Thursday, December 15, 2011

Pricing and the holidays

As usual, the disconnect between the FOB price and the actual market at wholesalers is getting wider and wider as the weather conditions in the west make growers' expectations soar.  Cauliflower is $20./carton FOB, but the wholesalers in Hunt's Point are selling for $22.  Freight is about $4.00/carton.  Profit on a $24. item should be at least $4., so the selling price should be north of $28.00.  The same disparity is apparent with broccoli and lettuce.  The cause is again the grower's desire to maximize profit, but to keep the coolers empty as we approach the holidays.  So they get the max FOB from anyone willing to pay and they make deals or consign the rest hoping for even higher returns.  These hopes are rarely fulfilled, but that doen't stop them from repeating this dance every year.

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