We’ve written a great deal about Wal-Mart. Yet some readers think we need to write more bluntly. This comment comes from an important supplier of grapes and tree fruit to many retailers:
Everyone just beats around the bush about Wal-Mart. Under Bruce Peterson, and a ‘fair sustainable pricing policy,’ Wal-Mart tended to get the best produce. Many companies ‘graded up’, especially with an item such as table grapes, because the vendor got a good value and secure pricing (not always the highest in the spot market, but the average was good, and the contract meant something).
As soon as Wal-Mart went to the ‘bid process’ and contract prices were no longer ‘contract’ if the market dipped, and suppliers were forced de facto to lower prices below contract or see their orders cut back, or cancelled, most table grape shippers started packing to the ‘letter of the specifications’, and quality delivered to Wal-Mart dropped dramatically. I lived it.
The result was that the ‘velocity’ of sales then dropped at retail, and again it became the suppliers’ ‘fault’, not the Wal-Mart’s ‘buy for less’ mandate.
There is no free lunch. Buyers pay for quality. Perhaps it is not as noticeable in potatoes or onions or packaged salads, but with table grapes there is, almost every day, usually a minimum $4 per box difference for the exact same 18- or 19-pound box weight of grapes — and sometimes the market spread is much greater than that.
If Wal-Mart continues to try to take the margin out of its suppliers’ profits, the first thing to happen is suppliers will choose to meet ONLY the specs — or less, in tight markets. Some suppliers will de facto ‘under cut’ the standards and risk rejection rather than give up tens of thousands of dollars on multiple purchases against a ‘contract’. In tight markets, shipping below the standard becomes ‘acceptable’ with many shippers who feel their relationship with Wal-Mart has been unfairly compromised by unfair policies.
I am thoroughly convinced that the ‘lead paint’ issues on Chinese-made toys was a direct result of Wal-Mart’s screwing their Chinese suppliers to the point they felt that they must ‘cheat’ on the standards to make a profit. As a mentor of mine once said, ‘you cannot make the sewer run up hill forever; at some point you are going to get your feet wet and you are not going to like it.”
We’ve written previously that one of the consequences of Wal-Mart’s changes would be that vendors — who previously supplied product beyond the required specification because they had 365-days-a-year obligations and sometimes were short the product that met minimum requirements — would find themselves in this situation much less frequently with short term arrangements.
This letter is going beyond that and pointing out that every day vendors have options in how they grade product, who they send which item to and many other aspects of the delivery of quality.
It is exceedingly difficult in any industry such as produce, where quality varies with the most recent rain, to set specifications in such a way that one gets the right stuff.
If one sets specs for only the best product, sometimes one will get no product at all, because it is not available. Other times one will pay a very high premium, yet a lower standard will mean that one often leaves better quality product on the table.
One can always experiment with specification setting but, for the most part, the answer comes down to two things:
First, working closely and consistently with certain vendors so that they come to know what a particular buyer’s needs really are. Is the customer the type who buys tomatoes for salsa or for slicing to go on sandwiches? Are they value hunters? Or do they want what they want at any price? What is a deal to this consumer?
Second, becoming the preferred customer. The one who always gets the stuff a little better than what he ordered, the one who gets taken care of when supplies are tight, the one that the vendor considers crucial to make happy.
It is a funny thing with produce, the guy who gets the lowest price doesn’t always get the best deal.
Yet for an organization such as Wal-Mart, connecting the dots is very difficult. It is unlikely that if out-of-stocks go up or if velocity of sales goes down, that the head of supercenters or Wal-Mart USA — both very distant from produce procurement — will ever come to think that this is because of a procurement switch to a quasi-auction system — especially because no one internally has any incentive to let them know!
It is certainly true that ten years from now if apple prices are up, nobody internally will say that because Wal-Mart shifted to an auction-like system, bankers were insecure about there being a ready customer for the fruit, so didn’t finance the plantings, so volume went down and prices up.
And frankly, even if someone made these connections, nobody would care. In these large organizations everything is often about the personal career goals and compensation programs of individuals. This, as much as anything, explains why Wall Street did what it did as a lead up to the financial crisis. It may also explain why Wal-Mart is driven by short-term considerations. Nobody’s pay and position is determined by what the situation will be with pears in 2019.
This year’s United Fresh convention and expo is filled with terrific presentations and wonderful networking opportunities. The Las Vegas venue makes it proximate to the great growing base in California and Arizona. Even if it is last minute and you can only make a day, you are bound to learn something valuable and make a connection that can help your business. So register here or just show up and sign up at the door.
If you make it to United, you can also witness a bit of history in the making.
The news will be, as it should, that there is a new Chairman:
Ascending to Chairman of the Board is Steffanie Smith, CEO of River Point Farms LLC, Hermiston, OR. Steffanie was named CEO of River Point Farms in October 2007 after serving as president of the Deli/Prepared Foods Division of Taylor Farms, one of the largest fresh-cut vegetable suppliers to the foodservice industry. Prior to that she served as president of Pacific Pre-cut Produce for 10 years before it was acquired by Taylor Farms in August 2005. Steffanie worked at National Pre-Cut Produce in the early days of the bagged salad industry from 1993-1995, focusing on sales and marketing, and learning the operations side of the fresh-cut business. Before moving to Salinas in 1993, she worked on the staff of United Fresh Produce Association (formerly United Fresh Fruit & Vegetable Association), making her the first former staff member to ever become Chairman of the Board of the association. Steffanie received her bachelor’s degree in Political Science from University of California, Los Angeles.
Yes, like the proverbial bag boy starting out at the bottom, Steffanie can inspire a lot of lowly paid staffers in DC that there are no limits to achievement.
We’ve known Steffanie for longer than either of us would like to admit and she will be an effective and inspiring leader for the association and the industry.
Less noted though of great long-term significance is that Reggie Griffin, Vice President of Produce Merchandising at The Kroger Co., and a longtime board member at United and, before that, at PMA, will ascend to become Chairman-elect of United — which means that, God willing, a year from now he will become the first retailer ever to hold the position of Chairman of United.
This ascension is filled with significance.
Inevitably it will bring to the fore the conversation of a possible merger between PMA and United, an issue we have discussed extensively.
The forces driving a merger have not dissipated. They can basically be defined by three factors:
1) The feeling among industry leaders that the trade needs to speak with one voice on matters of public policy.
2) The notion that there are substantial economies to be gained by consolidating staff and office functions.
3) The general notion that with United being the trade’s primary lobbying group but PMA having the larger and more profitable convention — that there is a mismatch of industry expenses (heavy to United) and industry revenues (heavy to PMA).
The counter to all this was that, in the end, merger was undesirable, perhaps impossible, because PMA’s heavy retail presence — there has long been a “rule” that a majority of the PMA board should come from buying sectors of the trade — meant that PMA would find it difficult, if not impossible, to actively lobby against policies supported by FMI — the supermarket industry association.
Now a chairman does not a board majority make, and United’s board will, for the foreseeable future, remain rich with its traditional constituency of grower/shippers and wholesalers. And, of course, 95% of the time, there are no issues between retailers and the producers that involve associations.
If an issue comes up during a retailer’s term as Chairman of United similar to what arose with PACA a few years back, where FMI wanted one outcome and the produce industry another, one supposes that the retailer would try to serve as a communications vehicle, explaining the retail position to United’s board and communicating the produce trade’s concerns to his own CEO and to FMI.
Still, there is the potential for a split, and one could imagine some retail CEO, upon hearing that one of his executives was Chairman of a group opposing policies that the retailer supported, insisting his subordinate resign from the group. It is also possible that grower/shippers could become irate if their chairman, coming from retail, is incapable of providing leadership on a key issue.
It is possible, but good policy can’t really be based on these extreme situations. Much more likely is that Reggie, both as Chairman-elect and when his turn comes as chairman, will be a highly positive influence at United as he has been during his year’s on the board.
Through the years, United’s biggest problem has not been battles between producers and retailers; it has been battles between core members. The National Association of Perishable Agriculture Receivers (NAPAR) was a bunch of United members who went off to establish an association to do things they didn’t think could be done at United. Same thing with the National Association of Fresh-cut Produce Processors (NAFPP), later named International Fresh-cut Processors Association (IFPA), which was set up as a separate association and eventually merged with United. And, of course, there were tougher battles between tomato growers and tomato repackers than ever existed between growers and retailers.
PMA’s great strength has been that its buyer focus tended to keep the battles between producers to a minimum as the focus was on products and services and policies that the buying end identified as industry priorities. This is crucial because it is the buyers who define the scope of the industry. Afterall, the only thing a lettuce processor in Salinas has in common with a potato grower in Maine is that the two are sold in the same department.
United is changing. Although not having the great financial engine that PMA does, it has used its money conservatively since it sold its headquarters building in Alexandria, Virginia, years ago. It has been successful in getting grants to fund many specific programs, from the Produce Industry Leadership Program to this year’s Sustainability Conference. Outgoing Chairman Jim Lemke, Senior Vice President at C.H. Robinson, has been a big part of this change. Some industry members take on these jobs and either don’t have the resources to devote the time required or don’t care enough to try. Jim got the full backing of a large corporation and his personal nature is to do things at 200% velocity. He refused to see United as anything but a premiere industry organization and both staff and volunteer leadership followed that lead.
Reggie’s elevation is also part of this change. Another addition to United’s board this year is Bruce Peterson, most recognized for his service at Wal-Mart and, most recently, as President of Naturipe. Bruce also is an ex-chairman of PMA. That is a change as well. Steffannie herself is part of this change. Her work at Taylor focused on items that involved proteins and other ingredients not traditionally part of the produce trade. She is consumer focused and acutely aware that this is not her father’s produce industry.
To our mind, this movement of people back and forth among the industry boards is the most powerful argument against merger. The industry is filled with great people, willing and able to contribute to the trade. These leaders need forums to do so. PMA is aware of this and has tried to reorganize to allow for this contribution. It will allow for more participation. We suspect, however, that these kinds of efforts, by any organization, can have only limited success. Top people don’t want to serve on boards that can’t make policy decisions. They want real votes that really matter.
So when Karen Caplan’s term ended on the PMA board, she had a lot to contribute and went on to do it as Chairman of United.
Much as it took Nixon to go to China, it may well take a retailer to deliver a merger among the associations. It was easy enough for PMA’s board to reject entreaties from a bunch of vendors when United was interested in merging. The conversation will have to be handled differently if one of the largest buyers in the world is across the table.
United, in its very name, defines it purpose… to unite disparate parts of the trade, to bring them together to speak with one voice. It is never an easy job. Jim Lemke, coming from an organization that straddled the world between growing and retailing, was well suited for the role. Steffanie Smith, though now on the grower/shipper side, has lived the processor role and the association staff role — both of which have to bring together disparate interests — and, next year, Reggie Griffin, who has sustained good grower relationships for a long time, but understands retail needs like the back of his hand, is ready to assume the role. Those of us who have known these three: Jim Lemke, who leads his team to victory time after time, Steffanie Smith, who capitalizes on every opportunity and Reggie Griffin — easy-mannered, friendly, willing to listen, a speak-softly-and-carry-a-big-stick kind of guy, know that the trio have brought unusual talents toward the goal of bringing unity to a disparate bunch.
As the United convention commences, we thank Jim Lemke for his service as Chairman this year and applaud Steffanie Smith and Reggie Griffin for each taking on this challenge. We also thank C.H. Robinson, River Point Farms and The Kroger Company for allowing each corporate leader to be so involved as an industry leader. The fact that the produce industry has vertically integrated trade associations, meaning buyers and sellers alike comprise their membership, has always been a particular industry strength. These three leaders from different industry segments illustrate the strength found in this diversity. Reggie’s taking on the mantle of chairman-elect and, ultimately, Chairman at United is closing the loop on this vertically integrated model. May the wind be with both Steffanie and Reggie and may it carry them, and the industry, on to even greater success.
We’ve had occasion to mention Frieda Rapoport Caplan many times in these pages:
Be More Popular at Cocktail Parties
Washington Public Policy Conference — Action Plan For Government Relations
Caplan Scholarship Program Helps Family Businesses Learn Public Policy
Tim Vaux Reflects On DuPont, Leadership And Jeff Gordon
Pundit Pulse Of The Industry: Enza’s Dawn Gray
Pundit sister publication, PRODUCE BUSINESS, also devoted an early cover story many years ago:
Questions For Frieda Caplan
We’ve also had the opportunity to sing Frieda’s praises to Inc. magazine:
Frieda is doing well. On April 5th she had heart valve replacement surgery due to aortic stenosis. She was fortunate to work with Dr. Daniel M. Bethencourt and his practice, The Bethencourt Group, an MIT- and Yale-educated surgeon who has researched widely and has special expertise in valve replacement.
Frieda is at home now with two aides — one named Apple and one named Gellie — pronounced jelly! There will be some further cardiac rehabilitation at Los Alamitos Hospital, though Frieda has already demanded that work be brought home from the office for her.
It was 48 years ago this month that Frieda founded her business. Though the volume is small compared to those who ship conventional commodities, the specialty niche she pioneered has transformed the business, allowing supermarkets to use produce as a key point of differentiation.
Frieda was pivotal in transforming the trade’s attitudes toward women in the business, and the family has supported the Frieda Rapoport Caplan Family Business Scholarship, which brings an associate at a family business to the United convention each year.
She also, of course, gave the trade her two daughters Jackie Caplan Wiggins and Karen Caplan; Karen became the first female chairman of United.
Frieda has also touched many on a personal level. Just recently she came to hear the Pundit’s presentation at the Fresh Produce and Floral Council, and the Pundit family shared a wonderful afternoon with her at Karen’s home.
We’ve had the privilege and burden of giving eulogies — sometimes at the funeral, sometimes in print — for many, including family members and industry leaders, such as Carl Fields, Ralph Pinkerton, David Stidoph, Joe Nucci and Stan Silverzweig. Each time we have regretted that we didn’t say things while our friends were alive.
Aortic stenosis is typically fatal if left untreated. Thanks to a skilled surgeon, Frieda has a good chance of living a good healthy life for many years to come, being a source of inspiration and joy to her family, friends and the industry at large.
Those who have been inspired by her have been given another chance to let her know. If you would like to wish Frieda a speedy recovery or send other words of appreciation, you can do so here.
Our prayers are with Frieda and her family, that she may know a speedy and complete recovery.
Our piece, Spring Produce Show Lineup, focused on the New England Produce Council and its NEPC Produce & Floral Expo — but it also ran down the list of other major domestic produce shows, including this week’s United Fresh event.
We were, however, remiss in not mentioning our Canadian friends and Jane Proctor, who has contributed to the Pundit previously with pieces such as these:
Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns
Pundit’s Mailbag — CPMA & PMA To Lead Industry Closer To Global Traceability
Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns
Well, Jane sent a friendly reminder:
Great presentation at the United Produce Executive Course at Cornell — it was a terrific week with an outstanding roster of topics and presenters/profs.
I couldn’t help but notice that your article, “Spring Produce Show Lineup”, didn’t include CPMA’s 85th Annual Convention & Trade Show, so I wanted to drop you a quick note to remind you of our event which is considered a favourite amongst many in the industry.
— Jane Proctor
Vice President Policy & Issue Management
Canadian Produce Marketing Association
Ottawa, Ontario, Canada
The truth is that the CPMA event has always been one of our personal favorites. We had just seen Jane when we were up on Cornell’s campus teaching at the United Fresh/Cornell Executive Development Program, so it should have popped to mind. Three strokes with a wet noodle to the Pundit for failing to mention such a wonderful event.
We have always enjoyed its intimacy. You attend CPMA one year and you come back the next feeling like you know almost everyone. We fondly remember sitting in the corner of some reception or hanging out late in the evening at some restaurant or bar and chatting with Wayne McKnight back in his pre-Wal-Mart days when he was with Sobey’s Co-Op Atlantic. What an innovative mind. As the events get larger, there are more contacts to see and so it gets harder to have that incredible quality time that the CPMA event offers.
And back in our salad days, the convention was held in places like St. John’s in January. Now it is a May event, so the weather is generally pleasing and, this year, it is in scenic Vancouver.
You can access the agenda here. And register right here.
We also received a note in the same vein from the International Sprout Growers Association:
I noticed in your most recent issue a list of upcoming shows. I was hoping you would be able to mention ours in your next issue. Thank you.
— Rich Wolfe
International Sprout Growers Association
Warwick, Rhode Island
Well, as a commodity-specific show, it didn’t really qualify for inclusion in that article on the broader regional and national events. However, the President of the ISGA is Bob Sanderson, President at Jonathan’s Sprouts, who has contributed to the Pundit many times including these pieces:
Pundit’s Mailbag — The Acceptance Of Risk
Pundit’s Mailbag — Sprout Lessons Echo Food Safety Dilemma
Pundit’s Mailbag — More On Manure
Pundit’s Mailbag — The Tyranny Of Economics And The Goals Of Fairtrade
Pundit’s Mailbag — Can Irradiation Follow The Path Of Pasteurization?
Pundit’s Mailbag — A Look At Organic Versus Conventional Yields
Pundit’s Mailbag — Irradiation, Pasteurization and Labeling
Pundit’s Mailbag — Pesticides And Cancer
Pundit’s Mailbag — Food Prices And Free Markets
Pundit’s Mailbag — Organics And Manure
Testing Sprout Seeds
Since Bob is so familiar to Pundit readers, we thought we should go ahead and mention the show.
Plus the program includes people such as Mansour Samadpour, Founder, Principal at IEH Laboratories & Consulting Group, who we profiled here.
Tim Fleming, Executive VP at Strube Celery and Vegetable Co. and formerly Chairman of United, is leading a tour of the Chicago market. In addition, Dick Spezzano is going to be giving a workshop on how to “Price for Profitability.”
We have mentioned Dick Spezzano many times. Dick, now President at Spezzano Consulting Service, Inc., was formerly Vice President of Produce at Vons and Chairman of the Board of PMA back in 1997. His workshop should be very enlightening.
You can see the program here. And register here.
The event is in Chicago just prior to the National Restaurant Association show. So there chance for a “two-fer”.
By the way, although we can’t mention every event on the Pundit, sister publication PerishableNews.com is set up to do so. If you have an event to promote, please make sure that ProducePR@PerishableNews.com is added to your press release list.
We’ve thought carefully about the “Fresh for Ellen” campaign spearheaded by Dan’l Mackay Almy, Managing Partner of DMA Solutions, mentioning it in several pieces, including the following:
Plea For Ellen DeGeneres To Consider Produce In Her Sugar-Free Diet
How Will Success Be Measured For Fresh for Ellen Social Media Campaign?
‘Fresh For Ellen’ Shows Passion And Potential To Help The Industry
‘Fresh For Ellen’ Raises A Question: How Should We Define Success?
Will Our World Be Dominated By Junk Science And Sloppy Thinking?
Now a retail reader of the Pundit asks why we bother:
Why would your publication, or anyone for that matter, care what Ellen DeGeneres thinks is “good” for the rest of us?
And why perpetuate the “conversation’ regarding her personal preferences — simply because she is famous?
She is of course free, because of our beautifully free country, to pursue any eating choices (and any other healthy or destructive lifestyles) she chooses and the media is free to broadcast them to people who will watch.
But why the Pundit?
— Daniel Barth
Super King Markets
Los Angeles, California
In fairness to Ellen DeGeneres, although she invited people to join her on her “sugar-free journey,” she never claimed it was something others should do and frankly was vague about any health benefits one might gain, focusing more on her subjective feeling of wellness. Here is how she put it:
Well, that’s it. I’ve given up sugar. I know it’s not going to be easy, but I’m going to try. I already gave up meat and dairy. And when I did, I couldn’t believe how much better I felt. So now, with two jobs, I thought I’d better find a way to amp up my energy in a natural way. And I never liked the crashes that sugar caused anyway, so I’m excited to end my dependency.
If it’s something that you think you’d like to try, I’d love for you to do it along with me. Don’t be scared by all of those side effects I read on the show today; they’ll only be temporary. And we’re working toward a long-term, healthy goal.
In part, this is the problem we have identified with Ellen’s effort — it is exceedingly subjective. If she had actually gone out and researched matters and came up with a clear health benefit, urging people to follow that advice, nobody would object. Say she urged people to check with their doctors and, if possible, become physically active.
The problem is that it is not clear what the “healthy goal” actually is or how consuming “natural sugar” will contribute to this goal.
As far as the Pundit’s coverage of the matter, had Ellen simply given her rant about going sugar-free, we probably wouldn’t have covered it at all; it was too vaguely connected to the fresh produce or fresh foods industry. In fact, as we mentioned before, we listened to Ellen’s declaration and thought she was giving up produce much as she was giving up wine. We thought the declaration was incoherent, and we are still not sure why she felt she needed to give up wine and vodka.
However, once Dan’l decided to spearhead an initiative that specifically attempted a tie-in between Ellen’s sugar-free journey and fresh produce, it very much became an industry issue.
Should PMA, United and PBH join in with the “Fresh for Ellen” effort? Many companies were going to be asked to donate fresh produce, so how closely should they align with the effort?
If an opportunity arose for the industry to get some face time on Ellen’s show — what should we do with the opportunity?
We appreciate Dan’s concern about following someone just because he or she is famous. It is a societal problem where people who have achieved fame in some area attempt to translate it into another. You see it all the time when Nobel Prize Laureates will sign a petition or letter urging some public policy. Very often the policy is in some area completely unrelated to the work for which the signatories won their prizes.
It is also legion among performers who attempt to leverage their fame into influence on public policy. We confess to not attending concerts we might otherwise enjoy, because we just don’t want to sit through the lectures that some of these entertainers think they should deliver to a paying audience.
Yet the truth is that talk show hosts such as Ellen DeGeneres and Oprah Winfrey have enormous audiences and enormous influence. It is not unlikely that had Oprah Winfrey decided to reject Barack Obama and endorse John McCain, we would have a different President today.
It is also true that if Ellen DeGeneres wanted to evangelize for fresh produce, it would help sales and change habits. So, even if she isn’t a nutrition expert, the industry cannot be, and should not be, dismissive of her activities and statements.
Dan’l deserves nothing but praise for trying to make something happen for the industry out of Ellen’s sugar-free effort. If Ellen had been more focused, it might have really been a success for the trade. Maybe it still will be.
The problem of working with stars is that they are not on your payroll so they are difficult to keep on message. Despite promising to keep a record with a flip video diary of her sugar-free journey, the video diary hasn’t been updated in over two months:
I’ll keep you updated as often as I can. I’ll also be shooting flip videos of my progress. I’d love to hear how you’re doing, too. Just click on the “Sweet But Sugar-Free” button on our site.
The whole known journey only lasted 16 days! It is not even clear Ellen is still on her sugar-free journey.
In one of her letters to the Pundit Dan’l made this point:
“…we need to be discussing ways to collectively connect with the Food Network, Jamie Oliver, Biggest Loser, food bloggers, doctors, moms, etc… we have a lot of work to do!!”
We think Dan’l is absolutely correct. There are new ways of reaching out to the world and we would be foolish, as an industry, to neglect the possibilities that are offered by a world of influencers and new communication techniques.
So we pay attention to everyone and everything we can, but we can also be selective in how and with whom we actually engage. Here at the Pundit, we try to assist with that process..
Many thanks to Daniel Barth of Super King Markets for helping us discuss this important issue.
Our piece, With Penny-A-Pound ‘Victory’, Coalition of Immokalee Workers Looks To Justify Its Actions, brought this piece of praise from an ag association executive from clear across the country:
Nice piece on the CIW. You should have been a lawyer! Your arguments are logical and express excellent responses to the CIW letter.
— Robert P. Roy, Esq.
Ventura County Agricultural Association
We appreciate the note. That is high praise coming from Mr. Roy, who is among the most respected experts on agricultural labor and employment law in the State of California.
We do try to keep our arguments logical, but as far as being a lawyer goes, we did the next best thing: We married one!
Many thanks to Mr. Roy and the Ventura County Agricultural Association for the kind words.