Rising costs of fruit and vegetables hit the Philadelphia Wholesale Produce Market
This article was originally published in the Philly Inquirer
by Joseph N. DiStefano | Columnist
Updated Mar 5, 2022
The cost of fruits and vegetables jumped 5.6% over the year while meat rose 12% at the Philadelphia Wholesale Produce Market. Transportation costs are a big reason.
A cornucopia of colored fruit lights up the drive-in refrigerated warehouses, loading docks, and showrooms of the giant Philadelphia Wholesale Produce Market on Essington Avenue.
Here in this fully chilled warehouse, where area grocers buy $1 billion in produce a year from global growers, a bounty flows in daily from around the world: “Plums from Argentina, Asian pears from China, cherries from Peru, grapes from Chile, apples from Washington State, citrus from California and Florida and Texas,” sang out Tom Kovacevich, who runs T.M. Kovacevich Philadelphia Inc., one of the market’s 20 big distributors.
The cost of fruits and vegetables jumped 5.6% over the year that ended Jan. 31. That’s four times their annual average over the last 20 years, according to USDA data. Apples could cost “an extra quarter” a pound by spring, Kovacevich said.
Meat prices rose even more — an average of 12% over the same period, more than four times the 20-year average. “You need a loan to buy chicken breasts anymore,” Kovacevich cracked. The costs are hitting everyone from wholesalers and growers to grocers, restaurants, home cooks, and soup kitchens. Consumer prices jumped 7.5% in January compared with a year earlier, the steepest year-over-year rise since February 1982, the Labor Department reported. And food prices overall increased 7% over the last year while gasoline prices rose 40%.
The Russian invasion of Ukraine could make matters worse because both countries account for 28% for the world’s wheat and 15% of its corn, according to a report last week from Wells Fargo Bank. Wheat prices have already jumped 22% since the invasion began on Feb. 24, while corn prices are up 7%. Higher food costs — coupled with soaring oil prices — would raise food prices a lot more, the report concluded.
Free food costs money to move
Those increases are particularly hard to bear for lower-income people and the agencies that specialize in free and discount meals, said Vince Schiavone, chairman of Northeast Philly-based Caring for Friends, which serves half a million meals a year to poor and shut-in Philadelphians.
“‘Free’ isn’t free,” Schiavone noted. “We can get donated tractor trailers of potatoes in Maine, but the cost to bring them here is now $4,000,” almost double the cost two years ago, “and we can’t afford it” without help from donors. “We can’t raise prices, because we don’t charge people,” Schiavone said. “So we have to become more efficient, and raise more funds.”
The price hikes at the produce market aren’t from farmers or grocers keeping the change, Kovacevich said. Most of the increase comes from rising transportation costs.
Diesel, which sold for $2.90 a gallon a year ago, now costs $4.25 a gallon and is poised to go higher as sanctions against Russia over the Ukraine invasion tighten global supplies. Trucking firms also are contending with a shortage of drivers due to the Great Resignation, the rise in U.S. wages, and falling immigration.
“Our freight costs have just about doubled, whether you’re bringing it in from California or Chile,” Kovacevich said. “That translates into significantly higher prices.”
It hasn’t meant lower sales, so far. The market employs about 400 people, with hundreds more visiting each day moving truckloads of produce. Winter is a peak season for fruits and vegetables. Suppliers are relieved that the government has at least boosted SNAP benefits (what used to be called food stamps) to lower-income consumers.
The federal government increased SNAP benefits 27% last fall for more than 40 million Americans, boosting the payments to $835 a month for a family of four. “That’s really helped, that their SNAP cards are loaded,” Kovacevich said.
This winter, it costs $15,000 to move a trailer of fruit from the West Coast to Philadelphia, up from $8,000 last winter, he added.
Buying local won’t fix the problem Those transportation costs make local produce more attractive. “We’ll be saving ourselves 20 truckloads times $10,000 a truck each week,” compared with West Coast peaches, “just on the difference in freight costs,” Kovacevich said. “That’s $200,000 a week.” Or more, if local growers such as Sunny Slope Farms, near Bridgeton, have extra strong harvests.
Will the high cost of freight make it more attractive to plant and sell local produce, avoiding long-distance shipping costs? “When crops are available, we do buy local,” he said. “Maybe one-third of our produce in summer is local corn, peaches, blueberries fresh from the fields in New Jersey, Delaware, Maryland.”
But he doesn’t expect a major move to local produce among area farmers based on just the last year’s increases.
At the center’s longtime home in South Philadelphia, before the move to Essington Avenue in 2011, buyers historically arrived with their own trucks.
But the current trend has been toward supplier delivery, which forces the produce dealers to invest more in trucks, and squeezes out the old-timers who insist they’re not in the hauling business. From 27 owners when the current market location opened 11 years ago, just 20 larger dealers operate there now.
Kovacevich’s staff has grown to 115 from 75 when the market moved as he hired more drivers. He’s approached big national trucking outfits such as Cherry Hill-based NFI about taking on long-distance produce hauls, but has yet to land a deal. It’s not just higher fuel costs, Kovacevich added. “Our workers are Teamsters. They’re getting the equivalent of $30 an hour,” and a lot of that goes into pension and health-care benefits, which “young people don’t see.” He said the market is losing drivers to big nonunion employers such as Amazon, which may pay more cash up front, attracting younger workers.
Doesn’t all this shipping make for homogenized, shipping-tough produce?
Kovacevich said science is making hardy produce sweeter. He hands around a bunch of Autumn Crisp grapes, developed, he said, by university researchers in California. They’re as big and sweet as small ripe plums, as dense as apples.
Mangoes are hot globally Around the corner is Pinto Bros., which traces its roots back 100 years.
Michael Lombardo, one of the partners, is calculating how shipping costs are pressuring the market for mangoes, “the number-one fruit consumed worldwide, except in this country” which Pinto sells in increasingly diverse varieties to area markets.
“There’s hundreds of kinds,” he said, ticking off the North American names: red and green Hadens, pinkish and durable Tommy Atkins, and yellow Ataulfos popular with Mexicans. At ethnic grocery store operators such as Korean-owned, Mexican-themed Super Gigante locations in Norristown and Wilmington and pan-Asian-oriented H Mart in Upper Darby, Levittown, Elkins Park, Olney and the New York area, mango varieties proliferate.
“We find the immigrants are the only people who really consistently cook,” and especially appreciate produce diversity, said Lombardo, whose grandfather and members of the Penza family bought the business from their bosses, the Pinto heirs, in 1974, and kept the name. Shifting costs could bring back wooden boxes, which Lombardo said are much better for the sweetest kinds of green beans than cardboard, or plastic, which “doesn’t breathe.” The culprit, again, is “Amazon. They’re buying up all the cardboard for Amazon Prime,” the same-day delivery service.
Two years ago, cardboard boxes cost as little as $2, while wood boxes were closer to $3. Today, “they’re both about $3.25 to $3.75. If this continues, we may go back to using wood. Amazon won’t let up.”
if shipping costs are driving inflation, aren’t mangoes more expensive the farther they come? Here, Mexico has more than one advantage, Lombardo said: Not only does it border the United States; the growing season in mango areas runs from February to August, longer than rival growers in Brazil, Peru, Guatemala, and Nicaragua. And Mexican mangoes are denser, so they last well.
Plus Mexican mangoes arrive by truck in six to seven days — versus 15 or 16 days through the ports of Brazil, including time in ships on the Atlantic.
Vegetable trucks from the West Coast that shipped for $6,000 to $7,000 a year ago topped $10,000 recently, not counting the produce cost, Lombardo said. Ocean rates are less visible because they are combined with produce prices.
Lombardo, whose firm manages five to six truckloads of fruits and vegetables a day — 24 pallets to a load — is tempted to blame the shortage of truckers, like the shortage of grocery workers, on Amazon. “Not many people want to drive three days and sleep in a truck,” he said. “With Amazon, you can sleep in your own bed.”
Published March 5, 2022