Natural Gas Prices Pinching Food Processors

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(Sacramento, CA)
Monday, October 3, 2005

With a large number of crops currently being harvested in the valley, facilities that dry and process fruits, nuts and vegetables are operating at full capacity. The majority of them run on natural gas, which sharply increased in price after Hurricane Katrina. Many packagers are paying double the amount they paid last year.

Because of international competition, operators aren't in a position to pass on the additional energy costs to customers.

Rosanne Westmoreland of the California Farm Bureau says some processors are trimming the length of the production season to reduce overhead.

"They're cutting four weeks off that season which usually runs about eight to ten weeks, so that's how they're trying to make up some of the cost increases."

Processors say if they can't remain profitable they'll shut down their plants. That could affect growers trying to get their produce to market.