Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Got Produce?Generic Marketing Program Dialog Begins, But Is It Right To Use PBH Donor Funds To Lobby For A Mandatory Assessment?

There is a proposal outstanding to establish a National Fruit and Vegetable Research and Promotion Board, basically a program similar to those in the dairy, beef, pork and other industries.

It is an old idea, one discussed for many decades, and in fact it is not clear who actually supports the idea today. The spark has come from the Produce for Better Health Foundation — yet its board has not endorsed such a plan. There were six people put on a special committee to consider the idea, but the organizations they represent have not issued endorsements.

Paul Klutes, Director of Brand
Sales for C.H. Robinson and
current Chairman of PBH, and Elizabeth Pivonka, President of PBH, speaking at United Fresh

Mark Munger, Vice President of Marketing at Andrew & Williamson Fresh Produce and immediate past chairman of PBH, and Paul Klutes, Director of Brand Sales at C.H. Robinson, who is this year’s chairman of PBH, have been flying around the country with Elizabeth Pivonka, who is the President of PBH, giving presentations promoting the idea. However, neither Andrew & Williamson nor C.H. Robinson have endorsed the plan.

We have kept an open mind on the matter and have been studying the proposal. As is typical in things that depend on USDA data, there are many questions regarding the validity of the numbers being represented. The organizers already had to adjust the grape numbers because it seems like some wine grapes were accidentally included. We’ve been asking questions because the processing numbers look incorrect to us.

As these numbers get clarified, we’ve planned a series of articles, each of which will analyze a question raised by the concept. You can keep an eye out for the “Got Produce? Generic Promotion” logo you see included in this article. We will include it in each piece of this series and on a “hot topics” button on the left hand side of the Pundit.

We come to the issue somewhat wistfully as there is little question that the world would be a better place if diets shifted to a diet composed mostly of plant-based foods, especially fruits and vegetables. So the concept is not merely desirable; it is an important public health and sustainability opportunity.

Yet that doesn’t settle the matter. The way this is being promoted — as a program to increase consumption — there is a contradiction at the heart of the proposal. In this industry of family businesses, there are plenty of farmers who grow a set acreage, say 200 acres of vegetables. These growers will not profit just because consumption increases. They will only profit if prices go up.

Yet to argue that the program, by increasing demand, will cause prices to go up is inimical to the professed goal of increasing consumption.

If prices don’t go up, though, our 200 acre vegetable farmer and others like him will be compelled to pay to fund an activity — increasing consumption — from which they will derive no benefit.

To add insult to injury, the current proposal will result in farmers being charged to support the generic promotion program but will deny them a vote on the matter.

In this industry it is quite common for growers to have their sales handled by an outside entity that would be classified, under this proposal, as a “first handler” — it is the first handler that gets the vote and has to send in the check. Yet, these handlers often sell product under arrangements in which they charge back to the growers all expenses. So they deliver an account sales document that includes USDA inspections, warehouse charges, freight and, yes, the “tax” imposed by the generic promotion board.

So the comeuppance is taxation without representation. Compelling payments under these circumstances is very problematic.

There also is a real issue as to whether this type of program makes sense for produce and might not cause discord in the industry. In dairy or beef, generic industry promotion works because a “cow is a cow” — if the beef board decides to have James Garner grilling steak, the hamburger people don’t get upset because there are no hamburger people. The same cow — which is where the assessment is levied — produces both steak and hamburger.

Produce is not like this. The biggest competitors to produce producers are other producers of competing produce products and, inevitably, one can’t promote just generalities. James Garner had to grill something — a T-Bone, a New York Strip, a hamburger, a hot dog, a sausage — and the beef people may have thought a particular approach wise or not, but they basically would acquiesce to the advertising professionals.

In produce, in the context of a mandatory assessment, it would be a fighting matter if an ad showed grilling portabellas or sweet corn or roasting peppers or grilling pineapples or peaches. In fact, if through effective campaigns the board quintupled pear consumption, isn’t it highly likely that the biggest loser will not be Ring-Dings or Devil Dogs, but apples?

In addition there is a substantial group that could support a generic program but expect a credit for their current efforts. This could be a brand credit going to Sunkist and Dole, Chiquita, Del Monte and anyone who spends money on marketing. Some farmers who are already paying into commodity promotion boards think they should get a credit for those assessments. Otherwise many fear this board will “crowd out” other marketing efforts.

We’ve heard “over my dead body” from some producers over plans to exempt both organics (we would need an Act of Congress to change this) and sales to farmer’s markets from the assessment.

And all this assumes that the program would actually work. Yet there are real questions whether the budget proposed — roughly 10% of what the milk board spends, for example — would actually be sufficient to move the needle on consumption.

These are all serious questions and there are many more. Fortunately, the proposal calls for industry dialog and a decision deferred until October. That means we have some time to think about these problems and see if we can find solutions to these problems.

So the issue for the industry right now is how to conduct this conversation and the way it is being handled is quite problematic.

The involvement of PBH in this matter is in many ways very regrettable. The Produce for Better Health Foundation is a charity — what the IRS calls a 501c 3 organization. One donates voluntarily to PBH because one believes in the cause of enhancing public health through increasing the percentage of the diet that comes from produce.

But favoring this cause in one’s charity has nothing to do with favoring a mandatory assessment. There are many principled people in the industry who have supported the Produce for Better Health Foundation on a voluntary basis but who strongly oppose this mandatory proposal. Some would rather fund their own commodity groups; others want no assessments at all.

We have been receiving word from substantial donors to PBH who are simply aghast that money they donated expecting it to be spent on programs is, instead, being diverted to a lobbying effort for a referendum they oppose. Here is how one PBH donor put it:

Let me get this straight… as a voluntary donor to PBH I am giving them money which, without my permission, they are using to promote an idea I oppose that will compel me to pay money whether I want to or not? Can you imagine I will hesitate to donate to PBH in the future?

I think Tom Stenzel and Bryan Silbermann should give Elizabeth Pivonka a call and gently tell her to pursue other endeavors in the promotion of fruit and vegetable consumption.

At very least they should tell her to stop spending donor’s money on purposes that were never mentioned when those funds were solicited. Webinars are expensive and so are travel and staff time. What did it cost to build the web site? How much have they diverted from donor funds for travel? How much staff time has been diverted to this lobbying effort from doing what we donors intended to pay for?

Once again, it’s THE GROWERS being asked to foot the bill, not large retail chains (hello, Wal-Mart?) who get the healthy margin return from the sell generated by all of this wonderful advertising…

We are prepared to work hard to help analyze the issue and see if there are ways to advance the industry through this proposal. We are also prepared to look at alternatives. For example, maybe the industry should raise five million dollars to fund an effort to persuade the government that changing diet is cheaper than paying for medical care through Medicare, Medicaid, etc.

Yet it will be difficult to discuss this issue appropriately if people think it is being shoved down their throats.

There is nothing in the way the Produce for Better Health Foundation has solicited funds over the years that gave donors the slightest reason to believe it would spend their money on a lobbying campaign. So PBH staff and money should not be used for this effort.

Those who favor this new board should chip in and fund a campaign — including reimbursing PBH for its expenditures. Otherwise, we may get the worst of both worlds. The national board will not go anywhere and people will hesitate to donate to PBH lest their money be spent on causes which they do not support.




Dole’s Easy-Open Bags May
Jumpstart Stagnant Salad Category

With so much emphasis placed on the concept of increasing consumption with industry wide programs, it is important to remember that consumption cannot be increased in general unless it is increased for specific items.

For the last quarter century, the big growth in the produce categories came from two areas, the growth of counter-seasonal imports and the development of fresh-cut produce, especially bagged salads.

Most items are now available year-round so the counter-seasonal trade is not likely to grow any faster than the produce department as a whole. On the other hand fresh-cut, with the opportunity to innovate with packaging and product to meet consumer needs, holds out the promise of future growth.

Yet the promise is not being realized. The core of this category — bagged salads — has been flat or down since the spinach crisis of 2006. If we don’t find a way to make this category hot again with consumers, it will make plans to increase overall produce consumption very difficult to achieve.

Dole is, of course, the largest marketer of fresh produce, but in bagged salads it is number two — and by a substantial margin. Yet, as Avis taught us, sometimes #2 “tries harder” and we received word that Dole was setting its sights on jumpstarting growth in the packaged salad category by innovating to meet consumer needs.

When we learned that a focus of this effort was to address a Pundit Peeve, the tendency of bagged salads to “explode” while being pulled open or to require scissors to open, we were intrigued and asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Ronda Reed
Marketing Director
Dole Fresh Vegetables
Salinas, CA

Q: Tell us about your new easy-open packaging, its evolution and how it fits into your overall marketing strategies.

A: Basically what we’ve been doing over the past year and half is a tremendous amount of research through our strong new technology and marketing team, keenly studying the category and consumers, delving into their lifestyles, learning what frustrates and delights them to jumpstart the category.

We did a lot of packaging research as well. The biggest complaint voiced by half of bagged salad customers surveyed was frustration at not being able to open the bag.

Q: Do you have a copy of the report we could share with our readers? How many people were surveyed, who did you target, what was the methodology, etc.?

A: We don’t want to publish the internal research report. Market pools were conducted in June 2008. It was a quantitative study involving 1,196 people, over 18. We focused on the primary grocery shopper, and participants had to have used pre-washed packaged green salads from the produce section of grocery stores.

Half of the people found frequent problems when opening the package, and it happened again and again, making it very bothersome. When looking at the users, there is a tremendous percentage of heavy users. When heavy users are frustrated again and again, it presents a serous problem with the category.

Q: In addressing logistical problems with opening the bag, how did you resolve the technological challenges associated with maintaining product freshness? Does the new packaging impact lettuce quality and shelf life?

A: We’ve worked with our suppliers over the past year to implement the change. This is a complex technology issue because of the breathability factor and scientific characteristics of the film. Our team finally made a breakthrough to develop a new pinch-and-pull technology that allows one to easily and effortlessly open the bag. It doesn’t impact shelf life at all.

Q: How complicated is it to change over to the new bag? Is it a similar manufacturing process?

A: It took a lot of retooling in our factories to run the new line because it is a different type of bag. It has involved a large investment in equipment changes and process overall.

Q: From what you describe, it sounds like the project is well beyond the pilot stages. Has Dole made the commitment to a full-scale launch? How many different products in the bagged salad category will house the new packaging? When will the first products hit retail shelves, and do you have a scheduled roll-out plan?

A: We’re now rolling the technology across all our lines in the packaged salad category, covering four plants!

Q: Wow. Could you provide some numbers for perspective? How many varieties, what is the scope of your production?

A: We have about 45 different types of bagged salad products. Right now they’re going to be rolled out starting on the blends and kits. We’re still working on our classic iceberg-based salads, which have a different film and therefore additional challenges to overcome.

Q: Do you envision this technological advancement could transform a mature category or at least drive a substantial lift in category sales?

A: It’s a big problem when people can’t open the packages. We followed consumers in their homes to observe them interacting with products and building salads. Watching them try to open the bag, some would pull and pull and then explode it sending lettuce flying everywhere. People would open the film with their teeth, while others became aggravated as they searched for a pair of scissors. Clearly this exercise identified a window of opportunity.

Q: Has the bagged salad category become staid? If so, what factors have come into play? Did you glean any answers through your consumer research?

A: The category has been declining very slightly over the past four years, which is not good. Consumers say they are eating more packaged salads by far — 55 percent of consumers think they are eating more bagged salads, 37 percent about the same, and 7 percent less often. That is coming from our September 2008 consumer attitudes and usage study, focusing on added-value products. It was conducted by a specialized independent research company.

Consumers only fantasize that they’re eating a lot more salads in line with the trends toward nutrition and health. However, if you look at IRI trends, excluding Wal-Mart and the Clubs, the bagged salad category was down 4 percent in 2006, flat in 2007, down 3 percent in 2008, and down 3 percent year-to-date. Someone needs to step in and turn this category around, and this is one of many initiatives at Dole to do that. We are definitely well aware of the trends in this category.

Q: How does this packaging invention fit within Dole Fresh Vegetables’ strategic goals; and in a broader sense, owner David Murdoch’s health and nutrition initiatives and company vision?

A: About a year ago, we brought in a whole new management team; many with ConAgra Foods backgrounds and a welcomed consumer-centric mindset. The team is skilled in discovering what consumers really want. This has been lacking for quite some time; the category has been treated as a commodity for too long. We are trying to change our whole positioning to the consumer, almost like a re-launch of our brand. It’s beyond a salad-packaging change.

Dole overall promotes Mr. Murdoch’s vision. We are definitely listening to what he has to say and constantly working on ways to satisfy his vision. He wants people to eat healthy, and everything we do reflects this goal. This means we must really connect with our consumers again and become a more meaningful partner in their lives.

Q: In this quest, how will you market and merchandise the new packaging? What types of customers are you targeting? Are you primarily looking to invigorate the disheartened heavy-user base, generate new bagged salad-eaters, develop a few niches… what is the strategy?

A: Our marketing efforts stem from taking a good look at consumers and segmentation studies. In this way we’ve identified the group we’re going to be targeting the pinch-and-pull, easy-open concept. This group tends to be very creative and enjoys the interactive experience of building an imaginative salad by adding a variety of ingredients.

They come home at night, pour a glass of wine and are ready to play with the salad category. The one thing they don’t want to be is frustrated at the start of this process. Marketing efforts coming out later in the year focus on helping consumers to play and create and have fun with this category.

Q: It’s interesting that you describe the bagged salad consumer as a gourmand. I imagine true food connoisseurs as shying away from the prepackaged bags in favor of picking their own bunches of fresh misted greens. I thought bagged salads catered more to harried mothers relishing in the convenience, or younger generations that never learned how to cook!

A: It depends on the segment. We find bagged salad customers are very sophisticated on what they do, pretty much almost gourmet. They do appreciate the convenience, but what drives them are the blends they can’t easily put together by themselves. They don’t want to have to buy seven different lettuces. They view the lettuces as a base to start their creativity, rather than spend time buying all the lettuce varieties. They find the creative aspect more about the things they can add to the salad, like the crumbled blue cheese — the visual, the smell and the taste of it is the big deal.

Q: So there’s excellent cross-merchandising potential in this scenario…

A: Yes. Our marketing strategy can also boost the rest of the produce department. When people buy a salad, they purchase mushrooms, carrots, croutons, dressing, etc. If we can stimulate people to increase frequency and tap into this creative drive, it will boost produce sales throughout the department. Increasing produce consumption also helps Mr. Murdoch’s vision come to life.

Q: It’s nice that you’re injecting new life into the category. Could the economic downturn be impacting value-added items such as bagged salads? The industry certainly has taken its punches in the food safety arena, exemplified most acutely by the spinach E. coli crisis, yet the category does seems to rebound after an outbreak subsides. Have you considered these issues when developing your direction?

A: In 2006, food safety issues took a devastating toll on the industry, but now in research people don’t bring that up anymore, probably because there are so many food safety issues across so many categories. Consumers seem to focus on the most recent, whether it’s peanut butter or pistachios.

As far as the economic decline, a lot of categories are down as people pull back. They are forced to make choices. Some things are just very important to consumers, and even when economic troubles arise, they will continue to buy certain items.

Q: Does that apply to Dole’s creative bagged salad customers?

A: People we are focused on are very committed to this category. It’s not a penetration problem; percentage of households buying is not the issue. It’s the frequency with which they’re buying. People generally know when they open the bag they need to use it in the next few days. We are looking at ways to extend shelf life. At the same time, we must increase frequency of use.

Sixty percent of volume comes from people who buy the category every two weeks or more frequently. We have a huge number of heavy users; that is why only 23 percent of the people buy 60 percent of the salads, according to IRI Panel Data. When you have a hardcore consumer group, you want to alleviate the major problem they have with your product. Just as they’re getting ready to start a wonderful experience creating a salad after they’ve had a hard day, they can’t get the stupid bag open!

Q: When can your hardcore customers begin to get relief?!

A: It’s a new complex technology and the process has taken a lot of resources. The first couple of varieties will be coming out in July, and we’ll start rolling out the rest of the line from there. We’ll have everything out by third quarter of this year.

Q: You and the new management team certainly have ambitious goals, but this sounds like an exciting time at Dole… Could you share your perspective on the changes that are taking place?

A: I’ve been at the company 14 years, having spent time in all of the divisions. I started my career with packaged foods, did some foodservice work for a few years, then moved into the fresh fruit division and now I’m in fresh vegetables. It’s a fun time to be at Dole right now. I know everyone in the different divisions, and we are pulling everyone together to share in the same vision, bringing Mr. Murdoch’s vision to life. I don’t know of another company more positioned to help consumers make better choices and eat right while making it fun and tasty. We want to step up and help consumers. People don’t want to be preached to.

Communication at Dole is all about health, but that isn’t our overall message to consumers.

The new management team came in with vast expertise in different food categories. They have taken their knowledge and applied it to produce with new eyes. They jumped in and challenged people to think differently. They brought fresh perspective into operations, research and development, logistics, and helped all the functions to work in tandem. I was brought in permanently after consulting with this division for a year. We’ve built marketing from two people to 35 and initiated extensive consumer research to learn what we can do to stimulate produce consumption.

Q: Will you be extrapolating this packaging concept to other product categories? What other projects do you have in the pipeline that could pique our readers’ interest?

A: It’s too early to discuss other projects underway, but I can assure you this packaging innovation is just the start of many exciting things to come.

If the industry is going to succeed in creating products and shopping experiences that delight consumers, our producers and retailers will have to be focused on consumers, so it’s a positive thing for the industry to see that its largest company is focused on gaining insight into consumer behavior and attitudes and then utilizing this information for product development.

Of course, no amount of research is the same as having a product out on sale, so doubtless the industry — including retailers and Dole’s competitors on packaged salads — will wait anxiously to see precisely how consumers respond to this “pinch and pull” technology. Wouldn’t it be great though if Dole has identified a real barrier to consumer satisfaction, and making bags easier to open leads to the first real growth in the category in almost half a decade?

We were drawn to a few key points Ronda Reed made in her interview:

“Consumers say they are eating more packaged salads by far — 55 percent of consumers think they are eating more bagged salads, 37 percent about the same, and 7 percent less often. That is coming from our September 2008 consumer attitudes and usage study, focusing on added-value products. It was conducted by a specialized independent research company.

Consumers only fantasize that they’re eating a lot more salads in line with the trends toward nutrition and health. However, if you look at IRI trends, excluding Wal-Mart and the Clubs, the bagged salad category was down 4 percent in 2006, flat in 2007, down 3 percent in 2008, and down 3 percent year-to-date. Someone needs to step in and turn this category around, and this is one of many initiatives at Dole to do that.”

Note the disconnect between what consumers say and what they do! It shows that consumer research really needs to be tied to real life activity in sales and consumption. Reports of what consumers say are often useful not in and of themselves but because they lead us to ask this important question: “Why would consumers say that, since it is not true?”

“…the category has been treated as a commodity for too long. We are trying to change our whole positioning to the consumer, almost like a re-launch of our brand. It’s beyond a salad-packaging change.”

There was a moment, at the dawn of fresh-cut age, in which it looked liked bagged salads would be the produce industry’s portal out of the commodity trap. It didn’t happen, partly because innovations in the category were so quickly copied. And that is to some extent the question raised by this innovation. We suspect the research is correct and that consumers will prefer the easy-open bag. So Dole will have an advantage. But for how long?

Of course, from an industry perspective if a consumer-friendly innovation is copied it can lead to greater consumer satisfaction and higher sales, so it is an overall industry win. Yet if we are to have continuing innovation, which is what we really need, companies have to be able to profit from their investments in research and development. Commodity pricing just isn’t sufficient to fund either the marketing or the R & D we need to really grow this business. So we wish Dole luck in trying to break out of the commodity trap.

The key to breaking out of this commodity trap is always to look closer at the consumer:

“Our marketing efforts stem from taking a good look at consumers and segmentation studies. In this way we’ve identified the group we’re going to be targeting the pinch-and-pull, easy-open concept. This group tends to be very creative and enjoys the interactive experience of building an imaginative salad by adding a variety of ingredients.

They come home at night, pour a glass of wine and are ready to play with the salad category. The one thing they don’t want to be is frustrated at the start of this process. Marketing efforts coming out later in the year focus on helping consumers to play and create and have fun with this category.

Q: It’s interesting that you describe the bagged salad consumer as a gourmand. I imagine true food connoisseurs as shying away from the prepackaged bags in favor of picking their own bunches of fresh misted greens. I thought bagged salads catered more to harried mothers relishing in the convenience, or younger generations that never learned how to cook!

A: It depends on the segment. We find bagged salad customers are very sophisticated on what they do, pretty much almost gourmet. They do appreciate the convenience, but what drives them are the blends they can’t easily put together by themselves. They don’t want to have to buy seven different lettuces. They view the lettuces as a base to start their creativity, rather than spend time buying all the lettuce varieties. They find the creative aspect more about the things they can add to the salad, like the crumbled blue cheese — the visual, the smell and the taste of it is the big deal.”

Dole is sharing with the industry a different vision of the bagged salad customer. The image of the harried housewife throwing together dinner or the time-pressed office worker keeping a bag in the office for a quick lunch is being superseded by a more sophisticated consumer. It is not so much doing it for the consumer as enabling the consumer to do something special for him or herself. How many retailers are really marketing bagged salads to this consumer?

“Our marketing strategy can also boost the rest of the produce department. When people buy a salad, they purchase mushrooms, carrots, croutons, dressing, etc. If we can stimulate people to increase frequency and tap into this creative drive, it will boost produce sales throughout the department.”

You bet. As we’ve done a better job with fresh-cut cases, we have also isolated fresh-cuts from the bulk produce. One of the insights of this research is that it is not a war between bagged salads and bulk items. Our challenge is to cross market and find ways to make consumers reach for the celery and the cucumbers and the bell peppers and the mandarins — jarred or fresh — plus to intelligently market blue cheese crumbles, dressings and what not.

“It’s not a penetration problem; percentage of households buying is not the issue, it’s the frequency in which they’re buying. People generally know when they open the bag they need to use it in the next few days. We are looking at ways to extend shelf life. At the same time, we must increase frequency of use.

Sixty percent of volume comes from people who buy the category every two weeks or more frequently. We have a huge number of heavy users; that is why only 23 percent of the people buy 60 percent of the salads, according to IRI Panel Data. When you have a hardcore consumer group, you want to alleviate the major problem they have with your product. Just as they’re getting ready to start a wonderful experience creating a salad after they’ve had a hard day, they can’t get the stupid bag open!”

We applaud Dole for this consumer-centric approach. These types of questions — are we trying to increase penetration or frequency? — are the core of all efforts to develop and market products. Yet the questions are all too often neglected by produce marketers.

********

We don’t often write about individual new products, but the revival of growth in the bagged salad category is vital to the health of the industry. Dole’s new packaging is not available yet, but we got a hold of a prototype and made a shortvideo so you could see the concept. This prototype is a little harder to open than the final bag will be, but you can see how the “pinch and pull” system works. Take a look here:


We thank Ronda Reed and Dole for sharing not only their new product but the thinking and research that went into the launch. By electing not to hoard this information, Dole has made a real contribution to the development of a consumer-centric produce culture.




Pundit’s Mailbag — Mike Stuart Of FFVA Speaks Out On Ballantine And Buyer/Seller Relations

We received many letters on our recent piece, Did Wal-Mart Have A Role In Ballantine’s Fall? Many of the letters focused on the future and the implications of the story for the future of the industry. This letter came from a well respected executive at one of the most important regional produce associations:

Jim… it’s not been my practice in the past to respond to your articles in The Pundit. While I’ve been an avid reader, I’ve always thought it best to leave the dialogue to members of the trade itself. But in the case of your story on Ballantine Produce, I felt I had to speak up.

I’ll be brief. You’ve hit the nail squarely on the head. I would add, however, that this is not an isolated situation. There is no doubt in my mind that other significant suppliers are being treated in a similar fashion. At the end of the day, how are these firms going to make significant investments in food safety, traceability, sustainability and other important industry initiatives if the profitability of the business is squeezed to the breaking point? How are they going to survive at all? In the case of Ballantine, we know the answer. I fear other good companies will follow suit.

I urge you to dig deeper. It deserves more exploration.

— Michael J. Stuart
Florida Fruit & Vegetable Association
Maitland, Florida

We thank Mike Stuart and deeply appreciate his willingness to make an exception to his policy and speak out.

We need people to speak out because those who have the most to say — the producers that take supply-chain responsibilities most seriously but who are then put into a position of competing against suppliers that invest little or nothing in meeting such responsibilities — are fearful of speaking out lest they anger their customers.

Because our large national associations are vertically integrated, it is also difficult for them to really clarify the issues at hand. For example, the elephant in the room during the whole traceability initiative was simple: Would the big buyers constrain their supply chain to vendors that conformed to the metrics and timetables established in the Produce Traceability Initiative? Or was this going to be another bait-and-switch in which producers were enticed to make investments by the promise of business, but, in the end, the business would only go to traceability-conforming vendors if they were also the cheapest guy on the block?

It is a sign of how difficult it is for suppliers and associations to deal with issues such as these that, in the end, everyone just declared victory and went home, without the buying community making any binding commitments.

Of course, we have pointed to many examples of this kind of behavior. For example, in our piece, Is Tesco Defrauding Consumers? Promising Only Nature’s Choice Certified Product But Delivering Cheaper Alternatives? we pointed out that even a giant, with a fantastic reputation for food safety such as Tesco, was prepared to completely abandon its much praised Nature’s Choice program to save a few pennies.

Mike asks the question precisely:

At the end of the day, how are these firms going to make significant investments in food safety, traceability, sustainability and other important industry initiatives if the profitability of the business is squeezed to the breaking point? How are they going to survive at all?

So the question is how are we as an industry going to address this problem? Well we might make some progress by appealing to the enlightened self-interest of the buying community. Some of these activities are really not in the interest of the buying organization, which does, after all, have an interest in building and sustaining a supply base of quality.

The problem often is that the incentive of individuals is often to meet some quota or quarterly number and they really don’t care what that means for some future period because they expect they will be out of their current position and on to something else. So, just as on Wall Street we now have a movement that says you can’t pay people on a short term basis when they can make a fortune today and lose it tomorrow, so promotion and compensation programs at buying organizations have to change to incorporate values like the contribution to building a sustainable supply chain rather than just quarterly profits.

It is also true that producers can take some responsibility. Tree fruit is hard because those trees are planted and producing, but we know, for example, of one very large grower of a specialty row crop who went back and forth with Wal-Mart and almost didn’t produce for the retailer because he thought the contract unacceptable. In the end, Wal-Mart acquiesced but the grower was prepared to not grow a lot of crop if Wal-Mart had hung tough.

Of course, as consolidation continues on the buying end, it becomes more and more difficult for producers to say no. This is the British disease and one we’ve chronicled with pieces studying how vendors such as Del Monte eventually walked away from ASDA’s tender — ASDA of course, is Wal-Mart’s UK subsidiary.

Of course, it is one thing for a vendor of bananas, a crop traded across the world, to walk away; it can just send the boat to another country. Where, however, can a British cucumber producer go if he can’t get a profit from the handful of British retailers?

Perhaps these buyers think they are horribly clever to play one vendor against another and make the entire industry unsustainable. Perhaps they do even boost profits.

Yet issues such as food safety, sustainability and traceability are so in the public interest that the government may lose its patience with such games. Indeed, a free nation values a farming sector that is not merely productive but also manned by free and independent men and women, not supplicants to an oligarchy of buyers.

With all the attention to the financial crisis, we are at a time when democratic capitalism is itself under scrutiny. Many are thinking that the world of a few publicly held companies dictating to farmers who live at their sufferance is simply not the precondition for creating the free people necessary to sustain democracy… and capitalism.

We once wrote a piece that reported on Wal-Mart’s dedication to “Heritage Agriculture,” yet perhaps it has its focus wrong. Perhaps the heritage that counts most is not that the peaches once grew in Arkansas; it is that just as being completely dependent on government for one’s livelihood precludes the free expression necessary for democracy, perhaps a lack of alternative customers precludes the economic independence necessary for capitalism to be not just efficient but ennobling.

Perhaps big retailers should rethink their interests. After all, the US did break up Standard Oil. If large retailers come to be seen as domineering — squeezing independent business people and farmers so tight they can’t make a living or can’t properly produce high quality, safe and sustainable products — the government could well decide that the US could live — perhaps live better — with smaller retail organizations.

Many thanks to Mike Stuart and the Florida Fruit & Vegetable Association for the letter. As to our continuing to dig deeper into this issue… you can count on it.




Pundit’s Mailbag — Sprout Doubt…
What Constitutes A Direct Link?

Our piece, Alfalfa Seed Company, FDA, USDA And Supporting Cast Comment On Seed Withdrawal, featured several interviews, including one with Lyle Orwig, a principal with Charleston/Orwig, who was acting as a spokesperson for Caudill Seed Company, the firm whose seed has been implicated in the outbreak related to alfalfa sprouts.

We found the interview troubling both substantively and because we could find no verification for many of the claims made in the interview. We decided to run it and give the seed company its say, but did add editor’s notes and commentary to point out some of the more problematic areas.

We also questioned the whole notion that a PR agency is the one best able to speak on behalf of a company when food safety is the issue:

Lyle Orwig genuinely tried to help us and we appreciate it. However, he works for a prominent PR agency, Charleston/Orwig, and it is difficult to be both an expert on public relations and an expert on seed and food safety. We are all in favor of hiring professionals but we consistently find it a mistake to simply abandon the job of representing your company to PR professionals. Far more effective is utilizing outside agencies to coordinate interviews and to arrange for your own people, genuine experts in what they do, to talk to the press.

As a result of this “knowledge gap” there are several points made in the interview we question. We noted a couple with editor’s notes and left a few for readers to draw what conclusions they will.

One claim Caudill Seed made in the interview referred to an alleged failure on the part of the FDA to “conclusively tie” Caudill’s seeds to the outbreak. One well-read Pundit reader pointed out that this doesn’t seem to be an accurate characterization of the situation:

Regarding the claim by the Caudill Seed Company spokesperson that there was a lack of a “smoking gun” tying Caudill seed to the recent Salmonella Serotype Saintpaul outbreak that had been epidemiologically traced to alfalfa sprouts, the May 7 MMWR [Morbidity and Mortality Weekly Report] issued by CDC mentions:

“Alfalfa sprout irrigation water collected on March 10 from a growing facility in Wisconsin grew Salmonella St. Paul indistinguishable from the outbreak strain. These sprouts also were grown from a seed lot identified with prefix 032 received from seed company B.”

My understanding is that an “indistinguishable strain” is comparable to a fingerprint, and so constitutes a direct link to the 032 seed lot code from Caudill Seed Company.

We are not certain what standard of proof Caudill Seed would be persuaded by, but this tie appears rather solid.

Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us