Oct 23, 2020
California produce markets retain sharp division

Seven months into the ongoing pandemic, farmer Dave Vierra of West Sacramento said he thinks a new normal has arrived.

“How long this is normal is a good question,” said Vierra, who grows vegetables, watermelon and squash near the Sacramento River. “That’s part of the risk of farming, right? Especially in the fresh-market business.”

A new normal, in his case, means his food-service market is a fraction of what it was last year – but his retail market has more than made up the difference.

Throughout the fresh-produce business, farmers and marketers say they expect demand from restaurants and other food-service buyers to remain muted, as individuals and government agencies evaluate the risks of COVID-19, while retail demand remains strong.

Vierra said food-service customers once made up more than a third of his business; now, it’s about 5%.

“Some are in or out of business, some are in trouble, some are figuring it out,” Vierra said of his food-service customers. Retail, on the other hand, “has gone through the roof and stayed through the roof. Not much has changed. As my merchandisers tell me, it’s like the day before Thanksgiving just about every single day.”

Mark Shaw, vice president of marketing for the Markon produce cooperative in Salinas, said retail demand has reached an equilibrium after soaring in March and April and beginning to cool in May.

“Food-service demand has been swinging up and down since mid-May, dependent on the geographic area and increased or decreased infection rates,” he said.

What a new normal, or a temporary normal, might look like is a “great question,” Shaw said, adding, “Where does North America go from here?”

“I think most people are pining for the Old Normal, and hoping we can bring it back,” he said. “But more and more of us are realizing the Old Normal is not coming back.”

Shaw said he thinks the new normal may entail more grab-and-go foods with more packaging, instead of hand-selecting produce from the retail shelf.

“Packaging will give the feel the product has been touched by less hands,” he said.

Jim Boyce, owner of wholesale distributor Produce Express in Sacramento, said one factor affecting produce demand will be whether, and to what extent, restaurants are allowed to resume indoor dining.

In California, where outdoor dining is possible much of the year in some regions, a warmer-than-average winter could be ahead, according to the National Weather Service. Its Climate Prediction Center released a three-month outlook last week that foresees higher-than-average temperatures, especially in Southern California, and lower-than-average precipitation into the new year.

“It’s going to be curious to see what the general public thinks about eating outside,” Boyce said. “I think, as long as it’s not a windy day, I think it’s a practice that people won’t shy away from too much. If it’s cold out, they can use heaters. If it’s raining, most of them have tents set up now to where it won’t affect them.

“We can all speculate, but we’ve never gone through it before, when the only option to dine out is to literally dine outside,” he said. “We’ll see if people are willing to do it or not.”

In less-temperate climates, Shaw said, he fears the restaurant business will drop along with the temperature.

“Without a vaccine or meds to treat the symptoms of COVID-19, we will see the food-service industry take a step backward,” he said. “It will simply be too cold in most of the country, and Canada, to eat outside.”

That, he added, will drive people back to eating at home.

Shaw said a farmer’s primary market will dictate planting decisions. Those with a heavy food-service customer base will pull back some plantings on account of uncertainty “and will not overplant, which would create a supply-exceeds situation, dropping value of their crops.” Those with a strong retail base will keep to a normal schedule, he added.

“People will still crave and eat fresh fruits and vegetables, and will seek them out at the retail level,” he said.

Vierra said he saw that at his farm, where demand for watermelon was “huge” until Mexican melons hit the market earlier this month, and the market for sweet corn remains “tremendous.”

“Sweet corn was pretty much gangbusters from beginning to end,” he said.

But he did lose a cabbage crop at the start of the pandemic.

“I had a small cabbage program that went through winter, and right as I was finishing is when the pandemic hit,” Vierra said. “That’s when everything came to a screeching halt for about 10 days, when just the whole supply chain was screwed up, and I did end up disking about 20 acres of cabbage.”

At Produce Express, Boyce said some prices have stabilized.

“Some of the root vegetables like onions, potatoes, things like that, have leveled off, and the prices are back down to seasonal norms,” he said. “It’s been a rough year for most vegetables, being higher than normal.”

He attributed much of that to underplanting and a shortage of labor.

“For squashes, bell peppers, peas, things like that, it’s just been a very rough year– really uncharacteristic seasonal highs for the summer months,” Boyce said. “It’s basically all labor-driven, whether it’s the planting of the product, the harvesting of the product or the fear of COVID itself just causing people to underplant that drove the prices pretty much all summer.”

Late-summer heat waves and the plague of wildfires have also taken a toll on vegetable supplies, he said.

In Salinas, Shaw said demand for lettuce, cabbage, broccoli, cauliflower and strawberries is outpacing supply, as weather and plant diseases reduce supplies of those crops.

Kevin Hecteman, California Farm Bureau Federation

Dave Vierra looks over a pumpkin patch, among the last remaining fields awaiting harvest at his West Sacramento farm. Vierra says the COVID-19 pandemic and related restrictions on restaurants cut his sales to food-service customers to a fraction of what they were before, but in his case surging demand from retail customers has more than made up the difference. Photo: Kevin Hecteman


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