Gilroy-based Uesugi Farms issued a statement on its website saying that due to market conditions and factors outside of their control, they will be “winding down” operations and not planting for 2019. The company produces a multitude of crops including peppers, corn, and pumpkins.
General Manager Pete Aiello is a friend of AgNet West, and last year he detailed how labor costs and availability was putting a strain on the company. “It’s been an ongoing problem for several years for us, but it’s become severely dire in the last three years,” Aiello said back in March of 2018. “It’s gotten to a point where our business does not have a sustainable model with the labor we were using before.”
Uesugi Farms started using H-2A crews in 2018 to fill labor needs. Aiello said he was impressed with the crews and saw more efficient work, however, that labor has even more overhead associated with it. Aiello said last year that despite that added cost, they had no choice. “We had to make a change just in order to ensure the longevity of the company.”
It seems as though the change didn’t help enough, as well as other contributing factors, as the company begins selling off all its equipment and equity according to the online statement.
The statement mentions market conditions were one of the contributing factors to the tough decision. Aiello talked last year about how difficult it is to remain profitable when production costs can rise, but producers can’t increase prices. “When labor is your largest expense….and that expense goes up exponentially year to year that’s not a sustainable model for an industry that does not set prices,” Aiello said. “We take prices that are given to us, and when your expenses go up like that, it’s hard to survive, and it doesn’t pencil out.”
Uesugi Farms has a popular pumpkin park just outside of Morgan Hill, CA. The company posted on the park’s Facebook page reassuring the public that they will still be open this fall. The post reads “Good morning everybody. In light of the media frenzy this morning, we want all of you to rest assured that we will be open for business this fall. See you Saturday, September 28th!”
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