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Salyer American tells growers that it is going out of business

by Tim Linden | April 29, 2009
In late April, Salyer American Fresh Foods Inc., based in Salinas, CA, told its growers to stop planting crops for the firm as it was planning to close its doors after the crops already in the field are harvested.

Although Salyer American President Eric Schwartz did not return multiple phone calls requesting comment, many people in the Salinas Valley had first- and second-hand knowledge of Salyer American's decision with regard to its growers.

"It is true," said Glen Dupree, vice president and chief financial officer of Merrill Farms, a longtime Salinas operation that was one of Salyer American's larger growers. "I will confirm that. It's common knowledge in Salinas. They are not trying to keep it secret."

Mr. Dupree told The Produce News April 29 that Salyer American officials had scheduled a meeting for the following day "where we expect to hear more." He said that the preliminary indication is that the shipper would remain in business until the current crops are harvested, which he estimated to be as long as 75 days from now -- or into mid-July.

Mr. Dupree said that he would know more after the meeting the following day. "We are very interested [in what they have to say] and very concerned. We and the other growers are going to have to scramble to find alternatives."

He said that vegetable acreage in the Salinas Valley is down this summer as many shippers have cut back because of the recession. While the expected Salyer American production was already factored into the total production, Mr. Dupree indicated that placing that production with other shippers is not necessarily going to be easy.

In the first few days following the Salyer American announcement to its growers, Merrill Farms continued its regular planting schedule with the expectation that it would be able to place that production with other shippers, said Mr. Dupree. Following the Thursday meeting with Salyer American, Merrill Farms as well as all of the Salyer American growers will no doubt be making independent decisions about their planting operations in the coming weeks.

There is much ground in the Salinas Valley that is worked and ready for seeds that were destined to be handled by Salyer American.

One Salinas shipper who asked not to be named said that Salyer American has some very good growers and very good contracts with retailers, both of which will be in demand. This person estimated that Salyer American shipped in the neighborhood of 15 million cartons annually, sourcing from many different locations. That level of production would put it close to the top 10 California vegetable shippers in terms of volume.

"And they had some great customers including five Walmart [distribution centers], Kroger and Delhaize," he added.

Mr. Dupree acknowledged that Salyer American was in deep debt, owing Merrill Farms an undisclosed amount of money. "That's no secret," he said. "They owe us money just like most of the other growers they deal with." He said that Merrill Farms has been growing for Salyer American for the past seven or eight years.

"Anytime a company goes under, there are usually some missteps that occurred, and I suspect that is the case with Salyer American," said Mr. Dupree.

While Mr. Schwartz did not speak with The Produce News, in early February he was featured in a Salinas-area newspaper claiming that while some companies might not make it in these difficult economic times, Salyer American would.

Mr. Schwartz joined Salyer American last year as the firm's president as well as chief operating officer of SK Food Group, of which Salyer American is one of the member companies.

SK Foods, which is a separate entity but also owned principally by Scott Salyer, is a San Joaquin Valley food processor that handles processing tomatoes and other items.

SK Foods has found itself mired in legal battles the past year as it was associated with allegations of price-fixing and bribery in the tomato- processing business before Mr. Schwartz joined the organization. A criminal case is still pending against the firm.

Growers of processing tomatoes are bracing for the shutdown of SK Foods, which processes about 8-10 percent of California's huge processing tomato crop. This year, California processors have contracted for more than 13 million pounds, which is a record. There is fear that there is no capacity to handle the SK Foods acreage if that plant closes down.

Many growers of processing tomatoes also grow fresh crops, including melons, lettuce, almonds and tree fruit.