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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Whether It’s One Pepper
Or More, FDA’s Lack Of
Transparency Is Unacceptable

Our piece, FDA Finds One Jalapeno With Salmonella Saintpaul And asserts Authority To Bankrupt Innocent Parties As Part Of FDA’s Pursuit of Vague “Public Health” Goals, pointed out that coincidence is not causation and the mere fact that one pepper was found to be contaminated does not prove or even indicate that this jalapeno pepper — previously unknown as a vector for Salmonella — is actually at the root of this outbreak.

One distinguished food safety expert was a bit aghast as he read the press reports and asked us two pointed questions:

1. Was the detection actually a single jalapeno pepper or from a single composite sample of several taken from the distributor? I thought this must be a mistake in reporting by media.

No, it definitely was not a mistake in reporting. After initially pointing out that “one of the jalapeno pepper samples” had tested positive for Salmonella Saintpaul, FDA’s Dr. David Acheson, M.D., Associate Commissioner for Foods, said clearly — and in the singular:

“The discovery of this positive pepper was a result of the past weeks of investigations by FDA scientists and field agents…”

And…

“The pepper that we found was positive was grown on a farm in Mexico…”

One positive jalapeno in a sea of negative samples is very odd, so we have tried to get clarification. First, when asked, FDA spokespeople told us it is a composite sample — but they would not tell the world how many peppers were composited to make this sample. Then they said the word "composite" might be wrong and they would get back to us — which they never did. The FDA is also not withdrawing or clarifying Acheson’s singular comments although we gave them the opportunity to do so. So it is very odd.

2. Is the industry or others questioning the actions taken in the absence of reasonable disclosure of the total number and locations of jalapeno samples processed that were negative?

The lack of transparency is simply unacceptable For those congressional staffers who read these pages and those scientific peers whose opinions influence people at FDA — this is a place you can really help. More than any decision, it is the secrecy and manipulation of data that is causing outrage toward FDA.

The days are past when people could be expected to blindly accept whatever the FDA says as gospel. The meaning and significance of this positive finding can only be assessed in the context of “…the total number and locations of jalapeno samples processed that were negative.” So why will FDA not release the numbers?

Others have doubts about whether there was a positive sample at all. The fact that it showed up at this very small distributor is, in and of itself, interesting. Large companies don’t generally allow the FDA to simply take samples — they follow a process called shadowing, in which a third-party lab follows the FDA around and takes a sample everywhere the FDA takes a sample. So if the FDA takes a snippet of a pepper, the private lab takes a snippet of the pepper; if the FDA swabs a corner, the private lab swabs a corner.

This way if FDA claims a positive, there is an independent lab ready to confirm or deny that positive. If the private lab test is negative, it leads to searches for cross-contamination and other procedural errors in the FDA lab. In this case, because the distributor is so small, they probably had no idea what to do. Skeptical minds might wonder if this small distributor, with no epidemiologists, no consultants, no private labs, etc., wasn’t the perfect choice to take a fall.

We received a letter from an industry member with a long and painful memory of how FDA has functioned in the past:

It was just 2 grapes in one box, out of 190,000 boxes on the Almeria Star back on March 13, 1989, as I mentioned in a letter you published under the title of Friday The 13th, 1989… Important Date In Produce History.

In the cyanide scare, it turned out the find was at best a ‘mistake’ in the FDA’s lab, or a hoax to show the FDA and State Department ‘were on the job’, after Lockerbie and the Alar scar.

Don’t be surprised if this episode is not staged.

Besides, Jalapenos, at least in my diet, would have the same results as Salmonella.

— Richard A. Eastes
Director of Special Projects
Ballantine Produce Co., Inc.

Of course, one doesn’t have to believe in nefarious activities to recognize mistakes happen. Just over a year ago, we published this article: Church Brothers/True Leaf Recalls, Then “Unrecalls’ Spring Mix, Arugula After Testing Mishap. The piece profiled how a lab error led to a contaminated sample. What assurance is there that the same thing hasn’t happened in this case?

Jalapenos are a very tiny and insignificant part of the produce industry. It would be expedient to accept the FDA’s indictment of them so that tomatoes and other produce items could be exonerated.

But it would be wrong.

The industry needs to view the indictment of jalapenos with the seriousness it would if bananas were indicted. Indeed the jalapeno people need the industry more than the banana people do because they have fewer resources of their own.

One pepper, two grapes… these are ridiculous standards and the industry should stand up and object.

How many samples were taken?

Where were the samples taken? When?

Which lab processed the positive?

Is there any possibility of cross-contamination?

If the industry just rolls over because jalapeno peppers are a small item, it will be rolling over with larger items in the future.




With FDA/CDC Protected By Sovereign Immunity, Compensation For Losses Looks Bleak Says Professor Richard Epstein

Back in the spinach crisis of 2006, many spoke of the importance of efforts to get compensation for innocent spinach farmers who had been crushed by the FDA’s action. Industry leaders emphasized how important it was to establish the principle that those producers who do the right thing should not be penalized, that penalties should be reserved only for those who have done something wrong.

These pleas, for the most part, fell on deaf ears.

Now, many are looking for paths that might get compensation for tomato and other farmers damaged by the broad sweep of FDA’s current actions.

We confess that we have seen little reason to be optimistic about any of these efforts. Yes, via legislation anything can be done, but it is hard to get the various groups to appropriate funds for one particular group. And the judicial approach has struck us as almost hopeless. This is because there is a legal doctrine known as Sovereign Immunity, which basically means that neither the state nor people acting as agents of the state can be sued for acts within the scope of their responsibility.

We say the approach was “almost hopeless” because 23 years ago, a book was published called, Takings: Private Property and the Power of Eminent Domain, which began a renaissance of interest in the “takings” clause of the Fifth Amendment to the United States Constitution.

That clause holds as follows:

“… nor shall private property be taken for public use, without just compensation.”

We wondered if we could make the following argument: In order to obtain a public purpose — in this case public health — the FDA de facto confiscated the property of innocent individuals by depriving them of a market. Could we make an argument before the Supreme Court that this constituted a “taking” of private property for a public use and thus required compensation?

We turned to the author of that book, a man not only brilliant, but with the exceedingly rare trait to not be influenced by the intellectual fashion of the times.

We asked Pundit Investigator and Special Projects Editor Mira Slott to speak with Professor Richard A. Epstein:

Richard Epstein
James Parker Hall
Distinguished Service Professor of Law
University of Chicago
Chicago, Illinois

Q: We are intrigued by your body of work and look forward to receiving your legal analysis and abstract thinking on FDA’s outbreak investigations and produce company restitution.

For example, would constitutional issues in your book, Takings: Private Property and the Power of Eminent Domain, apply to tomato growers who lost their entire crops, or by default couldn’t plant or harvest due to FDA’s consumer warning not to eat tomatoes, and the uncertainty of how long the warning would remain? Are there applicable cases of government compensation based on government actions taken to protect public health and safety, etc.?

A: I am happy to talk, but the information is all grim under the current legal system. Takings was a well known book not because it represented the law but because it attacked it. But here is the bottom line: When the CBS show dumped on Alar, the case for defamation against a private party was summarily thrown out. Government defendants are always in a stronger position, with absolute immunity from suit for all decisions done in the exercise of their discretion. The FDA and its officers get total protection against any and all losses, as far as I can see.

There are small hopes, such as “all clear” calls when the information turns favorable, which help mitigate losses. But once its wheels grind, it has the choice on having wide or narrow bans on any product or product group. There are no examples of restitution for these kinds of decisions. It took over 40 years to get some pittance in compensation for the Japanese interned during World War II, and that took legislation. I don’t like these rules very much, but they are unshakable.

Q: You describe bleak legal prospects for produce company restitution. Alas, sovereign immunity sounds very strong. Still, I know it would be incredibly valuable for our readers to hear your out-of-the-box thoughts, both legal and abstract, on several scenarios.

A: One of the things everyone has to understand is the interactions between regular business and government have multiple dimensions… drive businesses into lamp posts, oversee huge portions of the economy…

One of the largest organizations is FDA — your industry is interested in the food side, but the drug side is just as big and at least as controversial. One will see a lot of uncertainty and confusion. The central problem one has to face is that government itself gets sovereign immunity, and officials get their immunity for actions in the ordinary course of duties.

The essential line one tends to see drawn is this: with any action, be it legislative or administrative oversight, if it is not directed at a particular person or involving culpable malice, the government or government official will use the sovereign immunity defense. These have not narrowed but have grown in the last 20 years. With respect to physical accidents, any effort to try and use a legal remedy produces a breakdown in the inspection process and has failed, and food will be no different.

Q: Could you comment on the government settlement with the guy who was “a person of interest” in the anthrax situation — If the rule is ironclad, why did they give him money? And why wasn’t his lawsuit thrown out?

A: The reason why the anthrax case came out differently is because it combined leak and defamation of a particular individual — the government called him a criminal with little reason to believe it. The courts, to break the hold on sovereign immunity as being absolute, will find cases like that as targets of opportunity.

Q: Our interview with Dr. Michael Osterholm in our June 24 issue provides a blunt critique of FDA and CDC’s seriously flawed Salmonella Saintpaul outbreak investigation, resulting in the decimation of many innocent parties.

A: As disastrous and misguided as I suspect it was, it would be odd for the Saintpaul investigation to get the same status. Massive incompetence wouldn’t be a matter of defamation.

Q: The FDA’s Saintpaul outbreak investigation has already resulted in devastating losses for growers, packers, distributors and other companies down the supply chain. Florida tomato growers, among others, are intent on receiving government restitution for losses they’ve incurred, estimated at upwards of $100 million. Companies also project future sales declines from lingering lack of consumer confidence in produce safety. Are you saying their prospects are futile?

A: Courts don’t want to investigate those cases that involve thousands of decisions — determining what products were involved, whom to inspect first, how much to inspect, what public announcements and warnings, what seizures of individual goods you make — it’s very, very hard and courts are reluctant to enter into a case when they can’t see a clear goal post and limiting principles.

I’ve grappled with this for 20 years. Absolute immunity shields the worst kind of people. Error costs of any rule are extremely high. It just goes with the territory. That’s what’s involved. It’s a stark reality — not a recent development, but more important inspections have increased from security issues to food safety.

Q: Putting aside for a moment the current law, what legal rules could be established to deal with this kind of issue in the future? On the one hand, there is a public policy interest in not having administrators paralyzed by fear of lawsuits. On the other hand, if businesses can be destroyed with no consequence, we will have a lot of businesses destroyed.

A: The usual question, what can we do, and the realistic answer is to reform day-to-day operations, weaseling out the problems in the system. There is the question of voluntary compensation programs where Congress says, ‘here is x sum of dollars’; people are frightened to death of these schemes, myself included.

Q: Why?

A: You could have a tomato farmer who misplanted tomato crops and was going to lose crops anyhow. Another said they plowed over crops when they never planted crops. Restitution programs are ripe for fraud because the government can’t superintend. How many people have farms? You can’t inspect them all and you can’t scrutinize crops before and after. It never quits. The question is can you sell private insurance? It’s very difficult to get anyone to write it. They face fraud risk and complementary risk.

Q: What do you mean by complementary risk?

A: If the government has a national inspection, it becomes a common mode failure. If it triggers one, it triggers all. That’s what happens. People realize how difficult it is to handle. It doesn’t get easier, it gets harder. When you insure risk, you want random acts.

Q: After many innocent spinach growers were bankrupted, and now tomato growers and jalapeno farmers unrelated to any outbreak facing the same fate, it is becoming difficult to attract investment. Could you speculate on what law Congress could pass — not so much to compensate the spinach, tomato or pepper farmers, but to establish a new system to prevent future harm?

A: How do you attract investment? The strategy is difficult to reconcile with small geographically isolated farms. It exposes them to all-or-nothing peril. Diversification is the way to deal with risk. Since you’re never sure if the crop business is good or bad in a particular commodity, invest in a diversified company, with 20 different farms in 20 locations, growing 20 different crops. Farmers can’t diversify like that, corporate shareholders can. It’s a calculated strategy; it doesn’t minimize risk but minimizes its consequences. As far as sovereign risk, I’ve never heard a persuasive account of what to do but diversify.

Q: As far as the current situation goes, what would the argument be if you were before the Supreme Court? Could a spinach grower in New Jersey argue that in banning his product, the government was de facto “taking it” for public use or purpose” to avoid any possible public health threat without paying him compensation?

A: As to your question of government taking property, this gets into an extremely complicated area. You’re combining two tracks. You have to keep them separate. Track one is taking property for public use. Say a government decided on the process of inspecting tomatoes. It needs a warehouse in the tomato belt and has no time to build one, so the government takes a farmer’s facility. The government has to pay rental and the amount of money to get premises back in the position it was in before the government took the lease.

Assume tomatoes are all up there, and the government doesn’t know if they are healthy or contaminated. The general rule is these are police power regulations, and the exercise of the police power never requires compensation. The theory is you have crops to sell into commerce; if the new crops are dangerous, the farmer turns them under. That’s the more simplistic scenario.

Q: What if the tomatoes weren’t even being produced during the time of the outbreak?

A: Suppose you don’t know the tomatoes are dangerous, but just the announcement and they get plowed under when those tomatoes were marketable. The answer from the Supreme Court is no compensation.

The problem you’re raising of the tomato farmer not producing at the time of the outbreak, when the FDA is looking at all these tomatoes: The government might say there could be some form of transfer contamination. No compensation. In an effort to protect government from being too cowardly, you make it too reckless. There is no way out. You can’t find a judge who would deny public health.

Q: The FDA justifies anything it does on grounds of “public health.” What is the constitutional standing of such a claim? Has it been established through case law and legislation that a specific person known to be contagious can be put under quarantine? If this is the case and we learn that one person had TB, could the government order all people with similar traits to go into quarantine for six months?

A: Is the government allowed to quarantine? You betcha. Could the government order all similar people quarantined? That’s an extremely hard question. With destruction of property, the government has more sway; it is easier killing tomatoes than locking people up. What makes it so complicated is that generally the law won’t allow people locked up when there’s a way to see if they were infected. The disease may be in the latent stage, which testing can’t detect, and then they could be contained.

There’s a famous Jew Ho case versus the City of San Francisco. The city wanted to quarantine everyone in Chinatown. The Chinese couldn’t leave but any white traders could enter. It was struck down because it was a phony quarantine. If you have a legitimate bona fide one, you can hold them, not more than six months I believe… there are some restrictions.

Q: In Florida, the state sought to control citrus canker and ordered all citrus trees within some radius of any infected tree destroyed. In the end, judges ruled it unconstitutional, I believe because the state had to seek out an individual warrant for each tree it sought to destroy. Could you help clarify this case?

I believe later the judges ruled that the program’s “compensation,” a gift certificate for a tree from Wal-Mart, was not sufficient.

A: In the citrus canker case, this was unquestionably OK to destroy the trees. Canker is rapidly contagious. You say “infected.” Infected and contagious are completely different words. If AIDS was contagious, all mankind would be dead. The pressure to put people in confinement would have been enormous. Infections go slower.

I haven’t read the case, but what’s going on is that the procedural hurdles have to be satisfied. We think a tree is contaminated, so we take all trees from a certain distance away. This appears to be a search warrant case from 2002 and there were some procedural defects in how the process was handled on the edges.

Q: The lawyers we interviewed in Miami claimed that FDA was utilizing “Import Alerts” in an essentially lawless way to avoid the restrictions Congress has legislated. Similarly, we are not aware of any statue that calls on FDA to issue recommendations not to eat things. It has recall authority and other authorities, but aren’t those restricted and subject to judicial review?

These actions are arguably not within the scope of authority Congress has given to FDA. Doesn’t that make a difference?

A: Import alerts. This is very serious stuff. It’s a form of defamation again if it’s false. It’s impossible to figure out how to cut back.

The standard rules on liability are either wildly restrictive or wildly generous. I don’t think where we are in the equilibrium there will be any major changes to the system.

Produce companies have to work for better administration on the ground. Maybe they are willing to contribute to a fund essentially to provide better research into epidemiology — self-help stuff. It doesn’t help that the nature of produce makes it difficult to control bacteria.

What’s happening is a tragedy for the produce industry. I think that these issues are interesting enough for further academic work. I would like to send them on to our Law Review so that they could think of possible topics for student notes.

We certainly gave Professor Epstein full permission to share the industry dilemma with his students at the University of Chicago as it just means some of the brightest and most rigorously educated law students will be advancing the thinking on these important topics.

Although Professor Epstein is not particularly optimistic about the chances for the produce industry to win compensation judicially — no real surprise there — he opens the door a bit to individual companies that have been defamed by a false Import Alert.

Our extensive analysis of the Honduran cantaloupe situation has pointed to a great injustice. Perhaps Agropecuaria Montelibano’s attorney ought to consider bringing Richard Epstein in as Special Counsel?

With the following three pieces, we define the weaknesses in the legal and scientific environment in which the CDC and FDA are operating.

Fix Suggested For FDA’s Vigilante System Of Banning Product
Through Import Alerts

Dr. Michael Osterholm, Esteemed Authority On Public Health, Speaks Frankly About The FDA, The CDC And The Incompetent Management of the Salmonella Saintpaul Tomato Outbreak Investigation

With FDA/CDC Protected By Sovereign Immunity, Compensation For Losses Looks Bleak Says Professor Richard Epstein

Although certainly much can be done by discussion with FDA and CDC, in the absence of reform in this basic environment, real progress seems likely to remain elusive.

Many thanks to professor Richard A. Epstein for taking the time to share his thoughts with the industry.




Food Prices Not As High As We Think

With publications filled with reports on food prices and scarcity, it is useful to come across some sanity from Steve Malanga, a senior fellow at the Manhattan Institute:

The Good News You Missed on Food Prices

Within the last few days, stories of a worldwide food crisis have given way to alarm in the media about America’s own grocery prices. Newspapers, nightly news programs and talk shows are filled with tales of how spiking demand worldwide has led to supermarket price hikes that are said to be squeezing people’s budgets. A few examples:

  • Numerous media outlets quoted testimony from a Congressional hearing on food prices last week in which Sen. Charles Schumer (D-NY) said that walking the aisles of his local supermarket he was “floored by the prices” and was especially worried by “prices of the staples we all depend on for a healthy diet.” He listed a whole series of products that have seen double digit price increases from March 2007 to March 2008.
  • A story in Friday’s Chicago Tribune talked of “desperate” money-saving tactics grocery shoppers are resorting to in order to keep down their weekly food bill.
  • An Associate Press story the day before told of consumers who are now stockpiling food as a hedge against future inflation as well as potential shortages.

If you know anything about food prices in America, you know that what all of these stories lack is a serious dose of context. Over the last several decades, groceries have been one of the real bargains in America, and the average rate of inflation on dozens of food items tracked by the U.S. Bureau of Labor Statistics has consistently been less than increases in the purchasing power of the average American family.

As a result, the percentage of income that families devote to their food purchases has fallen sharply since the food inflation of the 1970s, even though more and more Americans (like Sen. Schumer’s family, judging by his testimony) have opted for buying more premium-priced items, like organic foods. Recent price spikes have done little to reverse years of moderation in the cost of food.

The good news started for most consumers in the 1980s and has continued since then. In the decade before, food prices rose at average annual clip of 8.4 percent, which was more than a full point above the overall inflation rate. But in the 1980s, the rate of inflation on food items declined to 4.6 percent annually, nearly a point below general inflation. That downward momentum continued in the 1990s, when food prices rose by a mere 2.8 percent annually, a trend that has pretty much continued in the new century until the last few months.

You probably missed the many media stories over the years about what a bargain food has become, or maybe there simply weren’t many such stories. But one result of these very moderate increases in food prices is that we are paying less, sometimes considerably less, relative to our purchasing power today for a whole range of products, including many staples.

A pound of ground beef, for instance, cost $1.86 in March of 1980, which is, according to the BLS’ own cost-of-living calculator, the equivalent of $4.82 in buying power today. But in March of this year (the most recent monthly data, on which most pricing stories are based), a pound of ground beef cost on average just $2.82 in the United States.

A pound of fresh chicken, one of a dozen food basics that the BLS includes in its most-requested data series, was 67 cents in 1980, the equivalent of $1.71 in buying power today, though the actual average cost of chicken in March 2008 was just $1.17 a pound. A pound of coffee was $3.25 in 1980, the equivalent of $8.42 today. While you might pay that much for a pound of Starbucks coffee, the average retail price of coffee in American stores in March 2008 was $3.48.

Even among those items where price hikes have been steepest in the last year, consumers are hardly very far behind. Price spikes on flour have received enormous media attention, with Sen. Schumer observing that the cost of flour is up a “whopping” 32 percent in a year. But the increase comes after years when the price of flour was relatively stable. As a result, in March, a pound of flour cost 49 cents, compared to 21 cents a pound in 1980, which is the equivalent of 55 cents in today’s dollars.

In some cases, prices are rising now after having fallen. Sen. Schumer complained that bananas are up in price about 13 percent in the last year. True, but the Senator forgot to mention that the inflation rate for bananas has been negligible for years, and that in fact the price of a pound of bananas dropped by nearly 6 percent in 2004. That’s why bananas, at 59 cents a pound in March, are still a bargain compared to bananas which on an inflation-adjusted basis cost consumers 91 cents in 1980.

These differences are significant enough once you add them all up that they have helped produce a sharp decline in the percent of household income that the average family is paying for food. Since 1984 the BLS has tracked the impact of spending on dozens of categories — from groceries and energy to apparel, health care and entertainment — on family budgets. In 1984 the average family spent 9.3 percent of its after-tax income on food at home, but by 2006 (the latest year statistics are available) that percentage had fallen to just 5.9 percent of after-tax income.

Even with the recent price hikes, Americans are spending on average about a third less of their family income on food than they did in 1984, and since food is a staple that everyone purchases, the gains have benefited families across the income spectrum. Among families in the lowest income quintile, spending on food has shrunk from 38 percent of after-tax income to 21 percent since 1984. Those in the second lowest quintile are spending 10 percent of family income on food, compared to 17 percent in 1984.

None of this is surprising to anyone who has spent considerable time in supermarkets over the years, or has watched how food retailing has changed. Consumers have an array of new stores to pick from that offer bargains on food, like warehouse clubs. Technology has driven up productivity in the food distribution network, cutting the cost of deliveries and keeping stores in-stock but not overstocked. The most successful food retailers today operate with net margins that are less than one percent of sales.

America’s low food prices, in other words, have been earned, not gifted from on high. But perhaps after nearly 30 years, some consumers (and much of the media) assume that we’re simply entitled to such low prices every year. Sen. Schumer probably best exemplified that sense of entitlement when, during his testimony, he complained that his daughter is now paying $12 a pound for organic chicken. Given that there’s no scientific evidence that organic foods are any better for us or any safer than other foods on store shelves, it’s hard to work up outrage about someone spending $12 for something that on average costs $1.17 a pound.

This year, economists are predicting food inflation of about 4 percent, which is higher than recent history, but hardly represents hyperinflation. The bad news is we haven’t seen this level of inflation on food since 1990. But that’s the good news, too.

We surely have our problems. Still, it is well worth remembering that if we are comparing ourselves to the status of previous generations or even a few years ago, we are often not comparing apples with apples.

Senator Schumer’s report on his daughter’s organic chicken is an obvious case in point, but there are many others.

If you think housing prices are high, it is partly because the house we expect today is light years away from the house your grandfather expected.

The Momma Pundit thought the Poppa Pundit was rich because his family had a house as opposed to a Brooklyn apartment. The house had no garage, one bathroom for three children and the parents, no air conditioning, minimal square footage, etc.

Wal-Mart and warehouse clubs led the move to lower food prices, and even substantial blips in commodity prices are unlikely to change the fact that food is an enormous bargain.

There are issues, but much of the media has seized upon anecdotal stories to create drama.

The Pundit was recently called by a national TV program asking if he thought it was wise for a guy to convert his garage to a freezer so he could buy meat at today’s “low” prices and beat future inflation.

Our assessment was that this was ridiculous… the electric bill alone was likely to be far more than any likely inflation. More broadly that the fear this kind of activity represented was simply not justified by the situation.

Unfortunately, many are more interested in fanning the flames of fear than talking about realistic scenarios: Such as that food, which had gotten very cheap, may cost a little more for a while. Although if we find oil prices drop, don’t be surprised if food prices quickly drop too.

The whole locally grown movement may have started as a philosophy, but, today, it is being driven by the high cost of trucking. Low transport costs allowed us to purchase from the most efficient production region and put all production regions in competition with one another.

With transport so expensive and difficult to get, the regional producers — efficient or not — have a big edge and little competition. If the transportation situation changes, the food price situation will change even more quickly.




Publix Greenwise Concept
Puts Home-Meal-Replacement
Revamp Into Perspective

We are out at PMA’s Foodservice Conference and the focus is on the glamorous world of TV chefs — with Cat Cora, the first female Iron Chef from the Food Network’s Iron Chef, and Tom Colicchio, head judge of Bravo TV’s Top Chef, appearing as headliners.

Yet with economy as it is today, the industry would do well to look for growth in more mundane corners — such as supermarket foodservice. Pundit sister publication DELI BUSINESS, the leader in this category, and in a series of columns both here, here and here, we’ve argued that a confluence of circumstances — high gas prices restricting travel, tough economic times leading to a value on economy and a post 9/11 cocooning instinct — has created an opportunity for supermarket foodservice to rapidly gain market share.

This opportunity comes after more than a decade of experimentation with home meal replacement, which led to a new appreciation for restaurant-quality food at retail. Now the gold ring of shifting consumer shopping habits away from restaurants and back toward supermarkets is within grasp.

BUT THE CHALLENGE IS STILL TO DO IT RIGHT.

We thought of this challenge as we dined at the new Publix Greenwise store that opened not far from Pundit headquarters in Boca Raton, Florida. We had run a piece about the first store in this concept, which had opened in Palm Beach Gardens, Florida. Later we visited the store several times but held off writing about it as we had some trouble getting our hands around the “soul” of the concept.

The new store in Boca Raton is actually a gut renovation — and we mean gut. Publix jack-hammered the concrete out of the floor, but they kept the four walls intact. The Boca store is significantly smaller than the Palm Beach Gardens store, which, among other things, features a large loft filled with tables for dining.

Despite it being smaller, we like the Boca Raton store much more than the Palm Beach Gardens store. Every time we’ve been in the Palm Beach Gardens store, the traffic felt light compared to the square footage, whereas the Boca Store is bursting with people and energy.

The store has stunning — and doubtless very expensive — design, and the produce department is genuinely beautiful offering an exceptional diversity of items that we rarely see. Right as we walked in there were interesting displays of Monster Fruit and tropical specialties rarely seen in such a prime location.

Greenwise is a brand, an aisle concept and a store. All Publix stores have a Greenwise section selling Greenwise branded grocery products and other organic and natural items. Now Publix, with these two initial Greenwise stores, is experimenting with its own “Whole Foods” fighter.

As with any high variety, high perishable, high service concept, it is too early to say how it will play out. It is much easier to build a beautiful store than to operate one. We’ve visited too many openings of stores filled with great fresh produce, wok stations, food bars, pizzerias, etc., and a year later the stores contain large displays of peanuts as they fill the gondolas of the now-abandoned specialty and service areas with some less perishable items.

This store, though, strikes us as important learning opportunities for others because of its focus on two very important areas — organic and retail foodservice. The organic offering strikes at the very heart of the debate over the appropriate way to market organics. It was common for the store to have a product, say, “fresh-cut cantaloupe,” presented in stacked bowls; then immediately next to the product, another row of bowls, completely identical in packaging and appearance, marked as “organic fresh-cut cantaloupe” — the only difference that was obvious was a far higher price on the organic.

We understand the logic. Publix wants to offer organic, but since this deeply conservative company doesn’t believe in its collective heart of hearts that organic is superior, it is loathe to market it as such. So it offers the organic product for those who already want it, but will do nothing to actually sell it.

Our sense is that this may not matter in a place such as Boca Raton. It is not only an affluent community but a spending community — lots of showy cars and houses… lots of people who just want to shop at the nicest, most upscale place around.

In this sense, the Greenwise concept is less about promoting organics than it is about tapping into evolving standards of “upscale” — if in the Eighties, upscale meant little packages of cookies from Europe, today upscale means organic, fresh, natural, local, etc., and so, at least in Boca Raton, the Greenwise concept doesn’t have to be fully committed to organics to be a success.

Whole Foods has had its greatest success in demographics with high educational levels. We wonder if the Greenwise concept, riding the wave of organic but never getting in to swim, will be enough.

One thing that could trip up Publix is execution on the complicated foodservice offer. The foodservice selection is extensive and Publix offers some in-store seating. There is evidence of a lot of thinking. In many stores the problem is that if you’ve just done shopping a supermarket, you typically have refrigerated and frozen items you need to get home so you will pass by the chance to have a meal or snack after you shop. But at Publix Greenwise, they will refrigerate and freeze the appropriate items for you while you enjoy a meal.p>

Yet we have eaten at Greenwise a dozen times since it opened and have found it to have a few too many shakeout problems. The menu is interesting and extensive, but the execution has been troubled.

Once we were in the middle of giving a person an order when another employee appeared to announce she had a phone order that had to be ready in 20 minutes, so both employees walked away and our order stood half done. During another visit, the sandwich being promoted was done with high end bread. After we waited almost 15 minutes being told it was being prepared, we were finally told they didn’t have that bread. As a substitute, they literally served the sandwich on two pieces of white bread from the bread aisle. On a few occasions, we found ourselves running out of time during a lunch hour as we stood behind indecisive customers.

We’ve been impressed with some of the ordering technology that companies such as Sheetz use and such as Safeway selected for its new “The Market by Vons” concept. These machines move the indecision away from scarce manpower and allow people to avoid a second line at checkout as the Safeway version allows one to pay with a credit card right in the foodservice area.

Still whatever the shakeout problems, Publix knows how to hire foodservice experts who should be able to do the kind of training and reorganization to make foodservice hum.

Such a beautiful store deserves the effort — and if the trade is ready to make the effort en masse, there is quite an opportunity to be seized.




Pundit’s Mailbag — USDA Opposes
Current ANSI Effort To Define Sustainability

I am a food industry environmental lawyer and love your writing, which I only recently discovered at a conference in California.

In particular, you’ve done a stellar job of covering the “hot news” and public debate in the ANSI sustainable ag standard… In case you did not see this while you were digging into the salsa-salmonella-scare issues, attached is a letter USDA sent and some press about it.

Since your last post on ANSI etc., was weeks ago, this might be good grist for your mill. I hope to have the opportunity to meet and look forward to see more pithy writing.

Thomas P. Redick
Global Environmental Ethics Counsel

Well a hat tip to Tom Redick for passing along this most crucial document. Our extensive coverage of sustainability has included pieces here, here, here, here, here and here, addressing the efforts of Scientific Certification Systems to control a process that would ultimately lead to an ANSI standard for sustainability not only for produce but for all crops including biofuels.

For reasons both pragmatic — the SCS vision basically sees organic as defining sustainability — and moral — SCS has tried to control this process and has attempted to give a Hobson’s Choice to industry members — either participate in a process SCS dominates or don’t participate at all — the industry has overwhelmingly opposed the effort by SCS. The only question has been: What is the best way to oppose it… participation or active opposition?

This letter is very significant because it throws the weight of the United States government against the process. Since the ANSI process requires consensus, it is difficult to perceive that ANSI would endorse a standard for sustainable agriculture that is actively opposed by the USDA.

Although SCS might hold out hope that a President Obama would see the situation differently, it might not be that simple.

In fact, the letter claims that the SCS proposal actually deviates from the law, as back in 1990 Congress passed and the President has already signed a bill containing a definition of sustainable agriculture:

The term ‘‘sustainable agriculture’’ means an integrated system of plant and animal production practices having a site-specific application that will, over the long-term…
(A) satisfy human food and fiber needs;
(B) enhance environmental quality and the natural resource base upon which the agriculture economy depends;
(C) make the most efficient use of nonrenewable resources and on-farm resources and integrate, where appropriate, natural biological cycles and controls;
(D) sustain the economic viability of farm operations; and
(E) enhance the quality of life for farmers and society as a whole.

The letter contains a number of critiques of both the SCS proposal and the process that is being shepherded by The Leonardo Academy, which is the group SCS pays to administer the effort.

Fundamentally the letter points out that the process cannot be the open and representative process promised by ANSI if the people who actually practice sustainable agriculture every day, all across the country, are not represented.

This letter is a big deal. The way things are advancing, it looks like one day ANSI will have to either accept or reject a proposal from The Leonardo Academy. One imagines that scene in the movie Miracle on 34th Street in which a judge has to decide if the man is really Santa Claus. When a shrewd lawyer gets the US Postal Service to deliver the Santa Claus letters to the man, the judge says that if the US Postal Service, a branch of the US government, recognizes this man as Santa Claus, the court was not going to argue.

We suspect there is a shrewd lawyer working the sustainability issue a s well. Many thanks to Tom Redick for bringing this document to the attention of the industry.




Perishable Thoughts

When we started our Perishable Thoughts section, we figured it would be fairly simple. We knew we would get lots of great quotes in from readers and figured we could publish most of them with just a little commentary.

Now that the quotes are flowing in we are finding it is a big job. Why? Well, it turns out that a high percentage of the quotes we are sent are not precisely right.

The Internet serves as an echo chamber for good and bad information alike — so just because a quote shows up in some online forum doesn’t mean it is accurate.

For example, we received a letter from our old friend David Linder, who we met over 15 years ago when he was with Camilia Foods and joined the Pundit — along with Lee Smith, who had been with WaWa at the time and now heads up Pundit sister publication, DELI BUSINESS — to serve on United’s retail board.

Well now David has a different position with a different organization, and he included a quote:

I look forward to the “Pundit” and appreciate the time and effort, even when all efforts result in a one line tidbit that helps the industry.

On quotes, I have a few that are in my top desk drawer and read daily as I reach for pen, calculator or paper clip. Here is a favorite:

AGRICULTURE…

The inherent profession of the wise man, the most adequate to the uncomplicated man and the most honorable occupation for the free man.

— CICERO

David A. Linder
Military Produce Group
Director of Merchandising
Norfolk, Virginia

Now we appreciate David’s sending this along, but we were unable to find a matching citation. Now part of the problem is that translations can vary. After all, what Cicero actually said was this:

“Omnium autem rerum, ex quibus aliquid adquiritur, nihil est agri cultura melius, nihil uberius, nihil dulcius, nihil homine libero dignius.”

You can check out paragraph/section 151 here to confirm it.

Now the best translation, combined with a specific citation, comes out like this:

“But of all the occupations by which gain is secured, none is better than agriculture, none more profitable, none more delightful, none more becoming to a freeman.”

Cicero, Volume XXI. On Duties (De Officiis):
De Officiis (Loeb Classical Library No. 30)

Marcus Tullius Cicero
44 B.C.

Funny thing is… we actually like David’s version better, which is why it is so widespread on the Internet. We suspect that more than a few growers are chuckling over that reference to agriculture being the most profitable profession. Then again, Cicero never heard of investment banking.

Many thanks to David Linder for sending along this quote. If you would like to contribute one of your favorite quotes to this new Pundit section, you can do so here.

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