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The First Ripples of El Nino

April 15, 1998|RUSS PARSONS

Fasten your seat belts. The long-predicted El Nino vegetable shortages have hit, and it's going to be a wild ride. In fact, you might as well make yourself comfortable. This could be with us through the middle of the summer.

The price of iceberg lettuce has tripled in the last two weeks and almost doubled in the last week alone. What's more, it probably hasn't peaked yet. The real crunch may not hit until the first two weeks of May.

Oddly enough, these shortages aren't entirely due to the rains this weekend, or even this month. We're actually feeling the aftereffects of the series of storms that soaked Northern and Central California in January.

How does January's rain result in April's shortages? January is when farmers in the northern growing districts of Huron (near Fresno) and Salinas should have been planting their crops. Because of the wet fields, those plantings had to be put off for days and even weeks.

Everything is exaggerated because we're dealing with iceberg lettuce, which in reality is almost more an industrial product than a vegetable. Think about it: Nearly every fast-food hamburger and taco sold in America has iceberg lettuce on it (during the shortage of 1995, some companies flirted with shredded cabbage, but the idea never caught on).

That was the last big iceberg shortage we had. There are important differences between this year's and that one, though. The March 1995 crunch came as a result of a single cataclysmic storm system that flooded the Salinas Valley, wiping out everything that had been planted (in 1995, lettuce peaked at a wholesale price of more than $50 a 24-head case, as compared with the current $18).

Anyone not vacationing on the North Pole has had plenty of warning that El Nino was coming, and farmers, being a resourceful group, were prepared. Furthermore, once the rains arrived, there was plenty of time to adjust planning and planting.

Faced with the coming shortage and gambling on cashing in on the resulting high prices, lettuce farmers have been creative. The first thing they did was plant lettuce in places it had never been planted before. This spring, you may be seeing iceberg lettuce coming in from as far away as New Mexico and West Texas.

Furthermore, after the rains started, farmers began planting nearly every available spot with lettuce, hoping that some of it would stay dry long enough to mature.

There's an unintended consequence of this gamble. All of that acreage that is now being gambled on with lettuce would probably have been planted with something else. As a result, the ripple effect of vegetable shortages could spread well beyond iceberg.

"Where lettuce might be crazy on the front end, other items like green-leaf, romaine, broccoli and cauliflower will probably be tight all summer long," says Derek Derdivanis, managing partner at Fresh Network, a produce procurement company.

"People are taking some pretty big gambles," says Derdivanis. "The payoff could be great if the market is as tight as we think it's going to be. On the other hand, there could be an oversupply because of everyone hedging their bets."

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