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In Great Turmoil Is Hidden Great Opportunity
Is Now The Time To Invest In Puerto Rico’s Agricultural Sector?
Gualberto Rodriguez Of Caribbean Produce Exchange Tells Us Why He’s ‘All In’ At The Global Trade Symposium

Some things in life are serendipitous. So it is that The Pundit has had a connection with Puerto Rico since birth. 

When the Pundit Poppa, aka Mike Prevor, and his identical twin brother, the Pundit uncle Sydney, went into the family business, it wasn’t very large, so as to avoid eating into anyone’s income, they de facto created their own business within a business.

Sydney had moved to Puerto Rico and quickly became one of the top importers on the Island, while Mike purchased product to ship to Sydney in Puerto Rico.

The Pundit Poppa worked hard, and for years all our family vacations were in Puerto Rico, where the Pundit Poppa could safely ensconce his wife and children at the Caribe Hilton or the El San Juan while he went off to work with his brother.

Over the years, the connection was reinforced as we lived there, worked there and enjoyed the Island. We watched our family open Supermercado Don and Grade A convenience stores; we put signs everywhere when we opened a large fruit store located in a remote port district, telling the Island to “Siga La Flecha a La Cosecha” and we were deeply involved with a growing operation on the Island and marketing that produce around the world.

So when we saw so many news reports, such as here, here and here, advising that Puerto Rico was unable to pay its debts and that people — Puerto Ricans are US citizens — were leaving the Island, we found ourselves thinking of our many good times on the Island and thinking of friends we left behind.

But we also thought of opportunities. Back when President Nixon broke the final connection between the US currency and gold, the dollar collapsed and things looked bleak, but all of the sudden, the Prevor household was filled with Europeans looking for opportunities, saying that with such a collapse of the dollar, there must be opportunities.

So in search of the opportunities today’s tumult in Puerto Rico can present for those in the produce trade — buying, selling and investing — we invited a super smart scion of an old Puerto Rican produce family, whose family are longtime friends, to lay out the situation and the opportunity at hand. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Gualberto Rodriguez
Caribbean Produce Exchange
San Juan, Puerto Rico

Q: With all the attention being paid to Puerto Rico and its fiscal crisis, interest is piqued for a presentation on Puerto Rico, the Puerto Rican produce trade and new opportunities for interacting with the country’s produce industry at the Global Trade Symposium.

As part of our pre-show coverage, we’d like to introduce you and preview your talk to inspire New York Produce Show attendees.

A: I may need your help with that! I know I’ll be addressing an esteemed and diverse international audience. I want to make sure I do a good job in adding value to the conference, and I’m also looking to learn.   

Q: If someone is hesitant about investing in Puerto Rico because of the financial crisis and future uncertainties, what would you tell them? Does it take a real entrepreneurial spirit to jump in?  

A: It’s a great question. I’ll be really frank. I believe my message, my testimony, my sharing, will resonate more with people who have an appetite for risk. I don’t think I’m going to change minds there.

If adverse conditions scare you, you won’t be interested in this talk. But if you have the experience or conviction that in adverse conditions, there are unique opportunities that don’t repeat themselves when the situation is already stable, then this is a talk for you. If you already understand and know through your business experience and observations when these things happen, you have a unique opportunity to set up companies for decades later, then this talk will resonate with that profile.

Someone who thinks of all the reasons not to go into a market, all you need is a couple of indicators. Someone who thinks like that will find fault in California, Florida, Texas… there’s always something to be scared about.

The certainty about Puerto Rico is things will be changing. It won’t be the same. When things come undone, assets go down in price, land is available cheaper, talent is obtainable, and it pays off to take some risks, smart risks, but you have to be willing to take them. 

Q: There is no doubt you’ll be adding value. We are privileged you will be sharing your firsthand perspective and shining the light on untapped market potential, smart business investments and strategic partnerships in Puerto Rico at this critical juncture for change.   

A: As a general framework, first I’ll give an overview of the current economic situation in Puerto Rico. Second, the evolution of the produce business in Puerto Rico, including the current status on growing, retailing, wholesale and foodservice… channels of distribution, key players, etc., as well as shipping, air connections, etc.

Then I’ll talk about the opportunities for exporting to Puerto Rico, and for importing from Puerto Rico. In addition I’ll look at potential investments in the Puerto Rico ag/produce sector. Other issues I’ll discuss are the possible impact of special situations, such as bond default, Cuba opening, etc.  And of course, what the future holds. 

Q:  You’re certainly equipped to cover all the angles. Could you tell our readers the story of your company and your interest and role in capitalizing on these turnaround opportunities?

A: Caribbean Produce Exchange is a 55-year-old, almost 56-year-old family business. I’m the third generation leading the business. We joke at the company that even though family members have been at the helm, our success is really attributed to our expert team and professional structure that can withstand family preference!   

We’re proud of our structure, especially in the past couple years, where we’ve innovated the market by bringing in talent from consumer goods, which is a trend also in the States. So we have people here who joined us recently from Mars, Kellogg’s and Sam’s Club and other food companies, with first rate skills and experience to transform the way we market fresh produce on the Island.

Q: Who are your customers? Are they also big food companies?

A: We are a full produce distributor. We serve the needs of national retailers such as Wal-Mart, Sam’s Club, and Costco, but also on the foodservice side, we’re part of the produce supply chain of operators such as Subway, McDonald’s and Burger King. In addition, of course, we supply to local players, but the national names are the names your readers and the Global Trade Symposium audience will recognize.

We source products from around the Hemisphere, a little bit of Europe and a little bit of Asia, but essentially from North America, Central and South America, and the Caribbean.

Q: All this evolved from a small family business?

A: It was started by my grandfather in 1960. He was a graduate of agricultural science locally from the University of Puerto Rico, and got his masters in 1953 from Ohio State in agricultural marketing. His training and his head were very forward-thinking, understanding at that time in the 50’s the emerging needs of supermarkets. He was a leader locally on standardizing produce, as far as weight and selection out of the box so it would meet the needs of supermarkets, which is something Jim Prevor and his family participated in back then, and that development of the retail sector in perishables.

What we carried on from what my grandfather instilled in his start up was the application of science to produce trading and marketing. That was his passion. His master thesis at Ohio State had to do with the ripening and commercialization of tomatoes, so he had a big edge on that. He was innovative for his packaging of tomatoes and sales to consumers.

So application of science is really still something we nourish, and we are developing it from marketing, logistics, operations management, pharmaceuticals, etc. We’ve kept nourishing that professional basis for what we do.  We want to create value for our customers, who are multi-national companies on the Island that require U.S. and global standards.

I want to share our purpose statement that defines what we do and show attendees how we go about that — together we create inspiring experiences for consumers. That’s the crux, and at its heart are partnerships. This is our whole reason for being; we’re organizing and striving to create that spark, whether on the shelf in a retail space or on the plate in foodservice. It could be an action of purchasing, making something that wasn’t going to be made, or building appeal for a product.

Q: Your fellow industry mentors recognize that. In 2010, you were selected as a winner of our highly competitive PRODUCE BUSINESS 40 Under 40 top young leaders award. 

A: As far as my background, I grew up on the Island until I left for college. I actually went to Fordham University in New York City in the Bronx. I worked at Hunts Point Market one summer as a college student, the night shift, and I finished a degree in economics and political science from Fordham. I worked in economic development in the public sector for three years after that, the Government of Puerto Rico New York, attracting the industry to the Island.

Then, curiously enough, I worked on the fiscal crisis of the District of Columbia, which I didn’t know was going to happen on my Island 20 years later. Here we are now, with the fiscal crisis in Puerto Rico, and Jim Prevor is the first person to ask me to come and talk about it.

Q: Life takes interesting twists and turns…

A: I had a chance in my early 20’s to work on the financial recovery for DC. Then with a scholarship I was awarded when I finished Fordham, called the Harry S. Truman Scholarship, I went to Yale for my MBA. I got the chance to work at Proctor & Gamble when getting my MBA at Yale, which helped me develop the marketing aspect of Caribbean Produce Exchange.

I also worked at a start-up in Miami back in the dot-com world and was a management consultant for the pharmaceutical and food manufacturing industry as well before I joined the family business.  I’ve been at the company for 13 1/2 years.

Q: You bring a unique perspective to the table…

A: It comes in very handy, pursuing interests as a young person, and weaving a very big thread, but you’re just not aware of it over the years, and then things come together. It’s wild, because I’m back in New York, where I did my studying. My country is in a fiscal crisis, and my background is with product development and produce.

Q: How do you come at these issues and best utilize your skills and experiences within the produce industry but also outside of it?

A: What’s exciting, and I want to share my excitement… I’m in the process of setting up a private equity fund on the Island to invest in agricultural technology and food. Puerto Rico in its economic development path decided to go after manufacturing of pharmaceuticals and medical equipment and industrial fields. We used to have very important investments in local agriculture. We produced a lot and exported a lot. When Puerto Rico went industrial, we eventually abandoned agriculture, and now the world has turned.

The land and climate on the Island has stayed the same. Now with the need to produce more food in the world, it’s like finding a $20 bill in an old pair of jeans, just lying there. There is opportunity now, and part of the story is in the headlines with the financial crisis. What’s interesting is how people are coming in from outside the Island to take advantage of the downturn.

I found myself involved in this start up, as a second business, to create this fund to invest in agricultural technology and food, to substitute imports in certain categories and become a player in exporting to the mainland.  

We also have the experience to be involved in a sophisticated, first rate global supply chain with companies such as Dole, Wal-Mart, and Subway, and agricultural outlets out of North America, to identify the requirements and have an understanding of what it take to sell into a Sam’s Club or Costco.  

In terms of food safety, quality and price, how can we contribute to this effort and take advantage of these opportunities to create a food story that builds the economy on the Island?

I want to make this the conclusion of my presentation, to emphasize all the opportunities people are acting on in the produce industry. People need to go beyond just reading the headlines that Puerto Rico in fiscal crisis.

Q: Can you delve deeper into what advantage can be gained by planting a stake in a market mired in economic uncertainty and $73 billion debt? Some people might find it a bit risky and shy away until things are more stable…

A: We could spend half a day talking about all the opportunities that are there, that we see and are acting upon, and that other people are acting upon in the produce industry, and the food industry more broadly. I made a list of them, and I can walk attendees through them.

First I’ll start with the obviously negative. There’s a consolidation wave, and we’re losing population. What that means for retail and foodservice is we have fewer people coming into stores. At the same time, surviving operators are the more effective ones in dealing with that slowdown, able to protect stores from losing traffic.  We expect certain stores to close down, resulting in more suppliers continuing to disappear from the marketplace. I stay away from calling that negative or positive.

Once you’re into finding opportunity in a downturn, you’ve just got to look at it like a doctor would; it’s just a fact. That is what happens. It happened to the U.S. in 2008. The opportunity is to focus on those stores that have the traffic because of the consolidation. Actually, at the individual store level, business will pick up.

We’re setting up these retail market programs, what we call the “candy shop concept.” We turn the produce department into a candy shop, filled with beautiful, colorful merchandising, floor signage, banners, shelf stickers, covers on the coolers… all suggesting the produce aisle is a candy shop of indulgent flavors and experiences of sweetness for the consumer.  

What it’s done is create a destination shop. Operators are reporting customers spending a longer time in the store and more time in that section because it’s very comfortable, cozy and appealing. Most important, it’s generating a lift in sales for stores.

Q: How does it work exactly? Are these candy shop concepts exclusive/customized to particular retailers or are they more generic and repeated in various chains?

A: It’s both. We have a generic program, then we customize it around the strategy and particular layout of each store. It’s flexible. For instance, Delicias Naturales (Natural Delights) is a corporate campaign that increases the produce sales of supermarket retailers. 

Two great examples of retailers participating: Wal-Mart locally adopted the concept strategically merging its campaign on nutrition. Instead of using our Delicias Naturales (Natural Delights) corporate campaign, Wal-Mart changed it to Healthy Delights.

Wal-Mart took its signage around the health of different produce items and created its own campaign for that and connected it to say these delights are healthy for you.

Supermercados Plaza Loiza, a local retailer, took the Delicias Naturales campaign on in August seeing an uptick in sales right away. 

Q: Where do the candy shop funds come from? Is the cost split between your company and different suppliers, whose brands are featured? Does the retailer pay into the program?

A: We’re doing this by partnering with some of our important produce suppliers, such as Dole and Litehouse. We present a program, which we can all invest in, to basically promote our own growth by promoting our customers’ growth. Those suppliers help to finance the program and in turn are featured as sponsors of the campaign by having their logos and brands highlighted.

In this candy shop concept we’ve established, we do product placement and insert the Dole brand, for instance, in certain areas and Dole invests some funds to defray the cost of that program, but it’s not just for Dole or just for the Litehouse products. We create this entire candy shop, which gives suppliers a more effective way to promote their brands to consumers, but they don’t have to pay that much to reap the benefits because it’s there all the time, 24/7.  

For suppliers in the audience, this is just a sample of how you can take advantage of this consolidation by partnering with the people who are going to be around and grow when others fall down, riding the consolidation wave instead of fighting it; I call it surfing.  Essentially, find the growth and invest within the downturn. 

For instance, we’ve partnered with Gargiulo, a tomato grower out of Florida and California, and they also have an operation out here on the Island. So instead of buying tomatoes from so many places over the year, as we used to do, we have focused our buying with Gargiulo. 

If my sales are down three percent on tomatoes, instead of splitting that 97 percent among multiple providers, I’ve focused 100 percent of that 97 percent with one provider. So as a result, three things happen; one, Gargiulo is experiencing growth in sales through me, I’m buying more from them so their sales are up, and by focusing my buying power with them, I have better pricing, better service and can capture more market share and help my customers sell more.

Number two, we become stronger by partnering up and becoming a team. It pays off nicely in a downturn cycle because we’re bringing something to the table. For them knowing we’ll buy from them every week and for us getting better pricing, they may work harder one week, knowing in a few weeks they’ll be better off, so they can be secure in their approach to the market.

And number three, they’re capitalizing on our marketing strategies at the store level. 

Q: Is there a downside to sourcing from a single supplier and losing that flexibility with all the issues that can arise in the produce industry? 

A: It’s worked out very well for us. Yes, we’ve faced problems, but then we have an intimate conversation, and we go back and forth and share the responsibility; if there’s a time they can’t supply us with a product, we decide together we’ll look somewhere else, so it’s beneficial for both of us, as opposed to these adversarial trading relationships, this week we buy here, next week we buy there. You can act differently, have transparency, and move forward.

Of course we are talking about engaging with a major player, such as Gargiulo, which has a lot of flexibility to get supplies from different places, etc. Also, because they have an operation in Puerto Rico, we are ideally positioned to help them. It is win-win-win, for them, for us, for our customers. But most of the shippers we partner with don’t have Puerto Rican production — that is an exception.

I don’t have access to nation-wide best practices, but it comes down to company strategies. If you have a quality brand where you need someone down in Puerto Rico to tell your story, and not just be another producer of another commodity, then it’s an easy solution to partner up because your message can be lost if you just trade.  

We start with that angle. You have a superior product, you go the extra mile and put in the extra cost to make the product better, last longer, be more attractive for the retail consumer. Let’s tell your story better and invest together, and have your backing that I’ll use my name, which is in many ways more known than a big national brand name in the States that may not be spending any money marketing here.  That approach is easier for a company with a differentiated quality product.  

Q: Does your company have a brand that is recognizable.

A: Yes. We have three consumer brand names; one for repacked tomatoes, Cacique Jayuya, which is a local brand consumers recognize; another called VivaFresh in the fresh-cut category because we have a fresh-cut operation; and Natu Fresco for bagged potatoes. The combination of marketing and sales support, combined with the quality of McCain potatoes, becomes a very interesting and appetizing brand for the retailers and the foodservice operators.

Q: How important are the brands?

A: Like any brand owner, we’re responsible for investing in them and using a lot of social media. For example, with VivaFresh, we have about 25,000 likes on our Facebook page, and it’s very active.  We’ve hired an agency, and everyday it keeps our content fresh, using the content we provide, and it manages the community to keep the conversation going with the consumers around the brand, and to get their feedback on it. So that’s pretty exciting too.

Q: If a company wants to partner with you, is it advantageous you have your own brands? 

A: More than the power of our brands or not, it’s the power of our marketing tools and systems and people we have in place to promote their brands, to take a partner from the States and make their products successful on the Island.

Our business is an art and a science, and probably more of an art than a science. But on the science part, we’ve been hiring not just from the outside, but assessing people from within our company. Our human resource team for the past three to four years has been applying these profile tools, so if you’ve been here 20 years, we’re making sure we support your ability as a produce expert to migrate and evolve to these new concepts.

We know change is not easy, but if we believe you’re a valuable part of our team and aligned with our values, we’ll give you the tools and training so you can adapt. When we’re bringing people in from the outside, we coach them to assimilate into the produce culture, which is not easy to understand.  

It takes people who are not stubborn and closed-minded, but they’re curious and they like to learn, and they’re also humble, able to admit they’re wrong about things, make mistakes, and learn from them, and teach us things as well. 

It’s been a heck of a process. I happen to love change because of all the different experiences I’ve had. My whole career I’ve implemented change in different environments. I’ve had to learn coaching tools and how to apply them, understand and help people walk through the cultural and emotional aspects of change. We had people who left, who felt too uncomfortable with the change, and wanted to keep things status quo, but most have embraced change, and it’s been really fun.  

When I brought in the first two or three hires from the outside, young leaders in their own multinational companies, it sent a signal, and I started getting all this interest from millennials sending in their resumes, saying what it meant to them to be part of this company.

Q: Could you provide more perspective on the historical context behind these new opportunities? For instance, do you believe Puerto Rico’s agriculture and farming industry will truly come back again? What are the ways to turn things around, and revive the produce industry?

A: In rough terms, imagine two trends unfolding from the 1940s: a big agriculture industry, sugar cane in the 30’s and 40’s, and also a very poor Island. In the mid-40’s Puerto Rico became a commonwealth of the U.S. The U.S. started development of Puerto Rico by incentivizing U.S. manufacturing companies to come and bring jobs.

Two things started happening: People started moving to the cities, leaving the countryside and farming and going to work in manufacturing houses, great jobs, progress and modernization. In the 50’s, people were moving out of poverty, but also out of agriculture.

Agriculture came from big landowners in sugarcane and using cheap labor. There was a political backlash. The government regulated against that so it wouldn’t happen again, by limiting the size of land people could own, so no one could control masses of land. The effect of that, as our modernization started increasing as a population, our agriculture started crashing.

Supermarkets are young, but then our transportation systems started improving with the U.S., so it became common to import food. People didn’t want to work the land and farm, but they had money to buy better food, and imports started flowing.

When my grandfather started, he could buy a lot more locally. We started developing our imports stronger and stronger. Today as a country we import 85 percent of our food and beverages.  With modernization, we have increased consumption, more consumer-market power, and the commercial system has responded with better transportation, more supermarkets. On the other hand, agriculture has vanished because we abandoned it.

Q: With imports, will you be discussing the impact of transportation costs, and additional burdens with U.S. shipping regulations and restrictions, etc.?  

A: In part, the costs of the transportation create opportunities for developing local agriculture because for certain items, the costs are so high from transportation. After the farming price, add in all the transportation costs; for example, bringing lettuce from California, you have to truck it across the U.S. for five days, then put it on a ship in Jacksonville, Florida to San Juan, Puerto Rico, it’s being transported for nine days…

Most of the costs for the product comes from transportation. It opens up possibilities for farming locally because you don’t have to be as efficient in price as the California grower, because you have all these dollars in between to kind of protect you.

Q: So that’s where your private equity company comes in?

A: Exactly. The private equity fund I’m starting up believes there is a great opportunity to develop products here. Some of these products are so expensive because they come from so far away. It’s not because the grower is charging too much; it’s the cost to bring it here. That’s the problem.

I think this is interesting for the audience, people who are in farming, or who want to invest in farming. A good example is Garguilo, the tomato farmer I told you about. In 1993, they opened up a farm in Puerto Rico for that reason to complement their production in Florida and in California.  

In the winter, when Florida gets hit with cold fronts and freezes, they actually have a winter operation in Puerto Rico, and they ship tomatoes from here, selling tomatoes across the Eastern seaboard that are not vulnerable to these cold fronts and freezes.

What we’re offering, if they see it beneficial, is to have a local partner willing to invest capital and provide some of the local knowledge to help them set up. We’re here if they want to partner up with a local investment fund to do business on the Island. They can have that tool. They also have the tool of carrying produce for the local market here.

For Garguilo, 30 percent of their production gets sold in Puerto Rico. So you use the local market to give you a step up in volume, and from there you export. It helps commercialize product on the Island, and helps with logistics off the Island. This is why I’m grateful to talk at the Global Trade Symposium.

In a way the opportunity we’re seeing has little to do with the fiscal crisis.  The opportunity is there regardless, even if the country is booming because companies like Garguilo have been doing this since 1993.

Q: Isn’t there a substantial mango growing operation on the Island? Why have they succeeded?

A: It’s based on Israeli technology and one of the growers is Israeli as well. They’re on the cutting edge, and globally competitive outside of Puerto Rico. They’re committed to keeping up with science and forward-thinking growing techniques, searching for the best around the world and being progressive, and always experimenting.

I was there three or four weeks ago looking at their methods and products. We’re very inspired by them, and speak about them as examples of what’s possible.

The fact Puerto Rico is in an economic crisis makes it more interesting because prices of land are down. The Government is more intent in supporting innovative ways of approaching this. When your bank account is low and you don’t have the money, you start looking for $20 bills in your pockets, but when you have too much, you become complacent.


When things were difficult for Tesco’s Fresh & Easy, it was common for Tesco to blame slowdowns in store openings on the bad economy. We never bought it. It always seemed to us that if the concept was sound, Tesco would have used the down economy to put the pedal to the metal and speed up its expansion. After all, this was when real estate, labor and supply sources were plentiful, when advertising was cheaper and expansion more feasible.

There is a lot of opportunity in Puerto Rico, but it also is true that to really change things, we need policy changes that may not be in the offering. Imposing the Jones Act Requirement on shipping between the US and Puerto Rico makes Puerto Rico less competitive than neighboring Islands on shipping to the US and raises costs in Puerto Rico.

Imposing high minimum wages and making welfare programs suitable for the US available for the Island also makes work less appealing.

Within the Island, policies are too welfare-state-oriented and the public sector too large for the size of the economy.

Of course, those who focus on the negatives often miss the opportunity. My guess is there is a profit to be realized here and Gualberto may just be the one to show us the way.

Gualberto is speaking at the Global Trade Symposium, and you can register for the symposium as well as The New York Produce Show and Conference right here.

The day before the Global Trade Symposium is the Foundational Excellence program, which Cornell’s Ed McLaughlin described here. You can express your interest in this program here.

Book a hotel room at the headquarters hotel for the best networking right here.

And utilize travel discounts here.

As our little bit to help out the Puerto Rican Economy, we are going to have a special drawing at the Global Trade Symposium, including round trip airfare and a hotel stay in Puerto Rico. But you have to be present to win, so make sure you register today.

Maybe you will be inspired by Gualberto and use the trip to check on your new investment!

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