Dec 12, 2007

Food Safety, Labor and Fuel Costs Dominate Shipping

The Vegetable Growers News interviewed a handful of experts to get their perspectives on recent trends in vegetable shipping.

Labor

Everyone agreed the industry needs an adequate legal labor force. The availability and cost of labor is felt throughout the entire produce industry, from growing and packing to the shipping end. When growers aren’t certain how many workers will show up – or how much they will cost – they’re not certain how much to plant.

“They’re putting something in the ground without any real knowledge if anybody will be there to harvest it,” said Pat McDonald, president of Yakima, Wash.-based Pacific Marketing International, which represents vegetable shippers from Washington and Oregon.

Food safety

Nobody’s quite sure what to do about food safety either, McDonald said. The problem is, there’s no single food safety standard. Major retailers have different requirements and often use different auditors. Mountains of paperwork add to the difficulty.

Food safety mandates are consumer driven, but competition doesn’t allow the industry to pass food safety costs onto consumers. The costs have to be borne by the industry, especially growers. That makes it more tempting for growers to switch from vegetables to commodity crops, which are easier to grow and are getting high prices right now, said Rich Rasmussen, co-owner of R.A. Rasmussen and Sons Inc., a grower, packer and shipper based in Granger, Wash.

Consumer-driven food safety demands are forcing growers to document everything, Rasmussen said.

“The public wants to be assured we’ll provide a safe and nutritious product,” he said. “We have to do that.”

Food safety requirement not only add costs, they add to grower liability. Rasmussen wonders how much liability growers can live with.

“It keeps me up at night,” he said.

Fuel

The rising cost of oil and gas has been felt in every segment of the industry, from transport to plastics and packaging. Meanwhile, competition doesn’t allow growers to charge more for their product. They have to absorb the extra costs themselves.

Hauling packages, bringing men to the field and driving tractors are all more expensive thanks to rising fuel costs, said Bob Consalo, president of William Consalo & Sons Farms in Vineland, N.J. The family business grows a wide array of greens, lettuce, peppers, cabbage and other vegetables, and ships fresh produce from other New Jersey growers.

Pacific Marketing’s shippers face surcharges if the price of gas exceeds a certain limit. Surcharges are unknown expenditures that are not part of a fixed budget, McDonald said.

High gas prices actually have been a boon to Eckel & Sons. Obviously, they pay more for gas like anybody else, but high costs give local producers a competitive advantage. Growers on the East Coast aren’t paying as much for gas as growers in California, Eckel said.

The Morning Star Packing Co. uses trains to avoid gas prices. The California company’s tomato paste is primarily shipped via rail car to private-label companies on the East Coast. On average, Morning Star ships about 200 rail cars a month, said Beau Waddell, who works at the Morning Star warehouse in Williams, Calif.

Packaging

A combination package holding four kinds of produce has been popular for Consalo & Sons the last couple of years. The 2-bushel, cardboard package holds a total of 12 vegetables, three of each kind – whether it’s collards, mustard, kale or something else, Consalo said.

A major change in asparagus packaging has been extended shelf-life bags, said Jim House, vice president of asparagus procurement for Los Angeles-based Gourmet Trading, which grows and ships asparagus from Peru, Mexico and Washington state.

McDonald wasn’t sure if asparagus bagging would turn out to be a long-term trend.

Give ’em what they want

Large wholesale growers need to be packers and shippers as well, so they can control the sales of their product. Without control, they’re giving up too much value-added profit. The marketplace prefers to be served 12 months of the year, even though vegetable production is limited by climate in most parts of the country. From a sales standpoint, it’s important to associate with organizations that have the ability to deliver product year round, said Keith Eckel, a grower, packer and shipper in Clark Summit, Pa. His business, Fred W. Eckel & Sons, grows and ships tomatoes, sweet corn and pumpkins throughout the eastern half of the United States.

“As a grower, you constantly have to be attuned to serving the customer with what the customer wants,” he said.

Also important, growers need to be vigilant in collecting the money owed to them.

“Slow pay will become no pay,” Eckel said. “Make sure you get paid by your buyer. It seems like common sense, but it’s been the undoing of many grower/shippers.”