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Perishable Pundit
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Produce Business

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American Food & Ag Exporter

Cheese Connoisseur



Dominick’s DiMatteo Family Closes Last Link To Chain

We received notice that the DiMatteo family, the founders of Chicago’s Dominick’s chain, had sold the real estate they had kept when the chain was sold:

The founding family of Dominick’s Finer Foods, the DiMatteos, sold seven Chicago-area retail properties for about $75 million to investment advisory firm RREEF Real Estate.

The portfolio totals almost 425,000 square feet and includes Dominick’s stores in Evanston, Northfield and River Forest as well as two shopping centers anchored by Dominick’s stores: Town Square in Schaumburg and Gateway Centre in Chicago’s Rogers Park neighborhood.

The other two sites are a small building leased to LaSalle Bank next to the 186,334-square-foot Gateway Centre, where other tenants include Foot Locker, Ashley Stewart and Hollywood Video, and a Walgreens-anchored strip center in Edgewater at Broadway Street and Glenlake Avenue.

The DiMatteo family held on to the seven properties when it sold Dominick’s to Ron Burkle’s Los Angeles-based investment firm Yucaipa Cos. in 1995, according to CB Richard Ellis Inc. marketing materials.

“All of the properties occupy prime, in-fill sites in high density city neighborhoods or close-in, affluent suburbs,” according to the sales brochure distributed to potential buyers.

The piece immediately brought Bob DiPiazza to mind. Bob is now back in hometown Chicago trying to fend off old friends who are always appearing on his doorstep pleading with him to take on consulting contracts.

Bob, however, has had a career filled with experience as broad as a retailer could hope for. After running first produce, and then perishables, at Dominick’s, he traversed the same route at Wal-Mart’s Sam’s Club division, from which he retired not long ago.

Upon his retirement, his friend and contemporary on the boards of both the Produce Marketing Association and the Produce for Better Health Foundation and at the pinnacle of regional retailing, Dick Spezzano, pointed out that:

Bob DiPiazza will be missed at Sam’s Club as he took them to new heights in their perishable buying, merchandising, and store equipment, that even Mr. Sam wouldn’t have dreamed of.

He worked for the biggest retailer in the world, was chairman of PMA and, as those who know him will testify, never lost track of his roots. So when we received word that the DiMatteo family was selling the last of the real estate it kept when it sold the chain to Yucaipa — ultimately to be resold to Safeway — we asked Bob, who knew the family well, what thoughts it engendered.

Here is what he wrote:

The sale of the real estate can be construed as the final chapter in the family’s involvement in the Chicago area chain, Dominick’s Stores. The DiMatteo family built this highly respected chain from a single store to over 130 stores with a dominant position in the market place. For those of us who were a part of this incredible journey, the “family” involvement will never be over.

Dominick Di Matteo Jr., or Mr.”D” as we called him, was one of the most passionate, charismatic and innovative leaders I have ever known. He inspired and motivated us to accomplish more than we thought possible… and he did it without lavish salaries, stock option awards and golden parachutes… he did it by example.

We worked side by side with Mr.”D“. We worked as a family. The DiMatteo family tradition inculcated values in each of us that had the privilege to play a role in building Dominick’s. Those values will continue on with all of us that were a part of this wonderful success story.

Ever wonder what the people who work for you will have to say about you? Many thanks to Bob for sharing his thoughts on the end of an era.




EurepGAP Becomes GlobalGAP… When Will We Have AmeriGAP?

It wasn’t long ago that Robert Yudin of Fyffes Tropical Produce wrote us asking Why Don’t American Retailers Just Standardize On EurepGAP?

It is a question bound to rise again with the news that EurepGAP is changing its name and title to GlobalGAP:

Using its eighth annual conference being held in Thailand this week as an appropriate platform, EUREPGAP has announced it is changing its title and logo to GLOBALGAP.

The decision has been taken to reflect its expanding international role in establishing Good Agricultural Practices mutually agreed between multiple retailers and their suppliers.

In ten years since its inception — initially targeted at Europe — the voluntary organisation has seen its influence spread and led to the creation of identical criteria adopted as far a field as South and Central America, Africa, Australasia, and most recently Japan and Thailand.

Established equivalent schemes such ChileGAP, ChinaGAP, KenyaGAP, MexicoGAP, JGAP (Japan) and most recently ThaiGAP, are backed by national governments, retailers, producers and exporters.

“Currently GLOBALGAP covers over 80,000 certified producers in no less than 80 counties with others expected to follow,” explains Chairman Nigel Garbutt. “It has meant that through the adoption of good agricultural practices subject to regular independent monitoring that committed producers regardless of their scale can compete on an equal footing.

“The reason for the name change is that it now makes common sense to clarify our far wider role at a time when both producers and retailers are operating on an international level across national boundaries.

Kristian Moeller Secretary GLOBALGAP added, “By positively aligning ourselves in this way, it allows us to identify and fit more closely and more clearly into the global supply chain.”

“The re-naming will be accompanied by a significantly improved website which will meet the information needs of our increasingly wider range of stakeholders.”

The website is www.globalgap.org, and it is clear that the more geographically extensive this standard becomes the more compelling the argument for the U.S. to hop on board.

For example, up until now, most American interest in EurepGAP was driven by British retailers. On August 17, 2007, however, JGAP, the Japanese Good Agricultural Practices standard, was announced. This harmonization of good agricultural practices is potentially quite important as Japan is a much larger customer for American producers than is the U.K.

An AmeriGAP or GAPUSA would offer the potential of expanded export markets for U.S. producers and a fixed standard for evaluating imports for retailers. In addition, it would reduce the duplicative audits that so vex growers.

It is not a perfect solution. First GlobalGAP only covers agriculture, not processing, so fresh-cut product would require some other certification on the processing end. Second, there are risks in relying on any certificate — there could be corruption or standards could have collapsed since the last review. Third, many of the GlobalGAP standards include ideas beyond food safety — crossing into environmental standards and social responsibility standards — and this may be controversial among Americans. Although one look at the video by the A&P clerks that we talked about here indicates things such as how employees are treated can have a real impact on food safety.

Still, everyone and their brother now claim to have a food safety program. They all seem to hire good names, but many times it is not clear what they are hired to do. Everyone claims they are third-party audited, but to what standard is unclear. If we are going to build regulatory and consumer confidence, we need more than amorphous claims of being third-party audited; we need a recognized standard.

GlobalGAP is kept as a business-to-business standard and does not have a consumer marketing component. There are no logos on product or other things that might raise issues with consumers. It is already well accepted, an enormous amount of work has been done, and developing a version that harmonizes with American conditions offers some commercial possibilities.

Even if there is not uniformity on this, we should move toward developing an AmeriGAP or GAPUSA so there will be one U.S. standard for those looking to export. Once the standard is established and the infrastructure built, retailers in the U.S. may well start standardizing on this for domestic suppliers as well.




Can Organics Feed The Earth?

A hat tip to Lauri Raymond, Chief Visionary Office at Sisters & Brothers, Inc., which sells products that can be used as sauces, marinades and dressings. Back in June, we ran a piece that focused on a letter she sent us regarding organics. You can read the exchange here.

A little while ago, she sent along an article based on this press release from the University of Michigan. The headline: Organic Farming Can Feed the World, U-M Study Shows. The study was shocking because the conventional wisdom is that organic growing techniques generally produce lower yields than conventional growing techniques. But these researchers said that wasn’t true — at least in developing countries:

Organic farming can yield up to three times as much food on individual farms in developing countries, as low-intensive methods on the same land — according to new findings which refute the long-standing claim that organic farming methods cannot produce enough food to feed the global population.

Researchers from the University of Michigan found that in developed countries, yields were almost equal on organic and conventional farms. In developing countries, food production could double or triple using organic methods, said Ivette Perfecto, professor at U-M’s School of Natural Resources and Environment, and one the study’s principal investigators. Catherine Badgley, research scientist in the Museum of Paleontology, is a co-author of the paper along with several current and former graduate and undergraduate students from U-M.

“My hope is that we can finally put a nail in the coffin of the idea that you can’t produce enough food through organic agriculture,” Perfecto said.

In addition to equal or greater yields, the authors found that those yields could be accomplished using existing quantities of organic fertilizers, without putting more farmland into production….

This was really startling and important news. The lynchpin argument against organic has always been that lower yields will require more farmland. If that is not true, then organics might offer a much more compelling option — both economically and environmentally.

Yet something about this study was troubling. We were particularly concerned by this sentence in the press release:

For their analysis, researchers defined the term organic as: practices referred to as sustainable or ecological; that utilize non-synthetic nutrient cycling processes; that exclude or rarely use synthetic pesticides; and sustain or regenerate the soil quality.

What disturbed us is that the term organic is already defined and shouldn’t require the researchers to say anything other than that they defined it as grown in accordance with the organic standards acceptable in the U.S., the European community or Japan or Australia, etc.

Note that researchers do not mention explicit bans on things such as GMOs, use of irradiation, etc. This raises the question of whether, in actuality, farmers growing to true organic standards would, in fact, experience the yields these researchers claimed.

Now the Center for Global Food Issues of the Hudson Institute has come out with a comment entitled, “Organic Abundance” Report: Fatally Flawed:

The recent report from Catherine Badgley et al., at the University of Michigan (Renewable Agriculture and Food Systems, July, 2007) claimed that “organic agriculture has the potential to contribute quite substantially to the global food supply” and said “organic methods could produce enough food on a global per capita basis to sustain the current human population, and potentially an even larger population, without increasing the agricultural land base.”

This claim is simply not credible given the following internal fatal flaws:

  1. Claiming yields from non-organic farming methods as organic;
  2. Comparing “organic” yields to non-representative “non-organic” yields;
  3. Double, triple, even quintuple counting of organic yields from the same few research projects;
  4. Omitting non-favorable crop yields while using favorable yields from the same studies;
  5. Misreporting yield results….

In perhaps the most brazen example of research misrepresentation in decades, 105 to 119 studies claimed as “organic” by the University of Michigan group were not organic. Only 11% to 21% of “developing world” yields cited were from studies actually using organic farming methods. Some “organic” examples even used GMO crops; many (if not most) used synthetic fertilizers and pesticides. The researchers did not provide enough detail to determine the exact number of misrepresented studies, but their main source (Pretty and Hine, 2001) stated clearly in their reports that only 14 of 208 studies in their database are “organic.” The Michigan group relied on 70 of these for their paper. They also labeled as “organic” 49 yield ratios from the “System of Rice Intensification” which is not organic. Combined, these represent 79% to 89% of the 133 “developing world” yield ratios included in the study.

As an example, Badgley et al. claim organic methods increased Argentine maize yields by 37%. (Source: Roberto Pieretti in “Pretty and Hine, 2001”) In fact, this statistic comes from Argentine farmers using herbicides to kill weeds, growing GMO herbicide-tolerant soy (~98%) and GMO insect resistant maize (~25%), and extensively using synthetic fertilizers and organic-prohibited herbicides and pesticides. To label these yield gains as “organic” is absurd. (Source: Mr. Roberto Peiretti, past president of the Argentinean No-Till Farmers Association: sdrob@idi.com.ar)

Another misrepresentation is China maize yield increase of 38%, reported from the East Gansu project run by the Chinese government. The primary source (Pretty and Hine, 2001) reports that “Grain output and food per capita [in the project area] have increased greatly because of improved crops varieties, runoff harvesting and water-saving irrigation, and fertilizers and pesticide use.” [emphasis added]

These facts are made clear in the research reports used in the Badgley et al report, so their ignoring the non-organic reality of these projects is hard to explain. It is especially hard to explain given supervising author Ivette Perfecto’s clear statement in a press release issued by the University of Michigan that “My hope is that we can finally put a nail in the coffin of the idea that you can’t produce enough food through organic agriculture.”…

Both the press release and the response are more extensive and we’ve linked to both so anyone can read them in their entirety.

There is another line in the University of Michigan press release that bothered us:

“Corporate interest in agriculture and the way agriculture research has been conducted in land grant institutions, with a lot of influence by the chemical companies and pesticide companies as well as fertilizer companies — all have been playing an important role in convincing the public that you need to have these inputs to produce food,” she said.

One thing that was certain is that all this stuff was outside the scope of the study. A careful researcher, seeking truth rather than confirmation for pre-conceived notions, wouldn’t speak that way.

In all of Keats poetry the most important lines are these from Ode on a Grecian Urn:

“Beauty is truth, truth beauty,” — that is all

Ye know on earth, and all ye need to know.

The world would be a most ugly place if we allow our prejudices to blind us to the truth.




Import Safety Working Group Publishes Dubious Framework Pundit Text:

The President appointed a high level Interagency Working Group on Import Safety via an Executive Order on July 18. Although it established the issue as high priority, one would also be tempted to think it is a bit phony as one suspects — maybe even hopes — that the Secretary of State, Secretary of Homeland Security, and the Secretary of the Treasury have other things to deal with than pesticide on ginger or lead paint on toys.

In mid-November, the Working Group is expected to issue its final report, but in the meantime they have published a “strategic framework,” which you can read here.

The FDA is pleased:

STATEMENT BY COMMISSIONER von ESCHENBACH
ON THE RELEASE OF THE STRATEGIC FRAMEWORK DOCUMENT
ON IMPORT SAFETY

Background: HHS Secretary Leavitt today delivered to President Bush a strategic framework on import safety. The framework was developed by the Interagency Working Group on Import Safety, established by the President July 18 to examine our nation’s system for assuring that all of our imported products are safe. For more information, visit: http://www.importsafety.gov.

“I strongly endorse the release of the Strategic Framework developed by the Interagency Working Group on Import Safety and commend Secretary Leavitt for leading this comprehensive effort.

Recent recalls of imported products have caused Americans to question the safety of imports. Americans rightly expect to purchase food and medical products without having to worry about their safety; and assuring the safety of these products is a core part of our mission at the FDA. The President has charged the Interagency Working Group to focus their efforts on how to work smarter and better with importers, manufacturers, and other governments to better assure that the imported products we purchase are indeed safe. As part of this Presidential initiative, Secretary Leavitt and I have traveled extensively these past few months throughout the U.S. visiting the Agency’s field operations. Across the country, we witnessed our field staff standing shoulder to shoulder with our partners from the U.S. Department of Agriculture and Customs and Border Protection and others, working together to assure the safety of imported products. In visits to nearly 20 cities/ports from Oakland to Miami, including El Paso, Tex.; Newark, N.J.; and Memphis, Tenn, we saw dedicated professionals doing difficult work; observing first hand the diligent efforts of FDA employees and what they do every day to protect the American people. Most importantly, we heard from these professionals many ideas on how they believe we could do this job better and smarter.

The three organizing principles that form the keystones of the Strategic Framework: Prevention, Intervention and Response are ones we embrace strongly here at FDA and are principles we know will guide us towards better and smarter import safety strategies. We know that in the 21st century’s global economy, our efforts to assure product safety for Americans cannot just begin at our borders, they must begin at the time the products are produced in other countries. I am excited about the fact that these principles have been embraced by the Framework, and I look forward to working with the Group on the Action Plan to be released in November. Together, we will further integrate and enhance our processes relating to the safety of imports.”

Yet the three “organizing principles” strike us as predictable:

Three organizing principles are the keystones of the Strategic Framework:

1. Prevention — Prevent harm in the first place.

The U.S. government must work with the private sector to adopt an approach to import safety that builds safety into manufacturing and distribution processes. Producers and the importing community will play a key role in accomplishing this objective by implementing preventive approaches and requiring these approaches from their suppliers. In addition, third-party certifications and testing requirements can play an important role in this area, as can credible manufacturer supply-chain management programs. Continued enforcement activities will also create incentives by deterring bad actors and encouraging U.S. importers to review their suppliers. The federal government will be prepared to work with the importing community to further develop the tools and science necessary to better identify those imports that pose the greatest risk, and to identify the points in the import life cycle where the most effective intervention can take place to ensure the safety of these products. The federal government will also be prepared to work with foreign governments to oversee manufacturers within their borders to help ensure safe domestic production practices that facilitate safe imports meeting U.S. safety standards and other requirements, such as the enforcement of intellectual property rights.

2. Intervention — Intervene when risks are identified.

Federal, state, local, and foreign governments, along with manufacturers and the importing community, must adopt more effective techniques for identifying potential product hazards. Through risk-based inspections and sampling utilizing science-based detection technology, government officials can more effectively detect potential import hazards. When problems are discovered, government officials must act swiftly and in a coordinated manner to seize, destroy, or otherwise prevent dangerous goods from advancing beyond the point-of-entry. The earlier potential hazards are identified, the greater the likelihood of successful interventions. The private sector’s meeting requisite pre-entry documentation and certification requirements also plays a pivotal role in helping to identify potential product hazards.

3. Response — Respond rapidly after harm has occurred

In the event that an unsafe import does make its way into the domestic stream of commerce, swift actions must be taken to limit potential exposure and harm to American consumers. In most instances, existing product recall mechanisms have proven capable in this regard. But we can do more.

We need a more robust, collaborative system of response that leverages information already available to the importing community for the benefit and protection of the consumer. While the response would be led by the federal government, in close collaboration with state and local governments, it would involve the manufacturer, importers, and retailers in order to contain the problem rapidly, recall any products of concern, and inform customers and the general public.

There are many interesting and true things in the report and, of course, we have to wait to see what the final report says.

Yet we confess to a certain skepticism. The report is filled with paragraphs such as this:

We must develop a culture of collaboration that will permeate the relationships among federal agencies as well as our relationships with external partners. All parties (federal, state, and local governments, foreign governments, foreign producers, and the importing community) involved in the import life cycle need to work together to prevent unsafe products from entering the U.S., and to take swift and effective action if such products do enter domestic commerce.

Yet admonitions — “we must” — do not create realities and in our quick read of the report, we see no evidence that anything is going to change very much.

Government officials have been traipsing around America learning about this subject. We highlighted one visit to a produce port facility here.

The whole thing is so self-consciously political. To start with, the panel was ordered to come up with a plan that didn’t cost a dime. So you see what a low priority this is. The prominent press at each visit by a cabinet secretary to some facility made it clear the goal was less education than projecting an image of “working to resolve the problem.”

Now this initial plan — written in consultant-speak (the six building blocks, the three organizing principles, etc.) — makes clear than any change will be an enormous amount of effort to achieve tiny incremental change.

You can learn about the public meeting here.

You can submit comments to the Working Group on Import Safety here. And you can watch a video with Department of Health and Human Services Secretary Michael Leavitt, who chairs the Working Group, right here.




Finished Product Testing Rewind

Although a lot of what we run here at the Pundit is fun or interesting, we also have the responsibility to lay out issues, sometimes weighty and technical, simply because they are important. An example of this type of piece was an extensive article we ran last week entitled A Closer Look At Finished Product Testing.

The piece was built around an interview with Dr. Mansour Samadpour of IEH Laboratories & Consulting Group. Dr. Mansour, among many other things, was instrumental in helping set up the testing system that Natural Selection Foods implemented after last September’s spinach outbreak.

The importance of the subject can hardly be overestimated. On the outcome will depend not only the expenditure of hundreds of millions of dollars but the shape of our food safety systems and the safety of the product we present to consumers.

Still, because it requires concentration to absorb, it is easy to skip over such an in-depth piece. To make sure everyone wanting to understand this industry dilemma didn’t pass over the piece and forget to return, we wanted to draw attention to it. You can find the article right here.




Pundit’s Mailbag —
Sunkist Jarred Fruit
Just The Beginning

Our piece, New Sunkist Jarred Fruit Line May Lift Sales Of All Produce Items, pointed out that Sunkist was introducing a new jarred fruit line which would compete with the line sold by Del Monte Foods. The deal is that Sunkist has given a license to Old World Enterprise Group, which will produce the product but the Sunkist fresh fruit sales team will sell the product.

The article prompted a letter from Woody Johnson, Vice President Sales & Marketing for Green Giant Fresh by Growers Express, which we published under the title, Pundit’s Mailbag — ‘Sunkist Has A Winner’ With Jarred Fruit Line. Woody expressed his informed assessment that the product line should be a big success.

Now we have received a note from the President of Sunkist’s licensee on this product:

As the president of Old World Enterprise Group, I appreciate the interest and comments being made about our new Sunkist product line.

Our emphasis through the new product development process has been on differentiation, through fresher, natural taste and less emphasis on added syrup. We employed Mattson, one of the leading food development firms in the country, to help us with formulation, specifications and consumer research.

We also have our own advertising and marketing firm, Noble Communications, that contributed what we believe to be a winning consumer strategy and brand proposition.

And, lastly, our plans go well beyond this core product line to include additional, unique flavors and category ‘adjacencies’, that we believe will add more value to our customer/partners. By offering consumers a choice, we believe there will be ‘stimulation’ to the category — another key benefit for our customers.

— Dick Sanderson
President
Old World Enterprise Group

We appreciate hearing from Mr. Sanderson. It is interesting to learn that Old World is going to try to differentiate the product. The samples we received were delicious but we can’t say that we saw, at least in these preliminary products, any clear differentiation on taste or flavor.

But time will tell. Without a doubt, more varieties and “adjacencies” could help boost the category. However, refrigerated space is always at a premium and the amount of space produce retailers are willing to allocate for jarred product is limited, so it is not necessarily easy to expand the range.

In fact, in the majority of cases when a vendor makes a presentation to boost its new line, the retailer responds with enthusiasm and then asks the vendor which variety the retailer should discontinue to make room for the new line.

Produce isn’t canned goods, and it is unlikely that many retailers will offer consumers a choice. Retailers will select one line or the other to carry. In fact, a powerful argument for the Number 2 player in the market to come out with unusual varieties is that it gives retailers a reason to give the second player a slot. If they do well enough, the Number 2 player might get the whole gig.

Mr. Sanderson is certainly on the right track — differentiated product, less syrup to ride the anti-obesity wave, consumer research leading to a brand proposition and consumer strategy. How it will play out depends much on Mr. Sanderson.

Sometimes a licensee arrangement works out great, as everyone is acting within their comfort zone. But, sometimes, the division — brand owned by one party, the product by another — can make it difficult to spend money on brand-building… and on slotting fees.

We will see how it works and, certainly, another major entrant is a win for the category, and all these brand impressions will be a win for Sunkist and, we hope, is a win for Old World Enterprise Group as well.

Many thanks to Dick Sanderson for his letter.

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