Procurement management a full-time job at Crystal Valley
Procurement management a full-time job at Crystal Valley
The phrase “timing is everything” takes on new meaning when it comes to Peruvian asparagus production. Jay Rodriguez, president of Crystal Valley Foods, said it is important to coordinate Peruvian asparagus volumes and commitments with the projected harvest and export plans of major Mexican growers.
“Due to Mexico’s expansion in various production areas this has become important — in order to optimize prices and returns to the farms, to ensure that Peru doesn’t program peak harvests to coincide with heavy Mexican volumes for any period,” he told The Produce News.
He said Peru enjoys a generally favorable climate. “During the winter and peak summer months, there are some reduced yields due to the warmer and colder peaks,” he commented. “But Peru can produce virtually year-round in different microclimates. Peru also normally has two harvests a year in a farm: a heavy main harvest and then a short light harvest. This is not true in Mexico where there are extreme temperature variations limiting production to a specific 12-week period each year.”
Mexico’s peak production occurs from Jan. 15 through April 4. “During that market window, especially in the month of February, border crossings from the Caborca region can reach 1.9 million boxes per week for four to five consecutive weeks,” Rodriquez stated. “This can be a very volatile period with extremely low prices in the absence of a high level of chain promotional activity. Peruvian growers have tended to cycle crops not to coincide with this peak Mexican harvest.”
Because Crystal Valley imports asparagus from both countries, Rodriquez was asked how procurement is handled to minimize overlap and help growers get a good return on investment. “Procurement management is a full time job and requires continuous communication and daily evaluation in-house from sales to our procurement director and the information flow from our own farm and our associated growers in both Peru and Mexico,” he replied. “You start with a vision of what each region is expecting as ‘a normal year’ and you establish an initial global sourcing model for the upcoming year. And then you adjust as Mother Nature provides her input. The crucial aspect is the long-term relationship and transparency established between Crystal Valley and our growers. We all want to be economically successful for the long term and to be able to provide a continuous flow of high-quality, food-safety certified product to our customers in North America.”
Growing conditions in Peru are similar to California. “There is land. But water is very limited,” Rodriquez explained. “What we see in Peru is large diverse growers evaluating alternative crops to determine which ones provide the best overall economic return given the combination of water and labor requirement. We have seen some growers remove asparagus fields — young ones — to switch to citrus, grapes, avocados or blueberries. That being said, there are growers who are replacing old asparagus fields with new ones, basically with the objective of maintaining net producing acreage levels.”
Production costs aren’t cheap. “Asparagus requires drip irrigation in virtually all Peruvian farms due to water limitations,” he said. “That alone is a huge expense. And labor is a major issue everywhere. Peru has zero unemployment, and some growers of various commodities have lost fields due to lack of harvest labor. It is also a major management issue in Mexico where large growers establish lodging for large temporary work forces who will only be there 12 weeks.”
Rodriquez said Peru enjoys an attractive logistics position, exporting asparagus to Europe, Australia, Japan and even South America. “In 2013 for the first time Peruvian exports to the U.S. represented less than 50 percent of total Peruvian fresh asparagus exports,” he said. “That is a dramatic shift from the years of the 90s when we began, and the U.S. represented over 90 percent of the green asparagus fresh exports. White was planted originally as a European and canned crop.”