Fresh Produce Discussion Blog

Created by The Packer's National Editor Tom Karst

Monday, December 31, 2007

New Year's resolution - again

The pastor at our church yesterday asked who in the audience were going to make New Year's resolutions. A smattering of hands were raised, and then the pastor asked, "How many of you would make New Year's resolutions if you felt like they would do any good?" Nearly everyone else raised their hands.

The good thing for the produce industry is that most people will give New Year's resolutions a chance, despite the woeful track record of change in previous tries. Here is a link to a Web site claiming ownership of the concept;
From the Web site:

Gary Ryan Blair is the inspiration behind New Year's Resolution Week. This annual event was founded on the premise, that a single resolution can positively and profoundly create lasting change in your life and help to make the world a better place. To become part of the world's largest personal change initiative, visit www.GoalsGuy.com.:

Here is what Gary Ryan Blair says about the history of the NYR:

The tradition of the New Year's Resolutions goes all the way back to 153 B.C. Janus, a mythical king of early Rome was placed at the head of the calendar.
With two faces, Janus could look back on past events and forward to the future. Janus became the ancient symbol for resolutions and many Romans looked for forgiveness from their enemies and also exchanged gifts before the beginning of each year.
The New Year has not always begun on January 1, and it doesn't begin on that date everywhere today. It begins on that date only for cultures that use a 365-day solar calendar. January 1 became the beginning of the New Year in 46 B.C., when Julius Caesar developed a calendar that would more accurately reflect the seasons than previous calendars had.
The Romans named the first month of the year after Janus, the god of beginnings and the guardian of doors and entrances. He was always depicted with two faces, one on the front of his head and one on the back. Thus he could look backward and forward at the same time. At midnight on December 31, the Romans imagined Janus looking back at the old year and forward to the new. The Romans began a tradition of exchanging gifts on New Year's Eve by giving one another branches from sacred trees for good fortune. Later, nuts or coins imprinted with the god Janus became more common New Year's gifts.
In the Middle Ages, Christians changed New Year's Day to December 25, the birth of Jesus. Then they changed it to March 25, a holiday called the Annunciation. In the sixteenth century, Pope Gregory XIII revised the Julian calendar, and the celebration of the New Year was returned to January 1.
The Julian and Gregorian calendars are solar calendars. Some cultures have lunar calendars, however. A year in a lunar calendar is less than 365 days because the months are based on the phases of the moon. The Chinese use a lunar calendar. Their new year begins at the time of the first full moon (over the Far East) after the sun enters Aquarius- sometime between January 19 and February 21.
Although the date for New Year's Day is not the same in every culture, it is always a time for celebration and for customs to ensure good luck in the coming year.


Here is a link to the Top Ten New Year's resolutions, as rated by the author:

1. Spend more time with family and friends
2. Fitness
3. Tame the bulge
4. Quit smoking
5. Enjoy life more
6. Quit drinking
7. Get out of debt
8, Learn something new
9. Help others
10. Get organized


TK: The industry's universally acceptable new year's resolution should be to "sell more produce" and Americans are likely to contribute to the effort - at least for the first couple weeks of January.

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Learning from Whole Foods

Who shops at Whole Foods? We don't. Distance from our home (7 miles or so), lack of familiarity and perceived expense (whole paycheck) are factors that keep us very much outside the orbit of the retail phenomenon. On the other hand, I know of a couple who help account for why Whole Foods seems to have such a loyal following. My brother's in-laws, who live in North Sioux City, S.D. are committed Whole Foods customers, though the closest one to their residence is in Omaha, Neb. This week the couple visited Kansas City to rendezvous with my brother's family for a Christmas celebration. At the same time, they brought coolers so they could make a big stock up shopping trip to a KC Whole Foods before their return to North Sioux City. What makes them true blue customers of Whole Foods and devoted organic food aficionados?

Mary, my brother's mother in law, is a cancer survivor and is scrupulous about what she puts in her body. Randy, My brother's father in law is an endodontist, suggesting a level of disposable income that easily defeats resistance to higher prices.

How has Whole Foods captured the hearts and minds of customers like Mary and Randy? There is a book review in The New York Times on the Gary Hamel book "On the Future of Management" that profiles the Whole Foods business model. From the book review by William Holstein:

If companies now innovate by creating new products or new business models, he asks, why can’t they do the same in how they manage organizations? Might not a more modern approach to management be just the ticket to keep American companies ahead of their global competitors? This would entail moving from a century-old command-and-control model to a more latticed, networked style of organization.
If industrialization and world wars created one model of management hierarchy shared by business and the military, perhaps the next set of management ideas should be spawned by the Internet and the upheaval it has prompted in how humans think about information and community.
Mr. Hamel, who wrote this book with Bill Breen, critiques three companies that he argues may be harbingers of the future:
Whole Foods Market, W. L. Gore & Associates (a privately held company that invented Gore-Tex, among other products) and Google.
Whole Foods has organized itself into roughly eight teams at individual stores, all of whom have the mission of improving the food that Americans eat. These teams, which have the right to hire and fire their own members, are given wide latitude about what to stock on the shelves and how to manage their stores as a whole.
But their performance numbers are open to all to behold, and their compensation is strongly linked to team, not individual, performance. “Unlike so many other companies, front-line employees at Whole Foods have both the freedom to do the right thing for customers, and the incentive to do the right thing for profits,” Mr. Hamel writes.
The fact that front-line employees are empowered to respond to the changing tastes of finicky shoppers is powerful. “In a more hierarchical company,” Mr. Hamel argues, “top management only sees problems once they’ve become pervasive and, therefore, expensive to fix.”


TK: More than a philosophy about food, Whole Foods also has ownership of a distinctive management approach that delivers a customer experience that is satisfying for Mary, Randy and millions more. Hamel suggests this management approach, at least, is transferable to other organizations.



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Friday, December 28, 2007

National Retail Report - Dec. 28

Here is the link to the USDA's National Retail Report issued Dec. 28. I've also added a page of retail links to food page ads, a page that I will add to as I find more online food page ads.

Here is the USDA's summary of retail activity this week:

Advertised Prices for Fruits & Vegetables at Major Retail Supermarket Outlets 12/22 to 01/031,
Holiday celebrations continue to influence ads.
Retailers were wrapping up Christmas promotions this week and ads breaking midweek and later were focused heavily on the upcoming New Year’s celebrations. Traditionally popular foods thought to bring luck in the New Year such as pork, cabbage, and a variety of greens were promoted nationwide. Retailers also continued to highlight party items such as seafood platters, deli/bakery platters, and fruit and vegetable trays. The bulk (nearly 50 percent) of this week’s ads was concentrated on just 9 items. These top commodities included: avocados, limes, cherries, carrots, cabbage, grape tomatoes, pineapples, mangoes, and cantaloupes. Fruits continued to command the majority of ad space and accounted for more than 56 percent of the total ads. Notable increases in activity were seen on some tropical fruits (avocados, limes, lemons, and mangoes) while ads on staples such as apples and bananas declined drastically. Imported peaches, nectarines, and plums as well as Florida strawberries were beginning to show up more often in ads this week. Imported cherries continued to be featured heavily. Several items which had seen heavy increases in activity over the past few weeks for the holidays were beginning to decline. These included: asparagus, celery, pineapples, and sweet potatoes.


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COOL Survey results by country

The U.S. Government Accountability Office in November apparently released results of a country of origin survey for various countries, and the link can be found here. Although part of this report appears dated, another element appears to be new. In any case, it might be worth a review. An explanation from GAO:

To determine country of origin practices of U.S. trading partners and update the 1998 Foreign Agricultural Service report, we surveyed the agriculture attachés for the key trading partner countries and the European Union that were surveyed in 1998 as well as other key trading partners, for a total of 57 countries and the European Union. The 57 countries account for about 94 percent of U.S. trading activity for food and animals. This information in these tables is based on responses to GAO’s survey.

Here is how France responded:

Country-of-Origin Labeling for Certain Foods - Survey Results (GAO-03-781SP)
France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
6. Does your host country government require country of origin labeling at the retail level?
Yes

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
7. Was the labeling implemented after 1998?
No

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
9. Does your host country government require country of origin labeling of domestically produced products?
Yes

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
10. Does industry in your host country independently require country of origin labeling at the retail level?
No response

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
11. Was the industry labeling implemented after 1998?
No response

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
13. Are there routine inspections for country of origin labels at the retail level?
Yes

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
14. How often is this product correctly labeled at the retail level?
Always or almost always

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
15. Are there enforcement actions or penalties associated with the country of origin labeling program inyour host country?
Yes

France
Fresh Fruits and Vegetables (Pre-packaged for consumers)
16. How often are enforcement actions or penalties used when parties do not comply with country of originlabeling requirements?
Always or almost always

France
Fresh Fruits and Vegetables (loose in store bins)
17. Does your host country government require country of origin labeling at the retail level?
Yes

France
Fresh Fruits and Vegetables (loose in store bins)
18. Was the labeling implemented after 1998?
No

France
Fresh Fruits and Vegetables (loose in store bins)
20. Does your host country government require country of origin labeling of domestically produced products?
Yes

France
Fresh Fruits and Vegetables (loose in store bins)
21. Does industry in your host country independently require country of origin labeling at the retail level?
No response

France
Fresh Fruits and Vegetables (loose in store bins)
22. Was the industry labeling implemented after 1998?
No response

France
Fresh Fruits and Vegetables (loose in store bins)
24. Are there routine inspections for country of origin labels at the retail level?
Yes

France
Fresh Fruits and Vegetables (loose in store bins)
25. How often is this product correctly labeled at the retail level?
Always or almost always

France
Fresh Fruits and Vegetables (loose in store bins)
26. Are there enforcement actions or penalties associated with the country of origin labeling program inyour host country?
Yes

France
Fresh Fruits and Vegetables (loose in store bins)
27. How often are enforcement actions or penalties used when parties do not comply with country of originlabeling requirements?
Always or almost always

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Thursday, December 27, 2007

More food trends for 2008

We've already noted an AP story on food trends for 2008, and now this article also presents fearless predictions about food for 2008. This time the prognosticator is Phil Lempert, Today Show contributor and self-proclaimed supermarket guru. On to Phil's predictions:

1. It's all about the garbage. "2008 will clearly be driven by the headlines that measure garbage."

2. Where did this product come from? "Tesco’s Fresh & Easy stores now open in California, Nevada and Arizona will no doubt force the industry to install similar systems that will enable the retailer in seconds to track an individual product’s path from farm to table with all the details necessary to determine a product’s safety. "
"...I can only hope that by the time you read this a few wise people in Washington, D.C., have woken up and made Country of Origin Labeling a reality, finally. "

3. It's how much?"I am not suggesting that food companies run out and increase their prices. What I am suggesting is that the drive to have the “cheapest food supply on earth” is old-school and needs to be forgotten.
We need to shift our resources, and produce foods and ingredients where we can ensure the proper nutrients and safety procedures are in place — hopefully that occurs on American soil."


4. The aging of America..again. "The 76 million baby boomers start turning 65 years old in 2010, and while the impact of this generation turning 50 drew lots of attention but little impact, this time it will be different."

5. Relationships. "It’s all about relationships: relationships with our farmers, our suppliers, our peers, our associates and most importantly ... the relationships with our fellow shoppers."


TK: In my view, Phil overestimates the sensitivity of consumers toward garbage. At least in the Midwest, this sensitivity will not be the dominant food trend. Yet there does exist a strong ethic about garbage and recycling in some parts of the country. My son, in the Portland area, told the story of when he had put an empty soup can in the garbage. A new roommate fetched the soup can from the trash, peeled off the label and put paper and can into their respective recycling bins. Yes, some people care that much - but not all of us.
And for Phil to suggest Americans will be less price conscious now, at the doorstep of a recession, is also off base. Phil is on target about the movement toward traceability in the food industry. But will baby boomers suddenly become more health conscious? I'm afraid some of us will be clutching a McDonald's double cheeseburger when the Big One comes.

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Vegetable and Melon Report

Here is a link to the Dec. 18 Vegetable and Melon Outlook Report from the USDA ERS. Some highlights:


On import growth of asparagus...


Since 1989, Peru’s share of the U.S. fresh asparagus import market has risen from 5 percent to 58 percent in 2006. At the same time, Mexico’s import market share has declined from 79 percent in 1989 to 40 percent, even as their shipments to the United States have nearly quadrupled—courtesy of expanding U.S. demand for fresh asparagus and a 37-percent decline in U.S. production. Imports, which now enter year round, will likely account for about 78 percent of U.S. fresh market asparagus consumption in 2007—up from 59 percent in 2000 and 24 percent in 1989. The longrun outlook indicates that vegetable production may rise about one-tenth over the next decade, with fresh-market vegetable output rising fastest, followed by potatoes and vegetables used for canned, frozen, and dehydrated products.


On fresh vegetables...


During the first 10 months of 2007, the value of fresh-market vegetable imports (excluding potatoes, melons, and mushrooms) increased 7 percent to $3.3 billion. Most of this gain occurred during March-May and can be partly attributed to impacts of the January western freeze, plus increased demand for onions, garlic, and greenhouse vegetables. This winter, assuming average weather, fresh-market import volume is expected to remain at or below that of ayear ago due to expected larger domestic supplies and lower prices.


On melons....


The value of fresh-market melon imports increased 14 percent during the January-October period to $339 million due largely to higher average import prices. Volume increased just 3 percent with most of the gain coming from a 9-percent surge in watermelon imports. As usual, the majority (86 percent) of watermelon imports ente red from Mexico, with a surge in volume in May. Reflecting yearround demand and higher prices, imports are expected to account for nearly 19 percent of domestic watermelon disappearance in 2007—up from 12 percent a decade ago.


On the long term outlook....


The average annual growth rate for vegetable and melon production value is forecast at 3 percent through 2017, with the value of vegetables expected to reach $27 billion by 2017. About three-fourths of the total value of U.S. vegetable production is expected to come from fresh-market crops.

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Wednesday, December 26, 2007

After Christmas in Nebraska

Here in Nebraska for some post-Christmas feasting, gaming and other indulgent activities at mom and dad's. Guest bloggers feel free to chime in while I'm on a restricted schedule, but I should have some time to post tomorrow. Right now the gang is playing "Apples to Apples" - a fruit and vegetable friendly game if ever there was one.

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Rude and unusual

I got a classic anonymous comment the other day that slammed the Fresh Talk blog pretty good. I decided not to publish it in its entirety because it also took some unfounded and untrue swipes at others. One of things that the poster said, however, was that the blog was all about massaging egos. Here is what the commenter said.

"Too much time and energy is being dedicated to this medium only to massage the egos of a few reporters and editors."


TK: I would suggest the anonymous commenter needs to relax and enjoy the season. Leave your name next time and we can dialogue.

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Losing ground in Europe

These are not the best of times for U.S. fresh fruit exports to Europe. From this USDA FAS report, published Dec. 19.

European Union imports of fresh fruit approached 8 billion EUR in 2006, a 25 percent increase from 2001. Despite the overall increase, the U.S. fresh fruit industry experienced a 15 percent decrease from 2002 to 2006. The main suppliers of fresh fruit to the EU-27 market are South Africa (grapes, oranges, apples), Costa Rica (bananas and pineapples), and Ecuador (bananas). In 2006, the United States was the 15th largest supplier of fresh fruit to the EU- 27.

Nuts have done better, however....

Imports of tree nuts4 into the EU-27 grew 63 percent between 2001 and 2006. The United States has been successful in increasing imports in this category; market share increased by 6 percent while actual value of imports from the United States more than doubled in the six year period. The United States maintains a leading share in almond exports and is also the main exporter of pistachios. Turkey is the main supplier of hazelnuts while India provides the majority of the cashews. Note that peanuts are not included in this market. EU-27 imports of fruit and vegetable juices increased by 21 percent in the six year period. The United States and Brazil both lost market share in the six year period and had a decrease in the value of their products imported. Switzerland, a center for juice processing, captured a greater share of the market in 2006 than 2001.4 Tree nuts include coconuts, Brazil nuts, cashews, almonds, hazelnuts, walnuts, chestnuts, pistachios, macadamia nuts, pecans, pignolia, and nuts or seeds not otherwise specified.

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Chad Vader - Day Shift manager




TK: I hope you get a kick out of this like I did. The lesser known brother encounters the challenges of supermarket management.
A link to the origin of the YouTube series is here.

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Tuesday, December 25, 2007

Year in produce

The Packer's Year in Produce has been published and you will find coverage of the Top Ten stories of the year(ranked by The Packer's editorial team). The list:


Top 10 stories:
1. FOOD SAFETY CONCERNS CONTINUE
2. FARM BILL'S INCLUSION OF SPECIALTY CROPS
3. CALIFORNIA FREEZE
4. IMMIGRATION REFORM A NO-GO
5. SALAD BOWL UPHEAVAL
6. TESCO LANDS IN AMERICA
7. DEVALUED DOLLAR
8. AVOCADO WOES
9. WHOLE FOODS/WILD OATS SAGA
10. CHANGING CONSUMER TRENDS

TK: I would look for food safety, the farm bill, immigration and perhaps Tesco to make the list again in 2008, along with the 2008 elections and industry impact from the predicted recession.

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Monday, December 24, 2007

We don't need a Wii or do we?

I was in Target this morning and asked the guy behind the camera counter if they had any "Wii' game consoles in stock. No. When do you expect the next shipment? Don't know.

I find the pursuit of Wii fascinating. People will spend their vacation days camping out in subfreezing temperatures for a shot at snapping one up. I really don't want a Wii, but if I would somehow run across one, I would probably buy it in a heartbeat. But if there were two or three on display, I would probably pass. It's the psychology of supply and demand.

Any club that will have you is not worth joining and any game console in abundant supply is yesterday's news. As we all prepare for much gift giving today and tomorrow, I hope that you find truth in the sentiment that is more blessed to give than receive. Merry Christmas!


.

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Saturday, December 22, 2007

USDA National Retail Report

Here is the summary of the USDA's National Retail report from Dec. 21.


Advertised Prices for Fruits & Vegetables at Major Retail Supermarket Outlets 12/15 to 12/27
Retailers focus on Holiday entertaining.
The Christmas Holiday took center stage for all retailers with major promotions in several departments. Hams took center stage in most ads. Holiday entertaining items such as shrimp, king crab legs, deli/bakery platters, and fruit and vegetable trays were also promoted heavily. Many stores were also highlighting their stores as “one stop shopping” as consumers can purchase a variety of items other than groceries. These items included bakery ingredients, floral assortments, general food items, retail gift cards, and a variety of wines. Overall, this week, there were more fruit than vegetable ads. The top five featured items were: pineapples, blueberries, clementines, celery, and cherries. As was the case last week, the leading fruit items were imported products. Pineapples were featured heavily throughout the country. This was especially noticeable in the northeast and southeast. Ads were observed in eighty percent of the stores. Navel oranges, when combining per each and per pound ad activity, were the fifth most featured fruit commodity. Vegetable ads showed a total increase of about fifteen percent this week compared to last week. In addition to celery, the leading vegetable ads were shown on asparagus, round green beans, grape tomatoes, and tomatoes on the vine. Broccoli, bunched and crowns, when combined together actually was the third leading featured vegetable commodity.


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Friday, December 21, 2007

Bringing home the orange juice

There is much good for Florida in the latest spending bill, says Rep. Adam Putnam, R-Fla. From the office of Adam Putnam:

WASHINGTON, D.C. – Florida agriculture will benefit from new legislation passed this week, said Congressman Adam H. Putnam (R-Fla.), who worked to include the provisions.

“This session of Congress was very hectic at the end, and it was very touch and go for awhile, but it turned out to be a pretty good year for Florida agricultural research”, said Putnam. The benefits are in two bills Congress passed this week, the omnibus spending bill and energy legislation. The spending bill includes the following provisions:

Citrus Health Response Plan: The $35 million program will provide means for enhanced, control, detection, and survey, in addition to identifying minimum production standards to enhance the industry’s ability to produce fruit suitable for trade, protect the integrity of the citrus nursery certification program, and provide a mechanism by which citrus pests and diseases do not spread to other citrus-producing States.

Citrus Canker/Greening Research: $1.3 million will go toward the critical continuation and expansion of vital Citrus Canker and Greening research by the University of Florida (UF) Institute of Food and Agriculture Sciences (IFAS), through the Cooperative State Research Extension and Education Service (CSREES), to improve technologies for treatment and detection, methods of movement and containment, and means to control and eliminate these devastating diseases.

Citrus Waste Utilization: A research program to develop bioenergy from renewable sources such as citrus waste received $393,000.

Florida Renewable Energy Program: the University of Florida’s Florida Center for Renewable Chemicals and Fuel received $750,000 to advance the development of new alternative energy technologies.

In addition, the energy bill, which was signed into law earlier this week, includes a Renewable Fuel Standard that requires the annual use of a certain volume of renewables in transportation fuel. By 2022, 16 billion gallons would come from cellulosic biofuels, including those made from Florida-based feed-stock.




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W.E. Coon

It was great to talk to Bill Coon today, as we exchanged holiday greetings and got caught up with family news this morning. Bill is always gracious to make a supportive comment about The Packer or my efforts with the blog.

Bill's call brings to mind an article I came across when doing some research about Bob Carey before my recent Q&A with the long time leader of PMA. Paul Campbell, former editor of The Packer, wrote this on June 24, 1996:

Bob Carey's retirement signals end of an era
Two months ago, Bill Coon retired from THE PACKER, and on July 1, Bob Carey will retire from the Produce Marketing Association. Thus, an era has ended.
It's out with the old, and in with the new, a natural occurrence. But don't forget the contributions these two men made to the produce industry. And don't forget the unique relationship that has existed between PMA and THE PACKER over the years.
PMA and THE PACKER grew up together -- the parallels in their progress and growth are remarkable. I joined THE PACKER in September 1966 and planned to work there a couple of years to ``get some journalistic experience.'' I stayed 18 years. I had worked only a month before attending my first convention -- the Produce Packaging Association meeting at the Palmer House Hotel in Chicago. Knowing nothing about the produce industry, conventions, airplanes or Chicago, it was quite a learning experience for me. I remember the exhibit hall was very small, and one could walk through the exhibits in a couple of minutes. At this time, both PMA and THE PACKER were searching for the keys to their future. Both knew they needed to change their approach, and they knew it had to do with retailing and marketing, but they hadn't quite put it all together yet.
PMA changed its name three or four times to reflect the marketing changes. A turning point for PMA was 1969. The organization had begun making a strong effort to get more retailers to join, and Chan Copps was only the second retailer -- and the first since Mal Ellison in 1962 -- to be president. Starting in 1969, the president of PMA was a retailer at least every other year, sometimes two years in a row.
It was about this time, too, that we started our face-to-face interviews with the outgoing PMA president each year. My first one was with Bob Callendar in Buffalo in 1970. I think I interviewed every president from then on until 1984.
In 1971, the PMA convention returned to Chicago, and it was at this convention that I started attending PMA board meetings. The reason for attending the board meetings was to gain insight into the industry and get ideas for future stories. I began to realize then the tremendous respect Bob Carey and the PMA board had for THE PACKER's publisher and vice president Jim Connell and Coon, and vice versa.
Even then, PMA planned its convention sites a few years in advance, and Connell was pushing hard for the association to come to Kansas City in 1975.
A lot of resistance existed among board members, which was understandable because Kansas City didn't have the appeal of a San Francisco or a New Orleans. They were concerned that having the meeting in Kansas City would hurt attendance. At the same time, realizing how much Connell had helped publicize and promote PMA, they didn't want to offend him.
I overheard Ralph Pinkerton, then with the California Avocado Board, say to Carey, ``Why don't we give Connell an award?'' ``What for?'' Carey asked.
``I don't know, but it's a lot easier than going to Kansas City,'' he replied.
In any event, the board finally did decide to come to Kansas City in 1975.
The Kansas City convention was a success. It also was the first year of the floral seminar, so this added a new and exciting element to the PMA convention. By the mid-1970s, PMA had obviously found its niche, which was to get retailers to join and come to the convention.
The program was stacked with retail-oriented speeches and material, and retailers were beginning to flock to the convention. The floral seminar each year also gave retailers another reason to convince their bosses of the benefits of PMA.
The 1970s brought an explosion of new produce items from the United States and around the world. No longer was the produce director at the chain stores considered a stepchild. His department now was the most important in the store. Suddenly, eating more fresh fruits and vegetables was the thing to do. Consumers became more nutrition-minded as experts advised them produce was healthy.
Certainly, some luck was involved in the boom at PMA and THE PACKER during the 1970s and early 1980s. On the other hand, the two organizations were prepared to capitalize on the situation.
Foodservice became more important to both organizations beginning in the mid-1970s, and eventually THE PACKER gave Produce Man of the Year awards to foodservice gurus Joe Stubbs of Sunkist and Joe Brennan of Marriott Corp.
As usual, and most importantly, the No. 1 thing the produce industry has going for it is that it offers good, healthful products. You can't beat that for a public relations tool.

Paul Campbell was the editor-in-chief of THE PACKER from 1972 to 1985 and was associate publisher from 1983 to 1985.



TK: Paul's thoughts about Bob Carey and Bill Coon certainly put into perspective their impact on both the organizations they led and the industry they influenced for so many years.

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Poll Closed: Case Not Closed

The Fresh Talk poll was a real horse race this week. The question:

Would the industry benefit from a USDA generic promotion order, with mandatory assessments, for fresh produce?

Yes 8 (42%)
No 10 (52%)
Unsure (6%)


TK: So most believe a national generic promotion order would not benefit the industry. However, I would say the case is not yet closed. Could a promotion order be combined with a scheme for food safety oversight? I appreciate the input from those who find the idea less than stellar. Some believe relying on AMS would be a mistake, while others believe the market will provide a solution. Others say that mandatory assessments have been tested in courts and found wanting. Still, the industry needs to grapple with raising the profile of consumer messaging, and a national promotion order could do the trick.

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Go to New Zealand and pick some apples

Labor shortages aren't unique to the U.S.. In fact other countries can lay claim to more pronounced shortages of farm workers. This link and another tells the story of the labor shortage in New Zealand. From the story in The Southland Times:

Summerfruit New Zealand chairman Basil Goodman said there were $35 million dollars of export cherries hanging on the region's trees but no one knew where to find the 3700 seasonal workers needed to pick them.

"And the situation does not look any brighter for summerfruit, apples or grapes," Mr Goodman said

TK: Now that a labor shortage has been declared in several fruit growing regions, backpackers can apply for changes in their visitor permit to allow them to do seasonal work. Even with a new government program to bring workers in form the Pacific Islands, backpackers will still be welcome to work the apple harvest in February. On a related note, here is the link to a recent USDA Foreign Agricultural Service report on New Zealand apples. A highlight about organics:

New Zealand apple exports are forecast to fall 7.6% to 270,000 tons in MY 2007/08 continuing a downward trend after reaching a peak of 364,554 tons (19.8m cartons) in MY 2003/04. Over the longer term, exports are expected to remain in a band between 215,000 to 325,000 tons (12 and 18 million cartons). Prices for the Braeburn variety, which accounts for approximately one third of total exports, deteriorated badly at the end of the season and overall pool prices paid by exporters to growers are likely to be well below the cost of production. One bright spot in the sector is organic production, which accounts for 10% of total planted area. Prices for organic apples were 2.5 times higher than for conventionally grown fruit in MY2005/06. However, margins slipped this past season as a result of increased organic production in South America. Along with organic apples, new varieties in short supply command good prices such as Jazz, Tentation, and the Pacific series.

Later.....

High prices for organic apples are a primary factor driving production. In MY2005/06, organic fruit returned between NZ $42.84 per carton (18kg) and $58.87 per carton depending on the variety compared with a range of $17.02 to $34.24 per carton for conventionally grown fruit. For the main varieties - Braeburn and Royal Gala – returns on the organic versions were 2.5 times higher than for the conventional variety per carton. On orchard operating costs are higher for organics but only on the order of 10 to 30%. On balance organic orchards in MY2005/06 were much more profitable. However, during the MY2006/07, prices for organic apples fell due largely to increased organic supplies from
South America.

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Thursday, December 20, 2007

Canada f/v nation or fast food nation?

For as long as I can remember, Canada's per capita consumption of fruits and vegetable has been unquestionably ensconced in a tier above the U.S. In 2003, The Packer published an article by Jim Offner that put it simply, "Canadians eat more produce than Americans." Jim's lede:

Telling a Canadian to eat his or her fruits and vegetables is like telling a dog to beg at the dinner table.
It's an easy job.
By some counts, Canadians consume 500 pounds of fruits and vegetables per capita each year.


TK: Actually Jim's article quoted some sources that said the statistics of the U.S. and Canada aren't created in the same way. But the well-established notion then and now is that Canadians eat more fruits and vegetables than the U.S.

This study from 2005, "A Bilateral Comparison of Fruit and Vegetable Consumption: United States and Canada"(Timothy J. Richards and Paul M. Patterson), features a closer look at the phenomenon. An excerpt:

Of particular concern is the stark difference in consumption between the United States and its
largest, and most culturally similar neighbor-Canada. Whereas average consumption of fresh fruits and vegetables in the United States is approximately 3.6 servings per capita per day, Canadians consume an average of six to seven servings per day (Burfield, 2003).' If accepted, it is curious this difference persists in spite of the fact that Canada's climate does not allow for widespread production of produce year-round, as in the United States, with the notable exception of greenhouse tomatoes.

Later in the study....

Based on the official government data for each country, Canadians consumed 414 pounds of fruits and vegetables per capita on average over the sample period, while Americans consumed only 274 pounds (Statistics Canada, 2001; USDA, 2000a). However, this comparison is misleading due to the differences in how the data are recorded.

TK: The authors still find that Canada consumes more fruits and vegetables, however, using a comparison of retail sales in like stores. From the conclusion:

This research seeks to explain the source of the observed difference in fruit and vegetable consumption between the United States and Canada. Despite their demographic and socioeconomic similarity, Canadians consume far more servings of fruits and vegetables each day compared to their U.S. counterparts-an observation that, although challenged by some, is confirmed using retail-level scanner data on produce sales in each country. Because prices tend to be higher in Canada, and incomes lower, we hypothesize that this difference in consumption levels is due in part to the superior quality of imported Canadian produce. Canadian produce is generally believed to be of higher quality because consumers in import regions tend to substitute toward higher quality products, once transportation charges and other shipping costs, which are invariant to quality, are applied-as predicted by the Alchian-Allen effect. Econometric tests of the Alchian-Allen effect, however, have been rare due to the fact that measures of quality are not generally available.

TK: Now comes this story from Megan Fitzpatrick and CanWest News Service titled "Canada turning into fast food nation." From the story:


Canadians are opting for fast food instead of fruits and vegetables and generally don't have a balanced diet, according to a new study. Statistics Canada released the Canadian Community Health Survey: Nutrition on Thursday, the first national survey of dietary habits since the early 1970s and the largest survey ever conducted of what Canadians are eating.
Not only are Canadians skipping out on fruits and vegetables, they aren't consuming enough milk products, and many are getting more than the recommended share of their calories from fat, the study found.In 2004, 35,000 people were asked what they had eaten in the previous 24 hours, when they ate and where the food was prepared.

Overall, one-quarter of Canadians reported they had eaten something from a fast-food outlet in the last 24 hours. Among teenagers 14 to 18, the proportion was one-third. Men ages 19 to 30 were the most likely to get food on the go; 39 per cent of them had done so on the day they were interviewed.

TK: Tim Horton, you are to blame for this!

To be fair, those who frequented a fast-food outlet could have ordered a cup of coffee or even a salad, but the survey found 40 per cent opted for a pizza, sandwich, hamburger or hot dog and a quarter of the respondents had a regular, not diet, soft drink to wash it down.

Those numbers support the indication that Canadians seem to be ignoring the advice of the Canada Food Guide, which separates food into four groups (fruits and vegetables, milk products, meat and alternatives and grain products) and has an added "other foods" category that covers fats, oils, sugar, snack foods, beverages and condiments.

The Food Guide recommends that "other foods" be consumed in moderation, but the survey found that after grain products, "other foods" ranks second as the top energy provider, supplying 22 per cent of daily calories for both children and adults.

Canadians are supposed to have a minimum of five daily servings of fruits and vegetables according to the Guide but about half of adults are falling short of meeting that target. Only 20 per cent are eating four to five servings and seven out of 10 children aged 4 to 8 are not meeting the five-serving standard.

TK: One story can't erase years of hearing that Canada's f/v consumption far outpaces the U.S., but it certainly appears Canada is falling back from where they have been.

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Have your people call my people

Talking to Dave Gombas of United earlier in the week, he indicated there has not yet been a meeting between suppliers/association leaders with members of the Food Safety Leadership Council. The purpose of the clutch, of course is to talk about the merits of the council's on-farm food safety standards. Gombas was hopeful for a meeting before the end of the month. There appears to be, in my view, a little trepidation from all parties over what to expect from the process. Is this a technical discussion only or will it delve into marketing issues? In any case, there should be no reason that the council and suppliers should not agree to meet at least one time. If nothing comes of it except the perfunctory "agree to disagree" spin, it would be better than if the meeting never happened.

How big should the steering committee of the Produce Traceability Initiative be? The question appears to be open for at least now, as some favor adding a few more members to fill out the supply chain, while others would prefer a committee size that is more manageable.

I'm afraid they may have already breached the ideal committee size. From the Web site Solutions that endure.

Seven is the Ideal

Seven is the ideal number of members for a group to problem solve, find creative solutions, build a strategic plan or grapple with complex challenges. If groups are formed for other purposes such as building consensus, representing diverse communities or governing, these concepts may not apply.

Too Large

As a group gets too large in the 9-12 region group dynamics deteriorate. Meetings get longer and each person has less time to contribute. This leads to many potential pitfalls; boring meetings, members not paying full attention, noisy meetings and ultimately lack of attendance. In large groups many participants will feel not enough “attention” is given to their opinions and input. Aggressive personalities will feel the need to assert themselves to get their share of limited time. Passive personalities will hold back and not contribute equally as the meeting becomes time constrained. Dissatisfaction of members with the group dynamics, output or effectiveness will lead to a downward spiral of diminished group performance.

Balance

The closer the group size is to seven the easier it will be to achieve the balance needed to create a highly effective group. Creative synergy is the goal. This happens when group members throw their ideas on the table and others are stimulated and react to that idea, spawning another idea or view. The goal is to create a positive feedback loop of contribution of each member so that the individual members feel energized about their contribution. When this cycle occurs each individual contribution is a building block to a bigger and better final product built by the entire group.

Another objective of the balanced group is making fewer mistakes. This happens because the diversity of opinion allows more facets of a problem and proposed solution to be seen and vetted. There is a high value in diversity of life experiences. Just when the group feels they have solved the problem or found the ideal solution, one lone member will catch the flaw that others missed in their excitement.


Characteristics of a Team

A balanced group size has all members actively participating and sharing their questions, observations and ideas. An effective group evolves when members see themselves as a team, and value the output of the group and identify with the group with pride.


One Reason it Matters

Problems are created when people insist on designing and empowering very large groups to solve problems. The confusion comes from the focus on having all interest groups or stakeholders represented which is a laudable goal. After a very large council, commission or committee is formed it becomes evident the “work” cannot get done efficiently. At that point a methodology has to be constructed to work around the dysfunctionality of the 25 member group.


TK: At least we can hope for 7-member subcommittees after the Jan. 9 meeting in Atlanta.

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Manager's amendment - Extended cut

John Keeling of the National Potato Council passed on the summary compiled by United of the manager's amendment in the farm bill. I posted to a Google docs file here. Here are a few of the produce-related amendments:

On clementines....

SEC. 3205. QUALITY REQUIREMENTS FOR CLEMENTINES. Section 8e(a) of the Agricultural Adjustment Act (7 U.S.C. 608e-1(a)), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, is amended in the matter preceding the first proviso in the first sentence by inserting ``clementines,'' after ``nectarines,''.

Here is another on user fees......

SEC. 110__. EXEMPTION FROM AQI USER FEES. (a) In General.--Notwithstanding any other provision of law (including regulations), the owner or operator of any commercial truck described in subsection (b) shall be exempt from the payment of any agricultural quarantine and inspection user fee. (b) Commercial Trucks.--A commercial truck referred to in subsection (a) is a commercial truck that-- (1) originates in the State of Alaska and reenters the customs territory of the United States directly from Canada; or
(2) originates in the customs territory of the United States (other than the State of Alaska) and transits through the customs territory of Canada directly before entering the State of Alaska. (c) Sealed Cargo Areas.--A cargo area of any commercial truck carrying an agricultural product shall remain sealed during transit through Canada.

On a Buy America provision....

SEC. 4904. BUY AMERICAN REQUIREMENTS. (a) Findings.--Congress finds the following: (1) Federal law requires that commodities and products purchased with Federal funds be, to the extent practicable, of domestic origin. (2) Federal Buy American statutory requirements seek to ensure that purchases made with Federal funds benefit domestic producers. (3) The Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) requires the use of domestic food products for all meals served under the program, including foods products for all meals served under the program, including foods products purchased with local funds.
(b) Buy American Statutory Requirements.--The Department of Agriculture should undertake training, guidance, and enforcement of the various current Buy American statutory requirements and regulations, including those of the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and the Department of Defense fresh fruit and vegetable distribution program.

On organic research....
SEC. 7__X. SENSE OF SENATE REGARDING ORGANIC RESEARCH. It is the sense of the Senate that-- (1) the Secretary should recognize that sales of certified organic products have been expanding by 17 to 20 percent per year for more than a decade, but research and outreach activities relating specifically to certified organic production growth and processing of agricultural products (as defined in section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 6502)) has not kept pace with this expansion; (2) research conducted specifically on organic methods and production systems benefits organic and conventional producers and contributes to the strategic goals of the Department of Agriculture, resulting in benefits for trade, human health, the environment, and overall agricultural productivity; (3) in order to meet the needs of the growing organic sector, the Secretary should use a portion of the total annual funds of the Agricultural Research Service for research specific to organic food and agricultural systems that is at least commensurate with the market share of the organic sector of the domestic food retail market; and (4) the increase in funding described in paragraph (3) should include funding for efforts-- (A) to establish long-term core capacities for organic research; (B) to assist organic farmers and farmers intending to transition to organic production systems; and
(C) to disseminate research results through the Alternative Farming Systems Information Center of the National Agriculture Library.

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Why not?

I see that the nays are now winning (9 to 7) the Fresh Talk poll on the desirability of a national promotion order, with mandatory assessments, for fresh produce. I spelled out some of the reasons why I thought the concept was solid in an earlier post. A national promotion order would provide forceful and flexible consumer messaging, give more effective media outreach tools, bolster the fresh produce industry with greater clout at the USDA, satisfy the need for a fresh first focus in generic promotions and boost trade promotion dollars considerably.

I would like to hear the top reasons why people don't think it is a good idea. Just tack your thoughts, anonymous or not, on to this post.

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Wednesday, December 19, 2007

20 years and counting

New Zealand has had enough. As I was working on some details relating to the WTO panel appointed to hear Brazil and Canada's complaint against U.S. farm subsidies, I noted this item on the WTO Web site:

New Zealand requested a panel for the first time (WT/DS367/5) to review measures affecting market access of its apples into Australia. Australia did not agree to the panel. New Zealand said it had sought access for its apples into the Australian market since 1986. New Zealand considered that the measures prohibiting its apples into the Australian market were not scientifically justified and were inconsistent with the SPS Agreement. New Zealand regretted that the consultations held in October 2007 did not resolve the matter. Australia was disappointed that New Zealand had requested a panel and added that the bilateral channels were the most effective way to deal with such a matter. Australia said it remained open to further consultations and stated that the measures identified by New Zealand were science based and in full compliance with its WTO obligations.

TK: Australia's foot dragging on the importation of New Zealand apples is legendary, but of course the U.S. is no spring chicken when it comes to looking at access for Chinese apples, either.

Reaction from Down Under:

NZ continues apple battle with Australia

And from the land of kiwi:

Aussies block WTO probe into New Zealand apple ban

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Global warming (for real)

From a Dec. 13, this report from NOAA gives a wrap-up of U.S. weather in 2007 (one of the top ten warmest years since records began) and said this about global trends:

  • The global annual temperature − for combined land and ocean surfaces – for 2007 is expected to be near 58.0 F – and would be the fifth warmest since records began in 1880. Some of the largest and most widespread warm anomalies occurred from eastern Europe to central Asia.
  • Including 2007, seven of the eight warmest years on record have occurred since 2001 and the 10 warmest years have all occurred since 1997. The global average surface temperature has risen between 0.6°C and 0.7°C since the start of the twentieth century, and the rate of increase since 1976 has been approximately three times faster than the century-scale trend.
  • The greatest warming has taken place in high latitude regions of the Northern Hemisphere. Anomalous warmth in 2007 contributed to the lowest Arctic sea ice extent since satellite records began in 1979, surpassing the previous record low set in 2005 by a remarkable 23 percent. According to the National Snow and Ice Data Center, this is part of a continuing trend in end-of-summer Arctic sea ice extent reductions of about 10 percent per decade since 1979.

TK: Still, a global surface temperature increase of less than one degree Celsius since the start of the 20th century. Who to believe, Rush Limbaugh or Al Gore?

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Lime time

Mexican limes through S. Texas 11/19 to 12/19 - http://sheet.zoho.com


One discussion thread on the Fresh Produce Industry Discussion Group is the hot lime market. The market today is already $2 higher than Monday, Cal reports.

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NRA response

As to how the restaurant industry would respond to a recession, I received a reply from Maureen Ryan, media relations manager for the National Restaurant Association. From Maureen:

"Restaurants are an essential part of many consumers' lives meaning that while economic growth may slow, consumers will not give up dining out. Just look at the 2001 recessionary period where the industry continued to post positive real gains, although at a more modest rate. Let me follow my comment up with one statistic - 82% of consumers say that going to restaurants with family and friends is a better use of leisure time than cooking and cleaning up."

TK: I agree we Americans place a great deal of stock on convenience and we won't "give up" dining out, but I still wonder if the 4.4% growth rate may be on the high side for next year. I would look for consumers to "trade down" and frequent more value-oriented quick serve restaurants in 2008. I'm frankly amazed that 18% of consumers think cooking and cleaning is a better use of leisure time than "going to restaurants with family and friends." How fun are those folks?


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Something has got to give

The National Restaurant Association predicts 4.4% growth for 2008, while other economists are calling a recession likely next year. I don't think both scenarios are possible, so it will be interesting to see which prognostication is closer to the mark. Talking yesterday to Bob Young, economist with the American Farm Bureau Federation, he said agriculture broadly benefits from the weak dollar. For example, combined U.S. apple, pear and stone fruit exports have been up about 15% from January though October this year. Grain commodities benefits from several factors aside from the weak U.S. dollar. Improving economic conditions in Asia are creating a rare period of "demand pull" for U.S. agricultural products, and fund managers are hedging inflationary pressures on the stock market by speculating in the futures markets for corn, wheat and soybeans. Biofuel adds to the pitched demand for corn. All in all, it is an intoxicating brew for U.S. agriculture now, but it certainly appears the broader economy is walking on eggshells as we head into 2008.

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Imported fruit look in

South American Fruit Imports 12/3 to 12/18 - http://sheet.zoho.com

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Tuesday, December 18, 2007

There is money in them there food safety tests

There is money to be paid and money to made in food safety tests in coming years, says this article passed along by Doug Powell of the KSU Food Safety Network. From the PR news release:

Report Buyer, the online destination for business intelligence for major industry sectors, has now added a new report showing that the U.S. market for food safety testing will be worth $2.1 billion in 2007. This is expected to increase to over $2.8 billion by 2012, experiencing a compound average annual growth rate (CAGR) of 5.8%. “Food Safety Testing: The U.S. Market”, available from http://www.reportbuyer.com/go/BCC00173, reports that the market is broken down by contaminant type including pathogens, genetically modified organisms (GMOs), toxins, residues and others. Of these, pathogen testing has the largest share of the market. Valued at nearly $1.8 billion in 2007, this segment is expected to be worth $2.4 billion by 2012, a CAGR of 5.1%.
The second largest segment, GMOs, was worth an estimated $106 million in 2007 and will reach $193 million by 2012, a CAGR of 12.7%. According to the report the potency of toxins and the need to meet domestic and international tolerance limits should propel this segment from a $78 million market in 2007 to $135 million in 2012, a CAGR of 11.6% over the next 5 years. Residue testing will grow from a $67 million market in 2007 to $85 million in 2012.

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Christmas spread - Retail roundup

Holiday-themed food page ads featured delectable color pictures of ham, shrimp, beef and rack of pork this week. Produce was also found on the front pages of food ads, but typically below the fold. Here is a roundup of the produce ads in suburban Kansas City for the period of Dec. 19-24.

Price Chopper: - Dec. 19-Dec. 24
Sunkist navel oranges: 15 cents/each (front page)
Washington premium red delicious apples: 69 cents/lb (front page)
Dole celery: 79 cents each
Golden ripe pineapple: $3.99/each
Del Monte chunk pineapple: $3.99/16 oz.
Fresh green beans: 2 for 45/ 12 oz. package
Green Giant whole mushrooms: $1.29/8 oz package
Earthbound Farm organic spring mix or baby spinach: $4.99
Eat Smart Vegetable tray: $8.99/36 oz. package
Washington Anjou pears; 99 cents/lb
Green Giant baby cut carrots: 2 for $5/ 2 lb package
Sweet potatoes: 69 cents/lb
Santa Sweet grape tomatoes: 2 for $4/10 oz
Cauliflower: 2 for $4
Broccoli crowns: $1.19/lb
California cuties: $3.99/3 lb bags


Wal-Mart Dec. 19-Dec. 24
Golden pineapple: $2.86/each

Dillons - Dec. 19 to Dec. 24
Holiday fruit basket:$12.99
Seasons Greetings: $16.99
Fresh cucumbers or green onions: 69 cents each
Sweet potatoes: 79 cents/lb
Jumbo green peppers: 89 cents each
Celery: 10 for $10
Large ripe avocado: 4 for $5
Fresh Express cole slaw: 4 for $5
Kroger 2 lb baby carrots, grape tomatoes or cauliflower: 2 for $5
Herb Thyme organic herbs: $1.99
Jumbo Del Monte Gold pineapple: 2 for $6
Veggie trays include organic: $9.99 to $14.99


HyVee Dec. 19t o Dec. 24
Sweet juicy clementines: $4.99/5-lb box (front page)
Golden cantaloupe: 2 for $4 (More Matters logo)
Fresh mangoes: 99 cents each
Chile red sweet cherries: $5.99/lb
Fresh asparagus: $3.48/lb
Ocean spray cranberries; 2 for $3
HyVee Garden salad or cole slaw mix: 99 cents/16-oz package
Crisp red cranberries: 99 cents/1 lb package
Grimmway Farms carrot chips: 16 oz. package
Dole celery hearts: $2.68/ 2 ct. package
Monterey baby bella mushrooms: $1.88/8 oz
Grimmway Farms carrot stixx $1.28/12 oz. package
Hyvee Russet potatoes: $1.38/5 pound bag
Monterey whole white mushrooms: 2 for $3/ 8 oz package
Peruvian sweet yellow onions: 77 cents/lb
Fresh blackberries: $1.98/5.6 oz. package
Fresh blueberries: $2.98/4.4 oz.
Stemilt jumbo apples: $1.18/lb
Melissa's fresh peeled garlic: $2.29/ 6 oz. package
Golden sweet potatoes: 77 cents/lb
Texas Rio Star grapefruit: $9.99/ half box
Sunkist navel oranges: $9.99/ 24 ct. box
Sunkist pummelos: 2 for $4

Hen House Market - Dec. 19 to Dec. 24
Earthbound Farms Certified Organic baby spinach or springmix: $3.99/each
Jumbo Golden pineapple: $3.99/each
Jumbo size granny smith or red or golden delicious apples: $1.19/lb
Regal comice pears: $2.49/lb
Late Howell cranberries: 2 for $4
Medjool dates: $6.99/lb
Del Monte pineapple chunks: $3.99/each
Green Giant mini carrots: 2 for $5/2 lb bags
Stringed and cleaned green beans: 2 for $5/12 oz bag
Sweet grape tomatoes: 2 for $4/ 10 oz to 12 oz package
California broccoli crowns: $1.19/lb
Earth Exotic baby vegetables: $3.99/each
Green Giant sliced mushrooms: 2 for $3
Fresh pascal: 79/each
Louisiana sweet potatoes: 69 cents/lb
Apio Meat and veggies tray with dip/ $14.99
Mountain King butter red or butter gold potatoes: 2 for $5

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High marks on energy bill

Congress is getting some high marks for its energy bill from the American Farm Bureau. From a news release today:


Farm Bureau Commends House Members For Energy Bill Votes

WASHINGTON, D.C., December 18, 2007—The energy bill passed by the House today expands the production and use of fuels made from renewable energy sources, helps boost the nation’s energy security and encourages economic development in rural America, according to the American Farm Bureau Federation. AFBF commends members of the House who supported the comprehensive legislation.
“We’re pleased the energy bill passed by the Senate and now the House includes a strong renewable fuels standard of 36 billion gallons by 2022,” AFBF President Bob Stallman said. “American farmers and ranchers have the opportunity to play a significant role in the energy solutions of the future, including the production of renewable energy sources such as ethanol and biodiesel.
“We know key members of Congress negotiated long and hard to craft a strong bill that would receive bipartisan support. Now that the House and Senate have produced a final version of this significant legislation, we urge President Bush to sign it into law as soon as possible,” Stallman said. “This legislation moves our nation forward on the path toward greater energy security.”
The bill approved by the House by a 314-100 margin requires the use of 36 billion gallons of ethanol and other renewable fuels by 2022, a nearly six-fold increase over today’s use of these fuels. Of this total, 21 billion gallons ultimately would have to come from “advanced” biofuels, such as cellulosic ethanol, that have 50 percent to 60 percent lower greenhouse gas emissions.
The House approved the final version after senators passed it by an 86-8 margin last week. A sufficient number of Senate Republicans supported the measure after Democratic leaders agreed to strip the bill of language that would have required large oil and gas companies to pay nearly $13 billion in additional taxes. Another sticking point—a provision that would have required utilities to use a set amount of fuel made from renewable sources to generate electricity—also was removed to ensure sufficient congressional support and erase a threatened presidential veto.

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It's going to be a bumpy 2008

The Farm Bureau sent me the December issue of their Market Update, a monthly economic analysis of both the general economy and farm commodities. As for the overall outlook, I found it particularly sobering (negative growth ahead!) and yet well supported by facts. It confirms the general dread that we all experience when we see the stock market plunge for days in a row. Of course, we know economic predictions are often wrong........

From Bob Young, chief economist of AFBF

About the only thing that seems to be certain with respect to the future course of the general economy is the notion of at least a coming slowdown relative to the performance we observed in the first three quarters of 2007. Some have continued to raise the specter of things getting so bad that we may actually tip into negative growth territory. (There’s an economist term for you – negative growth) Third quarter numbers for overall growth in the general economy came in stronger than a lot of people anticipated. At an annualized rate of
4.9%, it caught a lot of people by some surprise.The figures were strong enough to move the
Federal Reserve to state at the October 31 meeting, “The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth.” One of those risks is the current rapid rise in mortgage delinquencies and the potential number of loan delinquencies. Numerous borrowers will see their loans reset over the next 9-18 months, moving even more home mortgages into delinquency and potentially even foreclosure. Foreclosed homes typically sell at a 25-30% discount compared to other homes in the market, dragging down housing prices for even the good borrowers. If you believe the financial press reports,thinking has changed considerably since the last meeting of the Federal Open Market Committee. Continued problems in the financial markets deriving from the sub-prime lending mess are being discussed daily with some discussion now moving over to how the issue is coming through on car loans and how it will affect some state and local governments that used the derivates as investment tools to park money. The results of efforts to get a handle on this issue are having mixed reception. A privately financed effort created to try to serve as a conduit of funds to buy some of these loans instruments was originally envisioned to start with a solicitation of $100 billion. It now appears that fund will only be about half that size. Lending institutions that are not able to move products into this fund or some other funding source will likely be forced to bring these loan amounts back onto their books. This will reduce their reserves and limit the supply of funds they have available to lend to other qualified borrowers. It is this potential limit in credit availability and flow of funds that is causing significant concern. This credit problem at the consumer level is already showing up as a sharp decline in net borrowing by the household sector. First quarter 2006 showed $1.2 Trillion in net borrowing on an annualized basis. Third quarter 2007 had the same number down to $691 billion. A significant chunk of these funds represent a decline in ‘mortgage equity extraction’ – read that as home equity loans that allowed consumers to extract part of their home equity for short term spending. Mortgage equity extraction has fallen 50% from its peak. This was a fine strategy when housing prices were rising and by some measures provided the funds for upwards of 5% of consumer spending. Remove those monies and consumer spending starts to feel pressure. Higher gasoline prices are taking an additional $30 billion per month out of consumers pocket books compared even to August levels of this year. Moody’s Economy calculates a cash-flow measure of income for households that includes salaries and wages as well as equity extraction and other consumer credit. It is at its lowest level in over a decade. Add all this together and you have strong expectations of a slowdown in consumer spending in the coming months, possibly even out to the middle of next year. Consumer spending typically makes up roughly two-thirds of the general economy. Exports have been very strong with the weak dollar and better economic activity in other countries. Many business balance sheets are still in strong shape with a significant amount of cash on hand to deal with slow-downs and possibly even to make investments. Job growth has certainly weakened, but is staying in the 1% range. Bottom line is an economy that is very fragile. Many have talked about the probability of a recession now approaching the 50% mark. This is certainly possible, but my expectation is that we stay slightly on the positive side for the next few months before things start to settle out and the economy moves back toward recovery. Hang on for what could be a rough ride in 2008.

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British retail report

They are probably more like us than anyone else in this world, and we appreciate the compliment. Here is a report about British retailing from the USDA FAS, a 14-page pdf that provides a profile of the retail sector and some predictions of growth.

One small nugget from the FAS report:

The Institute of Grocery Distribution (IGD) has estimated that the UK retail grocery market will grow at an average rate of 2.9 percent over the next five years. It is expected to be worth £138.2 billion ($261.2 billion) by 2010, at current prices. Growth is expected to come from both ends of the grocery store portfolio spectrum, i.e. convenience stores and superstores, also known as hypermarkets. There are currently, around 660 superstores in the UK. The IGD estimates that their number will increase by almost a third in the next five years, despite tough UK town planning laws. The convenience store sector is also expected to continue to grow strongly and is forecast to reach £33.9 billion ($64.1 billion) by 2011.

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Food in 2008

Some pundits and prognosticators identified "social responsibility" as the big trend in food retailing for 2007, I would say that trend was only warm to the touch, not white hot. The softening economy has perhaps taken some of the edge off "social" issues for consumers with subprime mortgages and workaday worries. Given the inexact nature of predictions - setting aside the Old Testament's prophets, of course -- what are the fearless forecasts for food trends in 2008?

Well, the Associated Press already has the answer. Here is a link to a story by the AP's J.M. Hirsch (passed along by KSU Food Safety Network) that spells out what we can expect. From the article, a few excerpts:

From the overview:

....two forces - the proliferation of foodie culture and its obsessive desire for provenance, and growing worries over food safety - have combined to create a whirlwind of information about food and drink.


TK: Hirsch amusingly writes that organics have "jumped the shark" (see this wikipedia reference for that term ) and states that local is now the golden child of foodies. But when Wal-Mart goes local, how long can this trend last? He writes:

Savvy food marketers today are latching onto the latest child of the natural foods movement - local - and are trying to take it mainstream. As eco-sensitivity has grown, consumers have questioned whether eating organic grapes from Chile is a particularly "green" choice. Now people want to know how far their food traveled, and the closer the better.
Hence, the growth in farmers markets, community supported agriculture, restaurant menus bragging about local sourcing, and the naming of "locavore" as word of the year by The New Oxford American Dictionary. Even mainstream grocers are jumping on, offering and advertising a growing number of locally produced goods. The question is whether "local" will lose cachet once big box retailers co-opt it as they did organic.



TK: Other trends that Hirsch spots include a growing consumer desire for more information on varieties. On food safety, Hirsch writes that "repeated recalls of meat and produce have drawn attention to the sluggish and outdated American food safety system." While changing the FDA won't happen overnight, Hirsch said marketers are reacting quickly. "Expect food companies to be as nimble, touting new and increased safety measures." Will 2008 be a celebration of fat? Well, Hirsch said bad foods and fatty foods are fighting back with consumer messaging touting "realness" over fake food. Finally, he said grocery stores are trying to become sexier, trading in the traditional aisle looks of superstores for a more glamorous, open market feel. While he didn't mention Tesco, we can probably credit Tesco for supermarket chains taking a closer look at their prepared food offerings. This article was a good read, but I feel it over-generalizes about local foods.
What I conclude from the article is that the fresh produce industry should ideally have a well-funded generic promotion arm that could create and sustain consumer messaging reinforcing the desirability of fresh fruits and vegetables.

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Grade standard for TOV

In a Dec. 18 Federal Register rule, the USDA has established grade standards for tomatoes on the vine, with an effective date of Jan. 17. Here is some background quoted directly from today's rule:

On May 26, 2006, AMS published a notice in the Federal Register (71 FR 30367), that solicited comments on the proposed voluntary United States Standards for Grades of Tomatoes on the Vine. The proposed standards contained sections pertaining to general information, grades, tolerances, application of tolerances, size classifications, definitions, and a table of metric conversions. The following grades and tolerances for each grade also appeared in the notice: U.S. No. 1 and U.S. No. 2. In addition, ``Application of Tolerances'' section and ``Size classification'' section were listed. The standards also defined ``Damage,'' ``Serious damage,'' ``Tomatoes on the Vine,'' along with other specific basic requirements and defects. Additionally, AMS also sought any comments related to the proposed standards that may be necessary to better serve the industry. In response to the notice, AMS received six comments on the proposed standards. The comments are available by accessing the AMS, Fresh Products Branch Web site at: http://www.ams.usda.gov/fv/fpbdocketlist.htm. On February 16, 2007, AMS published a subsequent notice in the Federal Register (72 FR 7593-4), that solicited comments on the proposed voluntary United States Standards for Grades of Tomatoes on the Vine based on comments received from the primary notice. A single comment was received on behalf of a trade group representing growers and packers, expressing the need for additional time to comment. The group requested an extension to the comment period to allow review of the proposed voluntary standards and consider comments. AMS published a reopening and extension of the comment period in the Federal Register (71 FR 34426), on June 22, 2007. The comment period for the extension ended on August 21, 2007. AMS received no additional comments from the industry on the proposed standards. The United States Standards for Grades of Tomatoes on the Vine will become effective 30 days after publication in the Federal Register.


TK: That must frustrate the agency. They get a request to extend the comment period and then no one else comments. Here is a previously published USDA summary of the six comments that were received in the first comment period.

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