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Pundit Letters

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

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



Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

PMA And United
Cease Merger Talks

To every thing there is a season,
and a time to every purpose under the heaven.

— Ecclesiastes 3:1
King James Bible

And the time for merger between PMA and United is not now.

That is the comeuppance of announcements sent by each association to its members. PMA sent this note:

To: All PMA Members

Re: Discussions with United Fresh Produce Association (UFPA)

On behalf of PMA’s Executive Committee (names listed below), we are writing to give you an update on the outcome of our discussions with UFPA.

For the past six months, a group of PMA volunteer leaders has been in discussions with UFPA leaders to explore the feasibility of a merger between our two associations. As with all PMA leadership groups, the members involved represented a cross section of our supply chain, including grower/shippers, processors, distributors, as well as retail and foodservice buyers.

UFPA and PMA representatives met in March and July to discuss the potential merger as well as the feasibility of a formal structural collaboration. During the discussions, it became apparent to us that UFPA’s and PMA’s core competencies and cultures are different, and that each association carries out its mission in distinct ways. After careful deliberation at our recent meeting, the Executive Committee determined that at this time, it is in our members’ best interests to have the two separate associations continue to focus on the unique value they each bring to the industry.

While the merger talks have been discontinued, please rest assured that both organizations will continue working together in a spirit of allied industry partnership on issues such as food safety, traceability and more. As in the past, PMA will also collaborate with UFPA and others to ensure your perspective is well represented in public policy debates. PMA will continue to participate in government relations and public affairs activities when such participation is in the best interest of our members across the supply chain.

We know both associations are committed to providing future services and value to their members under the leadership of their Boards of Directors, and pledge our continued cooperation in areas of mutual interest. We look forward to seeing many of you at Fresh Summit in Houston next month.

Peter Goulet — Chairman of the Board
Janet Erickson — Chairman of the Executive Committee

Members of PMA’s Executive Committee are:
Janet Erickson, Chairman of the Executive Committee
Peter Goulet, Chairman of the Board
Bruce Taylor, Chairman-Elect
Dave Corsi, Secretary/Treasurer
David Gill, member at large
Rob Robson, member at large

While United sent this announcement and news release:

Dear United Fresh Members,

I want to share with you a press release that our association is issuing today, simultaneously with a similar release from the Produce Marketing Association. As you may know, our two organizations have had recent talks to determine whether we might share a common mission and values that could lead to potential formal collaboration or merger of our efforts. The release below describes our recent meetings, and reports the conclusion that our two associations did not reach an agreement to go forward with talks of potential collaboration.

Our successful experience in bringing together the International Fresh-cut Produce Association and United Fresh Fruit and Vegetable Association in 2006 led us to support a serious look at the pros and cons of potential collaboration with PMA. When IFPA and UFFVA joined forces, the two Boards came together in common purpose to greatly expand expertise and member value in technical affairs, food safety, government relations, value-added produce solutions, international markets, retail and foodservice trade relations, and more. Similarly, we thought it was responsible to explore whether our industry might be served by combining potentially complementary services of PMA with the expertise and value our association delivers today. However, in our discussions with PMA’s leaders, it became clear that they did not share a similar vision at this time.

As discussed below, we will continue to work cooperatively with PMA, as well as many other allied organizations, whenever it is in the best interest of our members. As your Chairman, I will continue to lead our Board’s and staff’s commitment to promoting the growth and success of our entire produce industry, while delivering the unique value that companies can only receive as members of United Fresh. Please let me know if you have any questions or suggestions about ways in which our association can continue to help you grow your business.

Emanuel Lazopoulos
Senior Vice President, Del Monte Fresh Produce
Chairman of the Board, United Fresh Produce Association

PMA, United Fresh End Merger Discussions

The Produce Marketing Association and United Fresh Produce Association have announced that the organizations are ending any further discussion of potential merger at this time, but will continue to cooperate in areas of mutual interest to each association’s members.

A joint exploratory group of six Board members from each association met together twice in the last six months, in March and July, to explore potential areas of common interest and collaboration. During those meetings, the two groups expressed a variety of views on the potential value of merger or some formal structural collaboration, and discussed candidly the pros and cons from each Board’s perspective.

Following the July meeting, each association agreed to make a determination of whether to continue talks on potential merger, or suspend further consideration. Although the two Boards did not come to an agreement on proceeding with further discussion, both expressed their commitment to working together on common issues in a spirit of allied industry partnership, while recognizing that each organization has its unique views about its mission and mandate in serving the industry.

“United Fresh has long been committed to being the strongest possible association advocate and essential expert resource for our industry,” said United Fresh Chairman Emanuel Lazopoulos, Del Monte Fresh Produce. “We have built an association environment in which all sectors throughout the supply chain can come together as real partners to develop solutions that best meet industry needs. That mission has driven strong annual growth in new membership, revenues, expertise and services now for many years, with expanded programs such as our new crisis management/recall training program just announced.”

“One of our core values at United Fresh is to always be open to partnerships and cooperative relations that might best serve our industry, and thus we’ll continue to work with PMA and other allied partners in areas of mutual interest. But United Fresh will also continue to grow our unique expertise and services to the fresh produce industry, providing an essential value to produce companies, retail and foodservice partners, and allied suppliers across the total supply chain,” he concluded.

We would not be telling the truth if we said that we were shocked. This issue has long been debated in the trade, but when this particular set of talks heated up we published a special Pundit article devoted solely to the issue and entitled, An Industry Discussion: Pros And Cons Of A PMA/United Merger.

The piece contained an exhaustive inventory of reasons both positive and negative for why the associations should or should not merge but, in the end, we said this:

Still a merger will be hard to pull off. The United board is likely to seek a “blank sheet of paper” approach in which everything is on the table.

The PMA board won’t find that realistic. In real world mergers, a much larger organization with a successful business model becomes the dominant partner defining the terms of a merger.

And that is pretty much what happened. This process was driven by United. United’s board wanted a merger of equals. PMA’s board wanted to protect its successful business model and unique culture. And that was pretty much that. As Emanuel’s letter states in our discussions with PMA’s leaders, it became clear that they did not share a similar vision at this time.

And why would they? PMA looks at a merger and asks why?

Will PMA get more members? No, there are very few members of United who are not also members of PMA.

Will PMA’s trade show get much larger and more successful? No, almost all the exhibitors at United’s show already exhibit at PMA.

Will there be enormous industry savings? Not likely. Closing down one trade show would reduce expenditures but, presumably, exhibitors and attendees feel they get positive value from United’s show or they wouldn’t exhibit and attend — so that is not a savings. As for the rest, if PMA were to maintain a DC lobbying office and beef up to continue valued United programs, the administrative savings would be quite small.

Will PMA expand in service to the trade? Perhaps, but in a problematic way.

Our sense in talking to PMA board members is that they are more convinced now than they were when the process started that taking on the areas such as Washington, D.C. lobbying would make it difficult for PMA to focus on other areas — such as international issues.

So, really and truly, our sense is that PMA board members believe the industry is best served by two separate organizations, each focusing on its core competencies.

Yet, despite the decision to end the talks, our sense is that the issue is not done yet. United’s board came into these talks aware that about 18 months from now something will change: FMI, which has been United’s trade show co-locater for 4 years, has decided not to have a show in 2009. United hasn’t made any announcements but it seems that the inclination of the board is to continue with an annual show. Whether this will be a success or not is unknown.

United conducted these negotiations from a condition of viability. It raises enough money every year to run its programs, so it didn’t need to merge.

And PMA’s answer was thus: Great, you don’t need to merge, so let’s not merge, let’s each keep doing what we do well. We don’t want to risk our business model — or your business model — on a merger. After all, it is hard enough to do two or three things well. How many organizations could take on the five or six functions PMA and United do separately and do them all with excellence?

Except the decision to end talks did not assure United’s future ability to raise funds. If an independent show were to fail, if a bunch of mid-sized grower-shippers on the west coast decided to drop United membership thinking WGA is adequate to represent their interest in DC, then the issue might have to be revisited again.

If United was to become incapable of funding a government relations effort one day, it is doubtful the PMA Board would simply allow the industry to do without a lobbying arm.

In fact, the greatest issue now for the trade is what actions will United take now that a PMA/United merger is off the table.

  1. Will United explore merger with someone else? The National Association of Perishable Agricultural Receivers or NAPAR is now a part of FMI. FMI has been struggling because the core grocery business has been migrating to other channels. Is there a possibility that FMI and United might merge?

    It might work from a marketing point of view, but how could United’s government relations efforts proceed if the ultimate boss is a board of supermarket CEOs?
  2. Will United expand? Many feel that for United to attract dues-paying members to support its government relations efforts, it needs many other programs to reach out and “touch” the industry. Could this lead to an aggressive expansion effort for United?

    In an earlier series of talks between PMA and United, Bob Carey, the long-time President of PMA, urged the PMA board to be generous. He reminded them that there was a day when PMA pleaded with a much larger United to merge and PMA was rejected. PMA didn’t go out of business; it rebuilt its business and became the market leader.

    United is an old association and its leadership a proud one. It may yet find a way to restart aggressive growth at United. This could create more conflict between PMA and United.

The industry owes a special thanks to both boards for the seriousness with which they approached this effort but, especially, the trade owes a hat tip to United’s board and more particularly, its Chairman, Emanual Lazopoulos. It takes a certain kind of bravery to try something, and the fact that it didn’t work out this time doesn’t mean it wasn’t an effort worth making.

Success cannot be measured by merely “coming to an agreement” but must be found in the substance of an agreement. Sometimes no agreement is the best agreement that can be obtained at that moment in time.

Many a man weaker than Emanual would have hesitated to start negotiations, knowing that some would blame his leadership if the effort didn’t succeed.

Yet our sense is that in a real way the effort did succeed. Both boards understand each other in a far deeper and more incisive way than they did before. There is also an appreciation for each other’s sincerity and competency that did not exist before.

That is a major win for the industry and will pay dividends aplenty down the road.

Surely members of this industry, more than anyone, should know that we need to praise the planters of seed, for seeds grow and blossom, then bear fruit… often long after the planter has passed from the scene.

The Art Of Focus Groups

Finished doing three focus groups in Houston and am gearing up to do some more in London. Moderating focus groups is something of an art.

For the most part, we try to imitate the Jr. Pundits — age 4 and 5 — when moderating. The key is to have a kind of childlike curiosity and a childlike innocence. No question should be considered too simple to ask.

You have to show great respect to a randomly selected group of people and somehow convince them that they, and they alone, have important information that, if shared, could help make the world a better place.

Yet, you have to also persuade them that grandstanding and faking it won’t help at all.

Focus groups are humbling. What you learn is how unimportant our trade’s obsessions are to the average person.

Sometimes this is dangerous as it leads consumers to half pay attention, which leads to misinformation. So somebody will pipe up that they read that to be certified organic, beef has to come from a cow that lived on an organic farm for five days!

Sometimes, of course, this lack of attention helps the industry recover. Very frequently, if you are having a conversation in the focus group about brands and you ask if any branded produce has ever had a food safety issue or been involved in a recall, you will get a room of people all agreeing that they have never heard of that.

A lot more survey research gets done than focus groups. Surveys are quantitative; they produce simple numbers that can be promoted easily. Focus groups are expensive to conduct, need to be done in many locations with many demographic groups and then require careful analysis. They are qualitative and thus subject to all the wonderful variables of the human race. The findings are often subtle and often don’t lend themselves to headlines.

Both have their place, of course and, in fact, the best quantitative research is always preceded by a qualitative component to ascertain exactly what words mean to different people so that the surveys can be written appropriately.

Yet we confess a preference for the qualitative. To find a truth in a focus group is like listening to a symphony and then identifying that one note where the strings take flight.

In Houston, we talked all about sustainability, “green” issues, corporate social responsibility and much else. Now it is on to London to see what we can find to compare and contrast.

The Pundit is going to do a workshop on all this research at PMA in October. It is all a part of what we have named “Fantastic Friday” going on the day before the trade show. You can still register to attend, learn more here.

Flight Of The Homogeneous —
Is There Room For Sameness Anymore?

The Pundit is often asked to speak before different commodity groups. Very often we find that the focus of these groups is promoting their produce item based on nutritional facts about the item. Yet in marketing it is often the case that the overt features being marketed are less important than the latent truth those features represent.

Flying a new airline focused on high-end service made us contemplate what the airline is really selling, and it made us wonder if the trade doesn’t need to look at its marketing efforts in the same way.

Many Airlines in America have scaled back their domestic operations and are looking to expand their routes overseas. It is easy to see why. In the U.S., if an airline has a profitable route it can count on a gaggle of competitors — both traditional “hub and spoke” carriers, such as Delta, American and United, and the upstart point-to-point carriers — especially Southwest, but also JetBlue, Airtrans and others.

In contrast, most routes to other countries are still controlled by treaty and thus new entrants face a difficult task to get the rights to fly. This translates into much less competition on most foreign routes and thus higher prices and profitability.

British Airways has the only non-stops between Houston and London, so they can and do charge generously — especially for business and first class seats. Vacationers traveling coach are probably quick to book a domestic airline that changes planes, but business travelers — where time is money — hate the idea.

In any case, the Pundit budget didn’t allow for British Air’s hefty tariff, and with the need to get a lot of work done we loathed the idea of flying the trip in coach, so we decided to try something new.

We grabbed a Continental flight to JFK from Houston and switched over to EOS airlines. Eos is the Greek God of the dawn. The name was selected because of the company believes — or is the proper word hopes — that it represents the dawn of a new age in aviation.

What EOS does is take a 757 and proceeds to rip out all the seats. Normally a 757 seats about 222 people. EOS equips the whole plane with just 48 seats.

They advertise it as a business class service, but that is because most businesses will only pay for their employees to fly business, not first class. In fact, the seats and service are designed to approximate a good first class service.

It is an interesting concept. Many airlines have dropped first class all together and the point-to-point carriers never offered it in the first place.

Theoretically one could imagine a bifurcation of air service — with coach and business/first class literally flying different planes.

The EOS concept offers other benefits — fewer passengers mean few lines for luggage, for boarding, for immigration — and in that sense, the EOS experience apes that of a private jet.

Then there is the subject that Americans are always uncomfortable with — social class.

Looking around the airport, we saw plenty of people dressed for transcontinental flights in outfits the Pundit wouldn’t wear to the supermarket much less on an airplane.

Blame the Momma Pundit. We remember, as a boy, taking the Pan Am service from JFK to San Juan. Pan Am had built the ”Terminal of Tomorrow” there, and Momma Pundit dressed the children to fly. Poppa Pundit wore a suit, Momma Pundit a dress and we kids were all in our Sunday best.

The world is more casual now. Styles change. Today people wear expensive jeans to dress up, women might wear nice pants rather than a dress but, still, we have gone quite far from the 1950s, when The Man in the Grey Flannel Suit symbolized the conformity of The Organization Man.

Many would argue, perhaps correctly, that the conformity of that age was somewhat stifling and that a world in which people are not so worried about how others will perceive them and, consequently, dress for personal comfort rather than to satisfy their fellow passengers is a better one.

Yet that doesn’t mean nothing has been lost in this transition.

When you dressed up to go on an airplane — or for that matter to the shopping center — it was expressing a notion that you aren’t the center of the world. That other people matter and must be shown some respect.

Perhaps having to stare at a guy’s feet in his flip-flops or his armpit hair in his tank-top is not such an imposition. But respect for others is a habit, and if one doesn’t practice it on small things, one is unlikely to practice it on large things.

So EOS — and the half dozen airlines now doing the same thing — can be seen as a sociological phenomenon in which people with particular social mores try and separate themselves from dealing with those who behave differently.

The EOS flight we were on was notable for its conformity. Predominantly male, a couple of wives, one girlfriend, a few businesswoman and one guy traveling with his ‘niece’, who we are pretty sure was a niece in the sense that Julia Roberts was Richard Gere’s niece in Pretty Woman. Mostly there were business people. You could see the young and wiry London investment bankers working on their spread sheets, others filling out expense reports, some reading a novel or a newspaper. Many were pros at flying the route, leaping into the flat bed seats anxious to get themselves asleep so they could hit the ground running in London when they arrived at 7:30 AM.

You catch the occasional Australian freethinker — forgiven his deviation from the norm by his ready smile and quit wit. But most were wearing the uniform of the 21st century upscale business person — slacks or jeans, collared shirt, most had a blazer.

So if EOS offered comfortable flatbed seats across the Pond, it also offered a chance to be with people pretty much like oneself.

First and business class on conventional airlines try to do that as well. That is why your chance of an upgrade are better if you show up nicely dressed and speak politely to the agent.

But the separation is less complete than in the case of an airline such as EOS.

Besides, it is also part of the same long-forgotten ethos that made people dress to fly, which is part of respecting others by not flaunting one’s status. Being called on to board first, sometimes having coach passengers march through first class on their way to coach, is somewhat discomforting. Inadvertently one finds oneself turned into a showboat.

The success of an airline such as Southwest or JetBlue depends crucially on the ability to attract more affluent flyers. In Southwest’s case, it is a kind of western fun and in JetBlue’s case a kind of New York cool. These more affluent flyers make the customer base acceptable and allow the airlines to be an acceptable alternative.

If you want to know the root of many of Wal-Mart’s problems, you can find it in an inability to execute at retail as it has moved its stores out of a small town base. In a small town, Wal-Mart is likely to get the patronage of the richest man in town and be an acceptable place to work for every retired person looking to pick up cash or every kid looking for an after-school job. The customer and employee base may be from wildly varying income households, but the rural ethos of what kind of behavior is acceptable will subsume all.

As Wal-Mart moved into more urban and inner suburban areas, it drew employees from specific sub-cultures, employees that didn’t necessarily share the same values that Wal-Mart’s rural workers did. And Wal-Mart never really developed a way to deal with that divergence of values and the fact that in these heterogeneous areas, a consumer can look at the employees, look at the other customers and know, instantly, that this store is not for me.

Perhaps there is a marketing lesson for the perishables trade in this: It is not always the obvious that is the real selling point, and the obvious EOS selling point is fast lines, flat-bed seats and a nice meal service. But the undertext is a chance to operate in a world with people just like yourself.

Whether the existence of such an opportunity will, in the end, make for more peace and pleasure by allowing everyone to be with people just like themselves, or whether the ability to isolate oneself from different perspectives and ways of living will lead to an alienation from one another with disastrous consequences for democracy, is still to be seen.

Last Chance Once More

Our piece, Last Chance, Literally, To Teach Life Lessons, which chronicled the opportunity given a young Carnegie Mellon professor who has terminal cancer to give a final “Last Lecture,” brought many heartfelt notes thanking us for bringing the piece to their attention. It also brought requests for additional information.

Professor Randy Pausch appeared on Good Morning America, and ABC published this piece.

Many people asked to see the complete speech, rather than the excerpt we included in the original story. So we are publishing that below:

And if you would like to buy a DVD of the speech, you can send an e-mail here.

The Wall Street Journal also has been accepting reader comments on the article, and you can read those here.

One of the comments says this:

If it were my last lecture, I would recount the results of a survey that Dr. Tony Campolo mentions. It was one done on 50 people over the age of 95. They were asked ‘If you could do it all over again, what would you do differently?’ Three responses came back more frequently than the rest. The most frequent response by the nanogenarians was that they would ‘reflect more.’ The next most frequent response was that they would ‘risk more.’ And the third — that they would ‘do things that would live beyond them’ or in other words, leave a legacy.

Reflect more. Risk more. Leave a legacy.

Much to be said for that.

Pundit Mailbag —
Hurdles To GlobalGAP

Our piece, EurepGAp Becomes GlobalGAP… When Will We Have An AmeriGAP, brought this critique from New Zealand:

As a New Zealand producer who has been subject to EurepGAP for a long period, I would have this to say:

Good agricultural practice is, of course, a ‘must have’ these days and a plethora of certifications is time wasting, expensive and very difficult for a producer-supplier to multiple markets to comply with all.

In my opinion, there are two major hurdles to the GlobalGAP system:

  1. Chemical residue requirements.
    These are non-standard between the receiver countries and make it impossible for growers to manage their production for all markets adding to costs greatly and weakening suppliers’ marketing positions.

    For example, Zespri was hurt badly recently by the removal of an insecticide in Europe making it impossible for growers to meet an insect-free requirement in Korea.

The requirements also enforce residue standards at 0.01 ppm (parts per million), which the evidence would suggest is below any laboratory equipment’s testing ability. When labs are forcing the withdrawal of product for negligible chemical residues below 0.02 ppm, it becomes farcical.

The same labs will not stand behind clear tests at these levels and, as you have recently demonstrated, leads to false positives.

Japan also has totally inconsistent residue standards between fruit products in their positive list. A chemical can have 0.5 ppm on a Japanese Strawberry but less than 0.01 on an imported lemon. Japan also allows older chemical groups favoured by Japanese growers but will not recognize new softer chemicals.

The U.S now works on a food basket approach, allowing a chemical such as mancozeb on a limited range of products while not allowing it on others. This says to consumers that some products may poison you and others may not. Clearly this is ridiculous.

  1. The ethical side of the GlobalGAP system is regulated by whom? As growers we all respect the need to have minimal residues or biotoxins in our products and that the customer has a right to know what they are ingesting.

    However when, for example, the NZ Food Safety Authority makes a call on a chemical product and allows a spray residue for lemons at one level and for mandarins at a much lower level on the basis that in their opinion the chemical is not as required for mandarins, this is nonsense.

Grower/suppliers are now heading into an abyss of nonsense with no scientific backing to regulation. Sounds like the global warming dialogue you are also engaged in.

— Alan Thompson
Managing Director
Kerikeri, New Zealand

We appreciate this revelatory letter. It brings to mind several important points:

  1. While the whole industry has been focused on pathogens, in many parts of the world authorities and buyers have been tightening up on pesticide regulations both prohibiting the use of more pesticides and restricting the allowable residue levels. In Pundit sister publication, PRODUCE BUSINESS, Mark DeNaeyer of Trofi made the same point in regard to German discounters which you can read about here.

  2. In many, perhaps most, of these cases, there is no scientific evidence at all that these new residue levels and new pesticide restrictions are important.
  3. The problem with certification bodies is that some board or panel winds up making decisions. On issues such as pesticides, they are already making subjective judgments but, at least here, there is a theoretical scientific discipline.
  4. When certification bodies get into social responsibility issues, there is no proper way to make decision. These are purely subjective judgments. A true GlobalGAP would probably be unacceptable to Europe, for example, because it is doubtful that China, India, Brazil… not to mention the United States… would vote for the same standards Europeans want for product sold in Europe. Put another way, the purpose of EurepGAP was to impose European standards on the world for product that would be sold in Europe. What is the purpose of a true GlobalGAP?
  5. With all the problems on imports of food from China, we desperately need certification standards. We know we can’t inspect food safety into food products at the border. Even if we could somehow overcome the problem of corruption that Devon Zagory of NSF Davis Fresh pointed to in our piece, that still leaves the question of what standard we are looking to certify against. Because this question remains unanswered, producers that export to many markets and even to many customers in the same market often struggle with multiple audits and the need for multiple certifications.

Many thanks to Alan for bringing these important issues to the forefront of our industry discussion.

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