TAMPA -- The conflicting forces of consolidation and globalization have created a new landscape for the produce industry. In the process, these two entities -- one squeezing, the other promoting growth -- are compelling the entire supply chain to develop closer business relationships, from grower/shipper to retailer.
This new dynamic will be the focus of the annual convention of the United Fresh Fruit and Vegetable Association, to convene here March 17.
"We really don't have the opportunity much longer to operate strictly as a horizontal in the distribution chain," said Tom Stenzel, United's president. "You have to be much more involved in your partner's business, whether you're going forward or back in the supply channel. We're seeing that in the relationship between retailers and produce suppliers on just about every issue."
Indeed, everything from packaging to food safety has come up for discussion during the past two years, and resolving these issues has served as important milestones in marking the evolution of buyer-seller relations. Some topics have been easier to address than others, according to Stenzel. Others remain sticking points.
"It's always something touchy to address, but the use of marketing money, slotting fees, promotional fees -- it's just one more of the topics that needs partnering. You've really got to hear both sides of that equation talk about how they can best serve the consumer," he said.
The theme of this year's show, "Explore the Universe of Opportunity," seeks to demonstrate how the present challenges can help advance the industry as a whole to benefit the ultimate end user: the customer.
"We're doing a lot better in some key areas, but lagging in others," noted Stenzel. "It's hard to do anything that's going to bring every group to the table, right away. And, that's part of the challenge that we face [as a trade organization]."
Significant progress has been made in the areas of food-safety audits and produce packaging. Two years ago, both issues were key points of contention between suppliers and retailers. According to Stenzel, trade organizations like Alexandria, Va.-based United, as well as the Produce Marketing Association, Newark, Del., and the Food Marketing Institute, Washington, have increasingly taken on the role of moderator in getting participants in the distribution channel to negotiate a middle ground in the new field. Third-party audits, a retailer-initiated mandate, initially caused concern among grower/shippers because they feared they would have to maintain numerous standards for individual retailers. A committee to examine a single industrywide standard was formed, and within a year, reported general agreement among suppliers and retailers on major food-safety points.
"This food-safety group we put together really cut through a lot of the organizations by dealing specifically with the retailers and the suppliers. And I think that was very effective," said Stenzel.
United 2001 includes -- for the first time -- a workshop, co-sponsored by United and the Food and Drug Administration, on Monday, March 19, devoted to food safety as it applies to traceback investigations. Third-party audits are one component of the overall strategy to prevent such events from occurring in the first place, Stenzel noted.
"Whenever you have an outbreak of foodborne disease, the FDA starts investigating how the person got sick and where the food came from," he said. "Produce is still pretty tough to track, because it's not always in the same carton."
According to Jeffrey Oberman, United's vice president, trade relations, the how-to, interactive workshop will demonstrate key points of facilitating such an investigation. The all-day affair will cover application of Good Agricultural Practices and Good Manufacturing Practices; identification and assessment of potential food-safety hazards; and a review of the FDA's domestic and imported fresh produce 1,000-sample surveys.
"There will be speakers from the FDA and a tour of the trade show exhibition area, where we take the workshop out onto the floor to look at the actual solutions, and meet with companies that are performing third-party audits," he said.
Progress is also being reported by a joint industry task force on produce packaging, primarily corrugated cardboard and returnable plastic containers. The 24-member panel's efforts are being enhanced with a shared database of opinion and information accessible by computer. The group includes a single representative each from the RPC and fiberboard segments, as well as an even number of retailers, grower/shippers, food-service operators, wholesalers and brokers.
Select committee members will be part of Sunday's general session, and will update attendees on the committee progress, according to Stenzel. The discussion will be followed up with a two-hour workshop.
"I would encourage retailers to attend the sessions," he added. "If a retailer and a supplier are talking about whether to use RPCs or corrugated, or a standardized footprint, they can walk the show floor together and actually look at different exhibits with different packaging types."
While highlighting progress in the areas of audits and packaging, the very industry forces driving change in the produce category have yet to play out on other important matters that require close cooperation among supply-chain players. For example, the whole realm of business-to-business e-commerce is still very fluid.
"We're now in that mode where different retailers are selecting different platforms to use and basically saying to their suppliers, 'You must use this one,"' said Stenzel, noting that grower/shippers are balking at the idea of paying multiple transaction fees levied by the Internet providers.
"But, I think it's not unlike the other issues, that once people start talking about it, we're going to find common ground," he said. "We don't want to see e-commerce become an extra cost of business, but a way to reduce the cost of business."
Some of the larger grower/shippers have countered the retail-mandated use of select transaction platforms by forming their own alliances designed to eliminate third-party transaction fees and related integration costs. One of the largest and most recent to announce their intentions is ProduceSupply.org, made up of 10 leading produce suppliers. The "seller-direct" platform includes: Calavo Growers of California; Chiquita Fresh North America; David Oppenheimer Group; DNE World Fruit Sales; Dovex Marketing Co., LLC; Driscoll's Strawberry Associates; Grimmway Farms; L&M Cos.; Nonpareil Corp.; and Tanimura & Antle.
"It's a response to multiple requests or demands from multiple retailers that would add costs to the business," said Stenzel of such supplier initiatives.
He added that trade organizations may again be in a position to foster discussions that can provide some mechanism to reduce costs, regardless of who uses what service.
