Sysco declares force majeure, raises grocery prices

Sysco declares force majeure, raises grocery prices
Jack H Barnes's picture
Submitted by Jack H Barnes on 02/12/2011 13:37 -0500

Food inflation driven by freezing weather in Florida during December and in Mexico during February, is hitting the US supermarkets in the coming day’s. Sysco sent out an alert that announced an “Act of God”, to address their contracted supply issues.

The cold of the Superbowl weekend in Texas, has had a more lasting impact than on just the game plans for lots of travelers. The deep cold sank into the produce fields of northern Mexico, destroying fresh produce crops. This is the biggest page 16 story, about to hit a headline, that you have seen in a while. Your restaurants will be low on fresh produces for weeks. They will have to raise prices significantly or cut the produce out of the menu.

On Feb. 8, the U.S. Department of Agriculture reported prices of $22.95-24.95 for two-layer cartons of 4×4, 5×5 and 5×6 vine-ripe field-grown tomatoes from Mexico, up from $6.95-9.95 the week before and $5.95-7.95 the year before.

This cold storm has brought to the food growing region the coldest temps in 50 years. This has caused damaged to most of the fresh produce available to US supermarkets in the winter spring season. This is going to impact the price you pay at the Supermarket anywhere in the North American continent.

This event will add to the worlds food supply issues already impacted by fires in Russia, rains in Australia, droughts in China, and now freezing temperatures in Florida & Mexico. Here are some quotes on the topic

“The last time there was a freeze of this severity was 1957,” said Jerry Wagner, director of sales and marketing for Nogales, Ariz.-based Farmer’s Best. “It’s still too early to tell, but there’s a lot of damage.”

“It’s been a rough day,” said Lee Anne Oxford, marketing director for Raleigh, N.C.-based grower-shipper L&M Cos. Inc. “Right now we have all of our growers out in various fields. We’re expecting to regroup over the weekend and hopefully know where we stand by Sunday.”

The Packer:

“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 half a century.”

“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 an option.” Via Sysco Alert

“Supplies of tomatoes, peppers, cucumbers and other vegetables from Mexico will be severely limited until at least March following an early February freeze.”

Digital Journal:

This event will push up the price of produce in the US for the next few months. The bigger question is if the US wheat crop was damaged by the cold weather before the heavy snow fell to blanket it.