ThANKSGIVING APPETIZER,FOOD FOR THOUGHT.
Updated: Nov 20, 2018
Good morning and Happy Thanksgiving. With the holiday on Thursday and me traveling to see my family I am posting this a few days early this week. Enjoy your Thanksgiving meal and my food for thought.
We all have something to be thankful. In my life I have a rule concentrate on what you have not what you don’t, and you will be thankful. Most people would love more money, think of someone with no money, A home or a bigger home, think of someone living on the street or in a box, A nicer car, think of the people who have to walk miles just to get clean water. We are very fortunate and have more than most. What is your Thanksgiving wish? Mine is I wish I had 1 less X-Wife. LOL
BE GRATEFUL, BE THANKFUL, GOD BLESS YOU, GOD BLESS OUR VETERANS, GOD BLESS THE USA.
IN THE NEWS
The Mexican suspension agreement will continue. https://www.linkedin.com/feed/update/urn:li:activity:6468830687465127936
I am not a fan of the suspension agreement and in fact I b believe it is unfair to Mexico. Now before you sling arrows let me tell you, I am a veteran, I bleed red, white and blue, I believe in America first. A little background for those not familiar with the suspension agreement. The suspension agreement sets a floor price, which means they can’t be sold for less than that floor price. The assumption from mostly Florida growers were dumping product into the USA at below cost . FYI Mexico is the only country that had the suspension agreement imposed on them.
Now for some history. I will use roma tomatoes because it is the tomato commodity I understand fully. Up until about 15 years ago the preferred roma tomato was from Florida. While Florida growers rested on their laurels Mexican growers invested, improved and enhanced their product to the point where Mexican Roma tomatoes became the preferred tomato. As market share increase for Mexico it decreased from Florida. Mexican growers then increased acreage to supply the demand. Now with the Florida growers losing they cried foul. The Mexican growers are dumping, Dumping is the selling of product below cost. We have recently seen this with the steel industry from China. The caveat here is produce, all produce at some time or another gets sold below production cost regardless of where it comes from, even in the USA. It is truly a supply and demand market of a perishable commodity. Too few of any item price goes up, too many price goes down and unlike manufacturing you can’t turn off the switch so the product keeps coming, hence prices below production cost because some thing is better than nothing.
Now on Roma tomatoes this time of year the Mexican tomatoes floor is $8.30 for a 25# box at shipping point but Florida can be less than the floor if the market warrants. This system has been a failure since it’s inception, WHY? First Mexican growers thought wow $8.30 a box we can make “mucho dinero” lets grow more. The one thing they forgot was they needed to sell more not only grow more so many went to the National market or Canada, which has no agreement, for much less than $8.30. Let’s be honest here many went to the USA at under $8.30 too with less than legal accounting practices. This backfired on the Florida growers because now there were more and more Mexican roma tomatoes with better quality and they had to be less money not more and they lost all of their Canadian customers.
I can argue the suspension agreement for days, but I rather provide a solution.
The produce business has and always will be a supply and demand business. Administering constraints on the natural cycles has not and will not work. You know what will work? Better product and profits. Let a grower lose money for 2,3 or 4 years in a row and you will see market factors of natural selection take over, the best and strongest will survive. I have seen this with the red pepper market this year. Many growers lost money for several years and found alternative commodities to grow where colored bels were previously grown. Until someone invents the on off switch for growing fresh produce letting markets settle where they need to be is our best solution.
RETAIL FRESH PRODUCE
IFCO Just announced they have reached $1 billion in sales. https://www.ifco.com/news/e511548f0e9a5744
CONGRATULATIONS IFCO. I would argue they destroyed the $50 billion supermarket fresh produce industry. IFCO manufactures and sells plastic reusable containers for the packing, shipping and displaying of fresh produce. Now I have no quarrels with the packing and shipping part my problem lies with the displaying. You have seen these systems in #Walmart, #Supervalue, #Aldi #HEB #target to name a few. The premise is 1 box from field to store to have a reusable carton, yes, aid in transportation, yes and maybe, cut down on labor yes, make produce more appealing, NO, cut down on waste, NO, greater retail sales, HELL NO. There is no doubt packing and shipping produce in a plastic, ventilated and reusable carton is beneficial. My problem is with that terrible rack system where most times the top box is too high for the customer to reach and empty because the product falls down to the bottom boxes usually causing bruising. The displays always look empty no eye appeal. They were sold as dummy proof solutions for the retail produce departments. “All your employee has to do is replace the empty box with a full box, so you don’t need experienced well-paid employees, just dummies. IFCO should get the Nobel prize in sales that they convinced most every chain store to buy into this system. The cost of this move can’t be calculated in my opinion. I believe what you think you saved in labor you lost in sales and shrink. Look at the pictures attached to this posting. Two are rack systems and 2 are #MPGA( Make Produce Great Again )way. Beautiful “BUY ME” displays are what rock the produce world which are not possible with box in box out mentality. Furthermore, an experienced, knowledgeable produce man will drive sales, cut shrink and make eye catching displays, If you replaced him for the IFCO system, shame on you and we now know who is the real dummy.
The produce department in a brick and mortar establishment is the most important gateway to omni channel marketing of produce. If the customer sees beautiful displays of beautiful produce, cared for by produce professionals he will come to trust you on the other levels. It bogles my mind how so many of you don’t see these things? There is much more to be successful in produce than finding the least expensive way to do things. A good rule is to keep CPA, MBA and accountants far away from produce. They may be good at calculating widgets, but they are missing the boat in produce. Sometimes more is better and remember this “You get what you pay for”, and in my opinion those rack systems are not worth 10 cents in a retail produce department.
Well we all know in the produce world the feast is followed by famine for the next 7 to 10 days. Business and demand are lethargic at best. I am a demand side practitioner. To me in the supply and demand equation demand is always the driving force. With that in mind for the next week or 2 most if not all prices will fall, some more than others but the general trend will be down, even the items that have been in short supply, tomatoes, red peppers will stall. Do not fear because in 2 weeks prices will start to rise again for the Christmas, New Year holiday pull.
RED PEPPERS We should be starting in Mexico in the next week or two and still limited volume in California. This market will come off it's highs but it will not get cheap until after the New Year.
GREEN PEPPERS - More growers are starting this market will be lower.
SUMMER SQUASH Green squash is headed lower searching for a bottom. Yellow and grey squash are more stable.
EGGPLANTS. - More volume less business, prices will be lower.
CUCUMBERS - This market steady to lower.
ROMA TOMATOES This market is short on #1 quality. Many #2 floating around so if the prices is too good to be true, it probably is and you are getting #2. I do expect this market to stall but we can have a shortage for about a month until new sections con on line.
AVOCADOS The strike is over, the pipeline is filling. I am not a fan of market manipulation. The market was cheap before the strike and based on experience the markets always go to their legitimate levels. With that in mind this market will be lower.
LIMES This market has been cheap and I see nothing on the horizon that will change.
If you need anything in produce including but not limited to advice, consultation, buying, selling, loading, business opportunities, comments good or bad. I am available. Produce is truly my passion, my hobby, my life. I am always willing to share my experience and always willing to learn from someone. I listen more than I speak. Thank you for reading have a wonderful Thanksgiving and enjoy the time with your family.