Retailers are sort of like building on this momentum. They discover that they push, sure, you know, lack of consumer knowledge of what the market really is. And that's something we can't play in the food service side of the business. We're up like a rocket, down like a rock, because our chefs and some of the buying teams that they have are much more knowledgeable about markets than the average consumer. Interesting. So if they see high tomato prices in the headlines, they're not going to be fooled thinking that like, oh, it's going to go up even further from here. Or they're like, all right, the spike's done. Why are you still charging me this amount? They're going to log on to the USDA website. My prices are going to be talking with some of our farmers and growers about field projections as well with some of them. And so, yeah, it's a much more savvy buyer than maybe the traditional, you know, American retail consumer.
It's interesting to think that, you know, one of the promises of the internet was like, oh, the customer is going to be able to like, be so well informed, right? And they're going to know, like they're going to be able to find the best price. And there probably is that to some extent, right, that there probably are customers who are like extremely well informed and can find the best price. But the part that they didn't talk about was that the retailer would be very well informed about the customer, and that they would be just as savvy and have all kinds of counter tactics to counter the customer's ability to learn about the price, right? And not to get all antitrust. But if the customer has limited options for buying tomatoes, it's not like you can go into a supermarket armed with your knowledge of the USDA website and start negotiating, although that would be fun. I can't say I haven't tried that before.
Oh, work. Oh, interesting. All right. I do complain to the head produce clerk at our store every once in a while about the price. Yes, I know the --- come on guys.
Hello, and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway and I'm Joe Weisenthal. Joe, I know you love tomatoes. I love to make know. Oh my God, I love tomatoes. I love tomatoes so much. This is the episode just Joe talking about how he loves tomatoes.
Well, this is a funny one because like this is a new episode. You know, you like books. You're like, oh, let's do a tomato episode, which I'm glad you did because I love tomato. You're going to make it. You are I my name. But it's not like. But I don't know anything about tomatoes. I just love eating them. And I'm going to like, when I was a kid, like, growing up in, like, exurban Illinois. You know, I had terrible tomatoes growing up, so I hated tomatoes from the super from the grocery store. So I got tomatoes on, like the worst vegetable on the planet. Well, they're not well, are you going to correct? No, no, don't say they're not a vegetable or fruit, you know, so I'm just going to go on because I'm going to take this episode over. But like, you know, I once heard someone say that, like, knowledge is knowing that tomato is a vegetable and wisdom is knowing that to put tomato in a fruit salad. But I've like come to like, like tomatoes are so delicious. There are some varietals that I absolutely would put in a fruit salad. No no I would this is wrong. And so these tomatoes that we know. No no no. Like when you if you tried one of the tomatoes I have so sweet in a fruit. Absolutely. Would I love tomatoes anyway. Sorry.
Okay, so we got to talk about tomatoes. Perhaps not in the way you have been so far, but, we'll spend one minute talking about how tomato prices are really high. Yes. And then the other 45 minutes, we're going to talk about how delicious tomatoes. That's right. Okay. So the genesis of this entire episode is that, as you will have heard, tomato prices are really high right now. Yeah, I think we're looking at something like a 40% increase year over year. Yes. I just saw some new data that's out this morning. So there are a lot a lot of tomato headlines floating around saying that tomato prices are at a record $2.69 a pound. So tomatoes are getting kind of expensive, which is bad news for you.
It's really bad news for me because because I'm addicted to them and well, I am price insensitive. So it doesn't matter how high the price of tomatoes get, it will not affect my volume at all. So that's just straight. Like I just straight money out of my pocket. It is not bad news for me because I just installed five raised beds, big raised beds dedicated all to tomatoes, and I just planted them out yesterday and I'm very excited. You should be excited to know you'll get some. Tracy always brings me tomatoes at some point in the summer and they're always delicious. Well, I've got a really big selection this year. Cherokee, no Brandywine, all the classics and some new things. 4th of July I've never tried before. I don't mean to get all like Bubba Gump and just start listing tomato varieties here. But tomatoes are on my mind, and I think they're on a lot of other people's minds just by nature of the price increase. So we should figure out what's actually going on here. I cannot wait to just talk tomatoes for the next hour. You're not just gonna say how good they are over and over, I might. Okay, well, I am very happy to say that we do, in fact, have the perfect guest. We're going to be speaking with Jacob Krempel. He is the SVP of Procurement and Merchandizing over at Baldor. So thank you so much for coming on Odd Lots.
Yeah, absolutely. Very excited to be here. I have, quite a few friends that are flabbergasted that I get to be on our lots of all things. So know this is excited to talk to me. This is the perfect guest for the perfect moment. Can you tell us what Baldor actually does? So Baldor is a, 30 year old food service distribution company, based, up in the Hunts Point Market area, Bronx, here in New York City, we distribute food from Maine to Northern Virginia, send out about 500 trucks a day, with food mostly to, food service restaurants. Right. So about 70% restaurants, 30%, independent retail. Our other wholesalers, we got our start, actually, you know, about Dutchess and, Greenwich Village. Yeah, sure. So Andy Banducci and Joe Doria, Joe Doria was their, produce sourcing guy. And he was always out there looking for the best and most unique varieties that he could possibly find. And so suddenly they saw a lot of chefs that they knew in the area. Shopping at their store had a great idea of starting a wholesale distribution company. So they took Belushi and Doria, combined them together. That's actually how you get that order. Which is which is a fun story. So, that was in the 70s, 80s, that that business grew, expanded. It started to blow up. They spun it off as a separate company in 91, when, Andy Belushi's, son in law, Kevin Murphy, took over the business. He ran it until about 2013, when he passed away from cancer. And his son, TJ, is our owner now and CEO and he's, been running the company since then within the realm of food distribution.
If someone asked me to name all the food distributors, I would be able to name Sysco. We've done at least one episode on them I might be able to name if, United Natural Foods, and then I would, be able to name Baldor. And all, but the and Baldor would be the only one that I would associate in my mind, maybe because you've done a good job with branding, etc. I was like, okay, these are high quality ingredients rather than, just, food distribution. Who is like, who is who are your client? Who do you sell into at Baldor?
Yeah, we sell just about anybody. Right. But I think we've we've made our bread and butter as this, I know I listened to your Sysco, episode, right. And broad liners that you're talking about on that, that, podcast, we view ourselves as a high liner. So we're going to carry a wide assortment. We carry everything from, meat and dairy to, to produce, which is what we had our start in. And that's our wheelhouse for sure. But we have experts in all of those areas, and our job is to build a curated assortment, of maybe 7500 SKUs versus the Cisco carrying 20,000 plus. Right. So, so the merchants on my team, they just have this insatiable appetite to go out and find the best produce, the best meat, that they possibly can to fit whatever that customers need is whether it is something that's more commodity based, like a basic romaine to, high specialty variety tomatoes. Tomatoes, like some of the ones that I brought.
And what's the mix in terms of restaurants versus grocery stores or restaurants first, whatever else? Yeah.
So we're about 70%, maybe a little bit more in restaurants. Okay. And there we service everything from the Michelin star, partners that we have, that we have a lot of long existing relationships with some of the top chefs in, in the areas that we serve to, your local bodega or bagel shops as well.
So how does the relationship with supermarkets or restaurants typically work? Would it be? I'm a restaurant and I don't know, I want to do a caprese salad. And so I need some really good tomatoes. Do I call you up? And I ask you specifically to to source tomatoes for the salad, or do you have like a catalog that I start flipping through or.
Yeah. So, you go to boot or food.com. Right. And you go on to our website. And from there you can see our full assortment. And then once you sign up as a customer, then you're able to see, pricing and availability and some of those things to make the decisions of what you possibly want to buy. We also have our sales reps that are partnering with, a specific set amount of accounts that, bring that white glove service. Right. We want to make sure that you have somebody that you can call and pick up the phone and say, hey, I want to do a Caprese salad. What do you tomatoes. Yeah. Or. Yes. Yes, exactly. We get mostly those calls, but also some of the innovation calls as well as like I'm looking to do a crazy. What would you suggest. Right. And so between that, that high touch white glove service that our sales teams provides, as well as our merchandizing expertise and storytelling on the website that we love to do, we're really able to, maybe bring that picture full circle a little bit better than maybe, some others out there. And to really allow you to tell that story on your menu.
So I don't really know that much about the restaurant industry, but, you know, I read Kitchen Confidential and they're in that book Anthony Bourdain talks a lot about, like, you know, he'll play off the suppliers. He's like, oh, this guy could get me this fish at this price. What can you do? But this in a ton. But this is strikes me very relevant in a time of high price volatility, which we've particularly seen over the last several years. Talk about the duration of contracts and how long they can last. I never seem to be able to get clear answers on this. Can a restaurant say lock in a price for six months is week by week? How like, what are these relationships and how stable are they?
Yeah, that's a trade secret. You're not kidding. No, I think we we want to offer that, we want to meet the chef where they are. Okay? And so we offer a wide variety of opportunities of how they might want to, price with us. Right? Anything from daily pricing to weekly pricing to depending on the size of of the restaurant chain, we will offer longer term contracts as well. But I do think there is some push and play left in this industry of, you know, a chef wants to be able to price shop a little bit. Right? Okay. And so, a lot of our customers, you know, our view is that we provide that value not just to making sure that you have a good value on the price, but that our service is, way above par. Right. We're going to deliver on time. Our cut offs are the latest that you can get from any distributor. So if you're a chef in New York City at 11:00 at night, you can go on our website and sell order product where most other competitors and what time when you get there the next morning, depending on their account and their delivery time. As early as 6 a.m.. Yeah. Wow.
So are you seeing a lot of customers at the moment trying to lock in tomato prices, given where they they seem to have, you know, gone to recently.
This tomato pricing thing is unique as far as, like how expensive it got. But I'd say in general in produce this is like a very much a, a normal working environment for my team. Just prices spiking and going crazy here and there. And I think a lot of that is, produce demand, especially in the US, is rather inelastic in the short term. And it's so reliant on weather and acreage grown and the production out of that acreage, that you see very wild swings in markets all the time. Right? Like tomatoes was the last thing to pop. Yeah. I guarantee this summer you're going to be hearing about romaine again. Because that's already almost $100 a case right now. Which is insane for romaine because of bad weather in California. And avocados as well. Avocados went from $30 a case to $80 a case in literally the span of a week. In the last week.
So, Joe, did I ever tell you for some reason, I'm on the it has avocado board email distribution list and really sent out really good updates about what's going on in the avocado market. I think it's because I was writing about bitcoin prices and Bitcoin avocado like. Yeah. And like somehow I got automatically signed up. Okay. So let's talk about this. Prices of tomatoes. There's actually a Bloomberg piece just yesterday prices up 40% from a year ago. Let's talk about let's decompose the price of a tomato. So I'm buy a tomato and it's 40% more like, you know how much of that is transport? How much of that is fertilizer, how much of that is land, etc.? Like what are the what goes into the price of a tomato and what is the main driver of swings year over year.
Yeah. So let's let's break this down a couple different ways. You have your retail price point that a customer sees. Let's save that for a second. Let's talk about the wholesale price of like what what a going price of the tomato should be. If you're going to go directly to a farmer and buy half a truck of tomatoes. Right. For that piece, there's all the costs they have to grow. Right. So you're talking fertilizer, seed labor, water. The production costs around their facility, the energy and the trucking. Okay. Those are the basic things that go into growing a tomato, right? So they have a base cost that they have to hit every year to just break even. Yeah, right. The way that market works is then usually, typically they're going to contract a certain portion of it to try to make sure they get a guaranteed return to make some profit, and then they're going to, call that 60, 70%. The rest are going to try to play on the open market, which means whatever the USDA price is going rate for what a wholesale tomato should be, that's what we're going to sell the rest of the 30% it. Right. Okay. To try to catch some of these upswings and actually make some profit. Right. Like a lot of these growers that we deal with, this is a razor thin margin business, just like ours is as well. In in groceries as well. Right. Like, your food cost is such a huge part of, the, the cost for, whether it's a grower, a retailer, a food service distribution company, you're playing in margins of single digits, right? What happened specifically this time was, if you look at winter growing of tomatoes, you can't grow tomato in new Jersey in the winter. You can't grow it in Illinois in in the winter. Right. You're going to be growing tomatoes in into the greenhouse conversation a little bit. But yeah. Okay. Right. But your traditional field tomatoes are going to be grown in Florida and in Mexico. And you think of, okay, for December until the spring starts. Right? So call around this time when some of the more local programs start going further south. If you needed 100 tomatoes for the U.S. market, 30 of them are going to come from Florida. 70 of them are going to come from Mexico. Okay. About 70% of our tomato production in the winter is done in Mexico now. 30% in in the US, if you go back print after right around when NAFTA started, that was completely reversed. It was about 80% domestic, 20% Mexico, which we can also dive into, which is a fascinating story, the globalization of produce. And when you talk about flavor and quality, it's it's it's a very interesting story as well. So there are two freezes that happened in Florida this winter that took, 80% of the crop in Florida out completely. Blooms fell off, fines, died was not a great situation. Right over $150 million worth of tomatoes lost again, produce demand is rather inelastic. So you took a market that needed 100 tomatoes and you took 26 out of the equation. And you're left with, you know, the 74 tomatoes that are left for 100. Right. And any time that happens, that's where you see these spikes. So it's less about the input costs themselves. Got it. At this point, I would say, majority of it was weather related. Now, the other thing is they're always going to grow a little bit more than what we need for the market or their best guess, but it's a very segmented industry. So nobody knows exactly how much acreage everybody's putting in. The USDA does some projections, but in general, we did see Mexico decline their production a little bit this year. Probably 3 to 4% doesn't sound like a lot, but when they're supplying 70% of the U.S. market in the winter, that was actually quite a bit. While that was because of the anti-dumping tariff that was put in place with 17% and change. It was it was implemented back in July of last year. So it's a long history between, Florida growers and Mexico growers, about the price of tomatoes and what a fair cost to grow actually is. And, and a lot of accusations of dumping by Mexican growers into the U.S. So, again, you think, you know, NAFTA in the mid 90s and the start of more free trade. That's when, Mexico, you think, Sinaloa. Sonora, holy SCO those are amazing growing regions with a ton of land that they had available that, had a lot less chance of a freeze like Florida does. Right? Right. And so once that they were already growing, tomatoes for the U.S. market were about 20% then, but they they started to really invest in, growing much more down there for the US market once trade became a lot more predictable. When that happened, they also started getting into shade House or greenhouse. Right. So there's shade House is basically like netting that you would put over a massive tomato field. You think of these like vines or tomatoes, just, you know, acres of fields that are covered by netting. And that sort of helps protect from the sun, but also from bugs, as well. And you see that with a shade house in Mexico, you get almost 3 to 4 extra return per acre on the amount of tomatoes that you can produce versus if you just left it out in the sun. So they evolved into a shade house, and then you got in a greenhouse, which was like perfect growing conditions. They they took the technology. They were using in Canada, in the Leamington area to do all the snacking, tomatoes and things that were starting to grow and be a bigger thing. It took that that down south into Mexico, started building these big greenhouses. So they could get year round production down there as well. In between those two, they're producing a significant amount more per acre than maybe a traditional field grown tomato would be. Right.
By the way, we'll get into this later. But if you just look at my laptop right now, I had literally looked up Leamington, Ontario, right? Yeah, because I knew this would come up. We'll get into that later. But I have I have questions about the, the Leamington market there. Yeah.
In the 90s and into the 2000, there were accusations by Florida growers of dumping by Mexico growers. There was the Mexico defense. Was our cost to produce is lower. We have lower labor costs. We're getting better yields. So this isn't actually something that, like, we're economically selling lower in our home country versus you or not. I think there's there's truth on both sides to that, for sure. But we had these suspension agreements in place that had force on tomato pricing that was allowed to be charged, in the US from Mexico growers. That changed, last year in July when they, the U.S. government reopened the case and put the anti-dumping tariff on Mexico. And that change created more uncertainty than maybe the floor would have, under the old suspension agreements that were in place. So between those two things, I think it was a little bit of a perfect storm of you decimated the Florida crop. Mexico didn't have a ton of extra production left available. And you see this crazy spike where a case of tomatoes, on average, went from, in April, much closer to the five year average to May was 65 bucks a case on average for the whole month. And and very high. But then the prices to go up more from here. So in June we're back to the five year average. All right. Good. It's, yeah, towards the end of May into June, it it started to drop again. But this is where you get into the retail component. Yeah. Everybody says retailers. They go they take their prices up like a rocket and down like a feather. Right. And so retailers we'll use this as an opportunity to see is there a new price floor that they're happy with where maybe I'm going to charge the consumer a little bit more than I traditionally used to when these markets are this cheap. Because the customer is still going to pay, it might not be to 69 a tomato, but maybe a dollar 99 or tomato. When I used to be able to have to go to 149. Right. If you think a grocery retail economics has changed significantly over the last 15 years, and I say more about, yeah, yeah, yeah. So if you think of like, how much home delivery or click and collect like pick up in the store. They're much more advertising and marketing companies now where they're, they're selling customer data to their suppliers about what are customers actually purchasing or not. All these things cost money for them to stand up and run, right? And so I think what you're what you're seeing is while grocery EBITDA is, is about the same there also that, you know, traditionally was 4 to 6. Now you might see the larger retailers in that still maybe 4 to 6, 5 to 7% margin as margin. Okay. Yeah. At the end of the day when you take all their costs into account. Right. It's they have a lot more expense on the books and in ways that they didn't have before, because they're having to pay for the additional labor intensive mass structure and warehouses to be able to do the direct delivery, the more like Amazon style approach that everybody is used to of, like, I want something today and I want it now.
So just to be clear, the margins are stable because on the one side of the ledger, their costs have gone up. Double down all this tech. But on the other side they have data that they can sell and that is monetizable and they roughly even out. And that's how you get the stable margin. Yep.
And they're also charging you a higher price as well. Right. Like I think some of the consumer is definitely paying for some of their wants of being able to get stuff more on demand. Right? Right. As well as the variety that they're expected to carry a grocery store in the 70s, a produce department was probably 75 to 100 SKUs. Grocery store today is 300 to 500 SKUs in their produce department. So there's plenty to carry this high variety, all these unique things that comes with more shrink, as well. Right. So they had to balance all of that. So with those economics changes for them, I do see I do think what we're seeing is that retailers are tending to hold on to prices longer than they traditionally would, to try to help pay for, for some of this. And that's where, you think a beef is also one of the things everybody's talking about how crazy prices are. And they are insane. I was at a restaurant the other weekend in the city, and they had a strip steak on the menu for like, $140. Oh, my God, for a strip steak. Strip steak? It's crazy. It's. Yeah, but people are still paying that, which is crazy. Like the demand for beef is not slowing down, even though these prices are getting so high. Yeah, but if you look at retail versus wholesale, the cutout, the difference between the retail price of beef and the wholesale price of beef, is it the highest it's ever been, both in a dollar perspective? In a perspective. So go back 20 years. The difference between the price per pound of beef at wholesale and retail is probably 30%. Now it's probably closer to 40 or 45%. Really? Yeah. So so again, retailers are sort of like building on this momentum. This I think for sure, that this, you know, lack of consumer knowledge of what the market really is. And that's something we can't play in the food service side of the business. We're up like a rocket, down like a rock, because our, our, chefs, and, and some of the buying, teams that they have are much more knowledgeable about markets than the average consumer. Interesting. So if they see high tomato prices in the headlines, they're not they're not going to be fooled thinking that like, oh, it's going to go up even further from here. They're like, all right, the spike's done. Why are you still charging me this amount? They're going to log on to the USDA website. And what the prices are going to be talking with some of our farmers and growers about field projections as well with some of them. And so, yeah, it's a much more savvy buyer than maybe the traditional, you know, American retail consumer.
It's interesting to think that, you know, one of the promises of the internet was like, oh, the customer is going to be able to like, be so well informed, right? And they're going to know, like they're going to be able to find the best price. And there probably is that to some extent, right, that there probably are customers who are like extremely well informed and can find the best price. But the part that they didn't talk about was that the retailer would be very well informed about the customer, and that they would be just as savvy and have all kinds of counter tactics to counter the customer's ability to learn about the price, right? And not to get all antitrust. But if the customer has limited options for buying tomatoes, it's not like you can go into a supermarket armed with your knowledge of the USDA website and start negotiating, although that would be fun. I can't say I haven't tried that before. It doesn't work. Oh, that's interesting. All right. I do complain to, the, the head produce clerk at our store every once in a while about the price. Yes, I know the real question. That's like, come on, guys, what's the deal with disease in tomatoes? Because I see that mentioned a little bit, in relation to Mexico. And my assumption nowadays is that basically every major crop in the world is dealing with like, some sort of very troublesome disease or pest or something like that. Is it the same for tomatoes?
Yeah. For sure. And I think that that created some I'd say pre freeze impact in general on the tomato industry where acreage and production was was probably slightly down overall, mostly in greenhouses. They were dealing with a couple of different viruses that were sweeping through, the more traditional greenhouse varieties of mostly you're snacking tomatoes, right. That they were not used to and didn't really, expect to have to deal with. And those viruses were decimating those, those greenhouses where they'd have to tear everything out, soil included, and just replant and start everything from the beginning in these greenhouses. So, tomato pricing, especially on more of the snacking or high flavor variety things that you would see in a, grocery store, have been pretty volatile for a while now because of this. They've introduced some new varieties that are very promising and have slowed the, the impact of this already. But, it's Mother Nature at the end of the day. Yeah. Right. And like, it's, it's a continually evolving mother Nature that, I'm, you're always going to be dealing with something new is a grower.
So let's talk about the tomato price because there isn't actually a tomato price because there isn't actually, tomato. And like, we have one kind and here is a box and I think there's a few different types of tomatoes just within this one box alone. So it's sort of a two part question. The first part is how correlated are tomato prices, like whether we're talking about like a new Jersey beefsteak tomato or one of these like generally speaking, is there a sort of stable relationship between tomato prices or do you see like the, you know, the big fat red ones might be pricing in a very different trajectory than, say, these multicolor snacking tomatoes.
Yeah, they all interplay with each other a little bit. I would say you do have more complementary substitutable tomatoes, right. So if you think of like a round tomato, like the new Jersey beefsteak and a Roma tomato, yeah, the are pretty interchangeable. So, in Florida, what happened was it was, a huge wipe out of, rounds. And so that created a lot of pressure on the Roma market as well. And so you saw that explode. And then this one was so bad that anybody was trying to get any tomato they could get. So you did see it start to affect some of the more cherry tomatoes or vine ripe tomatoes that you would see out there. I'd say in general there's some interplay. It all depends on, again, supply and demand. If there's not a ton of rounds to go around, then rumors are going to get pushed up. If there's not a ton of Romas to go around, then everybody's going to squish into the high flavor stuff.
So then speaking of the high flavor stuff. So it's like, you know, I'm addicted to them. Yeah, my children really like them. Do you see at the farm level, essentially a redistribution of acreage towards the high value, high margin stuff such that they're just not as a percent or just whole, like not growing as much of like the, frankly, like boring tomatoes, period. That like there is just less because I have to imagine the more margins, higher price for some of these that it's like, well, why are we planting that that cheap normally tomatoes.
Yeah, I think cheap normie tomatoes. When I was a kid we didn't know about that. Yeah. We didn't know about these tomatoes. Yeah exactly. And that's that's why now everyone you know the tomato as well is. Yeah. You know, there's still a consumer for a basic round tomato or vine ripe tomato aroma. Right. Like. And there's a use for that. You're going to put that on a sandwich or you're going to make a sauce out of it or something like that. Right. Again, there's consumers that want that basic tomato, maybe the more mild flavor. Yeah. There's going to be a guaranteed quality and look a certain way and always be the perfect round shape that when they're in their restaurant, or their production facility, they're always going to get the same yield out of it. Right. Well, what's interesting to me on the consumer side is definitely, yeah, the explosion of these flavored tomatoes. And I think what you're seeing here is that, growers that might have grown traditionally cherry tomatoes or, other type of tomato varieties are replacing them with these more sweeter varieties, because they know that customers like these, the snacking tomatoes in vogue. Right? People will just eat these as a snack versus only on a salad or something like that. So what you're seeing is probably more a replacement of maybe some of the older varieties of these that don't have as much flavor with the newer ones.
Earlier I went to look up tomato prices on the terminal, and I just realized there's a there's a Japanese bank, there's a Japanese bank that I just learned that. And it has an amazing logo.
I would, I would you would bank. You can just just off the brand identity. What's the correlation between fresh tomato prices and canned tomato prices? If fresh ones are going up, would it be reasonable to assume that the canned ones are going to go up as well?
No. They're completely different markets.
So a lot of your canned production type tomatoes are grown mostly in California. Different varieties, different subsets, different, completely different growing regions. For the most part. They do grow some processed stuff in, in Florida as well. But, I'm you would see maybe some pressure on that. But again, they're very different supply chains and in production. So those are also longer term contracts. Those producers put in place. So I think you see, you see them able to cost control maybe a little bit tighter than, than the fresh industry can.
