Storm’s Crop Damage Is Vast

While much of Central America struggled in the wake of murderous Hurricane Mitch, major growers and importers Tuesday began totaling the crop and livestock devastation, which will cause long-term economic damage to the region and higher prices at U.S. supermarkets.

The floods and mudslides unleashed by Mitch that have killed an estimated 7,000 people have also wrecked banana, pineapple, melon, coffee and other crops along the coastal areas of Guatemala, Honduras and Nicaragua, countries that U.S. consumers have come to count on as prime sources of winter fruit.

The powerful storm prompted major growers Dole Food Co. of Westlake Village and Cincinnati-based Chiquita Brands International Inc. to declare more than $100 million in losses between them.

Dole said it will incur a charge of $50 million to $70 million for losses on its banana, sugar and palm oil crops in Nicaragua, Guatemala and Honduras. Dole farms 40,000 acres in those three countries, which represent about 25% of its worldwide fruit production.

Chiquita said its losses in Honduras will be in the $50-million range. “Most banana industry plantings in Honduras have been destroyed or severely damaged,” the company said.

Chiquita has not yet assessed damage to its operations in Guatemala. It farms about 25,000 acres in the two countries.

The loss of crops, either through damage to the plants themselves or destruction of roads and bridges that will make it impossible to move the crops, was already being felt in U.S. markets.

Dole reported “some movement” upward in West Coast banana prices. East Coast banana prices jumped 20 cents a pound, according to sources.

“Banana prices will go up first, then pineapples will follow,” said Amrish Patel, head produce buyer for Harry’s Farmers Market, a seven-outlet operation in the Atlanta area.

While depressed prices always hurt growers, as occurred earlier this year in the banana market, higher prices because of shortages have a penalty too, Patel said.

“Prices will go up only so much at the retail level, and then we’ll just have to take a loss. Every item has a price limit,” he said.

The extent of damage to coffee crops was still unclear, but speculation that yields were hurt sent coffee futures prices on December delivery up 10 cents a pound to $1.29, the highest since May.

Melon crops in Honduras, one of the major suppliers of cantaloupes and honeydews to the United States from December through April, were virtually wiped out as some areas received 2 feet of rain in two days, said George Lindemann, president of Lindemann Produce in Reno.

Lindemann, whose company markets melons grown in Central America and Mexico, said one of his suppliers near San Lorenzo, Honduras, lost an entire ranch to the flood, including the drowning of one employee.

He said melon harvesting that was to have begun in mid-December in Honduras will be put off until at least the end of January, and that the scarcity of melons will cause prices to rise in the meantime.

“There are other producing areas that weren’t that impacted, like Mexico and Costa Rica, but supplies will be lower than normal, which normally means higher prices,” Lindemann said.

Dole spokesman Tom Pernice said that while some of the lost Central American fruit can be made up by fruit from other countries, overall supply is likely to be cut significantly, meaning consumers ultimately will pay higher prices.

Dole gets 25% of its worldwide banana production from Central America and Chiquita relies on Honduras and Guatemala for 17% of its bananas.

This had already been a difficult year for banana giants Dole and Chiquita. El Nino-driven rain in growing regions produced a bumper banana crop, which depressed prices.

Prices fell further during the summer when Russia, which once accounted for 7% of worldwide demand for bananas, suffered a debt default and currency devaluation, which dramatically cut demand for imported fruit. “You had that much more product needing a home,” Pernice said.

Dole said last month that its third-quarter earnings would fall 35% and full-year earnings 20% because of economic turmoil in Russia and effects of the El Nino weather pattern on banana shipments.

* MOURNING IN HONDURAS: Grieving crowds jam morgues filled with storm victims. A8