Driscoll’s desperately needs to know how many strawberries America wants

Just over a year ago, Soren Bjorn, who helps run the world’s biggest berry company, made a bad call.

Demand for fresh berries was falling as the onset of a pandemic shut restaurants, while grocers focused on keeping staples in stock. Mr. Bjorn, president of the Americas division of Driscoll’s Inc., told farmers in California to plant fewer strawberries.

Then, Americans stuck at home went on a berry binge. Strawberry demand surged.

This March, Mr. Bjorn made the opposite decision, telling farms to increase their strawberry acres when they plant the crop this fall. Those acres won’t yield berries until next spring. "The world will change three times over between now and then," Mr. Bjorn said.

Colossal challenges for food suppliers arrived with the pandemic last year, affecting every stop along food’s course from farm to table. Now, as the pandemic moves into its latest phase—under attack by vaccination, yet still unpredictable—it is proving even trickier for food businesses to navigate consumers’ ever-evolving appetites and a balky supply chain.

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The list of unknowns is long, ranging from how many restaurants will reopen, and at what pace, to how long many Americans will keep working from home. Labor shortages and supply disruptions complicate whatever plans food companies set in motion.

While the uncertainties affect all kinds of foods, and touch growers and buyers as well, the path is especially challenging for suppliers of fresh berries, where decisions have delayed effects and the perishable harvest can’t be stored.

In the midst of the berry-market swoon in March 2020, Mr. Bjorn had to decide how large strawberry production should be a year into the future. He needed to tell Driscoll’s nurseries how many plants to raise that spring and transplant into farmers’ fields in the fall—for harvest the following spring.

Forecasting consumer demand has always been a complex art, in which errors can result in a sea of wasted food or drive farmers out of business. Other crops, with shorter growing cycles, allow more flexibility. Spinach is harvested as soon as 30 days after planting. Lettuce takes 65 to 120 days.

Even with a shorter lead time, California vegetable supplier Steve Church needs to tell growers several months ahead how much to plant, meaning that he has to estimate what customers such as Walmart Inc. and Chipotle Mexican Grill Inc. will want then.

"It’s gambling with a perishable product," said Mr. Church, co-chairman of Church Brothers Farms, which he said plowed under $5 million worth of excess vegetables last year. The business is also a partner in a firm that grows berries for Driscoll’s, which is a private company headquartered in Watsonville, Calif.

For Mr. Bjorn, the gamble came in March 2020 when big berry buyers such as theme parks and cruise lines abruptly shut down. One customer canceled an order for 15 truckloads of raspberries. All told, Driscoll’s sent $20 million worth of unwanted fresh berries to be frozen or turned to juice, fetching as little as 10 cents on the dollar. Some of the excess, growers threw into ditches.

Mr. Bjorn told strawberry growers to plant about 5% fewer acres. He mostly left alone his plans for blueberries, blackberries and raspberries, whose bushes take years to bear fruit, making acreage changes even riskier.

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Just two months later, demand for Driscoll’s berries had recovered, with further gains in store. Berry sales at U.S. grocery stores grew 8% by volume for the 52 weeks ended April 17, versus year-earlier levels, and average prices rose 4%, according to Nielsen data.

Now, berry orders from restaurants are picking up, and the market for strawberries is spectacular. U.S. wholesale prices are hovering near $18 for an eight-pound flat, roughly double a year ago, according to Dutch lender Rabobank. Blueberries have hit six-year highs for this time of year.

Meanwhile, a winter storm pummeled Driscoll’s Mexican strawberry production. That plus its reduced acreage will leave the company short on fruit this year, Mr. Bjorn said.

This March, he called for as much as an 8% increase in California strawberry acreage. After getting board approval for the plan, he rolled it out to the independent growers who must adopt, and finance, the expansion.

Fourteen months into Covid-19, Mr. Bjorn considers the models that once guided him inadequate for gauging how consumers or prices will behave once the pandemic subsides. He is in near-constant contact with customers such as Costco Wholesale Corp. and Amazon.com Inc.’s Whole Foods Market, competing with his partner and three children for internet connectivity in their California home.

Among those adapting to berries’ gyrating levels of supply and demand is Mike DeClercq, principal buyer for perishables at Whole Foods Market.

Early in the pandemic, its shoppers focused their attention in the produce aisle on longer-lasting items such as potatoes and onions. Berries’ taste and reputation as healthy foods quickly drew customers back. Whole Foods increased its focus on larger berry packages for people seeking to stock up with infrequent trips to the store.

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At a restaurant called The Parish in Tucson, Ariz., co-owner and chef Travis Peters has made berries a staple of its cuisine since taking a tour of California berry farms in 2018. When the pandemic closed his doors, Mr. Peters quickly started pickling and preserving the 150 pounds of berries he had on hand for use in deserts and hot sauces. Only berry-infused cocktails made the pared-down takeout menu.

Now, with The Parish’s menu set to expand again, its berry orders will soon swell, for dishes such as grilled trout with strawberry oil and lamb chops with blueberry-beet purée.

One item won’t come back, though: a strawberry-brined chicken that diners didn’t take to. "People are weird about pink chicken," Mr. Peters said.

The fertile fields along California’s coast are the U.S. heart of berry production. Strawberries long were the star, but their economics grew tougher as labor expenses eroded growers’ profits.

Strawberries are among the costliest crops to produce. In California, "mother" plants are first raised in nurseries near the state’s cool northern border. Shoots from the plants produce perfect clones, or "daughters," which are then transplanted each year into raised beds in growers’ fields.

Unlike, say, lettuce, which can be planted mechanically, strawberry plants are set in the soil by hand, roughly 20,000 for each acre. When the berries are ready, workers pick them by hand, going over each plant every three days during peak season.

Strawberry farmers operate on thin margins, earning on average $2,300 per acre after investing about $68,000 an acre to produce a crop. Several growers have left the business in recent years or shifted fields to "blacks, ras and blues," as industry insiders call the other three main berries.

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Dane Scurich cut his family farm’s strawberry acreage more than 80% over a decade, switching to blackberries. Now, persuaded by Driscoll’s optimism, its new varieties and his strong returns in 2020, he is preparing to expand his strawberry patch by 5 acres, or more than 10%, this fall.

He has signed a new lease on choice fields just inland from Monterey Bay. He also got a bigger line of credit from his bank, partly to add 10 people to his harvest crew next year.

"There’s definitely a heavy sense of nervousness," Mr. Scurich said. "If things go awry, it can have a massive impact on our future."

Shipping fresh berries long distances is risky. They can get smashed and rejected on arrival. The market for frozen berries is also booming, and processors are paying up for berries to freeze. That means the frozen-berry market could draw off more fruit and further limit fresh supplies, said Anthony Gallino, vice president of sales for Bobalu Berries, a California grower, packer and processor. Bobalu has been steadily boosting its strawberry acreage.

Not so one of its rivals, California Giant Berry Farms, which plans its acreage years in advance and generally sticks with it. Tom Smith, its sales director, pointed to another risk in the berry market, which hammered some farms a few years ago. A wave of the blueberry growers switched to organic fruit, flooding the market and pushing prices for the premium berries below conventional ones.

For some smaller growers, one year of bad markets "could be enough to put you under," said Mr. Smith.

Fruit and vegetable growers have long struggled to find enough workers to pick and pack their crops. This year, labor competition from booming home construction could tighten the squeeze, Mr. Bjorn said.

To keep workers, some berry growers have added bonuses for staying for the full harvest season, and sweepstakes with prizes such as a car. Mushroom producer Mountain View Mushrooms, a Utah company, recently began offering signing and referral bonuses.

When mushroom sales fell at the start of the pandemic, Mountain View hauled hundreds of thousands of pounds of mushrooms to a compost dump and chose not to repair the worn wooden beds it uses to grow them, said Brenda Barney, sales manager. Now, orders from reopening restaurants are flooding in faster than it can fill them.

Even if it could hire 20 more people, production would be hampered by a lumber shortage that is making it tough to find the wooden beams the company needs to build new growing beds.

"Since Valentine’s Day, we’ve been short on mushrooms," Ms. Barney said. "We didn’t expect demand to stay as high as it did."

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For some suppliers of fresh foods, managing relationships with customers and assessing each one’s demand forecast have become delicate tasks as a tug of war emerges over a finite amount of food.

Restaurants and other businesses struggling to regain their footing are looking for a break on berry prices, said Mr. Bjorn, while grocers flush from a banner year are willing to pay up to get the fruit they need.

He is eager to support restaurant customers as they rebuild, but he also can’t turn his back on grocers, who supported Driscoll’s business during the pandemic.

"You feel like you should be able to manage because we’ve been in this environment for some time now," Mr. Bjorn said. "Yet it feels a little unmanageable."