A Canadian Perspective: On The Pandemic, On Produce And Progress
Jim Prevor’s Perishable Pundit, December 6, 2021
Ron Lemaire, president of the Canadian Produce Marketing Association (CPMA), will be one of the expert presenters for this year’s Global Trade Symposium, which takes place Tuesday, Dec. 14, 2021, and leasds into the Opening Reception of the New York Produce Show and Conference. Lemaire brings 27 years of extensive experience from a not-for-profit association perspective, with a focus on vertically integrated supply chains, sustainability, government relations, advocacy, marketing, public/private partnerships, capacity building and food systems thinking.
In his role as CPMA president, Lemaire has worked to represent the needs and interests of more than 800 Canadian and international member companies that are responsible for over 90% of the fresh fruit and vegetable sales in Canada. He works in a world of fast-paced change that maneuvers through global regulatory swings, variable climates, food safety outbreaks, disruptive technology advancements and ever-changing consumer demands and expectations.
During his New York presentation, Lemaire will give a Canadian perspective relative to the changing dynamics that face the global produce industry, whether you live in South Africa, South America, Europe or the U.S. We asked Susan Crowell, Contributing Editor at pundit sister publication, PRODUCE BUSINESS to find out more.
Canadian Produce Marketing Association
Q. Perhaps we could start with the pandemic and the past almost 24 months. Can you talk about what you witnessed — supply chain disruptions, labor shortages, etc. — that speaks to the resilience of the Canadian produce sector?
A. I think the key message is resilience. Produce is a global industry, relative to the Canadian market where we have a strong domestic production base season, but we also have cold winters where we rely heavily on a wide range and diversity of products from around the world, with our largest trading partner being the U.S. Our produce market is driven also by a very diversified population base. Our cultural mosaic in Canada drives the diversity of demand — especially if you look at the segments, the West being a little different from central Canada and being different from the East.
But overall, the industry has been able to navigate the pandemic in a way that is truly amazing, especially when you start looking at how the pandemic immediately disrupted our supply chain; our labor challenges, with temporary foreign workers not being able to come to support farmers and our domestic production; and shipping line adjustments on where ships were navigating from and/or containers being held up all over the industry, and the different lockdowns and coming out of lockdowns.
Q. What are the related issues you’re seeing today in the produce industry?
A. I’m not going to use the word ‘normal’ because it's not a ‘new normal.’ We're realizing that this is just how we are working today — being able to adjust to how we need to operate, and doing it again tomorrow. And that is truly why we're successful. The new normal is yet to come.
We do need to understand labor shortages right now within the supply chain. Take away the look at the grower side, because we know from CPMA survey work, 90% of growers are identifying labor shortages. But the bigger challenge are labor shortages in wholesale warehouses and distribution centers, and it is that workforce that moves the product across the country. That is truly a challenge.
On top of that, we’re working with a 40% increase in pulp and paper and packaging costs, and wood prices and access to wood is creating a pallet shortage. CPMA was a driving force behind identifying this, not only in Canada but in North America, and saying, ‘hey, we need to work as a group of associations and try to understand how we can navigate this with our providers for pallets.’ Because it's not the big guys, it’s the little, and small- to medium-size companies that are truly impacted by the requirement to access the specific pallet format to ship into the buyers. While they’ve adjusted some specs, it’s still a challenge for some small growers — and we are an industry built on small to medium-sized enterprises.
Then we go to trucking and other shortages. We see shipping costs in Canada, for bringing in product, increasing from $3,000 to $25,000 in container costs. You know, it's truly death by a thousand cuts.
Yet, somehow, we can still navigate this, and that's what's amazing.
Now, there will be collateral damage. We do know inflationary impacts to all of this work is going to create cost-of-food issues in the market. And we do know food is going to cost more — we can only squeeze so much out of a very tight margin. Not only in Canada, but on a global level, we're going to see all boats lift, with inflationary impacts to food pricing. The key is how do we find improved efficiencies? How do we deal with the supply chain disruption as an industry, to try and ensure that we have the free flow of products across borders and around the world in an effective manner?
Q. Are there trade and export barriers that you're dealing with today that you didn't have 24 months ago?
A. Most definitely. The pandemic also created a focus on sustainability, local foods, infrastructure, and national approaches to food sovereignty, and the food sovereignty approach that we're seeing on a global level needs to be addressed. Because we know, historically, the trade and commerce of fresh fruit and vegetables are fundamental for navigating the challenges we have, relative to weather, relative to access to water, relative to ensuring we can enable and provide cost-effective food to the consumer. There's a balance between food sovereignty and ensuring you can deliver strong, effective, local food programs in adjacent to a dynamic import-export strategy that is also essential.
What we all forget is, we want to protect our markets, but we also want to export, and that goes for any jurisdiction around the world. There are export opportunities that everyone wants to leverage, but as soon as a nation takes on a food sovereignty approach, it has the potential of hindering its own export strategies, as other countries will take on that same food sovereignty strategy. So a balance is necessary to ensure that we maintain open markets, that we do not create any nontariff trade barriers — it could be phytosanitary, it could be sustainability, or other precautionary measures that are being introduced. We see this especially in Europe, when we look at MRL (maximum residue limits) tolerances and other challenges that are impacting the global market.
We need to take a science- and risk-based approach. Without that, just taking a precautionary level that's driven by consumer demand isn't necessarily a founded strategy for anyone on a global level.
Q. But hasn’t that been an age-old problem?
A. Yes, but it’s heightened because of the pandemic. The pandemic has driven food sovereignty forward, where governments are putting in place strategies to re-engage the economy that may be swinging too far to one direction, relative to a domestic-only approach. We need to look closely at this trend, because the world complains about being denied access to China, for example, but at the same time, different nations are creating their own ‘build back better’ strategies that are potentially food sovereignty-based, which can create the same issues.
When we look at the North American market, it is one market unto itself. We can't fool ourselves. The North American fruit and vegetable trade flows from Mexico to Canada to the U.S. to Mexico and back again, and the companies that operate within this North American framework are truly integrated. How do we drive and adjust, and move through COVID, to operate our businesses how we need to operate today — not within the new normal, but to meet the market demands of now, which are changing rapidly.
Q. The pandemic kicked several produce-related trends into high gear: online grocery shopping and delivery or curbside pickup; more at-home cooking and meal kits; etc. Which of these consumer trends does CPMA see continuing, or what else is on the radar as far as consumers and produce?
A. At the beginning of COVID-19, consumers were focused on food safety, and packaging ramped up. People went online to shop, and people were doing curbside pickup, all of which drove increased packaging. But we're seeing the pendulum swinging back and consumers are back to where they were pre-COVID, looking at how we remove unnecessary plastics from our waterways and from oceans, and sustainability on a macro level. How are we looking at our food in a sustainable manner? Millennials and the younger generation are now demanding the industry take hold of what they see as a sustainability issue and address it.
What’s interesting, though, is in all of our research, the consumer is saying ‘we want you to do it, but we don't want you to increase the price of our food. We don't want you to remove the convenience or remove the quality and freshness, or any of the key attributes that drive consumption.’ So it's a double-edged sword for industry — the consumer wants to have their cake and eat it too — and that is going to be our next hurdle around consumer behavior and trends.
There's a series of things on the environmental side to address consumers demand and, in addition, retail demands to address the plastic issue. There is new packaging guidance coming out for major retail in Canada that is looking at all of the elements around more post-consumer, more recycled content, the right material types that can be recycled. All of these things are happening, and working with the associations, working with your importer, is going to be key.
At the end of the day, the public's already demanding it, and buyers are already starting to develop packaging guidelines to meet public demand and government rules. For example, in many cases, a lot of clamshells are already at 75% recycled content. If we're already there, let's just move toward that so that we can cross that off the to-do list, meet the market demands and show the consumer and the government that we are doing the right thing and part of the discussion to be sustainable.
Q. Even pre-COVID, CPMA has had an ongoing initiative regarding plastic packaging. Could you give us an update?
A. CPMA has worked with the Canada Plastic Pact, which is a group of 70 organizations, governments and businesses including major retail, that is looking at how do you reduce, reuse, recycle in Canada; understand systems issues, but at the same time try to hit key targets around increased recycled content in materials. (Editor’s note: In October, the pact released an action plan, “Roadmap to 2025: A shared action plan to build a circular economy for plastics packaging.”) The end goal is a circular economy — if a plastic material comes into the system, it's the right material that can be circular, and will not end up in our waterways.
Globally, many jurisdictions are starting to push back, saying shipping a recycled material into the market that doesn't meet the market system requirements (so that it goes into linear path of recycled content instead of circular) is no longer being accepted. That's a fundamental shift in thinking.
Many will think, ‘I'm using this unique polymer, shipping it into a jurisdiction, and that polymer is used from recycled content, so I'm meeting sustainability targets from the jurisdiction I'm shipping to.’ But shipping into a new jurisdiction where that recycled material doesn't have a circular path — it goes into a singular landfill or maybe lawn furniture, but in the end it's only linear — the market is starting to question why we're using those materials and asking for change. And that's key.
And a good example are the PLU stickers. Globally, we recognize PLU stickers that are not compostable and are a challenge to the system because they can ruin an entire lot of compost going through an industrial system. So how do we drive toward a cost-effective industry standard PLU sticker within the Canadian market, recognizing the global shift that we're seeing in Europe, France, Belgium and others that are either banning noncompostable or biodegradable PLU stickers. So we are going to have to grapple with this, to try and understand what is the global standard we need to reach, because produce ships globally. And you don't want to put industry in a position where they have to change PLU stickers for every jurisdiction they’re shipping into.
Where will the industry land relative to the need globally? In the end, you know pennies matter. Fractions of a penny even matter. And it’s hard to add even small costs into a system where, as I mentioned earlier, you see inflationary costs ramping up because of the pandemic and because of supply chain disruption. The last thing we want to see is unintended consequences of food prices because of our sustainability strategy, creating a different issue on food security.
Q. Tell me a little about the Canadian Food Industry Alliance and its advocacy for a mandatory code of practice.
CPMA is part of the alliance, which is looking at the development of practice for the grocery industry in Canada, a similar approach to what the UK and Australia have in place around retail fees and practices within those jurisdictions. The industry — the entire Canadian agri-food industry and other key stakeholders — is working to frame and develop, at the request of the national and provincial ag ministers, a Canadian-made code that looks at some key attributes around contractual certainty, transparency, fair and ethical trading, and dispute resolution, many similar attributes of what you have in the U.S. through the Perishable Agricultural Commodities Act (PACA) or what you have in Canada under the Dispute Resolution Corporation (DRC), which is a PACA-like model in Canada. We're fortunate in the produce industry that we have this mechanism (DRC) for fair and ethical trading — but the entire grocery industry in Canada does not. So what we're looking at is how do we create that mechanism for effective trade and commerce of food, and protect some other colleagues within the grocery supply chain.
The alliance is looking at presenting a code model in March of 2022 with implementation timelines to the end of next year.
Wow! What a superstar!
We decided to focus this year’s Global Trade Symposium on the Americas and we can’t think of a person with a more encyclopedic grasp of the kinds of challenges facing the industry in the post-pandemic period than Ron Lemaire.
Canada is always an interesting mix. Its policy issues standing astride both US and European concerns.
He lays out the cornucopia of issues the industry is confronting, whether motivated by consumers, industry, non-profits, retailers or government.
We can’t wait to be blown away by the presentation both broad and deep and hope you will join us.
The Global Trade Symposium takes place the day before the trade show at The New York Produce Show and Conference and leads directly into the Opening Reception.
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