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



With Penny-A-Pound ‘Victory’,
Coalition of Immokalee Workers Looks To Justify Its Actions

Jim Prevor’s Perishable Pundit, March 22, 2010

We’ve written a number of pieces related to the Florida tomato industry and the “penny-a-pound” programs, including these pieces:

Subway Joins Penny-A-Pound Program While Tomato Growers Feel The Pinch

Florida Tomato Growers Reject Penny-A-Pound Initiative At The Industry’s Peril

Pundit’s Mailbag — Defending The Florida Tomato Industry

Our most recent piece, titled Big Ramifications For Industry As Florida Tomato Growers Exchange Agrees To Penny-a-Pound Program, brought a response from the Coalition of Immokalee Workers:

First, let us start by saying that we here at the Coalition of Immokalee Workers are avid readers of your blog. You are consistently one of the most open-minded, thoughtful voices in the produce industry, and the industry as a whole is better for your work.

We are writing today in response to your recent post, “Big Ramifications For Industry as Florida Tomato Growers Exchange Agrees to Penny-a-Pound Program” (3/5/2010). It covers a lot of important ground for the future of the industry, and it’s safe to say that we agree with a good portion of what you had to say.

Your fundamental argument — that the produce industry is vulnerable on the issue of farm labor poverty and that, given the rising demand for sustainability, growers and their representatives ignore calls for real change at their own peril — is a very good one, and one Florida tomato industry leaders need to hear.

However, you do make one significant assertion at the conclusion of the post with which we strongly disagree, and we’d like the opportunity to share with you and your readers our thinking on that pivotal issue.

You write, “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.” As we see it, there are several problems with this argument:

  • First, there is the assumption that the increase of a penny per pound for Florida tomatoes would in fact drive buyers away from the state. Here, the good news is we don’t have to debate the outcome of a penny increase, because we’ve seen the results and there has been no impact on demand. Three times in recent years, the FTGE has imposed a penny-per-pound surcharge on all Florida tomatoes (for increased costs involving methyl bromide, pallets, and diesel fuel), and on all three occasions the market for Florida tomatoes has remained steady. As Elmer Mott, president of Arcadia-based Collier Tomato and Vegetable Distributors Inc, said about the 2002 methyl bromide surcharge in the pages of the Packer, “Buyers knew when the Florida tomato shippers decided to do something and it was unanimous, they didn’t have much choice anyway.”
  • But even if we assume that Mr. Mott was wrong, and past experience is of no use in predicting the impact of this particular penny-per-pound increase, we still disagree with the underlying assumption of your argument, i.e., that cost is the only basis on which Florida can successfully compete with the Mexican tomato industry. Cost is Mexico’s primary competitive advantage, not Florida’s (beyond the transportation cost advantage afforded by its natural proximity to the East Coast markets). A market strategy based solely on cost is a recipe for failure in the long-run, and a guarantee of continued labor controversy in the short-run. Instead, if Florida tomato growers — and therefore tomato harvesters — are to prosper, they must look to Florida’s own competitive advantage, and that is the promise of a socially responsible tomato, one produced under significantly higher environmental and labor standards. Right now those higher standards are undercut by the very issues you have pointed to repeatedly on your blog: farmworkers’ poverty-level incomes and the most outrageous incidents of abuse, like slavery, that highlight the need for improvement across the board in farm labor working conditions. But, today, Florida tomato growers can still seize the opportunity to improve farmworker wages and working conditions, to be the first on the market with a socially responsible product consumers can believe in. If they do, it will take Mexican producers decades to catch up. “Fresh and Fair Tomatoes from Florida” stand a far better chance to survive the challenges of today’s marketplace than do tomatoes competing with Mexico on price alone.
  • Which brings us to the third problem with your argument: Contrary to your assertion, our agreements in fact commit major retail food companies to purchase from Florida growers who meet those higher standards. Our members pick tomatoes. We have no interest in driving business away from Florida. That’s why our agreements are structured in a way to keep buyers here in Florida, and they’re the only purchasing agreements out there that do that. Current contracts based on price certainly don’t.
  • Finally, there’s the elephant in the room: Wal-Mart. As you and others have argued before, Wal-Mart represents the “unfunded mandate” school of sustainability: Buyers make new and costly demands for higher standards, and suppliers go bankrupt trying to meet them or lose business. Mike Stuart of the FFVA put it succinctly in the pages of your blog when, in May of last year, he wrote, “At the end of the day, how are these firms going to make significant investments in food safety, traceability, sustainability and other important industry initiatives if the profitability of the business is squeezed to the breaking point? How are they going to survive at all?”

You have rightly pointed out the limitations to this approach, and warned of its potentially destructive consequences. Yet you also criticize the Campaign for Fair Food precisely because it calls on buyers to share the costs of sustainability, because you fear doing that might scare buyers away from Florida all together. You can’t have it both ways. It seems to us disingenuous (to borrow your term…) to criticize buyers who demand unfunded higher standards and simultaneously knock workers who demand that those buyers help pay for the improved standards. We agree with you and Mike Stuart that the Wal-Mart model is not the way forward, and think that our campaign is a better approach for everyone, growers, workers, and retail companies alike.

While we may have our differences with other aspects of your post (we clearly don’t consider ourselves “extreme and disingenuous” and can only hope that one day you get to know us a bit better), all that can wait for another time. But we cannot leave unchallenged your suggestion that this campaign will lead to a loss of business for Florida tomato growers. It hasn’t and it won’t.

What is true is that the industry will, inevitably, continue to lose market share if it insists on fighting a losing battle with Mexico on price. In contrast, our campaign is designed to keep demand here in Florida, and for that demand to seek the highest standards of social responsibility and sustainability by rewarding growers who are willing to do the right thing. We’d like nothing more than to work with an industry committed to those higher standards, at which point our campaign would function as an ideal marketing tool for not only driving buyers to Florida, but keeping them

We appreciate the kind words regarding the Perishable Pundit; we try very hard to look at the facts of the matter and not just assume anyone’s position is without merit.

This being said, we don’t find CIW’s argument persuasive as to why raising the price of Florida tomatoes will not disadvantage Florida vis-a-vis other production areas and alternative eating options.

1) The examples of prior surcharges due to things such as diesel fuel strike us as different, not merely in degree but in kind from the imposition of a penny-a-pound fee on Florida-grown tomatoes. Costs related to pallets, methyl bromide and diesel fuel are not imposed on one production area and not another. Whether billed as a separate surcharge or negotiated in as part of the price, higher diesel prices, to take one example, affect all production areas and all products.

The distinctive nature of the CIW penny-a-pound scheme is that it applies to Florida tomatoes and ONLY Florida tomatoes.

Elmer Mott’s bravado aside, both trade buyers and consumers have choices, and increasing the price of one product over another surely influences those choices.

Indeed we would submit that the CIW’s own actions prove that CIW knows increasing the costs of Florida tomatoes makes them less competitive. After all, surely the CIW does not think that this penny a pound will be sufficient to elevate the lifestyles of workers to a level CIW thinks is satisfactory. So we only have to ask, why does CIW not propose a dime a pound or a dollar a pound or ten dollars a pound? The only possible answer is that CIW knows that price does matter and that this level of price increase would quickly and obviously cause a decline in demand for Florida tomatoes.

A penny a pound is sufficiently small that the impact on demand will be imperceptible — but that speaks only to the limitations of our perceptive abilities, not to a lack of impact. Economics 101 says if you tax something you get less of it, and if you subsidize something you get more of it. Economically, if we assume that the penny-a-pound scheme actually helps the workers — that is to say that it doesn’t depress wages from where they would have been by a penny-a-pound — then this scheme functions identically to a government-imposed penny-a-pound tax on Florida tomato production.

2) It is said that a definition of chutzpah” is when a child kills his parents and then pleads to the court for mercy on the grounds that he is an orphan… so it takes more than a little chutzpah for CIW to argue that the penny-a-pound scheme is desirable on the grounds that the alternative is “a guarantee of continue labor controversy” — a controversy mostly caused by CIW!

Although CIW’s assessment of market opportunities for Florida tomato growers is interesting, the market is pretty efficient in these matters and we have absolutely no reason to think CIW has special competency in this area. There do, of course, exist “fair trade” type programs and there is absolutely nothing stopping anyone from seizing the market opportunity that CIW describes and marketing a brand of tomatoes whose laborers are paid very well and promoting those tomatoes as “Fresh and Fair” as CIW suggests. Our experience with fair trade products, though, indicates that this is a niche product appealing to a certain sub-section of the population and that a much larger segment of the population looks to price, quality and service, perhaps preferring to directly control their charitable giving rather than giving through paying higher prices for groceries.

Once again, one is left with the distinct impression that this is more a talking point than an argument because if CIW’s executives really believed that there was this great market opportunity to pay higher wages and then market the product as more socially acceptable, they wouldn’t have to run penny-a-pound campaigns. They could start a tomato company and both provide the high quality jobs they yearn to see and make a fortune — to do with as they please. That they don’t do so and instead urge other people to risk the losses if their ideas are incorrect speaks volumes.

3) The agreements CIW has signed are not made public. Therefore we can’t judge to what degree they are effective or not in keeping people buying Florida tomatoes. In any case, the demand-suppressing effect of higher prices plays out in other ways. Right now because of the crop losses due to the freeze, if you go into Wendy’s there are big signs saying you won’t get tomatoes unless you specifically ask for them. Even if a company was obligated to buy all its tomatoes from Florida, higher prices lead to menu changes and the next new burger may have a slice of avocado on it rather than tomato.

4) We are not sure we see the connection between Wal-Mart and the penny-a-pound schemes. If they ever sign up and start paying the extra penny, you can be sure Wal-Mart will likely negotiate to make up that cost by paying less for the tomatoes. Indeed there is a real question as to whether the penny-a-pound scheme will actually increase worker take-home wages over the long term. If workers are willing to do a set amount of work for $100 dollars and an agreement is signed requiring employers to pay a bonus, over and above wages, of $10 for that type of work, over time the wage for that type of work is likely to gravitate to $90 because people are willing to do that job for $100, and $90 plus the mandatory $10 is the same thing.

There are distinctions that make a difference. CIW explains its position: Yet you also criticize the Campaign for Fair Food precisely because it calls on buyers to share the costs of sustainability, because you fear doing that might scare buyers away from Florida all together. You can’t have it both ways. It seems to us disingenuous (to borrow your term…) to criticize buyers who demand unfunded higher standards and simultaneously knock workers who demand that those buyers help pay for the improved standards.

We think we can have it both ways because the CIW is guilty of selective indignation. It has nothing to say about the treatment of workers in Mexico, the Dominican Republic, Cuba, California, or about workers who grow other crops or work in other industries, etc. It simply says that buyers should pay extra to help workers if, and only if, the buyers happen to buy Florida tomatoes. This may be politically astute to focus on one commodity and one place so as to maximize the pressure and minimize the costs to buyers — but it is not obvious that it actually helps any workers.

We bow to no one in our pursuit of social justice, but the laws of economics cannot be repealed, and actions, including raising prices, have consequences. We are not sure the penny-a-pound scheme will raise worker incomes because, as we said, labor markets adjust. If, however, they are effective and you raise the cost of labor you will encourage mechanization, alternative growing areas, consumption of alternative products and many other effects adverse to the interests of those looking for a job.

It would be nice if merely raising the wages of one’s workers was sufficient to entice consumer demand for high priced product, but as the Pundit Momma taught him as a very young boy:

If wishes were horses
Beggars would ride:
If turnips were watches
I would wear one by my side.

Florida’s tomato growers are in a pickle; if they don’t create working conditions whereby they would be thrilled if NBC did a piece on Dateline, the industry is vulnerable, but if they do spend money to do this, the industry will not be competitive. However, CIW’s suggestion to market the crop as socially sustainable will appeal to only a small percentage of customers.

The only solution may be to do what the rest of society has done — mechanize and thus harvest tomatoes with fewer people who, because they are more productive, can get paid more. That may be the best possible solution, but the cost — shutting off needed jobs for people — is real. CIW’s ignoring the results of the policies it advocates is more than problematic.

Many thanks to the Coalition of Immokalee Workers for weighing in on this important issue.

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us