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The Produce Paradox : Abundant Crops Not Cheaper Near the Source; Uniform Pricing Brings Cost Up

October 18, 1990|LEO SMITH | TIMES STAFF WRITER

No one would fault Ventura County consumers for considering themselves privileged when it comes to produce.

With so many fruits, vegetables and nuts growing virtually in their own back yards, they must be getting cheaper and fresher produce in supermarkets than consumers in other parts of the state. Right?

Wrong.

"It's just as fresh up and down the state," said Ron Lombardi, vice president in charge of sales at San Miguel Produce in Oxnard. "If you ship to New York it will take four days. If you ship to San Francisco it's overnight. As far as getting a break by living in Ventura County--they don't get a break."

But there must be a cost advantage. Right?

"I think people have a right to expect that produce will be cheaper where it is grown, and historically that would have been true," said Prof. Desmond Jolly, an agricultural economist at UC Davis. "If it's grown there and sold there it should be cheaper there."

However, a recent Times' price comparison of stores in several supermarket chains showed that some commodities, produced in bulk in Ventura County, were not only no cheaper in local chain stores, but actually cost more here.

Take lemons. Based on 1988 figures from the Ventura County Agricultural Commission and the state Agricultural Statistics Service, Ventura County is the No. 1 producer of lemons in the state, with 46% of the total acreage and 59.9% of the total production value.

Yet a recent comparison showed a lemon going for 39 cents at several outlets of a Ralphs chain in Ventura County while at the same time selling for 33 cents at Ralphs in San Diego.

A similar situation existed with celery. Though in 1989 celery ranked as Ventura County's third leading crop, a large bunch was selling for 10 cents less at a Lucky store in San Francisco than it cost in Newbury Park.

While in a few cases such as those above, prices at three major chains were as much as 10 cents higher in stores in Ventura County, in most cases prices were the same throughout Southern California.

For instance, during the week of Sept. 26, lemons were 33 cents at outlets in Ventura County, Los Angeles and San Diego. Celery went for 49 cents in each store.

Supermarket chains "pretty well charge within a certain range," Jolly said. "You find that prices are fairly uniform throughout the stores."

Dick Spezzano, vice president of produce for Vons, agreed that pricing throughout Southern California tends to be uniform, thus making shopping in Ventura County basically no different than shopping elsewhere in California. But, he said, "if you compare with people in the East or Midwest there's an advantage."

This hardly seems proper compensation for the heavy stench of Ventura County manure that comes floating off the fields when the wind blows in the wrong direction.

San Francisco consumers don't have to smell the stuff.

The problem is simple: Those who operate supermarket chains find it more efficient to standardize the operation of their stores as much as possible. That means charging similar prices for produce statewide, regardless of the location of the outlet.

Likewise, the same people find it more efficient and economical to have farmers transport produce to warehouses rather than deliver it to individual stores.

This allows for more organized inspection of the produce and helps to ensure that there will be enough fruit and vegetables to supply all of the outlets.

There are only rare occasions, primarily with specialty produce such as baby carrots, in which a farmer will deliver straight to a local supermarket.

So although produce may be grown within blocks of a chain supermarket in Ventura, in almost all cases it is shipped to a main warehouse in Los Angeles along with produce from other regions of the state, before making its way to the local stores.

This adds transportation costs that, along with other chain-wide operating costs, are distributed among all outlets within a chain, including those in Ventura County.

"Overhead for a chain store is very expensive," said Kent Pidduck, a broker-distributer who operates as a middleman between farmer and supermarket chains. And stores "are trying to cut a 40% gross profit."

Jolly calls the situation a paradox for the consumer.

Centralizing the market, in a sense, "means an area like Ventura is absorbing some of the costs of distribution to other areas because of the uniform price structure," he said.

But the uniform pricing structure doesn't always apply, because the costs of running a business can differ from store to store and so can competition, which accounts for those 10-cent fluctuations in price between, say, Camarillo and Los Angeles or Thousand Oaks and San Diego.

Roger Schroeder, vice president of produce for the Hughes chain, said "Cost in certain areas can be less just because of freight charges.

The consumer is paying for the cost of goods and my cost of shipping the produce back out again from the warehouse."

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