Two trends in the global produce market seem to be at odds with each other: Big-box retailers are getting bigger and buying produce directly from producers around the globe. Wal-Mart imports 60 percent of the fruits and vegetables it sells in U.S. stores, buying directly from producers and bypassing brokers and other middlemen.
At the other end of the scale is the “buy-local” movement that encourages people to eat produce grown locally, without the need for extensive transport to market. Local farmers’ markets are cropping up around the country. In suburban Boston, a Whole Foods Market created a one-third-acre produce farm on the rooftop of its new store. The green experiment is expected to produce about 10,000 pounds of produce annually, which will only have to travel down several floors to be sold.
With movement on the two extremes of produce marketing industry, it would seem that traditional regional produce markets would get squeezed in the middle, but industry experts say the markets are holding their own and often growing.
“People are getting excited about buying locally grown food for their families,” said Ben Vitale, executive director of the Central New York Regional Market and president of the National Association of Produce Market Managers. “But in the end, I think it means those same families end up also buying more regional produce and imported produce. Once it is in their diets, they’ll want it year-round.”
Vitale said the working definition of locally grown changes with the region and the season. “If you are in Southern California, locally grown can be very local. But here in Syracuse our growing season is so short that we have expanded what we consider local. We love to get things from New Jersey or from Virginia in early spring.”
Vitale said a large percentage of the fresh fruits and vegetables sold even in a regional market such as Syracuse is imported to maintain a supply of produce all year. “Our facilities make us a logical hub for imports. We have space, cold storage, and we have distributors and brokers who are tenants of the market.”
While big retailers are doing more direct purchasing, he said not every grower can sell to them, and not every buyer is big enough to work directly with overseas growers. “There will always be a role for distributors and even brokers. The brokers might not have the facilities, but they can put loads together that benefit buyers and sellers, especially when you get to the more exotic items. A lot of buyers aren’t looking for a truckload of raspberries; they are looking for a pallet.”
But even the smaller markets realize they have to modernize to stay in business, Vitale said. “Right now with markets growing and expanding, a lot of them are looking to do upgrades. They might want to be bigger, but there is also a need to improve their cold storage.” Driscoll Berries is one supplier that doesn’t like to do business with companies that don’t have an adequate cold chain, Vitale said.
“The name Driscoll is right there on the package, and they don’t like shipping to distributors that don’t protect the cold chain every step of the way,” he said.
Even selling hyper-local produce doesn’t reduce the need for cold storage, Vitale said. “We have wonderful local strawberries grown in Central New York, but, honestly, they don’t keep and store as well as the more generic varieties that get shipped in,” he said. “It’s just as important to protect those, because the shelf life is shorter.”
Produce coming in by air is often sold at terminal markets, according to Guilio Battaglini, vice president of sales and service for Jet Pro, a freight forwarder specializing in the cold chain. “Globally,” he said, “there is more produce being bought directly, but produce markets still have their role and are still an important part of the supply chain.”
About half of the perishable products Jet Pro imports into Southern California goes to the wholesale produce market in Los Angeles, he said. “Restaurants and smaller grocery chains still go there, and probably always will,” Battaglini said.
George diMatteo, president U.S. Xpeditors, said produce markets also play a role in finding the right buyers for a product. “Some chains might have a little higher standards,” he said. “Maybe they don’t want to sell fruit that isn’t beautiful. So what do you do if you get a shipment in that doesn’t meet your standards?”
Sending the rejected load to a produce market opens up the pool of buyers, diMatteo said.
Naturipe buys and sells berries, high-value fruit that is also extremely perishable. Demand is so great for the company’s products that most shipments go directly to a buyer, according to Richard Burden, director of transportation. “For us, terminal markets are more of an outlet for distressed fruit,” he said. “I think there will always be a need for that kind of secondary market.”
Philadelphia is home to one of the largest wholesale produce markets in the country. Completed in 2011, the Philadelphia Wholesale Produce Market bills itself as the largest refrigerated building in the U.S.
The facility was the result of years of lobbying, negotiation and even a little litigation. The 686,000-square-foot facility was built with both public and private funds; the Philadelphia Regional Port Authority invested $152 million in the project and serves as landlord for the enterprise.
The port wanted to be part of the project because keeping a vibrant produce market in Philadelphia is important to keeping a good mix of business at the port, according to Robert C. Blackburn, senior deputy executive director at the port authority.
“It’s not a normal thing for a port authority to own an inland produce terminal, but it brings a lot of maritime opportunities,” Blackburn said. “When we do talk about our market, people are surprised and impressed. It’s a beautiful, clean facility. It strengthens our repertoire when we are trying to maintain current business and attract new business. Carriers understand that a lot of the cargoes they carry are sold at the produce market.”
Produce industry consultant Tad Thompson thinks the Philadelphia market is missing a big opportunity for two-way trade. Thompson, who worked as marketing manager at the market until earlier this year, said the combination of transportation, produce companies and cold storage facilities should set the stage for Philadelphia to export perishables, as well.
“What the market could do is mix loads for export,” Thompson said. The president of Globalview Consulting said there is an opportunity to act as a clearinghouse for U.S. produce. “There are terrific blueberries grown in New Jersey and apples and cherries and other perishables from Washington and California.”
Those crops are already being shipped east for domestic consumption, so the market could be a consolidation point for shipments to South America or Europe. “Two-way trade is always better and more efficient,” Thompson said.
“Looking at a market like Philadelphia is a real frustration for a lot of us in the maritime industry,” said Howard Posner, general manager of reefer carrier Seatrade. “For us, the biggest question mark is Mexico and how its produce ends up in North America. It’s all being sent up there by truck and there is so much volume going over the highways that ends up at that terminal market and the Hunts Point in New York.”
He said Seatrade has looked into reefer breakbulk service from a Mexican port up to Philadelphia or New York. “To me, it would make more sense than all those truck miles,” Posner said. The biggest obstacle to such service is the Mexican highway system, he said. “Roads in Mexico generally go north-south. There aren’t good highways leading to port cities.”
The concept might become viable if truck rates continue to rise with driver shortages, fuel costs and hours of service regulations, he said.
Contact Stephanie Nall at email@example.com.