by SUSAN MANN
Fruit and vegetable prices have strengthened during the past two quarters but not all growers are able to take advantage of the increases.
It’s getting towards the end of the season “so the inventories are getting down” and some farmers aren’t really able to take advantage of the higher prices, says Craig Klemmer, senior agricultural economist with Farm Credit Canada.
Klemmer says anecdotally he’s heard farmgate vegetable prices have jumped and are now two to three times higher than those in previous years. “There has been a real run-up in prices during the last two quarters. Pretty much all vegetable prices have been relatively strong this year.”
That’s resulted in “quite a bit of optimism in the industry right now,” he adds.
The stronger prices are due to the lower value of the Canadian dollar versus the American dollar and the “lower production of vegetables in the United States, so just overall lower supply,” he says.
Klemmer attributed the decreased supply to the California drought and “the lack of production they’re having down in the southern states.”
The Canadian dollar, which was on par with the American dollar two years ago, is hovering at US $0.74 and that’s a “25 to 30 per cent change just in the value of the currency,” he notes.
Charles Stevens, chair of Ontario Apple Growers, says his marketer, Algoma Orchards, told him apple prices have gone up significantly due to the lower value of the Canadian dollar and the lack of apples across North America. He says he couldn’t say how much prices have increased.
Washington State had a huge crop in 2014; however, the “yields came down significantly in 2015,” he notes. In Ontario, the crop was cut by about 40 per cent last year because of frost damage.
According to the Washington Apple Commission website the crop in 2015 was about 118.3 million 40-pound cartons. That was down about 16 per cent from the record large crop of 140 million cartons in 2014.
“The overall supply of apples on the marketplace in North American has gone down,” Stevens says. Furthermore, the lower dollar means not as many apples are being imported into Canada “because it’s expensive.” The apples imported into Canada are priced in American dollars. Even apples coming into Canada from countries like Chile are priced in the American currency.
The drop in imports “increases the demand and up goes the price,” he notes.
The price increase won’t help growers whose crops were damaged last year by frost. “They don’t have the apples,” Stevens explains.
Some growers, however, had a beautiful crop last year “and they will do very well,” he says. Stronger prices will enable them to invest in new innovations, new apple trees as well as new varieties, “and it just enhances their business very well. It gives them money to bring their business back up to compete against the rest of the world.”
The higher prices are providing a much-needed cash infusion for some growers, particularly if they had a good crop last year and their crop was decimated in 2012 when widespread frost wiped out about 80 per cent of Ontario’s apples. It will give them a bounce.
However, that bounce isn’t occurring across the entire industry. “It would be nice if all of Ontario got a nice bounce like that,” Steven says. BF