Harsh winter weather in US opens market for B.C. farmers and distributors
The Canadian dollar dropped 6.4% against the U.S. dollar in 2013 and subsequently tumbled 5% earlier this year before recovering slightly. That’s been good for farmers who export to the U.S. and for fruit distributors such as Coquitlam’s Oppenheimer Group, which aims to do record sales of more than $700 million in 2014.
“Fruit prices are also rising because Asian countries such as China and Korea have developed a larger middle class,” Oppenheimer CEO John Anderson told Business in Vancouver. “There are more options for where we can sell our products and receive acceptable returns. That’s putting pressure on pricing in North America.”
Anderson pointed to freezes in Chile, California and parts of the U.S. southeast as part of the reason why supply for many fruits is limited. Drought followed the freeze in California and may persuade farmers not to plant crops, he said.
Even though it sold more than 40 million cases of fruit last year, Oppenheimer is just a mid-sized player in a sector dominated by ever-larger companies. Chiquita Brands International announced last month that it plans to merge with Ireland-based Fyffes PLC to create the world’s largest banana company. Other fruit giants include two privately held U.S. companies, Dole Food Co. Inc. and Del Monte Corp., and Ireland’s Total Produce, which last year bought 35% of Anderson’s shares and now controls 25% of Oppenheimer, Anderson said.
Anderson, who owns 65% of Oppenheimer, plans to sell more of his shares to Total Produce in 2017, he said. Having Total Produce on board as an investor gives Oppenheimer the deeper pockets necessary to consider making acquisitions, he said.
So far, all of Oppenheimer’s expansion has been organic. The 280-employee company has hired about 15 staff in the last year, and Anderson expects that recruiting to continue. His company buys fruit from about 30 countries and resells it to about 1,100 buyers in 27 countries. About 18% of Oppenheimer’s sales are in Canada, with 79% in the U.S. and 3% in the rest of the world, Anderson said.
The good news for consumers about large fruit distributors’ geographic diversification is that it reduces price volatility, Anderson explained. A single deep freeze in one region should not drive up prices because the market for most fruit is global and supply can be brought in from other regions.
“One big trend in the industry has been the berry category,” Anderson said. “It’s really taken off in the last few years – blueberries, blackberries, raspberries and strawberries. Avocados is another big growth area.”
Source: biv.com