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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

Carbon Footprinting Gone Wild!

Everyone who is doing business with British supermarkets is getting inquiries about the “carbon footprint” their products impose on the environment.

In France, the French division of the World Wildlife Fund has come out with a report purporting to measure CO2 emissions used in the production and transport of various fresh produce items:

But figures released this week by the French division of the World Wildlife Fund show the difference in CO2 emissions among produce delivered to Paris from a variety of sources.

One kilogram (2.2 pounds) of green beans from Provence in France costs 64 grams in CO2 emissions. Sourced in Andalucia, Spain, the figure rises to 128 grams. Flown in 6,000 kilometers (3,728 miles) from Kenya, emissions rocket to 3,948 grams per kilo of green beans.

Cherries driven from the Loire district in central France cost 67 grams, from Catalonia in Spain 134 grams, and flown from Chile, 1,052 grams.

It is hard to know where to begin in critiquing efforts such as this. But let us look at one example:

Transportation, which accounts for a large part of the carbon footprint, is very complicated. When interest rates zoomed many years ago, my family was approached by a man who had a contract to fly the most expensive European luxury automobiles to the U.S.A.

Basically, with the cost of money very high, they had calculated that it paid to fly these cars rather than take less expensive ocean transportation as they could get paid for the cars sooner. The deal was set up, the planes were chartered and flying. It was all paid for, exclusively, by the shipping fee for the cars.

We were approached to see if we had any ability to fill the back haul and were offered very inexpensive rates.

We took advantage of the deal and flew our produce cheaply. It continued for several months, then interest rates dropped, the flights were no longer economical and we were told that the charter was ending and along with it our deal.

Now today Marks and Spencer puts an Aeroplane logo on the product, sort of a scarlet letter, warning everyone they are bad people if they buy this.

The World Wildlife Fund in France will do some calculation of the plane’s emissions and declare it wasteful and dangerous to the world.

Yet, in fact, as the planes were flying anyway, the carbon emissions caused by utilizing these planes was as close to zero as you can get.

This is really why we need capitalism. Capitalism enlists billions of people, all with specific knowledge of different things, and then directs their energies to finding the most efficient ways to do things.

It is pretty well accepted that because these billions of people have knowledge even the most intelligent and benevolent central planning office can simply never have, allowing lots of individual decisions will create a better economic outcome than trying to dictate things.

What is not always recognized is that telling consumers to make buying decisions based on criteria such as that Aeroplane symbol or some calculation of carbon use will backfire for the same reason — insufficient information, in this case, by the consumer.

Knowing something was flown in, knowing the WWF calculation of the CO2 emissions, these types of information are just too limited to tell a consumer anything useful about the environmental impact of a choice.

What would make sense is to push politically for public policies that make sure the price of goods reflect their true cost to society. In other words, you want to make sure that the law does not allow people to pollute for free as this will encourage pollution.

But no consumer can make a useful decision based on any of these blunt tools we seem intent on promoting to consumers. It is as likely to harm the environment as help the environment.

Fairtrade’s Unfairness

An article in The Jamaica Observer posed the question of What is the future for Jamaica’s banana industry? As the piece explains:

The industry still employs more than 10,000 people and accounts for $26 million of Jamaica’s Gross Domestic Product. But the end of preferential access to European markets has threatened the industry with extinction. Competing with the “dollar”, bananas produced by near slave labour in South America seems impossible.

Jamaica used to receive special preference on market entry to the U.K. and has, more recently, had preferred access to European markets in general. The U.S. and Latin American producers challenged this access before the World Trade Organization and have won several times. Europe has continued to come up with new schemes but, ultimately, all of the schemes are illegal under the WTO and, presumably, will come to an end.

The reference to “slave labour” is telling. It is really a reference to lower living standards in some of the Latin American producers of bananas, not to slavery. And viewed in the context of these lower living standards in poorer countries, this article’s recommendations to the island’s banana industry really tells us something about Europe:

But the islands of the Eastern Caribbean seemed to have discovered a way to save their industry. They have repositioned their bananas as a niche Fairtrade product. This way they can charge a premium. Furthermore the premium can be as much as 25% higher than the market price. And earlier this year Britain’s second largest supermarket chain, Sainsbury’s, announced that all the bananas it sells from now on will be Fairtrade bananas.

Because Sainsbury’s sells over 1,000 bananas a minute, that is a huge amount of bananas. They have committed to buying 75% of St Lucia’s banana export crop, 80% of Dominica’s and much of the production of the other Windward Islands.

The impact of Fairtrade bananas in the Eastern Caribbean has been tremendous:

Sir John Compton, the 82-year-old premier of St Lucia, told Justin King, the head of Sainsbury’s: “You have saved the banana farmers of St Lucia.” And the prime minister of Dominica, Roosevelt Skerrit, travelled to Britain in February in order to explain to British MPs how much the Fairtrade scheme had done for his country’s banana industry.

He said “What Fairtrade has done for us is ensure that the social stability of our country is maintained; that poor people particularly in rural communities can enjoy a better standard of living as a result of a committed price in the UK market.”

The article goes on to talk about the details of how Fairtrade works and urges the Jamaica banana industry to reposition itself as a niche, premium, Fairtrade product.

The author may be correct that this is the best thing for the Jamaican industry, although the larger scale in Jamaica may make it difficult to find buyers for that much Fairtrade product.

But even if it could be done, and accepting that the Jamaicans, St. Lucians and the Dominicans are perfectly in the right to look out for themselves, the moral implications of this for Europeans are rather striking.

Nothing that has been done has helped to increase consumption of bananas, so if Sainsbury’s “…saved the banana farmers of St. Lucia.” — banana for banana, it caused poverty and desperation in even poorer countries, those with the “…near slave labour…” conditions the article references.

It is as if morally the only thing that counts is what one elects to look at. So eminent person after eminent person traipses through St. Lucia, looks at the development projects paid for by the “Fairtrade Premium” and declares it good. Nobody goes to see desperate people who have lost the opportunity to sell to Sainsbury’s and notes what that has done for those areas.

If we are going to get involved in utilizing our purchasing power to be more “ethical,” shouldn’t we consider both the good we do and the harm we do through our programs? Or is this some kind of moral vacation for the west, where we only congratulate ourselves on our virtue and turn a blind eye to the less desirable effects of our actions?

Pundit’s Mailbag —
Bigger Picture For WGA’s DC Office?

Our piece, Justifying WGA’s Washington Office, and Pundit’s Mailbag — Concern Over WGA’s DC Office continued to lead to industry discussion as leaders attempted to understand its meaning. One knowledgeable association executive put his thoughts this way:

I was surprised to hear WGA was doing this, because they already have two contractors in town — Bob Schramm and Julian Heron — and because a DC office has to cost them big bucks every year.

It’s no secret there have been differences between Tom Nassif, President and CEO of Western Growers Association, and United Fresh, which in my opinion is more a matter of egos than substance, but I thought that had settled down.

After the initial falling out between the two, nominally over the way COOL (country of origin labeling) was handled, the various grower organizations put together a loose organization to monitor events from a grower perspective.

At that time, there was discussion of joining together to create a DC presence if United drifted too far to the retail side. Of course, some version of this discussion has been around for decades, but it never produced much.

If you look at the cost of opening a really effective office, it’s humbling, so many were relieved that the two organizations seemed to be mending fences.

I’m not really sure what’s going on here: maybe Tom Nassif and his board think United can’t and won’t follow California’s (or the growers’) lead, maybe they look at the board of United and see mainly retailers and allied industry (although, of course, others look at the board of United and see mainly grower/packer/shippers), maybe WGA is just making so much money on insurance they have to bury it somewhere.

I do believe that any hint of a rupture in the industry’s ranks in DC is damaging to the industry (United we stand, etc.).

We wonder if Tom Nassif was properly briefed when he accepted the job running WGA? Tom was a person of great stature in the Reagan administration. He was Chief of Protocol, an Assistant Secretary of State and United States Ambassador to Morocco. That is a formidable resume.

So formidable, in fact, that one suspects he must have greater ambitions than to run a regional fruit and vegetable grower association.

As much as anything, that may be behind this D.C. office.

We happen to like and admire ambition in people so all this is no criticism of Tom. It simply means that years of observing these things teaches us that in trade associations, as in business, love and life, what happens often depends as much on personalities, ambitions and life stage as it does on anything else.

The obvious issue for the industry is what our letter-writer mentions:

“…any hint of a rupture in the industry’s ranks in DC is damaging to the industry (United we stand, etc.).”

Perhaps, though, the long-term impact of WGA’s Washington office might be found in something else our letter-writer mentions:

“After the initial falling out between the two, nominally over the way COOL (country of origin labeling) was handled, the various grower organizations put together a loose organization to monitor events from a grower perspective.”

If, in the fullness of time, WGA’s Washington office came to represent some other regional grower groups and, ultimately, produce growers all across America, wouldn’t this significantly reduce the sense that the industry needed to maintain a separate United Fresh in D.C. as the voice of the production end of the industry?

In fact, at one point after the outbreak of the Spinach Crisis, we were writing quite a bit about a possible merger between PMA and United. It was clear from the many letters we received that United was highly valued for representing the production end of the business. As a result we developed a model for how a merger could take place:

Here’s the Pundit’s specific suggestion: Sustain the successful business model of PMA but augment it with United’s very successful programs such as the Leadership Program, respected technical/scientific department and a D.C. office for lobbying and government relations. United’s very successful field outreach program, with people such as Jeff Oberman (recipient of the PRODUCE BUSINESS 40 under 40 award), would also be continued.

At the same time, a separate “Congress of United Fruit and Vegetable Growers of America” would be founded and housed in the D.C. office of the new association. Existing strong grower groups, such as Western Growers Association, Texas Produce Association and Florida Fruit and Vegetable Association, would be included as well as other regional groups with an assurance that every state in the union has a regional representative.

Then, the new national organization would cede government affairs for any grower-specific issues and dedicate to the regionals, say, 50% of the dues paid by growers.

Heading up a “Congress of United Fruit and Vegetable Growers of America” sounds exactly like the kind of job a former Ambassador would like to hold.

Pundit’s Mailbag — Making The Grade

So much of what we do here at the Pundit is on the level of industry policy that it is refreshing to sometimes try to clarify a specific business issue. This letter gives us an opportunity:

I have a question or issue, if you will, that I’d love to see YOU address.

Simply, why does Greenhouse product coming from Mexico come under an agreement where you can’t get NO. 1 product, but Canada you can? I bought a load of GH Beefsteak Tomatoes that failed better than 20%.

I bought it from a company doing business in the USA. My PO indicates US NO.1. I’m told I must pay this file in full???

What makes Mexico exempt but Canada must meet US NO. 1??

— Mike Gianatti
Executive Vice President
Quality Sales
Hartford, Connecticut

Of course the key to being a good Pundit is having really smart and accomplished friends. We’re pleased to count among them Al Vangelos. In fact, the Pundit stares all day at a photo of Al, during his term as Chairman of United, standing with the Pundit as we launched a long ago venture called The Retail Institute.

Alexey Gordeev, President Putin’s Minister of Agriculture, officiated in the ribbon cutting opening the newly added facilities at the Produce Distribution Center in D’mitrov, 40 miles north of Moscow.

The distribution center was developed and is owned by the Russian Farm Community Project. They pioneered the first ever “Russian” branded produce that is in distribution throughout Moscow supermarkets and expanding to other markets.

Photo (l to r) Al Vangelos, Chairman of the Board Russian Farm Community Project, Valerie V. Gavrilov, Head of D’mitrov Administration (Governor), Alexey Gordeez, Minister of Agriculture Russia, Andrei Danilenko, Pres/CEO Russian Farm Community Project.

Al was CEO of Calavo back then, but he has been a big wig with Dole, a director of both Sun World and Ready Pac, chairman of a farm project in Russia (see photo above), a leading consultant and, the reason the Pundit called him: he is now the Chairman of BC Hothouse Foods, Inc.

Al got together with BC Hothouse executives as well as with Tom Demma, President of the BC Vegetable Marketing Commission, and gave us this explanation:

Canada does not have to meet US No. 1 grade, but any producer that puts US No.1 grade on their carton has to meet US No. 1. If the carton does not read US No. 1, then it does not have to make the grade, thus it does not fail.

The shipper must be informed of the requirements prior to the shipment. Just having it on your PO means nothing unless it was stipulated, preferably in writing. At that point, it would probably be a PACA issue.

That clarifies that. Many thanks to Mike for raising the issue and to Al, the folks at BC Hothouse and Tom Demma for helping us resolve it.

On The Road Again

Time of the year for lots of travel.

The Pundit or part of our staff will be at the following venues in the next two weeks:

Along with sister publication, PRODUCE BUSINESS, we are exhibiting at the New England Produce Council Produce & Floral Expo.

The Pundit has a conflict this year but, once again, along with sister publication, PRODUCE BUSINESS, we will be exhibiting at United’s FreshTech. This is the linear descendent of the old International Fresh-cut Produce Association show. Last year, the Pundit gave a joint keynote presentation with Bruce Peterson and next year, this show is going to co-locate with the main United show.

Then the Pundit will be at the United Fresh/FMI show in Chicago, where we will be exhibiting along with PRODUCE BUSINESS, as we will also be at the CPMA show, where the Pundit will also be visiting.

Simultaneous to all this, along with our sister publication, AMERICAN FOOD AND AG EXPORTER, we will be exhibiting at Seoul Food and Hotel in Korea, SIAL China in Shanghai and HOFEX in Hong Kong.

On top of this, we have several board meetings to attend this month, both in Mexico and domestically.

Having so many events so quickly, even just in North America, is a significant strain on employees. Whether they need to get back for work or family, there is a price paid for long trips away from home. The Pundit manages to handle a lot of work from wherever he is and truly believes that it is good for the Jr. Pundits to see their father handling his responsibilities. Yet you only have one life to love your spouse, and children only grow up once, so every day away from the family is a high price to pay.

On the other hand, we expect very good attendance at both United Fresh and CPMA this year, in part because we’ve heard from a number of non-U.S. visitors coming specifically because they can hit both shows at one time since they follow each other so closely.

There is no real answer. Some events are moving to weekends so that people can keep their work weeks free to handle needed business — PMA, for example, is doing this with its trade show and convention, moving from Sunday, Monday, Tuesday schedule to a Saturday, Sunday, Monday event.

In contrast PMA is moving its Leadership Symposium so that instead of spanning a long weekend, it will take place over the work week, thus letting the mostly younger attendees at the Leadership Symposium spend their weekends with their families and friends.

It is a battle and it means that everything that asks for people’s time is increasingly pressed to provide real value. Maybe that is why your readership of the Pundit means so very much to us.

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