Pundit Interviews

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Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Just Say No: The New Dynamic Of Producer/Buyer Relations

Events as far away as London and Salinas are pointing to a new development across a range of buyers.

Buyers have so pressed their advantage that, increasingly, producers are just saying “What is the point?”

After years of living with the fact that they would lose money on individual items as a way of selling other items at a profit… after years of scheming to get their foot in the door with a loss in the expectation of better years to come… after years of thinking they had no choice… now producers are recognizing that they can’t sell at a loss and make it up on volume. And if they have to walk away from business, big business especially, then that is what they have to do.

Of course, it is easier for some than others. International companies marketing products that can be sold around the world can walk away from a particular product line or particular client and still stay in business. So the Fresh Produce Journal in London announced news in January that Del Monte walked away from the ASDA banana business:

Del Monte is re-evaluating its position in the UK after “walking away” from Asda’s banana business.

UK md Peter Miller told FPJ: “We decided that it was no longer the right proposition for us to continue supplying Asda with bananas.

“We walked away from the Asda tender because we didn’t like the money, but we still have 80 per cent of their pineapple business, a significant and developing share of their melon business and a massive proportion of their fresh-cut fruit business.”

Asda has extricated itself from the global supply deal its parent company Wal-Mart had on bananas with Del Monte, and is now sourcing from Fyffes, Chiquita and International Produce.

Recent events, both in London and Salinas, indicate that the movement is growing well beyond the banana giants and includes buyers well beyond big retailers.

As Tanimura & Antle recently decided to no longer sell to processors, press reports played it as if Tanimura & Antle — after a quarter century of selling processors — suddenly decided to discriminate against them.

A more accurate explanation of what transpired is that Tanimura & Antle decided to charge what it feels its product is worth or, at least, what it needs to produce it.

You can be sure if any processor with good credit wants to give Tanimura & Antle a contract to grow product at a price Tanimura & Antle finds appealing, the deal won’t take long to do.

One of things evident since the food safety initiatives of the post-spinach crisis era is that the growers who sell to the processors consider themselves to be price-takers, not price-makers.

We received many letters pointing out the increased costs of food safety standards. In a piece entitled, Pundit’s Mailbag — Trapping Stations And Food Safety Costs, we ran this letter:

Let me point out just one increased cost out to you: “Trapping Stations.”

Some processors are requiring trapping stations every 50 ft. for rodents. I grow 7,500 acres of vegetables. This would equal approximately 16,000 stations. So, 16,000 stations X $30 = $480,000. This isn’t a one-time cost. Now the stations need to be monitored 2X/week, and logged. I ask you, Mr. Pundit, how many people do you think that will take? I’m pretty sure that will be more than one person!

In summation, “trapping stations” alone would increase my costs by $100/acre, representing a $.015/pound increase on items like spinach and spring mix. A minimum of $.125/carton on other items. I am not even mentioning any other costs at this point!

— Jack Vessey
Vice President/Marketing Director
Vessey & Company

The sub-text of all these letters was that the processors were not going to pay any more even though these costs were all now being thrown on the growers.

Of course, pricing is ultimately a matter of supply and demand, and buyers can easily miscalculate their long term interests.

In business it often pays to not maximize your short-term profit. On the selling side, if you raise your prices too high, you create a margin magnet to bring in competitors and you give them space to undercut your position, while maintaining profitability. If you price leaner, there is no wiggle room for a competitor to move in, leaving you to dominate your space. Most potential competitors will decide they have prettier fish to fry.

Put another way, if you use your market but don’t abuse your market, you can often gain dominant share, make reasonable profits and sustain a business. If you abuse a market, someone else is bound to note those sky high profits and move in to undercut you. These new competitors could be larger, better capitalized, and you could well lose everything.

The same principle applies on the buy side. If you are a dominant buyer and use your ability to provide consistent high volume orders, you can gain access to a guaranteed supply of product from the best producers at a reasonable price.

If, as a buyer, you push too hard, you wind up losing the best growers, those who have other options — people such as Tanimura & Antle. If a whole category is competing to drive all profit out of the supply sector, then the best growers, who have other options, will give up on the business — as Tanimura & Antle just did.

Now as a matter of business, this rush to squeeze every cent of profit from the supply base is questionable. In the end, the outcome is predictable. Resources — land, labor, capital — that had been dedicated to supplying this sector will find other uses. Once gone, the remaining producers will find their hand eventually strengthened and will wind up raising prices. The buyers will find that once resources have shifted in other directions, they come back slowly, if at all.

There are also industry-wide concerns in this dynamic — such as food safety.

The industry still has an ingrained cultural problem regarding food safety. It is a problem I call “no points for extra credit.” The problem is that while the reality of food safety is a continuum, you can always be more cautious, have bigger barriers, more traps, more testing, etc.

Few buyers purchase in this way. If they do anything at all, they set up a minimum standard. Perhaps they will require a particular certification.

Yet this can be problematic. When Costco had a bit of a problem with carrots up in Canada, it was interesting to learn that Costco was buying Mexican carrots processed by a relatively small player. We saw this as somewhat troubling:

With all the talk about problems in food safety, one wonders if food safety is really the top priority in procurement. If you go to the Grimmway Farms web site, it says this about food safety:

Grimmway Farms knows that it’s important for you and your family to be confident in the safety of the produce you consume. Our safety standards are among the highest in the industry. Awarded Shield #002 for participation and acceptance in the USDA Qualified Through Verification (QTV) program.

Third party auditors include USDA, AIB, Siliker Labs, Scientific Certification Systems, Davis Fresh Technologies and many of our customers have excellent in-house audit programs as well.

Food Safety Standards and Guidelines: Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables — October 1998. Food and Drug Administration 21 CFR Part 110.

Good Agricultural Practices include monthly self-audits, quarterly third party program audits, and an annual intensive 3 day third party audit. Each field is audited prior to harvest. All new contracted growers must complete a self-audit as part of the contract. Audit reports may be reviewed by an additional third party.

Mock recalls are completed and documented often, with one of five most probable scenarios.

A new isolated Pathogen Laboratory for environmental testing provides us with results in 24 to 48 hours.

Perhaps the Mexican grower of these carrots had all these certifications. Perhaps not. Now anyone could have a problem and, in fact, we have no information that anyone has done anything wrong.

Still, it is hard to believe that Costco, which is the company pushing everyone in Salinas to test everything day and night, selected this roundabout pattern of having Mexican carrots, packed in Los Angeles and then distributed in Canada because it made the determination this was the route most likely to enhance food safety.

Now, we translate the news that Tanimura & Antle is withdrawing from the business of selling to processing to mean that processors are not willing to pay enough to entice Tanimura & Antle into growing for them, which brings up this question: Is every processor persuaded that every grower they will buy from equals or exceeds the food safety standards Tanimura & Antle adheres to?

In light of Tanimura & Antle’s scale and access to technology and expertise, this seems unlikely.

In which case, it would be fair to say that a pricing issue could be impacting on food safety.

Of course, the issues go beyond food safety and beyond processors. When we were reviewing the many changes that Wal-Mart was making in its procurement efforts, we received calls from several producers who said they had wound up in a game of brinkmanship with Wal-Mart. They explained that they refused to sign the contracts presented to them and almost wound up not being Wal-Mart vendors any more.

That sounds like a disaster and in fact the uncertainty of future options with Wal-Mart is one reason why Tesco’s Journey to America was so welcomed by America’s suppliers when it was first announced.

Yet Tesco may well disappoint US producers.

Certainly the company seems to be disappointing producers in Britain.

Sir Terry Leahy, the CEO of Tesco, had a skiing accident and so couldn’t speak before the National Farmers Union as scheduled. Instead Tesco sent someone named Lucy Neville-Rolfe, who has a fascinating background:

Tesco’s Company Secretary and Director of Group Corporate Affairs, Lucy Neville-Rolfe, is a fascinating example of ‘revolving doors’ between industry and government. At Tesco, her responsibilities include government, EU and competition issues, investor relations, communications, community affairs and corporate affairs policy for the international business in 10 countries. She reports directly to Terry Leahy.

Neville-Rolfe’s external appointments include business lobby groups, NGOs and government committees such as the CBI Europe Committee, UNICE Task Force on Enlargement and the boards of EuroCommerce and the British Retail Consortium. She also sits on a ‘work and enterprise’ panel for The Work Foundation and is on the advisory committee for the Economic and Social Research Council ‘Cultures of Consumption’ project.

Another advisory role is sitting on the President’s committee of London First, which Tesco also sponsors. She has been appointed to the Foreign and Commonwealth Office Management Board, as well as to the Deputy Prime Ministers’ Local Government funding committee, which is looking into better ways of funding council services, further crossing the line between influencing the government and being the government.

Neville-Rolfe joined Tesco from the Cabinet Office in 1997. She was formerly Director of the Cabinet Office Deregulation Unit under Michael Heseltine and later with Lord Chris Haskins who transformed it under New Labour. With Haskins, she wrote ‘Is there a future for European Farming?’ (2002) for the Foreign Policy Centre (see ‘Relations with Suppliers and Farmers’ section).

From 1992 to 1994, she was a member of the Prime Minister’s Policy Unit where her responsibilities included home and legal affairs and public sector reform. From 1973 to 1992 she worked at the Ministry of Agriculture, Fisheries and Food on EU and countryside issues and was Private Secretary to the late Rt Hon John Silkin MP. From 1991 to 1992, she was non-executive director of construction firm, J. Laing Plc.

Covering both bases (Labour and Tory) she spoke at the Conservative Party conference in 2003.

Neville-Rolfe’s husband, Sir Richard Packer, was Permanent Secretary at the Ministry of Agriculture, Fisheries and Food (now incorporated into DEFRA) from 1993 to 2000. He was mainly concerned with European Union polices on agriculture.

You can download the paper she wrote with Chris Haskins right here.

In any case, she appeared before the National Farmer’s Union conference and the Fresh Produce Journal covered it this way:

Neville-Rolfe stuns farmers with Tesco perspective

Tesco’s Lucy Neville-Rolfe did her best to alienate every sector of the NFU membership in turn during her presentation at the union’s annual conference, but saved some of her more palatable words for fresh produce.

Speaking in place of injured chief executive Sir Terry Leahy, executive director Neville-Rolfe rampaged through dairy, meat and poultry, drawing varying degrees of disbelief and anger with her perspective on her company’s positive contribution to each sector.

When she moved onto fresh produce, the word which caused similar consternation was “affordable”. She said: “We have made our fruit and vegetables more affordable. Our value range now covers 90 lines — many of them staple produce that [NFU members] grow for us. Sales of fresh produce have risen by over 10 per cent in the last year alone. We are also doing more to market fresh produce, such as aisles dedicated to seasonal fruit and vegetables — peas, strawberries, asparagus.”

She said Tesco has helped British farmers extend their seasons through local sourcing initiatives, and that the UK’s number one is creating serious opportunity for domestic farmers. “This year we expect to sell £400 million of local products in the UK. By 2011, we plan to sell £1 billion worth,” she said.

When questioned after the presentation about returns to growers, Neville-Rolfe said: “There are areas of fruit and vegetables from which you can make a fair, reasonable return, and consumers want more of them.” Without actually airing the obvious intimation — that there are also areas where growers cannot expect to make a fair, decent return, she added. “Affordability helps British growers of lines such as parsnips and Swedes, by making them more available to the poorer families, and that has enabled us to grow the market by encouraging consumers to buy more and be more healthy.”

She also said that Tesco, which has been openly telling some fresh produce suppliers that it wants to announce a £3bn profit in March and asking for their help to achieve that through discounts, is suffering the same economic and fuel problems as its suppliers. But her take on the consequences of that was not what the audience wanted to hear either. “The difficulty when you add costs into a competitive market is that some of those will be passed onto the consumer and others will be passed back to the primary producer,” she said, adding with no hint of irony that at Tesco the six per cent of sales that represents profits is a “relatively small margin” and that farming returns “come and go”.

“That’s why we have to work together and look at the opportunities,” she said. “We want our suppliers to do well.”

The disconnect between Lucy Neville-Rolfe and her audience of farmers is that she was focused on the idea that Tesco was doing a great thing for farmers because it bought and sold so much product.

The growers were basically saying that this is of no help if you require we sell to you at a loss.

The UK is a highly concentrated market. Del Monte can decide to sell bananas in some other country, but a UK grower of cabbage has much more limited options.

Tanimura & Antle is a large organization with many options, but a smaller grower may not be able to simply decide not to sell a whole class of trade.

The easy plea here would be to the buyers. To point out that all their corporate pronouncements on sustainability need to start with a consciousness of whether they are paying adequately to sustain the land and the supply base. And we make that plea.

But it is every bit as important for growers to not enter into contracts that they know are losers and not grow more than they have a high expectation they can sell profitably.

It is one thing for a shipper to take a hit for a buyer this week and make it up next; it is another thing entirely to do business that is unsustainable.

We can fault buyers for pushing for this, but we also have to fault producers who allow themselves to be so used. As Del Monte did with ASDA on bananas and Tanimura & Antle has done to processors, sometimes a producer just has to say no.




A Tip About TIPS

The term TIPS refers to Treasury-Inflation Protected Securities, which are basically Treasury bonds with a special characteristic: The principal amount of the bond will fluctuate with the consumer price index.

And the agreed interest is paid on the adjusted principal amount.

Now there are some quirky things about these bonds. You prefer to own them in a non-taxable account so you don’t pay taxes on interest payments that just compensate for inflation.

Many people find them complex — although they really are not — and so prefer to own them in funds in which management fees reduce income further.

What is interesting about this article is that the author, Brett Arends, ridicules them as an investment in the current interest rate environment. Here is how he puts it:

In theory, TIPS are an excellent idea. Like all bonds issued by Uncle Sam, they are safe from default. But unlike other Treasurys, they are also supposed to be safe against rising prices as well. They offer a certain guaranteed “real” yield on top of the official consumer-price index. So if inflation rises, the yield rises to match.

The problem? The guarantee that can make these bonds a fortress for your money can also make them a prison. This “real,” or after-inflation, yield is locked in when you buy the bond.

And right now, those real yields are terrible. They recently touched record lows.

The real return on the 10-year TIPS is just 1.56%, according to the Treasury’s latest data. Recently, it sank as low as 1.31%.

For the seven-year bond it’s just 1.23%, and for the five-year, a crazy 0.78%.

Early last fall, long TIPS guaranteed a respectable 2.3% plus inflation. At the time, I wrote that they appeared to be a much better bet than regular long-term bonds. And so it has proven.

But today they look abysmal.

The columnist goes on to call the investment absurd:

As a general rule of thumb, TIPS are usually worth looking at only when the real yield on the 10-year rises well above 2%.

This column doesn’t try to predict short-term market movements. The fact that Wall Street may be doing something really foolish today doesn’t mean it won’t do something even more foolish tomorrow.

So for all I know, TIPS could soar still further in the weeks ahead until they actually guarantee a negative real yield for everybody.

But that doesn’t mean you have to join in. As a long-term investment for serious individuals, TIPS right now look absurd.

We think that Mr. Arends is missing the point entirely. The fact that the market is driving the yields so low on inflation-protected bonds is a clear indication that the market — the collective wisdom of people investing money — is expecting very high inflation.

The Federal Reserve, which is kept semi-insulated from the political process specifically so it can resist political demands, has decided its purpose is not to ensure that the dollar remains a storehouse of value but, rather, that its purpose is preventing a recession.

Congress and the White House can pass all the stimulus programs they choose but, in and of themselves, tax rebates and government expenditures can be only modestly stimulating. After all, the money has to come from somewhere, so if the government is taxing or borrowing the money, that money is not available to be spent either directly by the person or company being taxed or, indirectly, by the financial institution that would be holding the money and lending it out for investment.

So the most you can argue is that the person who will receive a rebate — presumably a poorer person — will spend the money faster than the person who originally had it.

The stimulative effect will actually come from an increase in the money supply and that is highly likely to be inflationary. As Milton Friedman and Anna J. Schwartz explained in their epochal work, A Monetary History of the United States, 1867-1960 “Inflation is always and everywhere a monetary phenomenon.”

It seems from the behavior of the government that the Congress, the White House and the Federal Reserve are all more concerned with “helping” over-leveraged financial institutions and individuals than in ensuring that the dollar is a store of value.

How do you help somebody who is over-leveraged on his house? You inflate the currency so that the value of the property will go up in nominal dollars while the cost of that person’s debt will stay fixed.

Today because of adjustable rate mortgages, it may not work as well since the markets will eventually catch onto what is happening and interest rates will zoom.

Mr. Arends makes a big deal of saying that “This column doesn’t try to predict short-term market movements.” But for his argument to make any sense, you would have to say he is arguing that inflation rates will be very low.

After all, that “absurd” return he alludes to would look great if inflation hits double digits again.

Forewarned is forearmed.




Markon Looks To Produce Specialist ProPacific Fresh To Increase Service

We’ve spoken with Tim York, president of Markon Cooperative, many times, including here, here and here.

Now Markon has announced a new member:

MARKON ANNOUNCES
FIRST CALIFORNIA MEMBER

Produce Specialist Expands Markon’s
Geographic Reach & Service Capabilities

Markon Cooperative today announced the addition of a new member, ProPacific Fresh, a produce specialist based in Durham, California. ProPacific Fresh is Markon’s first California member and the first produce specialist to join the cooperative.

Tim York, president of Markon, said the addition reflects increased demand for Markon’s proprietary brands and added that it will help Markon improve service to its existing and prospective multi-unit account customers. “ProPacific Fresh fits our core criteria for membership: privately owned, handling quality products, and focused on customer service,” York said. “And it’s an ideal complement to our group in terms of its geographic reach and high standards.”

Commenting on being the first produce specialist to join Markon, ProPacific Fresh President Terry Richardson emphasized the benefits to all parties — from existing members to current and future customers. “We are delighted to join forces with such a respected and innovative group. It’s an exciting opportunity to put our respective approaches on the table, learn from each other, and together tackle the challenges of a rapidly evolving marketplace.”

Because Tim York and Markon have been so integral to the trade’s food safety efforts since the spinach crisis, we asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Tim YorkTim York
President
Markon Cooperative
Salinas, California

Terry Richardson
President
ProPacific Fresh

Q: What is the importance of ProPacific Fresh joining the Markon Cooperative? How does this help you tackle the challenges of a rapidly evolving marketplace?

A: TERRY: In summarizing the marketplace in terms of the competitive landscape, chains are expecting supplier consolidation, especially the customers we’re pursuing through Markon — the large regional and national chains. The chains prefer to deal with fewer suppliers that can cover a much greater geographical range. They can enjoy economies with fewer distributors. They’re also looking to leverage their purchases through a concentrated supply base. We can work together through Markon to leverage the overall program so economies are beneficial to all involved.

Q: The issue of consolidation has been bantered around for years. What’s different now?

A: TERRY: It’s more than just a catch phrase. Consolidation in customers, suppliers and product line is occurring at increasing speed and for different reasons. Regardless of what portion is undergoing a transformation, companies must recognize it and quickly adapt.

Q: Tim has been an aggressive leader in driving food safety initiatives both within Markon and industry wide. Did food safety play a role in your decision to join Markon?

A: TERRY: Food safety definitely comes into play. Several key areas attracted us to Markon, and food safety was at the top of our list. We became third-party certified and implemented a HACCP plan long before many in the industry moved on it. We recognized the importance of food safety. We realized how highly evolved Markon was with food safety.

Q: Are customers placing more importance on food safety when selecting suppliers? Is consolidation in part related to tightening control of food safety throughout the supply chain?

A: TIM: Food safety issues are creating a new urgency for consolidation. In the past, chains typically left produce purchasing decisions to individual units or buying was done on a regional basis where some chains had over 100 distributors. When chains looked at food safety and vulnerabilities in that area, it became clear since September 06 there were major risks in continuing to do business this way.

After the spinach E. coli crisis, chains started to get more and more concerned about getting their arms around suppliers and what products were coming through their back doors. It’s a shift from where food safety was important, but chains didn’t demonstrate it through their purchasing practices in produce. Chains look at us as a critical component in this food safety system. This shift is a key part of why ProPacific Fresh is such a good fit for us.

A: TERRY: We find that in the large national chains there are more food safety requirements and more concerns. We take a top-down approach to food safety; we live by it. We have a strong obligation and can’t take it lightly.

Q: By teaming up with Markon, then, you’re making a statement demonstrating your commitment to food safety?

A: TERRY: We are already hearing that feedback.

TIM: We look at food safety as a cornerstone of our business. It’s where we get the name for our 5-Star Food Safety program. In produce there are five touch points; first is the field where it’s grown and harvested; the shipping/processing facility is the second part; third is transportation, moving typically by truck; four is the distributor warehouse; and fifth is the operator kitchen.

We believe all these touch points are critical. Who we choose as a distributor is equally as important as the grower/shipper we choose. ProPacific Fresh specializes in fresh produce but they are a distributor.

Q: What food safety requirements does Markon require of its suppliers, and do those standards also apply to distributors?

A: TIM: There are two different levels of food safety requirements we demand depending on our suppliers. We have baseline requirements for any grower/shipper that provides us with fresh produce, involving a third-party audit. Those that pack our brand for us — over 50 suppliers — have more stringent demands and require third-party audits conducted by Markon that are reviewed with any shortcomings remedied.

Our distributors all have third-party audits done because national accounts require it. We review those audits and we have our own standards on food safety and quality.

When we first looked for California members, and the ProPacific Fresh name came in the mix, it was not only the quality of products and growers/shippers they used that impressed us, but their history in food safety. We looked at their audits and met with their food safety people. It showed us they wanted a strong food safety program by joining Markon.

Q: Produce specialists are becoming good, hard competitors to broadliners. Could you discuss this dynamic and how it influenced your strategy?

A: TIM: This is the first time we’ve actually added a produce specialist. Our profile traditionally is broadline distributors. We’ve long wanted a distributor in California to fill a niche for us. Hands down, ProPacific Fresh is the best company to work with in this capacity.

They’ve got a tradition of high quality products and people, both in retail and the food service business. It helps open opportunities to service retailers, not as our primary focus but as a way to expand our business. With ProPacific Fresh, our proprietary brands and positioning will be strengthened from a quality and food safety standpoint.

      

We have really three core brands: Ready-Set-Serve; that is plate-ready products like prepared salads, coin-cut carrots, diced onions. Then traditional commodities under the Markon First Crop brand. Then we have MVP, USDA #2 grade items, like #2 Idaho potatoes and onions. In potatoes, these would typically be misshapen, or with onions double centers, but still very usable products. If mashing potatoes, there is no sense in paying more for plate presentation.

Q: What differentiates a produce specialist from Markon’s broadline distributor base, and what advantages does this bring your customers?

A: TIM: Our bylaws have been organized to serve broadline members — they’re all we’ve served for 22 years. Produce was a portion of their business but well under 20 percent and, in general, averaging under 10 percent. ProPacific Fresh is virtually 100 percent produce. A produce specialist would be able to do smaller drop sizes and more frequent deliveries. It boils down to getting a higher service component from a produce specialist. They’re completely focused on the produce piece. That is what is unique.

Several of our distributors have a produce express program in which the produce specialist function falls within the broader business.

A: TERRY: Bringing in produce specialists is part of the overall strategic initiative of Markon. I can speak on behalf of ProPacific Fresh… one advantage as a specialist is we dedicate ourselves to fresh fruits and vegetables and understand the relationship between quality, freshness and frequency of delivery. We’re primarily focused on the national foodservice accounts, and frequency of delivery is a very critical part of servicing these national chains.

The broadliners that are part of Markon are exceptionally evolved in their [produce] capabilities and are much more experienced than what you’d see as relates to typical broadliners. Considering the current broadliner availability of Markon, coupled with produce specialists coming in, Markon not only bolsters a quality produce program but increases frequency of delivery.

This is very important due to the perishability of the product as well as the fact that some operators don’t have enough capacity for storage. Typically, foodservice operators need deliveries at least three times a week. Our location is important. We service customers from distribution facilities in Durham, Sacramento, Redding and Ereka.

California is a very significant market, by filling in California, we’ll be able to service national businesses.

Q: Is Markon looking to add more produce specialists? Do you have any more gaps you’re trying to fill?

A: TIM: We still have gaps in national coverage. We have full coverage in Canada coast to coast. Geographic gaps in the U.S. remain in the Northwest and the Baltimore, Washington D.C. corridor. Those are the ones that really stand out. In the future, we plan to address those areas.

Leadership has its benefits, but it also carries a price, and it is worth noting that Tim could have expressed his zeal for food safety by trying to turn it into a competitive advantage for Markon. Instead he tried to help the industry.

In so doing, he wound up accruing for Markon a reputation for leadership in food safety that wound up rebounding the benefit of the Markon Cooperative.

Maybe there is some kind of cosmic karma that causes companies and individuals that do good for the industry to also do well for themselves.

We hope so.

Good luck to Tim York, Terry Richardson and all the folks at Markon Cooperative and ProPacific Fresh. We wish you many years of productive association.




Tesco Conference Call With Pundit Q&A Available For Your Listening Pleasure

The Pundit recently fielded questions from international investers who were part of a conference call hosted by Citi European Food Retail Team.

Here is the invitation that went out:

The Citi European Food Retail Team invites you to participate in a conference call to discuss the progress of Tesco’s new US grocery chain, Fresh & Easy.

Our special guest will be Jim Prevor — otherwise known as the ‘Perishable Pundit’ — who will be taking us through his impressions of Fresh & Easy as a consumer and as an industry insider. He has some firm views on what is working well and what does not seem to be working so far… There will be an opportunity for Q&A.

For those of you not acquainted with Jim — recently described by the Sunday Telegraph as “one of America’s most influential commentators on the grocery market” — you should check out his website at http://www.perishablepundit.com/.

If you click on the following link you will see over 50 articles he has written on various topics related to “Tesco comes to America” — http://www.perishablepundit.com/index.php?hot=tesco. Jim’s extensive industry experience is summarised at: http://www.perishablepundit.com/biographicalsketch.php

Please join us for what is sure to be a fascinating discussion — Fresh & Easy is likely to continue to be one of the key news stories in the sector for 2008.

The call was intriguing. British investors and investment banks have made so much money betting on Tesco for so long that it is hard for them to conceive that Tesco might not succeed in America.

Our job was to broaden the possibilities they might consider. We think we did so.

If you are interested in listening to the tape, it will be available through the weekend and through Tuesday, February, 26, 2008. Here is the call-in information:

Please note that a replay facility should be available for one week following the call. The details will be as follows:

Encore Replay Access Number: 34553929 #
International Dial In Number: +44 (0) 1452 55 00 00
UK Free Call Dial In Number: 0800 953 1533
UK Local Dial In Number: 0845 245 5205

Remember, if you are calling from the US, you need to dial 011 to get an international call through, and you don’t dial the zero in the parenthesis.




Pundit’s Mailbag — Duke’s A Hazard

Here is a letter we received with the accompanying magazine cover from a major force in production-side agriculture in Salinas:

“Duke” is quickly becoming a legend around here in Salinas. Many growers living on ranches have had to get rid of family pets, fence them in, chain them up, yet in Ohio you can pose with them in a middle of a field of your strawberries.

It still hasn’t been proven how the spinach got contaminated in 2006 and, certainly, domestic pets may not be a major issue, in any event, pets are basically banned from ranches in California.

It was always an image that tugged on the heartstrings as one would see growers driving around with their labs (or other appropriate hunting breed) in the backs of their pick ups. Now the dogs stay home all day. One friend told me his dogs are totally depressed.

But not ole Duke here….

Who says we don’t need to take these standards nationwide? Given the editor’s own comments on page 66 and the content of the publication, the cover image is inappropriate.

I don’t want to burst the bubble of the Klco family who seem like very nice people and great farmers, but where are their hair nets? Has their water source been audited 3 times this month? How large is their buffer zone? Do they have lot level traceability?

This publication should be more aware of what’s really going on in terms of food safety and farming.

Rainbow Farms sounds like a wonderful place and the Klco family wonderful people. The history is admirable, and they’ve even put this first generation farm into a Farmland Preservation program.

Yes, it would have been better if the publication was more focused on setting a better food safety example rather than allowing a picture to be published so prominently that it sets a questionable example.

Rainbow Farms seems to sell mostly U-Pick, from a Farmstand or from various Farmer’s Markets. This takes the company pretty much off the grid as far as the produce industry goes.

Perhaps, eventually, we will get to the point where we address food safety risks from this sector of the industry.

Right now, as we discussed in our piece, Food Safety And ‘Locally Grown,’ our bigger concern is commercial buyers who have completely different standard or no standards at all for locally grown produce than they do for their normal suppliers.

Not only is this unfair — it doesn’t make sense. Either these things really help food safety, and so should be uniformly required, or they don’t.

That is why this picture of the happy family and the happy pooch is arousing such resentment in Salinas. It reminds those farmers of a double standard and a country lifestyle now gone forever.




Pundit’s Mailbag — Further Clarification
On Nobel Prize

We started out by publishing Decline Of Nobel Culture: From Theodore Roosevelt To Al Gore…To Tesco & Non-existent Drowning Polar Bears, which brought a response from Sweden, which we entitled Pundit’s Mailbag — Letter From Sweden About Nobel Prize ‘Sarcasm’

When we published that letter, we thought it interesting that our discussion of the relative merits of the Nobel Peace Prize being awarded to Theodore Roosevelt and Al Gore should bring a response from a Swede. This is what we actually wrote:

Being that the Nobel Prize is awarded by the Nobel Foundation in Sweden each year, it seems somehow fitting that our piece, Decline Of Nobel Culture: From Theodore Roosevelt To Al Gore..To Tesco & Non-existent Drowning Polar Bears, should draw objection from a Pundit reader in Stockholm…

Strictly speaking, it is not correct to say that the Nobel Foundation “awards” the prizes and our Swedish correspondent wrote us back to remind us of this fact:

Just wanted to send a closing remark with regard to the Pundit piece entitled, Pundit’s Mailbag — Letter From Sweden About Nobel Prize ‘Sarcasm’.

For sake of good order, it ought to be noted that the Peace Prize is not awarded by the Swedish Nobel Foundation. You can see the way the Foundation explains the matter here:

The Nobel Prize Awarders
Who selects the Nobel Laureates? In his last will and testament, Alfred Nobel specifically designated the institutions responsible for the prizes he wished to be established: The Royal Swedish Academy of Sciences for the Nobel Prize in Physics and Chemistry, Karolinska Institute for the Nobel Prize in Physiology or Medicine, the Swedish Academy for the Nobel Prize in Literature, and a Committee of five persons to be elected by the Norwegian Parliament (Storting) for the Nobel Peace Prize. In 1968, the Sveriges Riksbank established the Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel. The Royal Swedish Academy of Sciences was given the task to select the Economics Prize Laureates starting in 1969.

— Åke Lewander
Group Networking Manager
LCL World Wide Group
Stockholm, Sweden

Many thanks to Åke for keeping us on our toes. We should have said that the Nobel Foundation funds the award.

If you are visiting Oslo, you can also visit the Nobel Peace Center. Going to Stockholm? Visit The Nobel Museum. You can learn more about Alfred Nobel here.

Just remember that none of this would have been possible without dynamite.

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