December 24, 2004 in Business

Gift-box shippers feel ill wind

Associated Press
Associated Press photo

Gourmet Rio Grande valley grapefruit in a carton at Pittman and Davis gift fruit shippers are shown this week in Harlingen, Texas.
(Full-size photo)

HARLINGEN, Texas — This is not exactly a season of joy for shippers of gift-boxed grapefruit and oranges.

The three hurricanes that battered Florida’s citrus groves over the summer devastated the state’s grapefruit and orange crop, causing a sharp rise in wholesale prices for the fruit that is stamped, wrapped and nestled in boxes for the chilly north every Christmas season.

Some gift-box shippers in Florida and Texas, the No. 1 and No. 2 grapefruit states, are now stuck with charging the lower prices they printed in their brochures and catalogs long before the storms hit. Others have raised prices, tacking on a $2 to $4 “hurricane surcharge” when customers place their orders.

“We’re paying about 50 percent more for fruit than we had planned. With the price of gasoline, the cost of getting the fruit out and delivered — it hurts the profits,” said Frank Davis, owner of Pittman & Davis, a fruit shipping business in Harlingen that decided not to risk alienating customers by imposing a surcharge.

Florida this season is expecting its smallest grapefruit crop since the Depression, and its worst orange crop in 13 years.

Traditionally, Texas’ Rio Grande Valley, with its trademark RioStar red grapefruit, is a distant second to Florida in grapefruit production, shipping 212,000 tons last year to Florida’s 1.7 million. California, which has a different growing season, is third with 184,000 tons.

Texas’ orange business is small. For 2003-04, the state’s orange crop brought in $7.1 million, compared with $1.1 billion for Florida and $557 million for California.

Texas growers are hoping Florida’s loss is their gain, with grapefruit lovers deciding they prefer Texas’ redder fruit to Florida’s more white and pink varieties. Texas growers are still rebounding from freezes in 1983 and 1989 that killed trees and drove many farmers out of business.

“This year has the potential to be the most profitable year that citrus growers have had in 25 years,” said Ray Prewett, executive director of Texas Citrus Mutual, an organization of growers.

Shippers of gift boxes do most of their business around Christmas. At the Pittman & Davis shed, it is peak season, with about 150 workers working 18-hour days to fill pack fruit into boxes for shipment all around the country. This season they expect to sell some 800,000 boxes of fruit — 80 percent of it before Christmas.

Davis said he did not believe a hurricane surcharge would fly for fruit from Texas.

“It’d be nice if we could get away with that,” he said. “But I don’t think it would make our customers happy.”

Larry Harvey, co-owner of Harvey’s Indian River Groves in Rockledge, Fla., said customers do not seem to mind his $2 fee.

“A lot of our customers are repeat customers, generation after generation. To add $2 to a $40 package is really less than 5 percent,” he said. “That I thought was minor.”

Arlette Kerr, 46, of Rockledge, said she did not question the surcharge when it came time to visit Harvey’s store to place this year’s holiday orders for friends, relatives and clients around the country.

“Actually, I thought it was going to be higher,” she said. “I was a little surprised it wasn’t sky high.” She added: “I probably would have paid more. It’s just one of those annual things.”

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