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

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


email:
info@PerishablePundit.com

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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Chinese Garlic And Food Safety

Our piece, China Plays Down Food Safety Problems, didn’t mention any fresh produce imports from China, but China is a significant supplier of garlic, and the piece struck close enough to home to prompt this letter:

As an industry we all have concerns about food safety and product integrity. Whether the commodity happens to be carrot juice, spinach, tomatoes or melons, a food safety problem for one is a produce industry problem for all.I have friends that pack spinach grown outside of California that are still trying to get back to sales levels achieved prior to the outbreak.

When CNN attacked the California produce industry, I think most of us in the industry felt as if it was an indictment of our industry as a whole.

China has been a popular target in the press of late. Perhaps the recent trouble with China’s consumer goods has been welcomed by some as a distraction away from our own problemsand shortfalls. But, the fact is that produce from China has not been responsible for any of the produce-related outbreaks that have plagued us in recent memory.Finger pointing hurts everyone.

Several areas in China have made the commitment to non-mechanized, small farm organic agriculture. There are entire counties dedicated to growing organically. We import garlic and ginger products from a company that is certified organic by the Organic Crop Improvement Association (OCIA International) based in Lincoln, Nebraska, and recognized by the USDA’s National Organic Program (NOP).

You correctly point out that organic certification inspections are conducted annually. Our facilities in China are audited to comply with standards for successful certification by JONA (Japan organic certification, with more stringent criteria than our USDA/NOP), HACCP, ISO 9000 and BRC Global Standards (a European certification). In addition, we do internal audits and testing, including weekly testing of the water.

In the end, does it not come down to trust and reputation? I Love Produce has an office in China overseeing our purchases and operations.Our name is on every product we sell.Our customers deal with I Love Produce because of our professionalism. This is no different than customers that deal with Dole because of their expertise in Chile or Chiquita because of their expertise in Central America. Customers deal with the category leaders because they know their produce is grown, packed and shipped with the highest quality standards regardless of whether the origin is imported or domestic.

In 2003 we hosted a trade media tour of our facilities in China. The facilities were reported to be among the best in the world. If anyone needs further convincing,please consider this letter as an open invitation to the Pundit, Produce Business and/or any Chainstore executive. If you would like to see what is really happening in China’s food industry, we invite you to see it first hand.

— Jim Provost
I Love Produce, LLC
Kelton,Pennsylvania

Jim, though still a young man, has been around a long time. Long enough to see the garlic industry transformed by the availability of relatively inexpensive Chinese garlic.

Quite correctly, Jim points out that none of the current food safety issues related to China have affected Chinese garlic. However, the absence of an outbreak doesn’t prove that proper food safety procedures are being used in growing and processing all the garlic in China.

Jim’s letter reaches us at an opportune time as The Washington Post just ran a piece entitled, Cause for Concern In Chinese Bulbs? — the piece highlights the way the discovery of food safety flaws that led to problems in both human and animal food is making people question all facets of the food safety system in China.

The article raises general concerns on imports of food from China and the inability of the FDA to inspect a reasonable sample of those products:

The FDA, responsible for inspecting some types of food from 130 countries, last year was deluged with 21 million shipments of food imports, among them 199,000 from China worth about $2.3 billion. FDA inspectors refused 298 food shipments from China in the first four months of this year: They included catfish laden with banned antibiotics, mushrooms laced with illegal pesticides, and others. The rejection rate for Chinese goods is about 25 times that for Canadian goods.

The FDA has 1,750 inspectors, but only 450 work at ports, notes William Hubbard, a former associate director of the agency. “There are 419 ports of entry, ship, air and land crosses,” he says. “The FDA is able to staff 40 of them. Some [workers] are part time.”

The article raises some specific concerns on dehydrated garlic imports from China:

Fresh garlic isn’t the only form of the vegetable causing concern. The U.S. Department of Agriculture’s Foreign Agricultural Service says dehydrated Chinese garlic imports increased 384 percent in the past 10 years. Layous and others cite a 2002 report by the now-defunct Americans for Wholesome Food, a coalition of businesses and organizations dedicated to educating consumers on domestic and imported garlic powder. The AWF’s report, based on independent lab tests, found “high levels of lead, arsenic and added sulfites in two supermarket-brand imported garlic powders from store shelves.”

In general, though, considering the scale of imports, there are only a smattering of concerns regarding imported garlic and typically they are related to processed product:

The FDA said it could not provide information on detention and refusal rates of Chinese produce and how they compare with those for other countries. But FDA records show that since 1994, fresh and processed garlic have been targeted for automatic detention and surveillance. Numerous shipments from several companies — five Chinese, one Canadian and one Argentine — were refused because of insects or insect damage, mold or filth between 1994 and 1996. The Canadian firm had repacked Chinese garlic and shipped it, peeled, in five-pound jars. Thirteen fresh garlic shipments from China were refused at California ports.

AWashington Post search of nearly 900 FDA “refusal actions” from May 2006 to April 2007 turned up 18 shipments of garlic products from several countries. Some examples of rejections: from China, chili garlic sauce, because manufacturing information was not provided; from Canada, garlic paste, made in unsanitary conditions and inadequately labeled; from Argentina, “filthy” garlic bulbs. In May and July 2006, 13 shipments of garlic in mango, tomato and green chili sauces from India were refused, 11 because of pesticide residue.

Since 1991, the Centers for Disease Control and Prevention has determined that three food-borne illness outbreaks (each involving fewer than five people) were caused by garlic oils. Twice, the bacterium that causes botulism was found. After outbreaks in the 1980s related to garlic in soybean and olive oils, the FDA required that oils contain an acidifying agent, and it recommended refrigeration.

Garlic, by its nature, is not particularly vulnerable to food safety concerns, and because it is eaten as a cooked product, it has a built-in “kill step” that makes it unlikely to be a source of food borne illness:

For several reasons, experts say, fresh garlic is safer than processed, and they suggest ways for consumers to make it even safer.

Michael Doyle, director of the Center for Food Safety at the University of Georgia, says that garlic has natural inhibitors against pesticides. Marion Nestle, professor of nutrition and food studies at New York University and author of “What to Eat,” says the skin also protects somewhat against pesticides, if any were used. “Pesticide residues can be removed by washing,” she says.

E. coli and other bacteria on fresh garlic would probably be only on the exterior, Nestle says.

She and Doyle agree that besides peeling and discarding the skin, the one sure-fire way to kill off microorganisms is to turn up the heat.

“A quick dip in boiling water would do it,” Nestle says, “as would searing.”

And, of course, the price difference is so great, and with a “kill step,” the food safety risk so small that even the stalwarts of the industry in California use Chinese garlic in certain applications:

Although most of our fresh garlic comes from halfway around the world, it’s cheaper than garlic grown in California. For example, California garlic bulbs were priced at $4.99 a pound at Whole Foods Market last week, but a pack of five Chinese bulbs — about a pound — were just 79 cents at Great Wall supermarket in Falls Church. The U.S. Department of Agriculture says garlic prices have dipped 12 percent in a decade.

California growers think that stinks, because it’s killing their business. They grew 18,000 acres of garlic last year, which is only about 2 percent of the world’s supply. A decade ago, they grew 36,000 acres. In the early 1990s, U.S. trade officials found that China was "dumping" garlic, or selling it below what it cost to produce. A 377 percent tariff caused imports to dip for a while until shippers found a loophole.

Some California growers and processors say that even though they don’t like Chinese garlic, they buy some because it’s cheaper than what it costs them to grow it — even in Gilroy, the “Garlic Capital of the World,” which in July will hold its 29th annual festival celebrating the vegetable.

Bill Christopher of the 50-year-old Christopher Ranch there, one of the largest U.S. growers, explained why: “A 30-pound box of Chinese garlic is $14, but our cost [to produce it] here is $26.27.” Although he claims California garlic tastes better — independent lab tests show it’s denser in texture than Chinese — his company uses imports in some prepared products, such as sauces.

Like Christopher, John Layous of the Garlic Co. in Bakersfield, Calif., buys Chinese imports to keep costs low. He supplies Costco, Sam’s Club and food-service companies. Layous rails against what he sees as China’s unfair competitive advantage, saying his 185-person company, in business since 1980, pays decent wages and provides health and other benefits, unlike Chinese growers. “Another big addition to our costs is the expense we go through to make a safe product,” he says, adding that U.S. companies are government-regulated to ensure food is safe.

So the concern with fresh garlic from China is really not a food safety one. Processed product is another story. What is consistent among the food safety issues from China is that, unlike in the United States, many of the issues are related to intentional adulteration of the food with cheaper ingredients.

That is what this whole melamine issue in dog food is about. In our piece yesterday, we referenced infants being malnourished because their powdered baby formula was adulterated. The AWF finding we reference above of adulterated garlic powder should be taken very seriously when viewed in this context. This time it may be an accidental contamination; another time it may be an intentional adulteration with a cheaper ingredient.

Now, of course, we had safe food, or as safe as our knowledge could make it, long before we had any government regulation anywhere. In the absence of government regulation, we have to depend on the companies that produce the product and the retailers and foodservice operators that sell and serve the product.

The Pundit is often invited to “inspect operations” of growers and packers all over the world. Jim was kind enough to invite the Pundit on the trade media tour he reference but a conflict prevented us from taking advantage of that trip. We certainly hope to go another time.

One thing is certain, though… We don’t go anywhere to pass judgment on the food safety systems. How could we? We are not an auditor, making a surprise visit, with the power to demand records. Besides, even if we were shown water test results and pesticide application data and soil test records, we wouldn’t know how to evaluate that data.

And food safety is a result of systems, procedures and HACCP plans — even a trained auditor or regulator can’t evaluate food safety procedures and compliance with such procedures on a walk through a field, packinghouse or office.

So reputation and competence are everything. Obviously trade buyers will feel more comfortable buying from a company with an on-sight office, long experience and a personal understanding of the stakes for trade buyers in buying unsafe product.

Is that enough? On a product such as fresh garlic — probably yes. On other products — maybe not. And one will demand a Primus audit all the way from China.

Certainly retailers still need to have standards and not simply buy from the broker with the lowest bid.

When we get into an area such as organic certification, there are more problems. The Pundit has a friend who is a kosher-certification rabbi, often working in China. The plant he recently inspected passed muster, except the employees often brought pork — which is not kosher — into the plant for their lunch.

To achieve the kosher certificate, the rabbi made the factory ban pork from being brought in for lunch and posted signs to this effect. The employees complied… right up to the moment the rabbi flew back to America. Then the employees, with the winked eye of a complicit management, brought for lunch what they chose.

Obviously, if one trusts completely the supplier or the government, then none of this matters. Yet we have auditors and regulators because we don’t trust anyone that much.

And the culture and financial incentives leave someone wondering about compliance. Is that small organic farmer really going to care so much about being organic that he will disk his crop under and bankrupt himself because something inadvertently spills in the field? If a crop failure looms, will these people, with no financial reserves to draw on, still avoid spraying and simply accept a crop failure and utter destitution?

Is the OCIA, based in Lincoln, Nebraska, really there enough to be certain about what is going on?

Jim’s point as to branding is precisely correct: in the absence of a strong governmental regulatory process, one depends on the integrity of brands. That may be great consumer brands such as Nestle or Kraft watching carefully what happens in their factories or it may be trade brands such as Jim’s I Love Produce LLC that trade buyers put trust in.

In reference to the Soviets, Ronald Reagan used to use a quote that came from Damon Runyon which seems apropos to this situation. When it comes to food safety in China: “trust but verify.”

Many thanks to Jim for his frank letter on this important subject.




Tesco Launches Price War In The U.K.

Just the other day Whole Foods was opening in London and The Economist, an esteemed British publication, was covering the event by telling us about changes in consumer attitudes:

People nowadays will pay a lot more for food they think is fresher and healthier. Whole Foods plays to this by spraying its great pyramids of bright red apples and head-high vegetable hedges so that they glisten as with morning dew.

Yet it seems that not all consumers are focused on the glistening of the morning dew on their produce. For Tesco, which needs a price war in the U.K. like a hole in the head as it prepares to invade America, has announced a price war:

TESCO LAUNCHES 270 MILLION POUNDS PRICE BLITZ

Tesco is to slash an inflation-busting £270 million off the cost of shopping in its biggest-ever price blitz, showing once again why it is Britain’s Favorite Supermarket.

Starting from next week, prices will tumble on more than 3,000 products ranging from nappies to bread with cuts as deep as 34%. And unlike some of our competitors’ price claims, these are genuine reductions and do not include the hundreds of promotions throughout the store which save customers even more money — and of course we reward customers with Club card points too!

Tesco’s Commercial Director Richard Brasher said:

“Consumers have had a tough start to the year with interest rate rises hitting many people hard and inflation creeping into some areas of household spending. We want to make sure that our customers don’t start their summer worrying about how to balance the budget and cutting the cost of their weekly shop is the best way we can help.

“These price cuts will go right across the store so whether you are a busy mum looking to cut the cost of entertaining the kids this summer or young, free and single but wondering how to pay the mortgage, there is something for everyone.”

Our independently-compiled price checker www.tesco.com/todayattesco/pricecheck.shtml consistently shows that Tesco is Britain’s cheapest supermarket, comparing the prices of thousands of products from Tesco, Asda, J Sainsbury and Morrisons. No other supermarket gives customers the chance to compare prices in this way so that they can judge for themselves who is the cheapest.

Examples of prices set to fall include:

ProductNew
Price
Old
Price
Percentage
Cut
Tesco Cranberry & Raspberry Juice Drink, 1l£0.98£1.49-34.2%
Clover spread, 500g£1.32£1.37-3.6%
Fresh Pork chops, kg£4.49£4.98-9.8%
Tesco Salmon Fillets, Skinless Boneless, 1.04 kg£9.99£10.99-9.1%
Tesco Value Mild White Cheese, kg£3.23£3.34-3.3%
Tesco Thick Sliced White Loaf, 800g£0.49£0.54-9.3%
Tesco Sparkling Diet Lemonade, 2l£0.35£0.39-10.3%
Loose Beef Tomatoes, each£0.49£0.59-16.9%
Pampers Baby Dry Economy J54£8.69£8.96-3%
Tesco Olive Oil, 1l£3.48£3.99-12.8%
Nestle Cheerios, 600g£2.40£2.48-3.2%

It is said that Wal-Mart never launches a price war, but never loses one either. So, predictably, Wal-Mart’s U.K. subsidiary ASDA, launched its own price war:

ASDA declares price war with
£250m of Rollbacks

Research Shows Average Family’s Disposable Income is £146

ASDA fired the first salvo in a £250m supermarket price war today (15 June), lowering 10,000 prices across food, George and general merchandise to celebrate winning the Grocer’s lowest price supermarket award for the tenth year running.

The move is especially pertinent after ASDA research, released for the first time today, shows that the average British family has only £146 per month of disposable income after they’ve paid all the bills.

The price move builds on ASDA’s consumer championing history following a decade of winning Britain’s lowest price supermarket award.

The average ASDA shopper’s inflation busting basket is now 17% lower in real terms than in 1997 as a result of ten years of price cuts.

‘We have a ten year history of fighting to keep prices low for consumers. We are declaring a supermarket price war today. Our research shows how little the average family has left once they’ve covered their living expense, which makes me even more committed to delivering Britain’s lowest basket of groceries,” said ASDA’s CEO Andy Bond.

“Rip-off Britain, where other retailers con their customers, is alive and well and we’re determined to put a stop to it once and for all. Over the next year we’re going to expose businesses that prey on customers, forcing them to pay through the nose for goods and services while they pocket massive margins,” added Andy.

ASDA has a longstanding history of championing the consumer and undercutting standard industry prices in order to pass savings on to customers.

In the past the company played a pivotal role in challenging the Net Book Price Agreement, meaning that retailers were no longer forced to sell books at recommended retail prices and also put an end to the over-the-counter medicine rip-off.

More recently it challenged greedy soccer bosses and sports stores over extortionate football strips and championed the parent’s right to choose where they buy their kid’s school uniform.

Amongst other things, today ASDA doesn’t charge a premium for higher factor suncreams, is now able to offer the latest book releases at hugely discounted prices and guarantees that products in its healthy eating range are never more expensive than the standard own brand equivalents.

The supermarket has also led the way with unbeatable prices offering products such as a complete school uniform for less than £10, a £19 men’s suit, £60 wedding dresses and DVD players for just £9, as well as delivering Britain’s lowest priced petrol*.

* Asda economic boffins compared the price of 26 every day groceries in 1997 and 2007. The price in 1997 was £29.39, by 2007 this had dropped to £29.10. However if you apply inflation to the 1997 basket it should actually cost £35.28 today, a difference of 17.5%. A full list of products and prices are available on request.

OutgoingPer MonthSource / Assumed
Take Home Pay£1588Based on 28k household pre tax annual income
Mortgage£510Based on 75k mortgage with 20 years at 5.5%
Car Loan£1765000 spread over 3 years
Insurances£60Estimate based on 1.4 Astra, 100k house, 50k life
Food (inc alcohol)£304Market divided by # households. Source: TNS
Council Tax£92Office of national statistics January 2007
Petrol£11212000 miles per year at 87ppl and 33mpg
Utilities£92Source: The Scotsman, £692 gas, £363 electric, £131 TV pa
Clothing£96Market divided by # households @ 90%
Truly Disposable Monthly Income£146

Examples

Bananas
Champagne
62p kg to 59p kg
£19.98 — 10.00
Asda Back Bacon 250g (8 rashers)£1.77 to £1.25
Asda Back Bacon 500g (16 rashers)<£2.96 to £2.47
Mince (standard) 500g£1.40 to £1
Warburtons Sliced Rolls 12 Pack£1.25 to £1
Shredded Wheat 18’s£1.58 to £1
Asda Cheddar Cheese 500g (Mild, Med, Mature)£2.32/£2.48/
£2.74 all to £2
Kelloggs Bran Flakes 500g£1.64 to £1
Rice Krispies Multigrain350g£1.98 to £1
Sugar Puffs 450g£1.83 to £1
John West Red Salmon 213g£2.31 to £1
Asda Olive Oil 500ml£2.33 to £2
Herbal Essence Shampoo &
Conditioner 400ml
£2.78 to £2
Hollow Fibre Pillow£5.00 to £4.00
Egyptian Cotton Pillow£9.00 to £7.00
Cotton Towel Bale£9.00 to £7.00

Following Tesco and Asda, fourth ranker Morrisons joined the fray:

Two Thousand New Lower Prices

Morrisons has announced 2,000 more lower prices, to be effective within the next two weeks. The move is on top of 3,000 prices lowered since 1 January and is in addition to over 4,000 promotional price cuts and £350 million worth of multi-save savings already delivered to customers so far this year. There will be similar activity throughout the rest of the year.

Separately, this week the Company is launching a ‘Summer Price Freeze’, guaranteeing that baskets of selected fresh food items, which are already very competitively priced in the market, will not increase in price for the rest of the Summer.

“These 2,000 more lower prices confirm our commitment to giving Morrisons customers consistently great value,” said Group Trading Director, Martyn Jones.

“Also, our own in-house production facilities give us the ability to offer a great quality basket of fresh foods at on-going low prices.

“Through this combination of low prices, multi-saves and strong promotions we continue to give our customers outstanding value on their shopping throughout the year.”

As its future in North America is about to be decided, what would motivate Tesco to launch such a battle in the U.K., its home base from which its profits flow to fund the American effort? Well, The Independent put it this way:

Both companies also indulged in tit-for-tat name calling, with Asda accusing rivals of “conning” their customers while Tesco said its cuts were “genuine, unlike some of our competitors’ price claims”….

Both companies claimed they were acting “in the interests of consumers”, citing figures showing customers were finding it tough after the rate rises. But it is significant that last night’s announcement came before Tesco’s first-quarter trading update on Tuesday, when analysts are predicting that it will report a slowing rate of same-store sales growth.

Tesco is facing tougher competition from the revived J Sainsbury and William Morrison as well as Asda. Citigroup noted yesterday that Tesco’s trading "seems to have slowed" and that the tougher competition from rivals "seems to have rattled Tesco".

The launch of a renewed supermarket price war would help to divert attention from the figures as Tesco seeks to claw back ground from its rivals.

We have another theory. Perhaps ASDA was about to launch a price war as Bentonville decided to put a little heat on Tesco and distract them from their American venture. Tesco got wind of it and decided to take a pre-emptive strike?

Whatever the case, we find it enlightening in this way: Sometimes an observer of the British supermarket sector and, especially, anyone who pays attention to the pronouncements of the CEOs, would think that the British consuming public is a uniquely selfless group, far more concerned with the well being of poor people in tropical climates — thus the interest in Fair Trade — and with the well being of their grandchildren — thus the interest in Carbon Footprinting — than in any day-to-day concerns like their own budgets.

Yet then the same executives turn on a dime (or a shilling?) and declare that the British consumer is struggling and barely able to make it through the week.

The question is this: is it the British consumer who is schizophrenic or are the CEOs of British supermarket chains?




Pero’s Hydroponic Farm — Higher Yields In Less Space

We ran a piece entitled pesticide Spraying Gets More Attention that brought up the issue of what happens as suburbs encroach on farmland. This was followed by a piece we called Pundit’s Mailbag — Green Acres Is The Place To Be?!? — that furthered this discussion.

More recently an interview with John Baillie of the Jack T. Baillie Co. that focused on how growers in California and, particularly, in the Salinas valley, were dealing with such issues.

Of course, the subtext of much of this issue is that in many areas, especially on the coasts, farmland has become very valuable for development. That certainly is true out in Monterey County, and it is also true in Palm Beach County, Florida.

This county is home to the Pundit who moved down from New York State. It is also the home to many produce companies, including Pero Vegetable Company. Peter Pero, an immigrant from Sicily, had a farm in western New York and this family also made the migration south.

Headquartered in Delray Beach, Florida, the family has farms in Delray Beach, Omega, Georgia and Benton Harbor, Michigan and has grown to include distribution and consolidation facilities as well as offshore deals. It also has gotten involved in greenhouse growing in Canada and itoperates the only commercial hydroponic operation in Palm Beach County — a fact that led to an article in the Sun-Sentinel, a Ft. Lauderdale-based publication. The piece is entitled Hydroponics Takes Farming Into Future:

No soil here — Pero Vegetable Company head grower Jim Hebb of Ft. Pierce, shows off a cucumber grown in Palm Beach County’s only hydroponic farm west of Delray Beach. (Sun-Sentinel/Carey Wagner)

West Delray — It looks like something out of Jack and the Beanstalk. Or a mad scientist’s lab.

But Pero Vegetables Co.’s 14 acres of greenhouses on State Road 7 are home to hydroponically grown cucumbers.

From the outside it’s hard to tell the transparent structures house colossal vines that spring from about a foot off the ground, wrapping around strings hanging from the ceiling. The plants rise as much as 15 feet and boast bright green leaves as large as elephant ears. A half-dozen 2-foot-long cucumbers hang from each plant.

pero Vegetables is the only commercial hydroponic grower in Palm Beach County, raising European cucumbers without soil, faster and bigger than they could be grown in the ground. Its 7-acre hydroponic operation is an impressive spread of agricultural technology and gives a glimpse of what might become the future of agriculture

With less land available for agriculture, growers nationwide are turning to hydroponics, said Arthur Kirstein, of the Palm Beach County Cooperative Extension Service

"It’s the future when you’re limited in land," he said. "We are actually trying to promote it.

While an acre of land might produce 800 crates of cucumbers per season, one acre of hydroponically grown plants can yield as many as 18,000 crates per season. …

Hydroponics technology also keeps fertilizers off waterbeds and aquifers.

"It’s the way everyone should go and will go in the future," Hebb said. "It’s an environmentally safe place to grow while being friendly with the environment around us."

The spinach crisis raised the issue of food safety and whether field growing doesn’t have inherent challenges. Consumer demands for quality already were driving the industry to more of a controlled environment.

Perhaps a need for higher yields in less space might be the final key to seeing controlled environment agriculture really assume a mainstream position in the world of produce.

Here is a nifty vision of what that future might look like.




How Immigration/Globalization
Affects The Economy

We have been following the immigration debate for some time with many pieces, including: Doubtful Immigration Policy, Pundit’s Mailbag — Immigration, Straight Talk On Immigration, Immigration And The Poultry Industry, Reducing Labor With Technology, AgJobs Take 2, Pundit’s Mailbag — AgJOBS vs. Lou Dobbs, Pundit’s Mailbag — AgJOBS Bill Needs More Support, AgJOBS Gets ‘Pull’ From PMA While United And Others Provide The Push, Compromise Reached On Immigration Reform, But The Battle Is Far From Over, Pundit’s Mailbag — ‘Unworkable’ Immigration Plan, Pundit’s Mailbag — English And Immigration, Still Fighting for AgJOBS and, most recently Pundit’s Mailbag — Immigration As An Economic Issue.

Now there is a new report out by the Organization for Economic Co-operation and Development (OECD) that focuses on the question of how globilization of the economy affects the labor force in the OECD countries, which are, basically, the more affluent nations of the world.

The Wall Street Journal did an article on the report and came up with this summary:

Offshoring and inexpensive imports may be hurting low-skilled workers in the U.S. and Europe to the extent that free trade and open markets could become increasingly difficult for politicians to sell to their constituents, according to one of the world’s leading economics institutes.

The Organization for Economic Cooperation and Development, a Paris-based institute backed by the governments of 30 leading industrialized countries, is a staunch believer in free trade, which most economists believe makes all countries richer overall, including those with high wages.

But in its annual labor study, published Tuesday, the OECD acknowledges growing popular unease about globalization — the growing integration of the world economy through trade and cross-border investment — and frets about a popular backlash if governments fail to ensure that lesser-skilled workers share the benefits

“Millions are benefiting from globalization, but at the same time there’s a feeling something’s wrong with the process,” said OECD Secretary General Jose Angel Gurría. That is creating political resistance to further moves to free up international trade and investment, he said — particularly in the U.S. and France.

A growing number of economists are expressing concern about the number of losers from globalization. Despite strong economic growth, these economists note, many workers in developed countries are struggling to find well-paid work amid a combination of cheap imports, the relocation of factories and offices to low-wage countries, and changing technology.

“The conventional wisdom was that all boats would be lifted by the rising tide. That was overly optimistic,” says David Audretsch, director of the Max Planck Institute for Economics in Germany. Now, economists are recognizing that today’s processes of globalization are posing new problems, he says — but they are only starting to overhaul their theories in response.

This is not a food industry issue, much less a produce issue, but as the immigration debate proceeds, we will need to think about this issue in the context of helping all of America’s citizens.

We haven’t read the report yet, just the media reports on it, so we will discuss this more when we have the whole story. One thing not mentioned in any press report, though, is whether the OECD report pays attention to the role of low wage workers as consumers.

After all, if we were to pay enough to attract American citizens to harvest all the apples, that might help raise wage rates in the U.S. and certainly would benefit those individuals who got the newly higher paying jobs.

It would, however, also raise prices on apples, so the benefit of higher wages would have to be weighed against the cost of higher prices.

Whether this would be a net win for various segments of the American population depends on a lot of things — including to what degree wages would actually go up?

One could also imagine a cascade of protectionism. If step one is high wages to attract apple pickers, step two is high tariffs to keep out cheap imported apples and apple products. Then, of course, other countries would retaliate in kind.

It seems hard to believe that anyone would be better off in this kind of world.




Pundit’s Mailbag — Too Much Hype Over ‘Organic’?

We ran a piece entitled Is Organic Produce Healthier? — and it brought numerous responses including a letter from a salad dressing manufacturer who responded as aconsumer. We ran that piece under the title Pundit’s Mailbag — A Different Definition Of Organic Health. Today we run a letter that points out some realities about agriculture:

It was interesting to note that there might be some nutritional benefit to organic production of potatoes. I expect that the potatoes have no ethereal preference for being grown organically and the difference lies in either fertilizer application, soil conditions, or location, i.e., terroir.

Personally, I question any positive nutritional value added to consumable plants because they might be farmed organically. Plants cannot ‘get up and move’ if attacked by pests or antigens. In nature, most naturally occurring plants have evolved to protect themselves by developing poisonous attributes which kill or discourage their consumption by other life forms (life threatening allergies for many to nuts come to mind).

Most of the commercial fruits and vegetables we eat today are edible because humans protect them during their life cycle. Throwing a few seeds on the ground does not guarantee dinner.

That said there are other significant advantages to organic and other low-impact environmental methods of production of fruits and vegetables.

The obvious one is expense, especially when considering the use of pesticides and fungicides. Many growers are finding new ways to meet consumer demands for tasty, cosmetically attractive fruits and vegetables while using fewer artificially made chemicals which may have a harmful impact on the environment.

Better scientific tools to measure a plant’s true growth and optimal production requirements in many cases is leading to better use of expensive production resources to grow healthy food — with less environmental impact.

I believe there is far too much hype over what constitutes ‘organic’. When I took chemistry in college, organic simply referred to any compound that contained the element Carbon.

I congratulate anyone who has found a way to produce fruits and vegetables organically, or even transitionally. Indeed, today we are finding that ‘less really is more’ and the real test should be to have the least impact on our environment possible, while producing healthy and nutritious fruits and vegetables. Maybe there is no added nutritional value to organic and low impact farmed produce, but we all are better off if we can “get more, with less”.

— Richard A. Eastes
Rixx Intl. Marketing Co.Inc.
Visalia, California

Rick makes several key points:

1) That this claim of extra vitamin C in potatoes grown organically is questionable.

We are also waiting to actually see the research on the notion that organically grown produce may be higher in Vitamin C than conventionally grown produce. In the past, as Rick references, differentials that seem to suggest something intrinsic about a growing method may, in fact, be due to something else. Comparing organic to conventional is especially difficult because, by definition, you can’t grow them in the same field.

Indeed if growing organically is more difficult, farmers may use their best land to grow when they use that method. This can give completely incorrect indications as to what would be the outcome if the whole crop — both that grown on prime and sub-prime land — was converted to organic.

Time can also distort these things. If the organic product is local and the conventional product from across country or if the organic product is new crop and the conventional from storage — well, you may, as they say, be comparing apples to oranges.

Besides, a small difference in a vitamin claim is not much of a health claim anyway. Are our diets deficient in vitamin C? Will we have fewer deaths from scurvy if we have vitamin C-rich potatoes? What is the real advantage?

2) There are other advantages to organics, notably avoiding the expense of chemicals.

Yes, avoiding the expense of chemicals would be great — if we didn’t have to use other things in their place. Whether we have to use organic substances or keep the field fallow more or buy beneficial insects or accept reduced yields — all signs point to organic production being more expensive than conventional — not less expensive.

3) That too much emphasis is placed on the term “organic” and that the world would be better off if we looked to use science to reduce unnecessary inputs into agriculture by all producers instead.

Rick has a crucial insight here. Anyone who knows chemistry knows that the organic industry has taken a trivial difference — the absence of a synthetic substance — and built a massive marketing effort around it.

Because the base is so much larger, virtually any interest one might have in expanding organic production — reducing exposure to synthetic pesticides in people or the environment — would be more easily obtained by obtaining changes in conventional agricultural practices than by promoting organics. In other words, getting a 10% decrease in pesticide use by conventional agriculture will achieve a reduction in synthetic pesticide use far exceeding what even a 100% increase in organic production would accomplish.

The problem, of course, is that we have created a "winner take all" game. Reduce synthetic pesticide use by 99% and one sells at the same price as all other conventional produce. Do that extra 1% and one gets the organic premium.

One caveat we would add is that knowing how something will ultimately affect the environment is very tricky.

Crucially, it depends on knowing what yields will be. If it turns out that organic yields 30% less than conventional, then the enormity of increasing acreage sufficiently to compensate for that decline in production is likely to do so much harm to the environment that it seems unlikely that any organic benefit could compensate.

Many thanks to Rick for his thought-provoking letter.

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