Archive for April, 2013

Turners & Growers and the Potato Washing Debacle

By the early eighties, Foodtown had made some inroads into direct supply of green leafy vegetables, tomatoes, kumara and a number of other crops.  Kumara were in fact one of the early crops which were  100% directly supplied – by no other than the late Gary Blundell.  When it came to potatoes though, Foodtown had a bit of a problem.  One of my predecessors hat come back very enthusiastically  from PMA in the US, having been introduced to the concept of washed potatoes.  We might takes these for granted these days… but that was not the case 30 years ago! 

Foodtown, naturally, approached Turners & Growers, its potato supplier, to suggest that potato washing should get onto the company’s agenda.  The answer was somewhat surprising…”it could not be done”, said Turners & Growers.  The reason given was the soil condition in Pukekohe which would defeat any effort one could undertake to get potato washing under way.

Luckily, Foodtown chose not to take NO for an answer and started a conversation with a large potato grower in the area, A. S. Wilcox & Sons  and the ingenuity displayed by Lex, Henry and Ross Wilcox sure enough got washed potatoes onto Foodtown shelves within a year.  And they have remaind there ever since.  Direct from the source from Day 1 and no longer supplied by Turners & Growers. A further chink in the relationship….

To be continued

Horticulture & The Trans-Pacific Partnership

Fruit Logistica, Berlin

Fruit Logistica, Berlin

By default, blogs are global in nature.  The topics discussed may at times be quite parochial but I, for one, see no sense in using a tool with instant access to the world for the purpose of discussing local issues.  If I have a local gripe, I write a “letter to the editor” at the local rag.

And yet…

Today is one of those ‘and yet…’ days.

Today, I want to discuss what I have read recently in a USDA publication and put it into a New Zealand perspective.  Pretty local, eh?

The matter on my mind is trade and specifically the potential ramifications of the  Trans-Pacific Partnership proposal involving Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA and Vietnam.

Whenever someone mentions trade opportunities in New Zealand, and tariff reductions, one thinks ‘agriculture’.  The next branch of that thought stream are dairy, beef and lamb, as many New Zealanders  still haven’t got a clue continue to be slightly challenged when it come to naming other export success stories.

Kiwifruit gets a mention from time to time – although recently more in connection which how one should not go about managing one’s market access issues and the real adventurous amongst us might fondly remember the perceived hold ENZA had on the global market apple market but other than that, horticulture rarely gets a mention in despatches.

Behold!  We are not alone in feeling neglected…here is how the US Department of Agriculture views that matter.

“One subsector of U.S. agriculture, the sometimes overlooked horticulture industry, shares a strong interest in the outcome of both negotiations, as fruit and vegetable trade patterns continue to be influenced by a range of trade-distorting policies. The horticultural sector faces a large number of high tariff rates as well as tariff-rate quotas (TRQs), some of which are characterized by cumbersome administrative procedures and over-quota tariff rates at trade-prohibitive levels. Moreover, phytosanitary and technical measures have affected trade by limiting or blocking imports of select horticultural products into world markets.”

Oh, really? All sounds familiar, doesn’t it?  So, being able to articulate the problem so well, might our American colleagues also have a solution to the problem?

Well, before they attempt that, they actually do a good job at scoping the challenge further.  They identify “four key long term factors” they hold responsible for the increase in global horticultural trade we have seen in recent years;

A growing middle class in emerging countries – and we sure have observed that as well, in China, India and Indonesia to name a few of our markets.

Technological innovation in transport and communication – yes, well, I can’t argue with the communication perception, I am writing this blog for all the world to see the instant I post it.  Transport? There is increased containerisation; bananas being a classic example and the container vessel are getting bigger….in fact too big to berth in New Zealand

Global consolidation of the grocery trade – yes, most certainly a trend that is not showing any signs of slowing down. And it does, of course, create supply chain efficiencies.  But as we are dealing with produce that comes in all sorts of perishable shapes, flavours and sizes and not light bulbs or Pinot Noir, “ueber-effeciency” in supply chain optimisation has the habit of producing nasty side effects.

The various trade agreements put in place since 1995 – true, but we still publish an annual report in this country on how the remaining tariffs limit our ability to move forward the way could if we were let loose.

The USDA report then analyses the US export and import position for horticultural products in some detail to reach a general conclusion of sorts — that an increased demand for US fruit and vegetables should be expected in the prospective partner economies, ours included.

Where to from here then?

Well for starters – have we looked at the impact of the TPP negotiations on New Zealand horticulture?  What are we likely to see entering the country as a result of these?  Any Biosecurity considerations we might want to consider?!?

What can we sell that we are not selling already?  Whom to? In what quantities?

Here is a fact sheet on the New Zealand horticulture industry, just 12 months old.  A good starting point for anyone interested in looking for opportunities.

Good luck.

 

Turners & Growers – Timeline Fog Lifts Further

turners&growers

 

 

In April 1970, thirty-three years ago, Foodtown was heading for its 12th store in Auckland, Birkenhead.  Once again, the supermarket chain suggested to Turners & Growers that there might be merit in working together to achieve direct fruit and vegetable deliveries from growers to a Foodtown warehouse for distribution to individual stores.  Jack Turner, who by then had succeeded Sir Harvey Turner as Managing Director felt that “any agreement to arrange direct supplies from growers would be against the wishes of growers…” (Stead, K. One Hundred I’m bid. A Centennial History of Turners & Growers, 1997. ISBN 0473 04169 3. Kestrel Publishing)

The T& G board advised Foodtown that “it was not prepared to agree to its proposal as the board was convinced it would be contrary to the interests of growers, consumers, retailers in general and the company”. (Ibid).

Foodtown responded “that it would continue to try to get whatever fruit and vegetables it could directly from growers themselves.” (Ibid)

And so the battle lines were drawn.

On one hand, the traditional produce wholesale company which had by then successfully been in business for half a century.  In the opposite corner, a business which had barely started a dozen years earlier and already threatened to disturb the industry fabric. Judged from a given point in time in, say 1970, one can understand the Turners & Growers perspective.  The system was working.  It was not broken.  Therefore no need to fix it.

From the supermarket’s point of view though, the system was already beginning to fray at the edges.  Getting produce to twelve stores every morning came with its challenges and being able to take possession of that produce the night before would have been a lot easier as the auction process itself was not very efficient.  Here is a description from the Auckland Fruiterers Association site.

Foodtown therefore quietly continued to build a core group of growers prepared to deliver some produce direct whilst maintaining a daily presence at the auction markets.

to be continued

 

Hunting & Gathering The Modern Way

We might be a fairly sophisticated lot, us humans,  but there  are some basics facts in play, which apply regardless of where we live, of our gender, our age or our occupation.  I want to focus on just one of those facts for now; namely, the fact we need to eat.  And as we , at least in the OECD countries, lead relatively charmed lives these days.  We do not even need to make time for hunting and gathering in the traditional sense in our busy schedules… we are able to just go shopping.

h-and-g-lg-1a9km9uThe places where we tend to shop for food are typically single category stores such as bakeries, butcheries, delicatessen stores, open air markets and supermarkets.  Nobody makes us favour one over the other, nobody stops us from mixing and mingling, nobody says we need to shop daily, nobody stops from just shopping fortnightly and, most certainly, nobody prevents us from placing whatever we fancy into those shopping trolleys. Naturally, there are constraints, such as the depth of our wallet, our dietary needs, distance between store and home, our mode of transport; but those factors not withstanding, life is pretty easy.  Our mind articulates a need and hey presto, we are down at the store, meeting our mind’s request.  Wouldn’t you agree that there is a far higher degree of certainty to that model than there is to the traditional style hunting & gathering lark?

So, if we are in agreement of that, why is it that not one week goes by where one or other consumer group gripes about the price we have to pay for our food?  Not shopping is not compatible with the structure of the post-industrial age we live in. Period.  The provision of shops where we can hunt & gather in a style more appropriate to today’s society is therefore a value add offer in its own right, regardless of what type of shopping experience we choose and prefer.

I would like you to think about that last sentence a bit before you read on….

Food shopping outlet price comparisons are a dime a dozen.  Everywhere.  And they all follow the same model… Supermarkets get the bash for being too expensive, green grocers tend to be cheaper but possibly lack range and discount stores sit somewhere in between.  Right?

Well, wrong.

Channel 4 in the UK published a price survey,  at the end of January 2013.  It makes for entertaining reading.

Firstly, their survey was based on three items only; “everyday fruit & vegetable items” they called them.  I can accept that description for Broccoli.  Pears are not really an everyday item and Coriander most certainly is not.

Secondly, the survey was conducted in “32 locations across the country”.  Hm, given the population density of the UK, this is certainly not representative by a long shot.

Thirdly, and here is a new aspect for us here down under, the three categories sampled were a

  • large supermarket,
  • an independent trader (greengrocer)/ local market,
  • a convenience store version of the large supermarket.

Well, this is one for the books.  The penetration rate of these shoebox supermarket mini versions is now such that they come under the spotlight of the price nazis consumer rights media.

I shall leave you to read the survey results in your own good time but, for me, the issue boils down to this:  what price is reasonable for convenience?   We will pick that theme up again in a little while.

 

 

 

 

Turners & Growers and Mr Tom Ah Chee

turners&growers

 

The Turners & Growers Annual Report for 2012 showed up in the mail today.  I was tempted to comment straight away but I will wait for a while and let it settle.  In the meantime, I shall continue with the missing years in the Turners & Growers timeline.

Fruiterers are innovative fellows and in the mid-fifties one of them, a certain Tom Ah Chee whose family fruit & vegie shop was up on Karangahape Road started dreaming  – and he dreamt big.  So big in fact that when he retired he could look back onto a company that started from the one fruit shop and had spawned 30+ supermarkets in Auckland, Hamilton and Tauranga at the time.  The company was Progressive Enterprises Ltd and the supermarkets were called Foodtown.

A by-product of that growth was what amounted to a fundamental change to the way the produce business was conducted. Change did not happen overnight…but a head of steam started to build from the early sixties onwards and Turners & Growers were right in the midst of it.

In November 1968, the head of steam had becoming sufficient enough to warrant discussion at a special Turners & Growers board meeting. Here is what the then General Manager had to say to the board .

“For the past few years, a new class of retail buyer has become prominent in Auckland.  I refer to the supermarkets.  These have been established for a quarter of a century and undoubtedly have cut across the retail trade in New Zealand as well as in all other coutries where they operate.  For some time now a leading supermarket organisation had been pressing us to arrange sales of vegetables delievered directly from the growers.Up to the present time we have been able to avoid getting involved in that type of business…One of the leading supermarkets is now exercising further pressure and has intimated that if they are unable to get supplies direct from growers through our organisation they may be forced to dela directly with growers themselves.” (Stead, K. One Hundred I’m bid. A Centennial History of Turners & Growers, 1997. ISBN 0473 04169 3. Kestrel Publishing).

Stead then concludes the section discussing the board meeting as follows: “The board discussed the problem for hours and eventually decided to stick to its traditional knitting:  It resolved that it would “…not make any move away from our present auction system that would help to break it down.”

All I can say – opportunity lost.  20+ years later, in May 1989, Foodtown walked.  Why that took so long and how the separation was achieved will be discussed in future posts.