“The real inflation is coming now and we have to see what part of that can be absorbed by the retail channels”
At this time of year UK importer Pacific Produce are working Brazil and Peru for the lime supply and Columbia will join in soon. Supply out of Mexico and Guatemala normally starts around May/June - there is production now but it is low season which means high prices in the North American market. "This year those highs are even more than normal at over £60 per carton because of the lower volume of key limes that are a local market staple, this reduction of volume has sent the Persian market shooting up," according to Rob Cullum from Pacific Produce.
"Unfortunately, that also means that criminal organisations start to look at the business adding complications as we have seen in the past and also very dramatically this week with the avocado business." Brazil has had an unusually high level of rain throughout the country which means that all lime areas are affected at the same time, Brazil is the size of Europe more or less so that is a huge amount of rain.
"The lime volumes are still departing but have come down a little bit, what we will see is more defects on arrival," said Rob. "The issue with logistics is continuing to put strain on all fresh produce but it has a bigger effect on sea freight items that have shorter shelf life like limes - a week delay really does lower pack-outs at destination and if you combine that with the rain quality issues then we are going to see some losses. Aside of course from quality we are dealing with increased supply chain costs - all the way through: raw material, cartons, energy, trucking, and in the UK trucking again, staff tax rises, service provision but the biggest impact of all comes from the shipping line costs themselves. The cost of fruit is higher for all the above-mentioned reasons, the real inflation is coming now and we have to see what part of that can be absorbed by the retail channels."
The traded market is always related to supply and demand so it will be a case of waiting to see what happens. The risk factor for an importer without a program is higher than it has ever been, if they pay high freights and advance payments with minimum guarantees to farms and something goes wrong then the losses will be more than in the past.
"It seems to me that the public grudgingly accept that the cost of energy, services, insurance, manufactured goods, processed foods and big ticket items like cars all go up with double digit inflation and they are left looking to the weekly shop to try and balance the books - as a fresh produce person I find it hard to accept. The amount of work and that goes into getting really good fresh food to the market is really not valued when people complain about the cost of fruit whilst buying an overpriced cup of coffee (no offense to coffee companies)." The market for limes has been higher than normal for January, now we are seeing a lowering and it remains to be seen if the lower volumes and quality issues will balance out.
Demand for limes has in general been increasing and the pandemic gave citrus consumption a boost - the client mix just changed with the decrease in catering and increase in retail. Rob reckons there will be low digit increases each year. "Limes are an ingredient and not an edible fruit so it is not a product that can be promoted to really increase market share in the same way as others - if you want to sell more apples then you can promote and a consumer can swap out another product for that week so you can steal some market share and then hope to keep it by giving a good customer experience.
Perhaps lime could swap out for lemon in some circumstances but in general if you promote too heavily one week you will just cannibalise your next week sale for a regular consumer." Spring normally brings an increase in consumption - sunshine = beer and G&T but there is no predicting the UK weather. "Lime is a semi luxury item and if inflation bites then we may see a counter position with customers spending less on both retail limes and also going out to the pub."