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Perishable Pundit
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Produce Business

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American Food & Ag Exporter

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Peterson Steps Down As President/CEO Of Naturipe, But Joins Its Board Of Directors

The man who built the largest produce operation in the world is going to be a focus of interest for this industry for a very long time.

When we first announced Wal-Mart’s Bruce Peterson Resigns, the industry was dumbstruck as company after company recalled meeting with him when Wal-Mart had seven, eight, nine supercenters and recalled an earnest young evangelist for Wal-Mart telling them of Sam Walton’s vision for the largest food store in the world. They marveled at how so many players in the industry had grown with Wal-Mart.

After he had left Wal-Mart, the industry wondered what he would do next. The answer, for a while at least, was revealed in a piece we entitled, Bruce Peterson Focuses On Traceability, and indeed, it would not be wrong to see Bruce as the father of the trade’s traceability initiative.

Soon though, Bruce startled once again as he moved over to selling side of the business. We called our piece, Bruce Peterson Lands at Naturipe As Its New President/CEO.

There he went quickly to work and soon we announced, Naturipe’s Peterson Builds All Star Management Team, as he had gathered together well known industry stars such as Robert Verloop and Don Harris.

Now, as quickly as it began, it is over… or almost.

Bruce is joining the Board of Directors of Naturipe Farms and is relinquishing his role as President and Chief Executive Officer of the company.

It is all very amicable and everyone has nothing but good things to say about each other. And Bruce will be on the Board of Directors, lending his broad experience to the company.

Naturipe just had an excellent year, and in a sense, you could say that Bruce is leaving because the mission has been accomplished. Expenses are down, management systems developed… the company just needs a general manager not a CEO.

All that would be true, but not the whole truth. When Bruce announced the new management team, this is what we wrote:

Robert Verloop’s produce marketing career began with the California Avocado Commission, but he had the progressive spirit to take a flyer and make the leap to Buyproduce.com., when dot coms in produce seemed all the future. He was Chairman of the Board of Directors of the Produce for Better Health Foundation and, while at Sunkist led all kinds of marketing and promotional efforts, from Sunkist’s innovative Take a Stand program with Billy Dean to Sunkist’s cooperation with Sesame Workshop and much more.

Don Harris had been Director of Marketing, Produce and Floral for Safeway before he took on the gig at Wild Oats. His appointment as Director of Procurement and Wholesale Sales, is a sign of the importance Bruce is placing on having people knowledgeable in the needs of Naturipe’s customers handle its procurement.

Wait a minute, though… Naturipe is a partnership of producers, so why does it need a Director of Procurement?

This is a clear sign to the industry that Bruce Peterson does not perceive Naturipe as limited strictly to selling its owners’ berries — in fact the one/two punch of Don Harris and Robert Verloop is like the puff of white smoke in a Vatican election — a decision has been made.

Don will build a supply chain of products that retailers will value, and Robert will add value through consumer research, branding programs and trade outreach.

Clearly what this is about is that the decision to transform Naturipe into a multi-product company is not going to be executed. So why would a solid berry company need — or want to pay for — an executive who ran an operation larger than Safeway? Thus the friendly parting of the ways.

It is probably the right decision for Naturipe. After all, precious few are the growers who have the strategic fortitude to financially fund and emotionally commit to long-term corporate development that has, literally, nothing to do with marketing their own crops. Still, it would have been exciting to see it happen.

For now, at least, the rest of the management team is staying, and we wish them all well.

As for Bruce, well, he did a lot for many producers, so we should, at least, try to help him find a job. Fortunately, that one is a no-brainer.

When Bruce left Wal-Mart, he had a non-compete agreement that prohibited his working in retail. But time has passed and that is now expired.

Since Bruce has a proven track record at taking a small chain and growing it into a giant, yet knows how to navigate around a very large organization, he is perfectly positioned to help a large retailer with a small division grow that operation.

Of course, this means he would be the perfect CEO for Tesco’s Fresh & Easy operation. They are bound to call Bruce soon, so Bruce may want to study up right here.

Best wishes to Bruce, Robert, Don, the rest of the Naturipe team and the complete ownership group. May the wind be at your back.




Is Produce Traceability Initiative
Worth The Investment?

We’ve written a great deal about traceability and, most recently, we were sent a copy of a letter that a Midwestern firm sent to David Gombas, Senior Vice President of Food Safety and Technology, United Fresh Produce Association, critiquing the Produce Traceability Initiative:

27 January 2009

Dr. David Gombas
United Fresh Produce Assn.
1901 Pennsylvania Ave. NW, Suite 1100
Washington, DC 20006

Dear David:

I’m a fourth generation produce guy who operates a company called Produce Packaging, Inc. in Cleveland, Ohio. We’re a wholesaler, repacker, and fresh-cut processor. I’m not usually outspoken about produce industry issues, but I recently found one that I just have to address.

Last week I attended the United Fresh winter board meetings in La Paloma. I’m a member of the new Wholesaler-Distributor Market Segment Board. During one segment of the meeting, Amy Philpott gave us a summary of the Produce Traceability Initiative (PTI) Action Plan, and we were told that you were heading up the PTI for United Fresh. Others on the board who were familiar with the plan helped clarify certain issues for the rest of the group. One raised the alarm about potential costs, so I decided to look into the PTI further, mostly because I don’t want to be “behind the curve.”

Now I’m scared! This morning, I went through the process of applying for a GS1 Company prefix. Based on my company’s sales and the number of items that I would need a code for (approx. 300), “BarCodes and eCom” wants $8830 for initial membership and $500/yr. annual renewal fee. For a company with margins as low as mine, this is an onerous amount, and this doesn’t even include costs to upgrade computers and associated hardware (such as scanners) required, software, and labor to company with this system. This could run into the many thousands of dollars for initial purchase and set-up, then many thousands in extra labor every year for record-keeping and maintenance.

Being a fresh-cut processor that sells to major retail accounts, we have to maintain a very high standard of food safety. We have a full time QA Coordinator, Angie Surtani, who has degrees in food science and nutrition, who keeps us in compliance with government and our customers’ requirements. We’ve received an AIB/Primus “Superior” warehouse rating for the last 5 years in a row, and last year for the first time we received our HACCP accreditation, also from AIB. We’re also a Kosher (Star K) and organic certified (QAI) packer/processor.

We have developed our own traceback system that is very simple and highly effective. It’s an 8-digit code consisting of the Julian date and the product’s incoming lot number. Every case that leaves our facility carries a traceback code.

Since we’re a tomato repacker, our system got a major test this past summer during the Salmonella debacle. We were able to provide a major customer who requested traceback information on all lots received during the whole month of May and first week of June (about 5-6 weeks) with the information in about 2 hours. I am very confident in the effectiveness of our system — our ability to comply with the Bioterrorism Act of 2002 requiring traceback of “one up, one back.” The traceback system that we have in place now at Produce Packaging is simple, cost-effective, and compliant with the law. Granted, the law could change, but I can’t see it being more onerous than PTI.

You state in your article in the January 2009 issue of Fresh Cut, “Currently, traceability requires step-by-step — or sequential — traceability from the point of purchase back to the producer, which is time consuming and prone to error. The goal of PTI is to overcome that weakness with a common language and common case-labeling standards. If a GTIN and lot number is identified at the point of purchase, everyone in the supply chain knows immediately and simultaneously if and when they handled a case from that lot.”

“Time consuming” I’ll agree with, depending on the scope of the shipments involved. “Prone to error” I can’t agree with, if you have an effective system in place, which many of us in the industry already do.

Can the cost of “reinventing the wheel” (which is what PTI essentially does for produce companies that can already comply with current law) be justified? You admit, “the full economic impact of the steering committee’s recommendations is not yet known….”

I’m here to tell you that this PTI is bad news for repackers, processors, and the consumer. The costs involved will have to be passed on to my customers, who will have to pass them along to the end user (or go broke). Does the end user want to pay for universal traceability when what we have already in place works fine? No. Should they? No.

The implementation of the new COOL regulations last summer is, in effect, a new tax on produce. I’m sure, thanks to much industry input, the damage from government intervention was minimized, but the effects in increased cost to the industry are staggering. The PTI is another “voluntary tax” that we want to impose on ourselves before the government supposedly imposes a larger one. It’s like we’re saying, “Let me hurt myself and show you I’m hurt so you won’t hurt me so bad when you come after me.”

Why do we go in for this self-mutilation? Why don’t we just stand up for what we believe in? These tough economic times can make any business struggle just to stay afloat. My customers are demanding pricing less than I gave them last year! How can I afford COOL, and now PTI, and stay in business?

On a related note, I’m sure you know well about the growing “buy local” trend in produce purchasing the last couple of years. We’ve noted both retail and foodservice food safety requirements that, by God, better be in place 10 months out of the year, seem to hypocritically get “thrown out the window” in the summertime up here in the Great Lakes area, indeed nationwide.

In other words, “local” trumps food safety. How will these small, local farmers comply with PTI if they don’t need a HACCP plan? What do they care for PTI if they’re growing tomatoes next to a cow pasture? How is it that food safety is not relevant to consumers in the summertime when local farms are selling produce out of baskets and roadside stands? The answer is obvious — it is as important as ever, but the fact that they want to buy local proves that they don’t want to pay any more for food safety. They just want safe food. It’s the classic, “I want to have my cake and eat it too” scenario. I’d bet the same is true for traceability.

Why don’t we, as an industry, instead of pushing for a universal traceback system, concentrate our efforts to push for all produce companies, regardless of size, to at least pass a minimum set of food safety standards? One of those requirements should be conducting a mock recall and scoring a certain percentage of effectiveness. This would help insure that they can effectively trace their product “one up and one back.” Those that can’t pass should be given a 30-day warning to get into compliance or they will not be allowed to operate in the produce industry until they can comply with the standard. Those that do pass should be allowed to operate using the systems they have developed to allow themselves to operate profitably.

You’ve probably figured out that I’m against PTI, and I urge you to consider the opinions of other United members who may be opposed to this initiative. Let’s let this dog lie.

You’re probably a very busy man with a lot of projects on the table, and I appreciate your listening to my concerns. Please feel free to contact us for any other information regarding our food safety plan. Also, I welcome you to visit our plant to see for yourself how our system works and gauge whether we need PTI.

— Gregory J. Fritz
President
Produce Packaging, Inc.
Cleveland, Ohio

We found this letter most intriguing. Not because it complains about the cost of implementing the Produce Traceability Initiative, nor because it claims current systems are sufficient. Both these objections have been frequently raised.

We find this letter interesting because it raises three often overlooked points:

First, it focuses on the consumer. It asks the classic question that producers always have to ask about any expenditures. Would consumers actually like to pay for this?

Second, Mr. Fritz questions the sincerity of this effort, pointing out that despite the trade’s supposed commitment to food safety standards, these standards are regularly waived for local growers. Surely many will never enforce these traceability standards and will simply buy from the cheapest guy, and what is United — or its association partners in this venture, PMA and CPMA — going to do about that?

Third, as any businessman should, he asks what evidence there is that investment in this traceability initiative is the best use of scarce resources. Perhaps, as he argues, the same money and attention paid to holding mock recalls would result in more practical improvements in traceability as it would catch those not even meeting the current legal standard as opposed to burdening those who already meet standards with tougher standards.

We empathize greatly with Mr. Fritz. We do not think he is the problem. Here is a letter we ran in a piece entitled, Though Traceability Initiative Is a Big Win, Weak Links Still Exist:

Putting in a system to trace product gets more difficult the further down we go in the distribution chain. Stand on the floor on a busy Terminal Market and try and imagine where the product goes after it is sold by the Wholesaler. A customer known as “Ken, the guy with Red truck,” pays cash for a pallet of tomatoes. He takes the tomatoes to his garage where the boxes sit on the floor next to cleaning supplies, motor oil, and who know what else.

He and his kids (2 of whom just used the toilet without washing their hands) dump the tomatoes on a dirty tarp to sort them for color. The green ones sit in the garage for a few days to color up during which time one or two rodents snack on tomatoes. When they finally ripen, Ken delivers the tomatoes to some of the finest restaurants in town for all of us to enjoy.

Somehow I don’t think that Ken or even a legitimate small wholesaler or purveyor is interested in investing in a traceability system. They will have to be dragged kicking and screaming to the table. The problem is that the system is only as good as its weakest link, and unless Ken is a part of the system it doesn’t work.

Since “Ken” is not going to be part of the system, the system will not work. So why not abandon this effort as Mr. Fritz suggests. There are really three reasons:

First, whatever improvement we can get in traceability is useful. Although Produce Packaging, Inc. may be scrupulous about maintaining its one-up-and-one-back traceability requirement, doubtless some of its customers are not. If Mr. Fritz sells something to a Cleveland wholesaler, who sells it to a Chicago wholesaler, who sells it to a purveyor, this new system, though not perfect, at least holds out the possibility of improved traceability. That is a plus.

Second, it is an example for the industry. There is, of course, no law that requires Produce Packaging, Inc. to do this. If the company proceeds, it will either be because its customers demand it or because Mr. Fritz wants his company to be perceived as top of the line. One thought is that it matters what we get the best people in the business to do because this sets up a standard that organizations aspiring to leadership will seek to maintain.

Third, most of all, though, this is a case where you come to realize that the dynamic that moves a private company is different than what motivates a trade association. United, PMA and CPMA have pushed this because they hope to see substantive improvement in traceability and, perhaps more important, because they want to safeguard the image of the produce industry before the media, legislators and regulatory officials.

Although it was in many ways unfair, the trade’s traceability capabilities were disparaged during this past summer’s Salmonella Saintpaul outbreak. Folks like Caroline Smith Dewall, Director of Food Safety for the Center for Science in the Public Interest, were holding press conferences at the National Press Club in Washington, DC, demanding tougher traceability laws. This is not trivial. She is a sharp attorney, articulate, well-respected and, in fact, the favored candidate to be President Obama’s choice to be the new head of the USDA’s Food Safety Inspection Service!

If all the industry did was act defensive during the Salmonella Saintpaul crisis, indeed we would have probably wound up with tough new legislation. Certainly we would have no goodwill to tap into when we needed help with other matters. Now we have a bit of a goodwill bank account to draw on because the industry made this effort and, bottom line, in DC the only alternative to mandatory government regulation is self-regulation. So the trade associations pursued this matter for lots of reasons other than because they thought it would result in perfect traceability.

One question Mr. Fritz did not ask but that is completely legitimate is this: Is the goal of avoiding mandatory regulation one that should be pursued in this case? After all, if the problem is our “Ken, the guy in the red truck,” and he is not a member of any association and cannot be brought into a voluntary system, aren’t we going to make all the top performers vulnerable to a food safety problem caused by “Ken” Maybe the industry is better served with a mandatory regulatory structure that, at least theoretically, applies to Ken as well?

As for Mr. Fritz and whether he should make this investment, we cannot be doctrinaire. Industry self-regulation is not a suicide pact, and if Mr. Fritz believes his customers will so little value this that by Mr. Fritz fattening his expense structure, he will not be able to compete and will have to close — well, we would advise him not to do it. Although we will say that there is a branding value to a company in always being associated with best-of-class initiatives, so we would urge Mr. Fritz to think carefully.

Long term there is a challenge for the associations to require more than nice words from buyers. Just the other day, we ran a truly scandalous piece, titled, Is Tesco Defrauding Consumers? Promising Only Nature’s Choice Certified Product But Delivering Cheaper Alternatives? From a trade perspective, it was the story of a retailer enticing vendors to spend money to improve supply-chain standards and then disregarding those investments to buy what was cheapest.

The bottom line is that there is nothing to stop big buyers from doing the same thing on traceability.

Some trade associations have codes of ethics and similar standards that require members to sign a paper promising to obey the code as a condition of membership. We thought about suggesting it but, honestly, we suspect the retailers would quit before they would sign it.

The Pundit Poppa used to say that there is nothing harder than to make an honest living. He may well have been right, and so we share with Mr. Fritz the frustrations of dealing with such rules and regulations. We know that United Fresh will be more than respectful in its response, and we think Mr. Fritz did the industry a service by speaking honestly and with integrity on this matter.

Our problem is not with those who forthrightly disagree; it is with those who never had any intention of executing on the plan, but sign pledges left and right because it is expedient.

If Mr. Fritz does decide to bite the bullet and execute the program, as we suspect will happen, we hope he’ll invite us for the first run; it would be an honor to see it working.




Pundit’s Mailbag — Tackling Tree Fruit Turmoil From Different Perspectives

Our piece, Tree Fruit Industry In Turmoil, prompted Steve Kenfield, Vice President of Sales and Marketing for HMC Group Marketing, Inc., Kingsburg, California, to send a note, which we incorporated into a piece entitled, Pundit’s Mailbag — Reshuffling The Tree Fruit Industry, which brought a torrent of objections.

One former tree fruit farmer, still active in the industry, put his objections this way:

I read with interest Mr. Kenfield’s analysis of the plight of the tree fruit industry. I was surprised with his brazen advertisement for HMC and their “commitment” to quality. This appeared to me to be a shameless free advertisement given the widespread distribution of your fine newsletter.

I would suggest that a major part of the problem which Mr. Kenfield glossed over was the retailers raising retail prices to well over the $2/lb mark. This in effect has been the root cause for reducing consumption as this cost level moves tree fruit from a core purchase item to that of a luxury item, very similar to blueberries and raspberries. Consumers now are faced with a shrinking food budget and $2/lb does not establish a reasonably priced food choice for the consumer. Not when they can now look outside the produce isle for other budget-stretching choices.

This inflation in the produce isle can be directly linked to shrinking profits for retailers in the center of the store and have forced profits to be drawn more heavily from the perishable sections. While a $2/lb retail on peaches returns a whopping $40 per case to the retail store, the farmers can expect the FOB price of a $14/carton to translate into a farm gate price of $6.60/ctn, or 33 cents per lb.

This disparity has created a huge pressure on producers that are unable to recoup even their production costs, while they sit by and have been forced to watch their fruit being sold at luxury prices on the retail stand and driving consumers to other choices, thus reducing consumption. California Tree Fruit Agreement research, as well as anecdotal evidence, has shown a dramatic increase in consumer satisfaction, a point that Mr. Kenfield overlooks in his letter.

So producers are faced with a marketing climate that has not a lot of upside. Consumers are definitely paying their fair share for California stone fruit, and they have become quite loyal to this product, yet farmers continue to suffer with farm gate prices that are similar to those of 15 or 20 years ago when adjusted for inflation.

The system is definitely broken.

While much of Mr. Kenfield’s thoughts are valid, I was disturbed by his shameless plug for HMC’s commitment to quality hidden in his explanation of the current industry woes. Most of the tree fruit farmers that I come in contact with on a daily basis are all concerned about producing a quality product that will make consumers happy with their purchase.

It is not just large vertically integrated mega farms that have this feeling as Mr. Kenfield highlights, but most California stone fruit producers.

We appreciate the kind words about the Pundit and certainly understand the sentiment being expressed, but we would have a slightly different take on Steve’s letter. Although we are very fortunate here at the Pundit to have numerous correspondents who write generously out of a desire to see industry improvement, it is also true that many who participate in this dialog both want to help the industry and believe that what they or their company is doing is in service to that desire.

Steve had the courage to state his case and to sign his name. He may be right or he may be wrong, but he has put out there his take on things for public analysis and debate. That is a contribution to the industry.

When we reach the substance of the argument, our correspondent today makes two points:

  1. The root cause of the industry problem is excessive retail prices on stone fruit.

  2. Most tree fruit farmers of all sizes — not just vertically integrated organizations — want to create a quality product that will please consumers.

When it comes to pricing, all producers of all crops have always complained about the gap between farm gate receipts and retail prices charged to consumers. We remember 20 years ago going to workshops where the likes of Bob DiPiazza, then at Dominick’s, and Dick Spezzano, then at Von’s, attempted to carefully explain to the grower base what went into retail pricing. The gist of the talks: The product is the cheapest element in the pricing equation. Real estate, labor, transportation, insurance, electricity, advertising, on and on, are the big costs, so even substantial reductions in the cost of goods resulted in relatively small reductions in prices paid by consumers.

Beyond this point, it is also true that the interest of retailers is not simply selling more stuff; it is making more money. Now proving that reducing retail prices will result in better retail profits is much more difficult than one might think. Look at how daunting the math is: If a retail chain reduces its gross profit on an item by 50%, it needs 100% increases in its sales to come up with the same gross profit. That is not easy to accomplish — especially on a sustained basis.

Yet even that doesn’t prove the point. Handling fruit is expensive. If sales go up 100%, the store will need more labor and space devoted to tree fruit, so even a 100% increase in sales will not compensate for a 50% reduction in gross profit.

Then, of course, there is an opportunity cost to the retailer. Very likely these massive increases in sales may mean fewer sales of some other item. If sales of tree fruit double but grape sales collapse, the retailer’s profit may go down.

Our correspondent gives an assessment that retailers need to make more on perishables because they are losing sales on core grocery items to Wal-Mart and club stores. Fair enough, but what is the alternative? Surely stores can only make money on things they sell. If history has conspired to shift purchases of paper plates to non-supermarket concepts, the stores will devote more space to perishables; perishables will account for a higher percentage of sales and, yes, will have to produce more profits.

Besides, there is another way of looking at this. If stone fruit is so exceptionally profitable, then retailers have exceptional incentives to devote space to it, promote it and, in general, boost tree fruit sales. It is not obvious that the tree fruit industry would benefit from reducing that incentive.

That our correspondent speaks up on behalf of the desire of growers of all sizes to produce consumer-pleasing fruit is heartening. Unfortunately, we are not sure it is relevant. Steve Kenfield’s letter did not accuse non-big-5 producers of being evil or of wanting to sell bad quality fruit. Instead Steve was making a different point.

It is a point that we have heard before in relationship to food safety. Way back in the midst of the spinach crisis, we ran a letter under the title, Pundit’s Mailbag — Grower/Shipper Calls Buyer-Led Food Safety Initiative Hollow Call To Action, and it contained these lines:

It is the buyer that can truly force change by committing to align its supply chain with like-minded suppliers. Take a look at Nogales — ground zero of lateral trading. It is amazing how many of the companies who signed on to the letter rely on brokers who have no control over or interest in the core elements of food safety.

Food safety is like flavor; to successfully deliver it you must have commitment and control in an aligned supply chain. The commitment required is to hold food safety (or flavor) as a core value. The control can only be asset-based. The parties involved must have control over the assets necessary to execute daily. These assets are obvious from the shipper standpoint, and from the buyer side it is control over the PO’s.

Very often we see good intentions at the VP level vaporize by the time the buyer goes to work.

Trade associations and governmental regulations are not structurally positioned to deliver the commitment or control to raise the bar. Many commodity promotion boards are well aware of the consumer challenge, and they speak to the trade and the consumer as a producer promising to deliver solutions. As a marketing order, however, these groups can influence standards but clearly cannot do what is necessary to solve the consumer challenge.

At best, they have the commitment and control to deliver like a coop… defined by the least capable member, in reality they operate at the lowest common denominator.

Even in industries where there were players who controlled the assets and worked at the commitment, they could not address the eating quality challenge without the retailer.

There must be an aligned supply chain to solve these challenges. When the end is clear and the relationship is right, higher quality (safer food) can be achieved and total costs can be lowered, but only if we get out of the bid-ask environment where these elements are not valued.

To our mind, this is the point: Achieving food safety… or achieving flavor… is not a matter of desire; it is a matter of money. If the person with the PO doesn’t care enough to constrain his purchases to those that accomplish these tasks, it is difficult to justify accomplishing them. We don’t read Steve’s letter as beating up on small growers; we read it as saying that the more closely aligned that grower is with a purchase order that specifies flavor, the more likely it is that flavor will be the outcome.

As it happens we received another letter on this topic from a frequent Pundit correspondent, also disagreeing with Steve Kenfield, but for a different reason:

I appreciate the dialog around the California treefruit industry. No question there are issues that have been well discussed in the postings I read in the Perishable Pundit recently. Steve Kenfield and I are well acquainted and have worked in complementary capacities in both the California and Chilean fruit industries.

However, I disagree that vertically integrated business models will be the ones best suited to adapt to the realities we find ourselves in going into the 2009 season and beyond. By the most liberal of estimates of the volume controlled by the top 5 grower-packer-shippers, they control perhaps 35% of the industry’s total 50 million 25 lb. box equivalent volume. That leaves 65% of the industry that are integrated at different levels and layers, but not necessarily ill-equipped to produce premium varieties, packed in industry demanded packaging, to the ultimate level of food safety.

The reality is that the economies of scale for treefruit are dramatically different even from other tree crops. Techniques for pruning, thinning, harvesting may be as efficient in some instances for a 40-acre grower in many varieties as it is for a 2000-acre grower on a per acre basis. There are hundreds of varieties of peaches, plums and nectarines grown in California, and every one is ‘different’.

However, when it comes to post-harvest handling — from the segregation-of-system approach, fruit from various ‘sustainability’ farming standards (including organic), and the dramatic proliferation of pack styles, PLUs and clamshells required from our domestic and export customers — the combinations may run to 50 [control points] or more to meet our buyers’ requirements. Certainly there is a need to aggregate fruit from growers who are efficient farmers but do not have the capital or the volume in all varieties to individually have their own distinct go-to-market strategies.

Our company, Fruit Patch, is a major treefruit packer with a full range of commodities and varieties with volume equal to the “big 5” to which Steve Kenfield refers. However, in our case, we are attempting to give our multiple individual grower base the facility to get their fruit to market in as efficient a manner as any vertically integrated grower-packer-shipper.

Certainly, there is still more industry consolidation that is likely to occur even before the first fruits are harvested in 2009 and in years to come. However, there still are companies like ours who are in a position to aggregate the best varieties, farmed economically by efficient and knowledgeable growers, and then add the post-harvest services of packaging, sales, and marketing services our growers deserve while offering a smooth go-to-market strategy that is seamless to our domestic and export buyer clientele.

There currently may be too many ‘sellers’ in the market that are contributing to inefficiencies in the marketplace. However, the majority of the fruit grown is grown by individuals who are good at what they do. What they need is better service to allow them the benefits of those who control large blocks of fruit. With the hundreds of unique varieties the industry manages during the season, there are still efficient ways to get them to market without thinking ‘only’ a major vertically integrated grower-packer-shipper has all the answers for the trade.

— Rick Eastes
Vice President Sales & Marketing
Fruit Patch Inc.
Dinuba, California

Rick is claiming that unique attributes of the tree fruit industry — particularly the many variants of fruit and pack — make it difficult for even a "big 5" company to be as perfectly aligned as it might like. Rick speaks up for the ability of his company, Fruit Patch, to “…give our multiple individual grower base the facility to get their fruit to market in as efficient a manner as any vertically integrated grower-packer-shipper.”

As Rick explains: “There currently may be too many ‘sellers’ in the market that are contributing to inefficiencies in the marketplace. However, the majority of the fruit grown is grown by individuals who are good at what they do. What they need is better service to allow them the benefits of those who control large blocks of fruit.”

So there we have two models: Steve arguing for a grand consolidation so control will rest with fewer, larger, players. Rick arguing for the provision of services to turn independent growers into superstars.

These are not intellectual decisions… the winner is chosen not by a vote of experts but by the rigors of the marketplace. We just hope the winner is clear before everyone goes broke!

Many thanks to Steve Kenfield, Rick Eastes and our other correspondents for helping the industry think through such a difficult question.




Perishable Thoughts —
Urgency Of Desire

Steve Travis, Director of Sales and Business Development for Hartmann Foods, a Snoqualmie, Washington-headquartered distributor and importer of fruits and asparagus, had earlier sent in a quote from Colin Powell that we used in our Perishable Thoughts section.

We owe Steve another hat tip for sending along this quote:

“Without a sense of urgency, desire loses its value.”
— Jim Rohn
The Treasury of Quotes
1994

This quotation can be viewed here:

In the Vitamins for the Mind section of www.jimrohn.com
It is the fifth quotation under DESIRE/MOTIVATION

This quotation can be purchased here:
The Treasury of Quotes
By Jim Rohn
Jim Rohn International, 2001
124 pages

We find this quote a little perplexing. Jim Rohn is famous as a particular type of motivational speaker who famously says one must first educate and only then motivate. Otherwise he points out you wind up with motivated idiots, which is pointless.

He also is intriguing because he suggests a focus on the person, not the job. His mantra is that one doesn’t earn success, that through personal development one becomes a person worthy of success, and it is those qualities that attract success.

What we take this to mean is that desire not coupled with urgency is something of a fraud. It reminds one of the famous line from St. Augustine’s Confessions: da mihi castitatem et continentam, sed noli modo, or “Oh, Master, make me chaste and celibate — but not yet!"

Another well known Rohn quote ties it all together in these times of economic difficulty:

“The major key to your future is YOU; it’s not the economy, not prices in the marketplace, not the government or even taxes."

If you truly desire success and achievement, you don’t allow excuses. The world always has opportunities, and if one desires, truly desires, to realize one’s potential, the statistics on the gross national product are just background noise.

In our family business, we never started any venture where it would have been important to get 100% of the market. So if we started importing honeydews, so what if the volume was going to be down for total imports? We still had an opportunity to make it a big success for us.

That may be the key. You are in foodservice and foodservice sales are down. Well, maybe foodservice sales being down is a big problem for Sysco, but for an entrepreneurial purveyor selling from the back of a van, why worry about national trends? The direction for your own business is clear, and the only mistake would be to lose the sense of urgency that gives one’s desire to succeed all its impetus and value.

Many thanks to Steve Travis for sending this quote along.

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