Archive for 'Produce'

Russia here we come

PUTIN-870x418

Geopolitics and fresh produce can be strange bedfellows at time. The EU slapped a few selective sanctions on Russia’s Vladimir Putin and his merry band of oligarchs and what did Putin do in return?  He prohibited the import of a range of goods, including fresh produce, from countries which he no longer considered to be friendly towards Russia. Australia appears to have earned Mr Putin’s displeasure but little ol’ New Zealand is clearly not on his radius, so our fresh food exporters are scrambling to see how the Ukrainian crisis can be turned into a windfall for our agri-exports. Cheese got a mention in dispatches earlier and now New Zealand cherry growers seem to have fixed their eyes firmly on Mother Russia.

In this informative freshfruitportal.com article, the cherry industry’s two principal challenges are highlighted –  these being rain and air transport capacity. So it might be a little while yet before we are supplying Russia with cherries by the plane load. But the messaeg is very clear. Our Asian markets represent enormous growth potential already, temporary windows of opportunity can arise when regular supply partners have a falling out, but we do need to get on top of our quality and logistic issues in order to truly take advantage of any opportunity that may present itself.

Just as well Russia can pay with the folding stuff these days.  We wouldn’t really want to start exchanging food for Ladas again…

 

The high cost of low prices

A few weeks ago we had the PMA Australia New Zealand Fresh Connections Conference here is Auckland. An all-round success in terms of attendance.  One of the industry stalwarts I bumped into there was Lex Wilcox, retired potato and onion grower/packer/shipper from Pukekohe and one of the brains behind the success of AS Wilcox Ltd in his day.  Lex has earned his retirement through decades of hard work for his company, the Pukekohe Vegetable Growers Association and the Vegetable & Potato Growers Federation, one of the predecessors of Horticulture New Zealand.

Catching up with Lex reminded me that he had sent me a 2006 article from the Sunday Start Times recently, entitled, “The high cost of low prices”, together with a philosophical statement by John Ruskin on the common law of business balance. Ruskin’s authorship of this ‘law’ can not be verified.  The one sentence version is “There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey”.

Lex sent the article in response to my blog entry on “Supermarkets, Growers and Food Prices” which introduced an earlier Guardian article on the topic.  Long before the supermarket bread war kicked off last weekend.  Lex’s article makes interesting reading – as does the longer version of the Ruskin quote.

It is an interesting social dilemma that is being played out.  Supermarkets compete for market share on the basis of product/price specials. Nothing wrong with that.  Consumers have come to expect ‘hot deals’ every week.  And they’d better be good or they vote with their feet.  Should suppliers contribute to supermarkets lowering their retail prices to attract more shoppers through their door? I don’t see why not, as long as the consultation process is alive and well, suppliers are not expected to produce loss leaders on a scale that threatens the viability of their overall business and when accompanied with a ‘give and take’ attitude.

These bread wars are not the last product/price action we have seen.  The game is changing. Online shopping is gaining favour with consumers globally.  Brick and mortar investments into new stores are getting harder to justify and being caught in the middle is not a pleasant experience any longer.  Tesco is the perfect example right now.

You Know The World Is Upside Down When (II)

cabbage

Cabbages claim first prize in a Verbosity challenge, involving some pretty important documents on mankind’s radar.

This little comparison is currently making the rounds.

Not sure where it originated. Inevitably, one of our team members, Helga, picked up on it on account of cabbage getting a mention in dispatches. 

Pythagoras’ Theorem: …………………………24 words
Lord’s Prayer: ………………………………………… 66 words
Archimedes’ Principle: ……………………………..67 words
Ten Commandments: ……………………………………179 words
Gettysburg Address: ……………………………………………….286 words
US Declaration of Independence: ………………………….1,300 words
US Constitution with all 27 Amendments: …………………………7,818 words
EU Regulations on the Sale of CABBAGES: ………………..26,911 words

I haven’t been able to lay my hands on the EU cabbage document yet but you might want to start looking for it yourself here, at the entry portal for EU Fruit & Vegetable Standards.

The Role of Government

Coat of Arms

2014 is election year in New Zealand. These events come around too often for my liking here anyway – every three years. The first year is wasted deciding who is going to govern with whom as under the MMP system it is highly unlikely that one party is able to govern alone. Understanding where the dirt the prospective coalition partners’ ‘sensitive’ areas also takes time. In the second year  election policies get rammed guided through Parliament and the third year is spent scheming planning re-election for another term. Surely there must be a better system.

This year’s campaign got kicked off early. Prime Minister John Key and his campaign manager Barack Obama met on a golf course in Hawaii, as one does, to set the scene. Go figure. Because the electoral system sucks is not as balanced as it ought to be given the diversity of the nation,we end up in a real mess every thirty years or so. The last major occurrence came after the 1984 election which saw Rob Muldoon evicted defeated and David Lange elected. Our foreign exchange reserves were so low that the country just about went bankrupt.  And then the restructuring started… The acronym SMP got replaced with a new one; SOE.  The civil service was slimmed down, Roger Douglas was in full flight changing the tax regime and Fay Richwhite made enough dough earned sufficiently from the sale of NZ Rail to the State Railway of Wisconsin, to afford comfortable retirement in Switzerland and on Great Mercury Island.

Let’s stick with SMP.  Have you looked it up yet?  Yes, there is that dirty word….subsidies…and successive New Zealand governments have done their darndest to ensure that our producers were lily white at all times since the mid eighties to ensure we were competing on a ‘user pays’ basis on world markets. Pity that many of our trading partners did not follow suit straight away…and in some cases not for thirty years….

The New Zealand Herald recently ran an article entitled “Reform in wind for farmers”. The topic of discussion was the farm subsidy system Japanese micro farmers have enjoyed until now. I hasten to add that the NZ Herald did, of course, not research and write that article itself – the story had been run by Bloomberg in mid December. It is certainly an interesting read. How about this for starters?

“Takashi Nakajima earns $120,000 a year growing lettuces, employs Chinese labourers to harvest them and has four months off in winter to indulge his passion for speed skating. He’s the result of a protected farming system that Japanese prime minister Shinzo Abe is about to dismantle.”

Naturally, Nakajima is fuming less than impressed.

“I don’t trust the Government at all. They want to streamline Japan’s farming business. Small farmers won’t be able to survive and the community will die.”

When the New Zealand Government removed SMP payments in the mid eighties, they killed off discontinued the MAF Advisory Service for good measure. This service was staffed by very skilled horticulturists and applied scientists who formed the link between the universities and research institutes and growers, to ensure that new advances in science found their practical application. The service was free. Ever since then, ‘user pays’ rules.  How many small farmers do we have left?  We are down to about 120 potato growers, for example, compared to several hundred a decade ago. Not sure about lettuce growers. And our rural communities? Those who have survived sure do not have an easy time.

The article is one of the better ones I have read, as it not only looks at the situation today, but also takes a historic perspective, citing land reforms instituted by Douglas MacArthur after World War II, when he broke up the Japanese feudal landlord based system where land ownership was the privilege of few and most farmers were tenants on the land they farmed. I guess that is where the American concept of bringing US style democracy to conquered nations originates and someone now needs to clean up the mess. And not stopping there, this piece of excellent journalism then touches on retailers taking charge of their upstream supply chain by purchasing farms, academics uttering stern warnings about cheap imports from abroad, food self-sufficiency in terms of calories ratios, crop substitution and the definition freshness.

The second to last ‘word’ belongs to lettuce grower Nakajima…

“Our lettuce is good and when it comes to freshness, foreign products won’t be able to match us. But I sometimes wonder whether people see the difference.”

Well spoken for a lettuce grower and part-time speed skater and welcome to the “what constitutes freshness?” debate.

So – what is the role of Government – in New Zealand, in Japan or elsewhere? And what should Government’s relationship with the agricultural sector be?

Bloomberg is quoting Japanese Prime Minister Abe as saying , “Agriculture is the most difficult sector to reform”. How much reform is needed though? Are farmers business people? They sure are and if they are not, they need to become so quick smartly. But surely food production ought to maintain a link with the place where the people live, even if some of our food can be easily exported or imported these days. And equally as surely, food production and land are inextricably intertwined.

Even greenhouses and factory farms do not float on air!

TESCO: Two Thirds Of Produce Grown For Bagged Salads Is Wasted

_70610491_foodwaste_editNot my kind of headline but straight from The Guardian no less! It appears that Tesco went and monitored 25 of its top sellers as they moved through the supply chain and merged the data with another set available from WRAP – the Waste and Resources Action Programme – to come up with the findings reported. WRAP is focused on “minimising resource use and diverting priority material from landfills.” Not the most obvious research partner for a corporate retail giant in days gone past, but “times are a-changing”. To put this into perspective, the six months tally for wasted food in the company’s stores and distribution centres comes to a whopping 26,85o tonnes. The average British family wastes an estimated £700 per year according to the same study.  I hasten to add, this waste is spread across the entire food category and does not just involve produce.  The information is staggering, nevertheless, and highlights the fact that all the modern systems in the world can’t distract from the fact that mankind in general and the food trade in particular wastes a shocking amount of food every day, just by pulling supply from producers to the consumer and not getting the process as right as we ought to by now. We will never be able to eliminate all waste, that view is just naive. But we can surely do better than this!