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CANTALOUPE CRISIS ANALYSIS:
Key Performance Indicators and Food Safety...
Shall The Twain Ever Meet?

Our piece, The Truth That Dare Not Speak Its Name: The Priority Can Be Safe or The Priority Can Be Local, But It Cannot Be Both, attracted many comments.

This one came from one of the most prominent food safety experts in the industry:

It is hard for me to measure the depth of our agreement with your commentary, but I can assure you it is deep.

I would like to offer a few comments or questions:

1. For years there has been a battle going on within the corporate structure of many buying entities with one side advocating action and other side advocating avoidance of responsibility.

2.There have been many a letter sent from buyers with no internal changes regarding performance reviews or interaction between buyers and the corporate guardians of the brand and customer.

3. While we agree whole heartily with your analysis — do other buyers not mentioned avoid negative reviews by simply doing less, doing nothing or being less public about their intent?

4. For all of the buyer faults mentioned in your piece where do the two retailers mentioned stand with regards to their assuming responsibility in contrast to their peers?

Thank you so much for what you do for this industry.

Another thoughtful piece came from a leader in the mushroom industry:

An excellent analysis, as usual. I sincerely appreciate your articles and well-researched opinions, even when I don't totally agree with everything as stated.  You are very careful to point out the clear problem in this article, although one implication can be slightly awry.  The issue here is a waiver of food safety standards, not locally grown produce.

Every producer is locally grown in their own specific area.  So, the most carefully controlled, highest standard, safest producer of any fresh produce can also be locally grown.  As you noted, "...the more general cause is the local food movement. More specifically, the willingness of large buyers to waive food safety standards so they can buy regionally."

The local food movement itself is not the issue, but the federal government’s willingness to exempt small growers from food safety standards (Food Safety Modernization Act) as well as the willingness of buyers to waive these safety standards.  At the recent PMA Foodservice Conference in July, Karen Caplan of Frieda's asked a most important question of a panel that just discussed how important food safety was to their companies.  

Basically, she asked, "How have you changed your KPI's throughout your organizations to reflect the food safety priorities you just outlined?"  To their credit, they honestly replied, "We haven't."  In a nutshell, they said that while publicly their top priority was food safety, their buyers' top priorities was still cost alone.

We all deal with multiple priorities every day.  That's part of every business.  However, there can be only one #1.  You closed your assessment with this point, "...any commercial buyer, can make a priority of safe or he can make a priority of local. It is a deception to think he can make both his top priority" (emphasis added).

Both can be priorities, but only one can be the top priority.  That is the key. When buyers' KPI's have that as their top priority, then we'll see real change.

Thanks for your efforts to face these important sensitive issues.

—Joe Caldwell
Vice President
Monterey Mushrooms, Inc.
Watsonville, California

We also managed to agitate a very intelligent Yalie from one of the most prominent Eastern apple shippers:

I read your column faithfully and I enjoy your insights into the produce industry, but I have to take strong issue with the argument posed by your article on “The Cantaloupe Crisis.” This story contained the rather amazing assertion that “whatever the specific cause of this outbreak, the more general cause is the local food movement.”

Moreover the story repeatedly maintains that a retailer can prioritize food safety or prioritize buying local, but it cannot prioritize both.

I take strong exception to the implication that local produce is inherently less safe somehow than the industry standard.  I would maintain that plenty of “local” producers are operating at the same safety standards as the companies that are marketing themselves as complying with multiple food safety audits and therefore “safer” than other companies.

Multiple audits prove little.  A company is only as good as its most thorough audit.  To rank a company’s food safety program by the number of audits it passes is to invite huge costs into the industry that will eventually be passed on to the consumer. Will it make our food safer?  I doubt it.  Either a company uses best practices when approaching the issue of food safety in its production practices or it doesn’t.  One well-designed audit should be able to establish this. 

What an audit cannot do is guarantee that no pathogen will ever slip into the food supply.  No audit is that thorough.  I predict that a major outbreak of food-borne illness in the next ten years will be traced to a company that has undergone multiple food safety audits.  I guarantee it.

Plenty of local producers are using best practices to grow and handle their product, and they are passing their food safety audits with flying colors. My company is one of them.  To suggest that a major retailer like Wal-Mart applies lax standards when purchasing produce from regional suppliers is simply untrue.

Wal-Mart is now requiring that all of its produce suppliers pass a GFSI-level audit at both their production facilities and their farms. These are among the most stringent standards in the industry and hardly constitute what you characterize as “certain minimum standards.”  

I do not accept that this retailer is looking the other way when it sources regional product. I think Wal-Mart is making every effort to ensure that the produce they buy is as safe as they can make it. I think you are playing a dangerous game when you suggest that there is “perfectly safe” food somewhere, and that is what every retailer should try to buy.  We grow food in the real world, and the world is not perfectly safe.

—John Rice
Vice President
Rice Fruit Company
Gardners, Pennsylvania    

We are, of course, deeply appreciative for the kind words regarding our work and for the time that such leaders in the field have put into such thoughtful letters. There is a common thread in these critiques, and we will accept three strikes with a wet noodle for not being more clear on two points:

1)  It is obviously not the case that local food is always less safe. Every farm or packing house and every fresh-cut facility or greenhouse is local somewhere so, clearly, sometimes local food is coming from the top farm or facility in the world.

2)  Although we happened to mention Wal-Mart and Costco in the piece, this does not, of course, mean that these are particularly bad organizations when it comes to food safety. They are actually among the best organizations. Many organizations promise nothing and deliver nothing and thus don’t often get spoken of. If an organization sets the bar for itself high — say by publicly proclaiming that its vendors will all be GFSI-certified — and then doesn’t follow through, it will get criticized for failing to be true to its self-proclaimed goals.

This is as it should be because these pronouncements are promises to consumers. So if a retailer makes such a promise, it is entirely appropriate that it be held accountable. Still, failing to meet a goal does not mean one is inferior to competitors on food safety, and we certainly wouldn’t wish to give that impression.

John Rice’s defense of Wal-Mart is heartening, but we are not sure what to make of it. John writes that “Wal-Mart is now requiring that all of its produce suppliers pass a GFSI-level audit at both their production facilities and their farms.” This is certainly the position. We quoted the press release in the last article. But is there any evidence that Jensen Farms had this certification?

It seems exceedingly odd that in all the thousands of news reports done on the Jensen Farms cantaloupe outbreak that both the farm and the buyers would all forget to mention that Jensen Farms has such a certification. Indeed John is implying that Jensen Farms has two such certifications, one for the farm and one for the packinghouse. Yet there is no mention of either on the Jensen Farms website.

Apples are an unusual commodity in that large shippers in places such as New York and Pennsylvania run world-class packing operations. Indeed, when Cornell did a study regarding locally grown that focused on apples, we actually questioned whether it made any sense to key the study to apples. Although geographically, apples are a local crop in many places, we wonder if these large, well-established operations, would meet the small scale and biodiverse criteria used by many local advocates.

We also would say that it is very clear that many retailers use differential criteria when buying local produce. It is not at all uncommon, for example, for retailers to require that California producers meet the criteria of the California Leafy Greens Marketing Agreement and that local producers simply meet the laxer criteria of a USDA GAP Autdit.

We have been told by many vendors of horror stories in which they have sat down to do an annual review that starts out with retailers explaining new food safety standards and enhanced testing or trapping or buffer zones that will now be required. In the course of the review, the retailer explains its volume requirements on a week-by-week basis. The retailer cut out the big, typically California-based producer, for a number of weeks for the “local program.” If the shipper points out to the retailer how amazing it is that the retailer actually was able to get local growers to meet the standards just placed on that shipper, he is warned never to raise the issue again.

Rice Fruit Company finds itself in the fortuitous position of A) Dealing in a product that is not considered particularly prone to foodborne illness, and B) Having a top-notch facility and food safety program.

It is just not clear that there exists a similar option if one wants to buy cantaloupes in Colorado.

Beyond these clarifications, we would say the letters also bring forward this key point:

Despite all the talk of food safety being a priority, retailers have been unable to find a mechanism beyond establishing minimum standards to enforce food safety as a corporate priority. By using the phrase “minimum standards,” we are not implying that the standards are low. We are simply pointing out that the buying staff is not incentivized to pay more for product in order to get product that is safer. Instead the buying staff is precluded from buying product below a set standard and then is given every incentive to buy on the basis of price above that standard.

The reference to KPIs that Joe Caldwell mentions in his letter is a reference to Key Performance Indicators — this is consultant-speak for how one actually pays and promotes one’s people. Karen Caplan is a shrewd lady and she knows perfectly well that it is all fine and dandy to pronounce lofty goals or proclaim priorities, but if an organization claims its priority is food safety, but pays its people based on profitability, then the great likelihood is that decisions will be made to enhance profitability even at the expense of food safety.

We have been harping on this disconnect between corporate goals and the way people are evaluated and compensated for a long time. One of the most circulated Pundit pieces ever was first published in the aftermath of the spinach crisis back on November 17, 2006, and was titled Tale of Two Buyers. It told the story of a business review in which a retail VP proclaimed food safety the top priority then left the details to a buyer, whose own day to day priorities were different. Here is an excerpt:

If the VPs are sincere about wanting the buyers to place food safety first, the VPs have the responsibility for changing the culture and the economic incentive systems.

Because, let us talk straight and imagine two buyers:

1. The buyer in the little story above buys into the contracting idea and, as a result, gets the food safety standards the chain wants but, even though the grower worked closely, the contracted price turned out to be higher this season than the market price so, all season long, the chain had to either price higher than its competitors, which reduced sales or had to accept substandard margins or a loss.

2. The buyer in the little story above resists contracting because he wants market-priced produce and as a result his product, though meeting all legal requirements, is produced with no extra food safety protocols. The chain is not always aware of exactly where it is grown and packed, but they deal with a good supplier and they did a field inspection once a year, although the actual crop used may not come from that field. The vendor signs lots of representations and warranties as to the way the product is grown and packed. Fortunately there were no outbreaks and buying at market price, the chain was consistently priced competitively to consumers and made decent margins.

Ok, now here is the test: Which buyer gets a bonus this year? Buyer #1 — who put food safety first, or Buyer #2 — who put profitability first?

If your answer is the same as the Pundit’s, you realize why solving this problem depends on a lot more than the intentions of retail VPs. Until the culture and compensation systems change, this is a problem that will stay with us.

Unless and until the way employees are evaluated and compensated by retailers charges to actually put food safety first, it will be a long uphill battle to make food safety the top priority.

And indeed, as Joe Caldwell’s letter indicates, one may have many priorities and all may be legitimate. But one can only have one top priority.

When the government exempted certain smaller growers from the Food Safety Modernization Act, it established that it was more important to foster these small scale operations than it was to have safe food. In other words, that food safety is not the top priority.

Although we agree with John Rice that some local growers produce to top standards, we don’t think that applies to this situation. In this case, we think that when a buyer decided to buy these regionally produced cantaloupes, that buyer was prioritizing something other than food safety.

At last count 21 people are dead as a result.

The obvious question is how will the industry change to make sure this does not happen again? In the The New York Times article that we quoted in our original piece, Craig Wilson, head of food safety at Costco, was quoted as criticizing the cantaloupe industry.

The problem with criticizing the cantaloupe industry is that First, there really does not exist a “cantaloupe industry” — the relationship between a seasonal grower in Colorado and the large California growers is almost nill. The relationship with the large growers in the tropics, still less. Second, there is no reason to think that this is only a cantaloupe problem. It just manifested in that way this time.

In our piece in The New Atlantis, titled How to Improve Food Safety, we argued that the way to deal with this issue is to move toward a more British-like system in which a retailer would not be able to hide behind the liability insurance of its vendors but would, on pain of liability, have an affirmative obligation to do due diligence on its suppliers. 

If every retailer knew that its stock could tank every time there was a food safety outbreak because it would be called up on the stand to justify its procurement decision on a food safety basis — food safety would zoom in priority status.

But if there is not a change in liability standard and buyers do not change their Key Performance Indicators to prioritize food safety and give up differential safety standards for local product, this will happen again.

And knowing what we do, it will be our fault.




The History Of A&P And The Importance Of Scale To American Prosperity:
Marc Levinson To Present At The New York Produce Show And Conference

Each year at The New York Produce Show and Conference, we take pride in showcasing authors doing important work. Last year we featured Joan Nathan and, here at the Pundit, we provided a “sneak preview” of her presentation last year in a piece we titled, Famed Food Writer Joan Nathan To Speak At New York Produce Show And Conference.

This year we turn to a writer specializing in business and commerce but also one who seeks to draw bigger lessons from the history of discrete technologies and companies.

We knew we wanted Marc Levinson to present as soon as we read his latest book: The Great A&P and the Struggle for Small Business in America.

Partly the fit was perfect because A&P, though now operating under Chapter 11 of the U.S. Bankruptcy Code, is still the largest single retailer in metro New York — with banners that include A&P, Waldbaum’s, Food Emporium, Pathmark and Food Basics.

But also because the author examines the issue in the context of American ambivalence about size. This ambivalence has manifested itself in recent years in the context of Wal-Mart, with Americans simultaneously loving the deep discounts it has brought across the land and bemoaning the impact of Wal-Mart on small town, mainstreet retailing.

With the future of NY metro retailing to be significantly affected by what happens to A&P — will it be sold, broken up, continue as an independent company? — we thought a deep dive into the rise and fall of the Great Atlantic and Pacific Tea Company, with a gaze into the possible future was an absolute winner for The New York Produce Show and Conference. We asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could learn more about what Marc Levisnson would present at the event: 

Marc Levinson
Author
The Great A&P and the Struggle for Small Business in America
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
The Economist Guide to Financial Markets

Q: You’ve said that although you have opinions about almost everything, you specialize in trade and international economics, finance and financial regulation, transportation, and energy and environmental affairs. That’s quite a comprehensive portfolio.

Using your latest book as a stepping stone, could you give attendees a sneak peak of your talk at the New York Produce Show and Conference? What are a few of the compelling issues most relevant to produce industry executives at retail and throughout the supply chain?

A: A fair amount of produce-related issues are connected to A&P historically in the book, although I didn’t go into detail. Produce played an integral role in the A&P story.

Let me start chronologically because that’s how my mind works. Chain grocery stores started developing in a small way in the 1890s, made possible by two developments that seem pretty prosaic today. One was achieving an efficient way to make cardboard boxes and the other was canning. Once you had cardboard boxes and cans, you had a way to put on labels. Selling in bulk, there was no way to brand them. Now there were canned tomatoes and boxed soap powder, and consumers could go into the store and ask for product by name. It made grocery chain business possible.

The canned industry goes back to the Napoleonic Wars. Canning was very expensive, made by skilled can makers, cutting by hand. With the development of new technology, it was possible to make cans by the thousands and tens of thousands that could become accessible to consumers in the store.

The canned goods weren’t always healthy to eat because of nasty things getting in, like a good dose of lead in tomatoes because it leached into the can during the canning process. Consumers could now get fruits and vegetables all year round canned, where up to that point, it was just seasonally. Now you could have efficient groceries and buy fruits and vegetables in large scale. Developed in the turn of the century, chain grocery stores were fairly common in the northeast but not the rest of the country.

Q: What was happening with fresh produce?

A: At this point, chains didn’t handle fresh produce for a couple of reasons. First, it was difficult to handle and get delivered with no refrigeration except ice. There was no way to ship produce across the country and expect it to arrive in good condition. Transportation systems were inefficient.

At the wholesale produce terminal market in Chicago, produce had to be picked up by horse cart and moved from incoming railheads, but motor trucks couldn’t get to train tracks to pick it up. So the horse carts would take product to the produce market a few blocks away. It was laid out in the open with no refrigeration. If it wasn’t sold quickly, it wasn’t sold. This was a very inefficient distribution system.

Starting around 1920, Atlantic and Pacific began to change this system. It already had a cannery to produce juice. It was trying to find ways to get fresh produce into the store. The wholesale distribution system was inefficient. Produce would end up at warehouses along the way, and by the time it got to the store it was in bad shape.

Another reason chains didn’t like to sell produce was because there was no way to guard against theft by store managers. They could calculate inventory with cans. They could see if they sold a full case of ketchup, but with produce, the manager could say product was bad and he had to throw it out and management had no way to know if that was true.

Q: How did A&P get the upper hand?

A: A&P set up its own subsidiary in 1925 called the Atlantic Commission and it was going to control its supply chain. It didn’t want to deal with brokers, wholesalers and jobbers it regarded as very inefficient. So Atlantic Commission would go out to an auction, go to the fields and sign contracts with growers, buy large quantities for its own use, ship in its own rail cars and trucks and go through its own warehouses.

It didn’t have to go through a Terminal Market. It could get produce into stores faster and at lower costs, not paying commissions to brokers and jobbers. This was crucial because you can imagine a lot of people in the industry didn’t like this. Brokers, wholesalers and jobbers didn’t have much use for A&P because they were cut out. This is one reason that created a backlash against big grocers.

In 1929, A&P had nearly 16,000 grocery stores, and Atlantic Commission was supplying almost all its produce; this was more than a tenth of the industry, which was not going to these middlemen’s livelihood.

Q: This sounds eerily familiar to many of the issues Wal-Mart has confronted. Is history just repeating itself?

A: Almost everything Wal-Mart is accused of doing these days, A&P was doing in the 1920’s. It was alleged unfair for A&P to go to Yakima, Washington, and buy up the apples. Distributors felt that was unjust. Its size allowed it to operate in ways distributors couldn’t. It could send agents to Washington and also to the Chicago wholesale market and get the best prices. Other distributors felt this was market manipulation. But it was really just about getting products in the cheapest way.

A&P became a flashpoint. Adding to the controversy, it ended up selling to competitors, which is inevitable if you think about it because the produce market is inconsistent. The product wasn’t getting any fresher, so a small percent of their sales was to these smaller grocers: ‘We have a load of tomatoes we have to get rid of, how much will you pay for it?’

This also became a subject of attacks. A&P was accused of selling inferior produce to its competitors.

Q: If that was the case, wouldn’t the smaller grocers stop buying it if the value wasn’t there?

A: The critics didn’t think much about the economics. It’s as if these smaller grocers were required to buy this product. It was somewhat the same people screaming.

Many farmers liked signing contracts in advance because they would have less risk then selling in a spot market. A&P was the biggest buyer by a large margin.

Q: Did A&P’s buying requirements lead to consolidation on the grower side?

A: A lot of business was with farm cooperatives. If you go back to the 1930’s, a lot of coops were being formed.

Q: When did the first legal challenges to A&P’s retail dominance in the marketplace occur?

A: During World War II, the government filed an antitrust suit, and A&P was found guilty of essentially selling food too cheaply. The judge found Atlantic Commission particularly suspicious. The judge didn’t like that Atlantic Commission was selling to competitors, buying so much quantity. The suspiciousness was because it was so different from how everyone else did brokering. A&P was convicted in 1946 and it was upheld on court of appeal.

As soon as the conviction was upheld, The Truman Administration filed a civil antitrust suit asking that A&P be broken up in pieces. The government wanted Atlantic Commission separated from A&P, and A&P broken up into seven different chains.

And that dragged on until Eisenhower became president.

A&P agreed to shut down Atlantic Commission. So it was in business 26 or so years, but then it was forced to close because supposedly it restricted business in the produce industry.

Q: How did this impact A&P’s vitality? Did it continue to remain a stronghold?

A: So that was 1953, and A&P was still the biggest retailer in the world.

Q: But didn’t A&P expand globally?

A: A&P was also in Canada, but its sales were bigger than any other retailer in the world.

Once A&P closed down its Atlantic Commission company, the government stopped investigating it for the first time in three decades.

Q:What led to A&P’s fall from its pedestal?

A: A&P went down quickly on its own, from an enormous powerful retail giant it became slow moving, not adapting to change, and other folks in the retail business started to pass it by.

Discount retailers were gaining momentum. A&P didn’t want to get into discount retailing. It was a very conservative company with an attitude: groceries are us and we don’t want to do other things. So when you had companies coming along in the 50’s doing discounts, and then in the 60’s Kmart, Wal-Mart and Target, there was no way A&P could compete.

A&P was slow to pick up on people moving to the suburbs after World War II. More affluent customers moved to the suburbs, but most A&P stores were in urban centers.

Other retailers were more astute with changing customer tastes.

Q: In what ways? When you say tastes, are you referring to product selection?

A: Customers expected to drive to a very large store, 40,000 square feet or 50,000 square feet, with a wide variety of food. Supermarkets have been around since the 1930s but started getting big after World War II. Especially after suburban development started, there was no longer a constraint on space.

By the 1960s, A&P already was becoming a basket case.

Q: So the company was in need of serious intervention. Did anyone rise to the cause?

A: A&P took action, but much of it unwise. For example, in the 1960s, it built what was at the time the largest processing plant in the world near Corning in Horseheads, New York. It built this plant thinking it would bring more efficiencies with things like canned goods.

We’re talking early 1960’s now, with the arrival of television in people’s homes on a large scale. Television increased the power of brands because brands could advertise. Consumers were excited about brand names like Dole and Del Monte and no longer just interested in A&P brands.

Q: Yet in the produce department, brands don’t play the same kind of role as in other areas of the store.

A: Still, there’s a place for brands as a symbol of quality.

Q: Do you see a future for A&P?

A: My book in regard to A&P ends around 1979, when it was sold into control of a German company. As you know, A&P is now operating in Chapter 11 bankruptcy.

There is not much hope for it to survive as an independent retailer.

Q: With your historical perspective, could you discuss the current retail environment?

A: I’d say this about the retail environment. Part of the reason so many independent merchants fell by the wayside is that they had nothing special to offer. People have these romantic notions of what mom-and-pop stores were like. The fact is they sold the same canned goods as A&P for more money.

The lesson here, for a small store to survive, it has to come up with a unique concept.

We have some trends now that work in favor of smaller stores and against the large retailers. One of them is that you’ve got consumers who don’t want to drive so far. They want a smaller store, and you’ve seen the average size of supermarkets come down for several years now.

Big companies lose a lot of their competitive advantage if they have to supply smaller stores. Big companies have big cost advantages supplying a relatively small number of large stores. And they don’t have a big cost advantage when trying to provide differentiating product. Their efficiencies don’t fit with finding local farmers or bringing in niche items. The economics of that don’t work out for the chains. This is an area where smaller merchants can gain a competitive edge.

Q: Your book, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, points to challenges and necessity of staying nimble and adapting to a changing world. From supply chain logistics to international trade to food safety/security and traceability to sustainability, all have ties to the produce industry…

A: The container made it possible to think of international trade in produce; it’s brought a whole host of issues with it. Yes, you can get produce cheaper and produce in the winter. But there are new challenges with food safety and traceability. Retailers are even more disconnected in many cases from where produce is grown, and it puts new burdens on the industry.

Certainly, if you don’t think your business is under threat from changes in the industry, you’re crazy. A&P shook up the produce industry in the 1920’s just as Wal-Mart shook up the industry in the 1990’s. These are just examples of the pressures to cut costs throughout the distribution system.

One of the questions you have to ask yourself constantly in today’s economy is where are you adding value, and if people in an industry think that a competitor is not providing sufficient value to customers, it’s up to them to show that.

What we like about this book is that it portrays the rise and fall of A&P in the context of American ambivalence about size. On one hand, we yearn for the economies of scale size can bring, but on the other we celebrate the independent shopkeeper as an authentic America original, with his independence building the kind of character indispensible for the success of the American system of self-governance.

We see in this dispute the battle for the American soul waged between the Jeffersonians and the Hamiltonians. Thomas Jefferson imagined an America composed of sturdy Yeoman farmers and saw avoiding the piling in big cities as indispensable for developing the traits of character necessary for self-governance. In contrast, Hamilton envisioned a great commercial Republic with a powerful central government facilitating its rise.

In the end Americans love Jefferson, but they live in the world Hamilton created.

So Americans loved the independent shopkeeper, but the lure of better living standards through the efficiencies brought by A&P and similar chains became the world Americans actually lived in.

Even while New York unions, intellectuals and many businesses stage efforts to keep Wal-Mart from New York City, it is very clear that if and when Wal-Mart does enter the City, the very protestors will be the best customers.

The one question with this narrative, certainly where produce is concerned, projecting into the future is that it is not clear that large organizations have a price advantage to offer.

As we chronicled both here and here in Pundit sister publication, PRODUCE BUSINESS, in markets such as Los Angeles, big chains have abandoned hundreds of stores as unprofitable. Yet these same exact locations are now being operated profitably by ethnic retailers.

In produce, these retailers often buy less expensively off a terminal market than large chains can buy FOB. Freed of expensive union contracts, these retailers are both more flexible and have a lower cost structure.

We also note that they often fly under the regulatory radar and thus can gain economies not available to big chains.

In any case, the issue is an exciting one, and we look forward to being at The New York Produce Show and Conference and learning from Marc Levinson.

You can register for the event here

Hotel rooms are available here

You can find travel discounts here

If you are interested in exhibiting or sponsorship opportunities, please let us know here

 




One Walmart Shopper Stands Up For Civil Order And Gets Robbers Arrested, But She Could Have Gotten Herself Or Another Person Killed

Showing that Providence has a sense of humor, a Houston woman by the name of Lawless — Monique Lawless to be exact — decided she could not abide the break down in civil order represented by thieves getting away from a Walmart store in broad daylight. When the cashier didn’t act, Ms. Lawless asked her to watch her bag and ran to stop the thieves. Take a look at the video here:

Ms. Lawless thought other shoppers would join in, but like the boys on the barricade portrayed in LES MISÉRABLES, she waited in vain.

We have heard many times how demoralizing it is for retail employees when they learn that retailers generally can’t do much about theft. A friend of ours started working at a local Walmart and found herself calling security frequently as she manned the dressing rooms and found people constantly putting on seven layers of clothes and walking out the front door.

By the time security showed up, the criminals were long gone. Eventually our friend stopped calling security.

In fact, almost all retailers have policies specifically preventing clerks from challenging thieves. After all, the thieves could be whacked out on crack, have guns… who knows? Certainly no retailer wants to take the chance that a crazed thief whips out a gun and starts shooting employees and customers.

Shoppers didn’t join Ms. Lawless for much the same reason. An event such as 9/11 would be impossible today. Those airplanes rammed into the World Trade Center because the passengers assumed the hijackers were rational, wanting money or political asylum, etc., and so thought it best to cooperate while the authorities would negotiate or they would fly the plane to Cuba. The minute it became clear that the hijackers were ideologues wanting to kill themselves, the passengers had little to lose. That is why the passengers on flight 93, who had heard about the World Trade Center attack by cell phone, rushed the hijackers and the cockpit door, and the plane wound up crashing in a Pennsylvania field rather than the Capitol Building or the White House.

Ms. Lawless was, in fact, doing something very dangerous. How would she have felt if as she ran to stop a theft of some beer, one of the thieves whipped out a pistol and shot at her, missed, and killed some random child?

Yet her frustration is palpable and it has that “I’m mad as hell and I’m not going to take this anymore” quality. The thieves raise prices for everyone and make us all less safe and secure. She is correct that it is hard to imagine how a society can long endure when its citizens don’t have the self-confidence to battle some punk kids.

Yes, the video ends with police capturing the alleged thieves. But would they even have been called or pursued them if Ms. Lawless didn’t bring the whole situation to such prominence?

When we wrote about Michelle Obama’s efforts to end “food deserts” here, we complained that giving people money to open supermarkets in inner cities was an evasion of the problem. Like Ms. Lawless, we thought the priority should be on making sure that civil society prevailed in these areas. We suspected that if the areas could be made safe, insurance costs would drop, entrepreneurs would come in and the problem would solve itself.

But standing up for values, insisting on certain types of behavior, demanding that civil society prevail is very hard. It is much easier to appropriate some money and say that you solved the problem.




ETHNIC AMERICA:
Opportunities For Growers, Wholesalers And Retailers
In Ethnic Produce Items...
Rutgers University’s Dr. Ramu Govindasamy Unveils New Research

One of the really wonderful facets of The New York Produce Show and Conference is that we reach out to the great centers of learning in the region and give these institutions an opportunity to reach out to the produce industry.

We host students from the schools, and it is shocking how little some of the students know about job opportunities in the field. We also, however, host faculty presentations and it is shocking how little the industry knows about the research going on at these same institutions. We have already profiled two presentations that faculty members at Cornell will be making at this year’s event:

What’s In A Name? Professor Brad Rickard Of Cornell Produces New Research That Indicates Shakespeare May Have Been In Error… On Apples At Least

Cornell Professors To Present At The New York Produce Show And Conference: New Ways of Thinking About Local: Can The East Coast Develop A Broccoli Industry?

Now we asked Pundit Investigator and Special Projects Editor Mira Slott to speak with a Professor from Rutgers who does work that is tightly targeted to the east coast and who is making his encore presentation at The New York Produce Show and Conference:

Dr. Ramu Govindasamy
Professor
Department of Agricultural,
Food and Resource Economics

Associate Director of Research,
Food Policy Institute

Rutgers University
Extension Specialist,
Rutgers Cooperative Extension

New Brunswick, New Jersey

Q: Is your latest research a continuation of the series of projects you’ve undertaken through the USDA-funded specialty crops initiative?

A: Yes. This is a new project under the specialty-crops-initiative umbrella. Our research explores developing U.S. markets for new crops and new uses. It is a joint effort between Rutgers University, University of Massachusetts and University of Florida. What we proposed to do was hone in on ethnic greens and herbs in the Eastern U.S. from Maine to Florida, 16 states plus Washington D.C.  

Q: What were the objectives?

A: We outlined several goals: to estimate the size of the market and determine the demand for specific specialty items; understand consumer purchasing patterns, interest in and willingness to pay premiums for these high-value, niche-market crops; analyze the supply chain in the ethnic greens and herbs industry and the related market issues; conduct field trials, estimate profitability and recommend best production practices and strategies for optimal supply; and finally to share results with stakeholders.

Q: What methods are you using to tackle these goals?

A: To begin, we did focus groups to formulate questions and construct an extensive consumer survey to collect a range of data from different ethnic groups across the east coast. Due to cost restraints, we used an Internet bulletin-board design, working with experts specializing in these kinds of focus group meetings.

Q: In your earlier research, you segmented Hispanic and Asian markets into subgroups. Did you take a similar approach in this project?

A: Using a random sampling method, we again segregated information into four different consumer groups: Asian Indians, Chinese, Mexicans and Puerto Ricans.

Based on input, we then developed a phone survey with the types of questions that could elicit the most valuable information. The main objective was to document what kinds of greens and herbs these consumers buy right now, and also qualify volume and price.

Q: Could you elaborate on the size and scope of the survey for context and statistical significance.

A: More than 1100 people were interviewed by phone from all four ethnic groups across the 16 east coast states and Washington, D.C. The sampling error is estimated at +/-5 percent with a 90 percent confidence interval.

Q: What were the key findings?

A: We documented among the top 10 crops on the lists we compiled, which ones people were buying most, how frequently, and at what cost.  

For the Asian Indian group, the top three were radish greens, then Indian sorrel spinach, followed by fenugreek leaves. To give a little more perspective in terms of quantity and price they paid, for radish greens they bought 1.7 pounds per week and spent $1.66 per pound. For Indian sorrel spinach, they bought 1.63 pounds per week and spent $2.28 per pound, and for fenugreek leaves, 1.17 pounds per week and $2.02 dollars per pound

For the Chinese group, the top three were Shanghai bok choy, Chinese broccoli, and spinach.  Also by pounds and dollars, for Shanghai bok choy they bought 2.14 pounds per week and spent $1.44 dollars per pound. For Chinese broccoli 1.71 pounds per week and $1.74 dollars per pound, and for spinach 1.44 pounds per week and $1.96 dollars per pound.

Looking at the Mexican group, the top three were purslane, then roselle, followed by epazote, all leafy greens. For purslane, they bought 2.22 pounds per week, and spent $2.69 per pound; roselle 1.5 pounds per week and $3.38 per pound; and epazote, 1.4 pounds per week and $2.10 dollars per pound.

For Puerto Ricans, the top three were lechuga, then garlic chives, followed by culantro, which has a flavor like cilantro but looks very different. The breakdown for lechuga was 1.8 pounds per week, and $2.13 per pound; garlic chives 1.57 pounds per week, $2.46 per pound, and culantro 1.34 pounds per week, $1.88 per pound.

Q: What can we learn from these numbers in the bigger picture?

A: This is how much they buy on average. Now we have the latest census data on the east coast for the areas covered in our study -- the 16 states and Washington D.C. Breaking out the numbers for the four ethnic groups, there are 1.3 million Asian Indians, 1.2 million Chinese, about 3 million Mexicans, and 3.6 million Puerto Ricans. You can imagine how much they would buy if they buy at these rates. The demand for these crops could be astounding.

Q: How easy is it for these consumers to find these items now?

A: These crops are not commonly available; usually only in niche, specialty, ethnic stores.

The thinking is to make them more available and accessible to these ethnic groups, and they would buy more of them. And to bring them into the mainstream market as well.

Production information on these crops is not accessible, but for some of these highly specialized items, production is very rare, and some are being imported.  

Q: So, you see an opening for growers to fill this dearth in supply?

A: An objective of our grant is to research ways to make smaller farms viable on the east coast. Our research shows high demand for specialty greens and herbs, yet it is somewhat low compared to mainstream products like onions and tomatoes.

The volume on these specialty crops is so small for large growers, they are not interested in growing them. This leaves a niche for the small to medium-size farmers to fill.

Basically the opportunity is meant for small and medium-size farms. Ethnic specialty crops margins tend to be higher, especially on these new ethnic greens and herbs, which would help small and medium farms.

Q: Are there challenges or learning curves to growing these crops?

A: We currently are building this information. We set up three sites for production trials in New Jersey, Massachusetts and Florida. We are buying these seeds and doing trials on these sites right now; looking at yields, pest management, disease, harvest maturity, trying to determine which crops grow better, etc., and to train the farmers in production of these new crops.

We just started the trials this past summer in different locations, five or six crops at each site with three replications. After we harvest everything, we conduct twilight meetings, and we bring farmers in to look at these crops and we give them information on how to grow them.

Q: Will you be expanding these trials, and if so, is there a way for interested produce suppliers to become involved?

A: We will have similar trials next summer and the following summer. People who would like to participate can contact me. We targeted three distinct regions because we wanted to look at the impact of varying climates and geographies. Some crops need a lot of heat and do better in Florida than in Massachusetts. Some are seasonal, so in this case we’re trying to see if we can really just grow for the season. We have a big team monitoring the process.

The goal is to document which crops are better for the farmers, and to give recommendations in terms of price and volume. The quality they can grow in their region can fluctuate substantially based on where they produce. We want to advise them on which crops they should target and the potential challenges to grow them. These are unique crops. It won’t be easy to find information on where to buy these seeds. Some they can buy locally, others they can import directly or acquire through intermediaries.

Q: Do you see demand for these specialty greens and herbs skyrocketing down the line? Do you have comparative data on how demand has evolved within the ethnic subgroups?

A: We have not compared our current data to our earlier research; however, I can give you perspective on demand for the subgroups in our study.

Asian Indians spend $112 dollars per month on ethnic greens and herbs; Chinese, $87 per month; Mexicans, $85 dollars per month, and Puerto Ricans $79 per month.  Most often 20 percent to 30 percent of vegetable purchases are on these greens and herbs, which is very high.

In terms of demographics, we have data on family size that may be of interest. For Asian Indians, 53 percent of respondents had 4 to 6 people in their household and 44 percent of respondents had 1 to 3 people. For Chinese, 49 percent of respondents had 4 to 6 people in their household and 50 percent had 1 to 3 people.

Mexicans are very different:  67 percent of respondents had 4 to 6 people in their household. Only 20 percent of respondents had 1 to 3. But the most dramatic difference was that 10 percent of respondents had 7 to 9 people in their household.  For Puerto Ricans, 30 percent of respondents had 4 to 6 people in their household and 66 percent had 1 to 3.

Linking these to purchases, Mexicans spend more than Puerto Ricans, but Asian Indians spend the most, so I don’t see much of a correlation with family size.

Q: Did you take into account the impact of age, income, education levels, and other factors in purchasing decisions? For example, a more assimilated Asian Indian consumer might buy less unusual specialty greens and more mainstream items compared to a recent immigrant…

A: We have data on ages, income, education, gender, and whether they speak the ethnic language at home. We have not made any definitive assessments based on this information.

For Mexican respondents in the survey, about 49 percent belong to the 21- to 35-age group. When looking at the Chinese respondents, 49 percent are in the 36- to 50-age group; the buyers are a different age group. For Asian Indian respondents, the majority is in the 36 to 50 age range; and Puerto Rican respondents covered a full spectrum of ages.

From 2000 to 2010, the Mexican population really spiked, going up 92 percent, which is an amazing explosion. Many just migrated. Asian Indians are up 66 percent in that time period. The Chinese population is up 40 percent and Puerto Ricans 33 percent. These numbers are really baffling compared to the total U.S. population, which is up 9 percent.

It’s a whole new market. Four years ago, African Americans used to be number two populous, and now number two is Hispanics, including all the Spanish speaking subgroups.

These numbers point to a huge untapped market.

Q: Do you see mainstream retailers availing themselves of this opportunity, or is this geared more to independents and niche chains? Who can take advantage of this opportunity? Who should attend your presentation at the New York Produce Show and Conference?

A: Both producers and marketers could benefit by coming to my presentation. When we talk about mainstream products, many were once niche items. We see many specialty fruits and vegetables making there way on to conventional supermarket shelves.  At least the top products will fold into the mainstream.  Once consumers are exposed to these items, which are often rich in antioxidants and flavor, these new crops slowly will move into the mass market.

This project is quite astounding, finding consumption of pounds and pounds each week of obscure products not even sold in most conventional supermarkets.

Although the project is focused on finding opportunities for small growers in niche crops, we are not sure that is really the big win for this project at all.

First, our back-of-the-envelope calculations indicate that many large growers could have interest. Large growers grow many items and look to ship mixed trailers. If there are, say, a million Mexican households in just this region each buying 2.2 pounds of purslane a week, that is significant. It is an opportunity for local growers and national producers.

Second, if these products are so popular with various ethnic groups, one has to believe that exposing the broader population to these virtually unknown items could build additional purchases and consumption.

Third, mainstream retailers have every reason to want to carry these products. Just because these consumers enjoy specialty greens does not mean they don’t also buy Oreos – or apples, oranges, grapes, etc.

Identifying opportunities for producers, importers, overseas exporters and wholesalers and retailers – that is what Professor Govindasamy’s research is all about. It is also what the New York Produce Show and Conference is all about.

You can register right now.

Book your hotel right here.

Access travel Discounts on this link.

And identify exhibiting and sponsorship opportunities today.




Pundit’s Mailbag — Contrary To What You May Have Read: “Using wood signals the marketplace to grow more trees.”

Our recent article, Department Of Sloppy Thinking: “Save a Tree” Environmentalism Doesn’t Make Much Sense, pointed out the logical flaw in thinking that there would be more trees in the world if we would only stop using paper products. We received a few notes on the subject. One came from a new Pundit contributor who sells hand dryer and was not happy with our approach:

Making paper towels is a very energy-intensive process.  Hand dryers do not use that much energy. As a result, it takes more energy just to make paper towels than it does to dry hands. So that whole side of your argument gets thrown out.  

Plus paper manufacturing uses a lot of chemicals, and then you have to drive the paper to its location and then off to the landfill where it sits after only one use.  

Also, apple trees are not chopped down every time you want to use them. Sure, paper companies plant trees, but this isn’t broccoli that grows quickly and does not have a big impact when you harvest it.

The sloppy thinking title seems very apropos.

Chris Berl             
Owner / President
Restroom Direct
Huntersville, North Carolina

While we appreciate Mr. Berl’s contribution and we are sure is a fine man from which to buy hand dryers and other restroom appliances, we find his argument unpersuasive and off point.

First, he makes many assertions but doesn’t point to one link or reference to establish these assertions as facts.

Second, even if these assertions are all true, one has to do a kind of “lifecycle analysis” to know anything useful. For example, a lot of electricity is generated by coal and that coal has to be mined and transported. Is that better or worse for the environment than the chemicals used to make paper? We don’t know, and Mr. Berl’s letter doesn’t help us.

Third, Mr. Berl does not address recycling at all. Paper towels seem like something that could be easily made from recycled paper.

Fourth, nobody is opposed to offering consumers the option to use electric hand dryers. The issue is whether consumers should be denied a paper option.

Finally, the issue we were discussing was not whether paper towels or electric are better for the environment. We were addressing the issue of whether a specific factual claim was correct or not: Would there, in fact, be more or fewer trees in the world if people did not use paper products?

Our assessment was that the creation of a market for the products made from trees encourages their planting, secures land for that purpose and, in general, leads to more trees than would exist in the absence of such a market.

This position is endorsed in a thoughtful manner in the following letter from an old friend, a former PMA staffer and PMA FIT Executive Director, writing from her new post with a printing association in Georgia:

Even after two years have passed since I left PMA, I still scan and read your column. Thank you for printing the piece on Department of Sloppy Thinking: “Save a Tree” Environmentalism Doesn’t Make Much Sense.  In my position as Executive Vice President of the Printing & Imaging Association of Georgia (PIAG), this is a battle we are constantly fighting. 

I am a firm believer in the Triple Bottom Line of People, Planet and Profit.  As a consumer who is concerned for our planet, I believe it is important to be committed to understanding the facts about sustainability and not blindly follow corporate claims that are mere veiled attempts at cutting expenses versus employing truly sustainable business practices. 

You are correct that like apples, trees are a crop and are harvested in sustainable ways to ensure continued crop growth.  In fact, there are roughly 600 million trees planted every year by the paper and forest products industry, surpassing the amount harvested – about 1.7 million trees planted per day and roughly three trees for every one harvested.  As a result, there are more forests in the US today than there were 50 years ago (American Forest and Paper Association 2010). 

The Co-founder of Greenpeace, Dr. Patrick Moore, wrote “forestry is the most sustainable of all the primary industries that provide us with energy and materials.  To address climate change, we must use more wood, not less. "Using wood signals the marketplace to grow more trees.”

While I love my digital technology, the truth is that one of the most significant causes of deforestation in the US can be linked to greater use of digital media.  According to the Department of Energy, electricity consumed by data centers in the US doubled from 2000 to 2006, reaching more than 60 billion kilowatt hours per year.  That’s roughly the amount of electricity used by 559,608 homes in one year.  The EPA expects that number to double again by the end of this year.  And if you consider that 57% of the electricity generated in the US comes from coal, and mountaintop removal of coal is one of the more significant direct causes of deforestation in the US, you begin to see the bigger picture regarding true sustainability. 

If you are interested in more facts about the environmental impact of the internet, check out this video — http://www.vimeo.com/25329849 — titled, How Green is your Internet?

The bottom line is that all businesses, whether paper or paperless, need to be careful about claims they make regarding the environment.  Companies should not use the environment to inappropriately position their businesses as something that they are not merely for personal gains. 

If you want to use air hand blowers because it saves you money, then do it but don’t use the environment as a shield. Those who know the truth will see through this ploy and will consider you disingenuous. So I leave you with this… next time you get an email, feel free to print it, read it at your leisure and then recycle it knowing that it will come back in another useable form like cardboard, toilet paper or post-consumer recycled paper — thus continuing the green cycle of life.

As always, it is great to read your thought-provoking columns.

—Cindy Seel, CAE
Executive Vice President
PIAG
Smyrna, Georgia

It is always nice to hear from old friends, and we are flattered that even two years out of the industry, Cindy still finds value in the Perishable Pundit.

Many of the specific claims made for and against things are difficult to verify. Recycling itself is not clearly beneficial. You need to evaluate the environmental impact of setting up a whole separate infrastructure to pick up and distribute waste.

The truth is that this is the great blessing of markets. They tell us whether it makes sense to do something through the price mechanism. The best public policy response is probably not to “decide” what is wise or not; it is to seek out what economists call externalities and compensate for them. So, if a town has a free landfill, the world will generate more waste for the landfill than is optimal. Optimal being defined as the amount that would be generated if waste producers had to pay the full cost of the landfill.

Clearly issues such as environmentalism, sustainability, etc., are often used as covers for actions taken for other means — green-washing, as it is called. Think of all those hotels that claim they don’t change your sheets or your towels as a result of a commitment to the environment — when, conveniently, that saves the hotels lots of money. In one of the early Pundit pieces, we reviewed how at a time when many supermarkets were dropping selling live lobsters due to poor sales and low profitability, Whole Foods turned it into an opportunity to seem ethical to its core customer.

Some of this is marketing puffery and to be expected. But if our nation is to prosper, we need to be cautious about doing things because they superficially appeal to be beneficial. It is “save a tree” the first day, and a half billion dollars invested in Solyndra the next.

Many thanks to both Chris Berl and Cindy Seel for weighing in on the subject of environmentalism and sloppy thinking.

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