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Perishable Pundit
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Produce Business

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American Food & Ag Exporter

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Got Produce? Both SidesNeed To Be Heard

Our piece, Got Produce? Generic Marketing Program Dialog Begins, But Is It Right To Use PBH Donor Funds To Lobby For A Mandatory Assessment? — brought many opinionated letters. We will be dealing with the various pros and cons in later articles but thought this note on our current subject — which is how the industry can conduct this “Dialog” — was worth noting right now. It comes from one the largest shippers in the industry:

Thank you for your thoughtful insights on this very HOT issue brewing in the industry now. I look forward to additional dialogue as Webinars and meetings continue over the next few months.

However, I am concerned that those Webinars are merely a vehicle to communicate the merits of such a program and hear feedback at the end of each presentation. I do not see a mechanism in place by PBH to compile and disseminate comments, concerns, or issues expressed at these meetings back to the industry.

The only feedback we are receiving following the PBH Board meeting and the United Town Hall meetings is what we hear in the trade press. I almost feel compelled to listen in on each Webinar simply to hear the feedback — otherwise how will I know?

The writer of this note is one smart cookie and what he is alluding to is that although the process is billed as “An industry dialog” it is, in fact, a wildly stacked deck in favor of the proposal.

In our last piece, we pointed out that it had been stacked in a financial sense. PBH is paying staff time and expenses to fly an advocate of the plan to meetings, using staff time and its influence to get presentation venues at United, the Grower-Shipper Association, etc., but it hasn’t extended this offer to a critic of the plan. The webinars and presentations are not treated like real truth-seeking presentations in which each issue is delineated and then both pro and con are discussed via prepared presentations. Instead the presenters of the affirmative case get to give a fully planned presentation and then there is time for questions. So a critic gets a statement or two.

And because the process is so obviously one-sided, the promoters have no credibility that they will encourage the dissemination of information that would actually lead to real and useful dialog. In other words, had a Nobel Prize-winning economist stumbled into one of the United Fresh open meetings on this subject and pronounced that he had carefully studied the matter and wished to endorse the program as a very profitable one for the industry — we could reasonably expect that there would be a real effort made by the promoters to let the industry know about this opinion.

It is — and this is a big problem — not at all obvious that if the same economist walked into the same meeting and expressed the opposite view, any effort would be made by the promoters to get that negative view out before the industry.

Now we should say that we don’t really blame the individuals involved. Elizabeth Pivonka, President of the Produce for Better Health Foundation, is an entirely admirable person. She has single-handedly attempted to increase consumption of produce with resources palpably insufficient to do so. We have featured her in pieces including those here, here, here, here, here and here. And, Pundit sister publication, PRODUCE BUSINESS, has donated almost a million dollars in advertising to help her cause. We have not the slightest doubt she means to help the industry and the planet.

Mark Munger is also a person of admirable character. We met him a long time ago, became friends at a PMA Leadership Symposium sitting by the bar and discussing life for several days in a row. The Pundit and his then fiancée even invited Mark to our wedding although he and his wife were unable to make it. Mark has generously tried to help the industry and we have featured him in pieces such as the ones here, here, here, here, here and here.

Though our acquaintance with Paul Klutes is more recent, he has been generous with his letters to Pundit, which include these here, here, and here, and he has always impressed us as sharp and well intentioned. Friends at C.H. Robinson as well as vendors who work with him speak of him with the very highest regard. That he wants what is good for the industry and the world is not doubted.

Yet we are in a difficult situation for three reasons: The first is that these three generous souls are in a peculiar position. We cannot recall a single time in the more than quarter century we have been cognizant of these issues that a President or Chairman of PMA or United Fresh ran a public advocacy campaign for something that the boards of these associations had not endorsed.

The Produce For Better Health Foundation has an enormous board. If all the companies on it had endorsed this proposal and then sent these three out as advocates for PBH’s position, the plan would be difficult to stop. But speaking on their own, without the benefit of their own board’s endorsement, it is difficult to know what to make of their presentations. If they can’t persuade their own board members, what chance do they have of persuading the rest of the industry?

Second, as we have expressed, we don’t think spending donor money that was given to PBH is right because the money was not collected for that purpose. The willingness to do this seems to imply, once again, that nobody is supporting this proposal, that they couldn’t get 25 donors to each ante up $10,000 for a lobbying campaign, so they had to dip into the PBH kitty.

Third and perhaps most important, to be credible the process should have been managed by a neutral party. Then each question can be presented with both the pro and con being presented in the most effective way. Follow-up publicity could publicize both positions. Now industry members feel, legitimately, that the promoters are not working to get out the negative critiques on the proposal.

How could three people of such extraordinary good will and generosity have come to present things in this way?

We would say the industry is experiencing a “Lorelei DiSogra moment.” Lorelei, who we profiled here, is a true believer and this is her power. When we profiled her we introduced her this way:

One doesn’t so much meet Lorelei DiSogra as she appears before you… one would be tempted to say she bubbles with enthusiasm, but that trivializes her presence. She is enthusiastic, deadly enthusiastic, a woman with a mission who has had several positions but only one job: To carry the torch of good health through increased produce consumption during the long marathon of building support in the public health and education communities, the journalistic, policy and regulatory communities and the legislature.

Lorelei has found her place as the Vice President, Nutrition and Health for United Fresh, but she has had many other positions including working at Dole. When she was at Dole, we often spoke with other Dole executives about her. We never heard anyone fault her work ethic, her intelligence or her creativity, but we often heard questions as to whether, at heart, she was actually more interested in helping the world than in purely promoting Dole’s products.

Now the CEO of Dole was, and is, deeply dedicated to a vision of healthy living and so Lorelei had a place and promoted 5-a-Day and other pro-consumption programs with a Dole logo on them. Ultimately though, Lorelei’s vision really was not a one-company vision; it was an industry vision and so she pushes many of the same concerns from her perch at United.

It is notable, though, that the service Lorelei provides at United is not just a matter of increasing produce consumption; it is a matter of getting public funds to pay for it.

In other words, she didn’t try to get permission for the produce industry to supplement WIC funds or get permission for the produce industry to bring in fresh produce for a school snack program. She worked to get the government to fund these initiatives.

We suspect that Elizabeth, Mark and Paul are so enthused by the vision of a healthier populace based on increased consumption that they are driven to make it happen any way they can. It is, however, notable that not one of these three advocates own a produce company, not one of these advocates will actually have to pay the bill, and we would submit that focusing on the paying of the bill is pretty crucial.

It is unclear to what extent, if any, PBH has succeeded in increasing consumption, but as an organization funded by voluntary donations, that is not such a crucial matter. Those who believe can contribute and those who do not can decline to do so.

This proposal though — a mandatory payment — has to be sold based on a solid return on investment. Whether that can be obtained and at what level of investment is a matter on which men of goodwill can and will differ. We have kept our mind open on the substance of the proposal and on alternatives.

The imperative for the industry, right now… if we are to have a true dialog… is that both pro and con need to be given equal opportunity to be heard.

Many thanks to our correspondent for pointing out the problematic nature of the way this dialog is being conducted.




Another Sea ChangeAt Wal-Mart

In a sense, it is not a particularly important piece of news that Pam Kohn, who had been named to succeed Bruce Peterson when he left Wal-Mart as Senior Vice President, Perishables and General Merchandise Manager, has left the division to move over to global procurement.

Although doubtless important within Wal-Mart, she never took much interest in industry affairs and, unlike Bruce, didn’t participate in associations, certainly never sought to become Chairman of PMA or anything like that.

Her departure after just over two years in the job is not really surprising. She had no particular connection to perishables, having been a Senior VP for Non-perishables at Stop & Shop; her holding the job always had the air of Wal-Mart’s penchant for getting its people to cross-pollinate. So here they added some perishable expertise to her resume. If she ever acquired any love or passion for the category, it was well hidden.

She was never long for the job anyway. At the time Bruce left, she was Senior VP for the southeast division, which meant she was on the road constantly. She had wanted to get off the road and Wal-Mart filled the ”spot” with her.

Of course, that in and of itself is the story. For Bruce, being VP of Produce and then Senior VP of Perishables, was a career… a life’s work… to build and elevate Wal-Mart’s produce and broader perishables area. It was a position requiring special expertise in the field and was the fulcrum for passion about fresh foods at Wal-Mart.

Now, it is a slot to be filled a few years at a time by executives who need to get their resume punched that they have perishable experience.

This encapsulates the sea change that Wal-Mart has undergone and has extraordinary implications for the produce and fresh food industries.




Cancer Society Accumulates $1 Million From 50 Years Of Produce Industry Support

Some of the things we like most about this industry are the sense of family and history and the big heart of the people who toil in the trade. All these attributes were on display at an event this past weekend. A hat tip to Cindy Jewell of California Giant Berry Farms for sending this along:

50th Anniversary Celebration A Success in Watsonville

The Original Spring Lamb Barbecue celebrated its 50th anniversary on May 16, 2009, at the Crosetti Ranch in the foothills of Watsonville. This was a special event for many reasons and for many attendees, but most important for all was the $72,000 raised in support of the American Cancer Society. This year’s contribution surpasses well over one million dollars in total contribution made to the American Cancer Society from the event.

This long standing stag event was attended by over 800 men on a perfect sunny day as they all enjoyed lamb barbecued on four different pits, and a horseshoe tournament that included over 60 teams on the expansive property nestled among apple orchards and oak trees.

Bill Moncovich
President of California Giant
President and Chairman of Spring Lamb

Over the years, hundreds of volunteers from the Pajaro Valley have been committed to participating in the Spring Lamb event which contributed to its long running success. This year was special for many, including Abel Zinella the last of original organizers who attended the very first Spring Lamb Barbecue. This year Abel enjoyed witnessing a complete renovation of this historical ranch, which provided for greater capacity and enjoyment for all who attended. Renovations of the Crosetti Family Ranch began two months ago by one of the long time attendees (and volunteers), Jerry Shott. His construction crew spent long hours getting the venue ready for its 50th celebration.

Also new this year was the development of a website to capture information on the history of the event, acknowledge long time supporters that have passed, and to allow sponsors a way to contribute to the Spring Lamb event on-line. The website www.springlamb.org was donated by California Giant’s web host M29, and their ad agency McDill and Associates.

Jerry Shott
of Shott Construction Co.,
volunteer

“Support we receive for this annual event is so strong throughout our community here in the Pajaro Valley”, says Chairman Bill Moncovich. “We are so appreciative of everyone who helps to make the event a success each year. In addition to those who cook, attend, and clean up, we have over 100 individuals and companies that sponsored the barbecue this year”, adds Moncovich.

Last fall the Cancer Society acknowledged the longevity of the event and the cumulative contribution of nearly $1 million; praising Bill Moncovich and the organizing committee for hosting the oldest, consecutively held, fundraiser for the American Cancer Society in the United States. This accomplishment was also recently recognized by Congressman Sam Farr, with presentation of certificates to key supporters and organizers of the now 50-year-old event.

Proceeds from the Spring Lamb are also contributed to a local organization that supports families of children with cancer. Founded in 1998, Jacob’s Heart Children’s Cancer Support Services provides support to address the emotional, social, and financial needs of children with cancer and their families. The organization aims to normalize as much as possible the children’s experience by providing for families’ basic needs. All services are offered free of charge in both English and Spanish.

For more information on how to sponsor the Spring Lamb Barbecue held each year on the second Saturday in May and its fund raising effort to fight cancer, contact California Giant Berry Farms at (831) 728 -1773 or visit www.springlamb.org.

The history of the event is pretty amazing, with Bill Moncovich’s father, John Moncovich Sr., being among the founders of the event a half century ago. Fortuitously John Moncovich Sr. was chairman of the local chapter of the American Cancer Society, so that is where the money raised was sent and, last year, with the five decades’ mark ready to be met, the American Cancer Society acknowledged the longevity of this event in a letter:

Our records indicate that this is the oldest, consecutively held, fundraiser for the American Cancer Society in the country.

We were honored when your father, John Sr. and his friends — J.J. Crosetti, Louie Lettunich, Peter Scurich, Pat Carroll and Chick Arbanas — decided to donate the proceeds of the event to the American Cancer Society. We were thankful when you decided to continue to hold the barbecue as a tribute to your dad.

The longevity of the event is amazing enough, but coupled with the generosity of your family hosting the barbecue for all of its 50 years, that is truly special. Several years ago, you predicted the event was on track to raise $1 million by its golden anniversary. That goal is within reach; to date, the barbecue has raised more than $950,000.

Your donations support lifesaving discoveries, spread knowledge and awareness, increase the odds of surviving cancer and improve a cancer patient’s quality of life. The money raised is central to supporting our mission, which aims to fight cancer through research, education, advocacy, and service.

Congratulations to all involved. We think it is a pretty terrific thing that the produce industry should be involved in the oldest, consecutively held fundraiser for the American Cancer Society.

Many thanks to Cindy Jewell and California Giant for sharing this gem.




Pundit’s Mailbag — Response To Ballantine’s Fall: ‘Just Say No’

We received an avalanche of letters related to our piece, Did Wal-Mart Have A Role In Ballantine’s Fall? We thought this one raised an interesting point:

Very astute observations in your article (Did Wal-Mart Have A Role In Ballantine’s Fall), but it really gets down to Economics 101 and the classic business decision of when you “Just Say No” to a business relationship. Of course, once you say no and win the battle (if they come back) do you lose the war by selling to them again?

The situation is not unique to the produce industry. I fight the same battles every day. And there are many more culprits than Wal-Mart. When trucks are tight, shippers and receivers are quick to accept every one of my trucks and I am careful to adhere to spot market rates. But as soon as trucks loosen up, I am asked to match rates from carriers and brokers that were nowhere to be found in the tight truck market.

A customer that will throw you under the bus for a very small percentage is no customer at all, and in my opinion should be treated as the root problem rather than a customer “on vacation.”

In other words, don’t reward their ethics by accepting them back as a customer. Give that price break they are so hungry for to their competitor. Just say no.

— JC Cook
Riolo Transportation
Visalia, California

Alas the question is, “Who will say yes?”

Philosophically we agree with our correspondent. Producers are responsible for the deals they enter into, and they are foolish if they enter into deals that will not be profitable.

This spring we did a little tour with ex-Wal-Mart executive Bruce Peterson speaking at several schools and before some associations. Bruce would tell a story of how he was once presenting an analysis of what market conditions would be in the coming year for a particular crop. Producers in one region bitterly protested as the market price would be far below production costs for that particular region.

Bruce explained that he was merely transmitting information about what market prices would be and strongly advised the producers in that region not to plant that crop if it would not be profitable.

Yet they did plant and they did lose money, and that is bad because business should not be a habit. A business has to respond to price signals.

That being said, this is easier to do in theory than in practice. Sometimes there are a lot of sunk costs as with tree fruit. There are whole industries such as commercial aviation that have not made one penny since the dawn of the industry. Why? The sunk costs are so great that it always pays to discount so that one can cover the variable costs. So a giant airplane is purchased, the airport and gates, etc., were already built, the pilots and flight attendants are on the plane, the marginal cost of carrying an additional passenger is a little fuel and, maybe, a bag of peanuts and a soda. So discounting to fill seats seems smart and this is what “yield management” is all about — airlines trying to find a way to keep all their full-fare passengers paying full fare while selling the other seats at a discount. Inevitably, though, if there is a lot of capacity and everyone tries to yield-manage; there will be a lot of cheap seats sold.

With a crop like tree fruit, the trees were planted, pruned and tended, sometimes the fruit is already picked and packed — so, like in aviation, one will probably get discounting. In fact, the savior of both aviation and tree fruit may be the banks. If the banks refuse to finance more planes or more peach trees, capacity falls and the industry can be profitable but, often, only temporarily until those profits entice more investment.

What we liked best about JC’s letter, though, is his vote for loyalty in business. That is the way the Pundit was brought up and it is the lack of loyalty that seems to grate so much among those really angry at Wal-Mart.

Last season, we are told the grape buyer at Wal-Mart elected to begin a conversation with the grape vendors by announcing that the buyer never wanted to hear the name of Bruce Peterson again. Bruce, of course, was the architect of Wal-Mart’s produce operation, taking it over when it had only seven stores.

We always wonder why people say things like that. We don’t see how it could help them or Wal-Mart but, more broadly, it was kind of like asking, “What have you done for me lately?” If when Wal-Mart business was very difficult and profits were slim, some vendors jumped through hoops to help Wal-Mart build its produce program. Is it crazy to think those vendors maybe shouldn’t have to be the cheapest person on earth to get the business?

Don’t companies thrive if they have vendors that care, and didn’t these folks show a willingness to do things to help Wal-Mart that others wouldn’t do? And shouldn’t that count for something?

Many thanks to JC Cook and Riolo Transportation for helping the industry think through such an issue.

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