It’s here! Hurricane season 2018 began June 1 and runs through November, and experts are predicting that the 2018 storm season will be a busy one, but not as devastating as 2017.
According to the National Oceanic and Atmospheric Administration, the price tag for seasonal disasters last year was $306 billion, a U.S. record. This year, researchers at Colorado State University are predicting 14 named storms and seven hurricanes, of which three will be Category 3 or higher. While hoteliers need to begin preparing for possible impact, there’s a lot that can be learned from the past, especially understanding how these anticipated storms can affect a hotel’s food supply and prices.
Flashback to last summer: Two Category 4 hurricanes hit the U.S. coastline back-to-back the first time in 166 years. Hurricane Irma hit Florida just 16 days after Harvey laid waste to the Texas coastline on Aug. 25. The damage to human life and property, as well as to key segments of the U.S. economy, including food production, is still being assessed. The rain and winds that made up these powerful storms affected not only crops and farmlands, but the infrastructure associated with the agricultural industry. Many components of the food supply chain in the central and southeastern states, including irrigation systems, food processing plants, warehouses and roads, suffered loss and interruption.
Both hurricanes damaged important areas for U.S. food production. Texas is the nation’s largest cattle producer, as well as a supplier of wheat, soybeans and corn. Florida, the top producer of citrus crops, is the second leading supplier of all fruits and vegetables in the U.S. Hurricanes Harvey and Irma also affected the important agricultural zones of Georgia, Alabama and South Carolina. Even commercial fishing along the coastline experienced boat, facilities and equipment damage. The bottom line: Foods ranging from pecans to peppers have been impacted by the storms of summer 2017, and we are just now getting relief on pricing and availability for some products.
Losses in crops and livestock from the 2017 storms are estimated at $1 billion for Texas, and approximately $2.5 billion for Florida. Farmers and ranchers saw damage to crops caused by wind and floodwaters. Weather conditions delayed planting, which pushed harvest dates back. Mature plants, trees, and cattle were also impacted by these severe weather events.
While farmers were dealing with crop devastation, hoteliers were feeling the pinch of lower product availability, higher prices and damaged goods. When planning budgets and menus for the coming months, here are a few things to keep in mind if hurricanes strike Florida and/or the Gulf Coast again:
- Prices for mixed vegetables may rise in the third and fourth quarter. Bell pepper, cucumber and squash production should continue in Georgia and the Carolinas through mid-November. This historically overlaps with the start of Southern Florida’s winter crops, but re-plantings and delayed start times could create a gap in supply from mid-November to mid-December. Mexico’s fall season will begin by mid-October; strong demand will keep market pricing elevated if Florida growers need to repair operations.
- There may be a low yield on tomatoes in Central and Southern Florida through early December. Northern Florida tomatoes are more likely to receive less damage should a hurricane strike Florida.
- The Florida orange crop may be impacted, as wind damage can cause fruit to drop early. Juice prices would soar in Q4 2018 and Q1 2019 if the crop is widely affected by a hurricane.
- Strawberry yield may be later than normal if irrigation and plastic bed linings are damaged by strong winds. Planting typically begins in September. As long as the plants aren’t in the ground during the heaviest storms, yield should not be affected.
Despite all the challenges a hotel’s food supply chain could experience from storms, hotel properties that work with a procurement services provider, such as Avendra, should be largely protected by supply disruptions. Furthermore, price impacts should be relatively mild due to the resiliency these purchasing organizations have built into their supply chain on behalf of their customers.
Chip McIntyre is SVP, strategic sourcing for Avendra, a North American hospitality procurement services provider. McIntyre oversees Avendra’s contracting and supplier management functions, as well as the company’s supply chain development team. Avendra works with Zenith Energy to provide energy procurement audits for its customers.