Posts Tagged “Northeast produce shipments”
By Timothy Lanctot ALC Rochester
Vegetable and fruit markets, as well as many other areas of the food industry, have had to tackle a wide range of stressors and supply chain complications over these past two years. Weather-related factors, such as drought, flooding, colder than normal spring temps to name a few, have played a part in low crop production here in the Northeast.
Then of course with the pandemic, labor forces have had to deal with smaller than normal crews / staffs. The cost to the consumer has continued to increase to offset these factors, U.S. consumers paid increased prices for fresh / frozen vegetables and fruits from November 2019 to November 2021. Roughly an increase of 3.5% for frozen vegetables / fruits and approximately a 5.7% increase for fresh vegetables / fruits.
Over that same time period, you can start to see patterns for eating food at home as opposed to eating food away from home or a restaurant. Prices for food items eaten at home has increased by 10.4% overall and prices for food eaten out has increased 9.8%. These price patterns suggest that prices for vegetable and fruits here in the Northeast, have been less unstable, relative to other food sectors.
The Northeast is an economically important region for the production, and certainly the consumption, of many vegetable and fruit products, both fresh and processed. In the nine states that comprise the Northeast region, vegetable crops alone have generated an annual total farm value of approximately $800 million in recent years.
In 2022, as well as for the foreseeable future there are three major factors that will continue to shape the vegetable / fruit industry in the Northeastern United States.
First, at the farm level, the constant supply of productive and qualified labor continues to be the number one issue for all growers. Especially with fresh vegetable / fruit production, labor is the greatest factor in production costs. Of course, ongoing improvements in technology and the substitution of automated, robotic and intelligent machines for workers will continue to occur at the farm level. This change could lead to long run price reductions in production costs and improvements in crop quality.
Second, the consolidation of distribution and related businesses in the middle of the supply chain. There is widespread speculation that we will see additional structural change leading to greater industry concentration. This is part of a trend, but it has also been fueled by COVID-19, which has led to a reduction in the number of produce buyers and increased consolidation among major food retailers given their capacity to adapt to an evolving marketplace, including the expansion into online sales.
Farms in the Northeast will continue to have access to fewer and fewer buyers as more and more mergers and acquisitions occur. This will put added pressure on wholesale and farm-level prices. While at the same time, fewer buyers and increased consolidation among food retailers will increase market power for these food distributors when dealing with consumers. As a result, we could see higher prices for vegetables / fruits in supermarkets, throughout the “fresh” season.
Third, trends in the consumption of vegetables and fruit in the Northeast will be driven largely by income. Recessions and / or pandemics have the capacity to decrease nutritional intake and consumers would resort to more calorie-dense “comfort” foods. Although, some households during COVID-19 have shown to increase the time spent planning and preparing meals at home, there is evidence that this has led to an increase in overall dietary quality and a high vegetable and fruit consumption.
A large share of vegetables (approximately 40%) are typically consumed away from home in the foodservice sector, and any rebound of the foodservice industry is expected to increase overall vegetable consumption. As sited in the 2022 Northeast Vegetable Crop Outlook publication, “Frozen vegetable sales in the food retail market increased dramatically in 2020 and some of that increase was sustained in 2021; this suggests that COVID-19 allowed some consumers to rediscover frozen vegetables and that this category may end up having long run benefits from the pandemic.”
During the pandemic, many consumers became less interested in certain credence attributes (such as how or where the food was grown). It is expected that we will see a resurgence in demand for local and / or organic fresh produce, and this presents a real opportunity for Northeastern producers that are able to supply these markets.