A Buyer's Market
Ample Supplies of Frozen Fruit Are Changing Buying Habits
Yields and quality were up from 2015 at Berries Northwest, according to company president, Doug Krahmer. And, other than the traditional drop in price in July, prices for fresh blueberries also were “pretty doggone good,” Krahmer said.
Then there is the frozen market.
What price Berries Northwest gets for their freezer fruit, unfortunately, is anybody’s guess – a question that may not be answered for months.
With so much fruit in cold storage, buyers today are ordering minimum volumes at any one time, according to sources, and waiting to see what happens as the year shakes out.
“There is just not a lot of commitments happening,” said Jeff Malensky of Oregon Berry Packing, “and that is not a good sign.
“Guys who buy from us year after year, this year they are saying, ‘I’m going to hold off. I want your fruit, but let’s figure out where that price is going to be. And maybe I don’t need to buy as much as I normally do at this point, because there is enough in inventory that I can wait until a later time to take it,’” Malensky said.
Indeed, the days of buyers committing to a full year’s volume of frozen berries in late summer or early fall seems to be a thing of the past, and with more fruit coming on every year, it is a trend with apparently no end in sight.
“I’m trying to figure out how it is going to change,” Malensky said. “The writing is not on the wall yet for how it is going to change.”
Adding to the complications facing the industry are foreign suppliers, giving buyers even more leverage to buy or reject Northwest blueberries.
“The difference in blueberries and some other crops is that buyers can buy in our off-season from somewhere else. They can go to Chile if they want or any of a number of different areas of the world that are producing blueberries.”
Malensky said he would love to provide growers a price sooner, rather than later, but doing so puts him at risk.
“Four or five years ago, we put down a price at $1.50 to growers in August,” he said. “I sold it at $1.50 in the spring. I said to myself, you know if we keep doing this, I’m going to be out of business.”
Prior to that, when supply was more in line with demand, Malensky said, pricing fruit in August was common. Asked when growers can expect a price this year, Malensky said they will have to ask their packer.
“October would be the earliest, and it could go into the spring,” he said.
In addition to the uncertainty that is created by a lack of commitment from buyers for large-volume purchases, the practice is putting downward pressure on price, Malensky said. And while no one can say definitively what to expect for prices this year, Malensky believes it will be low.
“I think the price will be at one of the lowest levels we’ve seen, similar to 2008-2009,” he said.
Asked what it will take for prices to rise, he said, “We need to see a definite uptick in buyer commitments and, unfortunately, the opposite is true. This is just not good for this industry.
“If we continually, year after year, increase the amount of pounds that are going into the markets, we need some help at the buyer end,” he said. “We need some increased movement into existing markets and also opening of new markets.”
One piece of good news this summer, Malensky said, is that the U.S. Highbush Blueberry Council referendum passed, meaning the organization can continue its promotional efforts. Also, Malensky said, USHBC was working in September with the USDA on a buy which could relieve some of the current oversupply in cold storage.
It may take a dramatic increase in demand, however, to really relieve the current oversupply, Malensky said.
“Interest in blueberries is definitely there,” he said. “We just now need to take another step in these markets.”
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