Thursday, January 18, 2007

Retailers Assess Citrus Freeze Impact

Retailers Assess Citrus Freeze Impact

The Associated Press


January 17, 2007

Any time there is a product shortage, it follows that prices increase Grocery retailers are taking stock of the impact California's freeze will have on supplies and the prices of citrus, strawberries and other damaged crops in their stores.

Meghan Glynn, spokeswoman for Kroger Co., said Wednesday that severe weather in California, Arizona and parts of Mexico is expected to hurt store supplies for several months.

'We expect shortages of citrus fruits, berries, some lettuce varieties and several fresh vegetable offerings,' she said. 'We regret that we are not able to offer our customers the range of high-quality fresh produce usually available this time of year.'

Glynn said Kroger, the nation's largest traditional grocery chain, is working with suppliers to find alternative sources. Kroger has nearly 2,500 grocery stores in 31 states.

'We are working with our vendors to source some items from other countries,' she said, although details weren't yet available.

Growers in California say prices will shoot up in the aftermath of subfreezing temperatures that caused nearly $1 billion in losses to oranges, lemons, avocados, strawberries and other crops.

'Our prices will remain competitive based on market conditions,' Glynn said. 'We'll continue to monitor the situation closely.'

Whole Foods Market Inc. spokeswoman Kate Lowery said prices will go up for citrus fruit and customers could also see price increases for California strawberries.

'Any time there is a product shortage, it follows that prices increase,' Lowery said.

Wal-Mart Stores Inc., the world's largest retailer, said it's assessing the situation with its suppliers.

'Although it's too early to determine the impact, we are communicating with our California citrus suppliers to understand their losses and to help them manage the situation,' spokeswoman Karen Burk said in a statement, adding that Wal-Mart is 'revising their previously agreed upon costs to put them more in line with present conditions.'

Brian Todd, president of The Food Institute, an industry information service, said some of the fresh citrus and other damaged crops could be replaced with imports, but prices are still likely to rise.

'Supermarkets for the most part in some way will have to pass along the increase,' he said.

Restaurants might substitute other items for those in shortage, or raise prices, and price-minded consumers could switch to other fruits and vegetables, Todd said.

HSBC analyst Mark Husson said although prices will most certainly go up if a shortage results, the impact will not be big enough to substantially affect grocers' margins, sales or earnings.

AP Business Writer Lauren Shepherd in New York contributed to this report.

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The growers GOT THE SHAFT again since the crops are damaged we will not receive the income as expected and, any undamaged fuits that are still good, THEY WILL NOT BRING THE HIGHER PRICES; Believe me, the packing houses will lower the prices they pay TO THE GROWERS since they will claim that the FRUITS ARE DAMAGED!!!

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