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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

Project Sombrero:
Wal-Mart To Test
New Latino Store Concept

For several years now, the success of Wal-Mart in Mexico has been so substantial that Wal-Mart has been the largest private employer in the country, and the papers have been filled with articles exclaiming its achievements, such as Wal-Mexico: Wal-Mart’s Biggest Success.

More recently the company announced it was going to offer a separate membership Warehouse Club focused on serving Hispanics: Sam’s Club offering Màs in Houston

Also the original joint venture Hypermarket between Wal-Mart and the Cullum Cos. that ultimately generated into the Wal-Mart Supercenter was closed, and in the same community it was announced that Wal-Mart Replaces Garland Hypermart with first ‘Hispanic Community’ Store. This is a supercenter focused on the Hispanic clientele.

While the tiny little Marketside division has been getting all the press, as with our pieces here, here and here, and the media is playing up Wal-Mart’s Marketside vs. Tesco’s Fresh & Easy as some kind of “battle of the titans,” it appears that Wal-Mart has been working diligently on still another new concept store, one that has “Success” written all over it.

It is all very cloak-and-dagger with the whole enterprise being referred to by James Bond-like code names. The overall project is code-named — we kid you not — Project Sombrero.

It is hardly a secret though… more like the talk of the whole industry.

The concept is still evolving. Initially the first stores were to open in March of 2009 but that schedule seems to have slipped. Here are the basics:

  • The stores will be significantly smaller than a new suburban supermarket today but quite a bit larger than a Fresh & Easy. Most around 25,000 to 30,000 square feet.

  • The concept will launch in Houston, Phoenix and Los Angeles

  • The concept is designed to compete effectively with Ranch Markets in Arizona, Fiesta in and HEB’s Mi Tienda in Texas.

  • One can think of the concept as a cross between the atmosphere of a Mi Tienda and the price-orientation of Kroger’s Food4Less concept. Very value-oriented.

  • Focus is on unacculturated and partially acculturated Hispanics, especially from Mexico.

  • Limited rollout potential — If Marketside succeeds, Wal-Mart could roll out 10,000 of them. Project Sombrero probably can hit 500 stores max.

  • Produce is a disproportionately large component of the store, and it leads with tropicals.

Wal-Mart knows this customer with its large Mexican operation. It already procures all the brands and has all the sales data. Capturing this consumer is a big win for Wal–Mart as it positions the company to transition these customers into Supercenter and Neighborhood Market customers as they become more acculturated.

In addition, this is one of the fastest growing demographic segments, so it is a place where Wal-Mart would want to be.

And unlike Tesco’s efforts with Fresh & Easy, the concept is highly targeted, not an attempt to be all things to all people.

Retail always requires the real operational test of letting consumers walk in the door — no amount of survey or focus group research can substitute for that. Also Wal-Mart has had problems with store level execution. Still this seems like an odds-on favorite to be the food retailing concept of 2009.

So Much For Regulation:
SEC Misses A Big One…
Why Think FDA Will Do Better?

When it comes to those who see increased government regulation as some kind of panacea for food safety problems, the case of Bernard L. Madoff and his alleged $50 billion Ponzi scheme offers instruction. It turns out that the S.E.C., the regulator body that oversees securities markets and is supposed to protect investors, did nothing and so theNew York Times now reports: S.E.C. Issues Mea Culpa on Madoff:

The Securities and Exchange Commission said Tuesday night that it had missed repeated opportunities to discover what may be the largest financial fraud in history, a Ponzi scheme whose losses could run as high as $50 billion.

The commission said it received credible allegations about the scheme at least nine years ago and will immediately open an internal investigation to examine why it had failed to pursue them aggressively….

Mr. Madoff kept several sets of books and false documents and lied to regulators when they questioned him in previous examinations of his firm, Bernard L. Madoff Investment Securities, said Christopher Cox, the chairman of the S.E.C.

Investigators never used subpoena powers to obtain information, but rather “relied on information voluntarily produced by Mr. Madoff and his firm,” Mr. Cox said….

Besides investigating Mr. Madoff, regulators are now in the embarrassing position of examining whether they should have caught him sooner.

“Our initial findings have been deeply troubling,” Mr. Cox, the S.E.C. chairman, said in his statement. The commission received “credible and specific allegations regarding Mr. Madoff’s financial wrongdoing,” but did not respond aggressively.

“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,” Mr. Cox said.

Moreover, Mr. Cox said, the commission will investigate “all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm.” Mr. Cox added that he had ordered S.E.C. staff to recuse themselves from the investigation if they had “more than insubstantial personal contacts with Mr. Madoff or his family.”

Many who have thought the FDA to be doing a bad job have blamed the Bush administration for starving the FDA of resources and resisting regulation. For example, Marion Nestle, one of the nation’s most esteemed commentators on food policy wrote a letter to the Pundit in which she said:

I’m following your following of the tomato incident with great interest, to say the least. Your piece, What Would FDA Do With ‘Preventive Authority,’ raised important questions.

This one, I see differently. I don’t think the issue is totally FDA incompetence, although I agree there is plenty of that around. I think it is politics.

The Commissioner is a political appointee whose job it is to carry out the will of the administration. This administration doesn’t like regulation much and has made sure that the FDA can’t do too much of it.

Von Eschenbach got spanked when he asked Waxman for more money, and he sure hasn’t tried that again. Acheson would be fired if he spoke up, and he’s the best they’ve got, so it would be a shame to lose him.

My experience in government, limited as it was, taught me that the only way to maintain integrity is to have one foot out the door at all times and to be willing to be fired at a moment’s notice.

That’s a lot to ask of public servants. So what to do? Keep the pressure on, which is what you are doing. Thanks for doing it.

— Marion Nestle
Paulette Goddard Professor of Nutrition,
Food Studies and Public Health

Steinhardt School of Culture, Education and Human Development
New York University

Fair enough, but this example of negligence on the part of the S.E.C. goes all the way back to the Clinton administration, so the problem seems to be far broader than just the inclinations of one administration. It may speak to an inherent limitation of federal regulation: It encourages passivity by others in the chain.

Just the other day, we ran a piece that pointed out that Peter Schiff, president of Euro Pacific Capital, had been remarkably prescient about the financial crisis and accompanying recession. You can find the piece here.

Now Peter Schiff is quoted with a rather insightful comment on the Madoff Mess:

“Of course, the fact that the SEC routinely audited Madoff’s investment company and found nothing wrong is further proof that government regulation of the securities industry is ineffective and has done more harm than good,” he said.

“Rather than protecting investors, it merely lulls them into a false sense of confidence. If government stayed out, private-sector due diligence would do a much better job of ferreting out such massive and poorly conceived scams.”

It is an interesting question. In a sense government regulation, with its promise of safe banking, secure investing or safe food, tends to devalue branding.

Although it is practically a truism to say in the produce industry that consumers make no distinctions between producers and so a food safety incident affects everyone, perhaps this is only true because consumers believe everyone operates under the same umbrella of regulation. They have no reason to believe that, say, Fresh Express is more rigorous in food safety practices than Brand X.

We don’t know, and may never really know, why the S.E.C. didn’t aggressively follow up on “credible accusations” it had. Just as we don’t really know why the local authorities didn’t clean up the 7th Street Market in Los Angeles, as we discussed here. We also don’t know why the local authorities didn’t head off the rats in the New York KFC, which we discussed here.

What all these examples add up to, though, is a certainty that wishes don’t make things so and that simply charging a regulatory body with keeping food safe is no more likely to make it so than charging the S.E.C. with keeping accounts safe made that so.

Leadership Symposium
Offers Stimulating Speakers

When Michael Engeman of the La Manna group in Australia was applying to the Tip Murphy Scholarship for Leadership Excellence — a scholarship which, as we reported here, he eventually won — he focused in on two of the topics at the upcoming Leadership Symposium that he was especially interested in learning about:

After doing some research into the speakers, it would be great to hear what their thoughts are on topics that affect our industry. One of the more interesting topics would be the “empowering business culture” and/or “leveraging the individual strengths of a multi-generational talent pool.”

Michael was referring to presentations scheduled for the upcoming Leadership Symposium, which will be held January 14 — 16, 2009 in Dallas. An unusual event, presented by a partnership between the Produce Marketing Association’s Foundation for Industry Talent (PMA FIT), Cornell University and Pundit sister publication, PRODUCE BUSINESS, the Symposium brings speakers with “out of the industry” ideas into a place where produce industry leaders can be exposed to those ideas. Through a facilitation process headed up by Professor Ed McLaughlin of Cornell University, industry leaders will find relevance in their own companies and organizations for these new ideas.

The presentation Michael mentions on “empowering business culture” will be presented by Polly LaBarre. Her book, Mavericks at Work, co-authored with Bill Taylor, will just be released in paperback January 2, 2008, right before the Symposium. Her work is familiar to many as a longtime writer and editor at Fast Company magazine.

Michael’s interest in “leveraging the individual strengths of a multi-generational talent pool” means he will be paying special attention to the presentation being given by Cam Marston. Cam worked in foodservice sales for Nestle and noted that there were generational similarities in the nature of his customer’s values. From that original insight, he has generated a consultancy that helps companies and organizations deal with multigenerational relations and communications. His book was re-released last year and is titled What’s In It For Me’ Workforce: Managing Across the Generational Divide.

With Michael coming all the way from Australia to attend the Leadership Symposium, we’ll let him experience these two speakers on his own. We thought, however, that it might be useful if we took a look at the other two presenters at the Symposium. Today we thought we would focus on one with a remarkably eclectic work situation.

Rod Beckström will go to Dallas with the idea that his presentation will help attendees to “…take a fresh approach to your company’s structure.” Rod is a pretty impressive guy with a day job as Director of the National Cyber Security Center within the US Department of Homeland Security. He has co-authored a book with Ori Brafman which argues that traditional centralized organizations are being supplanted by distributed organizations with each section or cell of the organization living and growing on its own.

The presentation is focused on understanding the way the world has changed, which teaches us both why we have Al Qaeda and how businesses can organize themselves for success. Oh, and by the way, he owns a strawberry farm as well!

We are excited to meet Rod at the Leadership Symposium, but we wanted to see if we could gain greater insight right now. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Rod Beckström
Director, National Cyber Security Center (NCSC)
U.S. Department of Homeland Security

Q: How are you applying your expertise and background to your role in the U.S. Department of Homeland Security? What are the key challenges to keeping the food supply safe? In particular, what strategies and actions do you recommend to improve produce safety, both at federal and state levels, and within the produce industry?

A: What I do regarding my books and professional business are separate. I have a Chinese wall up with anything I do in government based on guidelines of an ethics agreement. I am unable to comment as a federal official on government matters under federal guidelines. The government chose to make this a Schedule A limited three-term appointment.

Because my position is categorized as such, I have the ability to do interviews like this one. Schedule A is not subject to the same guidelines as some of the other government posts. Therefore, I prefer to focus on the concept of centralization and decentralization in my book, The Starfish and the Spider.

Q: What is the main thesis of the book?

A: If I explain why we named it, The Starfish and the Spider, people will understand the fundamental hypothesis and theories on which the book is based.

If you compare these two creatures, superficially they appear similar with lots of arms and legs, but if you look inside, they are very dissimilar. By understanding the differences, you can learn a new model of two very contrasting types of organizations out there, at least in the extreme, with all businesses in a continuum of these concepts.

If you cut off one leg of an adult spider, it’s simply crippled. If you cut its head off, it dies. The spider represents a centralized organization. It has to have a brain command center to survive. We look at organizations in the West as hierarchical, run by a prime minister or president or CEO. That strategic concept is how a spider lives.

The world is being overtaken by a new type of organization that operates like a starfish. If you cut off an arm, it grows a new one with remarkable powers of regeneration. In the case of the Blue Linquia variety, if it is cut into five pieces, something amazing happens — the growth of five new starfish. It has intelligence, but distributed intelligence, not a centralized brain. Each has a stomach, circulatory system, and can live as another region.

This phenomenon serves as a great representation for the tremendous power of decentralized networks, on the negative side like Al Qaeda, or on the positive side like highly decentralized communities on the Internet, and the Internet itself, which is a decentralized network. In almost every industry, new players are growing, emerging and changing form, imbued with this starfish-like behavior.

In the book, we don’t say decentralization is better than centralization, but as a business you want to know where you fit on the pendulum. Then you can decide what direction you want to go consciously and with new awareness. Just as there are numerous business theories and market analyses, this is a new tool kit to evaluate your systems and the market place in which you work to better manage your company and develop more effective strategies.

Q: In what ways can these concepts translate to the produce industry? How can produce company executives and the industry as a whole apply the principles to help them survive and prosper in this fast-changing world? Do you have any associations within the produce business?

A: As a matter of fact, I do own a 60-acre strawberry and flower farm in Moss Landing, California, with 40 sheds I rent out. I chose to invest in the farm as lead partner, buying beautiful land with a view of the ocean. There was also a mushroom plant that moved out of state to take advantage of tax programs elsewhere. I’m in charge of running the farms, we rent out sheds of exotic-colored lilies, and some other crops are rotated through, connected with other agriculture businesses.

My mother grew up on a farm in Nebraska. She is German, and both sides of the family immigrated here from 1860 to 1880. All my cousins grew up on farms in the Midwest and made it, mostly corn farmers and the cattle business. There’s a story of how my cousin during the Great Depression quadrupled his holdings, one of the few with cash and no debts.

Q: What can companies do in this current economic crisis to quadruple their earnings, drawing back to the lessons of your book?

A: I actually mapped out hypothetical distribution frameworks for a conventional tomato grower and an organic farmer. Companies need to analyze the industry structure and how many steps are between you and the final customer.

Wal-Mart has a huge centralized structure, while on the other end, the farmer who owns his own farm and sets up a booth on the highway is completely decentralized. Most distribution channels are changing… Take a tomato farmer with 1,000 acres, right now a commodity producer, maybe selling out through a local processing facility a fairly generic product, and he’s not happy with that business model. He has a lot of options, and every farmer is the best judge of those options and the direction he should go.

Look at decentralizing: if he goes to organics, it takes a lot more labor and cost, and he’s going to lose income in the transition phase, but it could command a lot higher prices. He could partner with a big organic grower, or decentralize fields with small partnerships of people who want to get into the organic business but don’t have the land. This provides a way to get into a new business, see how well it works, who will buy it, without betting the farm.

Another option: he could look at diversifying, maybe tomatoes are not looking good, and it’s time to examine other crop potential. I don’t know the produce business well enough to suggest what commodities would work best, but spreading risk through diversification is applicable to crop expansion.

The notion of diversification in how I look at my own operation, also relates to income stream and getting my portfolio in order. In moving to more stability, I might lose on efficiency. Decentralization then becomes a management issue — how am I managing, like a spider making all the key decisions, or am I empowering managers? Maybe I’m hurting efficiency because the staff doesn’t feel motivated, and people feel like hired hands turning the crank. What is my management style in running farms and operations?

Large operations can form separate legal subsidiaries and ideally reward the right performance. Breaking the farm or business into subsidiaries can be a form of decentralization, if one has good managers with clear direction on what to accomplish.

Q: What about a huge food chain like McDonald’s, with reach in all corners of the globe? Would you describe its operations and strategic course as centralized or decentralized?

A: The processes and quality control are very centralized in McDonald’s. McDonald’s loves our book. It’s fundamentally decentralizing globally, starting 10 to 15 years ago, when it customized design and architecture in Sweden. It kept the golden arches, but no cheap vinyl seats. Culturally, certain aspects of the fast food chain were rubbing the wrong way in that country, and it motivated the person running the operation there to start innovating units.

McDonalds promoted this guy in Sweden to head of international to carry out the concept elsewhere. McDonald’s had American managers abroad, but now local managers were brought in along with unique items that met cultural and taste differences. McDonald’s still maintains its process and quality in a centralized manner. In 15 years, it transformed from a hamburger and fries to pushing regionalization in look, food, and pricing. McDonald’s deliberately decentralized a massive structure and if you look at the stock price, it paid off.

This is an example of a very large player that some think is centralized but moving to a decentralized spectrum. What’s centralized is concern about consistent quality food for a good price, quick service and clean restaurants and restrooms. It cares about certain drivers in the whole way the company was created.

Q: How has McDonald’s strategic structure impacted the way it has handled criticismthat it is the poster child for feeding the obesity epidemic?

A: McDonald’s faced a huge backlash with that movie, Supersize Me. It hurt short term, but they took the attack on them and turned it into a positive. McDonald’s put up calorie-counting posters. It didn’t say Supersize is good for you. It came out with healthier products, and used it to enhance product line. The reality is that most McDonald’s customers don’t want to order a salad, but McDonald’s offered options.

Q: Turning to large retail players, how do you view Wal-Mart’s approach?

A: Wal-Mart is going into a new fundamental phase in its corporate existence. It reminds me of what happened with Jack Welch leaving General Electric. Its new head is restructuring separate subsidiaries; not only must they be profitable in the market but they have to be high growth as well.

Until the last three to five years, Wal-Mart primarily focused on one thing, price — same product, lowest price, period. That worked until its phenomenal success capped, and the world expected corporate responsibility. What’s your commitment to the environment, what about quality of paints, and healthcare issues?

Wal-Mart has gone through a transition, maintaining commitment to price, but also responsibility as an environmental player. It responded to charges that it was not environmentally focused when it was buying out marshland. Now it has a review process of environmental impacts. Then it targeted energy loss and to see where it could save money. Refrigerated compartments used to be open-air. Putting cooling curtains up saved enormous amounts money, something like $100,000 per store. Because of its size, it realized that just selling a large percentage of more energy-efficient florescent lights could have an impact.

Wal-Mart has gone from just a buying business focused on low prices and profitability to an overall responsible green company. A lot of consumers don’t realize it yet, but Wal-Mart has good green standards, going all the way up the supply chain, asking what the carbon footprint of products coming into its company. This is a big change from just low price to a much broader set of issues; a shift in the culture of the organization.

Q: Is sustainability a mandate for firms?

A: If I’m a produce company and I believe in a more sustainable product, I might want to create a brand and put money behind it and educate customers. I may want to figure out a way to market more perceived value. For sure, produce executives should want to put their toes in the sustainability waters.

Sustainability is a big change farmers need to get ready for. Obama says he will put a cap in the trade system regarding the greenhouse gas market. This is not voluntary but a real market. When that happens, farmers on average stand to gain. Methane floats up in the air, and the amount generated by cattle and pigs is substantial.

This doesn’t relate as much to the produce industry, but no till farming stores a very large amount of carbon dioxide gases in the soil. The farmer can get paid for storing these gases by changing farming techniques. In discussing decentralization options, there is a new CO2 trading market. Carbon dioxide markets in general are a good opportunity for farmers.

Q: I read that you served on the board of the Environmental Defense Fund. Can you speak to the strategies here?

A: Companies need to study how they are going to approach environmental issues. I’m an economist by training, I helped create environmental markets in 1983, and a market-incentive recycling program at Stanford University campus, structured to reward recycling efforts and move more tonnage off the campus. I was co-chair of the Global Warming Air and Climate Committee for the Environmental Defense Fund until January of this year. I helped draft the Lieberman/McCain Kyoto bill.

With respect to global warming and the carbon dioxide market, this is an opportunity for farmers, which can be quite profitable if done right; companies need to get sophisticated and not sell off environmental rights too quickly. Capturing methane off the pigs, you don’t have to ship that service anywhere, building a facility on site is not rocket science.

This is a very big opportunity.

We’re not talking environmental costs here, but the ability to make money by just changing what you’re doing. No till farming involves an initial investment upfront. If you are able to sell carbon rights, you can decide worth and sell in advance. You may be spending more short term, but it’s a big gain.

Q: You mentioned earlier about companies assessing the organic market. The locally grown movement seems to be picking up steam, while organic growth is somewhat ebbing. How does a company stay on top of trends, while not acting too impulsively?

A: Locally grown is a decentralized concept and a value-added trend in place of organic. This issue you bring up has led me to do some quick web analysis. I pulled up an online tool whereby producers can use the power of the decentralized web to better understand new trends. You can find it here.

Google Trends is a service that analyzes how many times people have searched on a term such as “locally grown.” As you can see on the attached link, this is a relatively new concept. It was not even searched on five years ago! It only appears within the past 24 months.

Contrast that with a search on organic, which has more search results but which is steady or declining. You can find the search here.

Google Trends is a free, but information-rich way to analyze part of what is going on in consumers’ minds. Pulling together millions of individual, decentralized searches, into a common database provides rich insights.

Look at the issue of food safety and branding. In a decentralized world, customers are both overwhelmed with information and also want more. If information describes what they want in a product, they will pay more for it.

There were scares related to catfish coming out of Vietnam last year; concern of too many herbicides and pesticides in water levels contaminating fish. My guess is that American producers run more cleanly. How do you get customers to know and value that? That is a branding opportunity.

Q: In the produce industry, people argue the dangers of marketing food safety. Due to seasonality issues, and selling produce year round, American producers bring in product from Chile, Mexico… all parts of the world. Also, the issue of marketing one brand of tomato as safer than another could create an aura of confusion and fear, tarnishing the whole industry…

A: Those are valid points. In this day and age, in a decentralized world, the truth tends to get out through bloggers and the media. If you have a better product, do you convey that as an individual company or as an industry?

Harris Ranch Beef, a provider in California, created its own brand and premium product. It runs a huge steak house and sells its meat across the state in retail stores and on line, building a branded product with a quality reputation generating higher prices. They made the concept work with some 200,000 cattle. They decided to become a large player and get close to the consumer, rather than the approach of a Tyson selling through everyone else. To make the investment in brand pay-off, you need critical mass. The other way is to bring together all farmers in a state to build a brand, like California cheese.

If I were a farmer, I’d want to analyze the crux of my business and find out who are my customers. At the end of the day, how do I add more value, what does my distribution look like, where is it evolving and where do I want it to go?

My Nebraska cousins invested in ethanol plants because they wanted another buyer for their product. The move creates more local demand for their product, and saves on shipping. In the same way they invested in pork operations, teamed with other farmers to build really large pork operations, changing the distribution. When I grew up, all farms had pigs, cattle, some chickens and then all their fields sold corn for feed, and soybeans. Now, none of the farms have cattle and pigs on their own. They joined with other companies to do that.

The industry is going to change, produce companies need to ask themselves: Am I just going to be a low-cost commodity producer, positioned for what some big buyer wants for Costco or Wal-Mart? Do I want to go more niche like Driscoll’s, creating one’s own brand with a unique quality perception? My book is a tool kit to think strategically and conceptually. Companies can use it as a lens to bring more sense to the transitions going on.

Rod is blessed with a remarkably playful and insightful intelligence. We are looking forward to exploring some of his ideas further. We have done a lot of work on sustainability and are seeing buyers back off all around the globe.

We also wonder if some of the solutions Rod suggests, although perfect for a particular organization, are really solutions on an industrywide basis. After all, if everyone became like Driscoll’s, wouldn’t that be just another commodity too?

It is the opportunity to explore these types of issues with the presenters, with the facilitators, in formalized groups and around the bar late at night that makes the Leadership Symposium such a special experience.

Act quickly to get the best value. Early bird registration rates for the Symposium end this Friday, December 19, 2008. We’ve never known any attendee who didn’t feel they profited from the experience.

You can learn about the speakers at this link.

Here is the schedule.

The back story is compelling.

The Leadership Symposium will be held January 14-16, 2009, at the Omni Dallas Park West in Dallas, Texas. Full information can be found here.

Registration is right here.

Message To President-Elect Obama:
Quit Smoking And Eat Your Broccoli!

President-elect Barack Obama is a remarkably disciplined man. So it is a testimony to the enormously addictive habit of smoking that during a recent interview on Meet the Press, he confessed to Tom Brokaw that his earlier claim to Ellen DeGeneres to have given up smoking wasn’t quite true:

MR. BROKAW: Finally, Mr. President-elect, the White House is a no-smoking zone, and when you were asked about this recently by Barbara Walters, I read it very carefully, you ducked.

Have you stopped smoking?

PRES.-ELECT OBAMA: You know, I have, but what I said was that, you know, there are times where I’ve fallen off the wagon. Well…

MR. BROKAW: Well, wait a minute.

PRES.-ELECT OBAMA: …what can I tell…

MR. BROKAW: Then that means you haven’t stopped.

PRES.-ELECT OBAMA: Well, the… fair enough. What I would say is… is that I have done a terrific job under the circumstances of making myself much healthier, and I think that you will not see any violations of these rules in the White House.

Of course, the anti-smoking groups have now spoken out and so the papers are filled with headlines that read like this one: Anti-tobacco Groups Hope Obama Will Be Role Model, Quit Smoking.

We never smoked and, in fact, as a boy, the Pundit reacted to anti-smoking lessons in school and anti-smoking TV ads motivated by the Surgeon General’s 1964 Report on Smoking and Health by working tirelessly to make Momma Pundit’s life miserable (hiding her cigarettes, leaving her pamphlets, etc.) until she quit.

Still, although not being a smoker, we have always been of two minds regarding the public policy emphasis on reducing cigarette smoking. Although the public health benefits are now well established, it always struck us that the harm was mostly a private matter, whereas consumption of alcohol, with its spin-off into drunk-driving and reckless behavior, etc., seemed much more a proper subject of public concern.

We also have noted that a very high percentage of those who quit smoking seem to gain weight, perhaps substituting one oral pleasure — eating — for another — smoking. With all the public concern over obesity, we wonder how the cost/benefit of replacing one indulgence with another actually has worked out.

In any case, whether a President Obama continues smoking or quits, there is some new evidence that he could do himself a favor by eating broccoli and other cruciferous vegetables:

Broccoli May Lower Lung Cancer Risk in Smokers

The cancer preventive properties of broccoli and other cruciferous vegetables appear to work specifically in smokers, according to data presented at the American Association for Cancer Research’s Seventh Annual International Conference on Frontiers in Cancer Prevention Research.

Cruciferous vegetables have been shown to be protective in numerous studies, but this is the first comprehensive study that showed a protective benefit in smokers, specifically in former smokers, according to lead author Li Tang, Ph.D., a post-doctoral fellow at Roswell Park Cancer Institute.

“Broccoli is not a therapeutic drug, but for smokers who believe they cannot quit nor do anything about their risk, this is something positive,” Tang said. “People who quit smoking will definitely benefit more from intake of cruciferous vegetables.”

Li and colleagues conducted a hospital-based, case-controlled study with lung cancer cases and controls matched on smoking status. The study included all commonly consumed cruciferous vegetables, and also considered raw versus cooked form. Researchers performed statistical calculations to take into account smoking status, duration and intensity.

Among smokers, the protective effect of cruciferous vegetable intake ranged from a 20 percent reduction in risk to a 55 percent reduction in risk depending on the type of vegetable consumed and the duration and intensity of smoking.

For example, among current smokers, only the consumption of raw cruciferous vegetables was associated with risk reduction of lung cancer. No significant results were found for consumption of vegetables in general and fruits.

Researchers further divided their findings by four subtypes of lung cancer and found the strongest risk reduction among patients with squamous or small-cell carcinoma. These two subtypes are more strongly associated with heavy smoking.

“These findings are not strong enough to make a public health recommendation yet,” said Li. “However, strong biological evidence supports this observation. These findings, along with others, indicate cruciferous vegetables may play a more important role in cancer prevention among people exposed to cigarette-smoking. “

Public health recommendations depend on more than one study, and so it will be a while under the best of circumstances before confirmatory work is done and such a recommendation could be issued. Still, the report is very big news. Although a general urging to good health — as with the Fruits & Veggies More Matters campaign — can have influence, a specific health recommendation for specific people, such as, “People who quit smoking will reduce their risk of cancer by 20 to 55% by eating at least weekly servings of broccoli or other cruciferous vegetables,” is a much more specific and thus more powerful motivator.

We wanted to know more about this research and asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could find out more:

Dr. Li Tang
Post-Doctoral Fellow
Department of Cancer Prevention and Control
Roswell Park Cancer Institute
Buffalo, New York

Q: The American Association for Cancer Research provided us the abstract to your findings that cruciferous vegetables may lower lung cancer risk in smokers. Could you send us the full study?

A: We’re submitting the study for publication. I am not sure when the paper will be published. Although we will submit soon, the journal may take a long time to review it. We have strong biological evidence, but these findings are not strong enough to make a public health recommendation yet.

Q: What could a health recommendation be based on?

A: Smoking intensity and duration were co-founding factors in the results. Our study looked at cruciferous vegetables including broccoli, cauliflower, cabbage, brussels sprouts, turnip greens, collard greens and mustard greens. We also took into account raw and cooked intake.

Q: Did the results vary depending on whether the vegetables were eaten raw or cooked?

A: We know the phytochemicals in cruciferous vegetables combat against smoking carcinogens. The impact can be substantially reduced by the cooking element. This is why it was very important to separate out raw from cooked. Isothiocyanates, a group of phytochemicals uniquely present in cruciferous vegetables, can inhibit lung cancer growth in smokers and appear to be very preventative in long-term cancer risk. This agent is a rich source of phytochemicals shown to modulate smoking carcinogens in both animal and human studies. Cooked cruciferous vegetables also have a factor but a decreased amount. Raw ones are more potent.

Q: Have you examined the impact of cruciferous vegetables in reducing the risk of other cancers or diseases?

A: At this moment we are pursuing other studies related to bladder cancer research presented last year, where we also found cancer risk reduction with cruciferous vegetables.

Q: Is the bladder study linked to smokers as well?

A: That’s why we are looking at this. Smoking is related to both bladder and lung cancer. Smoking is a big risk with these two cancers. What’s most striking is that the phytochemicals in cruciferous vegetables make a difference in reducing bladder cancer risk in former smokers, people who never smoked and with heavy smokers. But for lung cancer you only see the factor with smokers.

Q: Why is that?

A: Because of the exposure amount and metabolism. The bladder is the most exposed organ in the human body, so you expect more effect with isothiocyanates in the bladder. With lungs, smoking carcinogens are a key factor. We’re still doing studies in this area.

Obviously there is much more work to be done, this study has to be peer reviewed and published, other researchers have to confirm the results, questions raised will prompt still further studies, but we see in this research some very interesting implications for the Produce for Better Health Foundation and the Fruits & Veggies More Matters campaign.

First, we recall that the old 5-a-Day program was initially launched with the National Cancer Institute as the lead agency; it was eventually transitioned over to the Centers for Disease Control and Prevention in no small part because the connection between produce consumption and reduced incidence of cancer was seen as less persuasive than other health benefits of consuming fresh produce.

This kind of specific tie-in between produce and cancer may help reinvigorate the tie-in between the National Cancer Institute and what is now the Fruits & Veggies More Matters campaign.

The second thing we find very interesting about this research is that it finds this effect to be much more powerful when the vegetables are consumed raw. We’ve written several pieces on the challenge to fresh produce being posed by the fact that the Fruits & Veggies More Matters Campaign includes fresh, frozen, canned and juices in its purview. You can read some of our pieces on this subject below:

Will Fresh Industry Foot Bill If Frozen/Canned Uses More Matters Logo?

Facts Obscured About Frozen Produce On General Mills/Green Giant Web Site

Now this inclusion of canned and frozen is a matter of scientific integrity. The body of science upon which the program is based does not provide convincing evidence that consuming fresh provides any special health benefit over canned or frozen.

Virtually all canned or frozen produce is at very least blanched. Beyond that, the defrosting process typically makes the product adequate for cooking but not eating raw. If these studies are confirmed and if further research shows that the positive effects of raw produce consumption are found to be meaningful compared to the state of commercial frozen and canned product, it would provide a scientific justification, perhaps a scientific requirement, for Fruits & Veggies More Matters to abandon the inclusion of frozen and canned produce in its promotional effort.

In other words, if confirmed, this type of research would lead to a transformation in the relationship between fresh produce and public health. Instead of a general endorsement for healthy eating, including increased produce consumption that is tied to general benefit such as reduced obesity, we would enter an age in which fresh produce items are explicitly endorsed for specific people and specific purposes. That would be a nutritional, public health and produce industry revolution.

Perhaps our new President will have a personal interest in seeing money made available to fund the needed research in this area.

Dispatches From The Field

A lot of the work we undertake to help the industry is not actually represented on the Pundit. In fact sometimes all the travel and time interferes with producing as many Pundits as we might like. We have, however, found that there are many ways to serve. We’ve been asked to provide an update from time to time on some of our activities outside writing the Pundit. Here are a few things we’ve been working on recently:

In early December, we flew up to Grand Rapids to be the luncheon speaker for our friends in the Michigan applee industry. Things aren’t easy for Michigan apple growers right now. The season started off fairly strong but bad weather had posed challenges for the Michigan growers, especially when faced with a massive Washington State crop.

From Left to Right: Denise Donohue of the Michigan Apple Committee, Nancy Foster of the US Apple Association and Julia Baehre Rothwell, board member of both the Michigan Apple Committee and the US Apple Association, with the Pundit at the AmWay Grand Hotel in Grand Rapids, Michigan

The Pundit didn’t bring much holiday joy as the presentation was focused on the impact of the economic crisis on the produce industry. We did, however, try to offer a little hope. The Grand Rapids Press picked up the story: Recession May Provide Silver Lining for Michigan Apple growers, PRODUCE BUSINESS Publisher Says:

…If consumers shy away from buying cars and taking vacations, perhaps they will spend more on items such as fruit, said Jim Prevor, founder and editor of Produce Business magazine.

“It actually has the effect of increasing their disposable income,” Prevor said during a luncheon at Amway Grand Plaza Hotel. “That creates a market opportunity for small indulgences.

“Those who can demonstrate consumer pull for their product, they’re going to do fine in bad times and good times. If you’re just another bag of apples out there, you wind up being a commodity trap.”

…Prevor, also known as the “Perishable Pundit,” was speaking at the annual Great Lakes Expo, a conference of fruit and vegetable industries that concludes today at DeVos Place.

He said if China’s apples do not come to the United States, they may compete with U.S. exports elsewhere. And that could push even more Washington apples toward the Midwest..

Just as food retailers in the current economy are refocusing on price at the expense of food safety and sustainability, consumers are “trading down” from upscale products to generic basics. On the other hand, consumers may spend more money on groceries as they spend less at restaurants, Prevor said.

We flew to Michigan shortly after addressing the board of directors’ meeting for the National Watermelon Promotion Board, speaking about the impact that the economic situation is having on sustainability and food safety standards. Of course, Mark Arney, now the CEO of the National Watermelon Promotion Board, previously headed up the Michigan Apple Committee. In any case, the watermelon growers and importers must be glutons for punishment — this was a return engagement after we presented at the same meeting last year.

We had a lengthy discussion with Jacob Adelman of the Associated Press on the concept of controlled environment agriculture. Although we are big fans of the concept and have often linked to Columbia Professor Dickson Despommier’s Vertical Farms Project, we see some real problems with the economics of urban greenhouses:

Long a niche technology existing in the shadow of conventional growing methods, hydroponics is getting a second look from university researchers and public health advocates.

Supporters point to the environmental cost of trucking produce from farms to cities, the loss of wilderness for farmland to feed a growing world population, and the risk of bacteria along extensive, insecure food chains as reasons for establishing urban hydroponic farms.

However, the expense of setting up the high-tech farms on pricey city land and providing enough year-round heat and light could present some insurmountable obstacles.

“These are university theories,” said Jim Prevor, editor of Produce Business magazine. “They’re not mapped to things that actually exist.”

The piece wound up being titled Urban Growers Go high-Tech To Feed City Dwellers

We discussed the refrigerated fruit segment of the produce department with Elaine Wong of BrandWeek. Particularly focused on the issue of whether Sunkist and its licensee Old World Enterprise Group can break Del Monte’s grip on this market. The conversation reminded us of our discussion of the same issue on the Pundit both here and here. As sometimes happens when one speaks to the media the end article, Del Monte, Sunkist Add Heat To Refrigerated Fruit Segment, did not precisely express the point we had hoped to get across:

There is room for more brands in the category beyond the dominant Del Monte, said Jim Prevor, editor of Perishable Pundit, which tracks the produce industry. The question is whether competitors can successfully introduce meaningful, new innovations. Otherwise, retailers have no incentive to play one up against the other, he said.

Actually, if all the products are parity products, retailers have every incentive to play one against the other. It is only unique attributes that would dissuade a retailer from doing that. The question we were actually asking is whether the Sunkist branded product would be sufficiently different from the established Del Monte line to motivate retailers to switch or, alternatively, was Old World willing and able to spend money on slotting allowances and consumer promotions that might encourage retailers to switch for promotional reasons?

Gave a General Session Presentation to the AgGateway Conference in San Antonio. AgGateway is “the agriculture industry eBusiness standards and implementation organization” The theme this year was “Shrinking World — Growing Markets — Global Business,” and the title of our presentation: “Disruption in the Supply Chain — When Things Go Wrong.” Our appearance was sponsored by John Deere Agri Services — so a big thanks to them.

The Center for Agricultural Business at California State University, Fresno, sponsored its 27th Annual Agribusiness Management Conference in Fresno. We gave a presentation and moderated a panel that included Trevor V. Suslow, Extension Research Specialist for Postharvest Quality and Safety for the University of California, Davis, Ed Beckman, president of California Tomato Farmers and Jim Henry, supervisory Investigator at FDA’s San Francisco district. Our piece was pretty much a focus on the nature of the trade’s food safety dilemmas.

We’ll try and do an update every month or two. If you think we can help your company or organization by providing a keynote, workshops, moderating a panel or other presentation don’t hesitate to click the "Request Speaking Engagement" tab just below the Pundit Logo at the top of the page.

Pundit Mailbag — Passing The Legacy

Our piece, PMA FIT Awards 1st Tip Murphy Scholarship: Michael Engeman Of La Manna In Australia To Attend Leadership Symposium, which followed up on our piece, Scholarships Available To Industry Through tip Murphy Legacy Fund, brought some nice responses. Jim Still, founder of Thermal Tech and inventor of TarpLess Ripening, has contributed previously, including here, and he decided to send some praise:

Outstanding piece on La Manna, Tip, and Bernie, nice work. Attaboy! (I don’t give out too many of those)

— James D Still (Banana Jim)
Consulting Director of Cold Chain
Moraitis Group of Companies
Homebush Bay, NSW

We also received a more extensive letter from a Chiquita executive:

Thank you for providing the media support on Tip’s scholarship. It was a great article on Michael Engeman with Bernie Treacy. I also think it is a great choice to have someone outside the U.S. as a winner and there is even a link with Tip as well.

In one of my previous roles with Chiquita, I was responsible for overseeing our Australian subsidiary, Chiquita Brands South Pacific. In the mid-90’s, after Wal-Mart had become a major force in the U.S. produce business and category management was the vision of the future, we asked Tip to travel to Australia to discuss these issues firsthand with our people and Australian customers.

Of course, Tip was a major hit, and I do believe his early visit was one of the reasons why there is such a significant Australian/New Zealand contingent at PMA these days. We followed up that meeting a year or two later with a separate meeting with Woolworth’s produce team at PMA in Anaheim.

— Craig A. Stephen
VP & GM Bananas
Chiquita Fresh North America
Cincinnati, Ohio

As they say, great oaks from little acorns grow and it may very well be that the trip Tip made has made all the difference.

Those who study history are divided into two camps. Some see great impersonal forces at work driving outcomes. These historians believe that the world is as it is because of these forces — that individuals play roles but if those individuals in history were not there, other individuals would have read from basically the same script. An alternative view, sometimes called the “great man” theory of history, is that history is made by individuals.

We don’t dismiss economic, social and technological forces, but we find that a bit too deterministic. We doubt that if Einstein wasn’t there, another one would have just popped up. We also are certain that it made a difference that Adolph Hitler and Winston Churchill were the individuals squaring off.

And in our personal lives, we have found that it is the unique qualities of individual friends and relatives that make all the difference. In sister publication PRODUCE BUSINESS, we once wrote a column titled, Ralph, Dave and Carl, when in one year we lost Ralph Pinkerton, Dave Stidolph and Carl Fields. And, of course, there was that horrible day we lost our friend Joe Nucci. Now we are giving a scholarship in memory of Tip Murphy.

When we remember friends like this, we find that we remember not just them but we remember what they brought out in others and in ourselves. We remember the way we felt when we were with them and we mourn their loss, at least in part, because a little part of ourselves, that part that they brought out, passes away as they do.

Programs such as the Nucci Scholarship for Culinary Innovation and the Tip Murphy Scholarship for Leadership Excellence serve many purposes. They continue the good work that these individuals started when they were alive, they memorialize a name for future generations so that a temporal existence can be given a little aspect of immortality and, for those who knew these men well, the events give us a moment when we can remember what it was like to be together and, even if only for an instant, we can feel almost as we did when we were with our friend.

Many thanks to Castellini, Chiquita, Naturipe Farms, Paramount Citrus and Ready Pac, all of which provided the foundational grants that made the Tip Murphy Fund possible. Thanks also go out to our peers on the committee: Todd Melton of Chiquita, Scott Owens of Paramount Citrus, Bruce Peterson of Naturipe Farms, Bill Schuler of Castellini Company, Bob Spence of Ready Pac and Dick Spezzano of Spezzano Consulting Services, along with Tip’s widow, Gretchen, and Dan’l Mackey Almy of DMA Solutions and the PMA FIT staff, especially PMA FIT’s Executive Director, Cindy Seel. All have worked hard to find a great scholarship candidate and to launch a great program.

Good luck and safe travels to Michael Engeman. We look forward to new friendships forming at the Leadership Symposium in Dallas.

Perishable Thoughts —
Courage To Bet On Your Ideas

The Times of London ran a piece, titled, Fed Throws Out the Rulebook, which pointed out the unprecedented nature of the actions by the Federal Reserve Board:

The Federal Reserve yesterday threw away the monetary policy rule book it has been using for 50 years in its most dramatic effort yet to stem the global economic crisis.

In a single stroke, the US central bank in effect eliminated the cost of borrowing money between banks overnight. It promised that US rates would stay at or near zero for the foreseeable future. And, acknowledging that it now has no more room to cut rates, it announced new, unprecedented measures to stimulate the economy, namely pouring cash into almost every crevice of the financial system and massively expanding its own balance sheet.

The two-day meeting of the Fed’s open market committee which ended yesterday must have been one of the most extraordinary in the central bank’s 95-year history. For more than a year the Fed has been deploying all kinds of weapons — traditional monetary policy implements as well as hastily-manufactured new ones — to prevent the US economy from collapsing into a deep and enduring depression.

But, indicating the gravity of the crisis and the failure of all those previous efforts to turn things around, Ben Bernanke, the Fed chairman, and his colleagues, today threw every remaining tool in their toolbox at the financial markets.

There were three key elements to the Fed’s move — each of them dramatic in its own right.

First, it cut rates once again from the existing one per cent to something close to nothing. But, instead of announcing a target rate for the overnight interest rate — as it has done for the last decade — the Fed said it would aim to keep the rate in a range — between zero and a quarter percentage point. This unusual move reflects the fact that the federal funds rate — a market interest rate that the Fed can move only indirectly — has been volatile recently because of continuing strains in the interbank lending market.

Second, in its statement accompanying the move, it noted that the US economy had deteriorated on almost all fronts in the last few weeks, and it said that those “weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

The Fed rarely commits itself to future policy decisions but those words are tantamount to saying that rates will remain at or near zero for a long time.

Third, Mr Bernanke has launched the US on an uncharted path of what economists call “quantitative easing”, emergency measures to stimulate an economy in the clutches of deflationary collapse. …

Well Mr. Bernanke certainly has confidence in his convictions, which brought to mind a fairly shop-worn quote from a pop-psychology classic:

“Often the difference between a successful man and a failure is not one’s better abilities or ideas, but the courage that one has to bet on his ideas, to take a calculated risk — and to act.”

By Maxwell Maltz

The quote can be viewed here:
Psycho-Cybernetics (Google Books)
By Maxwell Maltz
Published by Simon and Schuster, 1989
288 pages, Pg. 117

The quote can be purchased here:
By Maxwell Maltz
Pocket (August 15, 1989)
288 pages

Maxwell Maltz was a plastic surgeon who observed that patients who came in to his office feeling depressed about their appearance, did not, in fact, become happy after their plastic surgery, even if to an objective eye their appearance was much improved or even beautiful or handsome. In other words, their personal insecurities were not cured by curing the presumptive cause of the insecurities.

From this observation, Dr. Maltz became a famous author and speaker, and his classic self-help book went on to sell over 30 million copies. Dr. Maltz explained his choice of title this way: Psycho-Cybernetics — The word cybernetics comes from a Greek term that means ‘a helmsman who steers his ship to port.’ Psycho-Cybernetics is a term I coined which means, “Steering your mind to a productive, useful goal …. so you can reach the greatest port in the world … peace of mind. With it, you’re somebody. Without it, you’re nothing.”"

In fact, many of his thoughts about the mind/body connection and the relationship between thought and action have been further popularized by motivational and personal development speakers. From Zig Ziglar to Tony Robbins, there is a little bit of Maxwell Maltz in all their work.

When we look at the quote, though, we note its problematic nature.

It is almost certainly true that most of the great successes have come from people willing to act on their convictions. How could it be otherwise? Only those willing to act outside the mainstream can differentiate themselves from the mainstream.

Yet if exceptional success is found disproportionately in those willing to act outside the norm, isn’t exceptional failure also likely to be found among those willing to think and act independent of social convention?

In other words, believing in oneself enough to act on one’s convictions is a route to being exceptional, but much as we would like to believe that the man who acts independently is destined for success, we don’t actually have much data to back that up.

We can praise Ben Bernanke for acting boldly but, really, the open question is not is he bold or timid but, rather, is he correct?

We fear he may have too much faith in the economists’ machinations. If the Federal Reserve just pulls the right monetary levers, if the fiscal package is just the right size, if policy is good, then all will be well. Perhaps. We certainly hope so.

We think, though, that there are realities that can be suspended for just so long. So if we built too many houses because we wanted to put people in a house who couldn’t afford it, we can try to reinflate the bubble with low-interest rates and easy money, but we suspect that is just setting us up for terrible inflation and the Federal Reserve will then have to move to deflate the bubble they just pumped up.

Much as an alcoholic or drug addict often needs to hit bottom, as long as people think that the worst is yet to come, they just won’t buy houses. If they think their money may be inflated away, they may feel they need to save more.

Are the actions the Fed is taking really bold after all? In the end, they may be the easy route because they enable the Fed and the government at large to say, “We are going to save you,” when maybe the really bold path would be to say that there are limits to the effectiveness of monetary and fiscal policy and everyone better batter down the hatches for tough times ahead.

Despite Dr. Maltz’s prescription, we may, in fact, need better “abilities and ideas” — not primarily bold attitudes.


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.

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