Questions raised on overpricing in wake of weather events

With the recent return to winter-like conditions in many of the current key vegetable growing areas, a reversal of supply opportunities has taken place. When California, Arizona and parts of Mexico experienced a warmer than average winter, production on many commodities boomed, resulting in lots of volume and subsequently lower prices. Now, however, it appears that supply levels are coming down and prices are on the way up again.

Some suppliers, though, are not convinced that all pricing is accurate and question whether producers are taking advantage of the situation. "In the last few weeks, we have seen produce items that were priced extremely low hitting season highs practically overnight," said Paul Manfre of Top Katz in New York. "However, history has shown that growers will sometimes over emphasize bad news. They say there's been a freeze, that they've lost half their crop, all their crop, etc. It's a familiar story."

Effects move slowly
The main issue is that prices rose practically overnight. Manfre noted that due to the excess production, producers should in reality have plenty of inventory in the cool rooms, not necessitating a sudden increase in price. He noted that any effects from weather related events usually take a number of weeks to filter into the market, and it all depends on what stage a crop is at.

"It usually takes 2 weeks to get the true story," Manfre said. "And it can take many weeks longer depending on whether it hit during harvesting or during the bloom, for example. It's a supply and demand market, and artificially high prices will always come down eventually. After those 2 weeks, it becomes evident what the true story is."

Manfre added that holding up prices without a market will naturally result in a crash in pricing, something that he says should be managed better. "Produce is a business and people need to make money," he said. "However, they will only lose out if they keep prices elevated for too long, which eventually results in killing demand and prices dropping accordingly. An orderly decline in prices benefits everybody - the demand will remain, producers can still make money, and customers don't have to face high prices."

Produce items off the boiler for now
Some of the products that have seen higher prices are beginning to take a dip now. However, much of this is already in transition, with seasons about to end or kick off. There is still no doubt that things are slowing up overall. 

"Squash and cucumbers have hit a high and are beginning to come down," Manfre observed. "Cucumbers were already slowing down but the cold weather has definitely made it worse. Roma tomatoes are still high and we expect to see this continue until Florida begins their Spring crop. This has been delayed due to cooler temperatures down there, but once they've started we should see prices come down."

For more information:
Paul Manfre
Top Katz, LLC
Tel: +1 (718) 861-1933

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