Pundit Interviews

Pundit Letters





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

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


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Irradiation And Consumer Acceptance

We have dealt a great deal with irradiation, including an extensive review of the state of the art which we entitled, Irradiation Kickstart. This piece followed up on the heels of FDA’s Irradiation Ruling Puts FDA On The Spot, which announced FDA’s approval of irradiation for use with iceberg lettuce and spinach.

Although there are many technical issues with regard to irradiation — what dose, what packaging, logistics, cost, etc. — one of the key industry concerns is consumer acceptance of irradiated produce. To explore this subject more thoroughly we asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Christine Bruhn
Ph.D., Director, Center for Consumer Research
Department for Food Science and Technology
University of California, Davis

Q: What can you tell us about consumer acceptance of irradiated food?

A: We do research on consumer attitudes toward food safety and quality, and help to respond to consumer concerns, educate on the facts, and clear up misinformation.

Q: Have you done any studies related to fresh produce in particular?

A: Our main research on irradiation was done a couple years ago and related primarily to meat. We did have questions included about produce, related to availability of tropical fruits irradiated for disinfestation of pests rather than food safety applications. [Editor’s note: you can read the full report here]

Q: Do you think your earlier research would be applicable to consumer acceptance of irradiated spinach and iceberg lettuce, now that the focus has been shifted and elevated from pest control to combating deadly pathogens?

A: The application of irradiation for something eaten raw is a new opportunity. While the research doesn’t specifically address this, I can share my view of how people respond and would respond regarding irradiating food for food safety.

Q: What is our understanding on this issue?

A: Some are saying the public won’t buy it. That is not the case. The public hasn’t been given an opportunity. My work and that of other researchers over the last 20 years has found some people are ready to buy irradiated product right now. They want it, but complain that the grocery store hasn’t offered it to them. This group of consumers represents maybe 10 percent of the population. At the other side of the spectrum, 10 percent of consumers are appalled by irradiation. They believe it makes the product less safe and less nutritious and wouldn’t touch it with a 10-foot pole.

The majority of the population is in the middle. They don’t know very much about irradiation, or how it would benefit them. When we share the science — that it will increase safety but doesn’t markedly affect taste or nutrition — they are ready to buy it. They want to buy it. The goal is getting the correct information to the consumer.

Q: In your research, were consumers receptive to irradiating tropical fruit to provide more variety in the marketplace? If so, it seems they would be even more open to irradiation for improved food safety. What is your assessment?

A: In our study, we did ask questions about availability of certain imported tropical fruits like papaya and mango that consumers wouldn’t have access to if not irradiated. That’s purely a pleasure application, and consumer feedback toward irradiation was extremely positive. Great irradiated mangos were shipped into the U.S. last year. I’ve had delicious irradiated mangos from India and Thailand. Mexico is revving up to ship irradiated mangos. It is just a matter of being sure all regulatory approvals are in place because this is a quarantine operation. More irradiated fruits will be appearing in supermarkets.

You’re not cooking your iceberg lettuce. If consumers can appreciate irradiation in the form of pleasure, eating product that might not normally be available, it is not a leap to expect they will be even more enthusiastic about irradiation in the form of food safety, and they will have confidence they are serving their family safe product that is good for them.

Q: Since your research suggests the majority of consumers just need to know more information about the irradiation process to feel comfortable in purchasing the product, what communication efforts do you suggest, and by whom?

A: Having a grocery store put irradiated product on the shelves is an endorsement in and of itself. It is even better if the grocery store promotes it. Tell shoppers this is good for you. You’re buying a value-added product that is safe and nutritious.

Q: Wegmans has been progressive in this regard, offering consumers its own brand of irradiated meat, but it seems to remain a niche product. Why hasn’t it taken off?

A: Wegmans’ irradiated ground beef is fresh, not frozen, which means they need high enough turnover. I see that as a good thing. They wouldn’t carry irradiated beef if they weren’t getting good reaction.

I believe it would be helpful for any introduction of irradiated product to have the health community stand up and support it. Inform consumers it adds further protection to their families, and it is labeled to distinguish it. When there is another food safety problem related to leafy greens, this product is a safe haven and will protect your health.

The percentage of contaminated produce is extremely small and a testament to the industry’s food safety vigilance. Still, who wants to take the chance? The public expects safe product. This kill step means consumers can serve product with 100 percent confidence; it’s the only way when dealing with raw fresh produce.

Q: What about quality issues? Is there still a learning curve on balancing the higher doses of irradiation needed for food safety with maximizing taste, texture, and nutritional content for commercial application?

A: Just like any other approach to handling food, you do it through preserving flavor and quality; depending on your techniques you can make beautiful toast or hunks of charcoal. Can it be done where irradiated products are indistinguishable in taste and texture from non-irradiated products and the nutrition is preserved? The answer is yes. Early literature showed problems. Don’t look at studies done 15 or 20 years ago. Let’s do it right and give consumers a choice.

Q: In contrast to your research, anti-irradiation groups, while relatively small in number, have been quite vocal in expressing concerns and trying to stop progress.

A: I believe statements Food and Water Watch makes are not supported by science. Nutritional damage and concerns about safety are not based on the facts. Recognized health authorities confirm this. CDC and FDA mandates require safety and nutritional value are considered before they grant approval. These anti-irradiation groups are expressing their philosophical views.

Q: Food and Water Watch claims that irradiation of foods produces furans, which are poisonous. Furans have been at issue in FDA’s regulatory approval process of irradiated foods. Is there valid reason for concern?

A: Furan is a compound that can form in extremely small levels in foods that have sugar interacting with other compounds in the food matrix. Furans exist in canned goods and other foods as part of their composition. They are not hazardous. That’s one myth this Food and Water Watch organization propagates. Spinach and lettuce don’t even have furans.

Q: Is that one reason why FDA finally gave the OK for spinach and iceberg, but has delayed approval of irradiation for other types of foods like deli meats and ready-to-eat items?

A: The delay is for broader reasons. Deli meats cover a whole range of different foods, soy, milk powder, many different ingredients, etc. FDA wants to be sure it has investigated all the ingredients and how they interact with the irradiation process. In regards to fresh foods, FDA is assessing how many furans would be permissible before effects can be shown. The product needs a certain concentration of furans for there to be a safety concern. It would require consuming a heck of a lot of food.

Q: What challenges lie ahead?

A: The challenges I see are mainly logistical, first building the facilities. The ideal would be inline operations in Salinas and Arizona when production shifts seasonally. Companies want to test the concept with irradiation facilities already in place before building them into their own operations.

The issue of consumer acceptance of irradiated produce is something of a red herring:

First, right now no one is proposing irradiating all produce or even all spinach and iceberg lettuce. So it is not necessary to have 100% consumer endorsement. We have suggested initially pitching the product as a foodservice application to hospitals, senior citizen centers, assisted living facilities and other specialized places where consumers may have impaired immune systems.

Second, Dr. Bruhn is right on in saying that the key impediment in consumer acceptance of irradiated food is lack of availability. The meager research we have on this, which goes back to 1992 was when Carrot Top Market in Illinois and Lorenzo’s Market in Florida sold irradiated strawberries. You can see some of the research results here. The comeuppance of this research was that when irradiated and non-irradiated product was sold side by side with appropriate educational literature, the irradiated product sold well.

The truth is that the vast majority of consumers are unlikely to know or to care. How many people who buy ground beef from Omaha Beef know they are buying irradiated product? How many know the ground beef at their local supermarket is not irradiated? The assumption in the US is that food sold commercially is safe. The very act of selling an item is an endorsement.

Third, because most consumers expect the food they buy at a supermarket to be safe, the biggest obstacle is that without inline irradiation — that is to say as long as we have to take bags and truck them some place to irradiate — irradiation will require a premium price. Now why exactly should consumers pay this premium if the product is already safe? On ground beef, Wegmans can wax poetic about rare hamburgers. Many enjoy raw chop meat. But what, exactly, is the argument for why consumers should pay more for irradiated spinach?

This is where the public health authorities come into the picture. The problem is this: They can’t simultaneously say everything is perfectly safe and we have the safest food supply in the world but consumers should pay extra for irradiated spinach and iceberg lettuce. It is not a sound argument.

We would suggest that public health authorities start out by telling the industry that the FDA intends to issue a recommendation that hospitals, assisted living facilities, retirement homes, etc., should only serve irradiated ground beef, spinach and iceberg lettuce. This would assure the industry of a reasonable-size market.

A year after making its intent clear, the FDA should issue the recommendation.

Once this market is functioning, there will be spillover as some product will find its way to retail and other foodservice uses. Years of consumption in this specialized market will assuage any concerns that others might have on irradiation.

Long term we have to expect that this technology will be as common on high risk produce items as pasteurization is on milk.

Of course, consumers and restaurants need to be aware that irradiation does not protect against cross-contamination in a kitchen, food preparation workers with dirty hands or any risk after the product is irradiated. So vigilance is still required.

We have been fortunate to enjoy the low-key persuasiveness of Dr. Bruhn at many public presentations and a few private conversations. We thank her very much for sharing her perspectives with the industry on this important issue.




Bolstered By ‘Too-Big-to-Fail’ Theory,
GM/Chrysler-Merger Plan Is To Make
Two Losers Into A Winner

Wonder why General Motors and Chrysler may merge? On the surface it really makes little sense — and perhaps the GM board will still pull back. After all, it would be an enormously distracting and difficult task to integrate the organizations at precisely a moment in time when the executives need to be focused.

Both companies are hemorrhaging money, and their products are not particularly complimentary. The combination will not provide much in the way of pricing power, and eliminating overcapacity will be difficult as a result of union contracts.

So what could be the point? How can combining these two losers make a winner? How about this as a theory: GM wants to bulk up. GM has a 24% share of the US auto market, Chrysler 11%. Combine them and you have over a third of the market. The combined company will employ almost 200,000 people in North America, plus many more at parts suppliers. Its 11 brands will have over 10,000 dealers.

What is the lesson of the last few weeks? Be “too big to fail”!!! The word on the street is that GM President Frederick Henderson has been pushing the deal. Perhaps he is thinking he can become so big so that if GM threatens bankruptcy the government will feel it has to lend it money until the business cycle turns.

The theory is made more credible by the fact that GM first sought to merge with Ford — which would have made it bigger still. Ford should have done the deal; it would have been good for Ford shareholders as they run a real chance of losing everything as Ford may run out of money before an upturn comes. It is notable that its 56-year-old CFO unexpectedly announced he will retire.

One wonders if he pushed the deal? After all, though it may have been good for Ford’s shareholders it would have been a bitter pill for the Ford family to swallow. The Ford family controls the company through a special class of stock that gives it 40% of the votes, although the descendents of Henry Ford have an economic interest that is around a sixteenth of that. In a merger with GM, they would just get regular stock and thus lose their special place of influence in American industry.

Of course, the desperation of this moment is an outgrowth of the leveraging up of American business that has taken place over the past few years. One would lament more the possible passing of a great enterprise such as Ford except just a few years ago they drained a lot of money from the company by paying a $10 billion dividend — the largest dividend ever paid by an American company.

Maybe this is why so many Americans are angry at all these bailouts.




Lost Incentives For Home Buying

We have written a great deal about the financial crisis and it is possible that this particular crisis has been solved. Basically by flooding the world with liquidity, putting money into the banks and guaranteeing a lot of things, the financial system can begin to function again.

So why is The New York Times running pieces such as Stocks Plunge 8% on Economic Gloom?

The answer is that making credit available is a necessary but not a sufficient condition for a prosperous economy. There is a phrase economists use — “pushing on a string” — to describe the limitations of monetary policy. It is relatively easy to use monetary policy to reduce demand, but it is much harder to use it to create demand. The Fed and the Treasury can make money cheap and available but they can’t make banks lend it or make people borrow it. Almost a year ago Business Week ran a piece that described the problem:

Four years ago, an economist from the Federal Reserve Bank of St. Louis, Jeremy Piger, demonstrated the problem that’s giving Fed Chairman Ben Bernanke and his crew such a tough time. Piger showed that it’s a lot harder for the Fed to boost growth by cutting interest rates (as it seeks to do now) than it is for the Fed to slow growth by raising rates (as it tries to do when the economy is overheating).

Specifically, Piger found that in the two years following a one-percentage-point increase in the federal funds rate, quarterly GDP growth fell 1.21 percentage points. In the two years following a one-percentage-point cut in the funds rate, quarterly growth rose 0.53 percentage points.

Slowing growth? Easy. Stimulating it? Hard.

This is not just a theoretical issue. Paul Krugman, best known popularly as a New York Times columnist, is an economist who just won a Nobel prize for his work related to trade, wrote a technical paper back in 1998 entitled Japan’s Trap, which attempted to understand why Japan was in a major recession even though interest rates were near zero and the Bank of Japan had expanded the money supply briskly. Here is how he put the question:

Japan poses a problem for economists, because this sort of thing isn’t supposed to happen. Like most macroeconomists who sometimes step outside the ivory tower, I believe that actual business cycles aren’t always real business cycles, that some (most) recessions happen because of a shortfall in aggregate demand. I and most others have tended to assume that such shortfalls can be cured simply by printing more money. Yet Japan now has near-zero short-term interest rates, and the Bank of Japan has lately been expanding its balance sheet at the rate of about 50% per annum — and the economy is still slumping. What’s going on?

John H. Makin, a well known economist with the American Enterprise Institute for Public Policy Research, wrote a more accessible piece entitled, Japan’s Disastrous Keynesian Experiment:

Japan’s efforts to reinvigorate its economy and its stock market have so far foundered for fundamental reasons. Japanese policy makers have followed the advice of Keynesians while ignoring the wisdom of Keynes himself. Since 1992, 60 trillion yen ($600 billion) worth of public works spending, the ultimate Keynesian stimulus, has done no more than to recycle excessive private savings into Japan’s depleted spending stream. Meanwhile, the deflationary momentum, so much feared by Keynes and created by the lingering effects of the Bank of Japan’s overly tight monetary policy has not been broken. Until Japan’s consumers are convinced that goods will cost more next year rather than less, the economy will remain chronically depressed.

This strikes us as speaking to the core of the problem. Although many commentators have said that individuals who imprudently bought houses they couldn’t afford with mortgages they couldn’t afford to pay deserve a share of the blame, we think the situation is a little more complex than that.

These consumers were not irrational; the old model of saving up a substantial down payment no longer worked because the prices of houses were rising faster than families could save. So individuals made the prudent decision to grab what they could when they could do so because only by being “on the escalator” of rising home prices could they hope to have a house for their family.

Now the psychology has shifted. Instead of feeling that they must rush to buy a house because they won’t be able to afford the same house next year, people feel they can wait.

Right now, people have no reason to borrow money. One of our friends is a real estate developer. He built out the infrastructure of a 100-house community and built several model homes. Now he would love to borrow money and finish building all the houses, but he won’t do that unless someone buys the houses. It is very likely, though, that we currently have a surplus of houses if you define it against the number of people who can legitimately afford to own a home.

Especially in this type of situation, where the very core of the problem had to do with easy credit, we find ourselves stuck. Our friend can’t sell his houses because there is no demand. Cheap money helps a bit, but the reason we had to go to zero-down-payment, interest-only and teaser-rate mortgages is because just lowering the interest rate was not sufficient.

So the Federal Reserve can invest trillions in the banks, but if they set up a responsible loan criteria — say a 25% down payment, a verifiable income, no more than 25% of income spent on housing, a FICO score over 750… even if the interest rate is zero — there will probably be very little demand because the vast majority of people who meet these criteria already have houses. So they won’t buy our friend’s new houses unless they can sell their existing homes. Yet they won’t be able to sell their homes because, in a circular manner, all the people who meet the criteria and would be able to buy their homes already have homes.

Now there are always new people coming to meet the criteria as their savings or incomes rise — but there are always people who pass away or meet misfortune and must give up their homes. Now we are not urging any of the following as a policy prescription, but if the goal is to get home builders back to work then the only policy changes available to increase the demand for housing would most likely come in one of these three areas:

1. We can allow in immigrants or foreign purchasers. If we have a surplus of housing, one way to deal with it is to bring in people who will absorb that surplus. Of course these will have to either be entrepreneurial immigrants who create their own jobs or wealthy immigrants or investors who qualify to buy a house without a job.

2. We can increase general prosperity. If we increase the number of Americans employed or increase the incomes of Americans, more would qualify for the mortgages and there would be more demand. But increasing employment and average income are not easy to do. Many of the tools we have to do this such as increasing education can take many years to pay off.

3. Finally we can make it easier to buy homes. If we offer no-down-payment, interest-only loans, with an ability to add interest to principle if you have a tough month, and we give this to people without regard to FICO scores and with no attempt to verify income, our friends will have customers for their real estate development as millions of people who can’t afford homes will now be able to buy. Of course the default rate on these mortgages will be very high and so we will be right back in the situation we started with.

So the stock market is telling us that even great liquidity won’t provide an easy solution to the problem of boosting demand.

As As we mentioned in a piece in Pundit sister publication, PRODUCE BUSINESS, J.P. Morgan’s father taught him that surpluses would happen from time to time but that, in the long run, the enormous growth of America would absorb these surpluses.

That is a statement both fair and true. As the world seeks to avoid the struggling that a major recession or a depression involves, however, it does remind us of another statement by John Maynard Keynes:

…this “long run” is a misleading guide to current affairs. In the long run, we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past, the ocean is flat again.




Perishable Thoughts–
Reacting To Adversity

Whether one is sold out by his stock broker because he was on margin, loses one’s house because he couldn’t make the interest rate reset or comes out on the wrong side of a produce speculation, one question worth pondering is how one ought to react to adversity.

Robert Falcon Scott, CVO, was a officer in the British Royal Navy and led two expeditions to Antarctica. The first, the Discovery Expedition of 1901-1904, led to his being seen as a heroic explorer. He was named a Captain in the Navy and was invested by King Edward VII as a Commander in the Royal Victorian Order.

His second Antarctic expedition, the Terra Nova Expedition of 1910-1913, was not to meet the same fate. The purpose of the expedition was to claim for Britain the glory of being the first nation to reach the South Pole. When they did get to the Pole, they found that a Norwegian team led by Roald Amundsen had beaten them by five weeks.

Despairing as this news was, the worst was yet to come. It was an 800-mile trek over land back and they were not to make it. Of the final five people who were sent to the South Pole, one died on the way home, another, unable to travel more and fearful he was holding back the group and hoping his sacrifice might save the others, voluntarily left the tent and walked into the snow to die.

The last three men made a final camp and a fierce blizzard prevented any further progress. Out of supplies, riddled with frostbite, all three men would die, including Scott. Before he did he wrote a “Message To The Public,” which included this line:

“We took risks, we knew we took them; things have come out against us. We have no cause for complaint…”

By Robert Falcon Scott
1912
Found in his diary after the entire party froze to death in Antarctica

The line begins the penultimate paragraph of the Message, which concludes this way:

We took risks, we knew we took them; things have come out against us, and therefore we have no cause for complaint, but bow to the will of Providence, determined still to do our best to the last. But if we have been willing to give our lives to this enterprise, which is for the honour of our country, I appeal to our countrymen to see that those who depend on us are properly cared for.

Had we lived, I should have had a tale to tell of the hardihood, endurance and courage of my companions which would have stirred the heart of every Englishman. The rough notes and our dead bodies must tell the tale, but surely, a great rich country like ours will see that those who are dependent on us are properly provided for.

A search party discovered the bodies and the notes, and Scott was to become an iconic hero of the nation. Dozens of memorials still exist across the British Isles. A Memorial fund to help dependents raised the then-astonishing amount of £75,000 equivalent in 2008 to about $7 million.

It is only in recent years in line with a skeptical age that Scott has been attacked for his conduct and competence.

We wish we knew how we would react under such a situation. We think there is something immensely admirable about assuming risk and then being willing to suffer the consequences of things turning out badly.

It wasn’t very politic of Phil Gramm, the former Republican Senator from Texas and, at the time, an adviser to the McCain campaign on economics to declare that America had become a “nation of whiners.”

Yet as others have pointed out, his point was not without merit:

Yes, losing one’s job or home is traumatic, and having both taken away more so. But the average citizens facing $4-a-gallon gas and learning that their hacienda isn’t the money factory they thought it was haven’t exactly been thrown into the Dust Bowl. Some Europeans pay twice as much for gas and live in half the space, and no one is passing around the hat for them.

I spent last week replaying Ken Burns’ searing series on World War II. “The War” follows several American families ranging from working class to upper-middle class. None of them, not even the fancy folks in Mobile, Ala., lived as large as today’s typical McMansion family.

These people also had to endure the war’s horrific sacrifice, made more unbearable by the youth of the dead. Nearly 7,000 Americans perished on the tiny island of Iwo Jima alone, with several times that number injured, many grievously. It was a hideous battle in a long parade of gruesome campaigns. Over 400,000 Americans died in that war.

One of the documentary’s running themes was that of servicemen pining for their loved ones back home. And their homes were modest triple-deckers in Connecticut, farmhouses in Minnesota or bungalows in California.

When the war ended, Americans soon resumed their historic quest for bigger and better. But even then, the returning soldier’s idea of palatial living was a 750-square-foot house in Levittown, one-third the average size of a new home in 2006. The accommodations in America, by the way, were the envy of ruined Europe.

So the recent economic downturn hasn’t made Americans poor by any sane measurement. No one enjoys downward mobility, but let’s ask whether telling kids to share a bedroom or downsizing to a sedan represents anything worthy of the word “sacrifice.”

Middle-class Americans fell into this predicament because they started acting like people who are richer than they are. They had built extravagant lifestyles with borrowed money.

Put another way, many took risks and now they have turned out badly. Yet the risks were not so dramatic as those taken by Robert Falcon Scott and the members of his expedition. And the consequences of losing are not as great.

Perhaps in loss, there can even be gain. We recognize the loss of a home is no trivial matter but the character of a man is no triviality either. Perhaps in adversity, we will have an opportunity to teach our children what we are truly made of. That perseverance and honor matter in a way that material things cannot.

The quote can be viewed here: (Download this entire volume through Google Books)

Scott’s Last Expedition …: Vol. I. Being the Journals of Captain R. F. Scott, R. N., C. V. O. Vol II. Being the Reports of the Journeys and the Scientific Work Undertaken by Dr. E. A. Wilson and the Surviving Members of the Expedition, Arranged by Leonard Huxley; with a Preface by Sir Clements …

By Robert Falcon Scott, Leonard Huxley
Published by Dodd, Mead and company, 1913
Item notes: v.1
Original from Harvard University
443 Pages, Pg. 417

The quote can be purchased here

Journals: Scott’s Last Expedition (Oxford World’s Classics)Journals: Scott’s Last Expedition
By Robert Falcon Scott, Max Jones
Oxford University Press, USA; Reissue edition
(September 1, 2008)
592 Pages

There was also a 1948 film called “Scott of the Antarctic,” which chronicled the tragedy of the Terra Nova Expedition. You can purchase the DVD Scott of the Antarctichere.

*****

Perishable Thoughts is a regular section of the Perishable Pundit. If you have a favorite quote that you would like to share with the industry, please send it on. You can do so right here.

Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us