Parker Farms: Inflation pressure to impact Eastern veg deals
Parker Farms has been in the vegetable business for nearly 50 years, and has experienced rising input prices before, but Sales Manager/Partner Jimmy Carter said the current inflationary pressure is unprecedented and will definitely impact East Coast vegetable production this spring and summer.
“No one has seen this level of price increases before,” he said. “Every input is seeing significant increases. We are in unchartered territory.”
Carter said the flow of vegetables he was handling from Florida and Mexico earlier this month were planted before most of the steep input increases had occurred. But as the planting season for Georgia and the rest of the mid-Atlantic production regions got under way and are continuing this spring, price hikes have been unrelenting. He is convinced those inflationary pressures will impact the volume of fresh vegetables available as the season plays out. Carter reasoned that growers are not as willing to take chances on speculative production when the cost to grow the crop is so high. He estimated that the cost is up at least 25 percent in some instances.
He said Bell peppers are one of the most expensive crops to grow but others are not far behind. He added that growers have options, including grain crops such as soybeans, and he expects many to take those options if they appear to pencil out better than a fresh vegetable crop.
In early April, Carter, and most other Eastern shippers, were in conversations with retailers discussing this year’s contracts and the need for price increases. “Retailers are listening, but they are getting sticker shock,” he said. “We can’t go back (to earlier prices); our growers have to turn a profit.”
The veteran knows that the market is created by the supply/demand equation, and he expects that will tilt to the more demand side as growers see their vegetable input costs increase.
Nonetheless, Parker Farms was gearing up for the peak of its season in this mid-April time frame with some level of optimism. Carter said markets were fairly strong on many items and it appeared that Georgia would be a little late in starting, which could create increased demand as the state’s vegetable production gets rolling in early May.
Parker Farms, which began its journey in 1974 with two acres of vegetables, now has production in eight East Coast states as well as Mexico. It collaborates with almost 20 growers selling thousands of acres of production. Cater said broccoli is its signature crops and represents as much as 50 percent of its volume with sweet corn, squash, cucumbers, Bell peppers and eggplant rounding out its top half dozen commodities.
Parker Farms is mostly a bulk shipper, but it does offer retail-ready packaging, and has also added an organic category in the past three to four years. “Most of our customers are east of the Mississippi,” said Carter, noting that during the two years of COVID-19 retail business flourished as the foodservice sector was diminished by restrictions and retail picked up the slack.
Sean McFadden, business development manager for the grower-shipper, noted that retail has always been the primary focus of the company, but its foodservice clients are starting to come back as COVID-19 restrictions are relaxed.
Carter added that while bulk shipments make up the majority of its business, wrapped items became more popular because of health concerns. “It will be very interesting to watch this spring and summer to see if bulk returns or if packaging is still popular.”
He added that there is a conflicting pull as there are many shoppers who like bulk displays and want to minimize their use of plastic. “On the other hand, packaged products are easier to handle and merchandise, and track at checkout. Personally, I expect bulk to win out,” he said.
Packaging is noticeable in the company’s organic line as retailers are always wanting to make sure they get the correct ring at checkout. McFadden noted that the company handles organic broccoli on a year-round basis and has more seasonable availability of other organic items including squashes and peppers.
Organic sales have been growing but Carter wonders if higher prices due to inflation may hurt sales this year. “There is a segment of the population that will pay whatever it takes to buy organics,” he said. “But some of the growth has come from millennials who might think twice as the price rises.”
Regardless of the whims of the consumer, Parker Farms’ philosophy is to stay the course with steady increases and concentrating on its core products. “We don’t chase markets,” said Carter.
He noted that much larger production from California and Mexico during the year tend to set the market, but East Coast producers do have a freight advantage and a story to tell. “We get the product to them more efficiently and it is a lot of fresher,” he said, though he did note that freight rates on the East Coast have also risen significantly over the past year.
Parker Farms will follow the warming sun with its May production from Georgia followed by crops originating in North Carolina then Virginia before moving up the Eastern Seaboard to Pennsylvania and New York. Its customer list also stretches along the same corridor.
McFadden reminded that the company’s broccoli is sold exclusively through Atlantic Fresh, a sales and marketing partnership between Parker Farms and L&M Cos., based in Raleigh, NC. Carter noted that the collaboration allows both companies to cooperate rather than compete and give their customers year-round supply of top-quality broccoli from multiple regions.
With partners Rafe Parker, Joe Parker and Carter serving as the third generation to run the operation, Carter said Parker Farms is in good hands. The fourth generation is currently working its way through the education system and hasn’t yet identified which of those family members will carry on the legacy that began in 1974 when Admiral Parker put in those first two acres. Time will tell.