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Euclid To Leave Sunkist; Sun Pacific To Handle Marketing, Sea Change For Western Citrus

It may not be the end, it may not be the beginning of the end but it is surely the end of the beginning.

We have been covering the travails of Sunkist for some time including this piece we ran back in February that posited a new paradigm for the western citrus industry. That new paradigm may now be upon us.

Although no official announcement is out, we have learned that Sunkist will lose Euclid Citrus as a member and that Euclid will turn to Sun Pacific for sales and marketing.

This isn’t the end of things. Sunkist will lose still more volume before the start of next season. Citrus growers report that Sunkist has not corrected what they almost universally perceive as its excessive overhead, and these high costs are driving leading firms to seek alternatives to Sunkist.

The situation is far worse than it sounds. When members leave a co-op such as Sunkist, it is not a random event. It is the good members with capability and options that will leave.

The less capable firms, with less desirable fruit and less developed infrastructure, will stay at Sunkist.

The core issue is that Sunkist’s sales and marketing charge will be nearly doubled in 2007 to about $1.40 per box and that does not include a special 13th month assessment — an extra charge to cover expenses incurred that have not been covered by normal assessments.

This is all putting the Western citrus industry into a state of uncertainty.

The Pundit’s family used to have a banana import deal at a time when Chiquita had a virtual monopoly on the market. The Pundit Poppa, to this day, remembers that banana deal as the easiest deal he had in a lifetime in the produce industry.

Chiquita would each week announce its price, and we had lined up a group of buyers who weren’t concerned about brands but wanted a bargain banana. Whatever Chiquita’s weekly price was, we undercut it a bit and we were sold out very quickly.

Sunkist has provided a similar price umbrella for the Western Citrus industry. But its volume losses — paramount, Bee Sweet and now Euclid — means it will be difficult for it to serve this function.

This is a sea change in the industry… and a little dangerous as well.

Our experience has always been that strong competitors make for strong markets — weak competitors start flailing, sending out roller cars, dumping stuff in terminal markets, pricing incorrectly.

The industry can live with a strong, dominant Sunkist, it can probably live with a small and insignificant Sunkist. It is the middle-ground that poses a danger to the whole trade.

A middle ground is something we seem likely to be living in for at least the next season.




Tim York Recognized For Food Safety Leadership

In what was surely the most predictable and the most deserved award given this year, Tim York, President of Markon Cooperative, was chosen as The Packer’s Foodservice Man of the Year.

Tim spearheaded the Buyer-Led Food Safety Initiative, and Pundit Investigator and Special Projects Editor Mira Slott interviewed Tim here and here.

Tim didn’t have to lead this effort. He had already been chairman of the board of PMA, and nobody could have said that he hadn’t done his bit for the trade had he done nothing at all.

Yet Tim, located at the geographical epicenter of the spinach crisis, was possessed by a steely resolve to see right done and he did what a man secure in the virtue of his cause is compelled to do. In so doing, he both substantively moved ahead the industry’s agenda on food safety and provided an example for us all of the power of one man with a righteous cause.

Congratulations to Tim on this well deserved award.




Beware Of Headlines About Dubious Grapefruit Cancer Study

A new study was just published in the British Journal of Cancer purporting to show a Grapefruit Link to Breast Cancer:

Eating grapefruit every day could raise the risk of developing breast cancer by almost a third, US scientists say.

A study of 50,000 post-menopausal women found eating just a quarter of a grapefruit daily raised the risk by up to 30%.

The fruit is thought to boost levels of oestrogen — the hormone associated with a higher risk of the disease, the British Journal of Cancer reported.

But the researchers and other experts said more research was still needed.

The women had to fill in questionnaires saying how often they ate grapefruit and how big their portions were.

Oestrogen important

The researchers, at the universities of Southern California and Hawaii, found that women who ate one quarter of a grapefruit or more every day had a higher risk of breast cancer than those who did not eat the fruit at all.

Previous studies have shown that a molecule called cytochrome P450 3A4 (CYP3A4) is involved in metabolising oestrogen hormones.

And grapefruit may boost blood oestrogen levels by inhibiting this molecule, allowing the hormones to build up.

The researchers found that in women who ate at least a quarter of a grapefruit daily, levels of oestrogen were higher.

They said: “It is well established that oestrogen is associated with breast cancer risk.

“Therefore, if grapefruit intake affects oestrogen metabolism leading to higher circulating levels, then it is biologically plausible that regular intake of grapefruit would increase a woman’s risk of breast cancer.”

More research

And they said this was the first time a commonly eaten food had been linked to an increased risk of breast cancer in older women.

However, they warned that more research was needed to confirm the findings which may have been affected because they only took into account intake of the fruit, but not grapefruit juice.

Breast cancer accounts for almost a third of all cancers in women, and previous lifestyle factors linked to the disease include drinking alcohol and being overweight.

Dr Joanne Lunn, a nutrition scientist at the British Nutrition Foundation said: "This is an interesting study of a large group of post-menopausal women whose diet and health have been followed for many years.

“However, this study is simply a piece of the jigsaw that will eventually help us to understand how our diets affect our health.

“Although we are beginning to get a better awareness of how our diets can modify the risk of diseases such as cancer, we are still a long way from identifying particular foods that might specifically increase or decrease risk.”

However, she said that some dietary patterns are associated with a reduced risk of certain cancers and that a diet rich in a variety of different fruits and vegetables could help reduce the risk of heart disease and some cancers

Those poor grapefruit farmers. First they get hit because their high-usage market of elderly people is scared off because of drug interactions and now this.

Yet the publication of this study tells you more about publicity-hungry scientists than it does about grapefruit and cancer.

We’ve pointed out before how tenuous much of the research is that claims specific cancer-prevention properties for individual produce items. Well, the good news is we are equally skeptical about this claim.

The publication of research in this form was really highly irresponsible. It is highly predictable what the headlines will be and that the caveats will be lost as consumers pay attention to the headlines.

Not only is this one study finding something that nobody else has ever found but the researchers admit they did not control for relevant variables.

An obvious one: grapefruit juice consumption.

The basic thesis of the researchers is that consumption of grapefruit may increase the levels of the hormone oestrogen (estrogen) in the bloodstream by inhibiting a molecule called cytochrome 3A4 (CYP3A4) that helps to break down oestrogen.

Yet it is believed that grapefruit juice would have the same effect. So if the consumers that did not get cancer happened to drink grapefruit juice, it would knock out the whole research.

Not that it would settle anything if the grapefruit juice lead fizzled.

It is important to understand several things about this research:

  1. Nobody actually knows if these consumers eat more grapefruit than any other consumers. It is based on a self-reporting system that may not be accurate.
  2. The researchers did not actually take any blood tests on people who ate grapefruit to determine the level of oestrogen in the blood stream.
  3. Having failed to even look at obvious variables such a grapefruit juice consumption, there seems to have been no effort to ascertain what else these individuals who have cancer might have in common besides grapefruit consumption. Maybe people whose taste buds favor grapefruit consumption also like fried calamari and that is the cause. Or, perhaps, grapefruit consumption is concentrated in individuals of specific ethnic heritage, and the genetic predisposition of that ethnic group is to cancer.
  4. By selecting out one thing to study — breast cancer — and one thing only, the researchers neglect the possibility that even if they are correct, the product might have countervailing benefits to offer. What if it increased the likelihood of getting breast cancer but decreased the likelihood of getting a heart attack?
  5. The study covered only post-menopausal women. So it tells us nothing about women who have not yet undergone menopause. At the same time this holds open the question of long-term use. Even if the researchers turned out to be correct, how much usage would be required to generate this effect? Are these grapefruit consumers actually lifers — and the relevant statistic is that eating grapefruit daily for 50 years is the problem? Or does an 80-year-old woman who never ate grapefruit in her life increase her risk by starting now? The study tells us nothing.

It is hard to know who is more irresponsible, the academics who submit this kind of half-done research to respected journals, the journal editors and peer review panels that publish it or the consumer publications that run with the story blasting headlines that accentuate the dramatic possibilities more than represent a sober-eyed view of the truth.

There is a kind of unholy trinity at work here. Rarely do these stories come about because reporters are perusing their subscription to the British Journal of Cancer and suddenly leap out of their chairs in a moment of enthusiasm and declare that this is a great story.

Typically the researchers and the journals make sure the reporters know when they have headline-producing stuff. This transforms what could be a noble search to advance human knowledge by incrementally increasing our understanding into a tawdry battle in which academics pursue tenure, grants, prizes and publicity at least as much as they pursue truth.

Already the shame is spreading, Cancer Research UK felt compelled to issue a statement:

CANCER RESEARCH UK CAUTIOUS OVER
GRAPEFRUIT BREAST CANCER

Cancer Research UK has played down reports of a link between eating grapefruit and an increased risk of breast cancer in postmenopausal women.

A study by scientists at the Universities of Southern California in Los Angeles and Hawaii in Honolulu reported that eating as little as a quarter of a grapefruit a day may increase the risk of breast cancer in older women by 30 per cent

But a Cancer Research UK spokesperson pointed out that it was the first study to find such a link.

Researchers analysed data from around 46,000 women taking part in the Hawaii-Los Angeles Multiethnic Study, 1,657 of whom had been diagnosed with breast cancer.

Study participants were asked how much grapefruit they had consumed daily over the previous 12 months.

The researchers found that grapefruit consumption was “significantly associated” with an increased risk of breast cancer, and propose that that the link could be due to the fruit increasing blood levels of the hormone oestrogen, which is known to be associated with breast cancer risk

Previous research has revealed that a molecule called cytochrome P450 3A4 (CYP3A4) helps to break down oestrogen.

Grapefruit is thought to inhibit this molecule, and the team suggests that this could, in theory, raise levels of oestrogen in the blood.

However, Liz Baker, science information officer at Cancer Research UK, said: “Although the chemicals in grapefruit are known to interfere with the action of several drugs, this is the first and only study to show a link between grapefruit and breast cancer risk, and the researchers themselves say that the results need to be confirmed in follow-up studies.

“What we do know is that eating a good mix of at least five fruit and vegetables a day can reduce the risk of many diseases, including some cancers.”

It is good that reputable scientists feel a need to issue explanations and qualifications. But as Mark Twain told us, “A lie can travel halfway around the world while the truth is putting on its shoes.”

The researchers and the journal got their 15 minutes of fame, and the journalists got their headlines. Now that the cautionary notes are out… Where do the grapefruit growers go to get their customers back?




Learning From The High Priests Of Food Culture

PMA’s annual Foodservice Conference in Monterey, California, just concluded and it was, as it always is, a highly successful event. There is nothing else remotely like it in the produce industry — a unique place where foodservice, of which produce is a small part, can intersect with a produce industry that is still heavily focused on retail.

It is a shame, though, that more retailers don’t attend. Much of the conference focuses on chefs, and those chefs are very much in-touch with consumers and with culinary trends. Very often what is hot at a white tablecloth restaurant this year will be on retail shelves in the fullness of time. It seems to us that retailers need to have exposure to these trends, and attending an event such as PMA’s Foodservice Conference can serve as an early warning system for what is likely to be hot in the years to come.

At the same time, there is a terrible danger in simply accepting what is said by high-end chefs. With their importance as trendsetters acknowledged, it is worth remembering that the white tablecloth sector is about 2% of the foodservice industry.

If you are a commercial shipper that ships trailer loads of product, this sector probably accounts for zero percent of your direct business and it is just a tiny percent of what you may sell to wholesalers, who may sell to purveyors, who may sell to this elite sector.

So if a fancy chef explains that he rejects value-added product because he wants to add the value himself, it probably tells us little about the prospects for fresh-cuts.

In addition, we need to be cautious because too many chefs are prone to dismiss concerns that they cannot easily control. Issues, such as food safety that are crucial to the future of our industry, can be dismissed with the wave of a hand and an unsupported assertion.

When one of the chefs asserted that for every two local growers that have a food safety problem, there are ten good ones, one didn’t know whether to be more upset over the chef’s acceptance that one-sixth of his supply base has food safety problems or the fact that he thinks it OK to say things without any factual basis. If we could change anything about the seminars, it would be to have on the panels people in a position to challenge claims such as this.

Many shippers were frustrated listening to the workshops because what they heard was at such a disconnect from their actual experience. One foodservice director for a shipper that has the rights to some specially bred high-flavor varieties laughed at the general session in which celebrity chefs Anthony Bourdain and Walter Scheib, who have worked at a range of upscale venues including The White House, pronounced their focus on serving tasty food.

Our shipper friend says he finds foodservice may want tasty food, but has no interest in paying for it. Yet our shipper friend is almost surely wrong. The chefs were sincere, and they will pay a premium… they do it every day when selecting from a local grower, a purveyor or walking a wholesale market in pursuit of that one perfect lot of tomatoes.

The misunderstanding is partly because our shipper has not properly geared his marketing toward the flavor-conscious, willing-to-pay-more sector, and partly because, in fact, our shipper, is kidding himself. He is a large-volume shipper that needs customers who buy enormous quantities. In other words, he needs to sell to the mainstream, and chefs that have worked at the White House are many things, but certainly not middle-of-road.

The PMA Foodservice Conference illustrated a clear bifurcation of the foodservice community. You had chefs at white tablecloth venues focused on local and dismissive of food safety issues, while chain restaurants were concerned with scalability and cost control.

They were like ships passing in the night — destined to never meet.

The trade show illustrated another disconnect between the produce production-side and the foodservice operator. The vast majority of booths would not have been out of place at a retail show, with the possible exception of different pack sizes.

Yet, fundamentally retail and foodservice think differently and in that difference lies both a challenge and an opportunity for produce vendors.

Retailers do not make judgments about their products. Because a retailer decides to sell a kosher all beef hot dog tells you nothing about that retailer’s judgment of the quality of the product. It just tells you that the retailer believes enough consumers will buy it to justify the space.

On the other hand, when Costco, in its foodservice operation — its snack bar in every store — decides to sell a kosher all beef hot dog, it is making and expressing a judgment about the quality, the value, the suitability for the clientele, etc., of that item.

Because restaurants make choices for consumers, they tend to know their customers better and that means that restaurant chains are well positioned to partner in product development and menu development.

What was wrong with most of the booths at PMA Foodservice is that they consisted of companies showing their wares for sale when the key to selling foodservice is getting the product on the menu.

There are many famous stories that play to different aspects of this situation. The late, great, Dave Stidolph of Mann Packing is said to have selected the length of his first fresh-cut broccoli spears not by what was efficient in Mann’s production facility but by the width of the commercial steam table and what size would allow them to fit two across.

McDonald’s approached its chicken vendor with a need for a chicken-based product that could be cooked in existing equipment and retailed at X price. Only after that approach was the McNugget developed.

Booths looking to sell to foodservice should highlight not just a list of existing products but a willingness and ability to partner to create new ones perfect for the menu of that chain. and suitable for the price and facility constraints of individual operators.

Some of the goings on at the foodservice conference raise questions as to their take-home value. What, precisely is the take home from chef demonstrations, for example? Perhaps the take home of these events, as with the whole conference, comes from taking a moment to marvel at the wonder of our products.

Things are changing post-spinach crisis. In chain restaurants, produce had been the last bastion of the chef, but concerns about food safety are driving more institutional restrictions on procurement. This makes it all the more important to, at least one weekend each year, surround ourselves with people in white jackets — the high-priests of the food culture. These devotees of taste love our products more than we do ourselves.

Being around them for a few days, by the sea in Monterey, is a way of recharging our industry batteries with love of product and a recognition of the important place our work holds in the world. Many thanks to PMA for bringing it all together.




Serving The Future Of The Industry And Honoring Joe Nucci

It is fitting to take a moment to say thank you to the big-hearted folks who we are honored to have as readers of the Pundit.

On the very last day of registration for the PMA Foodservice Conference, we ran a piece entitled Lots To Learn From Foodservice, recommending people register for the event and especially urging people to sign up and play golf at the charity golf tournament used to raise funds for the Nucci Scholarship For Culinary Innovation.

Almost immediately Pundit readers stood up to be counted and we signed up an additional 35 golfers, sold several additional sponsorships and even had numerous people just send in donations.

As a result, the golf tournament was a resounding success, enabling the program to cover unexpectedly high airfares this year for the students and put a little bit aside for next year.

Thanks to everyone for helping to serve the industry and honor Joe’s name.




Pundit’s Mailbag — National Marketing Orders And Agreements

Our correspondent today has written to us before. Our piece, Pundit’s Mailbag — Two Windows And Two Issues, was built around the written testimony he had submitted to the FDA. One focus of that testimony was a recognition that one way to reduce liability for growers and handlers was to reduce the risk to consumers by having better treatments available for illnesses that can be a consequence of exposure to E. coli 0157:H7, particularly Hemolytic Uremic Syndrome (HUS), the kind of “kidney failure” that typically kills or does permanent damage in these cases.

It was a useful insight that the produce industry has ignored at its peril. After all, if HUS was an easily treated illness, this would change the dynamics of food safety quite substantially.

Today we received another note:

Congratulations on The Wall Street Journal Op/Ed. I’m one of the dinosaurs who still gets the print edition (as well as the on-line edition and services).

I received an email with the following:

“Lloyd Day, Head of the USDA Ag Marketing Service and the Organic Program, has been tasked to write a Federal Marketing Order for Leafy Greens.”

Does this square with what you’ve heard?

I also note that the Eat Healthy America Act has a provision to put control of on-farm food safety into the purview of all specialty crop marketing act entities (agreements, orders, etc) at the federal level.

Do you think the LGMA is a good enough model for federal, mandatory controls through the Marketing Act? Or is it more likely to backfire?

Obviously someone working in DC is pushing the original California program (state agreement, state order, federal agreement, federal order) harder than originally planned.

— Dan Cohen
Maccabee Seed Company
Davis CA

Dan raises an important issue on which there has been much confusion. The issue is really, what next? What is the next food safety step for the industry after the California Marketing Agreement?

The original plan was for the growers in the state of California to move from a Marketing Agreement — which is optional to sign-up for, although it is legally enforceable once one does sign up — to a Marketing Order.

This is mandatory and would cover all growers in the state — but Western Growers Association has held off on pursuing this plan because it doesn’t believe it has the votes. The fact that a year after such a catastrophe, WGA doesn’t think the spinach, lettuce and leafy greens growers of California would vote for mandatory regulation tells us may be more than we want to know about the real standing of food safety in our industry.

There are ongoing discussions with Arizona to try and do a second marketing agreement in Arizona with the thought being that between California and Arizona, we will have covered a big portion of the product used by major processors.

When it comes to a national marketing agreement or marketing order, we have something of a split among the big players in the industry. United and PMA have come out in favor of a federal regulatory program administered by the FDA. The Western Growers Association, which now has a Washington D.C. presence of its own, has favored the use of marketing agreements and marketing orders administered by USDA.

A national marketing order could, theoretically, provide food safety assurances, especially if it was structured to include imports.

One problem is that the USDA is seen by advocacy groups and the media as a farmer’s advocate and not an effective regulator. This means regulation via marketing agreements or marketing orders may not achieve the industry goal of rebuilding consumer and regulatory confidence.

The California Leafy Greens program has headed-off initial legislative proposals in California in large part because there have been no more outbreaks. If, God forbid, someone else dies from eating leafy greens, the immediate outcry will be that the “industry-drafted” metrics are inadequate and that the new outbreak stands as proof positive that industry self-regulation doesn’t work.

This voluntary nature of the Marketing Agreement is still problematic. Right now we are very vulnerable as it is only a matter of time before someone withdraws from the California Marketing Agreement. This will lead to instant attacks as the consumers will no longer be protected on virtually all the products they might buy.

Which leads us to question the practicality of a national marketing order. We have a few national marketing orders on items such as watermelons and mangos. However, as we said, Western Growers Association did not move to a mandatory marketing order in California in part because they didn’t have the votes.

A marketing order requires a vote of the growers, and WGA didn’t believe it could get those votes in California — how in the world are they going to get them in Colorado and New Jersey?

To sum up what really is a happening: USDA AMS is in the very preliminary stages of putting out an advance notice seeking comments from industry, consumers & other interested parties on whether the California Leafy Greens Agreement should be expanded nationwide. The key word is AGREEMENT. This would not be a marketing order.

Pundit Investigator and Special Projects Editor Mira Slott spoke with Bob Keeney, Deputy Administrator for Fruit and Vegetable Programs, Ag Marketing Service (AMS) to get some details:

Q: What is the current status regarding efforts to take the California Marketing Agreement national?

A: What we’re doing is preparing a document now called advanced notice of proposed rule making for a leafy greens marketing agreement nationwide.

This will be a document that will solicit comments from the industry on whether the government should issue a nationwide marketing agreement for leafy greens or not.

There is a marketing agreement in the state of California only. What we’re working on is a very, very preliminary look on whether the industry feels we should issue this agreement nationwide. We would first be soliciting comments from industry, consumers and all interested parties on taking this agreement national.

We want to emphasize this is very preliminary.

Q: Is there anything happening with the development of a marketing order?

A: We’re not looking at a federal marketing order for leafy greens.

Q: What are the differences between a marketing agreement and marketing order in your mind?

A: The difference at the federal level: marketing agreement allows regulation, if shippers agree. They become signatories then have to abide by all terms of the agreement. In California when they signed the agreement they agreed to abide by it. Marketing order differs in that all the handlers would have to abide by those requirements — whether they agreed or not.

At the federal level we are only looking at marketing agreement and we’re at a very preliminary stage.

Mira also spoke to Jimmie Turner, Public Relations Specialist Fruit & Vegtable Programs, for additional information:

Q: What is Lloyd Day’s position? And what is going on with regard to a national Marketing Order for Leafy Greens?

A: The Marketing Order Administration Branch is under the auspices of Lloyd Day. Any marketing orders or marketing agreements would be managed, coordinated through that branch.

What’s happening now is that the USDA AMS is working with California leafy greens growers seeking to make the California Marketing AGREEMENT nationwide. THIS IS NOT an ORDER, it’s an AGREEMENT.

Once a formal request from leafy greens growers is received that they want to change or establish a marketing order or agreement, a notice is put out in the federal registry seeking comments to change or establish the marketing order or marketing agreement or to not establish such an order or an agreement. People are given a comment period which could be 30 days or could be 60 days. Once comments are received it goes to the Marketing Order Administration Branch.

However, this effort to expand the California Agreement nationwide would not be a marketing order, it would be a marketing agreement. We also have not received any formal request from the industry. We are doing this preliminary work on our own.

As far as USDA AMS’s involvement, we’re in the process of putting out an advance notice, it’s a preliminary step toward a marketing agreement nationwide, seeking comment, asking questions, then analyze those comments, then promulgate agreement if that is the determination. A marketing agreement is voluntary, unlike a marketing order. Handlers of leafy greens become signatories, and by signing the agreement they agree to abide by the terms of the marketing agreement.

USDA AMS and leafy greens growers met in DC a month ago about this effort to extend the agreement nationwide. We’re getting ready to prepare an advance notice. As part of the process, for our purpose we publish advance notice in the federal register seeking comments.

The basic position of United and PMA has been correct on this: The use of marketing agreements and marketing orders for food safety is fine. Each one, incrementally, can advance the cause of food safety by developing metrics, establishing inspection regimens and with each additional state or national plan expanding the scope of exposure of these food safety plans.

So WGA can do what it wishes and it will get no opposition. After all, the growers have to either voluntarily sign up (a marketing agreement) or vote to establish (a marketing order) all these mechanisms.

Yet, in the end, if we continue to have food safety problems, only the FDA has the broad credibility with the health community, the media and consumers, to assure consumer confidence in our products.

That strikes us as about right.

Many thanks to Dan for giving us an opportunity to discuss this important subject.

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