Pineapple growers weather rains, tight economy

The Packer
By Cynthia David

(Feb. 11, Pineapple Marketing Profile) Between poor weather in Central America and an uncertain economic climate, the pineapple industry is preparing for a challenging year.

“It’s been a tough few months, but overall we see pineapple markets remaining steady,” said Ken Nabal, vice president of sales and logistics for Edinburg, Texas-based Frontera Produce Ltd., which sells mainly to retail and club stores.

Alan Dolezal, vice president of sales for Coral Gables, Fla.-based Turbana Corp., the North American marketer of Fyffes Gold pineapples, reports volumes for 2009 look to be relatively close to 2008.

“The market tightened dramatically right after the first of the year,” Dolezal said, “partially in response to seasonal fluctuations, but also due in large part to the exorbitant amount of rainfall Central America experienced in November and December.”

Production in Costa Rica alone is down by as much as 50% because of the weather, said Roc Baggett, senior category executive for grower-shipper Rosemont Farms, Boca Raton, Florida.

“With all the rain, the fruit didn’t size up,” Baggett said. “We now have a shortage of size 5s and 6s.”

While volumes from Costa Rica are usually lowest in January and February, Bill Sheridan, executive vice president of sales and marketing for Banacol Marketing Corp., Coral Gables, said volumes this year are down considerably because of weather.

“Customers are looking for value and looking more on a per-unit price,” Sheridan said.

On Jan. 26, the U.S. Department of Agriculture reported prices of $13-14 for 5s and 6s, and $10-11 for 7s.

To weather the economic downturn, Nabal said Frontera is working well in advance to secure movement commitments for projected volumes.

“This environment will not allow for us to bring volume into the marketplace without a plan for the sale or knowing who we will sell the product to,” he said. “We can’t predict consumer spending patterns three months out.”

As for exports, Nabal said exports to Europe aren’t as attractive as they once were because currency exchange rates are in flux.

Growing areas

With Del Monte’s acquisition last June of independent grower Caribana, the company is well positioned to serve its North American and European customers, said Dennis Christou, vice president of marketing for Del Monte Fresh Produce, Coral Gables, Fla.

Dole, meanwhile, continues to expands its growing areas in Costa Rica, adding three new farms in the north-central Pacific area, said Bil Goldfield, communications manager for Dole Fresh Fruit Co., Westlake Village, Calif.

While Nabal sees Costa Rica as important for Frontera’s growth over the next five years and credits offshore production for an expected 20% increase in volume from 2008, he also sees major benefits from the company’s Mexican plantation.

“Our Mexican production is closer to the consumer, which reduces food miles,” Nabal said. “Faster transit times allow us to harvest at the peak of quality with higher golden shell color.”

Some of Frontera’s European customers prefer the Mexican pineapple over the Costa Rican product, he added.

Panama also has its fans, including Rosemont Farms, which spreads out its pineapple production between Costa Rica and Panama in case of problems in one area.

“All the production being planned and developed is going to Panama,” Baggett said. “Costa Rica is pretty tapped out, production cost is getting prohibitive and growers in certain areas are under pressure to sell their land for vacation homes.”

He praised Panama’s excellent growing conditions and sunny days, which allow shorter production time, and said the product is equal in quality to Costa Rica.

“The transportation hub is excellent,” Baggett said. “There’s the canal and you can ship off both coasts.”

Turbana, which produces its Fyffes pineapples mainly in Costa Rica, also sees Panama and Guatemala as up-and-comers, Dolezal said.

Outlook

Whether consumers see pineapples as an unnecessary expense or an affordable luxury remains to be seen.

Christou said regions of the country where pineapples are not regularly consumed are starting to show lighter sales and slower growth. On the other hand, he said, areas where there is a high concentration of ethnic cultures have not been affected.

He predicted that rapidly rising input prices will have to be passed on to consumers this year, but he’s confident consumers will continue to recognize the value of Del Monte’s extra sweet golds, even at a higher price.

“Pineapples are not a staple purchase for consumers,” said Goldfield, echoing the concern of many industry watchers. “If the economy continues in an unfortunate downward trend, pineapple sales may fall into a similar pattern.”

David Nelley, pineapple category director for The Oppenheimer Group, Vancouver, British Columbia, remains optimistic.

“We see a good outlook for pineapples even during the recession, as consumers who would otherwise eat out in restaurants reach for a pineapple at the grocery store as an affordable and healthy treat,” Nelley said.