Pundit Interviews

Pundit Letters





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



Safeway’s Steve Burd’s Comments
Buttress Pundit’s Fresh & Easy Analysis

There’s more back up support for the Pundit’s assessment — also buttressed by a report from the Willard Bishop consultancy — that Tesco’s Fresh & Easy store volumes are only running at around $50,000 a week, per store, once the grand opening period passes.

The “evidence” of Tesco’s volume can be deduced from a statement by Safeway CEO Steve Burd. In a piece in the East Bay Business Times focused on a plan by Safeway to move toward “better everyday value” pricing, Steve Burd says this about Tesco:

Burd also said he’s not particularly worried about the entry of Tesco PLC, the British supermarket giant, into its home turf of California, where Safeway operates nearly 600 stores under the names Safeway, Vons and Pavilions. He said that each one of Tesco’s Fresh & Easy Neighborhood Market stores that open within 1.5 miles of a Safeway has only 10 percent of the impact of the opening of another conventional supermarket.

If we are generous and say a typical new supermarket opening is 50,000 square feet (if you exclude supercenter-type concepts, it is actually smaller) and if a Fresh & Easy sold on par with the per square foot sales of an American supermarket, we would expect Fresh & Easy (at 10,000 square feet) to draw 20% of the business that a 50,000 square-foot supermarket would draw.

Fresh & Easy was budgeted by Tesco to start out with sales of about $200,000 per store, per week. Working with Fresh & Easy’s approximately 10,000-square-foot footprint, that comes to about $20 per square foot. Now, assuming that a conventional 50,000-square foot supermarket generates about $500,000 per store per week, or roughly $10 per square foot in its first year, Tesco’s number requires sales per square foot to be about double what a US supermarket typically does.

If a Fresh & Easy is 20% of the size of a major supermarket, but doing twice the volume per square foot, we would expect a single Fresh & Easy store to draw 40% of the sales from a neighboring Safeway that a normal supermarket opening would draw.

If Fresh & Easy was averaging the same sales per square foot as US supermarkets (approximately $10 per square foot in its first year), its sales per store would equal about $100,000 per week. If we assume that it is 20% of the size of a US supermarket and doing the same volume per square foot as a US supermarket, we would expect that the opening of a Fresh & Easy would draw about 20% of what the opening of a regular supermarket does from a nearby Safeway.

But Steve Burd says that the opening of a Fresh & Easy only affects a nearby Safeway by 10% of the effect that a supermarket opening has. If the square footage is 20% of the size of a supermarket, you can only get to that 10% number if sales at Fresh & Easy are half the typical sales per square foot of an American supermarket or, roughly, $50,000 per store, per week.

But Steve Burd’s comments are just one more indication that Tesco is looking at a division in need of a dramatic revamp.




Friday The 13th, March 1989…
Important Date In Produce History

A longtime participant in the import deal reminds us of a never-to-be-forgotten day 19 years ago:

It was a Friday the 13th in March 1989, that we learned that in the early morning hours the FDA alleged they had found 2 individual Flame seedless grapes had been injected with cyanide in one box out of 190,000 boxes of grapes on a vessel named the Almeria Star.

It was later established in testing performed at UC Davis that at the reported level of cyanide found in the grapes they would have had to be in the possession of the FDA at the time of the contamination, or the test was in fact ‘an error’.

In historical perspective, the Pan Am flight had been blown up over Lockerbie, Scotland by terrorists, and the State Department had reason to believe there was a bomb on board, but failed to warn the public.

The show ‘60 Minutes’ had recently done an ‘expose’ of a growth regulator called Alar that gave red delicious apples their ‘5-point’ characteristics. Lab test had shown that at massive amounts, Alar might cause cancer in rats, and ’60 Minutes’ embarrassed the FDA for ‘failing to protect the public’s food supply.’

No other cyanide was ever found, and it was established at the level it was found, a person would have had to consume several hundred pounds of grapes at one sitting just to become ill.

Upon reflection, it would appear that the powers-to-be in Washington felt it was appropriate to show that both the FDA and State Department were ‘on the job’ to protect the American public from a terrorist plot to poison the public from the country of Chile, then headed by ‘dictator’ Augusto Pinchot.

The debacle cost the industry in excess of $300 million (1989 Dollars), for no good reason.

It seems the use of fear in justifying its actions to protect against terrorism and the whole issues of food safety and how to protect the public have their modern beginnings 19 years ago today.

Let’s hope that someday our society finds the way to make well considered decisions based on the reality of the circumstances.

— Richard A. Eastes
Director of Special Projects
Ballantine Produce Co., Inc.

Many thanks to Rick Eastes for reminding us of such an important date in produce history. We also yearn for a day when decisions are based on reality. Yet it seems unlikely to come very soon.

We are in the midst of the biggest meat recall of all time, yet scarcely any attention is paid to the actual risks of consuming this meat. Most companies simply hopped on the recall-and-destroy band wagon, afraid to be seen in the least bit soft on food safety.

Craig Wilson, the Assistant Vice President of Food Safety and Quality Assurance for Costco, who we’ve spoken to here, was like the little boy in The Emperor’s New Clothes, almost the only one to tell the truth:

“The food’s safe,” says Craig Wilson, assistant vice president of food safety and quality assurance at Costco. “We’re going to recall all this food and destroy it. This is morally and ethically wrong.”

We could have used Craig 19 years ago.




Pundit’s Pulse Of The Industry — Perfection Fresh’s Michael Simonetta

The relationship between the produce industry in Australia and New Zealand and that of the United States is most intriguing. There is some trade… the Pundit remembers, in his youth, buying apples from the late, great Harry Chilton of Tasmania. We ran a piece, ‘Great Mates’: USA Pears And New Zealand, about USA pear exports to New Zealand and, of course, there is a navel orange export deal from Australia to North America. There’s also some trade in apples, pears, kiwis, some small volumes of other items depending on crop conditions and price.

Yet even if trade is slight, that doesn’t stop the industry from sharing ideas and experience across the Pacific and from the northern to the southern hemisphere and back. Typically the largest single contingent at PMA from outside North America comes from Australia — a wildly disproportionate showing based on trade and on population.

We have discussed some of this industry interchange with pieces, such as Is It Possible To Have A PMA Chairman From Outside The US? and Pundit’s Mailbag — In Support Of Rob Robson.

We wrote a profile of a Canadian who is working in New Zealand in Pundit’s Pulse Of The Industry: Enza’s Dawn Gray. We also highlighted food safety efforts in Australia in our piece, Pundit’s Pulse Of The Industry — OneHarvest’s Rob Robson And His Food Safety Team, which we followed with Pundit’s Mailbag — More Insights On OneHarvest’s Leaders.

We also highlighted the efforts of Australia’s largest supermarket chain to increase consumption and health among children with our piece, Woolworths Supermarkets In Australia Promotes Kids’ Produce Consumption.

When we ran our piece, PMA Convenes First Country Council, we pointed out that Michael Simonetta of Perfection Fresh in Australia had been named Chairman of the PMA Australia-New Zealand Country Council. The piece brought us this note:

I have followed with interest your coverage of PMA’s new Australia-New Zealand Country Council.

In addition to providing an obvious produce industry networking umbrella, this new council can also provide a local platform for PMA programs and services that often go un-noticed overseas.

Having served for several years on PMA’s Board of Directors and later on its International Advisory Council, I am intrigued by this new PMA effort to establish a regional presence overseas and believe the “council” format has great promise in other countries as well — particularly if PMA can cultivate the interest and involvement of key supplier-retailer leaders elsewhere as it has in Australia and New Zealand.

This initial line-up is impressive and will do much to ensure that the council remains relevant and successful. PMA is particularly fortunate to have Michael Simonetta’s influence and leadership on this new effort. He and his Australia-New Zealand colleagues are industry stand-outs; PMA would do well to identify similar produce industry leaders in Europe, Chile, South Africa and Asia and to introduce country councils there as well.

— David Marguleas
Sun World
Senior Vice President, Licensing and Business Development
Coachella, California

Indeed PMA has gone in the direction David suggests, having launched a Country Council in Mexico — as we discussed in PMA Mexico Country Council Meets — and, without doubt, if local industry leaders support the effort, we would expect to see more such efforts.

As David alludes in his note, these efforts depend a little on PMA and the support it provides but they depend a great deal on motivated local leaders who believe in the industry, believe in a tie with North America and believe in a tie with PMA.

What kind of leaders are these? What makes them tick? What motivates them in their local industry and what do they relish about the tie with PMA? We asked Pundit Investigator and Special Projects Editor Mira Slott to speak with Michael and find out:

Michael Simonetta Michael Simonetta
Chief Executive Officer
Perfection Fresh
Sydney, Australia
Chairman, PMA Australia-New Zealand
Country Council

Q: What inspired you to take on the chairmanship of the newly-formed PMA Australia-New Zealand County Council?

A: I’ve been involved with various boards and councils with PMA for a number of years now, since the late 90s when I first joined the international council; I think that was in 1999. At the expiration of my three-year term, they asked me to join the food service board for another three years, providing a whole new perspective. Then I was asked to come back to the international council for two years as chairman, a great honor to lead world leaders.

The executives and board decided to enhance member value across the world, that we pioneer the country council concept. Australia-New Zealand would be first, followed by Mexico, now up and running. They asked me to be chairman, of course another great honor. And now we are coming into our second year.

My drive for wanting to be continually involved here is twofold; to give back to the industry we all love so much and to do it through PMA is a great opportunity. Besides this, here in Australia, industry is probably more fragmented than in the U.S. We don’t have a strong industry body that represents all aspects of the supply chain. Through this country council, we can get closer to having a strong industry body, forging a strong relationship with Horticulture Australia that shares a vision with PMA of where we want produce to go in Australia. Horticulture Australia is a body that’s been set up for a number of years. Its main role is to manage statutory levies, and through various committees representing products that have levies, oversee research, product development and marketing.

Q: What is your vision of where you want produce to go in Australia?

A: The key things for us, first and foremost, is to increase consumption. That is a continuing challenge. Produce is one of those food groups that is very much high profile when it comes to a health perspective and we have to capitalize on that. The average consumer is more aware of personal health, especially with baby boomers becoming more considered with what we put in our mouths.

Q: America has been contending with an obesity epidemic and serious health issues related to diet for quite some time now, but it seems the problems have proliferated, taking on an international sense of urgency. What is your perspective as an Australian?

A: I don’t think we’re too far behind. Those issues are just as prevalent in Australia.

Another area we find personally challenging is the area of recruitment and people. We have a bit of a talent shortage in Australia and around the world, and PMA has attacked this problem through the Education Foundation and the Pack Family/PMA Career Pathways Fund program.

It is difficult in Australia to get young people to join the produce industry. Unfortunately it’s very true. In Australia, the thing we have to compete with is a bit of a talent war with the mining and resource boom going on here in case you haven’t read about it, taking up our workforce and leaving a shortage. Salaries and incentives to go to the mines make it hard not just for the produce industry but for a lot of industries to compete with.

The next big challenge is the whole issue of going green and the environmental issues, social and environmental accountability we read about a hell of a lot. It’s not going away, consumers are aware, and as good corporate citizens we need to play our part in reducing carbon footprints. As suppliers to those supermarkets making a stand in this area, we have to set targets and meet them.

Q: Are retailers in Australia paralleling the actions of retailers like Wal-Mart and Safeway in the U.S., and Tesco and Marks & Spencer in the U.K?

A: Yes. Woolworths’ CEO Michael Luscombe only a matter of weeks ago made a commitment that by 2015 the company will reduce carbon output by 40 percent, leading the way on that issue when it comes to the supermarkets in Australia. Even some of the independent green grocers are talking about sustainability. Even in its most basic form, having recyclable packaging, where until recently independent retailers could care less about recycling. Sustainability is top-of-mind for the most progressive retailers. Some are not making a commitment, but the more proactive ones are.

Q: The issue of food miles has become quite controversial. I interviewed Kenyan High Commission officials who say U.K. retailers are unfair in labeling imported produce packages with airplane stickers to signify the product generates more carbon. They say this misrepresents the facts while disenfranchising developing country farm workers.

A: I read the study done by the flower industry that did calculations to show you reduce more carbon by growing in Kenya than producing in greenhouses where heating costs are astronomical. These are important points that need to be analyzed and addressed.

At the same time, suppliers are working closely with retailers driving sustainability initiatives; in our case with Woolworths, which is an important part of our business. Obviously, beyond ethical precedent, we’d be really silly to not to do our share.

Q: In discussing key issues and challenges, you haven’t mentioned food safety yet.

A: Our company was a pioneer in introducing food safety plans here in 1990 to 1991 when McDonald’s first introduced HACCP programs a little before the retailers here started talking about it. I will never forget a two-day McDonald’s HACCP workshop I attended. It was the only migraine headache I had in my life! It seemed so daunting at the time. Like anything else, when a major customer asks you to embrace and maintain something, you do. Food safety is a moving target.

We made the decision at least seven or eight years ago, we wouldn’t deal with any supplier that isn’t independently accredited with a HACCP program. There are a multitude of different programs; one developed for produce producers here is Fresh Care.

Q: Wouldn’t Woolworths demand that kind of food safety requirement from its suppliers anyway?

A: Wooolworths drove food safety in retail without a doubt, now the food safety plan is known as WQA [Woolworths Quality Assurance]; I’m not sure what version we’re up to, version 11 or 12 by now. Woolies certainly led the way, Coles got more serious about it in the last few years. I won’t say they weren’t before, they have their own food safety requirements, and the food service segment is very serious.

Q: Are all retailers following suit?

A: One area where we’re not seeing enforcement of food safety is in the independent retail arena, which surprises me. Unlike the U.S., a good percentage of business in Australia is taken up by independent stores, two types; green grocers with one, two or three stores, and then independent supermarkets trading under brands Food Works and IGA. Their updates to food safety and enforcement have definitely been slower than what I’d expect.

Q: Why is that? How is that tolerated?

A: I don’t know the answers exactly. They haven’t had food safety issues and haven’t felt the need to enforce standards. The more proactive ones are starting to enforce. Let’s hope.

Q: It’s notable that without stringent food safety requirements, they’ve escaped food safety incidents, at least those large enough to create a need to act.

A: Those people are dealing with people like us that are accredited. They haven’t said they will only deal with those that have implemented a food safety accreditation program, but 90 percent or more of their purchases end up coming from accredited suppliers. These independent retailers are not being like Woolworths and Coles and pushing a strict food safety code.

Q: Are consumers aware of this distinction?

A: Consumers expect when they walk into a retail outlet, that people running it have kicked out the problems and food they are buying is safe. .

Q: What was your reaction when the spinach outbreak hit the U.S. produce industry?

A: I was surprised certainly; shocked that something like this spinach crisis could happen in the U.S. I thought the U.S. was really leading the industry in this area. I was stunned to see how long it took to trace product back. That was the biggest shock of all. It was certainly a wake-up call for us and every player in the produce industry to never ever be complacent when it comes to food safety. As good as the system is and may be, it can always be better.

We’re not a big company by any means, in terms of international standards, but we have five full-time quality assurance people here; that’s the commitment we make to food safety and quality.

Q: Can you speak to product testing? Since the spinach E. coli crisis, U.S. produce companies have grappled with strategies to optimize its value.

A: Product testing has been happening in Australia for quite some time with Woolworths leading the way. It’s an assurance that food safety protocols are working. We do hundreds and hundreds of tests of both raw and finished product.

Q: Tell us more about the evolution of your company and your family history.

Simonetta Family

The Simonetta Family: Michael, CEO;
Tony, Founder/Director; Vince, Director of Sales;
and John, COO.

A: We were born into fruit. My father emigrated from Italy with my grandfather and started an independent fruit and vegetable shop in western Sydney, in a suburb called Moorebank, in 1955, and continued to run that business for many years. In 1978, Dad decided working seven days a week in a retail store was wearing and he had enough. In 23 years he never had a day off. He decided to buy a wholesale business with his cousin in Sydney’s Flemington Market, what you would call a terminal market — I hate that term, I prefer produce market.

Dad never wanted us to work in fruit and vegetables. He thought the hours were too long, and encouraged us to go to university, get a degree and enter other professions. To that end, I got an accounting degree and did six years in accountancy. In 1994 my brother got a law degree and worked in a law office. My middle brother straight after school went into the family produce business. Produce was in our blood and eventually my younger brother and I joined him. Now the three of us are running the business, each in different roles; I’m the CEO, my middle brother is in sales and the other in operations.

We’re a national company now, trading in four Australian market regions with distribution centers and packing facilities covering those areas. We employ 140 people full time, then a lot of part time people depending on the time of year.

Q: What products do you specialize in and where do you see the most growth potential?

BroccoliniA: Our specialties in commodity areas are lettuce, cauliflower, broccoli, celery and tomatoes, if you want to count that as a vegetable. In fruit, our two biggest items are mangos and table grapes. And the third area of business, started back in 1999, is our proprietary product program. We have exclusivity in broccolini rights to Australia and New Zealand. We were the first to introduce grape tomatoes to Australia. We still license the Grape Tomatoesbreeding rights in Holland, which we think is the best program. We have a whole staple of products we categorize in the proprietary area. One of the trends that is world-renown that we can’t ignore is fresh-cut produce. And we got more involved in the processing side of the business.

We’re not doing any processing of lettuce products. But we’re doing hard vegetable areas — broccoli, carrots, that kind of thing. We’re just in the final stages of rolling out our fresh-cut fruit offer, using new technology we’ve licensed from researchers based in New Zealand. We believe it is cutting edge in terms of any fresh-cut fruit product based on the processing and packaging techniques.

Q: Do consumer trends parallel those in the U.S.?

A: One thing we’re very proud of on our website is our electronic newsletter that goes out mostly to consumers, and keeps growing in interest. We run a lot of promotions, we encourage people to write back and enter competitions, and while 1,300 registered users isn’t a big number, we get a lot of requests and feedback.

Q: So you can utilize your newsletter to get a pulse on the market and shopper trends?

A: About 12 to 18 months ago, we were contemplating releasing some new products and initiatives into the marketplace and wanted to do consumer research. We used our electronic newsletter to ask for participants interested in joining a focus group, and we were bombarded with hundreds of volunteers.

Q: What are some of the most valuable consumer comments?

A: Originally, back in 1999, 2000, and 2001, we received a lot of inquiries when we started launching proprietary products. The main question: Are they genetically modified? (None of our products are). We don’t get that question much any more. Now we get a lot of packaging questions focused on the whole sustainability issue and consumers wanting to know what we’re doing about it. That’s a main area of consumer concern now. The other one now is that consumers are hungry for information on usage and what to do with products. We get requests for healthy recipes and new forms for using products. It’s a given that food safety is an issue, but we don’t hear from consumers about this. They expect the food to be safe.

Q: You’ve covered several critical issues the industry faces moving forward. Is there any other key challenge you’d like to highlight before we close our interview?

A: These issues we’ve discussed; health and obesity, talent and recruitment, regulatory requirements with food safety, environment and sustainability are only going to become more important. One last thing I’d like to mention is cost control and margin management, Australia is a very high labor cost market and coupling that with energy costs, it puts a lot of pressure on margins, and managing business on margins will be a challenge. We face tough economic times ahead here and in the U.S. The smartest and most efficient will prosper.

Q: Additional food safety costs place additional burdens on companies as well.

A: Yes, that’s true, but here in Australia, as an industry we’ve been ahead of that game with food safety, we’ve known about the costs and have already incorporated them into our planning.

Q: Your father tried to dissuade you from working in the produce trade, understanding the hard work and challenges you would face. After getting your accounting degree and working in a different world, what drew you back in?

A: We all grew up in a fruit shop. My younger brother is only 35, my other brother is 41, and I’m 47. My younger brother was more fortunate to be able to play football (soccer) while we worked in the shop on weekends. The produce industry is infectious and in our blood. If you don’t have the passion, you don’t belong in this industry. It’s too consuming, and unless you’re passionate you won’t survive.

Q: This takes us full circle to your mandate of drawing more talent into the industry. What is the best way to do this?

A: It’s about promoting ourselves as an industry of choice, if I may borrow that phrase from the PMA Education Foundation. This enters discussions in all areas of my involvement at PMA. It’s a matter of promoting the industry as better. It’s not looked upon as an option when students are sitting with a career advisor. I can almost guarantee a student in their last year of high school wouldn’t have produce on the list of industries recommended. The student may not know what he or she wants to do next year.

We have to get out there in those areas, promoting ourselves at university levels and continue the work through PMA and the Education Foundation, bringing those kids to PMA. Through the Pack Family program, I was a mentor for one of those kids from a university in Pennsylvania, it was a great experience, I so enjoyed it. This young, dynamic individual came with me to meetings and stayed with me the whole time at PMA. Last year for the first time, we had two university students from Australia. Recruiting is one area we don’t do enough of ourselves here, and we are determined to do more and more.

**

We suppose you could say that a paucity of trade makes it easier to share information and technology. Perhaps the position of Australia so far from the wellspring of Western Civilization has pre-disposed its population to hopping on airplanes and going long distances to learn and share information. We could even surmise that the small population has created weaker local institutions on an industry basis and that has led to more involvement with organizations from outside the country.

Yet, you listen to Michael tell the story of his father and grandfather emigrating from Italy, opening a little produce shop and dreaming of a better life for their children and you realize instantly why friendship comes so easily between the people of our countries — our stories are so similar.

Vast and empty continents on opposite ends of the world were filled with teeming multitudes of immigrants, all shaped under concepts of law and liberty that the English bequeathed to the world.

Every nation has its own history, every people their own past, yet there is some comfort to be drawn — in a world not always hospitable to our concept of liberty — that on the other side of the world we find not only trade partners and strategic allies but actual friends.

Many thanks to Michael for sharing his story with the industry.




Pundit’s Mailbag —
Grower Comments On Grape Shatter

Our piece, Grape Shatter Issue Hits Wholesalers Hardest, dealt with a grape industry initiative to change USDA grade and “good delivery” standards for grapes shipped in bags and clamshells. The grape growers hope to increase the allowance for shatter. The debate centers around four issues:

  1. To what extent is shatter a normal occurrence with healthy grapes and to what extent does it represent an inherent vice in the product? Consumer research done by the California Table Grape Commission seems to indicate that consumers are tolerant of shatter but the shatter used in the study constituted healthy grapes attached to the stem, which were manually plucked off to get consumer reactions

    If natural shatter is caused by a weakness in the fruit, then the shatter grapes may be of lower quality and might cause a different consumer reaction.
  2. Will California’s grape growers be able to enforce these standards against major retailers — or will only the wholesalers with less market power be forced to adhere to these standards?
  3. The specific proposal being advanced has the effect, perhaps inadvertently, of increasing the allowance for other defects such as discoloration and scarring when there is no shatter at all. Since these defects have nothing to do with bags or clamshells, it seems an unintended consequence of the way the initiative was drafted.
  4. The proposal calls for not scoring shatter up to 5%. Since good delivery standards allow for defects of up to 15%, grapes with no other defects could have 20% shatter and make good delivery. By the time a wholesaler sells the grapes to a retailer, the grapes get put on the retail shelf and purchased by a consumer and taken home, it is likely that shatter would be much higher. Even advocates for changing the shatter rule didn’t actually intend to allow consumers to buy grapes with one of every four grapes on the bottom of the bag.

We included many interviews in our piece and, of those interviews, those representing wholesalers were opposed to the new standard while those representing grape growers were backing the proposal for a new standard. Yet we have now received a letter indicating that not all producers endorse the proposed standard:

We are the only shipper on record opposing a relaxation in the shatter allowance. Attached is our letter, which is also posted at USDA’s website here: http://www.ams.usda.gov/fv/fpbdockets/grapes2.htm

Denver Schutz
Gerawan Farming

Denver included a copy of the letter submitted to the USDA, which reads as follows:

Gerawan Farming is a grower and shipper of table grapes. We oppose the proposed allowance for shatter in existing U.S. grades. As an alternative, if such an allowance is deemed appropriate, it should be as a new grade. For example, instead of “U.S. No. 1,” it would be “U.S. No.1 High Shatter.”

However, even without any changes to the grades, sellers are not currently prohibited from selling grapes with high shatter. That is, the grades are not keeping product off the market. Sellers are free to represent their grapes as “high shatter” and buyers are free to buy them. So, we do not feel it is appropriate to change the current grade standards and thereby downgrade the industry’s and consumers’ perception of table grapes in general.

In addition, more shatter can increase moisture in a pack and thus increase disease pressure and start the decay process quicker. So it’s not as though a high-shatter pack is otherwise equivalent to a regular-shatter pack just because all the fruit will move from the store’s shelves.

Sincerely,

Dan Gerawan
Gerawan Farming

Dan is an independent thinker and that has led him to lock horns with the various industry institutions in the grape and tree fruit industry. The same independent mode of thought led him to support the very first issue of Pundit sister publication PRODUCE BUSINESS in 1985, back when many were taking a “wait and see” attitude.

Dan’s arguments are important. He makes basically three points:

  1. There is no law prohibiting the sale of high shatter grapes. You just can’t market them as US #1. If grape growers, right now, want to offer buyers grapes with high shatter or demand that buyers accept high shatter, they are free to do so.

    The growers don’t do so because no wholesaler would buy the grapes without a substantial price concession if a grower said he wants to sell these grapes on the basis that 20% shatter delivered is OK.
  2. Since the grapes are fully saleable right now, it is hard to see why the USDA needs to weaken current grade standards.
  3. Dan rejects the argument that shatter doesn’t matter: “…more shatter can increase moisture in a pack and thus increase disease pressure and start the decay process quicker…”

    The USDA will surely pay close regard to a grower/shipper acknowledging that shatter is not simply something of no concern. USDA is not only going to be concerned about the date of the inspection but how consumers are likely to experience these grapes. Dan’s cautions about moisture and decay will probably carry real weight.

We indicated some sympathy with the concept that the market had changed and that with retailers selling clamshells and bags, they were selling shatter and so it is only right that industry customs change to accommodate that fact. We remain sympathetic to the concept.

However, if we are going to be revamping standards to bring them into the modern world, we also have to look at the intense competition for consumer dollars. This means that the revamp should result in higher quality grapes reaching consumers — not lower.

There is a separate 1% allowance for decay. Perhaps we could get a consensus around 5% shatter as a separate allowance. Then allow 5% for discoloration, scarring and other defects. This would probably be, overall, a tougher standard than what exists today.

And that is what the grape growers should really want: Grapes that consumers encounter to be better grapes, because that will lead to better consumer acceptance, higher repeat purchases and a more prosperous grape industry.

Many thanks to Denver for sending Dan’s letter along.




Pundit’s Mailbag — SCS Takes Exception To Analysis Of Sustainability Standard

We’ve been deeply engaged with industry efforts to wrestle with the issue of sustainability.

In addition to giving a presentation at the most recent PMA convention, we also taught a class this week on the subject as part of the United Fresh Executive Development Program at Cornell University.

We also have run a series of articles on the subject, including pieces such as these:

Michael Pollan’s Sustainability Arguments Unsustainable In Context Of Economics

A Call For An Industrywide Sustainability and Social Responsibility Initiative:

Sustainability Being Steamrolled — Does A Sustainable Vision Encompass only Organics

Pundit’s Mailbag — Organic Icon DiMatteo Weighs In On Sustainability Standard

Now we have received a letter taking exception to our analysis of the state of Scientific Certification Systems’ efforts to develop a sustainability standard for the industry:

As an avid reader of the Perishable Pundit for news of important issues and breaking trends in the food industry, I have appreciated the coverage you have given to the issue of sustainability. However, I was surprised to read your coverage of the current ANSI standard setting initiative for sustainable agriculture.

The March 6 issue contains several inaccuracies that may confuse your readers about the ANSI process, the role of the draft standard, and the opportunity for industry participation. I hope you will give me this opportunity to address these issues.

First, it is critical for your readers to understand that the ANSI process is, by definition, an open, multi-stakeholder, non-proprietary process for establishing American National Standards. Industry representatives (producers, retailers, food manufacturers, etc.) will occupy 50% of the Standards Committee positions. Indeed, the ANSI process ensures that industry representatives are directly involved and take a leading role in establishing the final standards that emerge. This ensures that economic viability and practicality are central considerations.

Second, under the ANSI process, a draft standard for trial use is submitted to serve as a placeholder document only, to stimulate discussion, and to provide test data from field applications that can inform the discussion. However, it is entirely up to the Standards Committee to determine what the final standard will ultimately be. In other words, by going through the ANSI process, the objective is to ensure that there will be a full vetting of each issue by a balanced committee of stakeholders.

Third, many unfounded concerns were expressed in the letters you have published thus far, both about process and substance. I would suggest that readers contact the Leonardo Academy regarding its response on process issues, and in addition, visit the Leonardo Academy website to download the Q&A document, which is updated and posted as new questions arise. I suspect that most of your readers’ concerns can be addressed directly in this way. I am also happy to correct misunderstandings about the draft standard submitted.

Now, let me speak to the need for a national standard. Over the past year, a public outreach effort, reported in a wide range of industry publication has been underway to acquaint agricultural sector stakeholders with the American National Standards Institute (ANSI) process. The purpose of this year-long education drive has been to invite stakeholders from as many different perspectives as possible to join in the process in order to share their views about the promise and practice of sustainable agriculture in a public, non-proprietary, consensus-driven forum.

Understandably, each different stakeholder group wants to ensure that sustainability is defined in a way that supports its own interests. These differences of opinion are one of the major reasons why a national dialogue on this subject is so desperately needed, in a balanced multi-stakeholder setting. Here are some other considerations:

  • Sustainability claims have emerged for a wide range of agricultural products, from foods and flowers to fiber-based products and biofuels. These claims may be based on laudable achievements, but lacking a common framework and a common set of sustainability indicators, they cannot easily be distinguished from “greenwashing”. The likely result is the dilution of such claims, and the accomplishments they represent, as a market force for positive change.
  • Growers’ sustainability practices are under scrutiny from their downstream customers, and retail-driven supply chain management programs and scorecarding systems are emerging. Growers increasingly recognize the need for an active voice to ensure that these initiatives do not impose conflicting or wholly impractical demands.
  • The proliferation of “sustainable” and “green” certification labels in the marketplace, based on competing proprietary standards, introduces a confusing array of interpretations, and imposes unnecessarily redundant costs upon growers seeking recognition for their efforts.
  • Half of American consumers now state that they select products based on one or more sustainability attributes, according to a 2008 survey conducted by Information Resources, Inc.
  • A comprehensive framework that brings product safety and quality into the equation is needed to ensure that these attributes, as central to successful business as environmental and social goals, are included in sustainability planning and investment.

A voluntary standard developed under the ANSI process can address these concerns and others, heading off potential disputes in an open, reasonable manner. It represents an opportunity to put concerns to rest, and seek common solutions.

CHALLENGES AHEAD

The challenges ahead are significant. There are clear regional variables, important product sector distinctions, concerns that the interests of small and mid-scale farmers be protected, and awareness that standards must remain flexible enough to encourage continuing innovation. Likewise, there is a growing recognition that sustainability is itself a journey, one that ultimately involves relationships along the entire value chain, from grower to consumer. Moreover, there are still many unknowns, because our understanding of sustainability evolves along with our increasing knowledge about the risks to the environment. But it is these very challenges that provide the most compelling reasons for stakeholders to engage in a constructive, forward-looking sustainability dialogue.

The ANSI process for writing the national standard will begin in earnest later this spring. Every stakeholder’s point of view will be taken seriously. The draft standard that has been published is a placeholder document that has already served its purpose in stimulating debate on key issues, but it should be understood as just that — a placeholder — rather than as a document set in stone. The objective, in the end, is to arrive at the best, scientifically supportable standard that can be used to support and drive measurable agricultural improvements and land stewardship, and highlight the agriculture industry’s ability to address the key environmental and social issues of our time.

— Linda Brown
Executive Vice President
Scientific Certification Systems

We thank Linda for her letter and are pleased to let her have her say. We actually are in complete agreement on the need for a national standard. As Tim York of Markon Cooperative wrote in his letter that kicked off this line of our coverage, we desperately need an industry standard to head off every buyer from developing his own.

Our problem is not with the concept; it is with the specific execution being used in this particular effort. We also find that many choices made by Scientific Certification Systems are presented as if they are required by the ANSI process, when that is not the case. Specifically, we note seven things about this letter:

  1. Although the letter states that our article “contains several inaccuracies,” the letter does not identify even a single inaccuracy in our piece.
  2. To say that the ANSI process is “by definition, an open, multi-stakeholder, non-proprietary process” is a truism. That doesn’t mean that the way the process is approached will make no difference in the outcome. So, for example, the choice of the Leonardo Academy to handle Process Administration is not required by the ANSI process. For that matter, the Leonardo Academy makes it very clear that it is not developing a standard but is providing “process administration for standards being developed by other organizations”. And who might be this “other organization”? Why it is no other than Scientific Certification Systems. Note that nothing in ANSI requires this process go through either the Leonardo Academy or Scientific Certification Systems.
  3. Although it may be true that “ Industry representatives (producers, retailers, food manufacturers, etc.) will occupy 50% of the Standards Committee positions,” it is irrelevant. First, the Leonardo Academy reserves the right to pick all members of the Committee. Since the produce industry had no choice in the selection of the Leonardo Academy, it should not be obligated to accept its choices of who serves on the Committee. Second, the whole process is biased by the arbitrary reservation of 25% of the seats on the committee for environmentalists. Environmentalists are a special interest group; they deserve a place at the table but no more so than advocates of economic development and many other interest groups. Note that reserving 25% of the votes for environmentalists is not required by ANSI. This is in Leonardo’s Constitution, not ANSI’s.
  4. Linda writes that “… under the ANSI process, a draft standard for trial use is submitted to serve as a placeholder document only,” but this is completely optional. If we wanted to begin the process with stakeholder engagement to determine issues of concerns and ask for feedback on those issues before drafting a document — nothing in ANSI precludes that process.
  5. We ran a link to the Leonardo Academy Frequently Asked Questions and we do so again here. But it is not the responsibility of produce industry companies to go, like supplicants, begging to understand the intricacies of the Leonardo Academy Constitution. If the Leonardo Academy has the slightest interest in gaining credibility in the produce trade in the hope of being an acceptable facilitator, it is incumbent on it to reach out and persuade. To date, it has done nothing.
  6. We published two letters as part of our article. One was signed by Bob Martin of Rio Farms on behalf of a group of California producers. The other was signed by these 33 organizations:

American Farm Bureau

American Seed Trade Association

American Soybean Association

American Sugar Alliance

Animal Health Institute

Biotechnology Industry Association

California Association of Wheat Growers

California Citrus Quality Council

California Dried Plum Board

California Grain and Feed Association

California Grape & Tree Fruit League

California Pear Growers

California Seed Association

California Warehouse Association

California Tree Fruit Agreement

Croplife America

Cotton Incorporated

Del Monte Foods

Florida Fruit and Vegetable Association

Grocery Manufacturers Association

Lodi-Woodbridge Winegrape Commission

National Association of Wheat Growers

National Cattlemen’s Beef Association

National Corn Growers Association

National Cotton Council

National Oilseed Processors Association

National Sorghum Producers

North American Millers’ Association

RISE

United Soybean Board

U.S. Rice Producers Association

United States Soy Export Council

USA Rice Federation

To simply dismiss concerns expressed by these organizations as “unfounded” — as if they are all a bunch of ninnies who don’t understand the process or the substance — is a little unfair. We would think it more reasonable to think the executives of these organizations understand both the process and substance and are not happy with either.

  1. Although Linda points out that “…each different stakeholder group wants to ensure that sustainability is defined in a way that supports its own interests.” — and we suppose that is fair enough — it is noteworthy that plenty of people, including the Pundit, are critical of the process that has been followed, although they have no particular interest to push.

Our position is simple:

  1. The facilitator has to be agreed on by the stakeholders — Leonardo Academy has not been agreed on.
  2. The allocation of board seats has to be agreed on by the stakeholders — The arbitrary allocation of seats to environmentalists has not been agreed on, nor has Leonardo’s right to choose the committee.
  3. The scope of the standard (Should it include biofuels? Should organics be separate?) has to be agreed on by the stakeholders. The current scope has not been so agreed.
  4. No draft document that creates a rebuttable presumption. Anyone can attach any number of standards as examples of things that have been done. The first draft, however, should be developed by people the stakeholders have elected. That has not happened here.

Basically SCS made the decision to go ahead and work with the Leonardo Academy, which is not required by ANSI. Since there is no industry consensus that Leonardo is the right facilitator or that its constitution, with it’s a priori allocation of 25% of seats to environmentalists, is just, this process is a dead end. We have to start again.

These are tough issues, and we respect Linda for standing up and defending her beliefs and the actions of her employer, Scientific Certification Systems. We have no doubt that Linda believes deeply and sincerely that her efforts are helpful to the industry.

Others, however, have different opinions and they are not obligated to acquiesce in a process they feel profoundly unfair.

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