ALL CAP LETTER Warning from Sysco Corp, a Major Food Distributor, on Fresh Produce Prices About to Go Bananas (or Peppers, Tomatoes, Zucchinis....)

This blog has already warned you about fresh produce prices set to skyrocket in yesterday's post due to historic freeze and crop damage in Mexico. Here's another warning from a major food distributor in screaming ALL CAP LETTERS.

From SHTF Plan (oh BTW, SHTF is what you think it is) on 2/13/2011:

Adding to already rising food prices due to monetary inflation and weather related supply problems around the globe, one of the world’s leading food distribution companies, Sysco Corporation, is advising clients and their customers that the recent freeze across North America has significantly impacted growing operations in Mexico (as well as parts of the U.S.) leading to 80% - 100% crop damage:

ALL OF OUR GROWERS HAVE INVOKED THE ACT OF GOD CLAUSE ON OUR CONTRACTS DUE TO THE FOLLOWING RELEASE. WE WILL BE CONTACTING YOU PERSONALLY TO REVIEW HOW THIS WILL AFFECT OUR CONTRACTED ITEMS WITH YOU GOING FORWARD.

THE DEVASTATING FREEZE IN MEXICO IS WORST FREEZE IN OVER 50 YEARS…

THE EXTREME FREEZING TEMPERATURES HIT A VERY BROAD SECTION OF MAJOR GROWING REGIONS IN MEXICO, FROM HERMOSILLO IN THE NORTH ALL THE WAY SOUTH TO LOS MOCHIS AND EVEN SOUTH OF CULIACAN. THE EARLY REPORTS ARE STILL COMING IN BUT MOST ARE SHOWING LOSSES OF CROPS IN THE RANGE OF 80 TO 100%.

EVEN SHADE HOUSE PRODUCT WAS HIT BY THE EXTREMELY COLD TEMPS. IT WILL TAKE 7-10 DAYS TO HAVE A CLEARER PICTURE FROM GROWERS AND FIELD SUPERVISORS, BUT THESE GROWING REGIONS HAVEN’T HAD COLD LIKE THIS IN OVER A HALF CENTURY. THIS TIME OF YEAR, MEXICO SUPPLIES A SIGNIFICANT PERCENT OF NORTH AMERICA’S ROW CROP VEGETABLES SUCH AS: GREEN BEANS, EGGPLANT, CUCUMBERS, SQUASH, PEPPERS, ASPARAGUS, AND ROUND AND ROMA TOMATOES.

FLORIDA NORMALLY IS A MAJOR SUPPLIER FOR THESE ITEMS AS WELL BUT THEY HAVE ALREADY BEEN STRUCK WITH SEVERE FREEZE DAMAGE IN DECEMBER AND JANUARY AND UP UNTIL NOW HAVE HAD TO PURCHASE PRODUCT OUT OF MEXICO TO FILL THEIR COMMITMENTS, THAT IS NO LONGER AND OPTION.

WITH THE SERIES OF WEATHER DISASTERS THAT HAS OCCURRED IN BOTH OF THESE MAJOR GROWING AREAS WE WILL EXPERIENCE IMMEDIATE VOLATILE PRICES, EXPECTED LIMITED AVAILABILITY, AND MEDIOCRE QUALITY AT BEST. THIS WILL NOT ONLY HAVE AN IMMEDIATE IMPACT ON SUPPLIES, BUT BECAUSE OF VERY STRONG BLOSSOM DROPS, THIS WILL ALSO IMPACT SUPPLIES 30 – 60 DAYS FROM NOW.

SOME GROWERS ARE MEETING WITH THEIR BOARDS RIGHT NOW TO DETERMINE WHETHER THEY SHOULD IMMEDIATELY RE-PLANT, HOPING FOR A HARVEST BY LATE-MARCH-TOEARLY-APRIL, OR WHETHER THEY SHOULD DISC THE FIELDS UNDER AND WAIT FOR ANOTHER SEASON.

Source: Sysco Release/Memo: Mexico Freeze [PDF]

Now might be a good time to hit the frozen foods (or fresh produce if you’ve got a vacuum sealer) aisle at your local grocery store and stock up on your favorite fruits and veggies, as there may be a severe supply crunch coming in the next couple weeks lasting perhaps several months. Why pay premium prices later when you can prepare yourself today, before the rest of the country gets wind of it.

I've been long 20lb rice bags (BTW, they are quietly disappearing, as per my personal observation), ramen noodles, tuna cans, bags of flour, sugar, salt. After reading this article, and seeing there was a bargain on roma tomatoes at a nearby supermarket (only 37 cents per pound, can you believe it?), I went and bought 5 pounds and froze them.

But on the other hand, if you believe vegetables are most nutritious and cheapest when in season (they are), then why do we even want summer crops like tomatoes and zucchinis and green beans in the middle of February?

(Well, just in case there are hurricanes and typhoons that will wipe out the summer crops during summer...)

Thanks Ben Bernank. Rising price is a sign of economic growth and rising wealth, as per your definition. Skyrocketing price is surely a sign of explosive economic growth.

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