Please ensure Javascript is enabled for purposes of website accessibility
top of page

New York’s Biggest Produce Market Is at a Breaking Point


On a recent evening in New York, Pedro Saavedra is hunting tomatoes. He turns on his iPhone flashlight and steps into the back of a dark, climate-controlled trailer, where hundreds of boxes are stacked to the top. He slides through a small gap between the crates and plays his light over the goods, opening a few boxes to check out the merchandise. He was lured here by the promise of a good deal. Each 25-pound box of tomatoes has been marked down from $35 to $24. Now he knows why. Even with the dim phone light, he can see a yellow tint, indicating they’re not fully ripe. It’s not a dealbreaker. “Never going to be perfect,” he says with a shrug. He steps back out of the trailer into a warehouse full of fruit and vegetables. Across the way, a salesman is sitting at a booth, waiting for offers. Saavedra buys 80 boxes.

 

His boss won’t be able to sell these tomatoes tomorrow, but to put them on his list of sales items for the week, he’ll need lots, including some that still have ripening to do. These are big and firm enough to sell in a few days—and now that Saavedra has found slightly less-than-ideal tomatoes for this price, $24 can serve as a floor for his haggling with nearby vendors whose inventory is ready to eat. Within 10 minutes, he’s arguing a different seller down to $24. By 1 a.m., roughly 1,500 boxes of tomatoes, cauliflower, grapes, peppers and other produce sit in his store’s 18-wheeler. While the truck trundles off on the 90-minute trip back to his employer in South Brooklyn, a 24/7 greengrocer called Three Guys From Brooklyn, Saavedra heads to bed. He carries out this routine five nights a week.

 

At Three Guys From Brooklyn, the sights and scents of fresh food from the many produce stalls outside help draw in passersby. To keep them coming back, Phil Penta, the proprietor, depends on a steady influx of high-quality fruit and vegetables at low prices. That is to say, like many of New York City’s 8 million residents, he depends on the Hunts Point Produce Market, a combination rail yard, truck depot and trading floor that quietly supplies about 60% of the city’s fresh groceries, $2 billion worth of fruit and vegetables each year. Organized as a cooperative, the market offers an entry point for both suppliers and buyers who’d otherwise struggle to compete with national chains and distributors such as SyscoWalmart and Whole Foods. It also keeps the many neighborhoods the big chains ignore from becoming food deserts. From pallets of California strawberries to boxes of Indian pomegranate seeds, “Hunts Point is the engine that feeds the city,” Penta says.


The market, the largest of its kind in the world, occupies about 113 acres east of Yankee Stadium, on a narrow peninsula at the edge of the South Bronx. The Walmarts of the world source fruits and veggies directly from large farms and run their own trucks to and from their own warehouses. Hunts Point’s 27 specialty wholesalers buy from farmers around the globe, move their wares to this central co-op clearinghouse, then compete with one another to resell them to thousands of small chains, ethnic grocers, bodegas, restaurants, caterers and fruit stands throughout the metro area. Prices fluctuate daily, if not hourly, rewarding dogged deal hunters like Saavedra. It’s a system that creates efficiencies for farmers and retailers, encourages competition, acts as a price control and diversifies the food supply.

 

This is the dominant model for grocery distribution in much of the world. In America, the land of vertical integration, it’s become more the exception than the norm. In some ways, this makes Hunts Point all the more mind-boggling. But on the most basic level, it’s tough to believe the scale of the place until you’re standing in it. (Partly because market officials wouldn’t allow photos in the most impressive areas.) Hundreds of trailers line the four quarter-mile-long platforms that make up the enormous site. Those platforms serve as loading and unloading areas, in addition to warehouse space for each vendor. Like much of New York’s real estate, the platforms are sliced into units and then cut further to suit each wholesaler’s specifications—potatoes and onions in one room, apples and pears in another. While the market hums at all hours, it’s at its busiest between 10 p.m. and 3 a.m., when forklifts and motorized handcarts weave around deals in progress to unload trucks or retrieve pallets of food from some corner of the warehouse.


The market has an old-timey vibe, but it’s resilient. It didn’t miss a day of operations during the worst of the pandemic, when it provided daily updates to government officials, giving them key intel on pressure points in the food system. During the summer of 2020, farmers upstate used the produce market to get sweet corn from stalks to shelves like Penta’s inside of a day. Other cities that rely on bulk deliveries from a few big chains have taken note, and some that unwound their produce markets decades ago are trying to start them up again.

 

Despite the critical role it plays in New York’s food system, Hunts Point has serious problems. Its facilities haven’t changed much since Lyndon Johnson was president, and as trucks have grown much larger and taller over the decades, they’ve become an awkward fit. The site’s physical space and electrical grid are maxed out, so it’s common for sellers to keep 600 to 800 refrigerated trucks running their diesel engines nonstop while 2,000 more trucks roll in and out of the market daily, all of them spewing black soot into the air. Phillip Grant, the co-op’s chief executive officer, says that because the member companies’ margins are so thin, these problems must be addressed through government intervention. Without the overflow space in the trucks, “we couldn’t feed folks,” Grant says. “In a new facility we’ll be able to run more efficiently and reduce our carbon footprint.”

 

Today the produce market is at a breaking point. The co-op estimates that essential updates and repairs will cost $650 million, nearly double what it’s raised from government grants, and it’s already behind schedule to comply with the latest food safety regulations. Starting now and having the vendors cover the difference would likely force co-op members out of the market, or out of business altogether. “If we don’t get the right capital mix, we could fracture the market,” Grant says. “We want to keep our merchants.”


Already, smaller stores like Penta’s have little ground to give. Mom and pop grocers tend to look with envy on the modest 3% net profits of the industry’s biggest names. Saavedra’s negotiating will allow Penta to charge $1.19 a pound for tomatoes that week, representing a profit of about $5.75 on each $24 box, without accounting for labor, gas and other expenses. If the tomatoes cost $25 a box instead of $24, he might not be able to put them on sale. Three Guys From Brooklyn relies on at least eight deals a week from Hunts Point that Penta can put in the circular to attract new customers and keep old ones happy. But those deals are getting tougher to find. “We’re surviving,” he says. “We don’t have a lot of capital. We don’t have the backing of a national corporate structure. It’s hard.”

 

Produce markets have been around in some form for as long as there have been cities, but their modern incarnations date to the early 1800s. Before then, governments wanted farmers to deal directly with consumers, making rules to prevent middlemen from sticking their noses into the process. That dynamic proved unsustainable as city populations ballooned and technology allowed for better growing, shipping and storage. In this new world, wholesalers became essential. Markets including Covent Garden in London, which predated the Enlightenment, or Les Halles in Paris, which predated the printing press, came to look much like their new counterparts in post-revolution America. Markets in Boston, Chicago, Philadelphia and other cities weren’t just part of the food supply—they were the food supply. New York’s Washington Market opened in 1812 on the west side of Lower Manhattan, covering much of what’s now Tribeca. At the end of the century, hundreds of wholesalers were doing business there.

 

By the middle of the 20th century, trucking had made it less essential to keep all that prime real estate set aside for produce. And by this point, the markets were bad tenants. A 1948 New York Times story documented rotting fruit and vegetables in gutters and under the highway near Washington Street, and a 1960 US Department of Agriculture report found narrow streets, crumbling facilities, and unsanitary conditions that “led to high costs of operations and made it difficult for many operators to remain in business.” During this period, most urban markets around the world found themselves nudged to the outskirts of town. Covent Garden and Les Halles became shopping malls; New York’s Washington Market was cleared about the same time as the neighboring Financial District underwent development. Today the site houses a park, a community college and the headquarters of Citibank.

 

Throughout Western Europe and in other parts of the world, cities made sure to maintain networks of smaller retail markets that could continue to bring fresh food in from the countryside and ports to within walking distance of their average citizens. In the US, however, produce markets have been more out of sight, out of mind. They were moved to industrial parks on the “urban periphery,” says Helen Tangires, a public market historian. “The average consumer doesn’t really see how all of this happens in the ways that they used to before.” Most American cities have seen their old-school markets radically shrunk or eliminated over the past half-century. The interstate highway system and trucking logistics won out over walkability, and market power has grown steadily more concentrated in the hands of the biggest grocery chains, leaving the food system vulnerable to shocks (such as pandemic-era shortages of meat and dairy) and consumers with fewer choices. The four largest retailers (Walmart, KrogerCostco and Albertsons) now account for 44% of grocery sales, compared with 17% in 1987. In some places, Walmart alone accounts for more than 50% of sales.

 

In some ways, the Hunts Point market is radically different from what it was when it opened in 1967. In the early going, its 150 wholesalers funneled in 75% of New York City’s groceries, and the city government managed the facility. But the wholesalers grew frustrated with the city’s cuts to maintenance and security during the 1970s fiscal crisis, turning it into a Wild West of sorts. In 1973 one wholesaler had $2,000 in garlic stolen. A year later, hijackers were caught stealing train cars of produce, $500,000 worth in all. The market went co-op in the ‘80s, agreeing to pay the city rent in exchange for operational control. This helped the wholesalers stabilize the market and made it easier for retailers to safely shop there. What hasn’t changed over the decades is that the business keeps getting tougher. Consolidation shrank the market’s membership to 50 wholesalers by 2004, when then-Mayor Michael Bloomberg’s administration first outlined a plan to modernize the Hunts Point neighborhood and address the “poor quality of life for the residents and workers.” (Bloomberg is the founder and majority owner of Bloomberg LP, Bloomberg Businessweek’s parent company.)

 

Around that time, a handful of elementary school students were crisscrossing the Hunts Point neighborhood with air quality monitors inside specially designed roller backpacks. It was part of an effort by New York University researchers to explain why the South Bronx has some of the highest asthma rates in the US. The resulting study, published in 2006, showed the air quality was worse than the city thought and linked diesel soot to the worst of the students’ asthma symptoms. Yet here the neighborhood is, still waiting for help. Today children in the South Bronx are six times likelier than the average American kid to be hospitalized with complications from asthma. “We have the right to clean air,” says Arif Ullah, executive director of South Bronx Unite, a community advocacy group. “The timeline has to be faster.”

 

Hunts Point customers say they support upgrades that would improve the neighborhood’s air quality, though several suggest that some of the upgraded facility’s new efficiency ought to be passed along to them in the form of lower prices from vendors. For many grocers, those lower prices will arrive too late. New York City lost about 1,200 grocery stores from 2012 to 2022, roughly 1 in 6, while the number of national grocery chains operating in Manhattan and Brooklyn more than doubled. The city’s small retailers desperately need the co-op to be well positioned to sustain them in the future.


Grant, the Hunts Point CEO, says an updated facility would address many of the environmental concerns. At minimum, it would eliminate hundreds of idling trucks. At the moment, though, the market needs the extra storage to avoid food shortages. “We’re doing the best we can with what we have,” he says.

Grant has been the co-op’s CEO since 2021. He’s an engineer by training and previously oversaw the market as a director of construction at the city’s economic development agency, where he helped coordinate rail upgrades. This CV belies his geniality. He’s a smiler, prone to calling things “beautiful.” It can be tough to get him to engage directly with the notion that the market’s essential upgrades remain paralyzed in a poisonous status quo.


City regulations require the $650 million project be fully funded to break ground. To jump-start it, Grant is seeking the remaining 40% of funding from the city, which kicked in $130 million last year. (State and federal funds make up the rest of the total to date.) Grant says he has faith. “It’s such a monumental project that means so much for us,” he says. It’s also a marked contrast to the national picture at a moment when America’s No. 2 and No. 4 grocery chains are seeking to merge, over the protests of federal antitrust regulators. US Senator Chuck Schumer, Representative Alexandria Ocasio-Cortez, Governor Kathy Hochul and Mayor Eric Adams have all touted the importance of the produce market and expressed support for revitalizing it. But those pronouncements haven’t turned into new money.

 

The story won’t end with the words “funding secured.” Grant estimates three to four years of construction after a couple years of environmental and design reviews. Any further delays will make it tough for Hunts Point to get the bulk of the construction work done by 2031, when a tranche of the federal funding is set to expire, along with the market’s lease. It’ll be even tougher to manage all that while keeping Hunts Point open for business.

 

If Grant can handle it, however, the example of a revitalized Hunts Point could help its model spread elsewhere. Phoenix, which saw its wholesale produce market fold in the 1980s, is one of the largest cities trying to create a new one. Its 1.6 million people have just a few independent produce distributors. “There’s a demand for fresh food in many parts of the city that isn’t adequately met,” says Todd Hardy, co-founder and manager of Arizona Fresh Holdings LLC, the company looking to build a produce market there. The USDA is funding pilot projects to create wholesale “food hubs,” which can include markets and distribution, in California, Montana and Rhode Island.



49 views

Comments


bottom of page