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Perishable Pundit
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a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Will Tesco Keep Its Promises?

Our piece, Tesco Takes Heat For Not Supporting Underserved, pointed out that the Los Angeles Times has attacked Tesco for not fulfilling its promise to locate stores in the “food deserts” of Los Angeles — areas without supermarkets so that residents typically must pay the higher prices of local bodegas or convenience stores.

The piece brought several notes, including this one from an important grower/shipper:

The LA Times editorial you quoted included this reference:

The first Fresh & Easy locations opened last week in Glassell Park, Anaheim, Arcadia, Hemet, West Covina and Upland. The much-heralded store in South Los Angeles was not among them.

Tesco offers an explanation for the delay: That store will be part of a development at Adams Boulevard and Central Avenue that also will include affordable housing, and the residential portion of the project hasn’t yet secured all of its funding.

This begs the question of whether Adams and Central in Los Angeles is really underserved residential. It is 15 or 20 blocks from USC.

The Los Angeles produce market is on Central Ave and Olympic (about 10th Ave.), and Adams is about 15 blocks south. It’s kind of light industrial as I remember, and I can’t quite remember that exact location of the garment district, but there are ‘back to downtown’ gentrified buildings moving that way. The apartments might be ‘affordable’ because they are 650 sq ft.

Not more than 10 or 15 blocks west on the ‘Figueroa Corridor’, the Staples Center is on Olympic, the LA Convention center is on Washington (about 20th St), Adams kind of starts USC student housing area, Jefferson (about 33rd) starts the campus, and Exposition (about 40th), starts the Coliseum, the Rose Garden, the Museums, which are all part of Exposition Park.

It’s south central LA in the sense that if you get arrested in that area, you are booked at the south central division of LAPD. (They tell you that as part of freshman orientation at USC)

The truth is that there are no places in LA without supermarkets.

We also heard from a former Sunkist employee, who gave us some insight into his former employer here, and now has opined on this controversy:

The complaints from the LA Times signify less the tone-deafness of Tesco than another example of the LA Times just not getting it. Not a surprise for those of us who live in Los Angeles.

As a resident of metro LA for most of my life, and knowing the areas that Tesco is looking at and going into, they, in fact, represent a broad swath of incomes, ethnic and socio-economic demographics.

The use of the term “food deserts” in reference to South LA shows that the LA Times does not understand or care to understand basic economics. It also does not understand the changing demography of South Central LA.

This area is increasingly Hispanic, mostly recent immigrants who are not acculturated, and less and less African-American. The Hispanic populations in the urban parts of southern California that consist of recent immigrants are serviced primarily by small ethnically oriented stores that have lots of produce in them.

In addition, the food deserts that came into southern California were a result of the Watts riots in the 60’s and the flight of the middle income black families into other areas of greater LA.

This flight took the income that could support a supermarket such as a Vons (Safeway), Ralph’s (Kroger) and Albertsons out of the area. The 1992 riots was the final coup de grace for retailers in South Central. Should a retail business feel guilty for closing a space that cannot support its operating costs, let alone delivering a profit? Of course not. Here are some facts to put things in perspective:

  • Tesco (Fresh & Easy) HQ in LA is in El Segundo. Distance to Watts: 10 miles. A little bit less as the crow flies.
  • The LA Times building in downtown LA. Distance to Watts about 10 miles.
  • A one-way commute of 40+ miles is common in greater Los Angeles.
  • Ralph’s has a store in Compton — yes, that Compton.
  • Ralph’s also recently announced plans to go back in South Central LA.
  • Vons has a store in Gardena — just as bad, just without the “Gangsta Rap” street cred. So does Albertsons.
  • Census tracts are not the best way to measure consumer traffic, and the inherent message is that Fresh & Easy should be located next to liquor stores.
  • And what poverty rates are they studying against? I’m pretty sure the poverty rate for the USA is much lower than what one would consider the poverty rate for LA. $20K goes a lot further throughout the rest of the USA than LA County or even the state of California.
  • And lastly Fresh & Easy is geared to a specific niche: Multiple-person households that need quick-and-easy meal solutions. Perfect sense here in LA with the commuting we do. Think single Moms and two-income families with children. Or a Trader Joe’s household with small children located in urban and suburban settings.

Let’s let Tesco get a firm footing in the Southern California market before the LA Times starts mongering its usual pabulum and accepting its musings as the gospel.

— Delos Walton

We are a big believer that every retailer should decide where it wants to put its own stores. The story here is less that Tesco is doing anything wrong by locating its stores where it thinks best than it is a lesson for all business in press relations and managing expectations.

Nobody complains that Whole Foods or Bristol Farms isn’t opening stores in the hood. If Tesco had simply said it intends to open stores everywhere there are customers willing and able to support its concept and left it at that, it would get no more heat on the issue than does Von’s or Ralph’s.

In this case, however, it was Tesco that raised the issue. As the LA Times said:

When British grocery chain Tesco announced that it would expand into Southern California with its new line of Fresh & Easy Neighborhood Markets, shoppers and local officials took heart. They were particularly excited about the company’s stated commitment to doing business in underserved neighborhoods, including South Los Angeles — where affordable, fresh groceries have been hard to come by since the 1992 riots.

We think urban supermarkets, certainly in bad areas, almost have to be left to independents. Every urban store we have personal knowledge of succeeds because it breaks the law — not in a malicious way, but doing what it has to do to stay in business.

This may mean paying “protection” money, using a garbage carrier that has been “pre-selected” for it, perhaps locking the night crew in the store for restocking so the store isn’t robbed blind — in violation of fire codes, taking shoplifters down to the basement to “teach them a lesson” so they will not come back, etc.

Few chains can do these things because you can’t write a policy that says employees will do illegal things. Yet it is hard to stay in business in these milieus if you don’t. The few exceptions are typically very large stores that can afford a fortune in security charges — typically hiring actual policeman to be on site 24 hours a day. Because of holidays, vacations and sick time, a store typically has to be able to pay the salaries of around six full time police officers — to always have one at the store!

In this case the point was two-fold:

First, Tesco needlessly raised expectations by promising to open stores in under-served areas.

Second, having asked to be evaluated by that standard, it was completely predictable that advocacy groups, labor unions, the press, government agencies, etc. would be looking to that criteria. Clever issues management of the situation required Tesco to open a store in a “food desert” early on, maybe as its first store — and bask in the reflected glory of its socially responsible nature.

Our assessment is that this is just the first of many areas in which we are likely to hear that Tesco didn’t deliver on its promises.

For example, Tesco hasn’t released any statistics, but it made a big deal that its employees will all have access to “comprehensive” health insurance. In all likelihood, this health insurance will either provide poor coverage or will be sufficiently expensive that most employees won’t buy it. After all, an employee who earns $10 an hour working 20 hours a week is only making around $800 a month — how much can that employee afford to pay for health insurance?

In all probability, for all the socially responsible talk, the percentage of employees covered by health insurance, pensions, etc., will compare very unfavorably to the employees at unionized operators such as Von’s and Ralph’s. This will all come out and Tesco will wind up looking worse than if it had never made such high falutin’ promises at all.

We appreciate the insight both of our correspondents delivered to the intricacies of the LA market.




A Closer Look At Retail
Safety Audits

When Western Growers Association issued an announcement challenging the Food Safety Leadership Council and its demands for different food safety standards, it also pointed something out:

… the consortium has not provided the fresh produce industry with its own set of good handling practices that demonstrate that consortium members are properly handling fresh produce after receipt of produce from fresh produce suppliers.

In so doing, WGA raised a point that the Pundit has often been focused on, in pieces such as one you can read here in which we discuss the 12 links in the cold chain before it gets to the home of a consumer.

We also have been particularly concerned about the maintenance of temperature in retail cases, and we discussed a study that had been done right here.

When we ran a piece about the disgusting standards hotels have for cleaning glassware in hotel rooms as an example of the important role the buying end of the trade plays in food safety, we included these comments:

We know of not one single supermarket chain that is having its refrigerated cases third-party audited for maintaining proper temperature everywhere in the case, including during defrost cycles.

This led to some objections from several retailers who claimed otherwise. Here was a typical note from one retailer:

This is something our company does and has been doing for several years. We use a third-party company named Steritech to perform these audits. I can tell you that the management in the stores are always very concerned when they receive any negative feedback. Anything less than 100% compliance is frowned upon.

We were obviously interested to learn more about Steritech’s program, so we asked Pundit Investigator and Special Projects Editor, Mira Slott, to speak with this company and learn more about what it offers the trade:

Chris Boyles,
Technical Director of Retail,
Food Safety Division
Steritech Group
Charlotte, North Carolina

 

Q: Issues with food safety in the produce industry have intensified exponentially since the spinach E. coli crisis. Could you give us an overview of what your company does that can help our readers enhance food safety?

A: I work as technical director for retail and foodservice operations. We provide food safety services across wide sectors; upstream to GMPs, auditing of processing facilities, and further upstream to GAPs and farm audits. We work with more specialist niches for organic and HACCP plans; some folks want full blown vender certification programs for all food supplies sent to them.

Our reach is quite broad, also covering audits in slaughter facilities, how animals are held, etc. We have an integrated approach and we try to encourage all clients to take an integrated approach to food safety and understand their place in the chain.

We spend a lot of effort in continuing education. Our employees specialize in specific food safety areas, constantly expanding their knowledge and fulfilling the updated requirements for maintaining their professional certifications and food safety credentials. If you go to processing, we have experts in produce, seafood, canning, dairy and other categories. And the farming side gets very specialized. Food safety issues at retail vary in scale, but are reasonably defined areas, such as a case or cooler. When you expand to food safety issues in the field, the scope is extensive, where at retail food safety follows a pretty basic level.

Q: With much food safety attention being focused on agricultural practices in the fields, packing and processing plants, some suppliers feel retailers don’t do their fair part. To what extent do you work with leading retailers in their pursuit to bolster safety of their produce departments? In particular, what auditing/inspection services do you offer supermarket chains?

A: Steritech provides a comprehensive range of auditing services for a number of leading national and regional supermarket chains. Our core service at the retail level is food safety audits. We use the FDA food code as the standard. We work with clients that are mostly national, so the one standard applies across the company in all states. We cover all different areas, including temperature control, storage and protection, equipment and utensils, cleaning and sanitizing facilities from floors to ceilings, and personal hygiene practices.

The basic rules for food safety operating procedures are pretty standard. We focus a lot on personal behavioral practices. You really have to get down to what people are actually doing. Our approach is training clients to help educate staff and identify gaps so they can improve food safety practices.

Our auditors are specially trained to be trainers. They are not there to regulate. Most of our auditors have worked in a range of food service accounts covering both restaurants and hospitality and they can translate this broad experience to solutions for supermarket chains. Food safety is officially regulated by government. We help coach retailers on how to meet those requirements.

Q: Give us more details about your auditing methods. How do you measure food safety performance?

A: We have handheld computers for data capture when we’re out in the field. Sophisticated handwriting identification software translates to digital text. The ways to manipulate this data are endless. We can do customized reports for clients to help them evaluate their own data.

FDA identifies critical and non-critical food safety issues based on how likely the problem would lead to a food outbreak. Auditors assess and input where the critical problems are located. The ability to break down that data by regions and mine for specifics is very powerful, allowing retailers to focus on where they have the greatest risks.

Q: Could you share some examples of work that you’ve done; perhaps a case study or vignettes that demonstrate the need for your services and ways you helped alleviate or solve certain problems?

A: Most of our case studies are proprietary, but we do have broad scale conglomerate reports that give perspective. The company produces an Annual Audit Trend Report, which shows the benefits of having a food safety management system in place in restaurants and the need for regular audits to insure proper procedures are being implemented and followed. In the coming year, Steritech will be working to develop a similar report for the grocery industry, which will include results as seen against regulatory and industry benchmarks.

Q: What are the critical areas of concern?

A: The study evaluates the practices associated with seven major categories, five of which have been used by the FDA in similar studies. Data are grouped according to the U.S. Centers for Disease Control and Prevention’s ranking of those factors most commonly associated with foodborne illness outbreaks: 1) improper holding temperature; 2) poor personal hygiene; 3) inadequate cooking; 4) contaminated equipment; and 5) food from unsafe sources. In addition the study presents data in other critical and non-critical categories.

Q: Could you summarize the results?

A: Overall, audit data on food safety practices at over 800 restaurants shows improvements in nearly all areas. Notable results in critical areas include a nearly 40 percent decrease in the potential for contamination of food by reducing likelihood of cross-contamination between raw and ready-to-eat foods; 23 percent decrease in the number of violations resulting from improper hand washing practices; 30 percent decrease in the number of violations related to food contact surfaces and utensils being in good condition. Looking at non-critical violations, the study showed some 27 percent decrease in violations of potentially hazardous foods being thawed properly; 18 percent improvement in in-use utensils being properly handled and stored; and a 13 percent reduction in violations related to the proper stocking and condition of hand wash facilities.

Several other areas didn’t fair as well. There were a substantial number of violations for cold, potentially hazardous food being held at temperatures higher than 41 degrees F. In addition, the holding of hot potentially hazardous foods was an area in which violations actually increased. These results suggest that further worker education and management engagement are needed to correct holding temperature issues. Improper holding temperature is the Number One factor most commonly associated with foodborne illness, according to the CDC.

Hand washing and maintaining adequate hand washing facilities both remain important challenges for food establishments. However, education can play a significant role in reducing these types of violations. The study revealed a marked increase in several critical violations in later parts of the day. Improper holding temperatures topped the list, with both cold and hot food areas, increasing during audits performed in the lunch, afternoon, and evening time periods. The overall percentage of violations increased during later audit times in areas of hand washing, storage of chemicals, potential for contamination of food, and proper storage of clean utensils.

Q: Many of these issues seem applicable and relevant to supermarket chains. How do you get to the root of these problems during your auditing/inspection process?

A: Some most commonly cited issues at grocery stores are behavioral, related to processing on site in deli or in produce. Are employees handling foods with bare hands? FDA food code strongly discourages it. In general, most clients prohibit this with ready-to-eat foods. We’ll observe practices. Are employees healthy? Are they handling foods on dirty surfaces or handling raw foods and then handling cooked foods?

If we see something wrong, do they know the right way to do it? In the last few years, we’ve been incorporating process questions, rather than just observations. It helps us understand where the breakdown is occurring. Do they understand their internal requirements; sometimes they need a demo in the proper way to wash hands. Did they feel they didn’t have time?

Even when it goes to common issues of food surfaces not being cleaned, you have to break down what the actual item is, what are the specific issues there, is it an ice machine? Forty percent of restaurants had ice machines with build up. What are the procedures for cleaning, and is it done by staff or outside services? What filters are being used; is there a regular cleaning schedule? It may come down to specking a machine that is easier to clean.

The only way to get to the root cause is asking lots of questions. Unless you change the underlying behaviors, you won’t change the root cause. People hiring us voluntarily already have the motivation, which is different from a regulatory audit, being done whether you want it or not.

Q: Are these surprise audits or do the retailers and employees know in advance that you’ll be coming? How much does it matter to the validity of your inspections?

A: We are invariably announced. Some of our clients prefer they know in advance. First thing we do is check in with the manager, because we need to gain access behind the scenes. There is only a limited amount that can be seen from the front of a deli counter. We go to the back, open drawers, take temperatures in cabinets, and become very involved with the staff.

We’ve actually seen very little difference in scores of announced or announced audits. Folks tend to have the impression it will affect scoring. They may be more skeptical of the results. So there’s some perceptional value in surprise audits.

Q: How often do you do the audits and staff training? You say behavioral issues are at the core of many of these food safety problems. With employee turnover it must be a continuous battle for retailers to keep staff educated and committed?

A: The majority of folks ask for audits once a quarter, some more, some less. It depends what other programs the client has in place. We strongly encourage self-assessment programs. Obviously we can’t be there at all times. We can coach and guide, but they have to watch what’s going on every day. We teach nationally recognized food safety certification courses like the ServSafe program and FMI’s SuperSafeMark training, but it’s a constant challenge with turnover in the food industry to keep employees up to speed.

Q: How wide is the scope of the auditing? What areas do you cover in-store? Do you go to the backrooms and warehouses, to the loading docks?

A: To understand the crux of the problem, you need to examine all the outside influences. Was product taken care of properly before it came through their door? For standard supermarket audits we absolutely go to the backrooms and loading docks. If the retailer wants audits of distribution centers, we do those, but they involve separate types of audits on shipping and receiving, storing, temperature control, etc. The scope of auditing usually expands as they get involved in the program and prioritize by risks.

Q: Could you discuss specific issues retailers face regarding safety of produce, such as maintaining proper temperatures of different commodities in refrigerated cases and other merchandising displays? What impacts do you monitor in relation to the safety and quality of the product? For example, do you account for the product type, quantity, and the way it is stacked, rotated and merchandised on the shelves? Do you find that product is often cooler in the back of case versus the front of case, etc?

A: When we’re checking refrigeration in the retail environment, we are typically testing for product temperatures rather than case temperatures. The case would be secondary in our inspection to find root causes. If product typically needs to be at 41 degrees, we need to investigate why it’s not.

We would check air temperatures and examine if there are outside factors. There may be a spotlight shining down on an open case dramatically affecting that case temperature. Whether it’s a refrigerated case or walk-in cooler, we expect some variances in temperature.

Typically, we are looking to the worse case scenario. We’ll test product in the front of the refrigerated case, which is most exposed in the store, verifying the worse case scenario holding the minimum amount of refrigeration. For walk-in coolers, we have temperature testing in the warmest part of the unit.

For display behind the counter, we may have to start asking questions. When was product prepared, is it a human issue where product is sitting on the countertop too long before it’s put in the case? The problem may be mechanical or behavioral. Corrective actions are very different.

Q: Describe typical behavioral food safety problems in the produce department.

A: We’ve seen merchandising food safety issues. Cases are only designed to hold a certain level of product. If the employee exceeds it, the product probably won’t be able to maintain the proper temperature. Did a person overstocking understand the risk?

Training is very important. Our auditing team consists of full-time Steritech employees. We put our folks through extensive training, food microbiology, inspection skills, knowing where to look, and how to write the report with standard phraseology. When examining the food safety record at a location in Boston or San Diego, a national client needs the same consistent product. We monitor and follow up with our employees on a regular basis, and we conduct in-field calibration programs to insure consistency.

We also have training professionals on staff to train on training practices. You don’t get behavioral changes in food safety by leaving a report behind. You have to face the reality that food safety as important as it may be is only one aspect of the manager’s day. The retail store manager or produce department manager is focused on a thousand things, from the customer to the bottom line. We are there as food safety experts with both an objective eye and a targeted mission to expose food safety issues.

Q: Some of these behavioral food safety violations such as washing hands or operating on dirty surfaces, or touching raw product and then cross-contaminating cooked product don’t sound like rocket science to learn, discover or fix.

A: What might seem like an obvious safety violation could go unnoticed. In the same way, resolving a more complex problem could involve a simple fix. When you’re in the store every day, sometimes you don’t see what’s right in front of you, and you need a fresh set of eyes.

We have folks working in a wide range of environments, where they may have seen better ways to handle common problems. For example, employees in the preparation area may be working with quite a lot of product out on the counter at one time. They may be in the deli creating a salad and don’t realize how important it is that product not sit out a long time.

Temperature will rise dramatically and when put back in the case it takes a long time to get it down. The solution may be just a matter of batch processing, using smaller batches. Intuitively the most efficient way is to take more product out at a time, but in doing so, the employee, without realizing it, is creating a food safety risk.

Q: Your auditing report of restaurants showed a rapid increase in food safety violations late in the day. Could you point to other trends or scenarios that exacerbate food safety problems at supermarket chains?

A: Certainly rules of food safety don’t change, but things to watch out for in different scenarios might. During holiday times, more product comes in affecting storage. Walk-in coolers get so tightly packed it may be hard to monitor temperatures, and overstocked areas impact airflow and temperature levels. Employees are under additional pressure during very busy seasons. The temptation is to overstock the cases because so many people are buying product, but you do run the risk of abusing product. The same phenomenon can occur during promotion periods.

In a supermarket advertising campaign for St. Patrick’s Day, I witnessed raw corned beef and raw cabbage being cross-merchandised in the meat department. There is no guarantee these products will be jointly purchased and cooked together. Merchandising raw meats and vegetables together creates a risk of cross contamination. From an auditing perspective, maybe the product is located in a different department and the manager doesn’t deal with the cross-merchandising display. To get to the cause of the problem, it requires asking questions and interacting with employees because you can’t tell everything just by looking.

Q: Going back to your original premise that food safety requires an integrated approach throughout the supply chain, how important is consumer education in the puzzle? Do you get involved in helping retailers to educate their customer base?

A: There’s no doubt we get into consumer education on an ad hoc basis. Most consumers wouldn’t blame themselves. Protection of one’s brand involves educating consumers, whether talking to them directly on the retail floor or labeling packages or bags they’re carrying product home in. Some of this labeling is mandatory on items like eggs or meat.The problem is that most consumers don’t read it, unless it’s in large print, so having supplemental signage or food safety information is advisable. Actually, there are some requirements to post consumer advisory statements, which does fall into our inspections; if offering a raw or partially cooked product, you would need to advise the consumer it is undercooked.

Q: Engrained behaviors and well-established habits are not easy to shake. Some industry executives say that to make meaningful long-term shifts in management and employee food safety behavior, a company needs to delve deeper into changing the culture of its organization. Are you familiar with the food safety strategy at The Cheesecake Factory? They have tied bonuses and compensation directly to employee food safety performance. [Editor’s Note: to learn more about the innovative program, see Pundit’s Pulse of the Industry with Kix McGinnis Nystrom, vice president of kitchen operations here].

A: I agree with this premise that food safety must be a part of the company’s culture, and where audit program scores are being linked to bonuses and salaries.We encourage this further by advising companies to include food safety practices in job descriptions and that core food safety components are integrated as part of the job itself. Then it makes sense as part of job performance and employees’ evaluations.

With our clients — supermarkets, restaurants and hotels — integrating food safety into the company’s culture and all realms of the organization is certainly becoming more common. It’s a motivation factor to attach financial compensation to success in that area. Food safety is so critical to a company and its brand that it really only makes sense.

Q: Do you have any additional words of advice you can share with our readers to help them improve food safety?

A: There are a few pieces of guidance we stress.One is verification; check both yourself and your suppliers. Knowing where product is coming from and going to is critical. Monitoring goes along with verification. As much as we want to do for our clients, we can’t give them food safety on a visit.They have to monitor and self-assess and carry it out daily. That is the only way to protect their brand long term.

Food safety really has to become part of the culture. We have company presidents that actually sign a food safety statement to declare their intentions for the protection of their brand.

We think this kind of program is a great idea for retailers, far better than not doing anything or trying to do it oneself.

It is not quite the same as an audit of a grower or processor because the results are kept confidential. If a grower is GlobalGAP-certified or a processor British Retail Consortium certified, losing the certification is a very, very big deal. Here it is as big a deal as management wants to make it.

Still, having a firm such as Steritech physically in every store and DC every quarter is a significant financial commitment and speaks to a highly motivated retailer. So we would expect anyone who is doing it would, in fact, take the results quite seriously.

The key to success, though, is definitely cultural, and these large companies express what they truly value through their compensation plans. That is why the Cheesecake factory interview was so intriguing — they didn’t just do audits; compensation is affected by how the audits come out.

One can always quibble: maybe the FDA Food Code is not the right standard, maybe all audits should be surprise audits — at least at the front door of the store; maybe there is some conflict between doing auditing and doing training since to some extent the company is evaluating the success of its own training efforts.

The biggest problem, though, is probably that the companies really needing this type of assessment and training aren’t the ones that retain Steritech and other such organizations to do this important work.

Still, it is a great place to start and those chains utilizing these audit services should be applauded. Those who are not should be urged to start doing so. And when WGA needs to stand up for its members, maybe it can say to retailers: “We’ll show you our audit if you show us yours.”

Many thanks to Chris Boyles and the Steritech Group for sharing so much important information with the industry.




PMA Leadership Symposium
Scholarships Announced

Back in November, we announced a scholarship program for retailers and foodservice executives to attend the upcoming PMA/PRODUCE BUSINESS/Cornell University Leadership Symposium in Dallas, Texas (January 16-18).

The scholarship program was announced in our piece, Scholarships Offered To Attend PMA Leadership Symposium:

This year, in order to encourage the participation of a diverse assortment of industry leadership in the program, PRODUCE BUSINESS magazine has partnered with Grimmway Farms and Mann Packing to make a special scholarship opportunity available for four fortunate industry executives, two each from the retail operator and the foodservice operator end of the industry.

The scholarship is all-expenses-paid, and this program will ensure that the PMA Leadership Symposium will draw on the intellectual capital of all segments of the trade.

If you work for a retail or foodservice operator, or know someone who does, this is an opportunity to attend a program that will take attendees out of the box of “industry thinking” that we often find ourselves trapped in.

And for two lucky retail operators and two lucky foodservice operators, it will only cost the intellectual commitment to make oneself a leader.

The nominations are in, the judges have deliberated, and we are pleased to announce the four winners of all-expense-paid scholarships to the PMA/PRODUCE BUSINESS/Cornell University Leadership Symposium:

FOODSERVICE OPERATORS

Gene Harris
Senior Purchasing Manager
Denny’s
Lynn Moorman
Commodity Manager
El Pollo Loco

RETAILERS

Heather Burley
Produce Category Manager
Kroger Company
Greg Corrigan
Vice President Produce & Floral
Raley’s Family of Fine Stores

Congratulations to our 2008 winners. We know they will gain much from the program as they will contribute much by being part of the learning and networking that goes on in the classroom, the meal functions, as well as in the (slightly upscale) university-like atmosphere that develops when 100 produce industry executives take over the Symposium’s new venue, the Omni Dallas Hotel.

It is not too late to join Gene, Lynne, Greg and Heather and a cross section of industry leadership as members of the PMA Leadership Symposium Class of 2008. Simply register here.




Photo Finish

A hat tip to Andy Hatch over at AMS Fruit and Vegetable Programs of USDA for pointing out that we had some incorrect photos in our piece USDA Fruit and Vegetable Industry Advisory Committee To Meet In January. We fixed both errors as soon as we learned of them so they were only up for a short while.

In case there was any confusion, here is who is who:

Chuck Ciruli Jr. must have thrown us off
with his youthful looks.

He is the Chuck Ciruli Jr. serving on the
USDA Fruit and Vegetable Industry Advisory Committee
One of his sons, named Chuck Ciruli III,
though not serving on the Committee —
at least not yet — is an-up-and-coming leader in the industry as symbolized by his recognition as a member of the PRODUCE BUSINESS 40-under- Forty Class for 2007. He works at Ciruli Brothers in Rio Rico, Arizona, with his father and his brother, Chris Ciruli, also a 40-under-Forty honoree.
Luis Monterde, a blueberry grower from
Mississippi, was wearing a handsome blue shirt
and red tie in the group photo his company,
B & M Blueberries, provided. Luis is serving on the USDA Fruit and Vegetable Industry Advisory Committee.
Unfortunately Keith Collins was also wearing a blue shirt and red tie in the photo, which led us to pick up the wrong photo.

Keith doesn’t serve on the Committee but has an august reputation. He is as the former U.S. Department of Agriculture Chief Economist.

Our apologies for any confusion,. You can see all the Committee members and their photos here.




Pundit’s Mailbag —
Defending The Florida Tomato Industry

Our piece, Florida Tomato Growers Reject Penny-A-Pound Initiative At The Industry’s Peril, raised quite a controversy and we’ll be dealing with the issue in many pieces in the weeks and months ahead.

Today we have received an important letter from an important man:

I read your Perishable Pundit and your comments about the Florida Tomato Growers Exchange and their battle with the Coalition of Immokalee Growers (CIW). Mr. Prevor, this is not the first time you have attacked the Florida growers nor the first time you and I have locked horns. You write well, but your research is poor and your writing is mostly fiction.

Years ago after the NAFTA debate, you took up for Jeff Gargiulo for siding with the government rather than the growers. In the end, 400 growers were put out of business by NAFTA and a $2.5 million antidumping lawsuit had to be filed to get any relief.

During the Country-of-Origin debate, you sided with the retailers and helped them conduct a campaign of intimidation against the growers and other trade associations to agree to a voluntary program for COOL. Imagine a voluntary anything. It would be like having a voluntary speed limit on the nation’s highways.

Well Mr. Prevor, I not only passed country of origin in 2002 but again passed it in the 2007 Farm Bill. How about that, Mr. Prevor.

Now you praise as brilliant the moves of the Coalition of Immokalee Workers. Let me tell you a little about the CIW. They have been around for over 10 years. In 1998, a couple of days after the election of Jeb Bush’s first term, he called me and asked me to go to Immokalee and help farm workers get a piece-rate increase. As an ally and long time friend of the Governor-elect, I went to Immokalee and met with all the growers I could find.

Before the day was out, all growers except for one large grower had agreed to raise the piece rate by 5 cents per bucket. At that time that amounted to 13% wage increase. For the rest of Mr. Bush’s term (8 years), we went on to build some $160 million in affordable housing for farm workers in Florida, we passed legislation to inform farm workers about pesticides in the fields and moneys for migrant children were provided. Gov Bush and Mrs. Bush gave out hundreds of thousands of dollars in Christmas gifts to farm worker children with donations from the growers. The CIW has never acknowledged or thanked Governor Bush for his efforts.

Back when I first reported the agreement to Governor-elect Bush, he was happy, I was happy, the growers were happy to be able to help the new young elected Governor. But that did not last. Later that week, the CIW starting attacking me, the Governor-elect and more vigorously the growers, the very same growers who would pay millions for the additional 5 cents per bucket. The CIW was mad because we did not include them in the negotiations. It was at that time I began suspecting that these folks wanted to position themselves into a labor union.

Today, 10 years later after watching their scheme for a penny-per-pound extortion against the fast food chains, I am convinced they want to start a labor union. The last thing the Florida Agricultural Industry needs.

J. Luis Rodriguez
CEO
Trans Tech AG Corp.
Monticello, Florida

Mr. Rodriguez is a lobbyist and an important Republican operative, a long-time friend of the Bush family and a past president of the Florida Fruit and Vegetable Association. We respect his opinion and run his letter in full.

Yet we confess that many years of doing this has taught us that people who are close to issues we write about — and Mr. Rodriguez is, as his letter makes clear, very close to this issue — often assume our pieces are about the specific battles they are fighting as opposed to what we actually are writing about.

Note that in a letter which is purportedly about a piece we wrote, Mr. Rodriguez elects not to quote even one single word we wrote. Instead we get broad-brush accusations that our research is poor and we write mostly fiction… unsupported accusations that make it more difficult for the trade to discuss important issues in a civil manner.

That Mr. Rodriguez does not quote the article we wrote is not an accident. It is because our piece was not about the battle between Florida’s tomato farmers and CIW — in fact, CIW is never mentioned, even once, in the piece.

The piece was actually about two things:

1) How the rejection of penny-a-pound schemes would play on the national scene in the context of the national debate over immigration reform.

2) How the rejection of penny-a-pound schemes will play in an environment of increased emphasis on Corporate Social Responsibility by major buyers, such as Tesco, and the larger media, regulatory and legislative community.

At no point in the piece did we express any position on the long-running battle between the Florida tomato industry and CIW. This is not because we don’t have a position; we certainly do. It is just that this is not what we were writing about on this particular day.

We think during the 23 years we have been writing publicly on produce industry issues, we have established a pretty consistent capitalist orientation. Our position is that Florida tomato farmers, as with all farmers, as with all employers, should pay whatever legal wage they want to pay, and if workers don’t like that wage, they shouldn’t work for those employers.

People know what is best for them and if they come from another country or travel across this country to pick tomatoes, it is because that is the best opportunity the world is giving them.

This capitalist orientation has not always been welcomed by the Florida tomato industry. We got plenty of heat when we stood up here, here and here for the right of the Procacci family to market their UglyRipe tomatoes.

The fact that we may believe in capitalism does not blind us to what others believe and, sometimes, one of the functions of the Pundit is to discuss broader issues. When we wrote about Kathie Lee Gifford’s “Sweatshop” problems, we were not necessarily agreeing with the critics of Kathie Lee Gifford:

If you think about all the problems Kathie Lee Gifford had because her clothes were being produced in “sweatshops” and ask how we will stack up when scrutiny starts to be paid to working conditions and compensation both of migrant workers in the US and field workers in developing countries, the challenge ahead is obvious.

In fact if you wanted our actual assessment, it is that banning “sweatshops” in third-world countries will raise costs and make it uneconomical to produce in the poorest countries. Producers will make clothes in more developed countries where it is easier and workers are more productive. This will cause the workers in the poorest countries to lose jobs and become poorer still.

Though we don’t agree with this commonplace assessment of sweatshops, we are not oblivious to the way many people, including many people of great influence, perceive the issue. So when we warn that Kathie Lee Gifford got in trouble over labor standards and write a piece warning the industry of its vulnerability on this issue, we are doing our job serving as an early warning system — not endorsing this outcome.

If you read Mr. Rodriguez’s letter, it is hard to imagine that he is writing about a piece filled with thoughts such as this:

We have no delusions that this is a morally easy issue. If we raise wages, it could lead to the American industry not being competitive with third-world suppliers. It is far from clear that workers would be better off staying in their home countries rather than coming to the U.S., whatever the wage.

Does that read like a paragraph of fiction as Mr. Rodriguez claims? Or does it read as an honest attempt to wrestle with very difficult issues?

Mr. Rodriguez makes four specific points in his letter:

1) Years ago after the NAFTA debate, you took up for Jeff Gargiulo for siding with the government rather than the growers. In the end, 400 growers were put out of business by NAFTA and a $2.5 million antidumping lawsuit had to be filed to get any relief.

Yes, we supported NAFTA as you can see in our column here. Why Mr. Rodriguez picks out Jeff Gargiulo as the one we “took up for” is unclear. Maybe we “took up for” the Washington Apple Commission or the Northwest Pear Bureau or the California Table Grape Commission or any one of countless produce industry organizations that support NAFTA.

For that matter, maybe we didn’t take up for anyone, but simply, as an American, made the decision that this was best for the country.

Mr. Rodriguez is an advocate paid to promote the interests of Florida agriculture. He works for the Florida tomato growers. To him, the question of NAFTA could be viewed through the sole prism of whether it is a good deal for Florida tomato farmers. As he points out, it was not, but that doesn’t mean it was a bad deal for America.

Our job here at the Pundit is much broader. We are deeply committed to the industry and to our country — and sometimes that broader agenda will conflict with what is best for individual commodities.

Mr. Rodriguez is in the enviable position of simply having to support what is good for his clients. We, on the other hand, have to actually figure out how to balance many conflicting interests to find out what is best for the industry, the country and the world.

2) During the Country-of-Origin debate, you sided with the retailers and helped them conduct a campaign of intimidation against the growers and other trade associations to agree to a voluntary program for COOL. Imagine a voluntary anything. It would be like having a voluntary speed limit on the nation’s highways.

Well Mr. Prevor, I not only passed country of origin in 2002 but again passed it in the 2007 Farm Bill. How about that, Mr. Prevor.

Yes, we opposed mandatory country-of-origin labeling. The reason: It will add costs to the system and produce few, if any, benefits for growers. At the time of the debate, we wrote a cover story in our sister publication, PRODUCE BUSINESS, on the issue, which you can read here. Just recently, we discussed the issue in an exchange with Bryan Silbermann, President of PMA, and you can read that exchange here.

We have had country-of-origin labeling on seafood for several years now, and any impact it has had on consumer purchasing behavior is too infinitesimal to be observed. We are convinced that the effect will be similar on produce.

As far as the bill getting passed at Mr. Rodriguez’s behest — we presume that the interest of Mr. Rodriguez is not simply passing laws but delivering some real benefit to the industry. It does appear as if country-of-origin labeling will finally come into effect, so we will see what happens in the end.

There is no particular reason to believe it will help the farmers of America. We hope we are wrong and it really helps the growers. If we are wrong, we will certainly be the first to write about it. Let us hope that Mr. Rodriguez will be out there honestly acknowledging that the whole thing was a waste of time and money if it turns out that way.

3) Now you praise as brilliant the moves of the Coalition of Immokalee Workers.

Actually, what we said was this:

Eventually, though, the advocates for the migrant workers hit upon a strategy more likely to have success. Instead of pressuring anonymous farmers, they would attempt to pressure foodservice operators.

It was a brilliant strategy on two accounts:

First, these consumer brand names ran real reputational risk in being tarred as responsible for low wages and poor working conditions. As such, they were susceptible to public relations campaigns singling them out as villains. Boycotts by “consumers of conscience” could really hurt these businesses — in a way they could not hurt any anonymous tomato farmer — and therefore created a real incentive for these foodservice operators to head off boycotts and protests.

Second, focusing on the foodservice operators accurately reflected the economics of the situation. Tomato farming is not so wildly profitable that individual tomato farmers could unilaterally decide to dramatically increase their labor costs. On the other hand, the cost of tomatoes in most foodservice applications — say a slice of tomato on a hamburger — is sufficiently small as a percentage of total ingredient costs or total item price that it is feasible for foodservice operators to contemplate an increase in tomato costs. In addition, foodservice operators have greater control over menu prices, and thus greater ability to pass costs onto consumers than do farmers selling a commodity.

The strategy bore fruit when Yum! Brands — which owns KFC, Taco Bell, Pizza Hut and other fast food restaurants — decided to participate in a so-called “penny-a-pound” scheme by which companies would agree to pay an extra penny a pound for tomatoes and the penny would be paid directly to workers.

Hitler’s decision to invade Poland with a blitzkrieg technique was a brilliant strategy; his plan to go around the Maginot Line rather than face it directly was a brilliant strategy; his decision to invade Russia was a colossal blunder. These words lack moral content and cannot be misconstrued to think the writer of them is pro-Hitler or anti-Hitler.

Anyone who is honest will acknowledge that the decision to pressure well-known companies with well-known consumer brands rather than obscure tomato farmers was a “brilliant strategy.” That doesn’t make it right, that doesn’t mean we applaud the effort; it just means that we acknowledge that all kinds of people — good, evil and ambivalent — can have a brilliant strategy or commit a colossal blunder.

4) I am convinced they want to start a labor union. The last thing the Florida Agricultural Industry needs.

Funny thing is that several growers have told us that they wish CIW would form a union. Then their behavior would fall under the National Labor Relations Board and we could have a legitimate vote at each operation to see if the laborers have any interest in these people. Remember the National Labor Relations Act generally prohibits secondary boycotts — the exact behavior of CIW that so infuriates the industry.

^

Mr. Rodriguez is clearly a knowledgeable man. He has been close to these issues and we appreciate him sharing his knowledge with the trade.

The Pundit goes way back with the Florida tomato farmers. We cut our eye teeth in the business buying trailers of tomatoes for weekly shipment to Puerto Rico and then selling them out of San Juan.

We have no desire to see the growers of Florida tomatoes do anything but succeed, and we recognize all the obvious facts and points, such as these:

  • It makes no sense to demand a penny-a-pound on Florida and only Florida tomatoes. What about Mexican fruit? It is manifestly unfair.
  • McDonald’s, Yum! Brands, etc., have no interest in giving a penny-a-pound to the farm workers. They act only under enormous pressure, including fear of boycotts and reputational damage. So when Florida’s tomato farmers oppose the penny-a-pound deal, they are acting in the interest of their customers.
  • All foodservice operators and supermarket banners are deeply concerned that schemes such as penny-a-pound will force them into a compromising legal position as a “co-employer” and create enormous liabilities for them.

Yet none of this changes our main point. As we wrote in the piece:

The issue for the Florida tomato industry is that in the new world of emphasis on corporate social responsibility, the industry would do better to position itself as a leader rather than a retrograde industry.

Does anyone really disagree with that sentiment?

We thank Mr. Rodriguez for giving us an opportunity to clarify what we were talking about. We will certainly be running many pieces in the near future to explore this issue in far greater depth. We always stand for the industry and our country, but the interests of both are often not so simply stated.

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