Fruits

Grower pricing

Grower pricing

by: Jason Smith

What determines blueberry pricing in retail stores?

Have you ever walked into a store, saw the price for a pound of blueberries, and thought to yourself, “Wow… I wish I was getting that much a pound for my blueberries!” I’m sure you have. How can the price be so high in the store, yet you receive less than half that amount? The more you think about it, the more you realize that there must be a few more steps in the chain or process involved in getting the berries to the marketplace and making the consumer aware that they are available and good for you.

Once the fruit gets to the packing facilities it must be sorted for soft fruit and off-color fruit, go through a metal detector, gets packaged and cooled or frozen.  All of the equipment and labour needed to operate the machinery to get the blueberries through these steps costs money.  When soft berries are discarded and the color sorter ejects green and red berries, these berries are what is called “shrink” and comes off the total pounds the packer gets to sell to their buyer.  If the amount of fruit that doesn’t meet the grade is higher than normal, the grower may be docked and the shipment may get downgraded. These costs could be in the area of 40 to 50 cents per pound that the packer has to incur before trying to sell the product.  Some packers use brokers to sell their fruit, who then charge a percentage for selling the product on top of the costs already incurred.

Then there are the shipping costs that could be over a dollar per pound depending on where it is going and how it is travelling in North America (where majority of our product is sold). Very little of our total harvest volume travels overseas.

Finally, the retail store puts their mark-up on the product.  This could range anywhere from 30-100% depending on their current promotions.  There are many different costs the stores must absorb as well.

All of these things add up to the prices you see in the retail stores for blueberries.

The price that growers receive for their fruit from the packer is determined by a number of factors.  Blueberries are sold in a world market and are a supply-management product.  The higher the supply, the lower the price, and the lower the supply, the higher the price.  The BC crop this past season was overlapped with Michigan’s, New Jersey’s, and our neighbours directly to the south of us.  This could mean a higher starting price, but when the main harvest is in full swing, there will be lots of fruit on the market.  This will lead to a rapid decrease of the price for the fruit.

The second thing that affects grower price is the amount of product from last year’s crop that is still in cold storage.  The amount in cold storage is currently about 30% higher than it was last year at this point.  This sets the bottom price for the fresh market.  This is the reason we want to sell as much product as fresh as possible so we have a lower carry over in storage going into the next season.

Another factor affecting grower price is the exchange rate.  The higher our dollar is compared to the US dollar, the less we will get for our fruit.

As you can see, the price paid by the packer to the grower is really out of their control.  It is determined by all of the above factors and can change a lot in a couple of years.  In the end, the consumer determines the price, not the packer!

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