Costs, Losses Mount for Produce Growers, Wholesalers
Grape grower Jim Pandol has been praying hard that his Thompson seedless table grapes will last longer than the lockout at West Coast ports.
Like many California food producers, he counts on exporting a portion of his crop at higher prices to help make farming profitable.
But with 200 tons stuck in port, unable to get to customers in Taiwan, Hong Kong and the Philippines, and an additional 600 tons backing up in his warehouses in the San Joaquin Valley, the operator of Pandol Bros. growers in Delano has had to pull the plug on much of his harvesting right at the peak of the season, laying off farm workers and letting grapes remain on the vine.
“The orders I have today have been canceled,” Pandol said. “They don’t need it anymore. If it isn’t available, [overseas customers] don’t wait. They just buy something else.”
Other California crops, too, have racked up losses and are waiting for a reprieve. About 14% of California’s annual harvest is exported, to the tune of $6.5 billion, according to state figures.
Although much of that is trucked to Canada and Mexico, right now thousands of tons of oranges, broccoli, lettuce and other vegetables are stuck in refrigerated containers at the ports of Los Angeles, Long Beach and Oakland.
Although dockworkers and their employers have agreed to mediation in their contract dispute, and ports could reopen in coming days, it may be too late for this produce to make it to overseas destinations.
And on the flip side, bananas and other imported fruit can’t make it into port, sparking fears of shortages.
So far the economic toll has been small, but even if the ports open up in the next couple of days, many growers and wholesalers could be out thousands of dollars in lost orders and additional costs.
The port shutdown comes when many of California’s top agricultural exports are being harvested. If the closures last much longer, Pandol and others say the U.S. market could be flooded with certain types of produce such as seedless grapes, a third of which are sent overseas.
“We already have a dramatically oversupplied [U.S.] market,” Pandol said.
That could mean serious losses for Pandol and the rest of the grape industry because grape prices have plunged on this year’s record crop.
And economists say that if the situation lasts much longer, even as little as a week, it could put a strain on California’s entire produce industry.
“Not only will people be hurt by this, they will be hurt pretty broadly [across the produce sector],” said Larry Karp, an economist at UC Berkeley.
Some farmers have embarked on letter-writing campaigns to President Bush and members of Congress.
But mostly, they’re waiting--waiting for their product to go out and for goods to come in.
“We’ll be out of bananas by Friday,” said Richard A. Flammino, president of Umina Bros. in the L.A. Wholesale Produce Market, as forklifts whizzed around him hoisting loads of grapefruits and tomatoes early Wednesday. “If you don’t have it you can’t sell it. This is a loss of revenue for us.”
As much as 40% of the company’s produce--including pineapple, avocado, citrus and bananas--travels through the port, both inbound and outbound, he said. If the ports don’t open by the weekend, he may have to lay off a worker.
Linda Chen, president of Borg Produce, also in the downtown Wholesale Market, doesn’t think the situation, regardless of its duration, will deter clever growers from getting their goods through. She believes many will find ways to bypass the ports, even if it means sending goods into Mexican seaports and trucking in from there.
“There are ways around it,” said Chen, who has seen a run on bananas at her stall as nervous customers fret about shortages. “You’re not going to see ‘no bananas’ on store shelves. They will truck the stuff in if they have to.”
Still, the added expense could mean higher prices for bananas and for other types of imported tropical fruit such as Hawaiian pineapple.
Maui Pineapple Co., for instance, already has racked up higher costs by shipping its canned pineapple weeks ahead of time and paying extra warehousing fees. The firm also paid more money to airfreight fresh fruit from Hawaii, President Doug Schenk said.
However, he declined to say just how much these moves were costing him or his customers.
Costs are mounting for Pandol too. The grape grower will have to first pay a trucker $800 to truck the 200 tons of grapes, lettuce and broccoli sitting at the port of Oakland back to his warehouse in Delano so he can switch out the grapes, replacing them with fresher fruit. The fruit that had been sitting in the containers, if it is salvaged soon, will have to be sold locally at a much lower price.
Some have given up on waiting to ship to overseas customers.
Tanimura & Antle, one of the state’s largest produce shippers, has begun diverting most of the 800 tons of top-shelf broccoli it would have exported this week to the regional market, foregoing the 25% markup the firm gets by selling in Asian markets.
“Customers here are now getting export-quality produce at a domestic price,” said Chuck Schreiber, director of international sales for Tanimura & Antle in Salinas.
For Schreiber’s 20 container loads on the dock and on a vessel in Oakland harbor, there are only a few days left before the produce ripens and the trip must be abandoned, along with the extra profit.
“Our growers in this valley have not had a great year,” Schreiber said. “Our job is to return the most profit back to them. This is just very frustrating.”
