If you Grow it they Will Come
#Good morning! Many of you have been reading either my Alpha and Omega report for many years or my market updates on Linkedin on Sundays. A little background I have been in the produce business for over 40 years and have done everything from selling produce from pushcart in NYC to growing produce in a foreign country. Very early in my career I had the ability to see market changes well in advance and as I get older I forget some things but this ability has not changed. No I am not right 100% of the time but I am right a high percentage of the time. Admittedly some of these calls are academic, just by knowing the areas, weather, transition times, demand times and past history many people could make predictions with some degree of accuracy. A little side note. Demand makes a market nothing else matters, this will be important when I get to my point.
As stated earlier I have been doing this for 40 plus years and this last year I have seen prices on some commodities cheaper than was just starting out. The Nogales deal we saw red peppers being sold for weeks for $2 fob, similar prices on squash and cucumbers but for an abbreviated period. Roma tomatoes that could not get off the minimum and the list goes on. We saw prices on our produce at significant times like Christmas and New Year drop significantly instead of rise as I have been accustomed for the past 40 years. There are many other examples but I must get to the point of this article.
We have seen an explosion in technology in the past 10 years that has changed the way many commodities are grown. Protected agriculture structures now cover what were once open field farms. Production has gone up, quality has gone up, areas that were once not suited for a crop are now grown in abundance. The landscape has change both literally and figuratively. We have all of this wonderful produce in abundance in and out of season but the real question, CAN WE SELL IT? Case in point this past winter we had beautiful weather in Mexico as well as in the Southeastern USA. Growing conditions were perfect and we had an over abundance of product that was sold at a deep discount or was dumped. Growers plan for someone somewhere getting hit with bad weather so that prices and demand go up but this year that did not happen. Now add to this scenario the countless number of greenhouses that are producing more and more of our products. This was a perfect storm for a disaster. Going forward as protected agriculture increases weather becomes less and less of a factor. Believe me I know any grower/shipper, business want to do more and more business but if you build it, buy it or grow it you have to understand you must have the ability to SELL it. Producing is wonderful but actually having demand for your product or the ability to sell all of your product is even better. We saw this scenario play out a few years ago when the Suspension agreement raise the floor to $8.30 on 25# tomatoes. Many growers rushed to plant Roma tomatoes because they were going to make a killing because $8.30 makes money on tomatoes. They forgot the most important fact that they needed to sell them so many of these growers received pennies on the dollar because their tomatoes had to be sold in Mexico, Canada or had to be dumped. If you have the business by all means grow your business and grow more to sustain your customers appetite but to grow more produce for the sake of growing more or to wait for something bad to happen to someone else or area seem to be a poor business model to me. I am an advocate of the 5% to 10% more when I speak with our growers because I know if everything comes out wrong or right depending on your point of view I can sell the extra product.
There is no turning back we are going to see more and more Green houses, shade house, hydroponic facilities etc. Yields will be up and costs will come down. If you have demand for your product all is good but if not reconsider your options. Going forward predicting markets may become harder when based on past experience and trends because protected agriculture will fill in where the gaps use to exist. Since I never want to retire from the business it is my hope that I continue to predict markets in advance and to see them coming as I always did, like a train coming down the tracks, you can’t miss the sight and the sound. Thank you have a great day and we’ll see you on Sunday for the next market direction.