With the United Fresh Produce Association meeting in San Diego, and one of United’s focuses being immigration, the confluence of how immigration reform might impact California agriculture is timely. So we were happy to receive a missive on the subject from Rick Eastes of Rixx International Marketing. Rick has shared his insights with us before in pieces such as these:
Rick has had a varied career dealing locally and globally and working with some of the biggest names in citrus, including Sunkist and Seald-Sweet:
As the economy has begun to rebound, the Dow has moved well above 15,000, and now the president and Congress have begun debate over creating a comprehensive immigration bill, with the need for clarity of the status of the undocumented workers already in the US.
A program to allow more workers has become paramount, especially for California. Sufficient labor in California’s agricultural industry has increasingly become a subject of real concern, especially over the last 18 months.
Historically, during the winter months in the San Joaquin Valley, most of the labor was either engaged in pruning of trees and vines, or harvesting navel oranges or lemons, and labor rates and availability remained relatively stable. Now with the massive increase in volumes of Clementines and other mandarin varieties, sufficient labor to harvest even Navels can be challenged by workers being paid dramatically higher wages on a piece-rate basis to harvest mandarins — sometimes triple the rates paid for Navels or lemons.
During February of this year, the threat of fruit-damaging cold weather shrunk the ‘available’ labor force to a demand exceeding supply situation with even the standard $50/bin harvest rate for mandarins jumping to $75/bin and higher just to get the fruit off the trees pre-freeze, leaving many Navels and lemons on the tree during the cold spell.
As the San Joaquin Valley stone fruit season starts in earnest now in May, hourly harvesting labor has taken a large jump from $9/hour (minimum wage in California is $8/hour) to $10/hour and more on piece-rate, and there still is insufficient labor to meet demand — and the season is just starting.
Plantings of newer cultivars in the last decade, such as cherries and blueberries, have added even more demand for early summer labor to compete with peaches, nectarines and plums, and later table grapes. Strawberry production in California is at an all-time high as well.
Labor to harvest oranges in the month of May, which might pay $60-70 per person/day, is being attracted away to harvest blueberries and cherries where piece-rates can pay from $120-200 per person/day. Overtime and weekend rates in the peak of the season are likely to be even higher as the season progresses, and during spells of hot weather, harvest timing for critical varieties could result in serious crop losses.
Although there is hope for meaningful immigration legislation, it seems Congress is already bogging down with 49 proposed limiting amendments (at last count) from Republican Senators alone. Senator Patrick Leahy from Vermont, on the other hand, has even offered an amendment to allow for the immigration status recognition of gay partnerships, which may address social issues, but certainly not the labor-demand issues of the Nation’s most important agricultural state.
The biggest obstacles to resolving the labor issues for agriculture are the insistence by some factions to further tighten the border with Mexico, rounding up even more resident undocumented workers now in the USA. There is also a proposed amendment by Senator Lindsey Graham of South Carolina to punitively fine any employer for hiring undocumented workers and imposing stiff fines to any company that hires such workers.
What was initially proposed as a “path to citizenship” has become encumbered by a lengthy multi-year program with a prohibitive number of requirements, including a method to calculate each of the 11 to 13 million undocumented individuals’ past income tax liabilities over the last 10 years of residence in the USA. The reality is that many of the undocumented workers have paid FICA and withholding taxes already from their paychecks for which they will never receive any benefits in the future because of their illegal status — a sort of “taxation without representation” position that played another role in our nation’s early history.
As of April 23, 2012, the Pew Hispanic Center announced that net migration from Mexico to the United States had stopped and possibly even reversed. The Center noted that from 2005 to 2010, about 1.4 million Mexicans immigrated to the United States, and about 1.4 million Mexican immigrants and their U.S.-born children moved from the United States to Mexico. When this information is added to the DHS calculation that 58% of the undocumented are Mexican and 24% of them are in California, the scope of the immigration issue for California agriculture begins to come into a sharper focus. There are estimates that California agriculture lost perhaps 600,000 to 700,000 of its labor force, leaving even fewer workers to be spread among even more work opportunities, plus demand from other lines of work.
Free-market proponent Milton Friedman of the University of Chicago stated in a speech in 1978 (it can be seen on YouTube) that, “bad laws make socially advantageous acts illegal undermining morality in general.” In his speech, it is his contention that the millions of immigrants who came in the late 19th and early 20th century with no meaningful restriction except paying passage, are the reason for our country’s rise to economic power in the world.
Free markets usually allocate resources, especially labor better than legislation. He further states that illegal Mexican immigration was “good” so long as it was illegal, because it was based on demand and did not automatically imply the benefits of citizen society. I suspect that by the accident of birth had any of us been born in Mexico and our choice of livelihood was to work for at best $10 a day or $10 an hour, it would have been difficult to keep many from finding a way to the USA to better their economic prospects, regardless of what the work entailed.
No one likes the word “amnesty” with regards to the current immigration dilemma. Many relate the word to either forced immigration due to war or human rights violations, or in the case of many opponents to immigration, as forgiveness of some criminal activity.
However, it is practically impossible to have undocumented individuals return to their birth nation, especially those who are working and have established an economic presence in the USA. It also is illogical to try to further round up the same undocumented workers who will become eligible for some legal immigration status once an immigration bill is passed by Congress.
Building, maintaining and staffing the monitoring of a border fence with no documented impact on diminishing illegal crossings at an estimated cost of $21 million/mile plus maintenance is out of the question to ‘better secure our borders’. Comedian George Lopez joked that the USA should build the fence before expelling all the Mexicans; otherwise, there would be no one to build the fence.
So, what is “at least” a partial solution to attending to the needs of California agriculture?
The economic answer is to allow anyone who can verify that they have been in the USA and have a work history of at least 3 years and no criminal convictions be given a temporary work permit. The work permit would allow for a legal driver’s license and a social security card, which would be required to track all FICA and withholding taxes as required of all citizens. If individuals are here, working and providing for their immediate family, they should be allowed to stay.
A system similar to Canada’s Temporary Foreign Worker Program needs to be adapted to the USA’s needs, which will allow foreign nationals to enter the country to fulfill seasonal work needs. The system should include some provisions that would allow temporary workers to find full time work when and if it becomes available.
The new immigration legislation is in danger of becoming so gummed up with special provisions that it will be unworkable or simply ignored. Laws that do not address the economic issues and incentives will be ignored or abused to the point of futility.
For California, without immigration legislation that allows for the ‘economic and social reality’ of our nation’s current undocumented workforce, a simple, unencumbered and realistic path to citizenship, and the means to attract new immigrants, the USA will find itself in a demand-exceeds-supply situation for a workforce to fill all of the service and agricultural functions our country needs to feed itself and even feed a good portion of the rest of the world.
Thinking back in our history, I wonder where our country would be today if the Powhatan Confederacy had turned back the passengers on the Godspeed 400-plus years ago and prohibited the foundation of Jamestown, VA? I also wonder where we would be in California if the Spanish priests had not brought the first grape cuttings and citrus trees to California as part of New Spain?
California (as is Arizona and Texas) is different and in need of special consideration of a national immigration policy unlike the states of Vermont, Wyoming, or South Carolina, for example. Let’s hope any new immigration legislation allows California to meet the present and future labor supply shortfall in a positive way.
— Richard A. Eastes
Rixx Intl. Marketing Co. Inc.
The issue of immigration is, of course, complex, and that is part of the problem. The experience with Obamacare has soured many on the general concept of these 1,000-plus page omnibus bills -- the type of bill, as Nancy Pelosi famously said about Obamacare, we are expected to pass so we can then find out what is in it.
The Republicans in the House seem in favor of an incremental approach in which individual bills are discussed and debated. So if the proposal on the table is to discuss the merits of, say, an agricultural guest worker program, that is brought up as a discrete bill, debated and then voted up or down on its merits.
There is little question that such an approach is more thoughtful. Critics would argue that such an approach wouldn’t produce any law because none of these proposals have sufficient support on their own.
This isn’t necessarily true. After all, log-rolling – I’ll vote for your bill if you vote for mine – is a long and hallowed tradition in Congress. Things don’t have to be in the same bill to get support.
One can’t help but think that the real issue is that DC elites from both parties have a lot of stuff in the bill that, if people really had a chance to read and study it, they would be opposed to.
There is no question that the lobbyists for the produce industry did a stellar job and got their prime priority — an agricultural guest worker program – into the bill that is on the table. So, in the short run at least, the bill is a triumph for the industry.
Whether, long term, it will help the industry or the country is quite unclear.
The bill seems to fail at dealing with the long term issue of illegal immigration. If the bill passes and is implemented, what happens to the first illegal immigrant after it passes -- the first person who has a tourist visa and doesn’t show up when he is supposed to leave? Will an All Points Bulletin be declared on this person? If ever apprehended, what is the penalty? Isn’t the most likely implication of this bill that if people overstay their visas or enter illegally, then one day, there will be another “path to legalization”? So isn’t the whole bill likely to encourage illegal immigration in the future?
For the produce industry, our take is that the guest worker program isn’t likely to sustain itself for very long. The day the bill passes, the Unions and human rights activists will be out there starting to modify the terms. And they will be successful because it is in contrast to American values to believe that these people can be living and working in America but cannot be part of American society.
Besides, the program will be deeply criticized and ultimately ended because it won’t work out in practice as in theory — meaning the guest workers won’t go home. At the end of their guest worker pass, some significant percentage will simply meld into society as the current illegal immigrant population has.
The bill does not make sex illegal, so one can bet that a not-irrelevant percentage of the guest worker program participants will have had children while in the US – and every one of those children are American citizens. Are we really going to deport all their mothers and fathers and put the children in foster care?
The bill also does not prevent impositions on society in terms of cost. Hospitals are legally required to provide emergency care to anyone in need of such emergency care — this bill does not provide any assurance that these costs will be paid.
As all this filters out, the program will be ended just as earlier Bracero efforts were ended.
The piece from Rick Eastes is great because it is so concrete, pointing out how the price of labor changes when labor, demand and supply interact. Of course, this is true of all markets. The fluctuations of supply and demand determine prices.
For the produce industry, the availability of labor is just one of many inputs, such as the availability of appropriate soil, weather etc., that determines when and if fruits and vegetable should be planted.
Whether it makes sense to plant a field – or locate a manufacturing plant – in an area short of labor is part of the economic analysis that has to take place prior to investing.
We think in the long run, it is unlikely to be sustainable to have a special program that requires people to work in agriculture. It just doesn’t make sense to say if this person will harvest rhubarb, he can stay, but if he has the temerity to want to cure cancer, he has to leave the country.
The industry has to look to mechanization as the only realistic option. Considering we have machines that can perform operations inside the human body, it is likely that we can develop machines that can help with harvesting. We have run a few pieces related to this subject, such as these:
The real problem is price. If labor prices are low, none of this mechanization makes sense. If the price of labor rises, all kinds of things are possible.
For society as a whole, there are big issues.
If we allow labor prices to rise, more agricultural production will be done outside the US. Is that OK?
Even more broadly, the immigration issue is less about immigration than about assimilation policies.
Many of the Republicans who oppose immigration really don’t. That is what the Friedman quote is really all about. If we could be certain, as at the turn of the century, that people who came to the US would not be on public welfare or get free medical care, food assistance or other aid from the state… if we could be certain their children could be put into public schools where English is the only option and civics and citizenship courses are reflective of a great cultural self-confidence welcoming people to come — but insisting they come to be Americans — people’s attitudes toward immigration could change.
As long as we, as a society, are unable or unwilling to do that, then we have to expect that anti-immigration sentiment will run high and the logical reforms will be to open America to those who are already proven assets – say those with high education or cash.
There are lots of politics that are playing out. The Democrats want legalization of what are likely to be Democratic voters; the Republicans don’t want to be seen as anti-Latino, and that has driven the immigration bill to date.
The Republicans in the House, though, mostly have very safe districts. Look at the recent by-election in South Carolina, where former Governor Sanford won back his old House seat despite having been disgraced. So these big political issues will affect the House less, which just might encourage attention to the details of the bill. This is not a bad thing, as speeding locomotives have their place, but not in producing thoughtful legislation.
Part of the United Fresh culture is that the organization is in many ways a family. This is what comes from the mingling of over 100 years of multigenerational family businesses. So the loss of Jan Strube Fleming, longtime President and Chief Executive Officer at the Strube Celery& Vegetable Company in Chicago, leaves an absence more profound than might be true in some other organization. After all, many knew Jan —she was the 10th woman to be recognized at the Women in Produce reception held each year at United, and she served on United’s board of directors for several years. Her husband, Tim Fleming, was Chairman of United, and her father and grandfather were active in the association.
Indeed, at the funeral, the quiet whisper among family members was that Jan had timed her passing to make sure it wouldn’t interfere with the plans of many Strube associates to attend United’s convention in San Diego. Among those planning to attend are Jan’s eldest son, Tim Fleming Jr., and Lisa Strube.
We told Jan’s story — her valiant battle with a rare appendicular cancer— in pieces such as these:
The emotions are strong, and there was an outpouring of industry love and affection for Jan. Many sent notes directly to the family and a few asked us to pass some sentiments along:
Your writing on Jan Fleming was beautiful to read and the thoughts were reassuring and a source of great comfort.
Every loss we experience is renewed when we read about an intense loss for others. Yesterday, I was allowed to shave for the first time after the 30 days of mourning since my Mom's passing.
Your thoughts are spot on. This life is our test life where we get a chance through our free will to be great and do great things for others.
The next life, our Olam Haba, is a wonderful place filled with love and truth and peace. Over the years, I have conceptualized a great hall where we are all but puffs of smoke, sharing the stories of all the good we did here in this life. The stories are inspiring and those that do good and are good are constantly sharing.
Perhaps those that did not do good, and were selfish, are in the same hall. Their hell is having to listen to the good ones speaking all day long about the good they did. Those folks do not have the ability to speak. They simply listen and contemplate what they could have been.
May you and all the mourners continue to be comforted by continuing your quest to greatness and helping others.
My condolences, Jim. I am so very sorry for your loss. Thank you for sharing about Jan; she sounds like an amazing person. And thank you for opening your heart in a so-called "business" forum. In the end, it is relationships to friends, family and the wider world that define us. In the end, there is only love.
Your tribute to Jan is a beautiful eulogy to a remarkable person. I too have lost both my folks to cancer and they were like Jan and your father… people that made life better for everyone they touched every day.
While I never knew either Jan or your father personally, I now know who and what they stood for. They lived life as it should be lived and enriched the world by their presence and reminded us all of our own mortality with their passing. I hope both families can find peace and comfort knowing that they are now free of the disease that took them from us.
My prayers and thoughts are with both your families.
Former Sr. Vice President Quality and Logistics Jack in the Box
San Diego, California
Currently CEO of
Grey Dog Partners, Inc.
Del Mar, California
I just finished the May 2nd article and, though I never had the privilege of knowing Jan (or your father Mike), I’m truly touched by the depth of feeling you’ve captured. Not only in your love for Jan and Tim, but everyone’s love for our Lord and His plans for all of us.
Thank you for writing what many of us understand – we are not alone as we walk through this life, and our journey with those who touch us is always worth embracing.
Since retiring in 2000, many items in the world of the produce industry slip by. The Strube family was the guiding light in my career and whatever success I achieved as a person and businessman. It is with deep sadness that I read this article about Jan — her life and Tim and those left behind. God bless her and her family… and she is in a better place.
—Frank and Allie Wiechec
Punta Gorda, Florida
To Tim Fleming, you have our sympathy. Jan was an angel on earth. Now she is an angel in heaven. God bless her soul. Tim, keep your chin up.
To the Fleming Family and Friends, I didn’t have the pleasure of knowing such a fine person as Jan but wish I had. I was greatly moved by all of the nice things that have been written about her today, what a wonderful person!
I pray God will give you His peace that passes all understanding during this time of mourning.
Sales / Procurement Berry Fresh
Dominguez Hills, California
Very good article on your friend Jan! I am sorry about your loss.
I did not know her well; however, she really helped me adapt to the industry when I first started. She always showed interest in what I had to say. Amongst a group of Produce men, she really stood out.
On behalf of the Blue Book, we want to express our sincerest condolences on the passing of Jan. She was a trusted friend, business colleague and an all around wonderful person. We will miss you, Jan. You were the epitome of what a XXXX AA firm and person should be.
I’m sorry to hear that Jan has passed. There is never enough time to make sure that you are able to do all the things in life that you would like. Even though, Jan tried.
She was always a mentor to me, and I will always appreciate that about her. She will be missed, and the produce business has definitely lost an icon. Tim, I know this is very difficult for you personally and your family, as well as the family that you and Jan have created at the Strube Company. My best wishes and prays are with you all.
Just read the moving commentary on the loss of Jan Fleming. My condolences and deepest sympathy to you and her family, and may her spirit and soul rest in peace.
Corey Brothers, Inc.
Charleston, West Virginia
To the greater Strube family~
This prayer has brought me comfort during times of sorrow. I hope it may do the same for you.
“May today there be peace within.
May you trust God that you are exactly where you are meant to be.
May you not forget the infinite possibilities that are born of faith.
May you use those gifts that you have received, and pass on the love that has been given to you.
May you be content knowing you are a child of God.
Let this presence settle into your bones, and allow your soul the freedom to sing, dance, praise and love.
It is there for each and every one of us.”
― Teresa of Ávila
I was so sad to have received a text on the passing of Jan last night. Words cannot express how empty I feel today.
We have lost one of the most beautiful, honest, and hard-working women in the produce business. Jan was, and always will be, one of my most favorite customers I have dealt with in my over 30+ years of Produce. I will dearly miss her cheerful voice and demeanor. She was honestly one of a kind.
My sincere condolences to the Strube/Fleming family and all the co-workers there at Strube Celery. May God give you strength and guidance during this painful time.
With an extremely heavy heart I write this note. I can’t begin to know how you must feel, but I trust that your faith will keep you strong and will help you get through this.
I held a very special place in my heart for Jan. Twenty-five years ago when I was a young salesperson very early in my career, Jan stepped forward and helped me when I needed it. I have looked up to her with the greatest respect ever since and I always will.
My heart was crushed this morning when I heard about the passing of Jan from earth to heaven. Joyous, yet sad.
I am so sorry I never made it back to Chicago. Jan and I talked a few times, but we were never able to confirm a date to see one another. But God knows best. Whatever I can do, please do not hesitate to call. I love you and the boys.
Foodservice Specialist HMC Farms
What a great lady, an incredible example of positive force in the produce industry and just a pleasant person to do business with. My deepest condolences to her family.
I met her over 30 years ago and considered her a friend whenever I was in Chicago.
She will be missed. My best to the family.
Dave Daguerre Farms
Tim and family,
It is with great sadness that I write this note to you. I know you are receiving many messages about your loss of beloved wife and mother. Our families have so many similarities, and I know how close all of you are to each other.
I also know from discussions with you and Jan during my time affiliated with you both just how strong your faith is, that is what will help you get through this very sad time. Go to the Lord and he will give you the peace and understanding that you need.
In the Apostle Paul’s writings, he said that we aren’t to grieve like the rest of men who have no hope. We haven’t “lost” our loved ones. We know exactly where they are… they are experiencing the joy of Christ’s presence in a place so wonderful that Christ called it paradise! What hope we have in our Lord and the magnificent reunion ahead!!
Tim, Jan was a wonderful lady. My prayers are that you and your family will remember all the wonderful times you all had together and cherish those fond memories.
May God Bless you and your family,
Rick and Susan Hanas
—Richard L. Hanas
Senior Vice President/CAO A. Duda & Sons, Inc.
I'm so very sorry to hear of Jan's passing. Please pass along my condolences to her husband and family. I will continue to pray for her, for her family and all those who mourn her during this difficult time.
Many blessings to the Perishable Pundit as well for keeping us informed about Jan and her battle. My prayer for you and your family is peace while going through this difficult time reliving your father's passing with the passing of your friend.
Tim, you probably don’t remember me, so let me freshen your memory. I worked with Carl at the Jack Keller Co. for just one year. I always respected you because as green as I was, you never tried to take advantage of that. You did whatever you could to make me look good in front of Carl and Sid Tobias.
My thoughts and prayers are with you and your family during these tough days ahead. You and your family are in our prayers.
Indeed, we were honored at the celebration of Jan’s life when Tim Fleming, Sr., paid us the great honor of calling this Pundit out by name from the pulpit, to thank us for facilitating the industry response to Jan’s passing. Sentiments he passed on in writing with this generous note:
Thank you for your continued support of Jan and me during the past few years. We are blessed to get to know you and your parents from a non-industry perspective.
I know every time trials like Jan's come along, it brings back memories of joy and sorrow from your own past experiences. May God bless and keep you during this time of reflection.
Giving the Fresh Produce Industry a format through the Pundit to share their remembrances of Jan with each other was very generous. Jan, in her own way, carried forth a Strube tradition of promoting and mentoring the industry and its people, and because of you the industry was able to say thank you.
—Tim Fleming Sr.
For those close to anyone who passes, such as the many who were to Jan Strube Fleming, the loss is acute. As so many of the letters published above attest, even those in the industry who did not know Jan personally have been affected by the outpouring of love and respect and the many explanations of what made her such an exemplary person.
One hopes that in death there is meaning for those of us who still live. One thing that we have noticed is that many have commented that they didn’t get to see Jan in a long time prior to her passing. This was so even though, in this case, Jan had a terminal illness for a long time. Can you imagine how much more striking it is when people die suddenly, of heart attacks and accidents and what not?
How many regrets there must be among friends and family that they never said many things they would have liked to have said.
One wonders, as the industry meets in San Diego for the United convention, whether the trade wouldn’t run a little smoother and be a little more pleasant if everyone treated each interaction as if this was the last time they were ever going to see one another.
It surely would keep the focus on the important things and prevent petty disputes from destroying important relationships. It may be too much to ask of people, but surely we could try, and the aspiration itself could add meaning to Jan’s life, a final salute to a life well-lived.
We have always liked the Star Tribune, especially since the editors solicited an op-ed from the Pundit that was published under the title, Who’s Guarding our Commerce?
Now John Ewoldt has written a piece for the Star Tribune about shopping behavior, and we are reminded of a piece we wrote in Pundit sister publication, PRODUCE BUSINESS, a decade ago titled Death By A Thousand Cuts:
The nature of the competitive challenge posed to the contemporary supermarket produce department has changed. Not all that long ago, the main concern was that another supermarket chain was opening in town and that the new stores would drive the existing chain out of business or at least take substantial market share. This was a dangerous situation, but at least the threat was clear. A new direct competitor is on its way and stores need to fight back. New stores must be built, remodels performed, pricing must be aggressive.
But today the situation is different. It is the exception that the major competitive threat is a new supermarket chain coming into town, anxious to take major market share. More typical is that supermarkets and their produce departments face death by a thousand cuts — death not from one new chain seizing 40% of the market, but instead from a plethora of new formats, each one seizing a few percentages of the business.
So the wholesale clubs come into town and grab 4% of produce sales. A Whole Foods chain, emphasizing a “back to the earth” atmosphere, opens and takes 6%. Fast food restaurants open their drive-through windows at 7:00 a.m. so workers can pick up a salad for lunch on the way to work — another 1% of business is lost. A supermarket chain opens specializing in small stores with limited variety and low prices, taking 6% of the market with them. Then we have gourmet stores, farmer’s markets, flea markets, U-Pick operations, supercenters, hypermarkets, home delivery services and more.
What it all boils down to is that it is increasingly hard to compete if your goal remains to be the broad-based supermarket attractive to 95% of the people in the community. Instead the trend is to the development of niche operations, each one dedicated not towards capturing the entire market, but instead dedicated to doing a great job serving a specific consumer segment.
Like increasing numbers of grocery shoppers, Ty Rushmeyer doesn’t have a regular store.
The 28-year-old and his wife go to Rainbow once a week, but they also stock up their pantry at Target. Then there are “fun runs” for unique products at Trader Joe’s, Whole Foods, an Asian market, the Wedge Co-op and, in season, the farmers market.
“We’re looking for healthier options,” Rushmeyer said. “But we’re also deal seekers. We know which store has the best price for each item.”
Welcome to the new grocery landscape, in which traditional grocers like Cub Foods and Rainbow are less able to count on loyal customers who buy everything they need in one visit. Instead, shoppers are spreading their money around and constantly looking for deals.
It’s a dynamic that complicates a competitive landscape for Cub Foods, the grocery market leader in the Twin Cities. Supervalu, Cub’s parent company, is leaning on the Cub brand to help revive its fortunes after it recently sold several major chains but kept Cub. Just last week, Eden Prairie-based Supervalu said it was cutting 1,100 corporate jobs to get its head count more in line with the company’s reduced size.
But Cub and primary rival Rainbow are getting squeezed, not only by Target and Wal-Mart, but also by co-ops, farmers markets, specialty gourmet stores, Aldi, dollar and drugstores. Rainbow recently closed its Forest Lake store and soon will shutter locations in Robbinsdale and Plymouth.
…The increased range of shopping options is changing the grocery business in many ways. Square footage allocated to groceries grew 5.7 percent from 2005 to 2011, according to the Food Marketing Institute, but the increase was at supercenters, convenience and dollar stores, warehouse clubs and discounters/liquidators. Traditional supermarkets decreased their space allotment.
Menards, for example, now devotes about six aisles to groceries as well as a refrigerated section with pizza, milk, cheese and eggs. At Walgreens, food and beverage items now make up 20 percent of the merchandise with plans to allot more space, said Jim Jensen, divisional vice president. “Food, along with beauty and health items, gets customers to visit the store more often and buy more,” he said.
The quote by the Walgreen’s executive, Mr. Jensen, is telling: “Food, along with beauty and health items, gets customers to visit the store more often and buy more.” This is the key to understanding what is going on.
Consumers visit grocery stores about ten times a month. They visit general merchandise and drug stores about once a month, so if these stores can get some food business, especially perishable food, they are likely to increase shopper frequency substantially.
This, of course, makes them very tough competitors as they have an alternative motivation for selling food. A Target that adds a PFresh concept, a dollar store that adds a fresh foods offer, a drug store that puts in a nice fresh assortment… these stores often see substantial same-store sales growth, much of it from increased sales of non-fresh items to customers who were drawn in by the fresh offering.
None of this is new; supermarkets were petrified at Wal-Mart’s entry into the food business precisely because it was theorized that Wal-Mart could happily sell food for no profit and then make a profit when the customers drawn in by the food offering bought high margin general merchandise at the same time.
One of the things that is crystalizing and that the Star Tribune piece emphasizes is that not only have retailers fragmented but consumers are themselves no longer demonstrating much loyalty.
In other words, it is not that there is a Costco customer, a Whole Foods customer, a Trader Joe’s customer and an Aldi customer, etc. Instead, many of the customers shop at many venues at various moments in their lives.
In fact, the market is becoming so fragmented that it may not make sense to go after a specific type of consumer. Instead retailers may need to pursue certain types of consumers at certain moments of their lives. In other words, retailers need to think of their stores as “buying dinner for a big date” outlets or “running in to pick up a quick dinner for the kids” outlets or “stock up for a big traditional holiday dinner” outlets, etc.
This likely means editing one’s assortment as one edits the customer experiences for which a given retailer chooses to compete. It means giving up on being everything to everybody — still a big challenge for many grocers who have always thought of themselves as a neighborhood’s grocery store.
With the growth of the internet, communities of like interest form more easily, and this tends to devalue the communities of propinquity that were the traditional core.
Equally, the multi-format retail world inevitably devalues the community grocery store. This poses challenges for many not yet ready to accept the necessity of Focus.
So when he asked if we would give a talk for the University & Industry Consortium, a group of top level academics and food industry executives that tries to bridge the gap between industry and academia, we were thrilled to have the opportunity.
Our presentation, presented at the University of Florida at Gainesville, focused on the role retailers play in promoting and hindering food safety and suggested various policy responses, such as those we suggested in our piece for The New Atlantis, titled How To Improve Food Safety.
We also did a panel with Dr. Suslow, Bob Brackett, Vice President and Director at National Center for Food Safety and Technology and Professor Michele Danyluk, an expert on the food safety and microbiology of nuts at the University of Florida.
When Q & A time came, there were many questions. One person asked what advice we would give consumers.
Our answer was that unless one is immune-compromised, very young, very old, has AIDS, just had chemotherapy, etc., one shouldn’t worry about the issue.
Basically the risk is so infinitesimal for a normal, healthy person that smoking three cigarettes while you worry about the issue or driving to your therapist to discuss the matter exposes one to more risk than just eating what one wishes.
This obsession with food safety risk is damaging to the country because it diverts attention and resources from serious problems.
Last month, the chief medical officer of Britain called antibiotic resistance a “ticking time bomb” and a threat as dangerous as global warming. In Europe alone, 25,000 people die every year from antibiotic-resistant bacteria — and that’s only counting the infections that were picked up in supposedly sterile hospitals.
The article is about the utilization of “pre-antibiotic medicine” to deal with antibiotic resistance, but the key point is that in Europe, 25,000 people die each year from anti-biotic resistant bacteria. The World Health Organization says that for tuberculosis alone, multi-drug resistance accounts for more than 150,000 deaths each year.
As a fan of many years, I congratulate you on another well-deserved recognition of excellence in journalism.
Journalists who depend on an industry for their livelihoods tread a very high wire in covering that industry. I imagine the temptation to self-edit one’s production in order to curry favor or at least avoid conflict with the powerful people and companies in the industry is ever present, but I have never seen any signs of it in your editorials.
Our piece, When Is The Retailer Responsible for Food Safety?, brought many responses. Most were from retailers who were surprised and disappointed that a retailer would be dumping older fresh-cuts in a non-refrigerated bin to sell at a discount but didn’t want to be quoted attacking a fellow retailer. Others, though, were willing to speak out.
One knowledgeable industry observer singled out Costco for praise:
Good points. While it is a positive thing to try to eliminate some food waste, it does carry microbiological risk. I doubt the CDC would ever be able to track whether food pathogens came from such sales.
Honestly, the room temperature display of much produce is a bad thing from both a food waste and pathogen point of view. Kudos to Costco for their uncomfortable, but highly functional, cold room for produce.
For what it is worth, the Jr. Pundits, Primo aka William, age 11, and Segundo, aka Matthew, age 9, consider the cold room in Costco a treat, and on hot days in their home base of Boca Raton, Florida, they will request a visit to Costco where the hot dogs and frozen yogurt round out the experience.
We also heard from a consultant with a long history in the business:
Unfortunately, I’m not the least bit surprised.
On any given day, you can walk into Wal-Mart in Paso Robles, California, or Safeway in King City, California, and find fresh, UNREFRIGERATED produce. Their display racks would not come close to passing a CDFA audit (Leafy Greens or Cantaloupe) when it comes to food contact surface cleaning and sanitation.
When I asked the produce clerk at the local Safeway store why strawberries are routinely displayed in unrefrigerated cases, she replied, “Because corporate tells us to put them there when we do promotions.” Oh, so I wonder, is this the price we must pay in order for the retailers to sell more fresh produce?
—Laura Giudici Mills
The issue of unrefrigerated produce is a significant point for the industry. As we mentioned here, here, here and here, years ago Frieda Caplan raised quite a stir when she provided some pointed criticism of the Washington apple industry for not only allowing, but encouraging, large displays of apples in unrefrigerated racks after investing so much to maintain the cold chain.
She was speaking more in terms of quality and consumer experience than food safety, but the point is the same.
Although we agree that retail cases are often not well-maintained, we would say that Laura may be letting the grower/shipper community off too easy. Although ultimately retailers are responsible for the displays in their stores, all too many marketers and commodity marketing groups go for the quick buck and urge retailers to put out a big display on a dry table up front, sometimes outside, knowing the quality, condition and the consumer eating experience will suffer.
One suspects that the boost from the short term display is obvious while the cost of the lesser consumer satisfaction is obscure, combine that with industry procurement practices that don’t ensure any producers that they will still be in the store next week, and one has a recipe for short term thinking.
We would say, however, that taste and quality issues aside, the example we highlighted of this being done with fresh-cuts is egregious. We know of very specific food safety risks, and every product is sold with an expiration date that is calculated based on appropriate refrigeration.
Those dates are deceptive — and probably dangerous — if the product is kept without refrigeration.
Many thanks to Steve Savage and Laura Giudici Mills for weighing in on such an important question.