Salad prices are soaring. An Unusual Culprit May Be To Blame – Fresh Del Monte Produce (NYSE:FDP)

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It’s not your imagination: that salad on your table is getting more expensive.

Some data points to changing eating habits that emerged from the pandemic in 2020. Farmers like Fresh Del Monte Produce Inc FDP struggled in 2020 and even lost money in the fourth quarter of this year. But that’s not the whole story.

While humans suffered from a pandemic, products suffered from their own disease.

The average price of romaine lettuce in US cities hit $3.14 a pound in October 2022, up 55% from February 2020, the month before the pandemic hit US shores, according to data from the St. Louis Federal Reserve Bank.

At Walmart Inc WMT, the cheapest head of iceberg lettuce was selling at one point for $1.88 a head and even then it was out of stock. Some heads of iceberg lettuce were selling for as much as $2.56 a head. Not all of this is due to COVID-19.

The perfect storm for lettuce: Farmers have grown less in response to pandemic feeding patterns, but the disease known as Impatiens necrotic spot virus (INSV) has descended on the lettuce crop in 2022 to s ‘add to the perfect storm.

The virus causes wilting, stem death, stunting, yellowing, poor flowering, sunken “chickenpox-like” spots on leaves and etchings, or ringspots on leaves, and spreads by thrips, according to Penn State University. And the climate is a big part of the equation.

Hot weather, especially in areas known for a bumper lettuce crop, amplifies the disease, which can spread easily from crop to crop. INSV was first reported in 2006 in California’s Salinas Valley, which is responsible for 70% of the crop in the United States.

A warmer-than-expected summer led to chronic shortages which, in the face of growing demand, drove prices soaring.

How dire is the situation? Salinas Valley, the salad bowl of the world, as it is lovingly called, recorded temperatures nearly 1% above 2019 average levels during the 2022 growing season, from March to October. In September, temperatures were 7% above 2019 levels, according to data from AccuWeather. And without the cold winters we used to have, we weren’t able to break this viral cycle, said Jennifer Clarke, executive director of the California Leafy Greens Research Board.

The bottom line is that it reaches consumers where it matters most and around the world.

First-hand accounts, like the Instagram account named “TCD covering the news in Dearborn, Michigan, reported that a local chain restaurant, Antonios Cucina Italiana, no longer offered salads in two of its locations, claiming that the average cost of romaine lettuce a year ago was $15 to $20 per case and is now at an all-time high of $97 per case.

Additionally, a Twitter user named Chris Gillett, supervising producer for ABC News Melbourne, posted a photo on Twitter of a head of iceberg lettuce ranging from AU$10 ($6.74) to AU$11.99 per head. in Australia.

Why it matters: There are no winners. Some industries, such as oil and gas, can benefit from structural supply constraints that drive up prices. Farmers lose crops and consumers pay more, adding to rising costs elsewhere. The latest inflation data from the US Census Bureau pegs November inflation at 7.1%.

If farmers such as Dole PLC DOLE have a worse-than-expected harvest due to poor weather or disease, it can negatively impact the bottom line, as its dwindling supply will not be able to keep pace with costs.

The AccuWeathers Long Range Winter Forecast calls for colder spells in the west that may impact California occasionally, but not persistent spells like in the northwest and northern Rockies.

Precipitation is expected to average near normal across the region, but below average further south. Unfortunately, this will not fix the issue, but will maintain similar or slightly improved levels for next year.

It also poses a dilemma for grocery stores such as Kroger CoKR or Walmart trying to offer their customers attractive prices and quality.

What impact will this have on already stretched household budgets? And will grocery stores be competing for supplies with casual eateries like Panera Bread and Taco Bell that are already reporting lettuce shortages? Time will tell us.

A lettuce crop in California’s Salinas Valley. Photo via Shutterstock.

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