Do you want to change the world?
DO YOU WANT TO CHANGE THE WORLD?
I was surprised to find out at the NY produce show that I have many millennial followers, and this is a shout out to them. We have much in common, we both want to change the world and change many things for the better.
The first thing you need to do facilitate change is to find out what needs to be change. A good start is when you hear “we always do it that way”. Learn to question all practices because we once though the world was flat. I need you to change how retailers buy and sell produce and I promise you the downstream events can keep farmers sustainable, make food healthier for you and your family and in the process help the environment as well. I will lay it all out here, unfortunately I will have to throw some bricks before I build my case.
The following statements do not apply to all large retailers, some do it right and no independents, they all get it right.
No matter what you hear in the advertisements, most Large retailers only care about a few things, the rest is all feel good stuff to make you feel better about buying and to coerce you into buying more. What they care about most is the lowest price and the highest profit ( which is between 40%-600%), which by the way is an acceptable business model for most industries but I will argue it is not in anyone’s best interest when it comes to produce and this my dear millennials is what needs to be changed. We start with the farmers. Check out the USDA report which tracks what the farm is paid and what it's sold at retail across the country.
Farmers, air and water are 3 commodities we can’t live without. Farmers get up early, work hard all day, go to sleep late at night to produce all of our wonderful fruits and vegetables. They put all their investments into the ground, take care of those plants like you take care of your children, or cat or dog if no kids. J. They then become a recipient or a victim of good weather or bad. Hopefully, the harvest will be good, but for many crops it does not come all at once, it has its natural highs and lows of production based on the season’s weather and other factors. Now the farmers sell his crop. What many large retailers want is a fixed price for that crops season. The farmer may also like that as long as the prices is above production cost. Keep in mind the price is set before all of the growing seasons variables are known and ultimately the size of the harvest. Can you see the problem here?
Let’s use a real-life scenario. That happened today. All of the major chains are on contract with Super select cucumbers, generally in the $12-$14 range FOB. Today the market is $20 -$26 FOB.
First, this has been a very bad year for growing many commodities, hopefully you have been following me and know all the reasons, so cucumbers are short. The farmers have to fill contracts at the $12 to $14 and they don’t have enough to cover the contracts, when they could have sold for the market at higher prices to make up the shortfall in lower production at a higher cost. The large retail chains can’t get all of their contracted cukes, so they have to look elsewhere, and pay many dollars over the contracted price, if they could find them, everyone is a loser. FYI all of you that don’t use me, your suppliers called me to cover your cucumber orders. On the other side let’s say there is a glut of cucumbers and the FOB is $8. The farmers need to sell more than is contracted but the reality is that many times the retailers take less of the contract volume. Again, everyone loses. Why? First $8 is a lot less than $12 but a lot more than $0 if the cukes go unsold. I would also argue the chains lose out to the competition with lower prices on cukes and the farmer loses orders when he needs them the most. Farmers, retailers and consumers will be better served if produce was sold with its natural ebb and flows. For example, when cukes are short and prices are high the retail reflects that market and conversely when the markets drop by 2/3 that retail is also reflected, which should increase volume and sales. The real change will come when retailers relearn how to sell fresh produce in accordance with supply and demand, which will require a paradigm shift and where my millennial hero’s come into play. Real sustainability for farms is to be able to sell their whole crop. Produce business is an end of season average business and farms are no different. If farmers are profitable, they put their profits into the farm. Farmers armed with new technology are improving yields and quality while continuing to reduce cost. Retailers need to be a partner in the process of moving the farm produce to consumers in a way that takes advantage of these bigger yields and reduced cost and pass them on to consumers to create more demand. My theory, which has worked in the past and is still working everyday with sharp produce people is that all profit from farmer to consumer and including the retailer. I hope these profits, with your help move us towards holistically regenerative farmers and land managers, in the future. I believe this may be our only way forward as we are depleting our soil but my money is on our farmers in getting us fixed and providing us with delicious and nutritious food well into the future and with this practice if adopted it is much better for the environment. Imagine affordable, sustainable organic produce for the masses while helping the environment Sounds like a great plan and I need your help to get it implemented? Yes, I know it’s a big dream, but you must dream big to move forward, you have been recruited. Let’s get to work.
For more info please read my produce manifesto which will be updated soon.