When talking with others in the fresh produce industry about the current state of tariffs, the word “volatility” is often used; it’s not just within the U.S., but also globally, said Anthony Serafino, president of Exp Group, a multinational company with a network of production, importation and distribution of tropical fruits and vegetables.
Serafino recently spoke to The Packer about the current impact of tariffs on his family’s business.
“We’re looking for clarity,” he said. “We’re getting volatility, and we’re looking for some guidance from this administration of where we’re going to see tariffs go. We know this administration favors tariffs, so tariffs usually, hopefully, mean short-term pain for long-term gain. We’re not seeing that right now.”
Serafino said his company’s overall forecast and guidance has been strong; that hasn’t been because of the tariffs, but instead because consumers flock to fresh produce. He said he’s seen duty prices increase, and that’s impacting many commodities.
This is being reflected at the grocery store in price increases, he said, pointing to the weakening dollar as another factor affecting the cost of goods.
“Fruit now is more expensive than it was two weeks ago,” Serafino said. “Vegetables now are more expensive than they were two weeks ago. We are charging more; it’s going to be more cash-intensive to operate businesses. There’s some cash intensity issues business owners are going to be dealing with. And more importantly, consumers are going to be paying more.”
Serafino said the 10% blanket tariffs have put a strain on the business, but further tariffs on imports from China have also hit hard, as the company imports garlic and ginger from China. Serafino said his company has started to look at sourcing produce from countries with tariffs, though not as high as has been placed on imports from China.
“With those two commodities, [it’s] 140%, 150%-plus tariffs that we’re seeing across the board,” he said. “Are we going to look to source those commodities from different places? Absolutely. We’re already having those conversations where we’re trying to give relief to our consumer and our clientele, because ultimately, we need to compete with pricing.”
Serafino said the produce industry faces such fickle margins that tariffs certainly make that more complicated. And with fruits and vegetables being food staples, it’s much harder for the consumer not to purchase. So far, Serafino hasn’t noticed an effect on consumers’ interest in fresh produce.
“There’s certain markets for different produce, but I’m personally not seeing a downgrade from the consumer side of quality of purchasing of produce in the supermarket,” he said. “We’re just not seeing that or in wholesale clubs.”
Serafino said one thing the industry needs to be mindful of is how tariffs could impact shopping habits in the long term.
“The administration says deals are coming. Everyone’s coming to the negotiating table,” he said. “So, let’s hope maybe there’s some deals happening. I’m going to be very optimistic for the future and the benefit of our organization and for our country, more importantly. But what does that mean for the consumer? It means some tougher times and a turbulent period where everyone is looking for some clarity.”
Serafino said time and patience are of the essence.
“I think we have to wait and see what the overall picture is going to be, and only time will tell,” he said. “The two most valuable warriors in life are patience and time, so these are uncertain times and volatile times and turbulent ones.”
Aside from the potential long-term impact on consumers, Serafino said he also sees tariffs affecting produce industry businesses.
“We’re seeing prices going up imminently because companies like ours and some of our competitors — there’s only so much you can do to eat costs. You’re going to pass this along,” he said. “Something we’re going to see — we’re looking at consolidation in this business. Operating a business is more difficult, more cash-intensive, so the cash outlay is going to be more difficult. [Accounts receivable] is going to be higher, [accounts payable] are going to be stronger, so the strongest and most sound businesses are going to rise to the top.”
And in the end, it hurts the consumer the most, Serafino said.
“We still go to the supermarket and buy berries, pineapple, lettuce, tomatoes, onions — all these items are going to be more expensive,” he said. “How we operate in this environment is going to be difficult, because you can only source so much domestically. You can only source so much from Canada or Mexico. Carrots are coming from Israel right now. Those are subject to a tariff. They’re more expensive. Hopefully, we can come to a solution.”
A bright spot, Serafino said, is that produce industry businesses have been working together to weather the storm.
“I’m seeing some cross-pollination between different vertical integration of the business and in the industry,” he said. “Hopefully, that can last after tariffs as well.”