“This year, we saw a huge increase in interest in kale as well as broccoli crowns,” points out Thomas Tramutola, Jr., vice president of marketing at A & J Produce Corporation. “Romaine hearts are on the rise, while romaine heads are less in demand.”
In addition to ethnic drivers, Hunt says the media and publicity are boosting produce. “In general, the spotlight on fruits and vegetables is very good,” he says. “Everywhere you turn, you see news that eating fruits and vegetables is good and healthy. I think the general publicity is helping and that the culture of eating is turning more positively towards going back to whole foods and fruits and vegetables.”
Challenges Weather: Bad Winter, Good Spring Weather, of course, can have a significant influence on supply and demand. Two years ago, an early frost wiped out almost 70 percent of the fruit crops in northern New England, causing shortages and price spikes, followed by record crop yields last year.
Overall, merchants at Hunts Point reported solid business at the market this year, despite a tough winter that brought severe storms and several days of closure at the market.
“We had a very rough winter,” confirms Tramutola. “Missing a day out of every week is hard to make up, and because of the winter, a lot of product came to market a little later this year,” he noted. Fortunately, as temperatures warmed up, the market’s pace increased and wholesalers were busy, with ample supply and good prices offsetting some of the difficulties earlier in the year.
Alisha Albinder, operations manager at the aptly named Hudson River Fruit Distributors, located in Milton, along the Hudson River, says, “Business is very good this year. Last year was one of the biggest crops that New York has ever seen; this year is looking to be about average, but the apples look good and the weather has been good.” Although Albinder said a “few scary storms rolled through” the region, the summer months were predominantly mild with no major damage.
Although Hudson River Fruit is more than 80 miles from Hunts Point in the Bronx, the grower-shipper sends its apples and other fruit to the market several times a week. “We have a truck going to Hunts Point about every other day,” Albinder says. “It’s the central hub for produce and one of our biggest customers.”
Fres Co’s DiMaggio also commented on last winter’s weather, admitting it was “a little rough. But the market came back in March, April, and May—the spring definitely made up for it.” As one of the newest merchants at the market, DiMaggio renovated the company’s space a few years ago.
The New York City Terminal Produce Market, otherwise known as “Hunts Point,” continues to rank as the largest terminal market in the world, moving more than 3 billion pounds of fresh produce each year. Hunts Point houses 41 produce wholesalers that sell more than $2 billion in fruits and vegetables annually.
This year, most merchants report that business is picking up, despite rising freight costs, a tough winter, and varied crop conditions across the country. And, as usual, the debate between rebuilding and moving the market continues, though a recent lease extension buys time.
Read on to learn why industry challenges and trends—both old and new—from the perspective of Hunts Point’s buyers and sellers provide an interesting point of reference for the industry as a whole.
Trending Commodities Changes in produce trends at the wholesale level are never abrupt, but come about over time following changes in consumer demand that trickle down from retailers to distributors and growers. Healthy eating and a growing and diverse ethnic population in the greater New York area continue to stimulate interest in particular commodities.
Morris Okun, Inc. introduced specialty fruit to their line last year. “We started off small, but there’s definitely an increased demand for tropical fruit,” comments Thomas Cignarella, Jr., president of the 88-year-old company.
Similarly, D’Arrigo Bros. Company of New York launched a tropical line including plantains, chayote, and yuca this past spring, to meet retailer and consumer interest. Much of the increased demand is attributed to the region’s diversity, and the tendency for ethnic populations to cook more meals at home rather than dining out.
“The ethnic population is driving and maintaining the market in this area,” confirms Charlie DiMaggio, managing member at Fres Co, LLC. “They’re the ones pulling the volume of produce that comes through the market.” DiMaggio says one of the biggest trends is still avocados. “Avocados have seen an 8 percent growth rate worldwide,” he says. “Every year, they’re getting more traction and becoming more of a mainstream item.”
Jimmy Hunt, president of D.M. Rothman Company, Inc. agrees: “Fifteen years ago, an avocado was a segmented item. Now it’s like a lemon or an onion.” Hunt says other items are trending in similar fashion. “Kale and beets are becoming more regular items,” he notes. “We’re selling loose beets, and at first curly kale, and now lacinato kale is becoming popular. We’re also seeing more demand for greens like baby spinach and mesclun mix.”
“This year, we saw a huge increase in interest in kale as well as broccoli crowns,” points out Thomas Tramutola, Jr., vice president of marketing at A & J Produce Corporation. “Romaine hearts are on the rise, while romaine heads are less in demand.”
In addition to ethnic drivers, Hunt says the media and publicity are boosting produce. “In general, the spotlight on fruits and vegetables is very good,” he says. “Everywhere you turn, you see news that eating fruits and vegetables is good and healthy. I think the general publicity is helping and that the culture of eating is turning more positively towards going back to whole foods and fruits and vegetables.”
Challenges Weather: Bad Winter, Good Spring Weather, of course, can have a significant influence on supply and demand. Two years ago, an early frost wiped out almost 70 percent of the fruit crops in northern New England, causing shortages and price spikes, followed by record crop yields last year.
Overall, merchants at Hunts Point reported solid business at the market this year, despite a tough winter that brought severe storms and several days of closure at the market.
“We had a very rough winter,” confirms Tramutola. “Missing a day out of every week is hard to make up, and because of the winter, a lot of product came to market a little later this year,” he noted. Fortunately, as temperatures warmed up, the market’s pace increased and wholesalers were busy, with ample supply and good prices offsetting some of the difficulties earlier in the year.
Alisha Albinder, operations manager at the aptly named Hudson River Fruit Distributors, located in Milton, along the Hudson River, says, “Business is very good this year. Last year was one of the biggest crops that New York has ever seen; this year is looking to be about average, but the apples look good and the weather has been good.” Although Albinder said a “few scary storms rolled through” the region, the summer months were predominantly mild with no major damage.
Although Hudson River Fruit is more than 80 miles from Hunts Point in the Bronx, the grower-shipper sends its apples and other fruit to the market several times a week. “We have a truck going to Hunts Point about every other day,” Albinder says. “It’s the central hub for produce and one of our biggest customers.”
Fres Co’s DiMaggio also commented on last winter’s weather, admitting it was “a little rough. But the market came back in March, April, and May—the spring definitely made up for it.” As one of the newest merchants at the market, DiMaggio renovated the company’s space a few years ago.
“Three years in the new store and things are going good,” DiMaggio says. “It definitely helps having a new facility, but it can’t be your only saving grace. Buyers won’t give you a dollar more because of your facility,” he relates. In his opinion, size matters, but customer service is still top priority.
Directory of Business Operating at Hunts Point AFL Hothouse Produce A&J Produce Corp. A. J. Trucco, Inc. Alphas Produce Company Best Tropical Produce C & J Brothers, Inc. C. M. Produce LLC Canyon Sales Company Chain Trucking Coosemans New York, Inc. Country Wide Produce, Inc. D’Arrigo Bros. Company of New York, Inc. D. M. Rothman, Inc. E. Armata Company, Inc. Fierman Produce Exchange, Inc. Fitz & Pal Food Center / Food Barn Fres Co, LLC Fruitco Corp. Gold Medal Produce Henry Haas, Inc. Ideal Fruit Exchange Issam Kanawi Corp. J Margiotta, Inc. J. Renella Produce, Inc. Jerry Porricelli Produce Juniors Produce Inc. Katzman Berry Corp. Korean Farm Corp. LBD Produce, Inc. Lee Loi Industries, Inc. Luna Fresh Greenhouse Corp. M&R Tomato Distributors, Inc. M&R Trading Company, Inc. Mabijo Mendez International Tropical Morris Okun, Inc. Mr. Sprout Nathel & Nathel, Inc. National Farm Wholesale Nature’s Best Produce, Inc. Pan-Hellenic Produce, Inc. Robert T. Cochran, Inc. Rubin Bros. Produce Corp. S. Katzman Produce, Inc. Ted Georgallas Tomato & Produce, Inc. Top Banana Tray-Wrap, Inc. Yola Distributors
Economic Factors Over at M & R Tomato Distributors, Inc., Denise Goodman says, “Everything is going well this year. I think the surrounding areas are finally recovering from the hurricane and the economy is improving.” In addition, she notes, “we’ve had some fairly high markets—the big drought in California has put higher prices on tomatoes and vegetables.”
Outsiders often believe the produce industry is recession-proof, but a good economy doesn’t necessarily mean consumers will buy more fruit and vegetables. “I have always thought the produce business is counterintuitive,” commented Matthew D’Arrigo, vice president of D’Arrigo Bros. Company of New York, Inc. “We do better in a bad economy. People shop retail when they’re pinching their pennies and go out to restaurants when they are doing well, which moves less produce. Individuals tend to overbuy and one of the biggest consumers is the kitchen garbage can, whereas restaurants are more efficient. The produce business doesn’t have a lot to do with the economy,” he asserts, “it’s in its own world and on its own clock.”
Better weather and a stronger economy don’t necessarily translate into a profitable year. For A. Gurda Produce Company, Inc., “Business is a little slower so far,” says Andrew Gurda, president of the Pine Island, NY-based grower-shipper of mostly onions and lettuce. “People aren’t buying vegetables like they used to,” he explains, “and our costs have gone up. Further, wholesale prices are stuck at 1970s and 1980s levels; everything is cost-driven and with good growing conditions up and down the East Coast, commodities are plentiful, and everyone’s competing for the same business.”
“When things are good, the weather is good, and crops are good, you can have over-supply in every commodity,” D’Arrigo confirms. “The domestic market provides enough to meet typical demand, but [growers] don’t always count on a bumper crop, and every so often people grow a beautiful crop and have a hard time moving it.”
But bumper crops don’t automatically mean flooded markets and low prices; there are some benefits. “When you have a bumper crop like last year, you can keep your customers happy by having a consistent supply for a longer duration,” Hudson River Fruit’s Albinder says. “When supplies are low, even though prices are higher, you have to manage inventory more tightly and decide who gets what—those are the hardest years.”
Paul Kazan, CEO at Target Interstate Systems, Inc., says the freight-brokering business is improving as produce sales increase. “When the economy is tight,” he finds, some “people shy away from fresh and shop more frozen and canned.”
Freight Rates & Margins For several years now, shippers have felt the pinch of higher transportation rates. Not only have fuel prices fluctuated rather wildly, but drivers and trucks have been in higher demand. The sum of all influences is higher freight rates for top producing states, such as spikes in pricing for loads coming out of Florida, as well as cost-per-load increases out of California.
“Freight has been very high, the highest I have seen it since I have been in the business,” says DiMaggio. “It does affect some of my buying decisions; I back away from some f.o.b. (free-on-board) loads because there’s too much risk with the increased cost of freight.”
DiMaggio further points out that freight from Florida—the main source of early season citrus and tomatoes—went from about $2,800 to the $5,000 to $6,000 range last winter. Meanwhile, rates from California and McAllen rose 20 percent this year as well.
But Kazan says even with the higher rates, they didn’t have the big swings of years past, and rates have leveled off a little. “This year, loads from California went up and scratched the $10,000 ceiling, and then came back down to the $6,000 to $7,000 range,” he explains. “That’s a reflection on greater demand for equipment, and produce customers still like having their product on trucks where it is watched and easier to manipulate in terms of delivery time and location.”
“Every year, the rates from Florida double between the low of winter to the high of Mother’s Day, and then settle back down,” D’Arrigo explains. “However, there is some concern that there aren’t enough trucks to handle the increases in produce volumes across the country, which will continue to lead to higher rates.
“But we’ve been talking about this for decades, and markets tend to work themselves out,” D’Arrigo continues. “Somewhere along the line, fuel will go up and equipment will get more expensive, but even so, if people need loads, truckers will likely increase their fleets.”
“The spring rates out of Florida and the Southeast were some of the toughest I have ever seen,” agrees D.M. Rothman Company’s Hunt. “I think when the corn and watermelon start, they occupy most of the trucks causing a shortage and hiking rates. On the other hand, higher freight rates protect prices at the market,” he adds. “So while freight is high, it constricts the market a little, which protects price.”
“When freight is high and you take f.o.b. loads, sometimes the prices become unrealistic,” commented Ron Myruski, in sales at Raymond Myruski, LLC, a grower-shipper specializing in onions and located about 70 miles northwest of Hunts Point. “Most of the time, though, if you need product to pack and run your business, you have to take it. As long as the rates you’re paying are in line with the market, the cost increase can get spread around, although you may sell less product during those periods.”
Shipping & The Internet: A New Marketplace In the past, brokers largely controlled price, and wholesalers were able to shop around for better freight rates. Today, the internet is providing a new level of transparency that’s creating price parity across logistics providers.
“All the truckers are wired into the Internet and are posting their loads,” Kazan comments. “Other carriers can check posted rates very quickly, and this becomes the new benchmark for the market rate. Truckers are negotiating prices based on what others are getting paid—they can see the supply and demand, and this is making rates a little higher as well.”
Kazan explains that many industries use the same trucks. For example, both Florida and California ship other perishables and need refrigerated trailers. “When we see the demand and price go up, it becomes high for all commodities, including produce. Produce wholesalers tend to use the spot market, and have to pay the current market rates.”
With increasing prices and demand, Kazan expects to see carriers adding rigs to the road. Among Target Interstate’s newer tools, customers can use a company app to track the location of their loads in real time on Google maps, and use another app to see loads not even booked with the broker.
To Rebuild or Not to Rebuild Going on a decade of discussions and negotiations, Hunts Point continues to face the same dilemma: outdated facilities and infrastructure, traffic and safety challenges, limited space and not enough cold storage.
The 100-plus acre facility, which resides inside the greater Hunts Point Food Distribution Center, is part of a sprawling 329-acre complex that is also home to the Fulton Fish Market and the Hunts Point Cooperative Market.
A few years ago, a bid from New Jersey for the market stimulated renewed dialogue between New York City and market managers, but the initiative lost steam with a funding stalemate, and a transitioning City administration. Part of the pressure concerned the end of Hunts Point’s lease, which was recently renewed for seven years with the possibility of further extensions in the future. So, while the need for change—rebuild or relocation—remains necessary, no concrete plans are being developed currently.
Stay or Go? “Personally, I would like the market to stay where it is,” remarked Hunt. “What everyone really wants is a good cold chain and controlled environment. If they could keep it on site, that might be more middle of the road, like a revitalization, but that doesn’t address the fundamental structural problems, such as the gas, electrical, and sewer lines that are some 40 years old.”
The facility was built in 1967, and aging infrastructure may be causing more than cold chain problems. Last November, two separate fires occurred, one in which 12 firefighters suffered smoke inhalation injuries. “The fires were rather unexplainable,” observed D’Arrigo. “We have a 50-year history of no fires and then two in one month. From what I know, they were accidental.”
“There’s talk, but since the lease extension, I don’t think any plans have been made,” says DiMaggio. “However, you are seeing merchants renovating their stalls; I gutted and renovated my place when I moved in. It’s a tough decision with a pending rebuild or move, but right now it doesn’t seem like we’re leaning one way or the other.”
Laurie Gregori, sales manager at Kent, NY-based Lynn-Ette & Sons, Inc., a grower-shipper of apples, cabbage, pumpkins, and squash, had this to say: “In terms of farmers and freight rates, I don’t think moving to New Jersey would make much difference. And truckers might prefer to go to New Jersey versus dealing with driving into the Bronx.”
“The Bronx is centrally located for doing business in Long Island and New Jersey,” said A&J Produce’s Tramutola. “It seems like a risky move to relocate and leave behind all these jobs, revenue, and taxes. And, not too many businesses are suited to move into an industrial area like this. But something needs to give; we need to get some traction. I would like to stay,” he added.
D’Arrigo, who is also vice president of the market, pointed out, “Right now, everything is pretty quiet. There’s a new mayor finding his pace, and when the time is right, we’ll sit down with the City and resume our talks about the options. Rebuilding or relocating is something that will have to be addressed over the next year or so. You really don’t have seven years, you have three, because it will take four to get anything done.” Bottom line, D’Arrigo says, “Many of us would like to stay here.”
In the meantime, market improvements continue to be made, not only to individual stalls but the general infrastructure as well. Morris Okun’s Cignarella said repairs to the rail track behind his stall began in the summer. Intermodal and rail transport are a critical piece of the market’s delivery system, bringing the “hardware” durables like potatoes and onions, into the market daily.
FRESH FORUM Looking forward, what will be different for you or your company in 2015?
Thomas Tramutola, Jr. A&J Produce Corp. In 2015, we’re looking at traceability becoming more important, and the trend continuing in the years ahead. The produce industry, overall, needs to adapt to this trend.
Alisha Albinder Hudson River Fruit Distributors We’re launching a new bag and brand called “Lil Chief,” a play on our main brand, Red Chief. This will be a 3-pound Ziploc grab-n-go pouch marketed towards kids.
Charlie DiMaggio Fres Co, LLC We’re going to continue working in our areas of growth. We’ve been strong in Mexican products: yuca, chayote, and calabasa, as well as pineapples. Those have been a mainstay and source of growth for us.
Jimmy Margiotta J Margiotta Company, LLC We will continue to improve our facility, as many merchants on the market are doing. Keeping our facility clean and properly temperature-controlled is a priority.
Laurie Gregori Lynn-Ette & Sons, Inc. We will continue to focus on our main commodities, green beans and cabbage, and will look into adding vegetables such as cucumbers and squash—but that depends on the strength of the market and demand.
Jimmy Hunt, Jr. D.M. Rothman Company, Inc. Being a smaller house, it’s harder for us to compete for some business, so we are primarily looking at streamlining our operations to remain effective and competitive.
Matthew D’Arrigo D’Arrigo Bros. Company of New York, Inc. We’re always looking at ways to attract new customers and at new applications to wholesaling produce. This business rarely takes dramatic changes, but I would say providing more delivery business and more merchandising and pricing for smaller retailers is something we’re looking to do next year.
Waiting, But Renovating To that end, some merchants aren’t waiting for a decision, but moving ahead with needed renovations to up-level their stalls. E. Armata, Inc., which has been selling fruit and vegetables in New York for more than a century, recently finished a six-month remodel with a focus on improving the cold chain. “Our main facility in Row A was renovated from top to bottom,” says Paul Armata, vice president and secretary.
“It had old blow-in insulation and other outdated equipment,” Armata continued. “Now, all the rooms are paneled and have state-of-the-art refrigeration and other equipment. We can fight the elements better—produce arrives at temperature, is racked at temperature, and is delivered at temperature.”
Armata says even without a rebuild decision, they needed to make the repairs. “There’s big uncertainty in the market—how long we will stay and if we will go somewhere else,” he comments. “But we believe in the industry and in the market, and wanted to do what we could to handle product in accordance with the quality expectations of our customers.”
GMOs, Traceability and Organics Labeling A bill mandating labels on foods containing GMO (genetically modified organism) ingredients died in the state legislature this past June. Advocates were promising to push it through next year, calling for transparency and consumer choice, while others were saying it would only raise food prices and GMOs had been scientifically proven as safe.
The impact on Hunts Point isn’t clear, and likely would be minimal since most merchants, except for repackers, move produce from farm to retailer, outside any GMO labeling requirements.
Of more urgency is traceability, as requirements are evolving with chains and larger retailers demanding more than the previous one-up-one-down tracking.
“The big retailers are leading this initiative, and the smaller shops will follow,” says Tramutola. “In our business, we move a lot of produce in a small area, so high-level traceability would slow us down. In the future, we will all have to get tagged lots to have clear origin information for all the produce that goes out.”
The trend is already in play for some grower-shippers. Gregori, who supplies vegetables to the market, says Lynn-Ette & Sons moves about 4 million pounds of cabbage each year and labels every lot.
Organics Another trend that has yet to fully take root in the wholesale market is organics. While consumers are more and more interested in organics, the bulk of produce sold at Hunts Point is still conventional fruits and vegetables.
“We’re not selling organics yet,” DiMaggio reveals. “Maybe in the future… Everyone likes the idea, but when it comes down to price, they back away.”
Hunts agrees on the expense, but looks at the situation a little differently. “I don’t see organics catching on strongly until they get a foothold on restaurant menus. The best comparison is fish—there’s a clear distinction between farm-raised and wild-caught fish that justifies the difference in price. With meat or fish, I’m personally willing to pay a dollar or two more a pound, but not everyone can afford a $9.00 head of cauliflower.”
Overall, the price differential between organics and conventional may still be too high, but on certain commodities the spread is such that organics are gaining ground. Nick Pacia, president at A.J. Trucco, Inc., says he’s selling more organic kiwis on the market this year.
“We’re planning to increase our organic kiwi program by 20 to 30 percent from last year,” Pacia commented. “We’re also planning to add other commodities little by little. While some organic commodities are off the chart, organic kiwis are at a good price point compared to conventional.”
Part of the demand, Pacia reflects, is due to news, increasing health-consciousness, and concern over recalled conventional commodities. “People are talking more about no GMOs (for further information about a non-GMO alternative for seed developers, see this issue’s front feature “TILLING: GMNO”), no fertilizers and pesticides, and that’s increasing awareness
of the organic option,” he notes. “The economy helps, but more important is major retailers carrying organics, which increases public awareness. The negative media on recalls has been pushing the demand for organic commodities as well.”
Concluding Thoughts Hunts Point continues to lead the country and much of the world in volume. Trends continue to arise with organics, exotic or specialty produce, and demand for greenhouse commodities. An example of the latter is a huge rooftop greenhouse in Brooklyn run by Bright Farms, an urban greenhouse company with locations in cities across the United States.
“The local movement is good, but it’s not moving the needle,” D’Arrigo contends. “If that rooftop does 1 million pounds of greens in a year, that’s 20 to 40 truckloads, depending on the commodity. We’re doing 600 to 1,000 trailerloads a day at the market, and that’s only half of the supply; the other half goes directly to chains or foodservice.”
Regardless of the trendiness of greenhouse or locally-grown produce, both are part of the impetus to supply fresh fruit and vegetables to retailers, restaurants, and consumers. The sheer volume of the Hunts Point market, not to mention the diversity of the areas it serves, will keep the attention of the industry for years to come.
