Archive for August, 2013

The week that was…in Kiwi (Agri)-Politics – Week32

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A new feature for The AgriChain Centre’s HortSource Blog….and I know that the week is not complete  yet but I would like this contribution to be in your in-trays on a Friday morning…so here we go.

Politics

The New Zealand cabinet will shortly be joined by a Minister for Compensation Payments, judging by the increase in pace of discovering that people serving long prison terms for capital offences might be innocent. This week’s candidate is Teina Pora. Alternatively this new portfolio could be managed by the Minister of Everything, Stephen Joyce. Or could this be a portfolio through which the ex-Minister in charge of bow ties and taxes is rehabilitated because his vote is needed so we can be spied upon?

(Agri)-

I am sorry but the Fonterra explanation about a dirty hose pipe does not wash with me . Professor Steve Flint from Massey University has a wee bit of a problem with it as well. And said so.

Nothing like a crisis though to focus people’s minds.  And on that basis – the Food Bill is now working its way through Parliament’s Select Committee Stages faster than it was anticipated when the Minister was called Wilkinson. I have just finished reading the latest Supplementary Order Paper, all 450 plus pages of it.  There will be changes afoot alright. Any New Zealand food business wanting to understand what’s around the corner in terms of proposed legislation and operational consequences should have a chat with Anne-Marie Arts.

The latest Tomatoes New Zealand Media Release about Irradiated Australian Tomatoes just turned up in my In-Box. Despite there being no compulsory country of origin labelling requirement for fresh produce, “the New Zealand Food Standards Code (FSANZ), which states all food that has been irradiated, or food that contains irradiated ingredients or components, must be labelled or have a label displayed on or close to it stating that it has been treated with ionising radiation” applies, according to Tomatoes New Zealand. Further details on the FANZ site.

We might as well close off with a Fonterra related aspect as well.  It seems that the Pure New Zealand brand is wearing some flak as the whey saga unravels – and understandably though.  What a classical case study though in marketing terms and a jolly good reason why one should think twice before one includes brand value on one’s company balance sheet!

We Would Not Want The Truth Get In The Way Of A Good Story

As I mentioned in blog entry “The Grocery Fullfilment Conundrum”, there was a second element in that NZ Herald article  of 3 August 2013 which caught my eye. Here is the offending paragraph…”Our survey showed some fresh fruit and vegetables were cheaper at Countdown than at an independent fruit shop but Fox said they would likely not last as long. She said the best place for fruit and veg was a Saturday morning market. There, people could buy in bulk and it would be fresher and better quality.”

There is absolutely no denial that visiting  markets is a very popular Saturday morning pastime for many city dwellers the world over. And if the image displayed in this blog is anything to go by, then we need to get used to Farmers Markets not being a passing phenomenon. They are here to stay alright. (The image is the back cover of the NZ Herald’s most recent weekend magazine and it is actually an advertisement for a radio station.Farmers market image) But none of that means that wild statements made by people with little knowledge should be allowed to go unchallenged. What industry and industry observers like myself are used to is the unrelenting negative commentary on supermarket pricing by people who have no comprehension of the intricacies of the fresh produce supply chain. So when Countdown then gets reported as having cheaper fruits and vegetables than independent greengrocers, what happens? Instead of letting that fact speak for itself, we need to immediately find some opinionated commentator to offer a negative angle, because the facts don’t suit the editorial direction. To imply that produce that reaches the consumer through the supermarket channel “will not last as long” as that purchased from an independent fruit shop is an outrageous piece of misinformation. Yes, there are some Saturday markets where indeed fruit & vegetable growers  are offering their produce direct to the consumer. In many cases that produce can be fresher if it has been harvested the night before or early the same morning. But to expect that to be the case with all produce sold at all markets  is based on a romantic myth fed by a lack of knowledge, a fair degree of ignorance, an unwillingness to put in the hard yards to establish the facts and an unfortunate tendency to generalise. It has been my experience that supermarkets take freshness and quality far more serious than journos give them credit for. Could they do more to increase awareness? Sure. Do they at times get it wrong? Sure. But give me a UK newspaper anytime. Their journos still know how to write an objective story.

The Grocery Fullfilment Conundrum

The local Auckland paper, the New Zealand Herald, recently published an article discussing supermarket pricing.  That in its own right is not a surprise, newspapers tend to pursue this topic when there is no other news about. This article differed though from others. In the first instance, the focus of the article was not the usual supermarket fare, food and FMCG consumables, but the journo offered opinions about the wisdom of buying typical non-supermarket items such as stationery, slug pellets and medicines from supermarkets.  The verdict? It could well be cheaper than buying those items where one would usually buy them. Ok, one would expect that though from a supermarket, wouldn’t one?  The question NOT asked is even more interesting. WHY are supermarkets moving into all sorts of other product? Answer – With consumers increasingly shifting towards online grocery buying, brick and mortar store operators need to figure out what else to put onto their shelves in order to keep the turnover going.
amazon feshSupermarket companies like Woolworths here in New Zealand may well be very successful with their on-line activities but they face a dilemma. Right now, on-line customer fulfilment occurs via a number of selected stores where ‘personal shoppers’ take the groceries from the shelf. The problem with that approach is that the goods come attached with the costs of getting them onto that shelf in the first place. Then adding the ‘personal shopping’ and distribution costs makes the whole process a fairly unattractive financial proposition. The smart solution is therefore to pick the goods at a distribution centre where the cost of getting into the store and the cost of the retail environment itself don’t figure in the cost of sales. The trouble with that approach is that individual unit fulfilment cannot be run out of distribution centres geared to dispatch goods by the pallet load. Pursuing that approach will lead to having to build dedicated distribution centres. Not the kind of thing you want to do if you already own stores which make money by stocking goods on their shelves for people to buy….and we are back to square one.

That’s why we need to sit up and listen very carefully if companies like Amazon suddenly decide to enter the grocery fray...particularly, the FRESH arena.  They are not encumbered by stores and dated paradigms.

There was another point of note in that article I mentioned at the beginning of this blog entry, but that will have to wait until tomorrow.