August 2009 - Crop Update - USA
Sensient Dehydrated Flavors LLC continues to offer the broadest range of dehydrated vegetables in the industry. Over the past several years we’ve made every effort to communicate the changing environment of the dehydration industry with our customers.
Our industry, along with the rest of the food and ingredients sectors, continues to face overwhelming challenges. Stress on global food production continues to be high. Prices have retreated somewhat in developed nations but remain high in developing countries. Although the cost of oil has fallen, the price of petro-based products has not dropped at the same rate. Costs continue to be volatile throughout the supply chain with agricultural land remaining at a premium, coupled with a challenging water supply system.
Over the past several years we’ve seen the price of fertilizer increase substantially, holding at nearly record high levels last summer, which were also associated with the planting of the onion and garlic crops we are currently processing. Diesel fuel, another significant agricultural input, also experienced soaring prices during that time. Although the costs of these two inputs have come down from the highs of last Summer and Fall, prices are currently above historic lows.
Ample water continues to have an effect on world crops. California, in particular, is in its third year of drought. Water flow from State water projects continues to be restricted and has adversely affected growing regions in the San Joaquin Valley. To ensure a stable supply of products to our customers, Sensient has proactively and judiciously been moving production from growing regions that strictly rely on Federal and State water supplies to those with access to well water. Water from wells can increase production costs upwards of 40%.
Dehydrated Onion
The Onion harvest began at the end of April and at this time the crop is developing normally. This year’s crop is expected to be equal to the 2008-planned crop by volume, excluding any unfavorable impacts from severe weather, disease, etc. The harvest is expected to last through mid-November. We are currently contracting land for next year’s crop.
Dehydrated Garlic - USA
Harvesting and processing of the domestic garlic crop began in late July. Bulb growth is normal and the harvest is underway. As with onion, barring any unfavorable impacts from weather or disease, the garlic crop is expected to be equal to the 2008 crop by volume.
Dehydrated Garlic - China
Plantings of Chinese garlic where replaced by higher valued crops such as corn and cotton with plantings down 30%. Severe cold weather and drought further reduced yields that delayed the start of dehydration by approximately 30 days of the 100-day dehydration plan. Processing is underway with raw material prices up nearly 2-3 times that of the prior year. Pricing remains strong and, in general, the trend is up for the balance of 2009.
