Cost Is the Tip of the Iceberg
You may think you’re a seasoned investor, having weathered junk bonds and savings and loan and stock market meltdowns. But consider this: In November, the wholesale price of a case of iceberg lettuce has gone from $14 the first week to $25 the second, to $11 the third to $5 this week.
Imagine if you had a thousand cases of the stuff. Now you know why lettuce growers are known as the riverboat gamblers of the produce industry.
Of course, this month is hardly typical, even for something as variable as iceberg lettuce. What happened was an odd combination of events all hitting at the same time.
The first factor is long term. All spring and early summer, lettuce prices were depressed. That prompted growers to plant their late-summer and fall crops more conservatively, reducing the amount of lettuce on the market. That raised prices from the $4 to $5 per case level where it had lingered all spring to the healthier $8 to $10 level.
What pushed prices beyond that was the switch-over from the summer-fall growing areas in the Salinas and Santa Maria valleys and around Huron in the central San Joaquin Valley to the winter ground in the Imperial Valley and around Yuma, Ariz. While supplies dwindled up north, the early southern harvest was late getting started because of early fall rains that had interrupted the planting schedule.
The final whammy came from several weeks of fall rains in the north, which further reduced those harvests. This also resulted in a pricing oddity: at one point last week “wrapped” iceberg lettuce (which is trimmed and wrapped in the field) was selling for twice as much as “naked” iceberg lettuce (which is shipped unwrapped and untrimmed) from the same area.
The culprit was the rain, again. Naked lettuce is picked by crews walking the fields and returning to the trucks with their harvest. Wrapped lettuce is picked by crews following trucks that are outfitted with wrapping and trimming equipment. Because the trucks were so much slower getting through the mud than the individual workers, there was much less of the wrapped lettuce available than of the naked.
All of that accounted for the prices skyrocketing. What about the rapid reentry? When prices doubled, people stopped buying as much lettuce. And just then the Imperial Valley and Yuma crops started kicking in. The result, as they say in the produce industry, was a “full pipeline.” There was much more lettuce on the market than there were buyers. Hello free-fall.
How will this play out? That’s anyone’s guess, depending on the market and the weather (both the Imperial Valley and Yuma are within the El Nino storm track and both have been hit hard by floods in the past). But some industry insiders are predicting that prices will recover and lettuce supplies will be tighter through the holidays.
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Carolyn Olney of the Southland Farmers Market Assn. reports that Laurie Spencely has four varieties of pecans grown on 25-year-old trees near Clovis. She sells at the Compton market on Friday, Gardena on Saturday, Torrance on Tuesday and Adams-Vermont and Santa Monica on Wednesday.
