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Big Ramifications For Industry As Florida Tomato Growers Exchange Agrees To Penny-A-Pound Program

Jim Prevor’s Perishable Pundit, March 5, 2010

We angered many in the Florida tomato industry when back in 2007 we ran a piece titled, Florida Tomato Growers Reject Penny-A-Pound Initiative At The Industry’s Peril.

There were letters such as one we included in a piece titled, Pundit’s Mailbag — Defending The Florida Tomato Industry.

And we certainly tried to point out some of the positive efforts the industry was making, such as in a piece we called, Redlands Christian Migrant Association Is An Organization Worth Replicating Nationwide.

But the move to so-called penny-a-pound programs seemed inexorable to us, as we profiled in a piece named Subway Joins Penny-A-Pound Program While Tomato Growers Feel The Pinch.

The big obstacle to instituting these programs, whereby buyers set aside extra money specifically for growers, was that the Florida Tomato Growers Exchange had instituted a policy prohibiting its members from participating in such programs.

Writing in PRODUCE BUSINESS in a piece titled, Wages And Social Responsibility, we warned the industry that sustainability involved a lot more than environmentalism and that wages and working conditions would be a big battleground. And we concluded our first piece on the penny-a-pound schemes and the resistance in Florida to them with this warning to the broader industry:

It is a truism now that in food safety, the industry will be judged by its weakest link. We should not think that any less so on issues regarding labor relations and social responsibility.

The Florida Tomato Growers Exchange had all kinds of reasons why it couldn’t participate. They claimed anti-trust issues, practical impossibility and on and on. Yet in the end, the newspapers were filled with articles trumpeting a change as in this one, titled Florida Growers Group Changes Stance On Tomato Pickers’ Pay:

In a major reversal, a powerful Florida agricultural group will now let its tomato-grower members distribute to workers extra wages contributed by buyers such as grocers and fast-food companies.

A new social responsibility program will let companies make supplemental payments to workers and establish guidelines for employment practices, said Reggie Brown, vice president of the Florida Tomato Growers Exchange, to which 90 percent of growers in the state’s $400 million tomato industry belong.

Brown said fair wages, and safe working conditions will help improve the lives of farm workers and their families.

For years, the grass roots Coalition of Immokalee Workers has tried to do that by raising pickers’ subpoverty wages — inert for decades — and improve working conditions with its Campaign for Fair Food. The goal is to increase annual earnings from about $10,000 to between $16,000 and $17,000 with a penny-per-pound increase. Major fast-food restaurants such as McDonald’s and other food buyers agreed to the hike, which calls for the companies pay extra for tomatoes harvested under a stricter code of conduct.

The coalition didn’t ask growers to pay workers extra; it asked that they transfer money the companies agreed to pay.

But the growers refused, threatening $100,000 fines for any member who passed along the increase. The group rescinded that policy last year, less than a month after East Coast, Florida’s No. 3 grower, dropped out of the exchange to pay the increase.

Now, the growers are offering their own version of the pass-through and code of conduct.

Brown said the program was crafted with exchange customers such as McDonald’s.

That came as news to McDonald’s spokeswoman Danya Proud, who said the company has and will continue to work with the coalition and to abide by their 2007 agreement.

“McDonald’s is not involved in the Florida Tomato Growers Exchange’s new social responsibility program,” she said.

Brown could not be reached for further comment.

The Florida Tomato Growers Exchange has announced its own Social Accountability Program that includes a Florida Tomato Grower Code of Conduct.

Much of the social accountability program is similar to the pre-existing Socially Accountable Farm Employers, or SAFE program.

Yet neither SAFE nor the new Social Accountability Program are likely to satisfy self-proclaimed advocates for the migrant workers.

Partly this is because the advocates are extreme and disingenuous, doing things like operating a “Florida Modern-Day Slavery Museum” to arouse public anger against the Florida growers, even though no reasonable person could view the state of agricultural employees as even approaching slavery — in fact, most workers have friends and relatives who are working and these friends and relatives have urged their family members and friends to come work in the fields of Florida because it is a far better opportunity than they have back home.

But the grower effort is not likely to gain traction even with more moderate advocates for the workers because it scarcely calls for anything beyond pledging that the growers will obey the law. Over and over again, the Code of Conduct includes reference such as these:

“Each participating grower commits to comply with all applicable laws and regulations governing employment in the jurisdictions in which they operate.”

“Each participating grower is an equal opportunity employer and complies with all relevant nondiscrimination laws and regulations.”

“Participating growers will not use forced labor. Forced labor includes prison labor, indentured labor, or any other activity in which the worker’s freedom is improperly or unlawfully restricted.”

“Participating growers will not use child labor, as defined by the laws and regulations regarding agriculture activities of the jurisdiction in which the work is being performed.”

“Each participating grower commits to pay no less than the established lawful minimum wages to migrant and seasonal agricultural workers. Migrant and seasonal agricultural workers will receive all benefits required by the laws and regulations of the jurisdiction in which the work is being performed.”

“Each participating grower commits to keep and/or maintain payroll records in a complete and accurate manner as required by law.”

“Workers will be trained to ensure safe procedures and proper use of pesticides in the work environment, in accordance with the laws and regulations of the jurisdictions in which the work is performed …”

“Participating growers who own or control housing will ensure that it meets all the applicable health and safety laws and regulations of the jurisdictions in which it is located.”

“Participating growers who provide housing to migrant agricultural workers will provide such individuals with written terms of occupancy as required by applicable federal law.”

Certainly these are all good things, but they simply will not be meaningful to advocates for the workers because all these things are required by law, with or without a code of conduct.

One of the basic premises of sustainability is that it involves going above and beyond the legal requirements.

We wanted to get another perspective and Pundit Investigator and Special Projects Editor Mira Slott spoke to a knowledgeable observer of the industry:

Q: What’s your take on the Florida Tomato Growers Exchange reversing its position with CIW and agreeing to distribute supplemental payments to workers? How will this impact the industry?

A: In a sense, because the tomato growers have held off so long, they’ve done the retailers a favor. They’ve basically been the bad guys, taking the hits for the rest of them. Retailers say they’ll participate in the program, knowing the tomato industry is hesitant.

Now Florida Tomato Growers Exchange is saying any grower can participate if they want to. If that’s the case, retailers targeted by CIW will want to be spared embarrassment. Now the big moment is with Publix being targeted, but CIW wants every retailer possible to do this deal with tomatoes as part of its whole big campaign for fair food.

Q: Do you anticipate retailers will feel the same kind of pressure as major fast food chains to follow suit and begin signing contracts with CIW? Further, why would CIW be satisfied to limit its fight to Florida tomatoes? Couldn’t this signal the start of a domino effect with other commodities to follow?

A: Once CIW gets retailers on board for one product, tomatoes, it will move on to other commodities. Is citrus next, maybe not? Once processed into juice, consumers don’t see it at the grocery store as a Florida orange. It might be challenging for CIW to create a clear messaging campaign to boycott Florida oranges. So, maybe it targets another commodity first. There are lots of question marks, but that’s a CIW dream to have all crops picked by migrant workers included.

Q: The Florida Tomato Commission argued relentlessly against the Penney a Pound scheme for so long, claiming anti-trust conflicts and impossible logistics in distributing the additional wages. Does the CIW view the change in policy as a major coup?

A: In certain respects, the Florida tomato growers look even worse now by reversing their stance and agreeing to CIW’s demands, because it puts into question the validity of all their original arguments. Still, in the tomato case, CIW feels it’s only half a victory; it wants input in code of conduct with the industry. This action by the Florida Tomato Growers does set a precedent, a nasty precedent regarding CIW eventually moving to another commodity.

Q: What does this mean from the supermarket chain’s perspective?

A: If you’re a supermarket executive, it’s a terrible precedent that an activist group is dictating to you which growers you have to buy from. You have to buy tomatoes from certain growers. You’re losing power, giving an activist group the authority to tell you how to buy.

Q: Are there legal issues involved here?

A: What’s interesting in this case… clearly CIW learned the mistakes of United Farm Workers Union with Cesar Chavez when it boycotted grapes and targeted the strawberry industry in California, wanting to organize farm workers into a union.

The government has specific laws to deal with organizing unions. It would be interesting to get reaction from Western Growers Association and big time ag labor relations attorneys. What is the impact of CIW’s actions and how could that affect farmers in California and elsewhere? Because CIW is not a union, does this mean any charity or activist group can dictate the rules? This is a dangerous precedent, no question about it.

Q: How did the industry allow the situation to spiral out of control like this? Doesn’t the industry have the power and wherewithal to counter actions of a relatively small, albeit effective, activist group?

A: The tomato guys have been warning the rest of the industry this day would come. No one listened, no one rallied on their behalf. The industry will have a million task forces on food safety and traceability. Yet PMA and United say they can’t touch labor, claiming anti-trust laws.

How do you know who CIW will target next? The contracts that organizations signed with CIW are private, no one knows what’s in them, but up until now those monies were put in escrow accounts. Now that money must be distributed.

Q: What about the long-standing contention of Florida Tomato Growers Exchange that there is no logistically plausible way to insure the money is distributed to the right people?

A: There is no way to fairly distribute that money. How do you know which worker picked tomatoes for McDonald’s or Burger King, and is now picking tomatoes for some small supermarket in New Jersey? The whole thing is a mess.

First CIW went after the fast food chains; now Whole Foods is on board. CIW feels like if it gets Publix, then it’s just a matter of time till Kroger and Wal-Mart cave. In December, CIW orchestrated a blitz of supermarket protests, which included Kroger and Wal-Mart. Once it gets one of the more mainstream supermarkets, the rest fall.

Q: Do you think produce industry executives just assumed the problems would remain isolated to Florida tomato growers? Perhaps they stayed silent for fear of being associated with the controversy, clouded by scathing accusations of slavery, or that speaking out would just aggravate the situation and generate more negative publicity… I imagine some anticipated the activist group would eventually fade away, rather than building more and more clout over the last decade? What happens now?

A: The moral of this story is you have to defeat a group like this early on. The industry should have been going after CIW 10 years ago. It started with Taco Bell, when four Immokalee guys went on a hunger fast; Jimmy Carter was involved.

During that period, the industry should have come out with the big guns and attacked this program. Once Taco Bell caved in, CIW started getting more publicity, and then it got McDonald’s.

Q: Is there a way to slow down the momentum? What proactive steps can the industry take at this point? How can it learn from this phenomenon moving forward to stave off a firestorm?

A: CIW can still go after tomatoes for a while with supermarket chains, and put new focus on the code of conduct part. CIW needs to get Safeway, Kroger and Wal-Mart, and then it can start lining up other commodities. Now it’s a supermarket headache. The industry put their heads in the sand, the damage has been done, and now there is no turning back.

The anti-trust issues never really made much sense and the logistics of distributing the money have been solved this way:

The growers argued for years, including at congressional hearings, that a third party couldn’t legally dictate the terms of its workers’ employment. They threatened fines against any members who participated. And they complained there was no way to track who picks tomatoes that ultimately end up on a Burger King Whopper or a Subway sandwich.

Now, the growers finally came up with another solution. Each restaurant or retail chain will decide on a weekly “supplemental wage” payment to be made to the grower based on the amount of Florida tomatoes it purchased. The payment will also include an additional 15 percent for administrative, insurance and payroll tax expenses.

The growers will divide the total money among the migrant workers on the payroll that week, giving each one a pro rata share based on the amount of hours worked. The program goes into effect immediately.

“This program doesn’t have any connection to who picked what,” Brown said. “If a customer chooses to enhance the income of my workers, we’re willing to pass those dollars along. This is a way that it can be done fairly and simply.”

The growers have also agreed to regular audits to ensure that the amount of tomatoes purchased and the supplemental wages are accurately reported and allocated to workers.

We are actually not certain this solution will be fully acceptable to the buying end of the business. Chains like Whole Foods don’t just want to increase tomato pickers’ wages on average; they want their own customers to know that if you purchase tomatoes at their store, the workers who picked those tomatoes were paid a premium.

We have little sympathy for CIW, which is basically trying to establish a union through subterfuge, without a Union vote. But we also think that the whole industry is not paying enough attention to this issue and to the general area of the social pillar of sustainability.

The folks at CIW may be unfair and attempting to seize leadership of the workers without a vote, but the leaders at CIW are shrewd and have set an example that will, without a doubt, ultimately reverberate throughout the industry.

CIW executives realized that produce growers, mostly without consumer brands, are simply not subject to much pressure. But most buyers, especially large chain restaurants and retailers, are very susceptible to pressure. These organizations have enormous reputational risk at stake in all their activities, and they spend very little money on tomatoes or any produce item compared to their total operating cost.

So it doesn’t take too many protests or too many TV reports for these chains to fold and say they will gladly pay extra if CIW will call off the protestors and stop the news reports associating the chain with abusing workers.

And it won’t stop with Florida tomatoes. It won’t stop with tomatoes and it doesn’t matter if CIW spreads or not. The pattern has been set: Find examples of egregious activity, no matter how atypical, associate it not with perpetrators or even the growers who might work with a perpetrator — instead the evil is associated with a brand name retail or restaurant chain that has a lot to lose from being associated with nefarious activity and almost nothing to gain from less expensive farm labor on a particular crop. Watch the brand names cave.

The really sad thing about this is it is not at all clear that the effort, even if successful, will help the intended beneficiaries. Part of this is because CIW has focused solely on Florida, whereas pay scales and conditions in countries that compete with Florida are far worse. By raising the cost of Florida product, CIW actually is encouraging buyers to buy from other areas. This seems unlikely to help the workers in Florida. .

Long term, increases in the cost of labor lead to mechanization and the use of varieties and horticultural practices designed to minimize the use of labor. That may be good if labor prices rise because of supply and demand — but if the world is filled with people thrilled to work at current wages, then how does setting an artificially high wage, which then leads to eliminating their jobs, help them?

Unfortunately, the industry has not engaged in this debate publically. The trade has wanted to believe that sustainability is mostly about environmentalism, but this has left the trade powerless to rebut Wal-Mart’s sustainability efforts — see related articles, Wal-Mart Must Include Adequate Return On Capital In Its Sustainability ‘Index’ Or It Will Do More Harm Than Good and Dangers And Broader Implications Of Wal-Mart’s Sustainability Index — which ignore the economic sphere and has left the industry defenseless against CIW because the trade, anxious to avoid the controversy over wages and benefits, has ignored the social sphere.

Now is the moment for a more sophisticated position, encompassing all three pillars of sustainability. Such an undertaking is the only way to effectively deal with the labor attacks that will be coming the industry’s way in the years to come.

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