Ag Alert June 9, 2021

Pallets Continued from Page 1

tocustomer-specificpallet requirements.” Strawberry farmers expect to ship 7.5 million to 8 million trays of strawberries during the next four weeks, and Christian saiddespite the tight supplyof pallets, “we are not seeing widespread disruption” in the harvest at present. But Snowden warned the shortages may linger. “A lot ofwhite-woodmanufacturers and recyclersareplanning that thisyear, at least for the duration of 2021, this is going to be our newnormal,” she said. “I don’t think that supply is going to catch up to demand this year,” Snowden added. “We’re going to have to wait for demand tomeet supply,” which, she said, could occur in 2022. All this isnewtowhat’sgenerallyastable business, Snowden said. “It’sanincrediblyunique time,” shesaid. “We’venever seen this, I don’t think, really in thehistoryof thisbusiness. Everybody’s trying to navigate it one day at a time, be- cause there’s somany rapid changes.” (Kevin Hecteman i s an ass i stant editor of Ag Alert. He may be contacted at khecteman@cfbf.com.)

executiveof theNationalWoodenPalletand Container Association, saidhis industry “is one of manyworking to adapt to unprece- dentedshiftsbrought onby thepandemic.” “WeunderstandU.S. sawmills arework- ing hard to increase capacity and meet strong consumer demand,” McClendon said in a statement, adding that the asso- ciaton “continues toparticipate invarious coalitions tosupport policy issues that can alleviate these recent challenges.” The soaringpriceof lumber isoneof the prime drivers of the pallet supply crunch, said Lindsey Snowden, general manager of Valley Pallet in Salinas. Betweenhomeownersflockingtobig-box stores and lumber yards to buy wood for home-renovationprojects andan increase in new-home construction, “the price of lumber just really skyrocketed,” she said. “It’sup, I think, about 400%year over year.” With the rise in lumberprices, Snowden said, customers have switched fromnew pallets to recycled pallets, which she said “certainly put a squeeze on the recy- cled-palletmarket”—andcausedhercom- pany to run low. “We’re producing as much as we can possibly produce every day, and we’re selling that,” she said. “We’re getting a lot of calls froma lot of agricultural customers, especially in theSalinasValley, right down into SantaMaria andOxnard.” Christiansaid thepallet shortageaffects different farmers indifferentways. Though there have been some harvesting disrup- tions, she said she has not seen anything “that’s significantly affected shipment.” Strawberrieshave reachedpeak season, she said, “and the cost and availability of pallets isyet another significant increase in productionandsupplycosts thathas really hit our industry, aswell asother industries, this year.” Pallet manufacturer Snowden said lack of skilled employees represents another

A Valley Pallet employee moves repaired pallets for shipment at the company’s Sacramento facility.

limiting factor. She said her company has hadproblems “gettingenoughpeople into ourmanufacturingfacilitiestokeepupwith demand. We’re really stretched for labor right now.” All that has driven up costs. “If you’re talking about a recycled pal- let, we’re seeing markets around $15 for a No. 1 pallet,” Snowden said, using the designation for the best-quality pallet. “In some of the coastal regions, we’re seeing higher than that—we’re hearing $18, $20 in SouthernCalifornia.” Constructing new pallets—if you can find the lumber and the people—is even more expensive. “We’re seeing manufacturing costs skyrocket from 150% to 200%, probably,” Snowden said, which then carries over to pallet prices. “If you look at the same time last year, we were selling new pallets for $12, $12.50. Today, they’renearly $40, and all of that is inmaterial and labor.” Navigating these times calls for good re- lations between suppliers and customers, she said. “It’s really about being proactive,” Snowden said. “That’s one thing that we are talking to all of our customers about— planningasbestasyoucan,havingmultiple suppliers if you can, and finding a supplier that’sabletoofferyoualternativesolutions.” And if youcan’t get aholdof anypallets?

“Idon’tknowanyalternatives,”Christian said, noting that strawberry farmers “use pallets for everything. We need pallets to take packaging out into the field. We need pallets to bring product in from the field, for cooling operations and for loading op- erations, transportation.” Thepurposeofgettingthewordoutabout palletsuppliesnow,shesaid, is“recognizing theshortageandthecostissues,”andmaking sure customers “are aware of that and are abletoworkwiththeirsupplierstotryandin- creasetheavailabilityofpallets,aswellaspo- tentiallymodifyingor providing exceptions

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June 9, 2021 Ag Alert 13