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USDA: Food Prices to Climb This Year

WASHINGTON — Total food prices this calendar year will rise 2.5% to 3.5%, according to a forecast just released by the U.S. Department of Agriculture’s Economic Research Service.

Much of the rise will result from the delayed effects of last year’s drought in the Midwest.

Even though the drought was severe, destroying a huge amount of field crops, food prices remained flat during 2012.


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That’s because, while prices rose for beef and veal, poultry, fruit and other foods, those hikes were offset by drops in the price of pork, eggs, vegetables and nonalcoholic beverages. Other food categories remained flat.

Read more: Fresh Food Prices Set to Rise in 2013

In addition, while the drought ravaged corn and soybean crops, which does affect food prices, it typically takes months for commodity price changes to show themselves at retail, according to the ERS.

“Most of the impact of the drought is expected to be realized in 2013,” the ERS report states.

Not surprisingly, beef prices are already up 1.7% in May over last year in May. Conversely, a decline in exports and an increase in hog production have kept pork prices almost flat. In fact, May pork prices were down 0.2% from May a year ago.

USDA’s ERS bases its forecast on current conditions and inflation.

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Peruvian grape production continues to climb

Peruvian grape production continues to climb

Despite exporting virtually no grapes as recently as 13 years ago, Peruvian grape exports were worth $ 365 million last year. That rapid growth has been driven by increasing production by the nation’s growers.

Although, according to a report by the United States Department of Agriculture’s Foreign Agricultural Service, the cost of planting new vineyards remains high, good prices and good returns on investment keep growers planting more acreage. That’s contributed to strong growth in production, with an estimated 305,000 MT for the current year. Of that production, it’s estimated 150,000 MT will be exported.

The primary markets for Peruvian grapes are the Netherlands and the US. Last year, 27,516 MT were shipped to the Netherlands and 25,420 MT were shipped to the US. The value of grape exports last year was estimated at $ 365 million.

Publication date: 6/28/2013
Author: Carlos Nunez

Sprouts earnings, sales climb in Q3

Sprouts Farmers Market, Phoenix, said earnings rose while new-store growth and strong comparable-store sales drove total revenues for the third quarter and 39 weeks ended Sept. 28.

Net income for the 13-week quarter rose 127.4% to $ 26.1 million, while sales jumped 21% to $ 766.4 million and comparable-store sales increased 9%. For the year to date net income climbed 113.9% to $ 89.9 million, with sales up 22% to $ 2.2 billion and comps rose 10.4%.

Sprouts opened 14 new stores in the quarter — four in Texas, three in California, three in Georgia and single units in Kansas, Nevada, Oklahoma and Utah — and a total of 24 units through the first three quarters of the year, for a total of 191 stores.

Sprouts said it voluntarily paid down $ 50 million of outstanding debt on its term loan during the quarter, ending the quarter with a principal balance of $ 263 million; $ 118.4 million cash and cash equivalents; and $ 52.6 million available under its revolving credit facility.

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Carrot sales continue to climb; supply outlook promising

Though it is considered a staple product and doesn’t generate an extreme amount of excitement, carrot sales have garnered considerable growth during the past year and are actually in the midst of a pretty good five-year run.

Bob Borda, vice president of marketing for Grimmway Farms in Bakersfield, CA, one of the nation’s leading grower-shippers of fresh carrots, revealed in late February that scan data shows a 4 percent increase in sales in the category over the past 52 weeks. He said the overall numbers show that baby carrot sales have been flat, while the value-added category is experiencing high single-digit growth and organic carrots are showing double-digit growth.

Perhaps surprisingly, whole carrots are also in a growth mode. Borda attributes this to the growing “foodie” category of people who love to cook at home and use whole commodities. He added that the juicing craze has also worked in the favor of carrots, as it is an excellent item to juice with good yield and good nutrition.

Carrots just may be one of those items that defies being categorized as it appears to have done well both during the recession, when people were cutting back, and post recession, when people are experimenting again with the foods they eat. Borda confirmed that sales have been good since 2008 when the poor economic times were at their peak and people were hunkering down and staying inside. More home-cooked meals meant an increase in sales for carrots.

Carrots are also a very popular item for school districts trying to meet established rules about increasing the percentage of fruits and vegetables that they serve. For both school lunch programs and moms at home, Borda said, portion-size packs of carrots are very popular. It is a very easy way, he said, for school kids and others to get good-tasting nutrition in an easy pack.

Consumers looking for carrots should have no trouble finding them over the next several months. In late February, Chris Smotherman, a sales representative for Kern Ridge Growers LLC in Arvin, CA, predicted a seamless transition from the San Joaquin Valley to the Imperial Valley, also in California. He said Kern Ridge was in the midst of transitioning its baby carrot operations to the desert that week and Imperial would be providing the bulk of that crop by the first week in March. The whole carrot production team will transition to Imperial a couple of weeks later in mid- to late March, he said.

ike most California crops, carrots follow the sun up and down the state. It is basically a six-month crop from planting to harvest. With the San Joaquin Valley’s winter crop concluding in March, the harvest transitions to Imperial Valley, which will provide most of the state’s carrots until mid-May. In the meantime, the spring crop (May-June harvest) from San Joaquin is mostly in the ground by late February, although there is still some planting to be done.

Smotherman said California’s well-publicized drought should not have a huge effect on this year’s carrot supplies. “Of course, growers are concerned but most of the growers are operating on well water and they will not be impacted by the lack of rain this year. Next year might be a different story.”

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Demand for avocados in U.S. market continues to climb as more fruit enters the market

A record 1.5 billion pounds of avocados were consumed in the United States in 2012, reflecting an ongoing dramatic increase in demand. So far, 2013 is on track to eclipse that record.

“It seems we are going to be well over last year’s numbers” for 2013, said Emiliano Escobedo, executive director of the Hass Avocado Board. He expects “definitely double digit growth,” which would put the aggregate volume of Hass avocados marketed in the U.S. in 2013 at 1.65 million pounds or more.

006-GlobalAvo-OutlookAvocados on the tree. In the United States, a record volume of fruit is expected to be consumed in 2013.Major sources of avocados in the U.S. market are Mexico, by far the largest, followed by California, Chile and Peru.

Mexico, which projected a record crop of more than 900 million pounds in 2012-13, was looking at another large crop for 2013-14. As of July, the old crop was wrapping up and the new Flora Loca crop, a light off-bloom crop before the start of the main new crop, had begun. Importers expected Mexico’s volume to begin increasing around mid-August and to be in full swing by the end of September.

California’s expected crop size for the year is around 500 million pounds, up from about 460 million pounds in 2012. Because of the larger crop, the California season was expected to run later than last year, continuing at peak volume through August and into September, with shipments continuing into November.

Jan DeLyser, vice president of marketing for the California Avocado Commission, told The Produce News she expected about 82 million pounds of California fruit to be marketed from September through November.

Peru, a relative newcomer to the U.S. market, was at peak season in July and expected to ship some 40 million to 45 million pounds of fruit to the U.S., with arrivals continuing into September. That number could double for 2014.

Chilean imports were down in 2012-13 but are expected to be up again in 2013-14 on a larger crop, with early arrivals expected in September and possibly as early as late August. The Chilean program will continue through March.

Aggregate weekly avocado shipments in the U.S. this year have reached as high as 40 million pounds, a number that seemed almost unimaginable just a few short years ago, and now when weekly shipments drop to 33 million pounds during peak season, it doesn’t keep pace with demand, according to Ross Wileman, vice president of sales and marketing at Mission Produce Inc. in Oxnard, CA.

“We expect the California crop to go well into October” this year, said Doug Meyer, vice president of sales and marketing at West Pak Avocado Inc. in Murrieta, CA. “Currently, we are right in the middle of the peak harvesting and packing window” for California fruit. He expected supplies from California to be available “well into October.”

U.S. distribution of new crop Mexican fruit has begun, he said. “September will be the time that we see increasing supply from Mexico.” By then, Peru should be “out of the equation” but “we will see the Chilean crop” arriving about that time. By October, “we can count on increasing supplies each week as we move through October and then on into the winter months.”

“We see a real increase in demand” over the past two years, said Dana Thomas, president of Index Fresh Inc. in Riverside, CA. “How I measure that is by the volume moving into the marketplace and relative price levels.”

Just last year, which was a record year, the market was “absorbing 28 to 30 million pounds at equilibrium,” Thomas said. “Now we feel the market can absorb more than 35, maybe even 39 million pounds, at times of the year, at equilibrium.”

Avocado demand is increasing not only in the United States but globally, according to Rankin McDaniel, president of McDaniel Fruit Co. in Fallbrook, CA. “Demand has been going up in every consuming country,” including the countries where the avocados are being produced. As a result, “we have seen a very good market that is developing very well to the point where, in the U.S., 30 million pounds a week is becoming a benchmark number, up significantly” from 15 million to 20 million pounds weekly just five years ago.

“One of the exciting things about the avocado industry here in the United States is the marketing programs that are behind this fruit,” said West Pak’s Doug Meyer. Whether the avocados are from California, Mexico, Chile or Peru, “we have marketing associations” for each of those sources of supply “that are working very hard in the marketplace, both at the trade level to customers — the wholesalers, the retailers, the foodservice distributors — [and] also the consumer level” promoting the many uses of avocados and their nutritional benefits. The have also been providing promotional support to the trade “to keep people using avocados and eating more of them. It has been a phenomenal, and it continues to be.”

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