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Perishable Pundit
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Produce Business

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It Surely is A Tragedy, BUT Should Not Be A Crime:
Arrest Of Jensen Farms' Owners Betrays Elemental Principles Of Justice And Sets Stage For Less Investment In Production Of Food

We have written a great deal about the Jensen Farms cantaloupe situation and we are no fans of the farm.  As we wrote here, we believe that Wal-Mart had no business buying from this vendor and should have constrained its supply chain to those higher volume vendors who pre-cool cantaloupes and, in other ways, follow the highest safety standards. We don’t know if Wal-Mart purchased these cantaloupes because they wanted a cheaper price or wanted to “buy local,” but it was a questionable procurement decision from the start.

Yet news that the owners have been arrested on criminal charges on grounds they introduced adulterated food into interstate commerce is very bad news — for the produce industry and for the country.

For the industry, such charges will significantly constrain investment. Margins are tight in this business and it is a lot of work. Participants already run the risk of suffering crop failures; now they also run the risk of jail. Many will decide this is not where to put their money or their time.

For the country, it shows the collapse of traditional standards of what it means to commit a crime. Traditionally no crime could be committed in the absence of mens rea, literally translated as “guilty mind.” The traditional rule in criminal law was actus non facit reum nisi mens sit rea, which translates as "the act is not culpable unless the mind is guilty."

In other words, as long as the owners of Jensen Farms did not intend to hurt or kill people, by traditional standards there can be no crime.

Note that this standard is different in civil law, where intent is not a factor. If the farm caused harm, it can certainly be sued and held liable for the damages it caused. But liability is different than criminality.

Over the years, the Common Law, which required mens rea, has given way to more crimes being classified as strict liability crimes. In the US, however, where our Constitution requires Due Process, we have typically reserved these strict liability crimes for minor offenses — mostly violations, for example a parking ticket where all that has to be shown is that a car was parked illegally, not the intent of its owners.

There are other exceptions. Statutory rape, for example, is generally a strict liability crime, meaning the law is that the adult has an affirmative obligation to make sure the younger person is of legal age. The belief that a minor is older is typically not relevant.

But farmers and packers are not rapists and neither should they be criminals. By all accounts, Eric and Ryan Jensen were trying their best to balance the many demands of producing quality food. They had their facility audited, met the standards of world class companies such as Wal-Mart and intended only to be a produce vendor.

That so many died from their product is a tragedy, not a crime.

Now that the federal government has decided to criminalize a normal, if rare and unfortunate, consequence of farming and packing, there will be less farming and packing than there would have been. That itself is a crime. Where do we go to press charges?




Making Life Tougher For The Little Guy:
USDA Good Delivery Standards Have Not Kept Up With Industry Standards

We received a bittersweet letter today from a longtime colleague and friend. We think it speaks to an important industry problem, though, one different than the one our correspondent identifies:

Effective September 15th, I retired as President of High Point Marketing of NJ, Inc. I have spent over fifty years, most of my adult life, in the Produce Industry. It is time to move on and spend some leisure years traveling with my wife of forty-six years, Carolyn. My sons Garren and Ryan Pflueger will begin their journey as I did so many years ago, with their New Company, HPM FRESH, INC., in Paramus, NJ. Of course I will be available for advice and guidance if needed.

In 1961, I joined in business with my father and older brother at J. Pflueger and Sons Wholesale Produce Company in Pittsburgh, Pennsylvania. We had a Wholesale operation in the Strip District at 1811 Penn Ave in the Produce Market. There I learned to buy and sell produce at the young age of nineteen, learning from my older counter parts as I went. I was always open to learn and discovered that older men that were established in the business for many years had a wealth of knowledge that was given to me for free.

Among them, I especially remember the Zidenstein Brothers Company. Oscar Zidenstein taught me the expertise about Maine Potatoes and New York State fall cabbage. Another well-respected man in the Pittsburgh market was Dick Battaglia of Demase and Manna Company. Dick liked my hard work ethic and took interest in me, and from him I learned about Western Vegetables, Northwest Apples, Pears, Eastern Peaches and Tomatoes, to name a few! Too many others to mention were all my mentors, whom I met during my daily travels through the early morning hours of the Pittsburgh Wholesale Produce Market.

In 1967, after my father retired, I joined the United States Department of Agriculture, Fruit and Vegetable Market News Service as a Market News Reporter. I was to stay with the USDA through 1986. Our function was to collect and disseminate current, unbiased Market Price Information to the Industry. In March, 1967, I reported to the Philadelphia office where I was trained in the techniques of collecting and reporting this information through printed reports and local radio broadcast. During my time in Philadelphia, I traveled and worked in many Wholesale Terminal Markets and Shipping Point offices throughout the United States gaining a wealth of knowledge about the growing and packing of various produce commodities. 

In 1977, I was selected to head up the New York City Office at Hunts Point where I made several innovations in reporting the Market News Conditions of the largest market in the United States. I initiated "The Early Sheet", prices of that day, that were quickly distributed to all companies on the market by 9:00AM the same day, instead of the next day as was previous before my arrival. Also, in 1979, I authored the "CHILEAN FRUIT AND MELON REPORT", covering all imported fruit arriving into the United States from Chile. During that year, I was invited by the growers of Chile and the Chilean Shipping Line based in Valparaiso to travel to Chile to speak to the growers, shippers and transportation companies about the value of Market News information and how it could help them make intelligent market decisions in their daily business.

In 1986, I was offered a position with Prevor Marketing International on the Hunts Point Market working in the Import Sales Department, which I accepted. While there, I met other mentors who furthered my career in the business and my knowledge of it. Namely Mr. Michael Prevor, principal of Prevor Marketing International, a third-generation family business. Mr. Prevor was a "Wealth of Knowledge" and was both highly respected in the industry and an exceptional human being. I remember one morning he came into the import office and nearby where I sat was the coffee pot. He asked politely if he could have a cup? I thought to myself “It's his coffee” and I simply said “help yourself,” but I thought “What a MAN!” In 1989, Prevor Marketing was sold to a foreign company and after about one year they decided not to continue in the produce business. High Point Marketing was formed that year, and we have continued over twenty five years, completing thousands of transactions without incident. I feel that I have earned an impeccable reputation in the industry. 

On a personal note: In May 2011, an Unlicensed PACA Shipper (unknown to us at the time) from Florida that was selling Argentine Garlic contacted us. They sent us a shipment that was rejected for condition problems but unfortunately was inspected upon arrival (Restricted to the upper 4 layers of the pallet) by the USDA and was graded US#1. However Anthony Sharrino (A Garlic Expert in the industry) of Eaton and Eustis Company in Boston called me and said that the Garlic was PURE GARBAGE. We ordered two subsequent unrestricted Inspections and found the Garlic failed to Grade US#1 account of condition, only (5) and (14) days after arrival. The Garlic was held at the Lucca Cold Storage, who holds a 99.33% Superior GFS rating certificate. The garlic was stored securely in cold storage at 32 degrees Fahrenheit and accordingly, Garlic in good condition can be stored for nearly a year in cold storage without incident, according to University of California at Davis. They work with all California Garlic growers providing advice and guidance of their garlic crops.

Apparently, the pallets were FACED OFF, with slightly better Garlic on top and the POOR CONDITION in the Lower Layers of the pallet, to deceive the USDA inspectors and High Point Marketing of NJ, Inc. The shipment delivered by the unlicensed shipper was shipped to High Point Marketing short weight and misbranded, in violation of Federal PACA Law and Interstate Commerce. The alleged fraud took place through (8) States of the Union, from Florida to New Jersey! When the unlicensed, dishonest shipper discovered that his alleged fraud was revealed, he abandoned his industrial grade garlic leaving High Point Marketing with sunk costs! The USDA/PACA refuses to enforce federal PACA Law, hold the shipper accountable for committing Federal and State Violations, and hold the dishonest shipper accountable for their actions!

Instead, PACA has decided to hold us liable for the shipment going off the information of the first Restricted Inspection only. Subsequent USDA unrestricted inspections and a private inspection by Carapella Enterprises revealed the same information that the garlic condition failed to Grade US#1, which they have ignored. We have appealed!

Furthermore, which brings me to my final point, it is my strong belief that the USDA PACA GOT IT WRONG THIS TIME! It may be time for a Top to Bottom revamping of the agency. There must be people in place that know the produce industry, so they can make fair and intelligent decisions. The decisions must be fair to receiving companies as well as shippers. We have operated in the industry for over twenty-five years without incident and have an unblemished reputation,  and it is our opinion that this company that is operating in the industry (unlicensed) has defrauded High Point Marketing of NJ, Inc., USDA inspectors and the inept PACA agency.

Presently, we are in negotiations with the PACA regarding the Poor Condition Garlic that we received and that the shipper refused to take back, (after his scam was uncovered). It appears to me that as they usually do (99 percent of the time), the PACA went with the shipper on its decision. Although everyone conducting business in the produce industry must maintain a license that pays for the PACA  that pays for the day-to-day operations of the PACA  receivers do not get the same consideration as do shippers.

In order not to encourage the dishonesty of this (unlicensed PACA) Florida shipper, and have them prey on another unsuspecting honest company like us, l have decided not to voluntarily place new capital in the company (as the product was dumped). This means that any judgment PACA might impose may go unpaid. For me, it is a matter of principle, but I would rather just close my company and retire than reward the behavior of this shipper. Not a fitting end for an UNBLEMISHED CAREER  in the industry such as mine. I want the industry and our peers to know the truth and know that we are not at fault! 

I believe strongly that a petition must be started regarding the Unfair Treatment that the PACA gives Receivers in the industry and perhaps they too can learn the correct way to administer the law correctly and fairly as they apparently know little about the industry and how it works when it comes to knowing produce! 

You have my permission to use all information included in this letter in any way you please.

— Mike Pflueger, President Retired
High Point Marketing of NJ. Inc.

We are, of course, sorry for Mike’s travails. We know nothing of this particular transaction, but have never known Mike to tell a lie in more than three decades of association. So we hope his appeal goes well and that he can end his career with an unblemished record.

Yet, whatever the merits of this particular case and whatever the truth about bias at PACA, we identify the root problem here in antiquated grade standards that have the effect of biasing the whole system against smaller operators.

Look, it's tough in business. It looks like the USDA Good Arrivals Guidelines allow 4% decay on arrival for garlic, which means one needs 5% to be out of grade. On a product like garlic, which the industry perceives as a hardware item and expects to be perfect, an arrival with 4% decay and 11% other defects would be considered complete garbage in the trade. Yet, it would still pass good arrival. This is a major problem for the industry, and it does not just apply to garlic.

Sure, one might argue that a smart broker/buyer would demand a higher standard, but it would be hard to get this, especially if a shipper is selling the garlic for a grower and doesn't have specific rights to offer this.  Of course those with great market power can and do impose tougher standards. No major chain store will accept garlic with 4% decay and 11% other defects. Not one.

This poses a great question for the USDA: Why do we have grade and good delivery standards at all in 2013? Wal-Mart and Costco don’t need them. The purpose of grade standards is to help the little guy to facilitate commerce by establishing a lingua franca and a default position in the marketplace. But if those standards have drifted over time to be far from the industry norm, those low standards disadvantage the small receivers who have little choice but to buy at the norms established by USDA.

In general, the USDA good arrival standards (and even the grade standards at shipping point) were created at a time when standards in the marketplace were lower and technology of shipping, precooling, packing, etc., were nowhere near what they are today. The "good arrival guidelines" are the same now as they were when The Grandpa Pundit would buy carrots shipped in an unrefrigerated railcar that was topped with ice at all the major cities along the way. To require that garlic with 4% decay and a variety of other condition defects must legally be accepted at the same price as perfect garlic makes the USDA standards largely irrelevant and makes the integrity of the shipper much more important.

As an old USDA employee, Mike thought he could rely on legal standards to protect him, but the standards are so low and so disjointed from industry expectations that they can’t serve that purpose.

For receivers, this is a warning. The integrity of the shippers one deals with is everything. Any top garlic shipper, given an inspection showing 4% decay and 11% other defects would realize the product isn’t suitable for the purpose intended and would work with the receiver — legalities aside — to mitigate the damages.

For shippers, it is, of course, an opportunity. It shows that building reputation, enhancing Blue Book moral responsibility ratings and the like are crucial.

Yet for the USDA, all of this is troubling. The point of having grade standards is so that anyone can buy from anybody and be confident in what they are getting. If “what they are getting” is so distant from what the trade expects as to be irrelevant, the USDA standards quickly become irrelevant as well.

We wish Mike Pflueger a happy retirement and think it should be noted that his final act in the trade has been of great service in raising this important industry issue.




In A Rush To Judgment, Taylor Farms Gets Connected To Cyclosporiasis Outbreak Without Sufficient Evidence

It is important that the industry be willing to discuss food safety issues and, certainly, here at the Pundit we have never been shy. From Botulism & Carrot Juice to Cantaloupe and Listeria to Buyer-Led Food Safety Initiatives, we have analyzed and assessed many of the issues.

When the FDA issued an import alert on Honduran cantaloupes, we were there, and when a grand Food Safety Leadership Council acted, we wrote about that as well. We focused on foodservice operators and their food safety efforts, and we looked at Irradiation as an approach to deal with food safety issues. When the National Restaurant Association asserted itself on food safety, we evaluated that effort.

We also looked closely at the Great Pistachio Recall. Of course, we intensively reviewed the Salmonella Saint Paul Outbreak, variously pined on tomatoes and jalapeños, and the Great Spinach Crisis of 2006. We have investigated food safety issues related to sprouts and, of course, looked at traceability and its impact on food safety.

One thing we haven’t done is write anything at all about Taylor Farms, Taylor Farms de Mexico and the cyclosporiasis outbreak. The reason we haven’t written about it is that there was this unseemly rush to announce things without satisfactory evidence or even a coherent theory.

The one thing we know about the situation is that the Center for Disease Control has found no evidence of the vast majority of cases having any connection to Taylor Farms de Mexico or to any other Taylor Farms operation. The Number One state having cyclosporiasis cases is Texas. It has almost half the known cases, yet to quote the CDC:

“The preliminary analysis of results from an investigation into a cluster of cases that ate at a Texas restaurant does not show a connection to Taylor Farms de Mexico. This investigation is ongoing.”

This is not a trivial matter, and it calls into question the findings of Iowa and Nebraska that claim they have identified a connection to Taylor Farms de Mexico going back through certain Darden restaurant chains. These states won’t make much information public, so it is hard to assess the accuracy of their claims, but Darden has stated it doesn’t use Taylor Farms lettuce mix in Texas.

It is possible that it is a problem related to a growing area and that Taylor, the largest of the players, was implicated because its large volumes led to an effective trackback but, in reality, everyone buying from that growing region was affected.

Yet we think this is unlikely because the outbreak is so long-lasting, with illness onsets spreading over two months, this doesn’t match likely growing and harvesting patterns.

We look at the geographic dispersion of the problem and its extended time frame, and we doubt that it is fresh produce and certainly not salad mix, at all. That somehow only the tiny percentage of this plant’s production that went to Iowa and Nebraska had this problem and all the rest did not seems odd, and since there is no indication the problem was widespread in Taylor's production, we question the accuracy of the assessment in these two states.

Most likely, there is another ingredient, say something in salad dressing, that has been the source of the contamination.

We learned from the Salmonella Saint Paul outbreak the limits of questioning consumers. Consumer reports are often incomplete, especially on a long incubation period illness such as cyclosporiasis. So consumers may remember they ate tomatoes when they really ate salsa and a component of that salsa is jalapeño. We also learned the limits of the techniques we use to identify foodborne illnesses.

Investigation of food safety outbreaks are a low-tech affair. They give questionnaires to healthy people and to sick people and attempt to identify differences in eating patterns between the groups. So, if a disproportionate number of people say they ate at a particular restaurant or ate a particular food, that restaurant or that food becomes an object of suspicion.

This works well enough for obvious foods — a hamburger, spinach in a spinach salad — but it doesn’t work well at all for ingredients. Who knows what items are in the salad dressing they ate at a restaurant two weeks ago?

It doesn’t help that the media doesn’t generally understand the issues at stake at all. No less a newspaper than The New York Times ran a piece titled, Taylor Farms, Big Food Supplier, Grapples With Frequent Recalls. The piece, written by Stephanie Strom, was shocking because, well, to start with, the basic premises to such a story, that Taylor farms has “frequent recalls” and that such recalls have some connection to the safety of its food, are never established.

Why would this reporter believe this to be so? Well, here is the paragraph in its entirety:

Food safety experts said the number was somewhat higher than they would expect, even given Taylor’s size. “While produce companies have by far the most recalls among food companies in general, I’d say one every 12 to 18 months is more the standard,” said Gene Grabowski, a consultant who assists companies in dealing with the public and the media over food recalls.

Where does one begin? First of all, the article does not quote ANY food safety experts, not one. Mr. Grabowski, though a PR man of great talent is, most decidedly, not a “food safety expert.” He has a bachelor’s degree in writing and history, and he has experience as a communications consultant. Second, Grabowski’s ballpark assessment of how many recalls are “the standard” for companies is neither supported by data, nor, even if true, meaningful. Suppose we prove that “the standard” is for restaurant companies to have one violation every 12 months. If Joe’s single unit diner has two, it is way above the norm, but if McDonald’s, with over 32,000 outlets, has 200, it is exemplary.

Well Taylor Farms is the McDonald’s of the industry. It is simply non-sensical to discuss the number of recalls as some kind of independent variable. It is more a numerator, and if you don’t know the denominator — how many servings shipped — you really can’t say anything very useful.

Besides, all recalls are not created equal. Some are due to mistakes that introduced an allergen into a food or are done out of an abundance of caution. Just as you can’t judge two surgeons by what percentage of their patients die without knowing the standards by which those surgeons accept cases, so you can’t judge two companies without knowing the standards by which they do voluntary recalls. 

If one surgeon specializes in the most dangerous surgeries and another rejects any patients with known complications, the statistics could deceive. A death rate of 20% for the surgeon willing to try difficult things might mean he is a more talented surgeon than a 2% death rate by the surgeon who plays it safe.

So, a high voluntary recall number or percentage might just mean that a company is exemplary in its willingness to accept bad publicity in order to safeguard consumers.

The temptation to jump to conclusions, to pass aspersions, it seems too much for our society. We need someone to blame and fast.

But such knee-jerk reporting isn’t helpful; it closes off avenues of investigation that might actually lead to meaningful discovery. Not to mention that it leads to wasteful demands to close plants, to conduct testing at specific facilities, etc., when that is not really justified by the science.

There are lessons here. Our state-by-state process is not really conducive to studying national outbreaks, the focus on traceability is overstated as the slowdown is almost always epidemiology, not traceability, and it is a terrible mistake to leap to conclusions on what individual states happen to say to deduce the cause of national outbreaks.

And, a little skepticism about what one reads in the newspaper is justified as well.




Registration Now Open For The New York Produce Show And Conference

It is amazing but true… the 4th annual edition of The New York Produce Show and Conference is coming up December 10-12, 2013.

Presented by the Eastern Produce Council and Pundit sister publication, PRODUCE BUSINESS magazine, the event will, once again, set a record this year with four years of double-digit growth.

Of course, in producing this event we have always been less concerned with quantity and more about quality. Whether it is the Global Trade Symposium, the “IDEATION FRESH” Foodservice Forum, the Opening Cocktail Reception the Perishable Pundit’s Thought Leader Keynote Breakfast, the University interchange program, the industry tours of the region, the media and consumer influencer’s panel or even the Spouse/Companion program, everything is done as befits an event held in the capital of the world.

And the timing is perfect… the tree will be up at Rockefeller Center, the Rockette’s will be kicking at Radio City Music Hall in the Christmas Spectacular and the windows along Fifth Avenue will be filled with Holiday displays.

Don’t miss this special event: You can register right here.

Book hotel rooms here.

Find out about travel discounts right here.

If you would like to consider exhibiting or sponsoring an event, please let us know here

Each year we prepare a brief summary video highlighting the event. You can take a look at the collection below:

 

2012 Show Highlights

 

2011 Show Highlights

 

2010 Show Highlights

Remember, complete registration info is available at the show website, which you can access here.

If you would like to consider exhibiting or sponsoring an event, please let us know here

Look forward to seeing you there!




Former President Of Trader Joe’s Wants To Conquer Waste Through Daily Table Concept — Will It Work For Expired Produce?

Doug Rauch, who had been with Trader Joe’s for 31 years, his career culminating as President, has announced a new hybrid retail/restaurant concept. An NPR piece on the idea is titled, Trader Joe’s Ex-President To Turn Expired Food into Cheap Meals:

Here's some food for thought: One-third of the world's food goes to waste every year. In the U.S., about 40 percent of our food gets thrown out. It's happening on the farm, at the grocery store and in our own homes.

Lately, there's been a lot of talk about what to do about it — from auctioning off food that's past its prime to getting restaurants to track their waste.

Doug Rauch, the former president of Trader Joe's, is determined to repurpose the perfectly edible produce slightly past its sell-by date that ends up in the trash. (That happens in part because people misinterpret the labels, according to a report out this week from Harvard and the National Resources Defense Council.) To tackle the problem, Rauch is opening a new market early next year in Dorchester, Mass., that will prepare and repackage the food at deeply discounted prices.

The project is called the Daily Table. Here's what he shared with NPR's Scott Simon, edited for brevity.

Simon: What gave you the idea?

Rauch: It's the idea about how to bring affordable nutrition to the underserved in our cities. It basically tries to utilize this 40 percent of this food that is wasted. This is, to a large degree, either excess, overstocked, wholesome food that's thrown out by grocers, etc. ... at the end of the day because of the sell-by dates. Or [it's from] growers that have product that's nutritionally sound, perfectly good, but cosmetically blemished or not quite up for prime time. [So we] bring this food down into a retail environment where it can become affordable nutrition.

A retail environment is a store ... or a food truck or something like that?

Yeah, it's kind of a hybrid between a grocery store and a restaurant, if you would, because primarily it's going to take this food in, prep it, cook it [for] what I call speed-scratch cooking. But the idea is to offer this at prices that compete with fast food.

Since the food is past its sell date, is it safe to eat?

Absolutely. As a matter of fact, if you have a product that says "sell by Sept. 1" or "Oct. 1" and, you know, it's Oct. 2, most customers don't realize you can eat that.

Still, is it a public relations problem to get people to buy stuff that is past due?

Well, we'll see, won't we? I think that the issue here is really how you talk about it and how you educate.

For instance, food banks for years have done this. I might say, without naming the names, one of the leading, best regarded brands in the large, national, food industry — they basically recover the food within their stores, cook it up and put it out on their hot trays the next day. That's the stuff that we're going to be talking about. We're talking about taking and recovering food. Most of what we offer will be fruits and vegetables that have a use-by date on it that'll be several days out.

Well, customers nevertheless have to consume the food pretty quickly.

As you know, when it comes to bread ... we all know if you put it in the refrigerator it could last for weeks [even if it's expired]. Milk lasts for days. It all depends on the temperature of your refrigerator, frankly.

Most people don't know that, but you lose several days of shelf, whether it's in code or out of code. Or do you leave the milk out on the counter while your kids are having breakfast? There's all kinds of ways in which, if you handled it properly, you extend the life.

Is there any concern among, let's say the people who might own a Trader Joe's or some other food store today that, somehow, your places are going to be potentially underpricing them?

You'd have to ask them. But most of what we'll be selling will be fruits and vegetables, freshly prepared product, stuff that's really not brand-driven. And [we'll be doing it] in areas that, frankly, are underserved. There aren't Trader Joe's in the inner-cities in America, at least to my knowledge.

This is about trying to tackle a very large social challenge we have that is going to create a health care tsunami in cost if we don't do something about it. I don't regard Daily Table as the only solution — there are wonderful innovative ideas out there — but I certainly think it is part of and is an innovative approach to trying to find our way to a solution.

It is a little difficult to understand what Mr. Rauch is exactly proposing but, basically, the idea seems to be to take product they can get for free or very cheap and cook it up and sell it.

On the grocery end, this is possible but even there the supply chain has become quite efficient and the quantity of product that goes unsold because of meaningless expire dates is relatively small.

In fact when the Pundit went to visit Kroger a couple of years ago to present the PRODUCE BUSINESS Retail Sustainability Award for the May 2012 issue (You can read the story here), executives were telling us that Kroger had begun a major project to wean unsalable fresh produce from the produce racks to donate to food banks. Kroger had been prompted to begin this initiative precisely because advances in food chain efficiency had so reduced the quantity of packaged food products that were in surplus that new sources of food for the poor had to be found.

Plus a lot of this kind of food goes to food banks anyway, so it is unclear how diverting it to Mr. Rauch’s project would achieve his goal of helping the poor.

When it comes to fresh produce, very little produce has “use by” dates at all. What does have these expiration dates is mostly fresh-cut, and most of that is lettuce-based, which isn’t really suitable for much cooking. Plus unless the state has very strong Good Samaritan laws that protect against liability for such donations, most would be loath to donate.

We certainly wouldn’t want to underestimate Mr. Rauch, and we certainly wish him well in his pursuit of a way to help the poor with food that would otherwise go to waste.

Yet we can’t quite see how this project will really work for fresh produce. Perhaps Mr. Rauch will wind up surprising us. We certainly hope so.




Pundit’s Mailbag — Wal-Mart Dilemma: Add Labor or Reduce Complexity?

We already published a piece — Pundit’s Mailbag — Wal-Mart’s Empty Case And TV Commercial. Were We Being Unfair?— in response to our article, A Wal-Mart Example — What Is The Produce Industry To Do When Its Showroom Isn’t Executing Well? This letter brings a different approach to the issue:

Wal-Mart has certainly been in the press a lot lately about their produce program, and from my own observations, I think there is a problem with Wal-Mart’s produce that they are not addressing: their people.  As in, Wal-Mart is not putting enough people in their produce department.

We’ve all been in the situation: a trip to Wal-Mart to buy a hardware or craft item, or something in electronics, and we can’t find what we want.  We also can’t find any identifiable Wal-Mart employees in the general vicinity.  Now, this is not so shocking given Wal-Mart’s merchandising style everything is out on their shelves, usually in quantities and displays too obvious to miss.  So Wal-Mart gets by with more cashiers and fewer customer service people.

While that may be an acceptable part of the shopping experience in other parts of the store, saving on head count in the produce section won’t get them where they want to be as the nation’s leading produce retailer. My local Harris-Teeter has half the square footage in produce merchandising as the local Wal-Mart, and it always appears that they have twice the produce business and twice the quality of what Wal-Mart does. 

With the exception of the occasional late night run for some necessity (like beer!), I never fail to see the produce manager or one of his assistants (Harris-Teeter has an amazing employee retention rate — always the same people) refreshing the displays.

In Wal-Mart’s produce section, like all the other departments, I rarely see the same person, or the same level of activity in maintaining the produce displays. Wal-Mart is going to need to change their staffing policies if they want to lead the pack in produce sales.

—Doug Stoiber
Vice President, Produce Transportation Operations
L&M Transportation Services, Inc.
Raleigh, North Carolina

Except, of course, Wal-Mart does lead the pack in produce sales. It sells more produce than anyone on the planet.

What Harris-Teeter does is interesting, but maybe not that relevant. After all, for several years Harris-Teeter was moving to more upscale and urban areas and away from its rural, middle-market stores.

The recent Kroger acquisition of Harris-Teeter was, in part, specifically motivated by Harris-Teeter’s excellent reputation in fresh. What Kroger would like to do, of course, is learn something from Harris-Teeter about fresh foods that it didn’t know and that it can execute in its other stores.  Supposedly Kroger’s acquisition of Fred Meyer Inc., the supercenter chain in the northwest, gave Kroger experience in running larger format stores that it used in developing its Marketplace concept.

Yet this type of learning is difficult to do, especially if the goal is to learn things that are easily scaleable across the whole chain. Indeed for a value-oriented chain such as Wal-Mart, one of the biggest challenges is to decide what NOT to do. There are so many things that are fun and interesting, things that create excitement, even things that boost sales — but each one adds cost and complexity to the operation, increases the risk that execution will be poor and that the higher cost basis will make it difficult to profitably offer low prices.

Think about why McDonald’s doesn’t sell hot dogs. It is not because they wouldn’t sell. Almost certainly if McDonald’s sold hot dogs, it would sell more than anyone else in the world. But the company has carefully assessed the matter and determined that the additional sales it could realize by offering hot dogs would not be worth the additional complexity of carrying another protein and another bun.

When we ran the piece A Wal-Mart Example — What Is The Produce Industry To Do When Its Showroom Isn’t Executing Well? that featured the photo of an almost barren secondary banana display we spied in a particular Wal-Mart store, and when we ran the piece Pundit’s Mailbag — Wal-Mart’s Empty Case And TV Commercial. Were We Being Unfair? in response to a letter criticizing us for running that piece, most seemed to leap to the conclusion that what Wal-Mart ought to do is staff up to keep those displays full. That might be the solution. There might also be more efficient staff allocation or staff-checking mechanisms.

Much as night watchmen have long had to insert keys in machines to prove they were making their rounds, staff could be given the job in Wal-Mart to somehow punch in that they have checked the secondary banana display on a certain schedule.

Of course, one could also cogently argue that the lesson of that forlorn banana display is that Wal-Mart has over-reached. It added too much complexity to the operation and can’t consistently scale that approach with satisfactory results. Or, to put it another way, Wal-Mart should not have displays it can’t consistently execute well. So, perhaps, Wal-Mart should only have a primary banana display so as to focus available labor on fewer tasks that are more efficiently located.

Obviously, the produce industry would like to see the produce department of every Wal-Mart look like that of Harris-Teeter, but with that high service approach comes a need for more labor, more management, more space, more shrink, more of a lot of things, and that tends to create higher prices. Higher prices would depress sales. So, perhaps, the produce industry needs to be careful what it wishes for. It just might get it.

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