By now most of us have had firsthand experiences with the nation’s ongoing supply chain woes. Much of the focus of these woes has centered on larger-ticket items, documenting the continual struggles of port congestion and subsequent transportation.
And recently there have been numerous examples of bare produce shelves at supermarkets. These shortages have been mainly attributed to transportation shortcomings.
Over the course of the past two years the industry has witnessed a shortage of drivers. This in turn has created fierce competition by fresh fruit and vegetable shippers to move their perishables across the country. And, as anticipated, has driven the cost of transporting produce to record levels.
Now on top of the overwhelmed supply chain and driver shortage, our largest produce trading partner, Canada (the U.S. exports 90% of Canada’s fruits and vegetables during the winter months), has imposed new border mandates that have prohibited unvaccinated American truckers.
With low vaccination rates among U.S. truck drivers, Canadian supermarkets are already reporting rising food costs and shortages of certain products. The situation is going to get worse, as the U.S. has begun imposing its own vaccine mandate on Canadian truckers.
The Canadian Trucking Association is estimating up to 16,000 drivers could be eliminated by these mandates. All these supply chain pitfalls lead to one unfortunate truth: these issues will negatively impact U.S. growers across the country.
Growers working off razor-thin margins is not a new phenomenon. However, the sheer number of supply chain cost increases that growers will be facing this season (such as minimum wage increase to $15 an hour, 40-hour overtime work week, all petroleum-related inputs, including fertilizers, drip tape and diesel fuel, as well as health insurance, to name a few) will be daunting.
All growers must be hyper-diligent on all their farming culture practices. On-farm efficiencies will be more important than ever to achieve the highest yields and superior quality in an effort to keep pace with incremental costs.
But all the fundamental farming practices used to keep costs in check in all likelihood won’t be enough. Recently, the local garbage and recycling service provider sent out a letter advising that their service costs would be increasing. As a customer, there is little to nothing we can do but to accept the increase and adjust our household budget. But as growers, we lack the bandwidth to do the same when also faced with unfortunate cost-pressure circumstances.
This is where retail and food-service sector customers play a critical role in supporting growers. California and Arizona vegetables growers enable retailers and food-service operators to keep the consumers supplied with the widest and richest variety of the healthiest vegetables the world produces.
A small FOB increase can have a massive impact in sustaining growers’ profitability and long-term viability. For instance, a $2-a-carton FOB increase on a standard 24-count vegetable carton pack equates to an 8-cents-per-head increase to the retailer or food-service operators, but would have a enormous beneficial impact at the farm level.
Without the opportunity of passing along increased growing costs, the future topic of fresh vegetable supply chain breakdowns may just start and stop with the first and most critical point in the supply chain: product availability.
Watch John Pattullo speak about the increased costs.