(June 26, 4:54 p.m.) MONTREAL — After enduring a long winter so severe that roofs across the province collapsed from the sheer weight of snow, Quebec growers are facing another challenge — energy costs — that’s putting pressure on the new growing season.
“Covering energy costs is going to be our major challenge this year,” said Andre Plante, general director of the Quebec Produce Growers Association. “If we sell at the same price as last year, a lot of producers will close their doors.”
Plante said the cost of heating greenhouses for the province’s tomatoes, cucumbers, lettuce, peppers and herbs increased 60% this spring. Inputs such as fertilizer increased 25%, while the price of packaging was up 15%.
“We’re going to have to increase produce prices by 20%, but, at this point, it looks good.”
He said Quebec asparagus, considered a harbinger of spring, averaged $31 (Canadian) per 20-pound case in May compared to $25 per 20-pound case last year. Prices for radishes, another early crop, increased up to 15% over last year.
“Our prices must increase,” said Serge Bigras, president of family-run Les Fermes Serbi, Sainte Eustache, Quebec, a major grower of rhubarb, field tomatoes and cabbage. “Our survival depends on it.”
With the increased cost of fuel and fertilizer, he said he expects his profit to be down 20% in 2008.
“Freight rates are also crazy right now, as one would expect with the added cost of fuel,” said George Pitsikoulis, president of major wholesaler Canadawide, which is celebrating its 25th anniversary this year.
But he did find one bright spot amid the gloom. Though the frozen ground took longer to thaw and prepare for planting this spring, putting some crops a week or two behind a typical season, “judging by the early crops, it looks like a beautiful quality season.”
The province’s top crops in 2007, according to the QPGA:
- potatoes (1.124 billion pounds), up 16% since 2002;
- carrots, up 45% since 2002; and
- cabbage, up 60% since 2002
After those, the top-ranked crops are lettuce, onions and corn.
Valerie Grenier, sales and marketing director for Les Serres du St. Laurent Inc., Portneuf, Quebec, which produces 60% of Quebec’s hydroponic greenhouse tomatoes year-round under the Savoura brand, said competition among North America’s greenhouse tomato growers is so intense “we cannot charge the consumer more at the moment. We expect, however, that the general price of all produce will rise in the near future.”
Mario Cloutier, marketing director for Les Productions Margiric, Auteil, Quebec, said the company’s greenhouses cost $10,000 a day to run in March and April until the new lettuce seedlings were big enough to transplant to the fields in early May.
To remain competitive, retailers must look at every aspect of their operation, said Bernadette Hamel, senior director for the Montreal-based retail chain Metro Inc.
“We are revisiting all the ways we transport and handle fresh product,” Hamel said. “That means maximizing our trucks and using direct delivery as much as possible. We need to keep shrink down with better rotation, and make sure product is in and out of our warehouses as quickly as possible.
“With the whole industry facing the same problems,” she said, “our job is to find solutions to minimize their impact.”
Exports, meanwhile, continue to be squeezed by rising fuel prices along with the strength of the Canadian dollar.
“Canadian exporters have long relied on the low Canadian dollar as a competitive advantage,” said Charlene Newton, account manager for Groupe Vegco, Sherrington, Quebec, a major grower, packer and shipper of onions and carrots.
“Since the dollar hit parity last Sept. 20, we’ve been faced with a new challenge to maintain competitive pricing,” Newton said. “Transport companies, understandably, no longer want to lock in rates with no end to the increasing cost of fuel. It’s still an advantage, however, to be so close to the New York and Boston market, allowing us and our U.S. customers to remain competitive in today’s market.”