The largest terminal market in the United States is marking 50 years in the international produce industry. Hunts Point’s vast premises is also abuzz with renovations—as merchants move forward with expansion plans and prep for the latest FSMA (Food Safety Modernization Act) implementations.
This year, 2017, the wholesale mecca celebrates its golden anniversary. And even though its tenants have been locked in rebuild discussions for a decade of its storied existence—the Big Apple’s wholesale hub shows no signs of slowing down.
Red Light, Green Light
Though its official name is the New York City Terminal Produce Market, Hunts Point sits on about 60 acres inside the Hunts Point Food Distribution Center and moves more than 3 billion pounds of produce each year.
For years now, efforts to find a solution to rebuild—or move—have plagued the outdated facility and its merchants. Efforts have been stalled by costs, politics, and lack of consensus.
Over the past few years some modifications, including renovating the rail area, have been initiated, but a full rebuild is still a thing of the imagination. Recently, a long-standing plan to build an off-ramp from the highway to the market got the green light, and should be completed within the next five years.
“To get a truck here, you have to get off the highway and travel several miles through local, residential streets,” explains Paul Kazan, president of Target Interstate Systems, Inc., headquartered in New York. “In addition to the delays and traffic, there are a lot of concerns about exhaust and health issues from the trucks.”
On the slate since 2000, the off-ramp project will finally be underway. It will also allow the City to reclaim other areas to build parks and recreation areas, so it will be a win-win for the market and the surrounding neighborhoods.
Upgrading Units
Despite a stalled rebuild and limited upgrades to the market itself, vendors continue to invest in their units.
“In the meantime, people are starting to put money into their stalls to take control of their own progress rather than wait for a rebuild,” comments James Margiotta, Hunts Point board member and managing member at J Margiotta Company, LLC. “But the market is outdated; I hope something, somehow gets done to help the market come into modern times.”
Charlie DiMaggio, managing member at Fres Co, LLC, who arrived on the market six years ago by remodeling an old stall, is doing the same again and expanding his product line with new units on Row A. The added space will help display more California vegetables and citrus, and provide better flow for inventory.
The largest terminal market in the United States is marking 50 years in the international produce industry. Hunts Point’s vast premises is also abuzz with renovations—as merchants move forward with expansion plans and prep for the latest FSMA (Food Safety Modernization Act) implementations.
This year, 2017, the wholesale mecca celebrates its golden anniversary. And even though its tenants have been locked in rebuild discussions for a decade of its storied existence—the Big Apple’s wholesale hub shows no signs of slowing down.
Red Light, Green Light
Though its official name is the New York City Terminal Produce Market, Hunts Point sits on about 60 acres inside the Hunts Point Food Distribution Center and moves more than 3 billion pounds of produce each year.
For years now, efforts to find a solution to rebuild—or move—have plagued the outdated facility and its merchants. Efforts have been stalled by costs, politics, and lack of consensus.
Over the past few years some modifications, including renovating the rail area, have been initiated, but a full rebuild is still a thing of the imagination. Recently, a long-standing plan to build an off-ramp from the highway to the market got the green light, and should be completed within the next five years.
“To get a truck here, you have to get off the highway and travel several miles through local, residential streets,” explains Paul Kazan, president of Target Interstate Systems, Inc., headquartered in New York. “In addition to the delays and traffic, there are a lot of concerns about exhaust and health issues from the trucks.”
On the slate since 2000, the off-ramp project will finally be underway. It will also allow the City to reclaim other areas to build parks and recreation areas, so it will be a win-win for the market and the surrounding neighborhoods.
Upgrading Units
Despite a stalled rebuild and limited upgrades to the market itself, vendors continue to invest in their units.
“In the meantime, people are starting to put money into their stalls to take control of their own progress rather than wait for a rebuild,” comments James Margiotta, Hunts Point board member and managing member at J Margiotta Company, LLC. “But the market is outdated; I hope something, somehow gets done to help the market come into modern times.”
Charlie DiMaggio, managing member at Fres Co, LLC, who arrived on the market six years ago by remodeling an old stall, is doing the same again and expanding his product line with new units on Row A. The added space will help display more California vegetables and citrus, and provide better flow for inventory.
“A lot of people are investing in their space,” confirms Margiotta. “Best case scenario: you get a deal done in the next couple of years, and it will still take five to seven years before the ink is dry and ground is broken. If a deal was done tomorrow, I would still have seven years of brand new coolers, so it’s worth it to put the money in.”
Rolling Up
Fewer, bigger, full-house merchants have been the trend at Hunts Point over the past several years. Those who can are buying more space and expanding, those who can’t are selling and moving out.
“A few years ago, we transitioned to being a full-service house and initially added berries,” says Steve Koster, in sales for E. Armata, Inc. “The berries were a tremendous addition and the program is still going strong. During the last renovation, we added potatoes and onions and a few units to our operation.”
Photograph courtesy of Fres Co.
Koster says the new unit on Row A was for ‘wet’ vegetables such as scallions and broccoli and produce needing ice, and the company recently closed on four more units. “We’re currently gutting and renovating those into state-of-the-art condition and they’ll house fruit. Once we’re done, we’ll have 18 continuous units on Row A.”
Many of the smaller wholesalers have thrown in the towel, making way for the much larger, full-service houses. Factors influencing the shift include big retailers and distributors who want a wider selection, guaranteed supply, and consolidated services, as well as the new food safety implementations coming into play.
“The heyday of the independent wholesaler—10 to 15 years ago—does not exist anymore,” explains Gabriela D’Arrigo, marketing director at D’Arrigo Bros. Company of New York, Inc. “There have been a lot of changes including e-commerce and food safety regulations. To be a relevant business today, being full-service is absolutely key.”
“It’s an interesting dynamic,” observes Joel Fierman, president at Joseph Fierman & Son, Inc. “When the market opened, there were 130 merchants and it was 100 percent occupied. Now, there are 32 merchants and it is still 100 percent occupied.”
FSMA Looming Another catalyst in the consolidation and full-service trend involves foodservice and food safety requirements.
Once upon a time, merchants could source locally from just about anywhere without worrying too much about traceability or even breaks in the cold chain, as long as the produce looked and tasted good.
Feeling the impact
In recent years, tightened regulation has forced wholesalers to upgrade facilities and implement food safety protocols, including inspections as well as pricey software and tracking equipment.
While the soft threat of FSMA has been looming for several years with no real bite, the deadline is forcing merchants to take compliance seriously.
Some are already up to date on requirements, while others might have to scramble a little to hit the mark. More relevant, the expense of requirements has also play-ed a role in displacing some smaller wholesalers—as well as growers—and contributed to the consolidation trend.
Size matters
“The larger chains won’t take product from smaller, local growers that don’t meet their food safety standards,” notes D’Arrigo. “A lot of businesses are closing their doors and smaller growers are going out of business because getting certification is expensive and time consuming. And now that it will be 100 percent required, if you don’t have certification you won’t have a buyer for your product.”
“What’s happening is the smaller companies are leaving and the larger com-panies are getting bigger,” weighs in Koster. “I think food safety is one of the things forcing some of the smaller companies out.
“It’s very expensive to be cold chain compliant—you have to purchase new, state-of-the-art technology and quite a few other things,” Koster observes. “It’s becom-ing more and more expensive to run a wholesale business.”
Murky language and grey areas
Although the deadline for some of the rules is pending, Fierman notes, “It might take a little longer before it gets enforced. And hopefully, when it comes to wholesale markets, they’ll back off on some of the requirements.
There’s no cross-contamination here and not a lot of handling of prepared product. Some of the FSMA regulations don’t necessarily apply to wholesale terminals.”
Michael Muzyk, president at Baldor, which operates from Hunts Point and Boston’s Chelsea market, says some of the language in FSMA misses the varied roles at different levels in the supply chain.
“Being part of United Fresh Produce Association, we helped craft parts of FSMA that we are satisfied with, but there are still a couple of things we don’t understand,” Muzyk says. “They define a farm as a family or person that grows and packs on their land, and if you’re not that, then you’re considered a processor.
“There’s a lot of grey area there, and getting thrown into the processor category brings a whole set of rules and regulations that may not be applicable to all operators,” Muzyk concludes.
Shippers on the hot seat too
Food safety isn’t affecting only wholesalers and growers, but other areas, including transportation. Target Interstate’s Kazan says tracking and traceability while in transit will be an important piece of FSMA compliance.
FRESH FORUM How has 2017 measured up – was this year better than last year for your business?
Michael Muzyk, Baldor So far, 2017 has been trending to be a very positive year for us. Our busiest time used to be the fourth quarter, but since 2008, the glory days of holiday parties have not returned. Now our busiest time is just after the Labor Day holiday.
Gabriela D’Arrigo, D’Arrigo Bros. Company of New York, Inc. It’s been pretty stable; there was some early weather, and that was a factor in a lot of the growing regions we work with, but it’s not anything we haven’t seen before.
Steve Koster, E. Armata, Inc. Yes, 2017 has been a good year. Over the past few years, we’ve been expanding and growing the business and have had a good run. All of our efforts to serve customers better have come back to us with increased sales.
Charlie DiMaggio, Fres Co, LLC We expected a little more growth in 2017 [with our] move. But even before we moved, the buzz about it increased interest and gave us a little lift. People heard we were expanding and got behind us, and that’s a great thing to see.
Joel Fierman, Joseph Fierman & Son, Inc. I like 2017 better than 2016; the market had a little more activity this year.
James Margiotta, J Margiotta Company, LLC Business has been great. We’re doing a lot more fruit than in the past. Our brand of pineapple has been doing very well and the potato, onion, and veg business continues to grow. I am very pleased with the way this year has gone so far.
Felipe Moreno, Moreno Produce NY Corp. To be honest, it is stable, but not as good as we expected. We were expecting higher volume in mangos and papayas, but political issues really affected the community.
Ray Myruski, Raymond Myruski, LLC This year, overall, the crops looks nicer than last year, but they were a little bit later. We didn’t plant as early this year and then we didn’t have real warm temperatures in the beginning of the growing season to bring the crop on.
Paul Kazan, Target Interstate Systems, Inc. It started out slow—volume-wise and dollar-wise—but volume and revenue came up. So, it’s better than 2016, but not as robust as we expected.
“Traditionally, data recording devices would tell us what happened in transit after the trip,” Kazan explains. “Now, we have real-time data—sensors that show if the doors have been opened, temperature, and other data. This tracking will be helpful for food safety compliance.”
Kazan also noted that since Target Interstate started using real-time tracking, he has had zero claims, a cost which used to be in the six figures annually.
Using technology such as TempTale from Sensitech gives dispatchers instant info on cold chain or other issues, and they can call the driver and remedy the problem versus finding out at the end of a run that the load has spoiled from a faulty reefer.
“What were once static recorders are now dynamic,” enthuses Kazan. “I’ll get an alert in the middle of the night—a text that the temperature has risen, and can get on that immediately. In the past, that wasn’t available.”
Unlike smaller wholesalers who might be forced to close due to food safety costs, Kazan says this new technology can actually help smaller truckers stay in business. “We can provide the device to owner-operators to keep them competitive—so they can offer the same telematics any trucking company would deliver and buyers want.”
Trend Tips
No specific commodity trends are breaking records this year—although kale,various other greens, and avocados are still hot. Instead—holidays, weather, and the media are influencing fluctuations in buying trends, according to Hunts Point merchants.
“It’s just such a variable business,” contends Margiotta. “Sometimes there’s an item you can’t get enough of and the next year there’s too much. A chef can go on YouTube, get a million followers, use fingerlings, and the next thing you know, everyone wants fingerlings.”
Additionally, weather does play a role. “When it’s hot and sunny, watermelon goes crazy,” Margiotta says. “If it rains a lot, watermelon and corn won’t be your leaders.”
Healthy and convenient
One trend that continues to have resonance is the combination of convenience and healthy foods. Increasingly, consumers care about what they eat; they want healthy food, but they don’t have time to shop and cook.
So, they want fruits and vegetables or prepared meal portions in the right size and packaging, and the right price.
Margiotta believes the vast amount of information available to consumers is stimulating demand. “How often do you see a potato or strawberry on commercial television? We can’t compete with major brand advertising.
“Social media is doing that for us, as people post about the benefits of eating fruits and vegetables along with all kinds of creative recipes for once-unpopular vegetables like cauliflower,” Margiotta explains.
Consumers want to try new ideas and recipes, but also want it fast, easy, and healthy.
“I’ve been here for six years, and from day one, consumers were making demands on how things were packaged,” recalls D’Arrigo. “Everybody wants higher quality in quick and easy packaging; they want organic but they don’t want it to go bad in two days.”
The role of grocerants
D’Arrigo believes the healthy-and-convenient trend extends to retail too, where more and more stores are becoming ‘grocerants’—offering retail shopping along with prepared foods and seating—a store and restaurant all in one, with a wide selection of quick and convenient meals and snacks.
While commodity popularity may wax and wane over the years, D’Arrigo says “convenience is a trend that will continue to grow. The younger generation, especially the urban population, is focusing more on career and making money versus family, and speed and convenience are important.”
“Packaged produce in all areas continues to increase to meet the demand for convenience,” agrees DiMaggio. “Even on the retail end, it’s much easier to display packaged produce than loose.”
Making space for organics and local
DiMaggio also commented on the continued upward climb of organics. “Every year, organics are picking up little by little, and we bring in and sell a little more.”
Historically, Hunts Point has been a buyer’s market—with buyers taking what looks good and tastes good at the right price. Organics were typically a sales item rather than a walk item (procured to fill an order versus displayed at the market)—but as the trend continues to gain momentum, the merchants have responded by slowly and cautiously expanding their offerings.
Local produce, on the other hand, is a seasonal powerhouse. “Local, especially during summer, is a big trend for us,” DiMaggio affirms. “Every year, we increase our bank of local growers and the amount of local produce we bring in.”
Typical local commodities include radishes, cilantro, parsley, kale, cabbage, zucchini and other squashes, and then tomatoes and corn as the season progresses. And of course, New York’s annual treasure trove of apples.
“I think local produce is attractive because it’s fresher, there’s less transit time, it supports the state and neighboring states’ farmers, has a smaller carbon footprint, and it keeps some of the smaller growers and shippers alive,” shares DiMaggio.
Ray Myruski, in sales at Raymond Myruski, LLC, is also a big fan of the state’s seasonal bounty. “Local has been lucrative for growers in the area,” he says. “People want to support their local farmers and they realize that local produce tends to be fresher.”
Waste not want not
As hot commodity trends come and go, movements such as local and organic build over time according to Baldor’s Muzyk, who thinks the food-waste management movement is the next big wave, though in some respects, it’s already here.
“Every few years you have a hot item, like the kale kick,” observes Muzyk. “I think last year it was more about local produce—not necessarily a single commodity—and that was more of a movement than a trend. In 2017 and 2018 we will be consumed with sustainability: how can we address all the food waste and be more sustainable? We must address these long-term issues.”
Baldor recently reached its goal of zero waste by partnering with other food processors and composters to handle the scraps from the more than 1 million pounds of food it processes each week.
Muzyk says such commodity driven sustainability—managing waste—is a priority now, and invariably leads to other forms of sustainability, particularly energy.
On The Road or Rails
Shipping and transporting perishables is always a challenge. Between fluctuating costs, availability of trucks, routes, and regulations, wholesalers and brokers are always seeking affordable and efficient options.
For some commodities, rail and intermodal shipping can provide a moneysaving opportunity.
“Rail has gotten better and there are more players than there used to be,” says Kazan. “But it depends on the commodity and the price.”
Because rail is slower, perishability and commodity pricing come into play. The bigger concern is trouble loads—while modern railcars do have monitoring equipment, there is no way to fix a broken reefer until the train stops at a station. “With a truck, we can call the driver right away and say, ‘Pull over, you’ve got a problem,’” Kazan explains.
“Dated items like mesclun and perishable fruit always go by truck because you want them as soon as possible,” adds Kazan. “Some of the ‘hard’ items—onions, broccoli, carrots, and so forth—can go by rail, because if the train gets delayed they probably won’t spoil.”
For Koster, using rail can alleviate two of his most vexing challenges: congestion and federal regulations. “Transportation is always an issue, especially here in the metro area where there is a lot of traffic, and there are always new regulations,” he points out. “We bring in potatoes and onions by rail, and that helps, but we use trucks for most everything else.”
Fluctuating freight rates
Other transportation headaches, freight rates and truck availability, have not been as big an issue this year. Overall, rates have been fairly steady, inching upward here and there, though with the expected seasonal fluctuations. Availability hasn’t been a constant thorn for shippers either.
“At holiday times, deliveries increase and rates tend to go up,” reiterates DiMaggio. “For example, around Mother’s Day with flowers, but that’s the norm.”
“In addition to seasonal fluctuations, rates have been up a little bit, but not too much,” confirms Koster. “And we’re always able to find the trucks we need.”
Political Fallout
A sour note in the New York produce scene has been the closure of some Hispanic retail stores. Felipe Moreno, vice president for Moreno Produce NY Corp says business was tough for him this year following the U.S. presidential election.
“We saw political issues really affecting the community,” he says. “Sales went down a little, as did volumes. We were selling 50 fewer pallets of mangos compared to last year—a lot of business owners sold and went back to their home countries.”
Moreno believes owners in the community who hired Spanish-speaking employees felt nervous following the election and some opted to get out of the business. “At least two of my customers with three supermarkets each and some foodservice businesses shut down,” he points out. “Now those locations have been converted to computer supply and hardware stores.”
Trade relations
Other potential changes, such as reworking the North American Free Trade Act or NAFTA, could have a greater impact, especially on Mexican inbound commodities such as tomatoes, cilantro, peppers, papayas, and mangos.
“Retooling NAFTA would affect many areas in the produce industry,” remarks Margiotta. “We do a tremendous amount of business with and value our relationships with Canada and Mexico.
“You can’t just cut out Mexico,” Margiotta continues, adding, “that’s where we get most of our winter produce. But, there are always a lot of things said during campaigns, and then there’s the reality of what actually happens.”
Big Apple Wrap Up
Since 1967, Hunts Point has been providing produce to the Big Apple and beyond, and from this perspective, not much has changed.
Commodities come and go, perhaps even more so today with the influence of social media and lightning-quick changes in consumer demand for quality and convenience.
But the market’s current growing pains—blending politics, merchant consolidation, and construction—are a testament to its strength and longevity. Staying on top of these and other industry trends are the true elements of success.
For most, despite a few new and recurring obstacles, 2017 has proven to be a good year—as business investment and sales have continued to climb for many wholesalers.
