Fresh Produce Discussion Blog

Created by The Packer's National Editor Tom Karst

Wednesday, January 2, 2008

When the weather outside is frightful - Retail Produce Ad roundup

Here in suburban Kansas City, the first page of food ads ("When the weather outside if frightful" - Hen House; Celebrating a new year and a healthier you - HyVee; Staying healthy for a great 2008! - Price Chopper) featured fresh blueberries, Dole salad mixes, bananas and cantaloupes.

Somewhat contrasting approaches as Hen House featured comfort food of chili, strip steak, apple pies and Blue Bunny ice cream. HyVee features a woman lifting a barbell, boneless skinless chicken breast, yogurt and Dole salad blends. Likewise, Price Chopper featured chicken breast, yogurt, Lean Cuisine, cantaloupe and Cheerios. Got to hand it to the Hen House ad planner for going against the grain and being counter intuitive - that is, if his approach resonates with his customers.

By the way, I've added some links for online food ads, and you can find that here.

A few highlights from the food pages:
Hen House - Jan. 2 - Jan. 8
Blueberries (Chilean fruit logo) 2 4.4 oz. for $4

HyVee Jan. 2-8
Dole Salad blends: 5 to 12 oz. packages: 2 for $3

Dillons Jan. 2-8
Bananas : 2 lbs for 88 cents

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Export Growth

This USDA report on the export outlook has some encouraging words for horticultural exports, but primarily price increases in grain commodities have sparked higher estimates.
From the USDA:


Fiscal 2008 agricultural exports are forecast at a record $91 billion, up $7.5 billion from August and $9.1 billion above 2007. This outlook is largely supported by continued strong demand, tight markets and sharply higher prices for grains and oilseeds, and a weaker dollar. While high-value product exports are rising, bulk commodities account for three-quarters of the year-to-year increase in agricultural export value, with about one-quarter of that increase from volume gains.

Fresh fruits and vegetable exports are forecast at a record $4.9 billion in fiscal 2008. Citrus is up slightly from last year to $690 million. An improved outlook for oranges is largely offset by reduced prospects for grapefruit and lemons. California’s orange crop is projected to increase 29 percent over last year’s crop, to 2 million tons. Grapefruit production is expected to fall 5 percent, and fruit sizes should be smaller due to lack of rain. Continued strong demand for apples is expected to hold values high and more than offset any downward pressure on grape prices stemming from a larger harvest. Processed fruit and vegetables are forecast at a record $4.5 billion. Fruit juices are forecast at $1 billion, or equal to last year; Florida's orange crop should recover (up 30 percent in 2007/08), but unit values should decline with increased supply. Strong dried fruit exports to Europe are expected, and frozen vegetable sales should rise to major markets. Tree nuts are forecast at a record $3 billion. A record large almond crop is expected, while the walnut crop should be smaller. Record almond crops in 2006 and 2007 pressured prices lower. In 2007 export value fell despite an increase in volume. A moderate increase is expected in 2008. Sugar and tropical products are forecast at $3.7 billion, up $250 million from last year. Exports of sugar and high fructose corn syrup (HFCS) were $1.5 billion in 2007. Record-high prices for HFCS last year were due to demand for ethanol and high corn prices. This year, prices should moderate but shipments are expected to increase, particularly to Mexico.




U.S. Fresh Exports - 2002-2006 - http://sheet.zoho.com

U.S. Agricultural Trade - 2003- 2007 - http://sheet.zoho.com

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December Agricultural Prices - USDA

December Fresh Apple Prices  - http://sheet.zoho.com


Fresh Grapefruit Prices - December - http://sheet.zoho.com


Fresh Tangerine Prices - December - http://sheet.zoho.com


November Fresh Potato Prices - USDA - http://sheet.zoho.com

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New poll question - Democrats

For those of you who receive Fresh Talk by email, I urge you to visit the site as well to take part in the weekly poll and see other updated RSS feeds of interest. This week the Fresh Talk poll asks which Democratic presidential candidate would best serve the interests of the produce industry; remember to see all previous poll requests at this link.

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Throwing agriculture a bone?

Now that it appears that border inspectors won't be headed back to USDA, U.S. Customs and Border Protection has announced a new position to help with oversight of CBP's agricultural mission. We'll be looking for insight from Joel Nelsen, United and others about this development.

From a CBP news release:

CBP Creates New Position to Protect U.S. Agriculture

WASHINGTON—To improve oversight of the agricultural mission U.S. Customs and Border Protection (CBP) has established the new position of Deputy Executive Director, Agriculture Operational Oversight. Kevin Harriger, who has twenty-six years experience in protecting American agriculture with the U.S. Department of Agriculture and with CBP has been appointed to the position.

Mr. Harriger is in charged with ensuring a more consistent application of agriculture inspection policy across all U.S. ports of entry. He will be the primary point of contact for Joint Agency Task Force coordination issues for the Department of Homeland Security, the Animal and Plant Health Inspection Service (APHIS) and stakeholders. His other responsibilities include:

Conduct outreach to Federal and State officials on agriculture border inspection issues

Oversee the joint CBP/APHIS Agriculture Quality Assurance program

Monitor agricultural performance measures for risk and efficiency

Ensure compliance with all agricultural program directives and policies

Ensure agriculture specialists have the equipment and resources they need to perform the agriculture inspection function

Prior to assuming his duties as Deputy Executive Director, Mr. Harriger was the Director of Policy and Planning for CBP’s agriculture programs. He also served as a special assistant to the Executive Director of Agriculture Programs and Trade Liaison Office implementing and coordinating agriculture related projects and training.

Mr. Harriger was transferred from APHIS Plant Protection and Quarantine (PPQ) to CBP at the creation of the Department of Homeland Security. He started his career with APHIS as a PPQ officer in 1981. Previous to his position in CBP, he was the PPQ Assistant Regional Director in Raleigh, North Carolina.

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When your product becomes a commodity

Here is another great link provided by Luis, a member of the Fresh Produce Industry Discussion Group. the next member of the FPIDG will be the 100th, so join and put us in triple figures.

The link is a Harvard Business School article by John Quelch, titled, "When your product becomes a commodity." From the article:

How often have you heard a manager blame "commoditization" for failing to deliver sales or profits? If you've heard it, you've probably wondered if it was just a convenient excuse or if the manager had a valid point.

The truth is, even when a raw material has no value added and quality standards are set by law or the industry, there is still plenty of opportunity for differentiation around availability, delivery, shipment quantities, payment terms, and all the other services that accompany the core product. Marketers must use their imagination. As the saying goes: "There are no mature products, only mature managers."

Later, some advice ......

But how do you survive if you find yourself in a commoditizing industry characterized by me-too products, overcapacity, and frequent price cuts? How can you make money?

1. Decide which customers you do NOT want to serve, try renegotiating prices with them and, failing that, fire them. You will lose market share but improve profitability.

2. Compensate your salesforce on profit margin, not sales revenues. A volume-based salesforce will sign up any customer, regardless of profitability. That's OK early in the product life cycle but not in maturity.

3. Trim costs and acquire competitors (with profitable customers) to extract maximum scale economies in procurement, manufacturing, and distribution.

4. If you aren't the low cost producer, complicate your pricing structures so customers can't easily make side-by-side comparisons, and provide discounts as needed of artificially inflated published prices.


TK: Interesting point about complicating pricing structure to confuse customers. Gee, I wonder if that is why we see so many varying sizes and weights at retail? Spare me the confusion of the 14.5 oz. package, the 19 oz. package, the 15 oz. package. And how about "firing" customers? Author does make good points about knowing the profit margins associated with individual customers and providing profit based incentives to sales force.

The overriding advice Quelch gives is to innovate and avoid become one of the crowd:

However you approach commoditization, try to innovate at all costs to beat it back. Because, as Peter Drucker said: "In a commodity market, you can only be as good as your dumbest competitor."

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Back at work

It was great to connect again with Lorelei DiSogra of United Fresh Produce Association this morning, who relates that the ag appropriations bill signed by President Bush in late December had some good news for expansion of the fruit and vegetable program, notwithstanding more significant gains expected from the pending farm bill. Meanwhile, Lorelei also notes there will be teleconference meetings every day this week with members of the Specialty Crop Farm Bill Alliance as industry lobbyists prepare to make their case to House and Senate staff preparing for farm bill conference work.

Also, Lorelei notes Stan Garnett. Child Nutrition Division Director for USDA, is retiring this week. After 37 years with the agency, Garnett is stepping down Jan. 3. Lorelei says Stan's dedication and knowledge of child nutrition issues will be difficult to replace; the USDA has announced that Cindy Long will be Garnett's replacement. We'll try to track down a bio on Long...

More coverage coming relative to fruit and vegetable program....

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Hillary getting the message out

I'm pleased to say that I made it on the Clinton campaign email list. Here is the latest spin from Camp Clinton:

TWO NEW POLLS SHOW CLINTON MOMENTUM
CNN & Zogby Polls Both Show Hillary

Leading In A Close Iowa Race


Two new polls released this morning show Hillary Clinton holding a lead in the Hawkeye State, continuing to build on her momentum in the final days before the Iowa caucuses.

A new CNN/Opinion Research poll conducted December 26-30, shows Senator Clinton leading the field with 33 percent, followed by Senator Obama with 31 percent and Senator Edwards with 22 percent. According to the poll, Hillary has picked up three points since their last survey in mid-December. Furthermore, “[t]he poll indicates that Iowa Democrats believe Clinton has the best chance of winning in November and is the most experienced.” Read more about this poll at http://www.cnn.com/2007/POLITICS/12/31/iowa.poll/index.html .

A new Reuters/C-SPAN/Zogby poll conducted December 28-31, shows that “Clinton, a New York senator, maintained a stable four-point edge over Illinois Sen. Barack Obama, 30 percent to 26 percent, in the Democratic race. Former North Carolina Sen. John Edwards was in third at 25 percent, down one point overnight.” Read more about this poll at http://www.reuters.com/article/topNews/idUSN2948587520080101?sp=true.

Also — a new Des Moines Register poll shows that among Democrats, Clinton leads 33 to 27 for Obama and 25 for Edwards. As Register columnist David Yepsen points out, had their pollsters used the 2004 turnout model, Hillary would lead by 29 to 27, figures in line with the other polls. Read the Clinton campaign’s full analysis of today’s Des Moines Register poll below.

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