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Grinding to a halt: Katrina slams coffee distribution

September 14, 2005

BY LEAH A. ZELDES

Hurricane Katrina's ill winds blew nobody any good and it's likely to rain on your grocery bill, particularly if you enjoy coffee, tropical fruit and seafood.

As of last week, Chicago's two biggest grocery chains weren't admitting that the storm would make a difference to customers. "We don't see shortages at this moment," snapped Juanita Kocanda, spokeswoman for Jewel-Osco. Higher prices? "We don't see that either," she said. "I can't speculate."

"At this point we've not changed anything," said Wynona Redmond of Dominick's. "It's too early to tell what the impact will be. We receive our supplies from many sources.

"We don't like to scare the consumers before we have to."

Yet others tell a different story. "Oh, boy, the market's skyrocketing," said Peter Economos, director of training and business development for Downers Grove-based Sara Lee Coffee & Tea North America, whose brands include Superior Coffee, a major restaurant supplier, as well as Chock Full O'Nuts, Hills Bros, MJB and Chase & Sanborn.

According to Economos, the majority of U.S. coffee imports come in through the Port of New Orleans. Although things were looking good last week for at least some of the 98 million pounds of green coffee stored in Louisiana warehouses, the disruption to the port may affect coffee imports and distribution for some time to come, he said, as the industry scrambles to find new holding facilities, trucking and rail routes.

Tons of beans are waiting in Brazil and other coffee-producing countries, he said. "Where are they going to send the coffee?"

While imports of fruit might be readily moved to ports in Florida already accustomed to handling produce, for coffee, Economos said, "We have no infrastructure. We simply can't move the coffee around fast enough."

The industry is moving as quickly as it can, he said, but " 'Quick' is six months. 'Quick' is not 60 days." Although some reports indicated that the Port of New Orleans might reopen as early as this week, it will be at reduced capacity; damaged warehouses and roasting facilities will take time to repair.

The biggest impact will be on food-service coffee, Economos said. "Retail is not as decimated. Consumers can expect not much more than 3 to 5 cents a cup" in canned-coffee increases. "The restaurateurs will be paying a lot more for it."

Sara Lee processes about 10 percent of its coffee in a plant in Hanrahan, La., just outside New Orleans. "It's under water," Economos said. "That's where all our specialty coffee comes from. Fortunately, that's not the bulk of what we do. Competitor Proctor & Gamble, however, produces more than half the output for Folgers brand coffee in Louisiana."

Starbucks fans need not worry about their mocha frappuccinos, however, since that company's plants are in Pennsylvania, Nevada and Washington.

The impact on produce could have been worse, said Chicago wholesaler Tom Cornille of George J. Cornille & Sons Vegetables. "We're still in home-grown season.

"Things would have been far worse had the storm hit after frost." The four hurricanes that hit last year had a bigger impact on local produce availability, he said.

"Potentially we're spared the brunt," he said. However, "people in the South that lost stuff may start pulling from up here," increasing the demand for Midwestern produce.

However the port damage did impact imports of tropical fruit. "I've seen the banana market go up," Cornille said. "Pineapples did go up -- huge. I'm paying double for pineapple than what I did last week."

"The biggest effects are the effects from the ports," agreed Susan Pollack, an agricultural economist with the USDA. Although the storm's winds damaged crops from Florida avocados to Alabama peanuts and Louisiana pecans, the hurt foodstuffs make up only a small percentage of the U.S. supply, she said. For example, most avocados consumed in Chicago are grown in California and Mexico; Florida's big green fruit tend be a specialty item.

Some of Louisiana's biggest crops, rice and sweet potatoes, are grown outside the storm-hit areas and weren't affected. Jim Kohout of Dietz & Kolodenko, Chicago produce wholesalers, said his sources for sweet potatoes are fine. "They come from farther north," he said, in Louisiana and North Carolina.

Kohout's biggest concern was transportation. "The biggest effect is fuel prices," he said. He's also worried about the availability of trucks, as emergency-management and reconstruction crews have hired many semi-trailers for hauling supplies down to the hurricane-struck region.

Denise Rebollo, co-owner of Chicago's Ricci Nuts, said last year's hurricanes had more impact on her business than Katrina. Most of the crop of peanuts and pecans coming here grows elsewhere. "There's an abundance of peanuts from Virginia," Rebollo said. "Our pecans come from Texas.

"The only thing that's really going to hurt us is gas."

Early fears about poultry also seem to have been unfounded. Although Mississippi is the fifth leading state in broiler production, providing about 10 percent of U.S. birds, and hundreds of chicken houses were destroyed in Georgia and Mississippi, production should be at near-normal strength soon. "Obviously, it's a knock to our industry," said Richard Lobb, spokesman for the National Chicken Council, a Washington, D.C., trade association that represents farmers and processors. But of the 14 chicken processing plants in Mississippi, Lobb said, 13 were operating as of last week. "Consumers should not be alarmed."

The fish story is rather different. "I wouldn't know where to start," said Bob Sullivan, president of Chicago's Plitt Co., a retailer and wholesaler of seafood. "I'll just give you a laundry list," he said, ticking off both unavailable native seafoods and those normally imported through hurricane-affected ports: Gulf oysters and shrimp, domestic snapper, tuna and swordfish imports, Mississippi farmed catfish, crayfish. "I have no live crayfish. It impacts grouper."

Some 40 percent of the U.S. oyster supply came from Gulf of Mexico waters. While local chefs and consumers tend to prefer Atlantic and Pacific bivalves, Sullivan expects suppliers from those regions to be stretched as Gulf-oyster buyers look for other sources. Local supplies of shrimp, which largely come here frozen from foreign countries, should be less affected.

Sullivan's also concerned about the future of the fishing industry in the Gulf. Many small fishermen were likely wiped out by the hurricane. "Those seafood businesses, they're gone."

Further, Sullivan said, "the sea gets rearranged in a hurricane." Reefs and underwater habitats might have been destroyed.

And even those who can still bring in a catch might not bother, Sullivan said. "They can't get the gas to get it up here anymore. I've got guys in Alaska right now who aren't going out to fish because the catch won't pay for the fuel."

Leah Zeldes is a suburban-based free-lance writer.

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