Archive for April, 2011

Pineapples & Portugal

As much as one might want to, escaping the wall to wall media cover about the Royal Wedding is nigh impossible.  Based on my democratic roots (one of my ancestors was a leading light in the German revolution of 1848), I have a highly developed ability to tune out most party political broadcasts related to Royalty, but one news item caught my attention.  Specifically, it was an analysis of what the then Princess Elisabeth received as wedding gifts that left me with my mouth open.  “Among the perishable items were 500 cases of tinned pineapple for distribution by the bride…”  The mind boggles. Who on earth would send pineapple as a gift? Why would this even be worth mentioning 64 years later?  I buy pineapples at my local greengrocer for $2.99 or $3.99 every week, all year round.  The tinned stuff typically gets thrown at you as supermarket specials.  Foodtown lists 440g cans of Homebrand pinapple slices in syrup for $1.58 this week.

Well, this just show how far we have come from a consumption perspective. Yesterday’s delicacy fit for Royalty and scarce for the rest of us has become today’s commodity.  It was not that long ago, 20 years or so, that all one could get in New Zealand were Queensland pineapple.  These used to sell for between $6.99 –  $8.99 at retail and buying one of these was akin to playing Russian roulette.  One did not know what one was going to get until one cut the fruit open.  Too often, the fruit was just about black and of very poor quality.  Marketers and retailers then started to make use of technology. Pineapple were peeled, cored and packed in transparent vacuum pouches in Australia and then airfreighted to New Zealand.  The price went up but at least consumers could buy the pouched fruit  and be certain that the product was fit for consumption.  The minute Dole pineapples from the Philippines became available in New Zealand, the Australian product in both packaged and natural form disappeared over night and our produce departments have never been the same since.  But that is a different story which will need to wait for another day.

And who gave the Queen pineapples in 1947 ?  It was Portugal, which not only had remained neutral in WWII but also had and still has control of the Azores, a group of islands where just about anything grows.  Given the state of the Portuguese economy, one does wonder what this year’s gift might be…

Twitter Sure Focuses The Mind

Zespri Stand at Fruit Logistica Berlin 2011

I sympathise with Turners & Growers.  I truly do.  Here they are, the quintessential New Zealand produce marketer, which in the 1960s probably did more than any other company at the time to turn kiwifruit into the commercial boon the fruit  is  for New Zealand today. But can they sell kiwifruit today?  Nope! Why not? Because of a set of  Parliamentary Regulations which ensure single desk status for what used to be the grower owned marketing company – Zespri.  Well, in a roundabout way anyway.  It is actually a little more complicated than that but I don’t want to open that can of worms right now.

Here is what I wrote on Twitter just now: 

Why do householder surveys on kiwifruit regulation? Zespri is the ultimate scale model, the NZ industry can’t afford not to have it. Period.  

Exactly 140 characters by the way, but I am digressing. I am a free marketer from way back, which is not surprising given my supermarket background; but I mean every letter of that Twitter message.  Turners & Growers have waged quite an effective PR campaign on their opposition to the single desk  model for kiwifruit and some of their arguments do actually make sense.  At the end of the day though, the horticultural industry simply cannot afford to jettison the only scale model it has in order to satisfy free market principles. Sorry guys, but no can do.

Railway Waggons, TV Shows & Produce

A couple of news items on National Radio caught my attention this morning.  The first one related to Kiwi Rail’s intention to buy more rolling stock from China instead of having the waggons built from scratch in its own workshops in Lower Hutt and Dunedin .  The second item concerned the intended sale of TVNZ’s Avalon Studios.  They also are in Lower Hutt.  Predictably, the supporters of those facilities are getting ready to head for the barricades, suggesting not building one’s own railway waggons or not producing one’s own TV shows makes no economic sense whatsoever, given that a) the competence exists and b) the economic necessity to preserve as many jobs as possible should be obvious to even the most dimwitted inexperienced politician. The counter argument suggests that it makes perfect economic sense to buy goods and services offshore if one’s own capacity is insufficient or if one’s own cost of production cannot match cheaper labour sources offshore.  Chuck a couple of accusations related to xenophobia into the mix, interview a minister or two and the debate takes on a life of its own.

As I was pondering what I was hearing, I could not help but think that there is a connection with the produce industry.   The old colloquial term of market gardener, for example, implies something doesn’t it?  It implies that the individuals concerned produces his or her produce for a market.  Where could one traditionally find market gardeners?  Around the towns.  Where were the markets located? Inside the towns!  Being a market gardener therefore suggests a degree of proximity to the locality where the produce meets the consumer.

Is This Really The Solution?

At the beginning of the 20th century Auckland’s market gardens used to be where the Ellerslie racecourse is today.  As the city grew the gardens shifted to Mangere.  Evidence of that can still be seen between the airport and the Manukau motorway. After the second World War, Pukekohe increasingly gained in importance as Auckland’s fruit and vegie bowl.   These developments played out all across the country to a greater or lesser degree.  A lot of Wellington’s vegetables used to come from Otaki initially.

The produce supply scene is changing on two planes.  Firstly, the corporate supply chains at wholesaler or retailer level distribute parcels of produce around the country based on what is the most efficient source on the day.  Gisborne lettuce can be found all over the country as can South Auckland tomatoes. Growing produce locally is therefore no longer a necessity. Secondly, the volume of imported produce, particularly imported vegetables destined for the process industry, is rising drastically.  On the other hand I saw a Turners & Growers press release recently which announced the company is now the largest exporter of Peruvian asparagus into Japan.

What does this mean?  Ask an economist and he will suggest that the sensible way of going about business is to produce goods and services in the most cost effective way.  And if that is China, so be it.  Sociologists will argue that basic functions like food production need to conducted within spittting distance of the people the food is intended for.  Governments are beginning to to grapple with the concept of Food Security.  History tells us that as societies progress, its members no longer want to perform the more basic job function but are looking for more complex tasks to take on.  Germany invented the term Gastarbeiter in the sixties, guest workers, for the mainly Southern European unskilled labour force which was imported to do the jobs Germans no longer wanted to do.  The Communist regime suffered from the same malaise.  East Germany brought in thousands of North Vietnamese workers for exactly the same reasons.  New Zealand did the same with Pacific Islander in the seventies – and today our industry has the RSE scheme for very similar reasons.

Helen Clark called agriculture and horticulture sunset industries ten years ago and substantially reduced government investment into our industries, wishing us to concentrate on developing high tech export solutions instead.  And yet – horticulture and agriculture are part of the very fabric of our society.  We need to eat to survive.  We need food. How much responsibility do we need to take for this individually apart from doing our hunting & gathering in the local supermarkets? 

The answer, I suggest, lies somewhere in between. As a country we cannot afford to be too reliant on commodity exports.  Yes, prices might be good for a few consecutive weeks, months or even years – but low entry barriers, over- supply and changes to demand will always create a  roller coaster effect .  It is just a question of “when.”  Conversely we cannot afford to go exclusively high tech altogether and import all our food. We can afford this neither financially nor as a society.

What we need then is a mix of sensible commodity production, value adding processing industries and mechanisms which allow us to generate, harvest and market intellectual property along our entire value chain.