(Dec. 4, 3:42 p.m.) NOGALES, Ariz. — As is the case everywhere, Mexico is feeling the effects of the worldwide economic downturn, and rising costs and sagging demand are making life difficult for growers and distributors.

Growing costs are up a minimum of 25% for Mexican farmers, said Jim Cathey, general manager and sales manager at Del Campo Supreme Inc.

Some growers report fertilizer cost increases of more than 700%, he said.

While oil prices are softening and fertilizer prices may have peaked, the cost of corrugated containers continues to rise.

Expenses are going up so quickly that only one or two bad years can be devastating for a grower, Cathey said.

Nogales distributors seem apprehensive yet cautiously optimistic as they gear up for a season filled with uncertainty.

“We’re definitely seeing diminishing orders from customers,” said Chris Ciruli, partner and chief operations officer at Ciruli Bros. LLC. “They’re not moving as much product through the pipeline.”

The company is trying to keep its revenue levels up by expanding its customer base and by promoting reasonable prices.

Prices were decent during the summer, he said.

“We would like to have seen more product moved, but that hasn’t been the case,” he said.

Growers and distributors need the cooperation of retailers and foodservice operators if the industry is to stay healthy during these murky economic conditions, said Jaime Chamberlain, director of marketing for Chamberlain Distributing Inc.

The produce business is a good business to be in during times like these because, “People do need to eat,” he said.

But, “It doesn’t do any good to have a lot of availability of product if prices are still high,” he added. “Prices need to come down a little bit where we can move some product.”

Chuck Thomas, owner and president of Thomas Produce Sales Inc., said he recently passed on some grapes at an area supermarket because a 1-pound clamshell container was priced at $3.69.

“There are (only) certain items people don’t have to have all the time,” he said.

For example, “People don’t have to have a hothouse tomato,” Thomas said. “They’ll buy a field tomato instead of a tomato on the vine.”

Farmer’s Best International LLC seems to be thriving through the economic downturn.

“We’re on a good growth pattern,” said Jerry Wagner, director of sales and marketing. “We’re going to have more product this year than we did last year.

“We’ve lived through economically depressed times before, and we’ve always seen (that) people eat,” he said. “They might not take $10,000 ski vacations, but they don’t stop eating.”

But even Wagner said the industry may not be able to maintain high markets this season.

“People won’t support a $30 box of cucumbers,” he said.

Farmer’s Best will offer “multiple promotional opportunities” to retailers and encourage them to pass the savings on to consumers, Wagner said.

At SunFed, owner and chief executive officer Danny Mandel said it’s too early in the season to measure the impact of the economy on the fall deal.

“So far, its effects have not been all that obvious, which is different than not having an effect,” he said. “It’s difficult to assess if prices would have otherwise been stronger with a better economy.”

Many Nogales distributors are tightening their belts in preparation for what could be a tough season.

“We’re really watching the bottom line,” said Brent Harrison, president of Al Harrison Co. Distributors. “Everybody’s going to be pinching pennies.”

Cathey said the new building that Del Campo Supreme moved to a year ago saves the company money because it combined several operations into one location. However, the cost of operating the facility is higher than running the old headquarters.

The company has not replaced some workers who have left the company’s operations in Nogales and Mexico.

“We’re running about as lean and mean as we can to keep our costs down,” he said.

At Ciruli Bros., “We have not made any cutbacks in Mexico or the U.S,” Ciruli said.

Instead, the company has added salesmen who brought in more customers and has increased its primary product line from two or three items to nine to attract more customers by providing one-stop shopping.

Consumers likely will not stop buying staple items, like tomatoes, cucumbers or squash, Chamberlain said.

“Where you might see a little bit of a decline are in the expensive exotic or organic items,” he said.

Although one might expect to see stronger sales at retail than foodservice as consumers deal with a tight economy, Chamberlain said he’s noticed restaurants running TV commercials in which they try to lure viewers by offering good values.

“Restaurants are fighting for that dollar,” he said.