RIO RICO, — “I’ve been in this business since 1996 — I’ve seen a lot — but this has been an unforgettable season” in the west Mexico produce business, said Omar Losolla, vice president of sales and marketing for GreenPoint Distributing LLC.
The twists and turns of the west Mexico vegetable deal are only compounding with this week's weather.
The broad scene is that two rounds of rain in November and a third around New Year’s “took their toll on all production,” Losolla noted in January. “Cucumbers, squash, tomatoes and green Bells were all hit very, very hard. It’s been very complicated. Growers are under a lot of pressure to save their crops. They have very low yields and very high production costs. They need good marketing to save their growing season.”
By virtue of supply and demand, prices for all commodities skyrocketed in January. Squash and cukes were in the $30 range. Tomatoes were around $40. Then, in late January, the word from Nogales was that high prices were dropping to levels that were more attractive to buyers.
Was Nogales’ spring season going to land smoothly?
Not so fast!
Three inches of rain drenched Sonoran fields in the night of Feb. 3, according to Losolla. Freezing temperatures were forecast for Sonora on Feb. 5 and Feb. 6.
“The situation is now even more complicated,” Losolla stated Feb. 4.
Losolla said there were freezes in Sonora in the 2011, 2012 and 2013 seasons, but “there has been nothing like this year that I’ve seen. At times like this you see who has character and honesty. I can’t lose my reputation.”
Contracts and complications
Contracts with retail customers become “very complicated” when demand far exceeds supply. Low production, which struck west Mexico growers this winter, gave growers an urgent need for price relief to overcome losses in their fields.
Losolla said that GreenPoint and many of its Nogales competitors were in a difficult position, trying to serve their suppliers and customers. GreenPoint is owned by the Gutierrez brothers in Obregon. This is a steady supply source for GreenPoint, but the Nogales sales office also has contracts or agreements with many other Mexican growers. Those growers are reluctant to fill contract orders when open market prices are much higher.
This can create great tension between growers and marketing companies. A key consideration for rebellious growers is the realization that “if growers have alienated themselves — if they’re not on good terms with the shipper — they may have to swallow their pride” when the markets are not so good.
Losolla said there are “growers in Culiacan who are big and very stable” who can withstand a season like this. But growers who are not that strong “don’t want to lose relationships with their distributors over this.”
In Nogales, distributors generally “think about structuring their business for the long-term. Then, when this happens, all we’ve done is in jeopardy. If I turn down the chains” and don’t meet contract obligations “it all comes back to the grower. It’s so naive and foolish to look at short-term benefits. Next year, if the market is $3, the grower will say, ‘What happened to all the retail business?’ Everything has consequences, right or wrong. No one forgets what you do. At the end of the day, we are fighting for the growers that fight for our reputation. How can I tell a customer of 20 years that I have nothing? We are fighting for our reputation and our careers.”
GreenPoint plans
This spring, weather permitting, GreenPoint plans to be shipping squash, cucumbers, hard squash and sweet corn. “We have a really good melon program, though supplies are down,” he said. These are the largest-volume of many GreenPoint Mexican items.
GreenPoint’s Murcott program from Obregon, Sonora, began in mid-January.
