LOS ANGELES — The economic recovery hasn’t yet swept through Southern California, but produce purveyors remain active, optimistically repeating the mantra that “People have to eat.”
“For the most part, the industry as a whole has had a decent run, especially those who are paying attention to what their customers want, what they need and paying attention to quality,” said Alan Pollack, general manager for Coosemans L.A. Inc.
At the Los Angeles Wholesale Produce Market, executive director Richard Gardner said business was holding up, though overall volume and profit margins likely were down because people were buying less as a result of the weak economy.
Some shippers are performing better than others, he said.
There are no vacancies on the market, he said the second week in June. And occasional vacancies that may turn up typically are short-lived.
At the nearby Seventh Street Market, “Times are tough for everybody, but we keep managing,” said Steven London, property manager for Meruelo Maddux Properties, which owns the facility.
The parent company itself filed for bankruptcy two years ago, but London said expenditures have been paid off and the situation was headed toward a quick resolution.
Meantime, tenancy was up as much as 15%, as some bays were remodeled and reopened after a fire broke out in 2006.
Vacancy was less than 5% at the Washington Boulevard transfer facility, which the company also owns, London said. At the firm’s Eighth and Alameda Street facility, tenants are happy because they’re allowed to operate seven days a week.
“They seem to do an excellent business on days when others are closed,” he said.
Some units are not renting, though, pending resolution of insurance claims for some roof damage.
“The most challenging thing this year is collecting money,” said Chris Martin, president of VIP Marketing and general manager of Value Produce.
“People are paying a lot slower.”
Some customers who paid in 45 days now pay in 60 to 70 days, he said, setting off a “trickle-down effect.”
Paul Vogel, managing member of QSI LLC, also was concerned about slow pays, with some companies doubling their receivables to vendors as a result of higher prices and extended credit terms.
“At some point, if they cease operations, they could have a negative impact on many companies they are buying from, which could have a significant effect on an entire market,” he said.
“It could be a significant domino effect.”
Despite the financial challenges, Vogel sees “more upside potential and opportunity than there has been at any other time in my career.”
For the first time in about two decades, Bill Vogel, president of Tavilla Sales Co. of Los Angeles, said he sensed that produce consumption was up in California.
“Our business has been very good,” he said, with a 20% increase from 2009 to 2010 and business this year ahead of last year’s.
The company offers tropical fruits, vegetables, Hispanic items and root vegetables.
Business is brisk on the organic scene, too, said Nikki Nagel, sales manager for Better Life Produce Inc.
“There’s nothing going backwards in organics,” she said. “It’s all just full speed ahead.”
Even stores that once were strictly conventional now demand at least some organic produce, she said.
The winter was tough, though, with items such as organic chard and kale impossible to get during some months.
“We’re still coming out of that, but I think July and August will be huge,” she said in early June.
“This is the time of year when (organic) prices get more in line with conventional prices.”
But Wes Liefer, partner and chief executive officer of Pura Vida Farms, Brea, Calif., said the produce business remains “very competitive.”
“We’re having to get creative to sell it,” he said, by offering frequent promotions and custom pack styles for specific customers, for example.
“We’re basically giving the customers what they want,” Liefer said.
Joel Young, an owner of Consolidated West Distributing Inc., Commerce, echoed those feelings.
“It’s very competitive out there,” he said.
“If you’re not aggressive and show that you want the business, there are plenty of people out there to take your place.”