Ken Bingham of J-V Farms, Yuma, Ariz., compares lettuce prices in the waning days of this season's desert iceberg lettuce deal to only one other time during his 35-year farming tenure in Arizona.
It has been almost 30 years ago since lettuce prices reached $40 to $50 per box price levels of March 2002 and stayed there. “It was the whitefly year of 1975,” said Bingham.
“I am almost tempted to pull over and sit here for a little while — this is the closest I'll ever get to heaven,” laughed Bingham as he drove slowly past a field of Romaine lettuce where three harvest crews were working.
It will be a March long remembered. How much money was made during the month? Figure it out: 800 to 1,000 boxes of lettuce per acre at $40 or more per box. Multiply that across the lettuce fields in the 90,000 acres winter vegetable deal of Yuma and Imperial Valley to glean a new meaning for “March Madness” that has nothing to do with the University of Arizona's famed basketball program.
Millions were made on a daily basis.
It was not uncommon to see crews and harvesters go across fields literally shoulder to shoulder.
The unheard of practice of second picking lettuce was not uncommon.
Of course any produce grower will remind that a month like March only “stops the bleeding” and allows them catch up on past due bills. “It makes up for all the zeros we saw earlier in the season,” he explained.
“We started this year's game down 28 to 0,” said Vick Smith, president of Skyview Cooling and J-V Farms, a 7,000-acre desert vegetable operation. “I'm not sure what the final score will be — it may be 45 to 28 our favor.”
In days of old, a $50 lettuce market was an across the board windfall. However, with 40 percent of the crop pre-contracted at prices well below $40 per carton, primarily for the processed salad packs, a red-hot lettuce market can be like watching a snow cone truck drive past your house in July when you have no money.
One field of lettuce Bingham stopped at was like that. Although not one of J-V Farms' fields, it was actually a money loser in an once-in-a-lifetime market. It had been pre-contracted, but the tonnage coming off it would not be profitable at the pre-season contracted price. The processor needed the lettuce to meet market demand, and the grower was taking financial loss on the field to satisfy the processor's demands.
Weather was the reason for the skyrocketing desert lettuce price.
“There seemed to be a hole in the ozone right over Yuma,” said Smith. Average nighttime temperatures for January and February were the coldest in a decade. Lettuce and other vegetables planted to meet projected supply/demand curves never reach anticipated supplies.
“Planting schedules were all screwed up by the weather and crops are having to be harvested before they reach full maturity,” he said. This naturally created a supply shortfall for the market, and thus record prices.
“Mother Nature is still the boss of farming,” laments Bingham.
Farmers can do little about the weather, but California and Arizona vegetable producers and processors are taking charge of their destiny in other ways.
Although painful at times, Pre-contracting is one. The growing practice ensures a steady supply of product and a profit for producers. Probably 40 percent of the Yuma lettuce crop was pre-contracted.
Pre-packaged salads to meet consumer demand for convenience are another.
Smith believes the growth curve on the pre-packaged market has leveled off for iceberg lettuce, but remains on the upward swing for Romaine blends and specialty blends. “Overall, I think the packaged salad market continues to show strong growth,” he notes.
However, meeting that growing processed vegetable market efficiently continues to be a challenge in a highly competitive business.
“I believe the fresh vegetable industry is way behind manufacturing practices of other industries in the U.S — more specifically the food industry,” he said. However, he believes it is catching up with in-field technology advances.
Reducing hauling and handling costs always improves efficiency, and that is why companies like Skyview and J-V Farms are shifting ready-to-eat processing at harvest sites rather than the processing plant.
No easy matter
“The idea is to give processors what they need from the field. We can now deliver product to processing plants where they can achieve a pack-out of 95 to 95 percent vs. 60 to 65 percent for bulk, unprocessed product,” he said.
Smith said moving processing plant activities to the field and is no simple move in this era of Herculean food safety measures. This involves third party food safety certification of equipment, field location, sanitary facilities, extensive worker training, hair netting and special clothing for field workers and stainless steel field harvesters.
Ramsay-Highlander Inc., Salinas, Calif., is one of the companies making this equipment that can withstand the rigors of cleaning with very caustic cleansers to meet safety standards.
Frank Maconochy, president of Ramsay-Highlander, said designing food safety certifiable field harvesters have gone far beyond engineering.
“It takes experts in microbiology and food safety; people from the processing plants where the product will be delivered and the farmer before engineers take over to design a vehicle that can carry the loads at the ground speeds required across a muddy field,” said Maconochy.
“It takes a lot of people working together, but it is working because people in the fresh vegetable industry have realized we have got to work together to increase productivity and cut costs,” said Maconochy.
“I think the idea of transferring food safety to the field is just beginning,” said Maconochy.
Smith agrees. “We are using a lot of Ramsay equipment, and we are definitely making strides to increase efficiency using it,” he said.
Moving forward can be expensive. Maconochy says self-propelled, sealed bearing, stainless steel lettuce harvesters designed for food quality certification can cost $250,000, double to as much as three and a half times non-food quality machines.
Nevertheless, business is good. “We are building a new plant in Salinas and I am considering building another manufacturing plant in Yuma,” he added.
Delivering a third-party certified food safe product to the processor does not bring the farmer more money, said Smith.
“We are in a partnership today with the major processors. When we can come together through field harvest innovations to increase efficiency in the processing side and transfer those efficiencies into better pricing for the ultimate consumer, we all benefit,” said Smith said.
“We are in a very competitive market for the consumer's dollar,” said Smith.
Competition in the fresh vegetable industry has always been keen and it remains that way. However, the nature of the competition has changed.
“For years we were always competing against the guy next door, trying to run our neighbor out of business so we could be the last guy standing,” he said. “The days of the gambling spirit of the fresh vegetable industry is over. There were very few highs then and too many lows. We are looking for stability today.
“We do not care what the other guys makes or does not make. We only worry about whether we are making a profit,” said Smith.
“One way to hedge that is with a good solid relationship with processors.”
Just-in-time supply dynamics have reached the fresh vegetable market, and they are challenging as Smith cited in an example of working with one of the leaders in the processed, bagged product.
Smith produces summer lettuce in Colorado for Fresh Express. He bought one of Ramsay's food quality lettuce harvesters last summer to help meet Fresh Express' demand that product be bagged within 72 hours of harvest, regardless of whether the processing plant was in Chicago or Atlanta or Salinas.
With four hours necessary for harvesting, cooling and back flushing with nitrogen to put the cored lettuce heads into “suspended animation,” that left 68 hours for shipping and bagging.
“When I was told of the requirements, I nodded my head yes but thinking if we do that 40 percent of the time we'd be lucky,” said Smith. “By the second week and the balance of the deal we hit the schedule 100 percent of the time,” he said.
“Some of the challenges we face today sound very challenging, but once we all get dialed in and focused on what it takes to accomplish a task, it almost becomes routine,” said Smith.
Besides certifiable, food safety harvesting equipment requirements, growers must be right in variety selection, planting timing and microclimate selection to meet the demands of a customer like Wal-Mart which wants product harvested on Monday to be on the shelves by Thursday.