Sunkist smiles

Here are excerpts from the press release with today's date describing the Sunkist annual meeting:

“Despite the freeze, our 2006/07 sales were close to $1 billion,” Sunkist’s President and CEO Tim Lindgren said in his operational report. “And grower returns were proportionally higher than volume would indicate, not only because of the shorter supply, but also because of aggressive selling.
For Sunkist, 2008 is off to a good start despite the challenges at the front end of the navel season and greater-than-normal competition overseas. It’s going to be a long season as the navel estimate was just increased by 10 million cartons, bringing it to a total 96 million cartons, the largest navel crop on record. “But as our growers and shippers know,” Lindgren said, “Sunkist is an historically strong performer in large crop years due to our internationally famous brand and our large and loyal customer network.”
Sunkist’s specialty citrus program, with some variation by variety, is also on track to beat the record set in 05/06. In addition to its strong program on tangerines, Sunkist has introduced a tangerine juice pool, a strong growth category for the future.
“The fact that we are working with a much smaller total lemon crop this year is widely documented,” Lindgren added. “Perhaps not so widely known is how Sunkist has been able to move the market up dramatically on price. The average FOB on lemons, season-to-date, is more than double the average FOB in 05/06.
With its aggressive marketing and attractive new packaging, Sunkist’s organics program is off to a good start with three packinghouses, one in each district, certified to pack organics. “Our customers tell us they are anxious to have Sunkist involved in organics in a big way,” said Lindgren. He predicts that organic citrus, combined with Sunkist quality, service and dependability will command a premium.
“Sunkist took many bold steps in 2007,” Lindgren concluded. “The operational restructuring now underway is enhancing our brand, streamlining our operations and allowing us to take advantage of new opportunities that better position us in the marketplace. We have reduced expenses by 22%, and while some of the reduction was freeze-related, most of those savings are on-going.
At the same time, Sunkist is gaining volume. “We embarked on a program to add new acreage on a very selective basis,” Lindgren explained. “We are adding quality production of the varieties we need to meet market demands. We set a strategic goal of bringing 2000 acres of quality citrus into Sunkist annually and in 2007 we successfully reached that goal.

TK: Sunkist, in my estimation, has made some savvy moves in recent years. Looking ahead, managing growth in tangerine production, maximizing navel prices in a heavy crop year and positioning Sunkist in the event Argentina lemons are cleared for export to the U.S. seem to be key priorities going forward.

Consumer Price Index - January

The Consumer Price Index showed that inflation was higher than expected in January, particularly for food and fuel. From the CPI summary:

On a seasonally adjusted basis, the CPI-U increased 0.4 percent in January. The indexes for food and for energy each advanced 0.7 percent, following increases in December of 0.1 and 1.7 percent, respectively. The index for all items less food and energy rose 0.3 percent, following increases of 0.2 percent in each of the preceding nine months. The January advance reflects larger increases than in December in the indexes for apparel, for medical care, for recreation, for education and communication, and for other goods and services. The food and beverages index rose 0.7 percent in January, up from 0.1 in December and the largest monthly increase since last February. The index for food at home advanced 0.9 percent, following virtually no change in ecember. The index for fruits and vegetables increased 2.2 percent in January, following a decline of 0.3 percent in December. The indexes for fresh vegetables, for fresh fruits, and for processed fruits and vegetables increased 3.3, 1.8, and 0.7 percent, respectively. The index for meats, poultry, fish, and eggs advanced 0.8 percent in January, following a decrease of 0.1 percent in December. Prices for poultry, for fish and seafood, for pork, and for other meats each increased, while beef prices were virtually unchanged. The index for dairy products rose 0.2 percent after a 0.2 percent decrease in December as a 2.1 percent increase in cheese prices more than offset a small decline in milk prices. The index for nonalcoholic beverages rose 1.6 percent in January, reflecting increases in prices for carbonated drinks and for coffee. The indexes for cereal and bakery products and for other food at home rose 0.6 and 0.4 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages--each increased 0.4 percent.

Bt crops - Time for adjustments?

Here is a link to a Q and A that looks at documented insect resistance to genetically modified Bt crops. From GMO Safety, which describes itself this way: "Internet portal gmo-safety.eu provides up-to-date clear and intelligible information about current and past biosafety research into genetically modified plants in Germany""

From the interview:

GMO Safety: Has the evolution of pests that are resistant to transgenic crops ever been documented before?

Bruce E. Tabashnik: No

GMO Safety: Did the occurrence of cotton bollworms that show a resistance to Bacillus thuringiensis toxin in transgenic crops surprise you?

Bruce E. Tabashnik: No. Most experts agreed that pest resistance to Bt toxins in transgenic crops was inevitable. Because of their inherently low susceptibility to the Bt toxin in the first generation of transgenic cotton, bollworm (Helicoverpa zea) was considered likely to evolve resistance faster than other pests.

GMO Safety: Would you say that the development of resistant properties is a reaction specific to the use of genetically modified plants?

Bruce E. Tabashnik: Definitely not. Evolution of resistance to insecticides has been documented in more than 500 species of insects. Evolution of resistance to Bt toxins used in sprays has been documented in two species of vegetable pests: diamondback moth (Plutella xylostella) in field populations in many regions of the world and cabbage looper (Trichoplusia ni) in greenhouses in Canada.

GMO Safety: Does the documentation of field-evolved resistance to a Bt crop imply, that the resistance management practiced so far has to be adjusted?

Bruce E. Tabashnik: Not necessarily. After more than a decade, nearly all pest populations targeted by Bt crops remain susceptible.

GMO Safety: What recommendations can be concluded from your findings for the cultivation of GM crops?

Bruce E. Tabashnik: If the goal is to delay resistance to Bt crops for a decade or more in all pest populations, some adjustments to resistance management might be needed. For pests such as bollworm, that have inherently low susceptibility, options include combinations of two or more distinct toxins, higher toxin concentrations, and a higher proportion of refuges. Use of multiple tactics, including biological control by natural enemies and cultural practices that thwart pests (e.g., crop rotation) can also help to thwart resistance.

GMO Safety: Are there any other factors that could possibly explain the documented higher survival rate of bollworms?

Bruce E. Tabashnik: The rigorous experiments of Prof. Randy Luttrell [Editor's note: University of Arkansas, Department of Entomology] and his colleagues include extensive controls. The results of their published laboratory bioassays provide conclusive evidence of field-evolved resistance in bollworm.

GMO Safety: Will we see more field-evolved resistances in the next years?

Bruce E. Tabashnik: Yes. The results to date suggest that field-evolved resistance might occur next in pests other than bollworm with inherently low susceptibility to the Bt toxins in transgenic crops.

Consumer Price Report - January

Here are a few figures as reported by the Bureau of Labor Statistics for average retail prices for fresh produce items in January.

Chat - Tracy Burgess

As Librarian for The Packer, Tracy Burgess touches the produce news of today and yesterday. Among her responsibilities is the regular “Packers’ past” feature and archive requests from readers. Tracy can help readers find photos and articles from The Packer archives and is reachable at tburgess@thepacker.com. I spent about 30 minutes in a keyboard chat with Tracy today, checking out her impressive crimson and blue background and what drew her to historical administration.

10:09 AM Tracy I wanted to ask you about your background, how you came to The Packer and also to give the readers a little window to your world...

First of all, where did you grow up?

10:10 AM tburgess: I grew up in Kansas City, MO. I'm originally from Columbia, MO - that may cost me my Jayhawk credentials, but so be it.

me: What was your first job as a youngster?

10:12 AM tburgess: My first real job was working in a music store - musical instruments and sheet music, that is. I loved it - I had that job until I was a sophmore in college.

10:13 AM me: That does sound pretty ideal - I think my son applied to work at such a job. You mentioned your KU credentials ; why KU and what was your major in college?

10:16 AM tburgess: I'm what they call overeducated. I actually have three degrees - one from Washburn University in Topeka, and two from Univ. of Kansas. I majored in journalism at Washburn. I went back to KU for a BGS in European history about 10 years ago - then carried on to get a masters of historical administration. KU has a great history program - that's mostly why I went there. Basketball had a little influence, too.

10:18 AM me: Too bad about that loss to KSU this year..but enough about basketball. What excites you about your course of study and , by extension, your duties now at The Packer?

10:21 AM tburgess: We can't win them all. Beasley is amazing. He's fun to watch...but I digress. It's kind of hard to describe what it is about history that I like so much. It's probably the reading and the writing. I'm geeky that way - I love research. I get opportunity to do plenty of that here.

The Packer has got a lot of history just hanging about.

10:23 AM me: Very true. Some of it is walking around like me. So how long have you been with The Packer and what is a typical day like for you (also give your title for our readers, if you would)

tburgess: One of these days I'll have to do some kind of oral history with you.

10:27 AM Let's see...a typical day. I'm here in the mornings, so there's a lot to do in a little time. I try to read as many newspapers as possible - I'm always looking for produce or food-related articles. So I spend a good chunk of time every day with my nose pressed to the computer screen or to newsprint.

I also look after the Packer's online article database. I'm responsible for the photo archives, too.

10:28 AM I spend a lot of time looking up articles and information for both reporters and subscribers, too.

10:30 AM me: Can readers contact you for past articles and photos, then?

tburgess: Always. That's my favorite part of the job.

10:31 AM me: Tracy, one last question. What is the latest book you have read?

10:33 AM tburgess: Oh geez...I usually read two or three at once! I just started a book called Thunderstruck - written by the man who wrote Devil and the White City, I forget his name. I finished re-reading Anthony Bourdain's Kitchen Confidential a few days ago. I'm on the waiting list for the new Pollan book...is that still sitting on your desk? I'm also reading Harry Potter with my son.

10:34 AM me: Guilty as charged. I'll bring Pollan's book over to you. Thanks for your time, and readers, you now know where to go for anything you want to know about produce and The Packer! Thanks again, Tracy.

tburgess: Thank you, Tom. This was fun.

New Zealand apple rebound

Luis of the Fresh Produce Industry Discussion Group posted a great article about the status of the New Zealand apple industry. Here is an excerpt:

This is the brave new world of apple growing in New Zealand. And about time, too. In the decade from the mid-1990s, the industry squandered a lot of its natural advantage and hard-won leadership. The results were disastrous. It is a cautionary tale for all New Zealand industries.
We should be good at apples, thanks to some unique pockets of climate and soil. The very best flat land around Nelson and Hastings can produce 100 tonnes of apples per hectare in the very best season. But 50 tonnes is a good average across the country, compared with 30 in Washington state, 17 in Australia and 13 in the UK.
Down through the decades, New Zealand has also been a leader in developing new varieties such as Royal Gala and Braeburn or commercialising new types from other countries such as Granny Smith from Australia and Fuji from Japan.
But in the mid-1990s, disaster struck. We'd failed to hang on to the intellectual property of Royal Gala and Braeburn. Planted widely in competitor countries such as Chile, they became highly commoditised.

TK: The gist: NZ on the rebound with labor saving technology, market positioning with no detectable pesticide residues, variety innovation and a more coordinated marketing approach.

Canadian retail report

Anyone doing business in Canada should probably take a look at some of the latest intelligence on Canada's retailers from the USDA. This recent Foreign Agricultural Service annual report provides a 48 page pdf summary of the Canadian retail sector performance. From the report:

Consolidation in the grocery sector has been the trend in the retail market over the past few years. This has boosted the sales of large grocery chains and brought the three major chains to the top. These are Loblaw Companies Limited (1,577 stores), Sobeys Inc. (1,709 stores), and Metro Inc. (1,628 stores) – all Canadian-based companies. Metro Inc, which, until recently, as mainly in the Quebec market, acquired the A&P Canada business in 2005, which gave the company a strong presence in Ontario, the largest Canadian market. Both Loblaw and Sobeys have been expanding through new store openings and a shift towards larger store formats. Loblaw has also been increasing the share of retail space allocated to general merchandise, to counteract competition and to maintain its strong positioning against Wal-Mart’s expansion. In contrast, Metro Inc, with an average store size below the national average, has also begun pursuing a strategy towards large-size formats stores. In 2003, it opened its first superstore under the Metro Plus banner, since then the number has grown to 58 in 2006. This amalgamation of the Canadian retail food sector has increased competition for the consumer’s retail food dollar in Canada within the traditional grocery store environment.

Later....

The chain share of total food sales decreased 0.7 percentage points between 2002 and 2006, decreasing from 60.7 per cent of total sales to 60 per cent. Total chain sales for 2006, which combine both grocery and convenience store figures, increased 17 percent from 2002, reaching nearly CDN$ 44 billion. Share of independent food sales has increased slightly since 2002 from 39.30 percent to a 40.00 percent in 2006. It is forecasted to decrease by 0.05 percent in 2007, while chains are expected to increase their market share by the same amount. Among the independent stores, the unaffiliated had the biggest sales increases in the past two years -- 4.6 and 4.8 percent increases in 2005 and 2006, respectively.

TK: There is much more to the report, including the interesting observation that food price inflation in Canada is being mitigated by Wal-Mart's expansion there.
Retailers are seeking to hold on to market share by holding back price increases, the USDA notes.

Tesco blitz

Tesco continues to make disproportionate headlines in the U.S., and Tesco-watching and commentating is being taken to obsessive, extreme levels. I'll join in the frenzy with some recent noteworthy, Tesco-related news:

Fresh Prince of Compton
Grocery rivalry heats up between Tesco, supermarkets
Fresh and Easy and American Forests plant 1,000 trees
British firm to bring small grocery format to the region
Fresh and Easy locale OK'd


TK: On a basic level - beyond the "inside merchandising" critiques and out of stock evaluations you will hear from some industry pundits - a common thread in many of these consumer press stories is community goodwill toward Tesco. Simply, thank you, Tesco, for building a store in Compton. Or, "It's the kind of thing we need in this town." Whatever else may come with Tesco's expansion in the U.S., that's not a bad way to start.

Not giving up without a fight

I was reading a story this morning about the "high cost" of fresh fruits and vegetables. Titled "High Produce Prices Hurt Low Income People," the author quotes from one source that suggests to save by "avoiding fresh."

Moores pointed out that a great way to save money and keep fruits and vegetables in your diet is to look in the canned or frozen section. Fresh fruit must be shipped quickly, which drives up the cost, but canned or frozen may have been picked months before."I know there are solutions to (cost). People should look more toward frozen and canned, because then you get strawberries in January, and they are frozen, but the nutritional quality of both canned and frozen is as good and some would argue better than it would be for fresh … Usually, for canned and certainly for frozen, the produce is picked at the peak of its ripeness, and so therefore it is at the peak of its nutritional quality, and then it is processed very quickly.

TK: No doubt there are merits to the idea that processed fruits and veggies offer value. However, I was pleased to see a source with HyVee was not easily steamrolled into the position that "avoiding fresh" makes sense. From the story:

Chris Friesleben, director of communications for Hy-Vee, which operates more than 200 food retail stores in the Midwest, said the price of produce is always fluctuating."Produce is really an iffy commodity," said Friesleben. "A lot of the price is determined by supply, and a lot of the supply is subject to weather. So, weather plays a big role in the price if you have a bad season."Two of the country's biggest suppliers of fruits and vegetables are Florida and California, both of which have been rocked by severe weather in recent years. Brutal hurricane seasons in Florida and severe rains, wild fires and deep freezes in California have adversely affected those state's crops.In January 2007, four nights of freezing temperatures wiped out more than $1 billion of the orange crop in California, which caused the prices of oranges to double, according to USA Today.Friesleben said that while prices may have gone up in recent years, Hy-Vee's produce departments have not seen a drop in sales."We have seen (sales) them stay steady or go up," Friesleben said. "And our produce departments are growing. Every time we open a new store, it seems like we add more square footage space to our produce department."Friesleben said that fruits and vegetables are a commodity like gasoline -- even when the prices go up, sales do not drop significantly because it is a vital part of people's lives and they probably just cut down on their budget in other areas."I am sure it does affect how much they can buy, or the variety that they can buy, but they understand it is important to their diet, so depending on what their food budget is, they will buy some fruits and vegetables," said Friesleben. "People are willing to cut a little out of the food budget in center store. They won't buy as many canned goods, for example, or maybe they will cut down on the ice cream or the meats."

TK: Friesleben gives a strong defense of fresh produce and the popularity of fresh fruits and vegetables. The assumptions in the article make it sound as if Mother Nature is doling out one disaster after another to our nation's produce growers, to the unavoidable detriment of shoppers. Yet week after week, there is value in the produce department in food section ads. Perhaps acknowledgment of the role of imports in helping to temper weather-related price shocks would have been illuminating to consumers as well.

Pivonka in the news

Tihs story from the State Journal Register in Springfield, Ill., quotes extensively from Elizabeth Pivonka of the Produce for Better Health Foundation, and is another example of the great public relations value that the Fruits and Veggies - More Matters is able to extract from their modest funds. From the story:

It boils down to this: Try to make fruits and vegetables half of all the foods you consume.

As the national public-health initiative Fruits & Veggies — More Matters celebrates its first birthday in March, the public/private coalition that sponsors it continues to urge Americans to eat more produce.
“Over 90 percent of the population isn’t eating the recommended amount of fruits and vegetables,” said Elizabeth Pivonka, president and CEO of the Wilmington, Del.-based Produce for Better Health Foundation, sponsor of the program along with the Centers for Disease Control and Prevention.
“Fruits and vegetables are important for disease prevention and maintaining healthy weight. If you’re eating fruits and vegetables, it automatically displaces some of the less-healthy foods.”

TK: I have argued for a mandatory industry assessment for generic promotion of fruits and vegetables, and perhaps the best argument for that position is the extreme value that PBH is able to derive from voluntary industry contributions. In a way, however, the built-in PR advantages of fruits and vegetables - as compared with pork rinds, for example - have probably contributed to the reluctance of the industry to make serious investments in a generic promotion message.