Marano believes some customers have cut back due to pricing and perishability. “There used to be more holiday and weather-related demand, when we’d see big pushes for merchandise, but we don’t see that anymore, so we’ve had to adjust our buying. I think people overbought produce before, and a good portion of it was ultimately thrown away,” he explains. “People are a lot more conscious of their pocketbooks—they’re not buying as much produce because they don’t want it to go to waste.”
Operating expenses are also an ongoing challenge for Chi-Town produce businesses. “The most difficult thing is trying to make as much profit as you can on every item you have,” says Gonzalez.
Gaglione reflects the same sentiment, adding, “It’s tough to keep up with labor costs and operating expenses.”
On top of availability, pricing, shipping, food safety, and extreme weather, there are also legal issues to contend with—which is when the U.S. Department of Agriculture Perishable Agricultural Commodities Act (PACA) comes into play.
While most produce companies are well aware of the PACA trust and know it is designed to protect their business transactions and perishable assets, David A. Adelman, attorney at Adelman Law Offices LLC in the northwestern suburb of Schaumburg, says many can and should be more “proactive in protecting their receivables.” Adelman helps sellers, brokers, and repackers enforce their PACA trust rights in federal courts, including bankruptcy cases.
In addition to having a PACA license and including the standard statutory language on invoices, Adelman says sellers should always thoroughly research each buyer.
“If the buyer doesn’t have assets beside the produce being sold and doesn’t do much other business, there would be little to collect in the event they fail to pay and go out of business,” he points out. If this does happen, Adelman says produce sellers should seek legal advice as soon as possible. “With aggressive legal representation, creditor produce companies can protect themselves and collect on their receivables.”
A Peek into the Future
What does the future hold for Chicago produce? “I wish I had a crystal ball and could tell you,” laughs Gonzalez. “This market is so unpredictable; it’s like a rollercoaster. All I can tell you for sure is that our clientele and our market determine the business.”
Despite the challenges they face, most Chicago produce businesses remain optimistic about the coming years. Adelman adds, “Although some Chicago companies have become victims of the economy, I think the future is bright.”
Image: Thinkstock
