With the Hunts Point Produce Terminal Market housed in its Bronx location for nearly 40 years, merchants have outgrown the original design and available space—and questions about a rebuild or relocation still linger for the future.
Looming large at present are vendor consolidation and the ever-rising demand for locally grown fruits and vegetables. Read on to learn what’s hot and what’s not from Hunts Point’s merchants and executive administrative director.
The Rebuild Dilemma The 1967 facility is outdated, undersized, and ill-suited to handle Hunts Point’s increased volume and business dealings, as well as the updated cooling and handling requirements necessary for food safety. For almost a decade, debates and discussions about a rebuild versus a move to a larger lot in New Jersey have ensued.
More recently, the market signed a lease extension at the current location through 2020, which has provided a temporary respite to a build-or-move decision. In the interim, upgrades and retrofits are taking place within the market’s infrastructure and at individual vendor stalls.
“We just spent $22 million—$10 million from the feds and $12 million from the City—on a project to redo the rail behind rows A, B, and C,” comments Myra Gordon, executive administrative director at the Hunts Point Terminal Produce Cooperative Association, Inc., which oversees the market.
“We’re also building a transfer platform to transfer produce from rail to truck. For the time being, we are not discussing a rebuild,” Gordon says. “I don’t think anyone sees the feasibility of a rebuild here; the best we could do would be to refurbish and make some other changes, if the merchants want to stay.”
In March, New York City Mayor Bill de Blasio announced plans to invest $150 million in the aging Hunts Point Food Distribution Center over the next 12 years to fortify infrastructure, protect jobs, increase natural disaster preparedness (following Super Storm Sandy in 2012), and connect consumers to more local produce and food from New York State. Part of this investment will support the produce terminal.
“The talk about a move to New Jersey or a rebuild has slowed down,” confirms Matthew D’Arrigo, vice president at D’Arrigo Bros. Company of New York, Inc., which he believes is due mostly to the new mayor (de Blasio, who succeeded Michael Bloomberg in 2014). “But there has to be, at some point, a rebuild or a major rehab, because this place is 50 years old and there are all kinds of size, maintenance, and subsurface issues.”
“I don’t see why we can’t rehab [the market] and make it work for another 30 or 40 years, and I hope that’s the path we take,” D’Arrigo adds. “Moving to New Jersey has a whole set of unknowns and issues, not the least of which being the impact on the buyers in terms of driving to the terminal,” he says.
With the Hunts Point Produce Terminal Market housed in its Bronx location for nearly 40 years, merchants have outgrown the original design and available space—and questions about a rebuild or relocation still linger for the future.
Looming large at present are vendor consolidation and the ever-rising demand for locally grown fruits and vegetables. Read on to learn what’s hot and what’s not from Hunts Point’s merchants and executive administrative director.
The Rebuild Dilemma The 1967 facility is outdated, undersized, and ill-suited to handle Hunts Point’s increased volume and business dealings, as well as the updated cooling and handling requirements necessary for food safety. For almost a decade, debates and discussions about a rebuild versus a move to a larger lot in New Jersey have ensued.
More recently, the market signed a lease extension at the current location through 2020, which has provided a temporary respite to a build-or-move decision. In the interim, upgrades and retrofits are taking place within the market’s infrastructure and at individual vendor stalls.
“We just spent $22 million—$10 million from the feds and $12 million from the City—on a project to redo the rail behind rows A, B, and C,” comments Myra Gordon, executive administrative director at the Hunts Point Terminal Produce Cooperative Association, Inc., which oversees the market.
“We’re also building a transfer platform to transfer produce from rail to truck. For the time being, we are not discussing a rebuild,” Gordon says. “I don’t think anyone sees the feasibility of a rebuild here; the best we could do would be to refurbish and make some other changes, if the merchants want to stay.”
In March, New York City Mayor Bill de Blasio announced plans to invest $150 million in the aging Hunts Point Food Distribution Center over the next 12 years to fortify infrastructure, protect jobs, increase natural disaster preparedness (following Super Storm Sandy in 2012), and connect consumers to more local produce and food from New York State. Part of this investment will support the produce terminal.
“The talk about a move to New Jersey or a rebuild has slowed down,” confirms Matthew D’Arrigo, vice president at D’Arrigo Bros. Company of New York, Inc., which he believes is due mostly to the new mayor (de Blasio, who succeeded Michael Bloomberg in 2014). “But there has to be, at some point, a rebuild or a major rehab, because this place is 50 years old and there are all kinds of size, maintenance, and subsurface issues.”
“I don’t see why we can’t rehab [the market] and make it work for another 30 or 40 years, and I hope that’s the path we take,” D’Arrigo adds. “Moving to New Jersey has a whole set of unknowns and issues, not the least of which being the impact on the buyers in terms of driving to the terminal,” he says.
“We have a vested interest in keeping the market here,” asserts Steve Koster, in marketing and mushrooms at E. Armata, Inc. “We believe in this market and will continue to do business here as long as New York City supports it.”
Upgrades In the meantime, some individual merchants are not waiting for a verdict one way or the other and are moving forward with upgrades. Five years ago, Charlie DiMaggio opened FresCo, LLC on the market and invested in major upgrades, even at the height of the rebuild-or- move debate. The investment has paid off as he continues to attract customers while the ongoing rebuild decision postponement hasn’t forced him to lose his investment.
“I’ve seen a lot of changes since I’ve been here,” says DiMaggio. “A few longtime companies have gone out of business, and in other ways, the changes are exciting. It’s hard to tell what the exact causes for these changes and drivers for growth are; for every negative there is always a positive or an opportunity. “We’ve been fortunate to be growing at 10 to 20 percent a year.”
Recently, E. Armata underwent a major renovation from the ground up. The company retrofitted stalls with improved cold chain capabilities and state-of-the-art technology, earning GMP and HACCP certification. “The remodel was something we had to do,” Koster states. “It was a chance we took, but we couldn’t really sit back and wait for a decision about the market [rebuild or move]; we had to improve our facility. And so far, it’s worked—the facility is top notch, we’re expanding lines, and we’re going after all the food safety certifications so we can have a complete traceability chain for our customers.”
Consolidation at the Market In addition to the upgrades, some longtime tenants have closed up shop, selling stalls to other merchants on the market. Over the past year, C.M. Produce LLC, Luna Fresh Greenhouse Corporation, Morris Okun, Inc., and Korean Farms have all closed and sold. Gordon says vendor S. Katzman Produce, Inc. took over Okun’s 16 units, adding to their existing 21 units.
“We hate to see a company go, but we’re also excited about the opportunity to work out of 37 units,” shares Mario Andreani, general manager at Katzman. “There will be a six- to nine-month buildout to put in a state-of-the-art facility that’s customer friendly and has continuous cold chain. In terms of the market’s location, we’re not sure what’s going to happen, and we have to continue to develop and grow our business to better serve the customer.”
The current trend seems to be one of consolidation, resulting in fewer, larger, one-stop produce houses at Hunts Point. In 1967, there were 122 merchants on the market; today, 36 remain.
To some, this is the evolution of the business, but to others like Hunts Point administrator Gordon, it is worth pondering. “The concern,” she explains, is whether “it will be harder for smaller merchants to compete with the larger, full service companies.” However, this shouldn’t significantly impact commodity pricing, Gordon stresses. “Even if we only have a handful of large companies left, they will still be competing with each other in a very close environment, which will keep pricing reasonable.”
“Consolidation has been going on for a long time at the market,” observes D’Arrigo, “and I don’t think we’re done yet. Okun’s sale of 16 units was the largest in history, and that will probably stabilize or slow down the trend for a while.”
DiMaggio says it’s hard to determine what causes one company to close while others are doing well, but most merchants don’t mind having fewer rivals to deal with on the market. According to D’Arrigo, the top five firms at the market are responsible for about half of the business, and many customers appreciate full-service shopping versus having to visit multiple vendors.
The downside of squeezing out smaller merchants may, in part, be balanced by the ever-climbing demand for local produce, which in turn supports nearby growers, shippers, packers, and handlers within the New York-New Jersey region.
Local Produce Still in Vogue This year, local was boosted in the early season by price spikes on California produce, much of it due to the ongoing drought. “Local is a very strong trend,” agrees Gordon. “When you go into a supermarket in the greater New York area, there will always be a local produce section, and more and more people are looking for it.”
Gordon continues, adding, “Whether it’s the romance of keeping small farms in business or the perception that local is healthier, people want local produce.” In the New York area, she’s seen the eat-local trend taken even farther, such as “the ‘locavore’ movement where people are doing urban foraging—collecting dandelion greens in parks or growing produce on restaurant rooftops, for example.”
“People like to buy local, in part, because of the perception that it’s eco-friendly and less of a carbon footprint,” offers James Hunt, Jr., president of D.M. Rothman Company, Inc. “The quality isn’t always comparable to California produce, but when you add in the freight, local can be a couple of dollars cheaper, and you can work with it daily—the trigger time is a lot quicker.”
Hunt explained that last year, Salinas, CA produce started high and stayed high priced all year, which opened the door for more Canadian produce to fill the market. This year, even with the ongoing drought, California prices have softened a little, possibly to stay competitive with local (New York and East Coast) and Canadian commodities.
“Produce is a funny industry,” reflects D’Arrigo. “It is very resilient. In a bad economy, it marches right along; in a good economy, no one notices. We’re more impacted by weather and water shortages than by larger economic trends. The local movement is a very sizable part of our business and our thinking about how we do business.”
“We do a lot of local, about two-to-one local-to-California produce,” states Thomas Tramutola, Jr., vice president of marketing at A&J Produce Corporation. “The cost of transportation is cheaper, and we can get just about everything—lettuce, celery, cucumbers, peppers —from New York or New Jersey.”
Tramutola says there’s been a great deal of “farm-to-table activity, rooftop gardens, and city greenhouses as part of the local movement. People know it supports the local economy and area farmers, and they think it’s fresher. But even though it might have been picked more recently, it’s not precooled like California produce, so the shelf life isn’t as long.”
Outside the wholesale terminal, farmers’ markets, green carts, and produce stands throughout the city and state also provide an outlet for locally grown crops. “There’s not enough volume at produce stands to seriously affect my business,” Tramutola remarks. “But if enough people who want to buy a head of lettuce—who would normally go to the store—stop by a farmstand in Union Square instead, that could affect us to some degree.”
In addition to the buy-local trend, kale continues to enjoy solid demand, including specialty varieties such as Tuscan kale (also called Lacinato kale). Avocados are firmly in the mainstream and no longer just an ethnic commodity, while other items such as root vegetables yautia and malanga, continue to grow in popularity (for more information on malanga and other Hispanic commodities, see the “Multicultural Immersion” article in the Hispanic market supplement, included with this issue).
Organic Grows Incrementally Organics receive mixed reviews. Some merchants are seeing more sales, others not. Overall, the trend of rising organic purchases by consumers continues, though slower than anticipated some years back. On the wholesale end, as the price spread between organic and conventional narrows, there should be more volume.
“I don’t deal too much with organics,” DiMaggio admits. “Everybody loves the idea, it’s just hard to find customers who are willing to pay for it. As soon as you say conventional is $1.00 and organic is $1.50, they go for conventional. In time, as the price gap closes, more and more people will be willing to buy organic.”
“The price gap is starting to close, and that is creating more demand for organics,” says Andreani. “And the demand is increasing because of education and publicity for organics.”
For wholesalers at Hunts Point, organics still don’t make as much sense as conventional. “I don’t really see much organic here,” observes Hunt. In his opinion, “It’s a matter of money and quality. The weights and shelf life aren’t quite as good as conventional items.”
Freight in Flux Despite lower fuel prices, the freight market is not smooth sailing for all carriers and brokers. There are still challenges with time behind the wheel, electronic loggers, speed inhibitors, and several other over-the-road issues. Add in the shortage of drivers and reefers, and shipping perishables remains a tricky maneuver.
“The U.S. Department of Transportation rules are slowing trucks down,” comments Paul Kazan, president of Target Interstate Systems, Inc. “They changed California delivery from a four-day trip to a five-day trip. I’m seeing a lot of business transitioned away from trucks to rail; a quick rail load can be here in five days and compete on price. Also, trucks have to be unloaded right away, whereas with rail the car can serve as storage for a few days.”
Kazan says Railex, the Rotterdam, NY cold chain rail shipper, has grabbed some of the produce business, impacting cross-country drivers—but the shift might help truckers who do load-to-load and multiple-stop deliveries.
Another concern for carriers, and more so brokers, is liability. According to Kazan, lawyers involved in accidents with trucks are more likely to go after brokers for damages these days. Extensive coverage of the fatal crash involving a Walmart driver and comic Tracy Morgan on a New York freeway has increased visibility even more, especially with the driver’s admission that he had violated hours of service rules.
“Brokers are now liable for the trucks they put on the road,” Kazan continues. “There are regulations based on vehicle maintenance, driver performance, accidents, and so forth. We have to do our due diligence and only use drivers and trucks that meet requirements.”
Even so, Kazan is seeing a 50-percent increase in earnings this year compared to last, primarily from switching his business model from the spot market to more contracts. He also says technology is becoming much more important to the industry: new onboard trackers, and even iPhone apps, can transmit real-time location and temperature information and help brokers, carriers, and customers track loads. While these apps can be critically important for delivery issues and traceability, not all drivers are happy about the intrusion.
For its part, Target Interstate offers a financial incentive to drivers who download the company’s app. “But in the near future,” Kazan stresses, “electronic, traceable logbooks are going to be the norm.”
Conclusion Overall, business at Hunts Point is “marching along,” as D’Arrigo says. Most vendors are reporting better business this year, expanding product offerings, and a few are making investments in their future with upgrades and renovations. Will the trend of consolidation into a handful of one-stop megahouses continue? Few can say, as the wholesale market evolves as much as its environment—the vibrant, multicultural nerve center of the Eastern Seaboard—New York City.
