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Perishable Pundit
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Chiquita’s Shame — And Our Ineffective
Anti-Terrorism Policy

The news that Chiquita has agreed to a plea bargain with U.S. Department of Justice as part of which it has agreed to plead guilty and pay a fine of $25 million in five equal annual installments has focused attention on issues of corporate morality.

Reading many articles about the announcement makes us think an awful lot of people don’t really understand the issue.

Let us acknowledge that what Chiquita did was clearly illegal. Chiquita is pleading guilty to paying “protection” money to the AUC, a Colombian based group designated as a Foreign Terrorist Organization by then Secretary of State Colin Powell on September 10, 2001. Providing material support or resources to a terrorist group is illegal.

The most significant thing to understand is that when this situation came to light, Chiquita quickly sold the subsidiary.

This is because there are areas around the world in which terrorist groups are the de facto governments.

People don’t pay protection money because they want to — they pay it because someone says they will kill the employees and blow up the facilities if the money doesn’t come.

And the U.S. government has no ability to protect companies or individuals caught in this circumstance.

After Chiquita advised the Department of Justice about the problem, the FBI and CIA didn’t leap to assure Chiquita it could stop making payments and the U.S. government would guarantee the safety of its people and facilities.

In fact the practical consequence of this law is that U.S. companies have to sell at below market prices their operations in areas taken over by terrorist groups to buyers acceptable to the terrorists!

Ask yourself this question: If Chiquita, with extensive experience in Latin America, and the ability to get the ear of high politicians in the U.S. and Colombia, felt it had no choice but to give away its money to these thugs — what price would you, as an American, banned by law from paying such payments, with less influence than Chiquita to get government to help, what price would you be willing to pay if Chiquita had offered to sell these holdings to you?

The answer is zero.

In fact the only ones who would buy the operation are people who have already made arrangements with the terrorists.

But note the law: the law does not require us to ban bananas grown in terrorist controlled areas of the world. Any U.S. importer can import all bananas it wants from regions such as this. And the fact that the non-U.S. producers have to make their own protection payments is irrelevant.

In other words, similar payments are made every day in many places around the world, and the cost of the payments is included in the price consumers pay in their supermarket shopping. It is just that in most cases U.S. executives are smart enough to know they can’t touch this and to simply walk away. Then the payments are made by non-U.S. citizens, and the U.S. companies keep their “hands clean” and simply buy product from the ones paying the protection money.

If the U.S. wants to be serious about choking off the flow of money to terrorist organizations, it needs to either protect US corporations operating in these environments or ban product from areas that terrorists control.

Making Chiquita sell its properties to someone who, almost certainly, has to make the same protection payments, may make us feel cleaner but it is not helping the war on terror.




Pundit Pulse Of The Industry:
Fyffes’ Dr. Laurence Swan

The Produce for Better Health Foundation has launched its Fruits & Veggies — More Matters campaign with a special focus on mothers and the PMA has dedicated $500,000 to partner with Scholastic in support of PBH’s Campaign for Children’s Health — all with the goal of teaching children basic food safety techniques and improving the diets of children through increased produce consumption.

So seeking ways to increase consumption is hot right now, especially with children. The PBH and PMA efforts are important but they are just pieces of the puzzle and, as an industry, we need to be searching for other efforts that might make a difference.

America is such a large country it is easy to ignore what goes on outside our borders so we need to pay special attention to programs that have been successful in other countries.

One of the most interesting of these programs is called Food Dudes and it has been so successful in pilot projects that the government of Ireland has elected to roll it out nationally. This doesn’t mean that the program will necessarily work in America, only our own pilot programs could determine that, but it is an endorsement we ignore at our peril.

We highlighted the program in a piece entitled Food Dudes Beat Junk Punks And Kids Eat More Produce in which we interviewed both an academic and a governmental official behind the program. Today we follow-up with an interview of a man active in the produce trade who also was instrumental in seeing the Food Dudes program realized in Ireland. We asked Pundit investigative reporter and special projects editor Mira Slott to interview an influential player on the supply side.

Photo taken in Merrion Square, Dublin just beside Dail Eirean, Irish Parliament. Micheal Maloney (Director, An Bord Bia of the Irish Department of Agriculture) Minister for Agriculture and Food; Mary Coughlan Techta Dàla; Dr. Laurence Swan (Director, Fresh Produce Ireland — industry generic body) plus the Food Dudes themselves!

Dr. Laurence Swan, Managing Director for R&D at Fyffes, and advocate in bringing the Food Dudes program to fruition in Ireland.

ABOUT FYFFES:

Q: Before we discuss your integral involvement in the Food Dudes program, could you help our diverse readership become more familiar with Fyffes? What is the company’s scope and position in the marketplace as well as targeted areas for growth? And any important news developments in product or strategy.

A: Fyffes is one of the largest tropical produce importers and distributors in Europe. With a turnover of €500m and an infrastructure that reaches across the globe, Fyffes is truly a global player in what is a relatively fragmented industry. The company is listed on the IEX (Irish Enterprise Exchange) in Dublin and the AIM (Alternative Investment Market) in London.

The Group is primarily involved in the production, procurement, shipping, ripening, distribution and marketing of bananas, pineapples and melons. This fruit is generally procured and shipped from Central and Latin America and is sourced under long term supply contracts with purchase prices agreed annually. Fyffes currently markets fruit in Europe and the United States primarily under the Fyffes, Turbana and Nolem brands and is one of the leading importers of bananas into the EU. The acquisition in late 2005 of a 50% shareholding in Turbana Inc also gives the Group a presence in the United States banana market. Fyffes is one of the leading marketers of Supersweet pineapples globally and, following its recent acquisition of 60% of Nolem Comercial Importadora e Exportadora SA in Brazil, it is also now one of the leading suppliers of melons in Europe.

Q: How important is the Fyffes brand in your marketing strategies?

A: Fyffes, the oldest fruit brand in the world is of course most closely associated with the banana. Our brand however is actually applied to a wide range of fruits, most notably tropical produce such as Fyffes Gold Pineapples and melons. Irrespective of the type of fruit, though invariably the same principles apply; only the choicest produce selected from only the most reliable producers is allowed to carry the famous Fyffes blue label.

Q: Where will you focus your future growth?

A: The Group is committed to continue to pursue further industry consolidation in its three tropical produce categories — namely bananas, pineapples and melons. Fyffes remains ambitious to apply its resources and management expertise in order to continue to develop its business organically and through further acquisitions and alliances. It is our long-term strategic vision to develop Fyffes into the most successful operator in the tropical produce industry.

ABOUT FOOD DUDES

Q: How did you get involved in the Food Dudes program?

A: About four years ago, at a conference, Professor Lowe made a presentation on Food Dudes and I had never seen anything like it before. We’re all used to selling produce with advertising, promotions and giveaways, typical short-lived methods that don’t do anything to change eating habits. Having spent a lifetime in the industry, when I heard Fergus Lowe expound, I knew this program was uniquely different and might really work for the long term. The world won’t go anywhere in combating the obesity epidemic unless we address the lack of fruits and vegetables in people’s diets. We have to tackle this issue at the preventive end rather than the reactive end when the crisis is out of control. I made contact with Fergus and said I’d like to do the program in Ireland, and was fairly persistent to conduct a trial program at two primary schools in Dundalk. I have an interest in education as well as produce, so we chose a private school of which I am chairman, as well as a national school, with children ranging in age from 5 to 12. A human weakness is we don’t accept others’ research, even if we speak the same languages and have roughly similar set ups.

Q: How did you proceed?

A: We had to bring the staff of those schools on board, so I took the head mistresses of both schools to meet with Fergus Lowe at the University of Wales to discuss what was involved in running the program. We had to have fruits and vegetables available and in means the kids could eat, and rewards for tasting and later for eating small amounts of 50 to 80 grams. The third element was the short sequence videos and the tune that goes with them. As we get older, it’s more difficult to understand kids’ thinking and what they enjoy, but they absolutely love that tune. The kids pick it up and sing it on the playground.

For the pilot to have any relevance, it was critical to evaluate and measure the program’s effectiveness. We wanted to establish a baseline to properly judge what happened later on. For about three to four weeks, we examined the lunch box culture and what the children were bringing to school. We are talking about good families, middle class, relatively well off, but the nutritious content was apparently lacking. In general, it is shocking to see what many parents give their children to take to school. For example, a bottle of water and potato chips in small supply wouldn’t sustain the child.

During the 16 day intervention stage, I used my staff at Fyffes to establish what would happen. It sounds silly, but it involved monitoring over 100 pupils’ eating habits to see if the child actually ate the small apple evidenced by throwing away the core. At the beginning a few children declared they don’t eat produce because it’s not cool. Fergus got involved in the program because his kids were asking their mother to hide the lettuce in their sandwiches because in school they were being called rabbits. The more resistant kids said they absolutely wouldn’t try a certain vegetable under any circumstances. By the second week of the program, parents of children like this were expressing their gratitude, saying my son is taking a hand to the produce department.

We then waited six months and went back to the schools to evaluate and to see if the kids slipped back into their old habits. And indeed we found tremendous increases in fruit and vegetable consumption. This has proven to be the case even two years later.

In the scheme of the program, it goes far beyond the 16 day intervention. Other materials are sent home to parents, who then check off how many fruits and vegetables the children are taking to school and eating at home. The kids receive letters from the Food Dudes, personally congratulating little Jenny for her accomplishments. Everyone gets caught up in the whole business. Half way through the pilot, the government, by way of the department of agriculture, decided to extend the program to two much larger schools in Dublin and results were very comparable in both tests, tremendous increases in consumption and equally good experiences in changing diets in underprivileged areas. In fact, the most effective results were with the most deprived children, which is just wonderful. We presented the findings to Dermot Haern, then Irish government minister of communications and currently minister for foreign affairs.

Q: How did you muscle the funding to expand the program?

A: As chairman of the working group on promotion at Fresh Produce Ireland, an organization like your PMA, I’m in Belgium quite a lot for that. The only one giving money for projects of this sort was Freshfel Europe, the Trans European body representing our fresh produce industry. Through the agricultural ministry, I presented them with this program, and got Fergus Lowe to come over from Wales to provide details. Then I rang our department of agriculture in the Irish government and they welcomed a proposal, saying money would be forthcoming. That’s where Michael Maloney came in to push the program forward and initiate funding.

The way Brussels works, it won’t give program money to private industry. One avenue was the Irish ministry of agriculture, and another was using the generic produce industry from Ireland, Fresh Produce Ireland, to collect money from its members.

We set a three year program to reach about 10 percent of the children in Ireland. The Irish government would provide 20 percent of the money, Brussel’s 50 percent, and the industry would be responsible for the remaining 30 percent. It’s horrendously difficult to get money from the industry.

Q: Why is that?

A: They’re private businesses, divided into many factions. They are busy dealing in perishable commodities with hands on the wheel 24 hours a day. There are also more fundamental reasons. I find a tendency in agriculture for extreme conservatism. I understand there’s a lot to be said for taking it slowly, but the industry is resistant to change and it involves getting over those hurdles.

Another reason is difficult for me to say in my position as a supplier of fresh produce. We pass on what we produce to retailers, and in the same way as in the United States, the philosophy is no secret. Any money available they’d rather use to promote. They don’t necessarily accept generic, no branding programs. None of the produce going into schools was branded.

Q: When manufacturers can integrate their brands into a healthy eating program, couldn’t it generate more participation and with that more financial resources to build the concept and expose more children to it? For example, Dole, as well as the National Dairy Council, has provided good financial backing and logistical support to a healthy vending program pilot program at schools in the United States. Part of the plan is that at least some of the products within the machines be packaged with recognizable, quality brand names.

A: I’m also interested in vending machines and read your piece in the Perishable Pundit about that healthy vending program. Yes you can have those in schools with branded product as well, but not at the beginning.

Q: Why are you opposed to branded produce within the Food Dudes program?

A: For ethical and moral reasons, we are dealing with children and not trying to indoctrinate them with a brand. We are looking to change eating behaviors in terms of health.

At a time when we’re trying to change habits and get this program adopted, brands are not the idea. When government saw results co-funded by industry it decided to institute a national rollout. Later on when we get consumption up, maybe there will be a place for brands.

We know you can influence children’s eating approach at the primary level, but once teenagers, they become very sceptical and it takes a huge amount of money for very little change. If you want bang for the buck you need to catch kids early on. You don’t want to appear to be forcing brands down the mouths of small children.

Q: What about a Food Dudes brand, logo or iconic images of the characters that manufacturers could place on produce packaging in addition to their own brands, and/or retailers could use in signage and marketing, somewhat like a 5 a Day or More Matters logo to get the word out to more families about the program?

A: The industry is broken up with branding. I could envision Food Dudes as a licensed brand, but its use would need to be carefully positioned and monitored.

We’ve had ongoing troubles getting money from the industry. It’s always a tight rope we walk. At the time Brussels agreed to provide 50 percent of the program money, it came with rules; you cannot use project money for actual product purchase or distribution to the schools. Our industry was to provide 30 percent, but actually ended up paying 44 percent covering costs of people running around distributing packets of fruits and vegetables to the schools, and insuring they were individually wrapped. Manufacturers that typically don’t package in these customized smaller sizes, had to change their production line, which costs a fortune. The third element Brussels didn’t fund was the study to assess its effectiveness. We had the money for monitoring that project rewards were in place, the fruits and vegetables were there, but there was no provision for monitoring the end results, did it change kids’ eating habits and did the change stick over time. Further it needed to be independent third party monitoring, and not government or industry assessment, which could appear biased. We couldn’t use the University of Wales either because as founders of the program it could look like it had ulterior motives. Michael Maloney persuaded the College of Dublin to get involved and it led a team to analyze the results of the program. With our program rollout, Michael Maloney screws all the pieces together to be sure it works.

Q: What are the program’s prospects for expansion to other countries?

A: It is starting to receive recognition. The World Health Organization (WHO) presented the Food Dudes program with an award last November at an obesity conference held through WHO/Europe and the European Commission in Istanbul, Turkey. We have a number of governments interested. We are looking at Italy with promise.

Q: Are there notable changes in program format or selection of produce items that will be made due to cultural differences or logistics affecting how it will transfer to various countries?

A: We’ve tended to focus on a limited selection of produce items because of the intensive 16 day intervention, and the knowledge that repeat tastings makes the difference. When you’re young and taste your first Guinness, it tastes dreadful, and you think, how could anyone make any money on this? It’s the same thing with many other foods, at first try, they taste yucky. In the 16-day program, the goal is to get kids to try to repeat tasting one item three to four times, so that limits immediately what we can offer. Often times we’re dealing with long distances, a variety of handlers, different facilities, not all schools equipped with fridges that can take fruit that day, and accommodate diverse temperature settings etc. All these issues come with costs. You want fruit that’s easy to eat because teachers don’t want to have to run around peeling oranges for all their students. Timing of the program and seasonal availability must be considered as well. If you offer a banana, it’s commonly liked, easy to peel and comes in natural biodegradable packaging.

Q: So, I suppose there are universal traits in children around the world?

A: What we’ve proved in doing the pilots is that this program is infinitely flexible in regards to its adaptability. Americans call people dudes, so the Food Dudes name works in the U.S. In some countries, they may feel the name is foreign, but want it to stay that way, while in others, they may choose to translate the name to something equivalent. It’s a mistake to think the program isn’t capable of crossing borders, because it could work anywhere.

We have built up a solid body of evidence that’s really very robust documenting the program’s success. Even so, we still encounter resistance. That’s what you find depressing, to go to another country and they say they must do trials again, delaying the start of the program for another four years. I believe it’s a human failing, perhaps related to feelings of nationalism or egotism when someone has to just stand strong and say, yes we’ll do it now because children’s health is at risk.

With the national rollout, the selection of suppliers has to be made by government and viewed as nonbiased. It goes out to tender following the rules. A company has been chosen that specializes in school distribution. In the fresh produce industry it is difficult for us to do this job because we supply supermarkets through centralized distribution. Companies need to contribute to this program, not because they may get a contract to distribute produce within this particular school Food Dudes program. It is the altruistic thing to do, but beyond that, supporting this program is a means to increase and broaden produce consumption by transforming eating behaviors for the long term. All the people from other countries growing and shipping produce benefit as well. It’s a win-win situation all around.

So now we know that it was the Irish equivalent of the PMA that brought this program to Ireland. With the new Scholastic program, PMA is demonstrating its interest in increasing consumption among children, surely PMA or its Educational Foundation, should consider organizing a pilot program in the United States. Dr. Swann’s thought that enough research has been done is understandable but, in fact, culture plays a major role in food and good pilot programs, perhaps testing different program varieties, could help us rollout the most effective program.

Cornell University has a College of Human Ecology Mrs. Pundit is an alumna that would be ideally situated to run an evaluation on such a program so we can determine its adaptability to the American culture. But the insight that repetitive trial of items increases acceptance is not something to be dismissed and this program has been supported by too much good research to be overlooked.

A key insight: This didn’t just happen. Dr. Laurence Swan pushed it to happen. We need someone to step up to the plate right here in America.

Many thanks to Dr. Swan and to Fyffes for both contributing to the establishment of this program in Ireland and for sharing with the U.S. industry how it can be made to happen here.




Pundit’s Mailbag — AgJOBS vs H-2A

Our piece Pundit’s Mailbag — AgJOBS vs. Lou Dobbs featured an important letter from Jim Allen, President, New York Apple Association, Inc. The letter focused on the problems caused because the industry is short of harvesting labor and on the need to lobby for the AgJOBS bill.

The letter was widely circulated and brought this note from the Managing Director of another commodity group:

We currently have a Guest Worker Program that enables growers to bring in farm workers on a temporary basis. So if growers are concerned about whether Congress will pass a comprehensive immigration bill, then why don’t they use the H-2A visa program?

Our peach growers have been using the H-2A program for some time.

— Charles Walker
Managing Director
NATIONAL PEACH COUNCIL
Columbia, South Carolina

Mr. Walker is asking an important question and one that may point to why the industry is having such difficulty getting the legislation it would like passed.

Many growers don’t like the H-2A program. The Pundit often hears complaints, particularly about the requirement that the growers provide housing for the workers.

The program is complex, though, so we asked Robert L. Guenther, Senior Vice President Public Policy for United Fresh Produce Association, to do a little Guest Punditing and let us know what United saw as the flaws in the H-2A program:

Current problems with H2-A Program

Submitted by Robert Guenther
SR. Vice President
United Fresh Produce Association

Overview

Farmers in the United States grow, harvest, and market the food that feeds the U.S. and most of the world. Historically, U.S. farmers face the same predicament every year, a shortage of legally documented workers when crops are ready for harvest. The Temporary Agricultural Guest Worker Program, commonly called H-2A, was created in response to this shortage of workers. The program is governed by the Immigration Reform and Nationality Act, as amended by the Immigration and Control Act of 1986 (IRCA). The H-2A Program allows agricultural employers who anticipate difficulty in obtaining domestic workers to petition the government for permission to bring nonimmigrant aliens into the U.S. for temporary or seasonal work.

Unfortunately, over the years, many have seen the H2-A program as unworkable on a broad scale related to labor intensive agriculture for several reasons:

  • Current program is extremely bureaucratic and unresponsive — The H-2A Program has numerous deadlines an employer must comply with. As the time for harvest draws near, a missed deadline can mean a one-week delay on having the workers available to harvest crops. A one-week delay could spell economic disaster for the grower. In fact the U.S. General Accounting Office found that Department of Labor misses the required processing time 40 % of the time for an application. In addition many growers are reporting that workers are showing up weeks after needing them.
  • Program is for many unaffordable as the H-2A program imposes a wage substantially higher than the market wage and also requires that the grower pays housing and transportation — Only the H-2A agriculture worker program sets the required wage based on the “Adverse Effect Wage Rate” (AEWR). This is a flat rate that is paid across the country and is an average of all workers in a specific industry. All other temporary worker programs use the Prevailing Wage Rate, which is determined state-by-state and region-by-region. The Prevailing Wage Rate is also based on each individual industry and specific occupation.

In addition, Employers seeking H-2A certification must provide free housing for non-local workers. The employer can provide the housing by erecting housing, or renting public accommodation type housing. Finally, every non-local worker employed on an H-2A contract is entitled to be paid for all transportation costs related to travel from the place where the worker was recruited to the site of the job, and then back to the worker’s home place. In addition, the employer shall provide free worker transportation, which meets all applicable safety standards, between the worker’s living quarters and the employer’s worksite.

Current program is litigation prone so a lot of people do not want to get into it — In fact the H2-A program has become a magnet for litigation, preventing most farmers from using the program and forcing those using it to exit and take their chances with a largely unauthorized workforce. The law punishes non-H-2A employers for being too diligent in inquiring into the legal status of prospective workers, but potentially criminalizes those employers for not being diligent enough when the Social Security Administration reviews their payroll tax reports or the Department of Homeland Security raids or audits a farming operation. In fact California growers who have tried to use the program have all been sued in recent years. In addition, the Florida sugarcane industry until the 1990’s was the predominate employer of H-2A workers. This changed because of several class action lawsuits brought to enforce various provisions

Many thanks to Robert and to United Fresh for providing this important explanation. In fairness, we also should note that none of this is news to Charles Walker. Among the issues the National Peach Council has lobbied for is to make the H2-A program more acceptable to growers. The NPC web site points out that it has lobbied for, among other things:

  • Guest Worker Program
  • Reform/streamlining the H-2A program
  • Replacing the Adverse Effect Wage Rate requirement in the H-2A program with the “prevailing wage rate” (H.R. 2457 and S. 1442)
  • Placing restrictions on Legal Services Corporation

Still, one wonders if the industry wouldn’t have better luck fighting to make the H2-A program less bureaucratic, more responsive and less prone to litigation than to create a whole new program?

And there is a time and place for everything. It is hard to sustain an argument that on the one hand the industry is desperate — produce is rotting in the field because we have no labor — and on the other hand sustain an argument that the H2-A program is unacceptable because the wage rate required is too high!

Sometimes if you push too hard, you wind up getting nothing. Those who are concerned about immigration in general and do not view it as primarily an ag issue, probably take a lot of comfort from requirements to pay for transportation home. And the mental suggestion of dormitory housing and transport being provided by the grower probably resonates as just what they would find acceptable — an army of workers (hopefully without families with them) staying for a limited time (during which we know exactly where they sleep every night) and then being flown home when they are finished working.

If United and WGA and other groups feel they can pass AgJOBS and that is easier and better for growers, so be it. But we don’t want the best to be the enemy of the good. If they don’t see success with AgJOBS as likely, there may be modifications we can make to the H2-A program that will both help get produce harvested and pass the Congress.

Many thanks to Charles Walker, the National Peach Council, Robert Guenther and the United Fresh Produce Association for helping us think through this important issue.

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