”

Between Chile’s fruit holdup and the schools’ apple bans, organic produce markets across California reported dramatic increases in produce sales. In Southern California, the six outlets of Sherman Oaks-based Mrs. Gooch’s Natural Food Stores reported record sales. And Ted McCaskey, manager of Erewhon Natural Foods in Los Angeles, estimated a 5% increase in customers.

“We absolutely have more people coming in,” said Jimmy Ilson, a produce worker with Real Food Co., a chain of six markets in San Francisco and Marin County. “A lot of more mainstream people are coming in--people who would be shopping at Safeway.”

The Good Nature Grocery store in Walnut Creek, a 20-year-old natural foods store, reported that vegetable sales have jumped by more than 30% while sales of organic juices increased sixfold.

Meanwhile, more apples are on the way--from Chile.

The refrigerated freighter Creole unloaded the first dribble of apples--960 boxes--in Los Angeles on Wednesday, but the Canadian Reefer is expected to unload 20,000 more cases, along with other Chilean fruits, in Long Beach today. On the East Coast, Philadelphia awaits the Choapa Reefer with 31,000 cases of Granny Smiths and the Jambu with 23,000; the Bongo Reefer is due to call at Tampa, Fla., with another 14,000 cases.

As the imported fruit begins to pile up in warehouses, liability for any lost sales sharply increases, observed Curtis W. Keyes, president of Marine Management Insurance Brokers in Newport Beach. Keyes’ 6-year-old company specializes in what he called “cargo-rejection” insurance.

“Usually the last fellow who paid the bill winds up with the liability of the loss,” Keyes said. “And it depends upon the purchasing power of the customer on what sort of adjustment might be made against future purchases.”

But, he added, few fruit importers carry protection against cargo-rejection by regulatory action--coverage that is more common in the higher-risk seafood industry.

“They might have coverage for, say, an infestation, picking up the fumigation costs,” Keyes said. “But ultimately, the liability will probably be passed down the line, perhaps to the suppliers.

“Or, if the condition is found to be so localized that a good deal of this fruit can be released, those in the distribution chain will perhaps agree to some kind of sharing of the costs,” he suggested.