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Sysco declares force majeure, raises grocery prices

Jack H Barnes's picture




 

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.

H/T Wattsupwiththat

Links of Interest to Article

Confessions of a Macro Contrarian www.jackhbarnes.com

 

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Sun, 02/13/2011 - 11:52 | 957594 stemmit
stemmit's picture

There is no one to blame, no one could have known.

Sysco says the worst freeze in more than 50 years, maybe since the 1930's.

No one could have predicted, no one is to blame.

  

Sun, 02/13/2011 - 02:34 | 957218 HungrySeagull
HungrySeagull's picture

That's it, one way or another those new tomato seeds and other crops are getting planted this year.

Sun, 02/13/2011 - 02:33 | 957217 fijisailor
fijisailor's picture

Odd article.  Our local Mexican fruit and vegetable outdoor market in SW Florida still has incredibly low prices for everything.  Prepare to get shafted if you rely on corporate america for food.

Sat, 02/12/2011 - 22:59 | 956886 dick cheneys ghost
dick cheneys ghost's picture

protest set for Iran for monday

 

http://nakedempire.wordpress.com/

Sat, 02/12/2011 - 20:12 | 956569 topcallingtroll
topcallingtroll's picture

There are other issues than just dollar devaluation and monetization.  It was either edward teller or Oppenheimer (one of the H bomb dudes) who said that if civilization was at risk of collapse it was due to failure of people to understand the exponential function.

 

Population has been growing at an exponential rate.  We are adding the population equivalent of a moderate size country every couple of years.  Food production has relied on just in time japanese inventory philosophy.  We have squeezed as much efficiencies and lowered carrying costs as much as possible in our food supply.  Zimbabwe was the food basket of Southern Africa until Mugabe decided his cronies who didn't know how to farm deserved to own the land.  china is suffering the worst drought in 200 years in its wheat region.  russia has been having problems with its crops.  Argentina has been hit or miss and unreliable due to Peronist style policies.

This is a perfect storm for our food supply.  It's not just monetization.  Bill Bonner of the daily reckoning claims he trades only once per decade.  Gold was his trade of the decade from 2000 thru 2010  He said in 2008 that the trade for 2010-2020 would be farmland and agriculture related industries.

We should take a food lesson from our little brown brothers and sisters.  They buy bulk food items and cook from scratch.  It is amazingly cheap that way.  This rebalancing of food prices in relation to the price of everything else is not going to go away.  Keynes is right that inflation is easier to hide than deflation and a lot less painful for most people, so of course we are going to try to rebalance everything by inflating enough to keep real estate stable, nominal wages rising a bit, and food and commodities rising a lot to close the gap. 

It wasn't too long ago that granny used to have bread (and cornbread) with every meal, cook a lot of beans, eat a lot of eggs, and wipe the plate clean with a piece of bread.  When is the last time you saw someone wipe a plate with a piece of bread?   My granny said that you could raise healthy kids on beans and potatoes.  Of course there was the daily buttermilk thrown in and cornbread or wheat bread, plus a squirrel or two the kids shot with their 22's.  Of course in the summer there were fresh vegetables from the garden.

If you don't like the way the world is going then disengage.  You can still buy a house in buttfuck kansas, Arkansas, and some other places for 15,000.  Rent an apartment for $250 (Clarksville and Lamar Arkansas, cheaper than that if you really want to get away from civilization.)  Buy a used trailer and put it on five acres of land and your total payments will be less than $300 per month.  Grow just enough dope for yourself and a few friends.  Learn to fish and trap and garden and grow a bunch of fruit and nut trees that don't require any spraying or management.  Make your own beer and wine much cheaper and much better than you can buy it (with a little practice!).  Build a solar dehydrator, but better yet buy a big cheap used freezer.  For less than $100 per year in electricity you can store huge amounts of food bought in bulk or produced from your garden.

If you don't want to go that far just learn to buy in bulk and cook from scratch.  It's a lot of fun and you can set up a cooking club with friends. Experiment and if someone fucks up just laugh about it.  Homemade lager from grain (versus concentrate) is easy to learn how to make, and once you get the hang of it you will make a better beer than you can buy, guaranteed. 

Sat, 02/12/2011 - 20:56 | 956678 Jack H Barnes
Jack H Barnes's picture

Great comments.  I was raised on a farm, so have a different feel for the land than most people here probably have. Where I live, neighbors share.  If you go Elk hunting, your neighbors all get 50 pounds of meat each.  If your neighbor goes fishing and limits out on Salmon, your door bell rings and the fish is delivered fresh. 

Small greenhouses, with exaust heat from the primary house for secondary heating is a great way to grow year around.  It is surprising how much you can grow in a small warm glass room.  My nieghbor has one, and its available for a couple of us to use in the winter for our starts.

The average house around here has 3 fridges, and 3 deep freezes in the garage.  Due to the weather conditions locally, people have been stuck for up to 10 days waiting for land slides to be cleared.  People prepare by nature here.

My wife brews beer from scratch, no kits.  $100+ in hardware supplies, and shazzam we have a small kegging system.  Fresh cold beer on tap. 

Sun, 02/13/2011 - 02:38 | 957221 SheHunter
SheHunter's picture

Much the same up here where I am.  Heavy storms last 2 weeks and the county had other places more important to plow so neighbors all helped dig each other out with our tractors, helped each other feed the livestock and all got together later at a friend's heated shop to share some good brew.  gardens and greenhouses.  snowmobiles and ice fishing.  No one complains too much about the elk coming in to eat with the horses...we hunt them all fall.  Doesn't hurt to share some of our hay with them later in the year.

Sat, 02/12/2011 - 19:55 | 956566 Cpl Hicks
Cpl Hicks's picture

tomatos bitchez!

Sat, 02/12/2011 - 19:57 | 956571 Cpl Hicks
Cpl Hicks's picture

Hey, I junked myself.

Try it, you'll like it.

Sat, 02/12/2011 - 20:01 | 956584 topcallingtroll
topcallingtroll's picture

If you keep doing that it will make your palms hairy.

Sat, 02/12/2011 - 19:54 | 956558 mogul rider
mogul rider's picture

repeat deleted

Sat, 02/12/2011 - 19:56 | 956554 mogul rider
mogul rider's picture

Lovelock's Gaia hyposthesis says that the Earth is a self regulating system. QE48 has tipped the balance and now instead of global warming caused by termite farts we now have a dissonant global freezing caused by all the toilet paper covering the termites. They can't eat it fast enough, thus, they can't fart.

It also could be the north atlantic current stopping but that movie was made already so I'll stick with the massive drop of termite farts.

 

Can I have my 50 million dollar termite fart project ZIRP/TWIRP/BIRP cash now please

 

Thank you

Sat, 02/12/2011 - 19:48 | 956544 hardmedicine
hardmedicine's picture

EVER heard of aquaponics?

hey I wouldn't mind having a greenhouse and fish farm in town.... that's a cool model!!!  anyone in Houston wanna go in?

Sat, 02/12/2011 - 20:16 | 956618 topcallingtroll
topcallingtroll's picture

look at hydroponics.com if they are still up, for a cheap design for a hydroponic system.  In Houston hydroponic tomatoes would probably sell well in the wintertime.  Urban gardening at its finest!

Sat, 02/12/2011 - 23:18 | 956925 goldsaver
goldsaver's picture

http://www.aquaponics.net.au/aqua1/

A working aquaponic greenhouse blogsite with a forum and instructional videos. Murray rocks!!

Sat, 02/12/2011 - 19:47 | 956538 hardmedicine
hardmedicine's picture

EVER heard of aquaponics?

hey I wouldn't mind having a greenhouse and fish farm in town.... that's a cool model!!!  anyone in Houston wanna go in?

Sat, 02/12/2011 - 19:21 | 956498 gwar5
gwar5's picture

Here we go. They won't come back down either. Got land?

Sat, 02/12/2011 - 18:50 | 956450 americanspirit
americanspirit's picture

Ohhh Sysco! Ohhh Pancho! You want fries with that? Sorry. Ketchup will cost you an extra buck.

Sat, 02/12/2011 - 18:48 | 956445 tempo
tempo's picture

A toxic and explosive mix....2+% world poplulation growth on 6+ billion people (1/2 desparately poor)....crop production problems....massive increases in paper liquidity.

The poorest countries riot.  The rich country with the corn belt and the world's reserve currency bitch a little.

Life is just not fair.

 

Sat, 02/12/2011 - 20:17 | 956620 topcallingtroll
topcallingtroll's picture

I prefer to bitch rather than starve!

Sat, 02/12/2011 - 19:59 | 956577 Cpl Hicks
Cpl Hicks's picture

No prob, when things get tough just tighten up your corn belt a notch or two.

Sat, 02/12/2011 - 19:28 | 956503 New_Meat
New_Meat's picture

tempo and JFK think alike!

Sat, 02/12/2011 - 18:08 | 956371 yabyum
yabyum's picture

On that note I went out to the cold frame and put in a packet of spinach seeds, the tomato starts are up and will start more stuff in the big south facing window, strawberies ect. Garlic should be up soon.....ZERO HEDGE! Came for the silver and guns! stayed for the produce! 

Sat, 02/12/2011 - 17:50 | 956326 Caveman93
Caveman93's picture

Wife went to get me two Jr. Bacon Cheeseburgers last night from McWendysKing. No shit. Sign on the window said due to freeze all tomatoes had to be requested if you wanted a slice on your burger. So she requested them and they scoffed at her. Best part, we noticed the burgers "patty" was now about 2 mm in thickness. $7 f'ing dollars for the two JR bacon's plus two wraps, 1 large fry and no soft drinks. SHTF soon and I refuse to buy anymore corporate BS food now. I could have grilled 8 1lb burgers for that price. 

 

Seriously, next time you go out to eat or get fast food, look at the portion size and you tell me if I am crazy.

Sun, 02/13/2011 - 02:06 | 957192 gmj
gmj's picture

2mm?  That sounds like McDonald's, back in the old days.  I used to call them "the leaders in thin film technology".

Sat, 02/12/2011 - 21:06 | 956699 walküre
walküre's picture

I noticed the same sign at a Wendy's yesterday in the Northwest where I'm located.

Struck me as odd that a Wendy's might be out of tomatoes but now to hear that this is accross the board?

Wondering what exactly these shops stuff into their wonderous buns and meats.

Sat, 02/12/2011 - 20:03 | 956589 topcallingtroll
topcallingtroll's picture

go to the slaughterhouse and buy half a cow.  Split it with your friends.

Sat, 02/12/2011 - 18:25 | 956409 Willzyx
Willzyx's picture

Look at fast food in Europe.  A cheeseburger value meal costs similar to that in the USA, but comes with small fries and soda instead of supersize

Sat, 02/12/2011 - 19:58 | 956575 duncecap rack
duncecap rack's picture

I am in Canada. Can you guys really get 8 lbs. of hamburger for 7$? Even on sale it would be like 16$ here.

Sun, 02/13/2011 - 00:04 | 957004 ToNYC
ToNYC's picture

 

Down here in the States, the mystery is part of the history of the meat..and there is no ham either in the burger if that's any clue.

Sat, 02/12/2011 - 21:04 | 956695 walküre
walküre's picture

Your Canadian beef is real meat.

The American beef is 50% meat and 50% *other* ingredients.

 

Sat, 02/12/2011 - 20:04 | 956591 topcallingtroll
topcallingtroll's picture

Yes

Sat, 02/12/2011 - 17:11 | 956234 apberusdisvet
apberusdisvet's picture

The problem will be felt on midnight 2/28 when your total SNAP buys one tomato, 2 cucumbers, and one of the newly promoted 1/2 loaves of bread.

Sat, 02/12/2011 - 17:07 | 956225 NOPOMO
NOPOMO's picture

**Listen**

Ben should by tried for treason.  I am all for a public hanging of Ben B. & Timmy G. the tax cheat, however the hanging is just not cruel enough.

Sat, 02/12/2011 - 17:11 | 956236 Matt
Matt's picture

hanged, drawn and quartered, perhaps? http://en.wikipedia.org/wiki/Hanged,_drawn_and_quartered 

Sat, 02/12/2011 - 19:44 | 956531 NOPOMO
NOPOMO's picture

Sounds good for starters.

Sun, 02/13/2011 - 00:00 | 956999 ToNYC
ToNYC's picture

 

How long before mock Bernanke heads on pikes show up

at my local Dollar Store?

Sat, 02/12/2011 - 17:08 | 956220 walküre
walküre's picture

I'm a small farmer and I like silver and gold for my products or barter with other producers.

Jobs on the tractor and back hoe are paid in pms and food. Who needs cash or credit cards.

There are a few of us who deal this way. We may be ahead of the curve.

That's how it's done. No taxes, no trail anywhere.

And then they say.. you can't grow Silver! Well, you can't grow Silver but you can grow potatoes, broccoli, spinach, alfalfa, and so on or raise goats, sheep, chicks, cattle and sell the fruits of the labor for shiny metals.

1 meat goat = 5 oz silver

Sat, 02/12/2011 - 20:46 | 956663 Cpl Hicks
Cpl Hicks's picture

My wifey pays me in PMS for everything I do around the house.

Sat, 02/12/2011 - 21:03 | 956689 walküre
walküre's picture

LOL

You need a farm my friend.

Plenty of chores around to work off all that frustration!

And your wife wouldn't have time trying to figure out how to look like a "real housewife from Orange County" or whereever..

LOL

Sat, 02/12/2011 - 20:25 | 956636 Tapeworm
Tapeworm's picture

1 meat goat = 5 oz silver

The old silver based US dollar of pre 1965 was about .72 ounces. You are selling a meat goat for 5oz/.72 or about seven dollars of old (28 silver quarters). Don't you think that is way too cheap? Or is the purchasing power of USD30 silver way too high?

 I would love to have farmers near me that sold so cheaply. I would do all of my buying from my bags of slAg.

Sat, 02/12/2011 - 21:09 | 956704 walküre
walküre's picture

a oz registered Ag is about $30 on the banker's market board

for now, I go with that but you're right essentially.

if $30 fake money can buy an oz of Ag, there's something wrong.

Sat, 02/12/2011 - 20:05 | 956594 topcallingtroll
topcallingtroll's picture

wow!  Live goats go for 25 dollars at the sale barn in our neck of the woods.  I want some change for my silver eagle, or maybe throw in a little goat cheese

Sat, 02/12/2011 - 21:01 | 956685 walküre
walküre's picture

the current market price at the auction is about $150

$25 for a goat that is super cheap

maybe you're thinking a goatie trim at the barbers for $25 ??

 

Sat, 02/12/2011 - 18:11 | 956377 Savonarola
Savonarola's picture

I also farm. I'm having second thoughts about taking credit cards, or checks for that matter.

Cash money, yessir.

Cash for noggins, and the pickins and the frickins.

 

Sat, 02/12/2011 - 17:05 | 956219 NOPOMO
NOPOMO's picture

This is not good.  All those that are now on food stamps are going to starve due to higher prices.  Great job Ben....I see no inflation here. 

Ben is a complete boob....the man did not see the housing crisis comming and we give him the keys to our economy.

When elections come around, we need to vote every last one of the fools out.  The includes the Marlboro man Obama.

Sat, 02/12/2011 - 17:14 | 956241 walküre
walküre's picture

why are they on food stamps?

Sat, 02/12/2011 - 19:41 | 956525 NOPOMO
NOPOMO's picture

Because their jobs are in China.  Why is it in China...well they make far less than the average American.  The manufacturing & technology loss of jobs is rooted in US trade policy.  Fix the trade imbalance and it will fix the jobs.  However, attempts to debase the USD is not going to resolve the imbalance.  A devaluation of the USD of >%95 would be needed just to put hourly wages within the ballpark. 

Sat, 02/12/2011 - 20:22 | 956633 sun tzu
sun tzu's picture

There are families that have been on welfare for generations. Nearly 40% of middle school students in Atlanta are illiterate. There are no manufacturing or technology jobs for them

Sat, 02/12/2011 - 20:08 | 956596 topcallingtroll
topcallingtroll's picture

I'm think a little darwinism right now might just make the herd a little bit healthier and stronger.  Crank whores shouldn't be having several drug babies before someone finally convinces them to get their tubes tied.

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