Spring Crop Report
Spring is a busy time for the global Silva quality team. Many of our vegetables are being harvested or planted in spring under our supervision and monitoring. At the same time we are assessing the full results of the winter harvest. With uncharacteristic cold weather in China, we are seeing challenging conditions on the ground in this region. The winter harvest of carrot was reduced due to damage caused by the cold weather. With decreased yields and less availability, we have seen a continual increase in raw material prices since February. We believe we’ll continue to see increased prices on raw material until the summer crop sets in around June.
As for vegetables harvested in early spring, we see disappointing yields and increased pricing on chives, cabbage and broccoli. The cold weather has impacted China from north to south. These crops are early spring crops where we have seen the full negative effects of the cold temperatures. As weather patterns are slowly starting to return to normal and we have seen a return to normal temperatures, late spring crops, such as spinach, has been delayed. But, we expect a much smaller impact on both availability and price here.
The advantage we see from the cold winter is that we expect to see less insect activity in 2016. We therefore hope that summer crops will be healthier and require less treatment with crop protection chemicals. Our survey of our own cooperative farms and neighboring farming communities suggest the cold weather has resulted in a significant decrease in the use of chemicals to combat issues in the field. We expect to see some of those positive tendencies throughout spring and into the summer.
We are also seeing speculative tendencies in the market, notably on garlic but also on other vegetables. With plantings of garlic looking promising and no other indications that our traditional vegetables are affected by any significant reduction in planting area, we expect that the current increase in pricing caused by speculative activities will decrease over time. With the arrival of fresh garlic in the market by June we expect pricing to return to more normal levels.
We remain optimistic that crops harvested outside of China, both in the northern and southern hemispheres, are seeing normal yields. We expect normal yields and stable pricing on spinach and peas in Europe, apples from South America, and onion from India.
While the dollar continues to be strong against many currencies, our farmers and dehydration partners continue to be faced with increased costs for farming land. Opportunity costs exist for plantings of more lucrative crops, reinforcement of environmental regulation in developing countries continues, increased wage rates in developing countries, and our own efforts to minimize the adverse effects through sustainable farming activities all contribute to higher costs of raw material. Fortunately, macro-economic conditions as well as general crop conditions, outside a few issues mentioned above, remain favorable allowing for stable conditions. As we move into the late spring we will monitor planting of bell peppers, tomatoes and a variety of capsicums.