No future for onions

Traders playing the oil futures market are among the culprits blamed for sending the price of a barrel of oil north of $140 in recent weeks.

While this five-fold price rise in five years has spread pain across the global economy, to onion buyers such wild swings are just part of doing business, according to CNN/Money:

Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

Federal law has barred an onion futures market since the late 1950s, the only agricultural commodity for which the U.S. government prohibits a futures market.

Bob Debruyn of Debruyn Produce, a Michigan-based grower and wholesaler, is the son of one of the original onion growers who lobbied Congress for the trading ban and now thinks the market would operate more smoothly with an onion futures contract.

"I would think that a futures market for onions would make some sense today, even though my father was very much involved in getting rid of it," he said.

No FDA presser today

Obviously, no FDA press conference call today. Perhaps tomorrow.

I had to smile at Jay Martini's reference to "co-mingled" United and PMA. Yes, the two national, multi-commodity associations are acting in unbroken unison in response to the salmonella outbreak - but isn't that what the trade has always said it wants from the two groups? A case of "can't win for losing"? Do we want them now acting independently instead, each trying to outdo the other in PR gambits?

We can't have it both ways. As the parable of Jesus goes, we either dance when the flute is played or we mourn when we hear wailing. For the industry's sake, let's indeed hope that United's/PMA wisdom is vindicated.

I think that major consumer press reporters are either falling short in their sourcing of PMA and United, or perhaps they are swayed by the delectable sound bites from The Perishable Pundit. I think Jim has done a credible job of raising doubts about the FDA actions, but the industry itself must be in the forefront.

Who is the ideal industry media spokesperson for this point in time? Association executives may seem to be the logical choice - Amy Philpott has done a good job in representing the industry in several stories I have seen - but to me the most credible and compelling sources would be tomato industry leaders like Mark Munger or Tony DiMare. Both of their companies have suffered as a result of the actions by the FDA and would be credible and sympathetic sources, I believe.

Salmonella headline roundup

Here is a roundup of headlines about salmonella today:

Deconstructing salsa in search of salmonella Washington Post page D1

FDA inspecting jalapenos shipments as salmonella victims near 1,000 E flux media

Push for locally grown food makes sense - Editorial Galesburg.com

Researchers track disease with Google news, Google money - Story about Healthmap Web site

Salmonella investigation spreads, along with anger at FDA - A compilation of reports

It;s not salmonella on tomatoes, it is no brain at the FDA - The lede from the edit:
"I want to be a government bureaucrat. Where else can you be so incompetent without any repercussions?"

Statistical Indicators - Come and get them

Here is a nice link to an assortment of statistical indicators the USDA feastures in its outlook projections. Many spreadsheets that may be of interest to the trade, and here is the list:

Summary
Table 1—Key Statistical Indicators of the Food and Fiber Sector

U.S. and Foreign Economic Data
Table 2—U.S. Gross Domestic Product and Related Data Table 3—World Economic Growth

Farm Prices
Table 4—Indexes of Prices Received and Paid by Farmers, U.S. Average Table 5—Prices Received by Farmers, U.S. Average


Producer and Consumer Prices
Table 6—Consumer Price Indexes for All Urban Consumers, U.S. Average (not seasonally adjusted)
Table 7—Producer Price Indexes, U.S. Average (not seasonally adjusted)
Farm-Retail Price Spreads
Table 8—Farm-Retail Price Spreads (part 1 of 2) Table 8—Farm-Retail Price Spreads (part 2 of 2)
Table 9—Price Indexes of Food Marketing Costs

Crops and Products
Table 17—Supply and Utilization (part 1 of 2)
Table 17—Supply and Utilization (part 2 of 2)
Table 18—Cash Prices, Selected U.S. Commodities
Table 19—Farm Programs, Price Supports, Participation, and Payment Rates
Table 20—Fruit Table 21—Vegetables Table 22—Other Commodities

Food Expenditures
Table 36—Food Sales

Transportation
Table 37—Rail Rates; Grain and Fruit-Vegetable Shipments

Indicators of Farm Productivity
Table 38—Indexes of Farm Production, Input Use, and Productivity

Food Supply and Use
Table 39—Per Capita Consumption of Major Food Commodities

Organic pullback?

Does trouble at Starbucks signal trouble for sales of organic produce? That seems like a stretch, but that is one observation in a story about signs of decreased demand for discretionary products like organic fruits and vegetables. Consumers who "dabble" in organic produce may be the most prone to wander back to conventional fruits and vegetables.

You might note the headlines I've linked to at the bottom of the blog each day or so. After they are posted here, I post them to an archive page at the Fresh Produce Industry Discussion Group.

Today, I noted one headline that carries some unsettling reports for organic marketers. From the Austin (home of Whole Foods) American Statesman, Organic retailers sees signs of a consumer pullback by Lilly Rockwell with a publish date of July 8.

Despite contrary views from organic retailers, Rockwell cites these factors in the organic consumer pullback:

But industry analysts say they're seeing signs that shoppers have shifted into "recession mode." The signs include strong sales growth at Wal-Mart Stores and discount clubs such as Costco and rising sales of store brand products, which are less expensive than national brands. Some say the recent troubles at Starbucks, which said last week it will close 600 stores, are a signal that consumers are pulling back on discretionary purchases.

On the dabbler....

But shoppers who had been dabbling in the pesticide-free lifestyle might cut back on their organic and natural purchases.
"They are more likely to pull back short-term as prices rise," Shea said. "They are not the committed organic consumer."
The growth of organic products has slowed from where it was two or three years ago, Shea said. Whole Foods' same-store sales growth rate has slowed down in the past two years.
But that is likely a short-term trend, Shea said, predicting that by next year, sales growth at Whole Foods will be more robust as the economy eases out of its deep slump.

On the idea that organic produce is rising in price at a slower rate than conventional....
"This notion of closing the gap between the price of organic items and conventional items is disputed within the industry.
Some experts, such as Shea, say they don't think the price of organics are rising at a slower pace. Others say organic prices are more steady than that of other foods in part because organic growers use natural fertilizers, instead of more expensive synthetics.


On the growth rate for Whole Foods....
Whole Foods Market:Same-store sales grew 6.7 percent in the first quarter, just over half the rate of a year ago.

TK: The challenge for organic retailers is to move the occasional shopper to the "committed" category in a time of economic weakness. It will be an uphill climb. Here is a Web link about measuring and communicating benefits of organic agriculture to consumers. The study notes, that for the most part, organic consumption is more about "me" and less about altruistic notions. From the European report:

An important aspect of communication with consumers is the concept of "credence characteristics" (6). The fact that a product is organic is not immediately apparent to the consumer. There is no way for the consumer to directly check whether a product has been produced organically or not. With the exception of direct sales from farmer to consumer, a well-functioning certification and labeling system is an important pre-requisite for successful communication with the consumer. It has to be made credible for the consumer that the product is actually organic, and organic products have to be easily distinguished from non-organic products.
Environmental advantages of organic food can also be regarded as a credence characteristic. Even if the consumer is sure that the product he or she is buying is organic, he or she must also believe that, during production, environmental advantages have been realized.
But are consumers really interested in the attribute "environmentally friendliness" of organic food? A review of the literature (15,17,19,20) shows that environmental friendliness of the production process of organic food is generally only the second most important argument for purchase. Magnusson et al. (15) found "health concern is a better predictor than concern for the environment" and interpret this as an indication "that egoistic motives seem to be stronger than altruistic motives." Wier et al. (19) conclude that consumers generally acknowledge non-use benefits of organic products, "but only those having use values in addition actually purchase organic to a high degree."
Two conclusions emerge from this: First, attempts to sell organic products to consumers based only on reference to their non-use values are likely to fail. On the other hand, evidence from the literature suggests that communication about the non-use values as a secondary aspect can have positive effects on sales.
This understanding of the organic farming market can, for instance, be found in the slogan used by the most successful German organic supermarket chain ALNATURA: "Organic — makes sense for man and earth." Another example of practical implementation is the information campaign on organic farming by the Federal Ministry of Consumer Protection, Food and Agriculture in Germany, which stresses the advantages of organic food for the individual and puts the societal advantages second (8).

A Parallel 'What-If' Universe

While it's an admirable campaign for the Western Growers Association (www.wga.com) to be calling for a Congressional committee to investigate finding federal funds to compensate growers for their massive losses during the FDA witch hunt, they may be biting off more than they can chew.

At least they're trying, though. I don't see the 'commingled' (isn't that a nice catchword now?) United/Produce Marketing Association doing much if anything to pressure Washington to at least consider the issue, when it appears they have ample political connections to do so.

But back to WGA's efforts. The question begs, where does one draw the line as far as the parameters & timeframe in quantifying a loss? Absolutely, the Palmetto/Ruskin (FL) shippers, the ones with unsold loads in their packinghouses, more in transit, and even more at destination when the initial CDC/FDA reports were released on June 6-7, deserve the first restitution if offered. They're ground zero from that standpoint.

Let's creep a few days forward, then. By the end of the next week, the media blast furnace was cranking, the FDA was chasing shadows, and the new deals in Charleston (SC), Quincy (FL) & Arkansas were picking & packing to a stagnant market. Not declining. Not falling. Morto. No movement whatsoever, to the point that the AgPlus Network, in their National Tomato Review, couldn't even peg an F.O.B. market for a day or two because of lack of trading.

Arguments will be made that these shippers, as well as the central San Joaquin Valley (CA) boys that began the following week, were hurt badly as well because their respective deals opened up in the pricing doldrums, where they remain to date. And they could be right in their claims.

Proving it, however, could be a dicey proposition, especially with the introduction of the ever-popular 'what if'. An example would be, what if...the flow of movement was not disrupted by this advisory, and it was business as usual? Of course, the market would have been better, but by how much? A couple bucks per package? Three or four? Who knows...

On the other hand, how many Palmetto/Ruskin sheds would have kept on packing, right on top of South Carolina & Quincy? We did have a $14-16.00 FOB market on our hands, and no grower in his right mind likes to leave valuable product in the field. The only offsetting factor would have been weather, the annual daily afternoon rains in the June Tampa heat that traditionally end a nearly-finished crop.

All in all, though, I give the WGA an 'A' for their efforts.

Later,

Jay

CDC July 7: 971, 40 states, DC, Canada: April 10 to June 26 onset

Here is the link to the CDC report July 7. Some highlights:
Recently, many clusters of illnesses have been identified in several states among persons who ate at restaurants. These clusters led us to broaden the investigation to be sure that it encompasses food items that are commonly consumed with tomatoes. Fresh tomatoes, fresh hot chili peppers such as jalapeños, and fresh cilantro are the lead hypotheses. However, at this point in the investigation, we can neither directly implicate one of these ingredients as the single source, nor discard any as a possible source. Since April, 971 persons infected with Salmonella Saintpaul with the same genetic fingerprint have been identified in 40 states, the District of Columbia, and Canada.