The volatile summer market for Peruvian asparagus elicited several different schools of thought regarding current conditions, but virtually everyone was in agreement that the fall marketing conditions, in terms of volume, would be typical, barring unforeseen weather issues.
Typical conditions would see volume starting to increase in mid- to late August with those increases continuing through September until weekly shipments reach their peak sometime in October. The September-to-December time frame should see strong volume, good demand and many retail promotions. Skewing the forward vision are the current marketing conditions, which are much different than that.
Speaking in mid-July, Peter Warren, asparagus category manager for Ayco Farms Inc. in Pompano Beach, FL, said tight supplies led to a “$15 jump in the price over the last eight days. That’s totally killed demand.”
Speaking a week later toward the end of the month, Warren said the market had settled a bit. He said he understands the views of the growers. They have built demand by expanding their market beyond the United States with increased shipments to many other parts of the globe, including Europe, Asia, Australia and other countries of South America. Couple this with a slight reduction in supplies and increased usage by processors, and there is very strong demand for Peruvian asparagus.
Warren would like to see growers to continue to expand the market, especially in the United States, by offering promotional prices several weeks in advance. But with the strong marketing conditions, most growers, he said, are more intent on playing the spot market where they can probably do better in the short term. He worries, however, that the higher price will affect sales and if and when there is a spike in supplies, retail won’t be able to react fast enough and total movement will suffer.
“There is no right or wrong,” he said. “But as a marketer it is frustrating when you can’t get a good price (from the grower) to move the volume that’s coming.”
Warren’s comments were echoed by many during 10 days of interviews with more than a dozen Peruvian asparagus importers.
Almost saying the exact words was Jeff Friedman, sales manager of Carb/Americas Inc. in Pompano Beach. He said the price increase in July had nothing to do with demand in the United States but rather Peruvian growers getting whatever they can for the crop. He argues that prices above $30 f.o.b. Miami prevent the orderly marketing of the crop, and will come back to hurt growers later in the year when they need the promotions. “We have to be in the low $20s to get good promotions,” he added.
Sure there are other markets that will pay more but he says they will not eat up the volume necessary to move supplies when volume peaks in October. “Right now the Peruvians are not in need of promotion. They don’t want to give any forward pricing and everyone just wants to play the spot market.”
He indicated that for long-term growth, suppliers have to work with their customer — in this case the retailers — to give them a price that they can promote so consumption continues to increase and the industry can remain strong for years to come.
Others indicated that it is a new paradigm and importers and retailers have to get used to the fact that promotional prices are going to have to be higher than they were a few years ago. Fabian Zarate of Tambo Sur LLC in Pompano Beach expects a strong market all year long.
He believes that the days of program prices under $20 are in the past. For all the reasons cited by others, he said demand is up and this year he expects the f.o.b. price Miami to often be in the $24 to $26 range, even when volume is heavy. “The big growers in Peru just aren’t giving program pricing anymore,” he said.
Paul Auerbach, president of Maurice A. Auerbach in Secaucus, NJ, and a longtime importer of Peruvian asparagus, does not advocate for low prices, but he does want to see orderly marketing. He said when the price is too low, it’s not good for the grower community. But on the other hand, he said rapid spikes in the f.o.b. price do tend to slow the market and kill demand.
All in all, however, Auerbach believes the Peruvian asparagus industry — both importers and growers — have done an excellent job over the years creating an orderly marketing situation that has resulted in excellent growth. He said prices from Peru have risen this summer and he believes demand, even with the higher prices, has stayed pretty steady.