High Lettuce Prices Strain Supplier Relations
Jim Prevor’s Perishable Pundit, October 19, 2007
Iceberg lettuce and Romaine supplies are tight, and prices continue to rise. It seems as if virtually all processors have activated force majeure clauses in their contracts and raised contract prices — in some cases, multiple times.
On processed product, it is a big problem with processors unable to fulfill orders in full, despite increased prices.
On the retail side the latent concerns over dealings with Wal-Mart come out in situations such as this with vendors being told they are obligated to keep “their stores” fully supplied when the market is $30 a head, but the same vendors are aware that when the market drops to $6, they will find out that some broker is dumping cheap lettuce into “their stores.”
To add insult to injury, the incumbent contract vendors don’t even get offered the right of first refusal to supply the cheap lettuce to “their stores”.
Most vendors are anxious to work with Wal-Mart but find that it defines the stores as “their stores” at Wal-Mart’s convenience.
The whole issue raises many of the points that our piece, Wal-Mart’s ‘Opportunity Buy’ Policy Reveals Much About The Company, dealt with some months ago. Though things have been generally quiet at Wal-Mart, with many vendors reporting a sincere effort by the company to amicably resolve disputes, the inherent tension between the desire to contract and the desire to take advantage of market dips remains unresolved.