Fresh Produce Discussion Blog

Created by The Packer's National Editor Tom Karst

Friday, February 29, 2008

Dramatic and hopefully temporary banana supply issues

The Packer's Pamela Riemenschneider has coverage of the banana market in the March 3 issue, and below is a statement from Chiquita she passed along to me about the reasons behind the shorter supply and spiking prices:

CINCINNATIFeb. 26, 2008 – As widely reported, a series of dramatic adverse weather conditions throughout Central America, as well as prolonged rainfall and major flooding throughout the banana growing areas of Ecuador, have substantially reduced the industry-wide availability of bananas that supply both the North American and European market. Due to these industry-wide conditions, Chiquita Brands International, Inc. is working with its customers to take steps that will enable the company to continue providing fruit in as fair and reasonable manner as possible.
While the company believes these steps are an appropriate response to these dramatic and hopefully temporary supply issues, the devastation within Ecuador has been substantial and it is not possible to assess at this time when industry volumes may recover from this severe shortage. Ecuadorian President Rafael Correa declared a state of emergency on February 20th, and has ordered troops to help thousands of flood evacuees. An estimated 25,000 hectares have been destroyed and up to 80,000 affected, according to the ministry of agriculture. In addition to heavy rainfalls, cloudy and lower than average temperatures are delaying the maturation of fruit by as much as five weeks. Elsewhere, the 2007 tropical storm season caused significant disruption to several banana producing islands in the Caribbean and destroyed thousands of hectares of production across the Dominican Republic. Adverse weather conditions have also led to decreases in productivity in Guatemala, Nicaragua, Honduras and Costa Rica.


New York City Wholesale Banana Prices Feb. 29 - http://sheet.zoho.com

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What happens if?

If no new farm bill is passed, what then? The USDA has prepared a document at the request of Congressional leaders that looks at the issue. Find it here. From the analysis:

As stated in the USDA analysis, the provisions of the Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949, which have been repeatedly suspended by several farm bills, would again become legally effective if a new farm bill is not enacted or Congress fails to extend the 2002 farm bill by March 15, 2008. Often described as a reversion to "permanent law," such a result would "dramatically narrow the universe of producers who receive support, and would do so in a way that most producers will view as irrational," according to the 14 page paper prepared by USDA and approved by the Office of Management and Budget.

Here is a summary graph on how the lack of a new farm bill would affect trade-related programs.


Congress has mandated that the Secretary permanently carry out certain trade and international development programs. These programs are authorized to receive mandatory funding on a FY basis; these funding authorizations would expire on March 16, 2008.[57] These programs include: export credit guarantees,[58] export credit guarantees for emerging markets,[59] market access,[60] foreign market development cooperator,[61] technical assistance for specialty crops,[62] food for progress,[63] dairy export incentives,[64] and facilities credit guarantees,[65] programs.

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Bob Bull passing

Bill Coon passes on news that Bob Bull has passed away. From our archives:

Bull, a former professor at the University of Delaware in the area of food distribution, played a major role in the reorganization of the Produce Packaging Association in 1958. He served on the association's board of directors from 1957-59 and was instrumental in fostering the organization's ties with the University of Delaware. Bull had also operated Food Business Associates, Temple, Maine, consultants to management in food marketing, beginning in 1959.


Here is a reference to Bull in a feature that Paul Campbell did about Bob Carey in 1996:

As destiny would have it, (Carey) answered a routine letter from the University of Delaware Department of Agriculture Economics. He found that he could be paid $2,000 a year and free tuition to earn his master's degree. In return, he was to help professor Robert Bull on marketing projects. Bull happened to be on the board of directors of the PPA at the time.
``Bob Bull was my mentor. I did a lot of work with him on consumer shopping pattern studies and also worked with the American Mushroom Association,'' Carey said. ``My master's thesis was on mushroom marketing.''

Accepting the challenge
After this two-year stint, Carey had accepted a position as extension marketing specialist to help local cantaloupe growers market their product. But in June 1958, he was called into the office of the dean of the School of Agriculture, who had been asked by the PPA board to recommend someone to be executive secretary.

TK: Bob Bull helped hand pick Bob Carey to take over the PPA at a time when the fledgling association was struggling, Under Carey's leadership, the PPA (later renamed the Produce Marketing Association) scaled the mountain to become one of the largest associations of its kind. Bob Bull played an important role in the evolution of PMA and will be missed by his friends and former colleagues.


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Onion charts -

U.S. Onion movement - Jan. 5 to Feb. 23 - http://sheet.zoho.com


Onion Prices - Nov 5 to Feb. 22 - http://sheet.zoho.com

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Friday Video Feature - Randy Pausch

You may have heard the story of Randy Pausch. This story reports that six months after giving his "last lecture" Pausch, a professor of computer science at Carnegie Mellon University and co-founder of its Entertainment Technology Center, sent an e-mail message to friends and family members saying that he is beating the odds and remains in relatively good health. However, his condition is measured in months and not years, and his inspirational message is as enduring as ever.


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Harkin teleconference 2/28

Here is the audio file from a portion of yesterday's teleconference by Sen. Tom Harkin. You can hear what Harkin says about challenging the Administration to respond publicly to budget numbers and offsets. He alludes to the possibility of moving a bill to the President without the White House blessing but with the buy-in of Sen. Chambliss and Rep. Goodlatte.

"This thing has gone on long enough; we've got to pull the trigger here."

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Thursday, February 28, 2008

Avocado update

I wonder how close the California Avocado Commission was to agreeing to a settlement with APEAM. The decision to take their chances with lawsuit raises the stakes for both California growers and Mexican exporters. If the lawsuit falls in favor of California, growers will continue to be aggressive in asserting phytosanitary protection. If Mexico gets the upper hand, it may be a costly to the commission and to growers, and serve as an exclamation point to Mexico's unwillingness to suffer from what they consider protectionist measures.


Avocado FOB - Size 40 - Feb. 2 to Feb. 23 - http://sheet.zoho.com

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Chat - Ksenia Evdokimova



Ksenia Evdokimova, resident of St. Petersburg, Russia, and working with the agricultural trade office at the U.S. Consulate General in that city, was a big help in setting up my agenda in my recent travels to Russia. I had the chance to have a brief chat with her today, and you can find it here. Among other topics, Ksenia reflects about a year as an exchange student in California and some observations that might be useful for U.S. exporters considering a visit to Russia.


1:02 PM me: Hello Ksenia!

1:03 PM ksenia.evdokimova: Good evening, Tom!
me: Thanks for taking part in this "chat" for Fresh Talk readers.
1:06 PM Ksenia, you were a big help to me when I traveled to Russia, helping set up interviews with importers. How did you become connected with the USDA FAS and the world for produce importing and exporting?
ksenia.evdokimova: First of all, Tom, I would like to express my thank you to you for taking the risk and coming to Russia in February!
1:09 PM I have been with FAS for over 3 years now. Getting connected with FAS was a result of several circumstances, like Rotary exchange in California and studies at economic faculty of the university. It has been great so far!
1:10 PM me: It was no problem to come to St. Petersburg - the weather wasn't as bad as advertised ...You bring up California. You mentioned to me that you were an exchange student in California during high school years. Did you enjoy that experience?
1:12 PM ksenia.evdokimova: Rotary is a truly great club and one of the programs they have is that student exchange tat gives youngsters of 16-18 dive into American culture for half a year or even a year. I got in a terrific family from Palo Alto and managed to graduate from high school. I enjoyed and miss it still
1:13 PM me: I have a hard question for you - what did you miss about Russia while you were in the U.S. and what do you miss about your experience in the U.S. now?
1:19 PM ksenia.evdokimova: Of course, while in US I missed my family. And when I talk about real Russian family it is a family behind a table with a soup, salad, main course and more. Also, what is typical for Russians is their summerhouse 'dacha". That place is very important for us. It is traditional to grow your own greenery, vegetables and fruits. It is cultural and I love it. Upon return to Russia, I started to consider US as my second motherland. I missed the spirit of independence, for instance, a pupil can stand up during the class and debate with a teacher if he wishes to and has another opinion. Also, it is typical for younger people to work part-time. All these things were not possible in Russia a few years ago. However, now it seems to be getting closer.. Also, I missed the huge shopping malls that you have in America. Luckily, now Russia is in the middle of retail boom and we have a choice where to spend an hour...or 5 hours.
1:21 PM me: Very true. I was impressed with the amout of retail - and upscale retail in Moscow and St. Petersburg ... If you had words of advice to U.S. exporters who want to make a trip to Russia, what would you tell them (other than avoid February)?


9 minutes
1:31 PM ksenia.evdokimova: I would simply tell them 'YOU SHOULD COME AND SEE and you might get really pleasantly surprised'. So, come to Moscow for 2 days, explore the chains of supermarkets that are successfully selling airfreight California table grapes in July at price of $30 a kilo, NZ cherries in February for $80 a kilo. Feel the crazy tempo of this expensive and booming city and then take a 5 hour train to the Northern capital of Russia and capital of fruit business St.Petersburg. Spend 2 days at meeting importers. These are special people. They have turned Russia into #1 market of the World in imported quantities of apples and pears in several years of rapid market growth. Meet them, they are interested in the US product nowadays. And on Saturday and Sunday enjoy the Hermitage, walk the channels of the city and absorb the culture of this unique city. You will have partners and friends after this trip and you will be back, I guarantee ;)
1:32 PM me: Ksenia - you are very generous with your time, as always - one last question. Can you tell readers about your new job yet?
1:34 PM ksenia.evdokimova: My new job s my Austrian husband, but I have a second passion and that is US fruits, so we shall see what comes out of this combination. Thanks for your time and best of luck exploring the Russian market. It is worth it!
1:35 PM me: Thanks and promise you will do another "chat" sometime soon!

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On marketing new fruits and vegetables

I was called up today by a writer of a feature article that will publish at some future date in the NYT Sunday magazine. The angle of the story, as far as I could tell, was a question: How would a marketer best purpose to introduce a new fruit - such as an unknown foreign heirloom variety or even a transgenic fruit or vegetable - into the U.S. market? He already had a list of the "usual suspects" of Frieda's, World Variety, PMA and others. I don't know if I was much help, but I did give him the name of Steve Lutz with The Perishables Group.

I think the assumption of the feature is that the marketing of transgenic fruits and vegetables will be much more common in the future. How, then, will the products be introduced and sold in the marketplace?

I told him that marketers who control their own retail operations - for example, some importers in Hong Kong also have their own retail shop - would obviously have more control over the decision on whether or not to sell transgenic produce to consumers.

As an aside, the author also mentioned the work of the Plant Transformation Research Center at the University of California Riverside It sounds if we may hear more about their work in future years. Here is what the center's Web site says about their work:

The goal of the Plant Transformation Research Center (PTRC) is research on efficient procedures for transforming plants of interest to researchers at UCR. This includes species of economic interest in California , and model systems used to investigate gene function. The PTRC facilitates the research of many UCR scientists who are investigating genes important in metabolic, physiological and developmental processes. The PTCR can provide cost-effective access to biochemical and molecular methods utilized in the analysis of genetically modified plants. The PTRC also serves as a resource in training students, post docs, and staff in technologies related to plant transformation.

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No number and no deal yet

I was able to listen to part of Sen. Tom Harkin's teleconference this morning, and Harkin said there is still no budget number for the farm bill and no deal with the White House to proceed. It sounded as if something doesn't break loose soon, leaders in Congress - particularly Speaker Pelosi in the House - will have to determine whether to appoint a conference committee, produce a farm bill and then leave it up to President Bush to decide if he will veto it. Harkin, however, said there is supposed to be a budget number for the farm bill by tomorrow, though not necessarily with the White House blessing.

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Testimony - Contaminated Food

Here is the link to the testimony from the Feb. 26 hearing of the Contaminated Food: Private Sector Accountability at the subcommittee on Oversight and Investigations. Excerpts below:

William Marler Marler Clark LLP PS
A year ago, I was asked by the spinach and lettuce growers of California to address them in Salinas. Considering that by then the leafy green industry was on its knees financially and I had lawsuits pending in several states, it was a tense lunch. Why I was invited? I am still not so sure, but why I was suing them was all too clear, in the prior 10 years there had been 21 outbreaks related to fresh leafy products with hundreds sickened. In 2006, 205 people became sick and five died from eating E. coli contaminated spinach, followed quickly by lettuce E. coli cases at Taco Bell and Taco John’s. The common denominators – California lettuce and more lawsuits. Mexico banned the importation of California spinach and lettuce.
I told the quiet audience of 250 growers and producers a story that I believed at the time to be true. I told them about what I had seen since the 1993 Jack in the Box case. I told them what seemed to have happened after the Jack in the Box crisis was that incidences of E. coli in meat seemed to decline. First slowly and then more rapidly. I told them how I believed that the problem – through governmental oversight and industry know how. I told them that I had lived to see one of the major food safety success stories of
our time. According to the CDC, E. coli outbreaks linked to tainted meat had declined by 42 percent through 2006. I told them that they should emulate what the beef industry had done to put me out of business, because they had. From 1993 to 2002, nearly all of my work was E. coli cases tied to hamburger. In 2003, one year after the recall of 19 million of pounds of meat, I had no ambulance to chase. I had no one to sue on behalf of victims of tainted hamburger because I had no victims.
And then the spring of 2007 started with an ominous “uptick” in E. coli recalls and illnesses and ended with hundreds sickened, 33 million pounds of meat recalled, and guess what? More sick and dead children, and yes, more lawsuits. China banned the import of some US beef. If you ask the USDA and industry to explain this “uptick,” they have none. That is unacceptable.
Things are different from Sinclair’s critical view of packing plants of the 1900’s. We now face things Sinclair could not even begin to imagine. Those two things must drive food safety decisions now. The first is the threat of terrorist attacks via the food system. Just as too many could not imagine the horror of 9/11, too many cannot envision this kind of food disaster today. When a terrorist attacks our food system it will look eerily similar to any other outbreak of foodborne illness. Second, is the growth of food imports. Sinclair could not have imagined a world where the meat that may be in one hamburger could originate in Argentina, Canada and Colorado or that we would have fruits and vegetables year-round shipped in from South America, Asia and Africa. It is with these two enormous issues in mind, that I offer suggestions on how to put me out of business

David DeLorenzo President and Chief Executive Officer, Dole Food Company, Inc.
We respectfully ask this Subcommittee, and, more generally, the Energy and Commerce Committee, to do whatever it can within its power to influence significant funding of pathogen research for produce. Private companies such as Dole will continue to accelerate and champion, as fast as possible, new practices and technologies aimed at eliminating food safety risks. Produce is a living, breathing tissue that does not hold up to most conventional food safety practices that work in other industries. We cannot inspect our way out of food safety problems any more than we can test our way out of it. It will continue to take a concerted and significant effort in time and funding and regulation from both the government and private sector, to make our food system – already the safest in the world -- even safer. We heartily agree with this Subcommittee that we – all of us – can, in good conscience, do no less.

Robert Brackett Senior Vice President and Chief Science and Regulatory Affairs Officer, Grocery Manufacturers Association

One, we urge you to require that every food importer of record institute a foreign supplier quality assurance program that assures that all imported ingredients and products meet FDA food safety and quality requirements.
Two, we urge you to expand FDA’s ability to build the capacity of foreign governments to prevent and detect threats to food safety. In particular, FDA should be directed to work with foreign governments to expand training, accelerate the development of laboratories, ensure the compliance of exports with U.S. regulations, and harmonize food safety requirements among countries.
Three, we urge you to enhance FDA’s ability to target those imports that pose the greatest risk to consumers. In particular, we urge you to create a voluntary program to permit expedited entry of foods that pose no meaningful risk. By permitting food importers who demonstrate the existence of a secure supply chain and who meet FDA’s standards and conditions to receive expedited entry, FDA could focus more scrutiny on those imports that are more likely to pose a risk to public health.
Four, we urge you to provide FDA authority to mandate that fruits and vegetables be produced following good agricultural practices. Rising consumption of fruits and vegetables creates new food safety challenges that should be addressed through strong and enforceable produce safety standards which can be tailored to reflect differences among commodities.
Five, we urge you to give FDA the authority to order a mandatory recall when a company has refused to conduct a voluntary recall and there is a significant risk to public health. Where the responsible party refuses to voluntarily recall a product for which there is a reasonable probability that the food will cause serious adverse health consequences or death, the Secretary should be permitted to order the company to conduct a recall.
Finally, we urge you to work with your colleagues on the appropriations committee to provide FDA with adequate resources. Because FDA food-related funding has not kept pace with inflation, more than 800 scientists, inspectors and other critical staff have been lost during the past four years. We urge you to reject taxes on food imports and facilities and to instead work with the Alliance for a Stronger FDA to increase FDA food-related spending by $150 million in FY 2009.

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Wednesday, February 27, 2008

Russia's economy

Luis shared this powerpoint recently in the discussion group regarding growth prospects for Russia's economy and I will share it here, for those exporters doing business in Russia now or in the future.


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New files on the board

I've added several new files to the Fresh Produce Industry Discussion Board. The "files" part of the discussion group is used by various members to share useful source material with other members, and represent another good reason to join the group. The new files:

Rural Plan for California Barack Obama's agricultural vision for California, and by extension, the U.S.

Status report : California Leafy Greens Marketing Agreement
From the report: During the 368 audits conducted in 2007 by government inspectors, a total of 457citations were issued. Most of these were Minor Infractions or Minor Deviations with corrective action taken either immediately or within a few days of the citation being issued.


APEAM complaint against the CAC A few points raised in the legal complaint:In response to the federal opening of the California market, the CAC, acting in concert with the CDFA, undertook a massive effort to stop the import of Mexican grown avocados into California including, but not limited to, 1) the unrelenting disparagement of the quality of Mexican avocados; 2) the reckless and untrue attribution of phytosanitary risks to California agriculture from the armored scales found on some avocados imported from Michoacán; 3) the promotion of an imaginary and self-serving “conflict” between state and federal regulatory standards (i.e. to exclude Mexican avocados from California because of armored scales and “invasive, unknown species” of dangerous pests)


Obama letter asking the Administration to hold off on reform to H-2A program


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Produce promotions - Feb. 27 - March 4

Slouching toward spring in the midst of a cold winter, produce promotions featured asparagus, oranges, bananas, Chilean fruit and more.

Here are the latest produce promotions in the suburban Kansas City market this week. For the period of Feb. 27 to March 4:


Price Chopper
Dole bananas - 29 cents/lb
Fresh asparagus: $1.09/lb
Jumbo cantaloupes: 2/$4
Blueberries: 2 4.4 oz. for $4
Dole salad kits: 9.5 oz. to 12 oz. 2 for $5
Mann's Veggies: 12 oz. selected varieties: 2/$3
Cucumbers or green onions: 2/$1
Washington premium fuji apples: $1.49/lb
Green giant baby cut carrots: 2/$3
Large baking potatoes: 2 lbs for $1
Jumbo sweet 1015 yellow onions: 69 cents/lb

Hen House
Sweet peaches and nectarines: 99 cents/lb
California jumbo artichokes: 2 for $4
Sweet Sun World black plums: $1.69/lb
Blueberries or blackberries: 2 for $5
Green Giant russet potatoes: 2 5-lb bags for $4
Pinata apples: $1.99/lb
Jumbo cantaloupes: 2 for $5
White or seedless grapes: $1.69/lb
Large Idaho baking potatoes: 2 lbs for $1


Wal-Mart
California navel oranges: $2.50/4 lb bag


HyVee
Asparagus: $1.68/lb
Dole Iceberg lettucde: 77 cents each
Disney jumbo navel oranges: 68 cents/lb
New red potatoes; 77 cents/lb
Fresh green beans: $1.28/lb
Mini sweet watermelon: $2.99 each
Monterey whole white mushrooms: $2.88/16 oz package
Chile red seedless grapes: $1.88/lb
Dole celery: 98 cent/lb
Fresh snow peas: $1.99/lb
Grimmway Farms carrot chips: 99 cents/16 oz.
Apple Sweets: 3 5 or 6 oz. packages for $4
Stemilt cameo apples: $1.18/lb
Sunkist pummelos: 2 for $4
Pro Health russet potatoes: 2 for $1
Melissa's shallots: $1.99/3 oz.
Capital Brand mixed color peppers: 4 ct. $3.29









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Supermarket secrets - Part II

Luis of the discussion group provides this link, with special focus of this episode looking at cosmetic standards of produce. Supermarkets are the villains for their standards for "perfect produce," so says Supermarket Secrets. "Critics claim supermarkets have British farmers by the short and curlies."


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Tuesday, February 26, 2008

Square watermelons and finding a better way

My wife Sally sent me this chain email that she received from someone else.The anonymous author offers a produce related life lesson, so here it is, just as I read it this morning:



You don't have room to waste. Watermelons, big and round, wasted a lot of space. Most people would simply tell the grocery stores that watermelons grow round and there is nothing that can be done about it. That is how I would assume the vast majority of people would respond. But some Japanese farmers took a different approach. If the supermarkets wanted a square watermelon, they asked themselves, "How can we provide one?" It wasn't long before they invented the square watermelon.

The solution to the problem of round watermelons wasn't nearly as difficult to solve for those who didn't assume the problem was impossible to begin with and simply asked how it could be done. It turns out that all you need to do is place them into a square box when they are growing and the watermelon will take on the shape of the box.

Square Watermelon


This made the grocery stores happy and had the added benefit that it was much easier and cost effective to ship the watermelons. Consumers also loved them because they took less space in their refrigerators which are much smaller than those in the US meaning that the growers could charge a premium price for them.

What does this have do with anything besides square watermelons? There are a few lessons that can you can take away from this story which help you in all parts of your life. Here are a few of them:

Don't Assume: The major problem was that most people had always seen round watermelons so they automatically assumed that square watermelons were impossible before even thinking about the question. Things that you have been doing a certain way your entire life have taken on the aura of the round watermelon and you likely don't even take the time to consider if there is another way to do it.

Be creative: When faced with a problem, be creative in looking for a solution. This often requires thinking outside the box. Most people who viewed this question likely thought they were being asked how they could genetically alter water melons to grow square which would be a much more difficult process to accomplish. By looking at the question from an alternative perspective, however, the solution was quite simple.

Look for a better way: The square watermelon question was simply seeking a better and more convenient way to do something. The stores had flagged a problem they were having and asked if a solution was possible. It's impossible to find a better way if you are never asking the question in the first place.

Impossibilities often aren't: If you begin with the notion that something is impossible, then it obviously will be for you. If, on the other hand, you decide to see if something is possible or not, you will find out through trial and error.



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Supermarket secrets - Part 1

This series is being talked about in the discussion group, and I thought I would post this installment of the British import.




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APEAM lawsuit vs. CAC

A lawyer connected with the case has told me APEAM, the avocado exporter group based in the Mexican state of Michoacan, has filed a complaint today against the California Avocado Commission in the US District Court for the Eastern District of California (Sacramento). The complaint alleges trade defamation, interference with contractual relations, interference with prospective economic advantage, negligence and unfair competition. According to the lawyer, the gist of the complaint is that CAC made numerous public defamatory statements about Mexican avocados which contributed to the severe drop in demand during 2007 and to some extent continuing into the future.

Developing....




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More on Bill

We here at The Packer have received several responses from industry veterans who enjoyed seeing the recent Q and A with Bill Coon, retired publishing director of The Packer. Industry leaders like Ed Odron, Rick Bella, Chuck Curl, David Marguleas and Ron Orr have checked in with kind words about Bill.

One letter from Ron Orr, director of business development for Graves Menu Maker Foods, Jefferson City, Mo., said it well.

"I know I speak for so many in stating that the fresh produce industry at large is appreciatively better off and further ahead, because of the commitment Bill Coon made to it."

If any other industry friend wants to connect with Bill, shoot me an email (tkarst@thepacker.com) and I'll give you his contact info.





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Chat - David Mitchell

I just posted a brief "chat" interview with David Mitchell, senior writer for The Packer. David brings a lot of journalism skills with him, including extensive work as a sports writer - something I have to say I envy. I managed to get a dig in at his Kansas Jayhawks, but he was above the fray and ignored my cheap shot. As if a K-State fan has room to talk....
11:03 AM me: Great - here we go - David Mitchell, senior writer for The Packer, where is your "hometown"?

5 minutes
11:09 AM david.edward.mitchell: I grew up in DeSoto, Kan., but my parents moved back to Hutchinson, Kan. -- their hometown -- while I was in college. I worked for the daily newspaper there for about five years when I was in my 20s. It was a nice set up. I was a mile from my parents, two miles from work and not far from my grandparents' house. I was a sportswriter back then, and I was minutes from the community college and the local high school. In an odd twist, my wife and I live in Shawnee, but we're in the DeSoto school district.
11:10 AM me: What do you think prompted your interest in journalism?
11:13 AM david.edward.mitchell: English was one of my better subjects in high school, and my sophomore English teacher -- who also was the journalism teacher -- encouraged me to take the newspaper class. So I guess it's her fault. I worked on the school paper during my junior and senior years and then studied journalism at the University of Kansas.
11:14 AM me: Well - you went into sports journalism - something I never did but always was fascinated with. What are the highs and lows of covering sports?

6 minutes
11:21 AM david.edward.mitchell: It was a fun job for a young, single guy. I got to cover two college bowl games, five or six NCAA Tournaments -- including two Final Fours -- a U.S. Open, the NBA Draft and some other interesting events. I've covered games in at least 20 states and have been to some places fun places like Hawaii, Vegas and New Orleans. The drawback is that sports writing, like a lot of journalism jobs, doesn't pay very well unless you're with a really big publication. The hours and travel are a real killer, too. The job I have now is a lot better, in terms of hours and travel, considering I have a wife and daughter. I can't even tell you how many birthdays, weddings, funerals, etc. I missed when I was covering sports.
11:22 AM me: At least now you don't have to write a story about KU losing in the tournament every year - ouch
11:23 AM david.edward.mitchell: Did I mention the two Final Fours? I'm not sure what to expect out of this year's Jayhawks. They have a nice looking record, but they seem to be having some trouble on the road of late. The loss at Okie State was disturbing. The Pokes aren't that good.
11:24 AM me: I'm sorry - I
11:25 AM I should say I don't have room to talk, being a KSU fan - they may not make it in this year at the rate they are going.... Leaving the sports world, what have been some highlights of produce journalism so far - any surprises?
11:28 AM david.edward.mitchell: This is the fourth newspaper I've worked at, and I have to say the working environment here is a lot better than in daily newspapers. It's a more postive experience. I think that's true of the industry in general. There are a lot of really friendly, helpful people like Roger Pepperl, Karin Gardner, Bryan Silbermann ... I could make you a very long list.
11:30 AM me: David, it has been good to have this brief chat. I could quiz you some more about the f/v industry advisory committee meeting that you covered recently but I fear I have already use enough of your time. Thanks for your help and we'll do it again sometime...
11:31 AM david.edward.mitchell: No problem. Thanks, Tom.

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Beware the shoe salesmen

One more presentation from the USDA Agricultural Outlook that you may want to review is this one, which addresses the speculative positions that hedge funds have taken in commodity markets. Amid the record price run ups of various agricultural commodities, one wonders when the bubble will burst and what impact that might have on the farm economy.

Here is a link from an AgWeb blog that talks about the speculative presence in the market:

“Old school” commodity brokers from the early 1970’s tell me it used to be “easy” to call a top in the commodity markets. The top came when the “shoe salesmen” of the world walked into the branch and opened an account. Today things are a little more complex, as the “shoe salesmen” of the world have a tremendous number of investment vehicles at their disposal (like ETF’s and hedge funds) and they can pile into long commodities without even knowing what they own. With Wall Street talking up commodities (and specifically agriculture) on a daily basis, I believe the volume of money that has poured into the commodity world in recent weeks could be the modern day equivalent of “shoe salesmen” opening a commodity account. Because this money has been flowing in, traders have stopped focusing on signs of domestic demand rationing. Just this week, Smithfield Foods announced a 4% to 5% cut in their sow herd.


TK: At least there is no commodity futures trading for apples or grapes, but I see a bear market meltdown at some point for soft commodities like grain and oilseeds, made more dramatic by the speculative positions in the market by hedge funds.

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Onion pickle

Idaho-Eastern Oregon Jumbo Yellow onions - Feb. 25 - http://sheet.zoho.com

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Tesco observer

Luis of the Fresh Produce Industry Discussion Group has been in Tesco Fresh & Easy stores on more than one occasion and submitted several posts to the discussion board on his observations. This post and continuing thread is his latest offering and I reprint some of it in this space:

Many readers probably know from other sources that Fresh-n-Easy started to discount perishables (i.e. prepared foods, meats and FV's) a while ago. This is done with a wireless hand-held unit and a portable sticky label printer. Some quick observations: It began with some sort of calibration procedure, starting at 75% of full price and being re-labelled to 50% and then a very deep 25% discount over a one day period (three labels on top of each other). Then, after a few days of that, the discounts started to take place over a period of around two days before item expiration, starting again at around 75% and stopping at around 50%. You see employees re- labeling items all the time and the greater time window seems to have improved the velocity of the items. Items are most discounted at expiration but seemed to be in fairly good condition. Kind of a balance between inefficiency to the retailer and of margin of safety for the consumer. Gives the store a bit of an auction feel. We'll see what that does to the image but is one heck of an experiment.


Luis later added:

To follow up, Tesco is also modifying assortment and display as well. May be they are starting to figure out they are selling to a bunch of cowboys (kidding).
Half of the original prepared food cooler in one of the stores is now dedicated to chilled wine. A few end isle displays midway through the store feature "loss leaders" (what an oxymoron) such as beer and paper products at attractive prices. Same with Oreo cookies, 7-up, Doritos and so on, at the front entrance with the items changing weekly. Still no widespread advertisement. Not sure the wider community knew about deals like the dozen roses $9.99 around Valentines. A fascinating thing is that the stores are still somewhat of a tabula rasa (blank slate) with very little inventory and could be "morphed" very quickly. Still too much food going to the food bank but Tesco is showing flexibility.


TK: Also note here news of a Piper Jaffray study on the Fresh & Easy concept. From the news story about the report, citing Mike Dennis of PJ:

But Piper's Mike Dennis warned: 'The Fresh & Easy concept is not right and they need to quickly find out what the issues are and reset the concept.' Dennis said it could cost Tesco £400m to exit the US - a dramatic move the supermarket insists it is not contemplating. Dennis claims the 50 Fresh & Easy stores opened so far are averaging sales of only $170,000 (£86,500) a week. He thinks Tesco was aiming for closer to $200,000 initially, rising to $270,000 later.'The overall indication seems to be negative,' he said. 'This begs the questions of how bad it could be for Tesco's Fresh & Easy stores across California, Arizona, Nevada and what it would mean to Tesco's long-term growth rates and international strategy in the US.


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Monday, February 25, 2008

Vegetable and Melon Outlook- Feb. 20

The Feb. 20 USDA Vegetable and Melon Outlook can be found here. You can find some insightful analysis of the painful status of grower prices for storage onions. Here is the ERS overview on commodity groups:

Fresh vegetables: The value of production for fresh-market vegetables totaled a ecord-high $10.9 billion in 2007, up 2 percent from a year earlier. Head lettuce replaced tomatoes (due to lower tomato prices) as the top fresh vegetable at $1.4 billion—up 31 percent from a year ago. Increases for garlic (up 43 percent), squash (up 2 percent), and snap beans (up 22 percent) outweighed declines for tomatoes (down 21 percent), onions (down 21 percent), and leaf lettuce (down 17 percent). Fresh-market revenue increased 5 percent to $5.9 billion in California, which accounted for 54 percent of the national value of fresh-market vegetables, compared with 52 percent a year earlier. Production of fresh vegetables generated $1.3 billion
in crop value in Florida—up 4 percent from 2006 as aggregate production rose.
Melons: The value of melon production totaled $871 million in 2007—down 1 percent from 2006. Watermelon production squeezed past the 1996 record high while good demand pulled average prices up, leaving crop value up 9 percent to $476 million. Meanwhile, the value of both the honeydew melon (down 7 percent) and cantaloup (down 11 percent) crops declined due mostly to weaker prices.
Potatoes
: According to preliminary estimates, the value of U.S. potato production fell 1 percent to $3.2 billion in 2007/08. With the season-average farm price declining 3 percent to 7.12 cents per pound, revenue fell in most states, with the most notable exceptions being Washington, Oregon, and Idaho. With both production and price higher, production value surged 23 percent in Oregon and 9 percent in Washington—two states heavily dependant on processing.
Sweet potatoes:
The estimated farm value of the 2007 U.S. sweet potato crop jumped 27 percent to $374 million—well above both a year earlier and the 2003 record-high crop value. Although production was up 14 percent, marketing year prices were expected to rise 12 percent. Although the crop was slightly higher than a year earlier, stronger prices boosted the value of the North Carolina crop 30 percent to $148 million—the highest on record.
Mushrooms: The value of the 2006/07 mushroom crop was estimated to be up 7 percent to $956 million, reflecting a 10 percent increase in average prices to $1.16 per pound. Reflecting higher production costs and reduced volume, prices for both agaricus mushrooms (up 10 percent to $1.12 per pound) and specialty mushrooms (up 5 percent to $3.16 per pound) increased in 2006/07.

On trade:
In 2007, the value of fresh vegetable (excluding melons and potatoes) imports rose 10 percent to $4.0 billion, with the majority of the increase reflecting rising import volume for crops such as fresh dry-bulb onions (up 40 percent), greenhouse tomatoes (up 15 percent), and garlic and chile peppers (each up 11 percent). Mexico and Canada remain the top two foreign suppliers of fresh-market vegetables to the U.S. market. In 2007, Mexico accounted for 70 percent of U.S. fresh-market vegetable import value, while Canada garnered 16 percent of the import market. Rounding out the top five import sources in 2007 were Peru (5 percent), China (2 percent), and Costa Rica (1 percent). On the outgoing side of trade, with higher prices outweighing reduced export volume in 2007, the value of fresh vegetable (excluding melons and potatoes) exports rose 7 percent from a year earlier to $1.6 billion. Canada remained the leading foreign destination for U.S. fresh-market vegetable and melon exports, with 80 percent of total value, followed distantly by Mexico (7 percent), and Japan (4 percent). At $276 million, leaf/romaine lettuce was the leading fresh export vegetable by value in 2007, followed by tomatoes ($160 million), onions ($136 million), head lettuce ($134 million), and broccoli ($131 million).

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Wanted : Retail managers

Rick Bella of America's Second Harvest passes on this link of a story published some weeks ago from USA Today about the need for dedicated retail store managers in the U.S. The story isn't specific to supermarkets, but there are obvious truths that transcend the mass merchandisers and food retailers.

Here is a great quote from the story:

"A day in the life of a retail manager would be a nightmare job for a lot of people," says Kathy Mance, vice president of the NRF Foundation, which helps retailers train and recruit employees and managers.


More from the story, about one retail manager:

Working a variety of day and night shifts suits her just fine, Koteski says. On a recent week, her day shifts were 6 a.m. to 3 p.m. and an evening shift was 1 to 11 p.m. She likes to sleep in and do errands on the days when she starts in the afternoon. Even though her shifts are typically 10 hours, during this season it hasn't been unusual for her to work 12 hours, given the restocking necessary to keep up with sales and recalls.

Of the holiday season, which included lines that stretched to the back of the store early on the day after Thanksgiving, Koteski says, "You just need to keep it all in perspective, have an organized plan and be flexible." Part of the plan: "You pick up stuff as you go, so at the end of the night, you don't have 20 carts that need to go back."


More reaction from other ex-managers:

Dillard says she left retailing last year because she didn't feel challenged or appreciated and rarely had time for her family and friends. "The final straw," she says, was when she was diagnosed with the flu and her district manager thought she should still report for work despite doctor's orders that she rest for at least three days.


And here are some choice reader comments

It appears to me that the retail industry fears they will no longer be able to hire and retain people with a selfess work ethic (suckers) any longer . Any semi-intelligent high schooler let alone a college grad knows retail is a dead end road to a miserable existence. This article is a lame propaganda piece. I pity that poor woman. Until Americans either refuse to work under such circumstances or unite to bargain with their employers collectively they will continue to suffer in the work place. One of the earlier comments talked about civil service as unmotivated or ambitionless (I nor any of my immediate family is civil service) and I disagree with this statement. Maybe civil service workers are smarter and like things Americans used to take for granted like a pension, healthcare,vacations, etc. Does this make them lazy or us stupid. Why is it a badge of honor to slave for an ungrateful employer who has disdain for their workers even our country itself and receive substandard pay and benefits for our labors? Maybe most of us are suckers sold a bill of goods about a good work ethic and what it will get you in this country other than taken advantage of. Employers are out for maximum output for minimum input how is it lazy unmotivated or wrong for workers to have this same philosophy?


From another:

I work at Sears part time and my managers HATE their jobs. All day they deal with: having to be a jerk to employees for not selling enough protection agreements and credit cards, problems created poor delivery service (the delivery managers always say its our fault, not theirs), problems created by poor service, (again, service managers blame us for their problems), people buying things online to pick up in store that we don’t have (it may say in stock online, but often is not the case), people angry we don’t have simple things in stock like gas cans ALL SUMMER, on and on and on


And another:

How I do not know what to tell my wife who works as a store manager and is starting to get stressed about all the hours versis the pay , all the theft , unmotavated employees, a over bering district manager ,sales goals that are just out of reach every year to accually make a bounus, the list goes on and on.
all I have ever done was to try and be there for her and give all the understanding and positive input that I could. I do know this much Not everyone out there has a Job better than min wage or just over and we are living a happy life and looking forward to the retirement years (about 12 years away) so all in all guess we will just keep going on and just be happy that we both still have jobs to go to .


TK: I appreciate this last comment. "Suck it up. We all have jobs to do." Managing employees at retail is not easy, and obviously it is a heavy cross to bear for some people. Improving job satisfaction with performance related bonuses, granting more flexible schedules, giving more recognition and providing more communication would be a start.

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Doug Powell - KSU Food Safety Network

Here is the famous Doug Powell of KSU on youtube, talking cows, strawberries, and always, food safety.

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USDA Ag Outlook Forum - On biofuels

This presentation on biofuels from the USDA Ag Outlook conference provides the "big picture" context that so many of us need to understand the growth and history of ethanol. Here are some risk factors to the ethanol boom, as articulated by Pete Riley, Economic and Policy Analysis Staff USDA/Farm Service Agency.


Biofuel Risk Factors: Oil Prices
Current outlook is uncertain: expectations for weaker economic growth are counterbalanced by geopolitical concerns and speculative price push
• A decline in oil prices will likely mean lower ethanol prices
• As recently as 1998, oil fell to $10 barrel in the wake of the Asian financial crisis.
• Demand Side Wildcards
– Consumer squeeze/recession
– More conservation
– Vehicle technology/mpg improvements
• Supply Side Wildcards
– Lagged response to strong price signals begins to increase supply
– Calming of political hot spots
– Blockbuster new energy discoveries

Biofuel Risk Factors: Government Policy
• Response to changing markets could lead to unknown policy change
• 2005 Energy Bill only lasted 27 months
• What if the policy criteria or objectives change?
– More focus on water use
– Refine carbon rules
– View of energy independence widened to include fertilizer
– Restrictions on land use
• If ethanol import tariff expires on schedule (Jan. 1, 2009), cheaper imports from Brazil could compete in coastal markets
• Pressure mounts from higher food costs
• Subsidy and/or mandate adjustments

Biofuel Risk Factors: Technology
• Unpredictable developments can change the game: for example, the DVD makes the videocassette obsolete or cell phones do an end-around land-line phones
• Competing fuels breakthroughs:
– Improved engine performance for diesel, and more substitution for
gasoline, as in Europe
– Plug-in hybrids drawing from the electric grid
– Improvements in battery technology
Butanol
– Fuel cells/hydrogen vehicles

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USDA Ag Outlook Forum - Notables

Here are some other presentations fr on the USDA Ag Outlook Forum that might be worth a look:

Procedural Impediments to Regulation—The Ossification of the Rulemaking Process: Interesting presentation on the barriers to rulemaking that exist in the federal government and possible shortcuts - such as issuing "guidance" - that may be ways around the problem. By Jeffrey S. Lubbers Washington College of Law American University JSL26@aol.com


The Challenge of Increasing Trade: How to Address Linkages and Barriers Drawing lessons from two specific examples —Avocados and Apples: Presentation by David Orden and Everett Peterson: Fascinating presentation drawing comparisons between opening of U.S. market for Mexican avocados and the potential opening of the U.S. market for Chinese apples. I pulled some highlights on apple in the following excerpts:


On apples:
Apple production in China has increased substantially in recent years and now accounts for nearly half of the total global output. Correspondingly, China has highlighted apples (and also pears) as products for which it has sought market access in many of its negotiations with trade partners about agricultural technical barriers. China’s apple exports have skyrocketed as markets have been opened. In the 2004/05, China exported 850,000 metric tons of fresh apples, a nearly five-time increase in the export volume over five years. A large proportion of the increase in Chinese apple exports has gone to Pacific Rim markets. In North America, the importation of Chinese fresh apples from approved orchards and packers in selected provinces has been authorized by Canada since November 2004 but importation of fresh apples remains banned by the United States.
Opportunity: It is not as obvious that there is an economic opportunity for Chinese apples in the U.S. mark et as in the case of Mexican avocadoes. Chinese apples have obtained only about a 3-percent share of Canadian fresh apple consumption. The Chinese apples imported by Canada are mainly sold in the Asian communities at relatively high prices as a somewhat specialty product. In the European Union, Chinese fresh apples account for only about a 1-percent market share. Imported Chinese apples would similarly be likely to enter the U.S. market as a specialty item. This limits the economic gains but also limits the pest risks which increase a larger volume of trade.

On apple science:
Science: Since there has not been a U.S. risk assessment, the scientific evidence is less cohesive at this point in time. One can examine the risk assessments that Canada and other countries have made and the risk-mitigation measures they have imposed. From this, one can describe a prototype or hypothetical systems approach that might be adopted by the U.S. The decision by Canada provides some evidence that a risk assessment can support Chinese apple imports with feasible risk-mitigation requirements. Canada identifies 10 pests of concern and its risk-mitigation implementation is closely coordinated with Chinese sanitary authorities. But a process of pest identification, data collection, risk assessment and analysis of mitigation measures has only progressed to an early stage for the U.S.

On political will:

Political Will: The current political environment does not seem conducive for decisions that open U.S. markets further to imports from China. At the macroeconomic level, there is a large U.S. bilateral trade deficit and arguments are made that the Chinese currency should be revalued. There is concern about industrial competition in general from this lower-wage country. And the safety of products from China, from pet food to pharmaceuticals, has
made front-page international news. In this context, it would be difficult for the two governments to agree to intense efforts to reduce phytosanitary barriers for a new product.
It can be argued that NAFTA was also controversial when negotiated. But once a high-level political decision was made to reach the NAFTA accord it provided an institutional impetus for various bilateral trade issues to be addressed. There is no similar high-level accord currently under discussion between China and the U.S.

Analysis:
Without considering pest risk, it is assumed that Chinese exports to the U.S. would achieve about a 3-percent share of the total U.S. apple consumption and sell at a price above the U.S. market average, similar to the situation for Canada in 2003-2004. This results in small economic gains. Next the outcomes are evaluated with pest risks and related control costs taken into account. The probabilities of U.S. pest outbreaks due to the importation of Chinese fresh apples are not known. Thus, the risk probability levels are estimated that cause the expected change in U.S. welfare due to granting market access to Chinese fresh apples to fall approximately to zero. Higher levels of risk from trade would result in expected welfare losses.
In the case of the assumed lowest costs from pest infestations, an expected frequency of a trade-related pest outbreak of approximately 0.2 per year, or one every five years, leaves U.S. welfare unchanged. For the cases of assumed “average cost” and “high cost,” the expected frequency of an outbreak that leaves U.S. welfare unchanged drops to once in 16.7 and 50 years, respectively.


From the report's conclusions:
There are several general lessons from this case-study evaluation:
• In some instances, calls to reduce technical trade barriers may not be matched by real economic circumstances that would result in trade.
• In other cases, where exporters rightly perceive a real economic opportunity, they face multiple challenges. These challenges should figure into their business calculations and industry strategy.
• An industry seeking market opening needs to send the “A team” into the fray and even then recognize that its fate depends in part on contextual forces beyond their control.
• Appreciation is gained of the complex environment in which regulators operate. This may be no surprise for those with experience, but the point needs to be widely understood. Such understanding will enhance the functioning of the regulatory process.

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USDA Ag Outlook Forum - Terry Long

Terry Long, chief of the Fruit and Vegetable Market News, Agricultural Marketing Service, USDA delivered remarks Feb. 22 to the USDA Agricultural Outlook Forum horticultural luncheon. Here is the link to Long's 35 page pdf presentation on developments in the market news service, "From market reports to market information" Answering the question of "what's next?," Long listed these points:

• Portal Communities
RSS notification of updated information
• Add Districts to rail movement data
• Improve display on Portal queries
• Make additional graphing options available
• Add improved functionality to the Retail
Report

TK: The USDA's Market News portal has been a very useful tool to extract market information on fresh produce movement and prices, and reports that price charting functions of the system are being integrated by March is another piece of welcome news for users of fruit and vegetable data.

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USDA Ag Outlook Forum - Climate change

All of the presentations from the second day of the Feb. 21-22 Agricultural Outlook Forum have been posted, and here is one that caught my eye:

How will global climate change affect agriculture?
This 37 page pdf by Jerry Hatfield of the National Soil Tilth Laboratory of Ames, Iowa, speculates about climate change in the next 10 to 30 years.
Here is a quick summary:
- Increasing temperature of 1.2C (2.2F) over the next 30 years
- Increasing CO2 of 60 ppm over the next 30 years
- Increasing variability in precipitation
- There will be increasing variation in temperature and precipitation within and among years

The plant response will be mixed, he said:

Occurrences of higher temperatures will
cause faster phenological development
- Higher temperatures will affect reproductive development because of the sensitivity of pollen survival to temperature
- Yields will be impacted because of shorten reproductive periods

For fruits and nuts:
- Warmer temperatures will cause earlier bud break or flowering in the spring
- Warmer temperatures will cause faster development
- Warmer temperatures could impact chilling requirements for many plants
- Increase potential problems when warm temperatures cause early development and then turns cold


On CO2
- Increasing CO2 will increase plant growth
- Difference between C3 and C4 plants
- Increasing CO2 will increase water use efficiency because of increased growth per unit of water transpired

On precipitation
- Variable precipitation will increase potential soil deficits
- Decreased soil water availability will offset the positive impacts of CO2 and exaggerate the effect of increasing temperatures

On pests
- Weeds will be favored by increased CO2
- Increased temperatures will change phenological development of weeds
- Increased spring, winter, and fall temperatures will allow for winter survival and earlier seasonal onset of insects and pathogens

Implications

Implications
- Temperature increases will alter phenological development of crops, increase potential sensitivity to temperature extremes in fruit crops
- Temperature increases will affect reproduction because of sensitivity of pollen
to extreme temperatures
- Overall impact will be to decrease crop yield and forage quality
- Temperature increases will negatively impact animal production and reproduction
- Increasing CO2 will positively impact plant growth and ultimately yield
- Increasing CO2 will reduce crop water use which will be an advantage under water limitations
- Increasing CO2 will offset some of the negative impacts of increasing temperature

Management Changes
- Producers can adapt to climate changes by altering crop management practices, e.g., planting date, crop selection, nutrient management
- Producers can adapt to climate changes in livestock through changes in management practices that reduce exposure to thermal stress


TK: All in all, more bad than good, and 2.2 degree rise in temperature over the next 30 years is a steep increase.


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