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The Perishable Pundit Visits South Africa
Dispatch VIII: Marketing Proprietary Varieties

As a world-class exporter, South Africa deals with many cutting-edge varieties. For an exporter, controlling varieties that supermarkets want is a prime way to get their business. But in an age of proprietary varieties, some issues going on in South Africa as well as elsewhere are raising real questions about how these proprietary varieties will eventually be marketed.

There is no problem if the company that develops a variety simply wants to charge all comers a license fee, but very often today the developers of varieties try to get better control and better profits by also controlling the marketing of the varieties they develop.

Of course, it is not a problem if these variety developers want to grant an exclusive to one grower/packer/shipper to both grow and market the variety. But if, as is sometimes the case, the developer of a variety wants to both license many growers to grow the variety and restrict their right to market the variety except through certain approved marketers, problems can develop.

It is probably not a big issue with melons or some row crops that are grown fresh every year. But if you are developing vineyards or orchards, where the decision to plant can be years from the actual marketing, this is easily a dispute waiting to happen.

What if a grower that grows a proprietary variety has a bad experience with an “approved” marketer? He might shift his business to some other marketer for all the grower’s other production but is stuck with few options for his proprietary variety. Maybe he’ll go back to the guy he hates. Maybe he’ll go to some strange marketer who competes directly with his other fruit.

It is very problematic.

I am not even sure it helps the owner of the rights to the proprietary variety. After all, even if it is the best variety, many growers won’t want to plant it if their chosen marketer can’t market that fruit. And, of course, in a country such as South Africa, growers rely heavily on the advice of their exporters as to what varieties to plant. Those exporters are scarcely going to recommend a variety they can’t sell.

GROWER VULNERABILITY

The whole issue sounds, to me, like one of those cases where if there isn’t a law right now, there will be one day.

In most states, franchisees, for example, cannot be compelled to purchase supplies from a particular vendor. They can be given specs. They can require that product meet the specs. They can even be given “safe harbor” — that if they buy from an approved supplier, they run no risk of being found in violation of the franchise rules. But franchisors can’t make anyone buy from a particular company.

I think a similar law is likely to be the end result of this issue. A grower who has his marketing options constricted is simply made too vulnerable. This would be similar to a franchisee who also would be left too vulnerable to being overcharged if they had to buy supplies from the franchisor or his approved agents.

In the end, if a company elects to license a variety to a grower, that grower probably will be granted the freedom to sell it however he elects. The alternative is anti-competitive, not likely to be judged either helpful to the farmer or in the public interest.




Starvation Or Obesity

The Cape Times published here in South Africa has an inadvertent juxtaposition of stories on September 5, 2006.

First there is a big article entitled “Global food scarcity crisis looms, warn UN experts.” This article explains:

Food supplies are shrinking alarmingly around the globe, plunging the world into its greatest crisis for more than 30 years.

You might ask why you didn’t notice this horrid crisis? The article has the answer:

The gathering crisis has been largely unnoticed because, for once, the harvests have failed in rich countries such as the United States and Australia, which normally export food, rather than in the world’s hungriest ones. So it has not immediately resulted in mass starvation in Africa or Asia.

Well, let us be thankful for that.

Basically the article goes on to explain that for the past year, as with six of the past seven years, less food was produced than was consumed, with the world drawing down stocks to cover the balance.

Since this can’t be sustained, we have the global food scarcity.

The article is filled with weird assertions such as that “Prices have already risen by up to 20% this year” —without identifying which prices, for what?

The article never wrestles with questions such as how accurate our numbers are or whether there are alternative reasons, such as the move to “just in time” inventory systems that could be responsible for these numbers.

It is not only alarmist, but lacking faith in human ingenuity. It recalls Malthus and the infamous “Club of Romereport, both of which forecast our doom based on crude extrapolations.

It is such poor journalism to report, unchallenged, these bizarre assertions that one could cry for the state of journalism.

But the fact that only a few pages after this piece, there are not one but two stories, both derived from the proceedings of the 10th International Congress on Obesity in Sydney, Australia, which brings the whole situation past tragedy and into farce.

After all, we just read that famine is upon us, and we now read that, in the words of one headline: “World’s agricultural policies produce obesity”. As the article explains:

“The over-production of oil, fat and sugar, largely due to government subsidies to protect farm industry revenues, has contributed over decades to the health crisis we have today.”

And in the next article, the headline advises us that “Fat is ‘brain food’, says expert”, and goes on to explain:

“…the human body has evolved to conserve energy in times of famine, an obesity expert said yesterday.”

These articles, once again, are not so much journalism as press releases; they fail to bring into the equation any alternative views or explanations. For example, it may be true that obesity is a big problem. It may also be true that people, on average, are living longer than ever if they don’t get AIDS.

Obesity may be explained by the body’s propensity to hold onto calories, but also may be explained by declines in the level of physical activity.

One reason the public is often simple-minded on these issues is that the media is simple-minded on these issues. So on one page we have extremism that we are all bound to starve and on the next that we are all bound to be obese.

Death by starvation or obesity-related disease — they share only one characteristic: Both forms of sensationalism can help sell newspapers. Let the reader beware.




Tragedy Befalls Nucci Family Again

How much sadness should one family be asked to endure? That is the only thought in my mind as I learned that Don Nucci, co-owner and co-chairman of Mann Packing, passed away on September 4. He had just turned 70 in August.

He had been enjoying Labor Day vacation, kayaking in Oregon. According to family friends, he felt ill, was taken to the hospital and died of an aneurysm on the operating table.

He was one of the most respected men in our trade. I never heard anyone describe him as anything but honest, fair and honorable.

He was involved in civic work, building a company and raising a family.

I knew Don a long time but came to know him in a different way when we spent the better part of a week together last year after the death of Don’s son, Joe, who was only 40-years-old. I wrote about it here.

I saw Don conduct himself with quiet dignity as he mourned his beloved son. I saw Don quietly secure Joe’s legacy as he moved to temporarily assert control over the company while permanent arrangements were made. I saw Don be a rock around which his family could lean on in that time of such sadness.

Both Joe and Don at least had the saving grace that they passed away happy, on vacation. Joe was with his wife and children, and Don was with his wife Joan.

I am far away in South Africa, so I can’t be at the funeral, but I pray for Joan and for Don’s daughters Lorri, Gina and DeeDee, and ask that they be granted the strength to endure what is seemingly beyond endurable.

And may they draw some solace from the certainty that Don is now with Joe once more.

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