Mar 14, 2014

Michigan asparagus growers get 1-cent price increase

Michigan asparagus growers won’t receive the price boost they saw in 2013, but a 1-cent-per-pound hike for 2014 is seen as a positive sign for the industry.

Handlers will pay 79 cents per pound (cash) for the growers’ asparagus this year – 80.5 cents per pound with payment terms, according to Ken Nye, executive director of the Michigan Agricultural Commodities Marketing Association’s Asparagus Division.

Nye announced the processing prices (for cuts and tips) during Oceana Asparagus Day in New Era, Mich., March 13. He said three of the four Michigan handlers had agreed to the price, and he anticipated the fourth would soon follow.

Growers received a nickel-a-pound price hike in 2013, going to 78 cents (79.5 cents per pound with payment terms).

“The 2014 price recommendation, 79 cents, is what the committee had developed and sent out to the processors, and 80.5 cents with the normal terms that we have,” Nye said. “The reason for that is stocks are in pretty good shape; we’re processing asparagus. The Peruvians have backed off a little bit, or at least not growing, and that has given us a little breathing room. Anybody who wants to find some domestic product has to come to us.”

The price in 2012 was 73 cents per pound; 70 cents in 2011; 62 cents in 2010; 66 cents in 2009; 67 cents in 2008.

Nye said fresh prices in 2014 have been “really weak coming from Mexico. We hope that’s going to turn around, and by the time the glacier melts here in Michigan that we’re going to have a really good situation.

“The price recommendation is based on this idea that we’ve got to get more acres in the ground and want to provide encouragement to the grower community to get that job done in the face of labor concerns, added costs land values, replant problems and so on. We’ve got to get more acres in the ground and that’s what the price is all about.”

“That price is up 1 cent from last year after a pretty significant jump in 2013,” Nye said. He had a message for the growers at the meeting.

“Quality. Guys, our future depends on this. We have to pay attention to this. We can’t get lazy. The Peruvians already own four-fifths of our market. They would gladly take the rest of it if our quality is somehow not as good or not better.”

“Our domestic stuff already costs more to the processors than what the Peruvian product costs,” Nye said. “If we don’t hold and maintain the value of this thing from a quality standpoint, we’re going to lose our place in the market. If the Peru doesn’t take it, the Chinese will.”

A continuing theme for asparagus growers is the unavailability of workers.

“With labor, I understand you have an availability problem but it adds up to quality also, and the quality of the labor we have in the field makes a big difference to this industry to get the right thing picked and the right thing in the box,” he said. “I hope the prices we have today for both fresh and processed have allowed the industry to move forward to have a good supply of labor, but I understand it’s really difficult.”

He said the processed side of the industry should not be allowed to wane.

“We have to do this fresh and processed thing together,” he said. “We all know we would be in dangerous shape if all we had left was the fresh market, even though it’s been really good. We’ve got to maintain the processed side of this, maintain the cut and tip if we can and certainly spears and be able to grow both of these things with the fresh market as we get more acres in the ground. We have to have both of these things coming together. The fresh thing has been absolutely fantastic for the industry, but we have to pay attention to this.”

And it’s vital for growers to meet expectations

“We have to deliver what we commit,” Nye said. “Processors are selling based on that. We have to maintain the processing industry as firm and strong as we can.”

He also voiced concern for preserving the industry’s infrastructure.

“The issue is the whole infrastructure – the asparagus advisory board, research staff, processors, fresh market and the help we get from Extension. We have to make sure all of it is maintained, as this industry has really declined over a period of years. While this decline has gone on, it has impacted the infrastructure around us.”

Nye, who is retiring in June after 37 years with Michigan Farm Bureau, will remain involved in asparagus during a period of transition. He first presented market information to asparagus growers in 2003, and compared the industry’s stronger status at that point to what is taking place today.

“Acres are down about a third since that time period. In 2003 we had the largest crop we had in a while, and certainly it’s the largest crop since then.

“Today, the processed side has changed quite a bit – it’s considerably smaller today. The fresh market has grown and that’s good. Prices for fresh and processing are up nicely. We used to have 10 processors; now we’re down to four. In 2003, we were selling quite a bit to Uncle Sam for domestic feeding programs. We’re not doing that anymore.

 “With the current situation, the economy continues to improve. General commodity prices are declining a bit; food prices are up a bit.

“Peru is there, it’s just not growing anymore. It’s kind of stabilized a little bit, giving us some breathing room, although it’s still significant. Mexico has expanded in asparagus production. Last year they had big problems with weather; this year they’ve got a big crop and it’s depressing prices significantly.

“Domestic production in the U.S. has declined and is still declining. All three production states – California, Washington and Michigan, have all declined over the last 10 to 15 years. It’s hard to imagine, but pretty soon at some point Michigan could be the biggest producing state if California and Washington keep going the way they are.”

Looking closely at Michigan, Nye said “you have to ask yourself is the decline over? Are we planting enough to stabilize ourselves and grow this industry back a little bit? We’ve had some pretty good incentives, some newer varieties and newer production. Hopefully, this decline is over because we need some more production.”

He said it all comes down to “labor and quality. The labor thing is holding our industry back and it’s very unfortunate. We’ve got to focus on quality. We cannot lose attention to quality, either fresh or processed. When we’ve got good demand and high prices, sometimes we can be a little bit lazy here. Frankly, that’s to the detriment of the long-term structure of this industry. We’ve really got to continue to do a better job on quality I think than we’ve seen the last couple of years. Weather and labor has something to do with this, but it’s a long-term issue that we have to pay attention to.

“We’ve got the fresh and processed,” Nye said. “It’s great that this fresh thing has grown and it’s great we have been able to get some good prices the last couple of years and be able to diversify this industry more. At the same token, it has taken some production away from the processing side and has really shorted our processors to some degree.

“It’s kind of a dilemma that you really want this fresh thing, and you really want those high prices. The bread and butter of the processing side of this industry needs to stay strong, and we’ve got to pay attention to that and grow these two things together.”

– Gary Pullano