No bananas, Part 2

A separate letter from Taylor Farms outlined the impact of three factors on the market:  (1)  increased growing costs, (2)minimum wages and labor availability, and (3)  packaging cost increases.

1.  Increased growing costs – Again, the doubled costs of fuel since 2004 and the 100% increase in “fertilizer, pesticides, and other inputs” are causing farmers and suppliers to scramble to keeps costs as reasonable as possible, but neither can continue to absorb cost increases.

2.  Wage rates and labor availability – “Minimum wage in California is up 18% in the past 14 months” which is the leading cause of harvest costs increasing “over 15% in the last two years.”  Immigration issues have greatly reduced the work force.  Growers are investigating and investing in greater automation of harvesting.

3.  Packaging – Would you believe oil prices impact this too?  “High oil costs are increasing the cost of resins, which is affecting film costs” which have risen 10% this year.  Liner board costs are increasing box price, too.  Taylor is working hard to contain costs, but will still have to raises prices this month and possibly again in September to offset the costs they’ve incurred.