Tag: growers

Supermarkets, Growers & Food Prices.

munichmerch1One of the more intelligent articles I have come across in recent years on the topic of supplier relationships in the perishable food area can be found in the Guardian.  Here is a poignant part of  the article’s last paragraph which should have some resonance in our part of the world too.

“…farmers need to be paid enough to invest in our agricultural base. We actually need to pay a little more for our food now to avoid paying much more later. A price war might be good for consumers in the short term. It might offer some sort of relief. In the long term, however, we would all be much the poorer.”

I wholeheartedly agree with this sentiment but would even be more specific. Growers and farmers need to receive sufficient enough a price for the food they produce to provide them with a reasonable income as well as a return on their investment.

The background to the article is the market share loss being experienced by the UK’s main stream supermarkets at present, with the writer analysing the predictable price cutting strategies being implemented from the perspective of their potential impact on Britain’s self-sufficiency in food production.   A very worthwhile read.

Horticulture New Zealand – Evolving or Revolting?

hortnz logoThere seem to be some changes afoot at Horticulture New Zealand. Some quite obvious, some not quite so. Andrew Fenton, the organisation’s inaugural president has hung up his shingle as far as that office is concerned, although he is continuing on the Board. Andrew had a good run and worked hard at moulding those two fairly disparate bodies VegFed and FruitFed into one homogenous organisation. Opinion is divided in terms of how successful he was in that. My opinion, for one, is this: Andrew provided solid leadership to Horticulture New Zealand. And leaders are not there to be liked, they are there to be respected. His presidency had to cope with the potato psyllid, kiwifruit PSA, a blurring of lines of how to define a grower, a whole bunch of other issues and a Government which firmly believes that grower pockets are deep enough to pay for part of the country’s Biosecurity incursion response costs. So yes, Andrew was a successful president.

Andrew’s successor, Julian Raine, is a Mainlander, as is the Vice President, one Brian Gargiulo, this well known Banana grower from Christchurch. – At least this is how Brian referred to himself at the speaker’s podium recently.  A remarkable transformation from growing little round green fruit that ought to be red to longish bent green fruit that turn yellow if you know your stuff, but I am digressing. -

Julian is also a kiwifruit grower. He does not just grow kiwifruit, he is also into apples, boysenberries and blackcurrants – but kiwifruit are part of his diversified portfolio. My point being? Well, no one should be surprised about the fact that a kiwifruit grower follows a kiwifruit grower in the presidency of Horticulture New Zealand and if you believe its a coincidence, you probably still believe in Father Christmas and the Tooth Fairy.

I am not complaining and I am sure Julian will also be a worthy leader of Horticulture New Zealand. We just need to understand that with the weighting kiwifruit has in our fresh produce export portfolio, a kiwifruit grower as President is more or less a foregone conclusion, like it or not. What will Julian’s challenges be then? There will be plenty I reckon. Some have been around since Adam was a cowboy, others are raising their head now.kiwifruit payments

I picked up this booklet on ZESPRI  2013 Grower Payments up at the conference and Julian, being a kiwifruit grower himself, will obviously be familiar with the content. The booklet is very well laid out, easy to follow and anyone who reads it  is left in no doubt that the kiwifruit sector is, despite PSA, well organised and displaying all the hallmarks of a well organised industry, where growers know where they stand, how their payments are structured and how excellence is awarded. If one compares this with a broccoli grower supplying local supermarkets at the other end of the scale, one gains an appreciation how diverse the produce industry is and that growers face rafts of differing issues, depending on what they grow, how they are organised and whom they supply.

One of the recent HortNZ weekly e-mail newsletter updates announced the formation of a “working group to look at the organisation’s structure and Board election processes. The group will develop a discussion paper including a description of the status quo and various options for change to enable wider industry discussion.” That announcement relates to the recently published Future Focus report. Two of the fundamental pillars of that report clearly do not sit well with all growers, particularly some of the the larger growers who are very focused on their specific crops and consequently have put a lot of energy into building robust product groups affiliated to Horticulture New Zealand.

A Motion was therefore put to the Horticulture New Zealand AGM in July 2013, Motion 6, entitled PRODUCT GROUPS NOT GROWERS AS MEMBERS OF HORTNZ  which wanted to see individual growers to be funneled into product group membership and product groups being the only Horticulure New Zealand members. The order paper containing all motions is noteworthy for three aspect in relation to Motion 6. Firstly, Motion 6 is the only motion on the Order Paper that starts with a legal opinion – a sign that this is a meaty issue indeed. Secondly, the Explanatory Note accompanying the motion states that only 28% of growers voted in the 2012 Commodity Levy Referendum, suggesting that Horticulture New Zealand “remains disengaged…with approximately 4,000 growers.” If that is correct, then we are seeing an accelerated rationalisation process taking place within the industry.  A successful levy referendum needed to be supported by more than 50% of voting growers and more than 50% of associated production volume. Growers seems to be be further reducing in numbers and the remaining ones are getting bigger and are diversifying into other supply chain functions. Thirdly, this motion can only be seen as a direct challenge to the existing structure and task allocation of the grower bodies, with product groups lining up on one side of the fence and Hort NZ on the other.  Not a pretty sight if it gets ugly.

One of the signs that “ugly” is not too harsh a term to use, played itself out in the Tomato Sector Conference held in conjunction with the main Horticulture New Zealand event. Arriving midway during the morning session, I promptly realised that I had walked into a stoush between growers and the independent sector chair. It seems that the product groups chairs at a meeting earlier in the year decided to place a cap on operating grant applications accepted from local grower associations. Given that it is grassroots growers at local level and regardless of size who are paying the levies to both Hort NZ and their respective product groups, a fair head of indignant steam was being vented by amongst others, the aforementioned Canterbury banana grower.

And do you know what? They have a point. With growers providing the money in the first place, it is a little hard to swallow for them that they should now be limited in funds they can apply for to run their local activities. With any organsiation, a healthy grassroots structure is the critical platform to achieve critcial mass, whether you are a member organisation, a supermarket chain with local branches or a political party with local MPs. What we seem to have here is a national body under attack from product groups wanting to pursue their own agendas; more product groups appointing independent chairs, wishing to inject heightened levels of objectivity, skills sets and professionalism into their performance; and, growers funding both bodies but with reducing ability to pay for their local industry association activities unless they want to dip their hands into their wallets a third time.

Is it a surprise therefore that growers are disgruntled? No! And what’s more – all the above discussed lines of thought are very plausible when assessed in isolation – unfortunately, we are living in the age of global connectivity and isolationism is no longer good enough. Does this need to be sorted? Absolutely? When? Yesterday! Why? Because the common ‘enemy’ is ‘out there’, not amongst us!

And before any grower reader of this column starts wondering why a non-grower like me is getting interested in how Horticulture New Zealand and the issues it faces will evolve, I suggest you head for the this page of the Hort NZ site.  Julian, I wish you well.

Bananas from the Bay of Plenty?

I think not!

locavore

Grab One is a New Zealand website focused on daily deals and aimed at stimulating targeted consumption.  Nothing wrong with that.  Today, one of the deals popping up in my electronic in-tray is an offer to buy a fruit box, door to door delivery, supplied by Kiwi Growers Direct.

So far so good.

The offer is quite specific…”Tuck into a wide variety of freshly picked fruit including apples, lemons, mandarins, kiwifruit and persimmons.”

Can’t be clearer than that…and the merchant claims to be a collective of growers, 100% kiwi owned…and for my convenience, a link to the organisation’s website has also been provided.  Here it is…Kiwi Growers Direct

Naturally, I go for a look….and immediately end up with an authenticity/credibility problem…

The composite picture shown on the website includes bananas, table grapes, pears and melons, none of which are grown in the Bay of Plenty….as well as tomatoes, artichokes and egg plants, product I can’t order from the supplier.

Guys, a good initiative, but you ought to get your marketing story straight.  I ‘shop’ with all my senses…

Food Prices, Food Prices

There has a lot of talk in the media recently, and in homes too I’m sure, about the escalating food prices and the price of fresh produce in particular.

Here are just two of the recent articles, one from the NZ Herald and one from the Business Desk of One News.  In essence, fresh produce gets the blame for the increase in the weekly shop, and we can’t have high fresh fruit and vegetable prices now, can we?  Apparently fresh produce, along with potable water and petrol, are a basic human right and shouldn’t be expensive… especially in this time of rising obesity and the associated spiraling health costs.

What a burden to place upon the humble tomato and broccoli!

The thing is, and I think the media has missed the point again, there is nothing more natural than the cycle of bud, blossom, fruit, harvest.  When it is ready – eat it.  It is an irrefutable law of nature; there are some things we humans can not alter – try though we might.

But it is the 21st Century! We can have anything, anytime!

Well, yes – yes you can.  If you are prepared to pay for it.

When you buy your fresh produce item out of its season, then you are paying a premium for the logistics required to make it available to you.  The flip side of that statement is this: your local grower, being part of this 21st Century global market, will send his produce off shore if he knows he’ll make a better return on it.

Which brings us to that other law: the one about price being driven by supply and demand.

Fresh produce is particularly sensitive to this law.  For example: in season, with a good volume crop, strawberry prices quite naturally will be around the $2 to $3/punnet level.  And that volume crop will sell – there’s a demand because Kiwis love their strawberries, especially at Christmas.  But if the volume available is reduced thanks to bad weather, the price will rise and the market will bear it because the demand is there.  To a point.  As we have seen from the media, fresh produce prices aren’t “allowed” to be too high.  But as I’ve said before – why shouldn’t the grower get a return for his efforts?  Every other business owner is in the business of making a profit, why is the grower excluded from that basic business tenet?

Whilst this article from The Guardian has some good points, it still assumes that people have access/ time/ skills to do the things it suggests.  Where does that leave the high-density urban dweller?

Back at the supermarket, wondering why she can’t buy local tomatoes at a decent price anymore…

 

The Role of Fruit & Veg in Society

I have discussed fresh produce pricing on a number of occasions – as those who visit here regularly will have noticed.

Well, I had an epiphany last week.  I think I have the answer to the problem of fresh produce pricing…

I was listening to the segment on National Radio where they rattle through the headlines from the New Zealand newspapers around the regions and one headline caught my ear – enough to make me look up the news item in question from the Dominion Post.

So, what are the issues again?

People need to eat fresh fruit and veg.  But the price of fresh produce is too high for people afford, so their health is at risk.

Growers need to make a living from growing and supplying fresh produce.  But the price of fresh produce is too low for them to do that, so their livelihood (and our food supply) is at risk.

“Somebody” isn’t prepared to pay growers a high enough price for their produce and that “somebody” is being driven by the behaviour of the consumer.

So who is driving this consumer behaviour?  The influences are many and varied, ranging from the mother-in-law, the school, the mommy bloggers, the kids, nutritionists in the media, and so on…

I’m going to stick my neck out here:

the glass ceiling for fresh produce prices exists because people like nutritionists persist with pushing the idea that fruit & veg should be cheap!

Here’s my answer, then.

What needs to happen is that the fresh produce industry takes the nutritionists in hand and makes them understand the commercial realities of growing fruit & vegetables, so that the nutritionists’ ability to influence can be harnessed better to correctly position produce on the consumers’ plate.