Water, farm labor, shipping containers, truck drivers — it’s as though everything that’s not actual food is coming up short for local agricultural producers these days. And now this: They’re running low on pallets, too.
An inadequate supply of wooden pallets, the squat structures used to make shipments easier to move with a forklift, has hit the industry just ahead of the grape harvest, raising concerns that farmers’ profits could be lost to packaging expenses — or worse, lead to a produce shortage.
Industry officials say the kind of heavy-duty pallets major retailers insist on have roughly doubled lately to $15 or more apiece. Even lower-end models cost about twice what they did a year ago, and companies that sell reconditioned pallets are having to keep up with demand as well.
Local produce shippers have responded in several ways, including asking buyers to temporarily lower their standards for the type of pallets they’re willing to accept fruit and vegetables on. But either way, growers say the dearth is exacerbating runaway costs.
The president of Delano-based Jasmine Vineyards, Jon Zaninovich, said by text message there’s only so much local ag companies can do to lower their exposure to what he described as a severe pallet crunch. Price quotes aren’t lasting more than a week before they go up again, he stated.
The result, he said, is a new set of complications in a part of the business that used to be dependably stable.
When asked how table-grape growers expect to make it through the upcoming harvest amid the pallet shortage, he responded: “Push for higher markets and hope there is enough water and labor to get through.”
ONE MORE PROBLEM
The confluence of ag-related shortages has exacerbated the industry’s various and pressing challenges.
The drought, combined with restrictions on groundwater pumping, has strained irrigation practices just as a longstanding shortage of farmworkers has stretched growers’ ability to attend to their crops.
Meanwhile, the pandemic has contributed to port congestion, increasing shipping costs and delaying overseas deliveries. Another outgrowth of the coronavirus crisis has been a dramatic worsening of the nationwide shortage of truckers able to make deliveries.
People in the business point to different factors for the recent lack of pallets.
The biggest driver, they say, is skyrocketing lumber costs. Shipments stranded at ports have made things harder, along with a surge in demand for nonperishable goods that must also be stored on pallets.
Correa Pallet, a Pixley-based reconditioning company with an operations yard in Bakersfield, Calif., is struggling like never before to meet customer demand for pallets, sales supervisor Martin Correa Jr. said.
He said customers unable to find supplies or unwilling to pay recently high prices for new pallets have put in their orders earlier than normal, such that business is as busy now as it normally gets at the height of the grape harvest, which hasn’t yet begun.
Although many industries are impacted, he said he hears the most concern lately from agricultural producers. They’re worried because their crop is ripening in the field and they’re unable to make plans for getting produce to market, he said.
“It’s going to be really interesting to see what’s going to happen,” Correa said.
WORRISOME LETTER
Last week, 19 industry groups including Western Growers, the Produce Marketing Association and other ag trade groups released an open letter calling for “temporary modifications or exceptions to pallet requirements, as long as they do not jeopardize safety.”
The idea was to ask large retailers and others to ease up on their usual requirements that shippers package their fresh goods on certain, industry-standard pallets that are sturdy, attractive and in short supply.
It said conversations about how to meet the challenge are ongoing globally but that many buyers haven’t yet grasped the severity of the situation.
“The lack of pallets is adding stress to a supply chain that is already facing significant challenges,” the correspondence stated in boldface letters.
It went on to say the industry needs to bring the overall availability of goods into balance with the availability of food.
“If there is not a concerted effort across the supply chain to ensure pallet availability for shipment of produce,” it stated, “there is little doubt that it will be very difficult, if not impossible, for the grower/shipper community to meet buyer and ultimately consumer, demand for produce.”