Sysco declares force majeure, raises grocery prices

Jack H Barnes's picture

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.

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

“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.

H/T Wattsupwiththat

Links of Interest to Article

Confessions of a Macro Contrarian