How nice it would be to have a crystal ball, to take the uncertainty out of growing, shipping, and retailing fresh fruit and vegetables. Barring such magic, there is another way to gauge the future: talk to the experts. So we asked industry veterans and subject matter experts to consider the various political, socioeconomic, and climatic factors impacting the industry and to provide their views on what 2015 might have in store for us.
We’ve divided these predictions into topic sections for your reading pleasure. For good measure, we also consulted buyers and sellers far and wide to get their opinion. For these comments, read the “Across the Industry” sidebars and let us know what you think. Dive in, agree or disagree. We’ll be returning to our prognosticators next year to see which predictions were on the money and which ones fell victim to the industry’s highly unpredictable nature.
Commodities & Innovation
When discussing commodities and innovation, the subject can range from new varieties and point-of-sale displays to packaging and social media campaigns. Anthony Totta, vice chairman at Missouri-based FreshXperts LLC, talked about packaging, predicting “a transition away from polybag, flexible-bag packaging to rigid plastic packaging that is tamper-proof and safety sealed.” Concerns over food safety and shelf life are behind this trend, and Totta believes the increased use of rigid plastic containers addresses both, as well as preventing the crushing and bruising of product.
He also sees a continued movement toward more technical, higher-efficiency growing, such as hydroponics. Given the water shortage in much of the country, Totta says, “Hydroponic greenhouses allow you to grow high production with limited water use, and even allows recycling of water.”
Hand-in-hand with indoor growing environments, Totta has seen an increased interest in using LED lighting to grow herbs, fruit, or vegetables in warehouses. High-efficiency, indoor growing environments such as hoop houses and greenhouses lend themselves well to the buy-local and sustainability movements.
Looking shorter-term at 2015, Totta predicts continued enthusiasm about what has been called the ‘Mediterranean’ diet. “It’s fuelling more interest in things like kale; demand for kale is just on fire. Some of this new type of higher-tech growing lends itself to being able to grow things like kale—to sell it fresher and produce it faster.”
Along with interest in healthier eating is an increased interest in organics. Kristen Park, Extension associate at Cornell University, believes organics demand will continue to rise in the coming year in both larger and niche markets. “You have Walmart and the extending of their organic product line, you also have the small players like Sprouts Farmers Market, which seems to be doing very well. There’s enough interest at the consumer level,” she notes, “and they’ll respond by purchasing more organic products.”
How nice it would be to have a crystal ball, to take the uncertainty out of growing, shipping, and retailing fresh fruit and vegetables. Barring such magic, there is another way to gauge the future: talk to the experts. So we asked industry veterans and subject matter experts to consider the various political, socioeconomic, and climatic factors impacting the industry and to provide their views on what 2015 might have in store for us.
We’ve divided these predictions into topic sections for your reading pleasure. For good measure, we also consulted buyers and sellers far and wide to get their opinion. For these comments, read the “Across the Industry” sidebars and let us know what you think. Dive in, agree or disagree. We’ll be returning to our prognosticators next year to see which predictions were on the money and which ones fell victim to the industry’s highly unpredictable nature.
Commodities & Innovation
When discussing commodities and innovation, the subject can range from new varieties and point-of-sale displays to packaging and social media campaigns. Anthony Totta, vice chairman at Missouri-based FreshXperts LLC, talked about packaging, predicting “a transition away from polybag, flexible-bag packaging to rigid plastic packaging that is tamper-proof and safety sealed.” Concerns over food safety and shelf life are behind this trend, and Totta believes the increased use of rigid plastic containers addresses both, as well as preventing the crushing and bruising of product.
He also sees a continued movement toward more technical, higher-efficiency growing, such as hydroponics. Given the water shortage in much of the country, Totta says, “Hydroponic greenhouses allow you to grow high production with limited water use, and even allows recycling of water.”
Hand-in-hand with indoor growing environments, Totta has seen an increased interest in using LED lighting to grow herbs, fruit, or vegetables in warehouses. High-efficiency, indoor growing environments such as hoop houses and greenhouses lend themselves well to the buy-local and sustainability movements.
Looking shorter-term at 2015, Totta predicts continued enthusiasm about what has been called the ‘Mediterranean’ diet. “It’s fuelling more interest in things like kale; demand for kale is just on fire. Some of this new type of higher-tech growing lends itself to being able to grow things like kale—to sell it fresher and produce it faster.”
Along with interest in healthier eating is an increased interest in organics. Kristen Park, Extension associate at Cornell University, believes organics demand will continue to rise in the coming year in both larger and niche markets. “You have Walmart and the extending of their organic product line, you also have the small players like Sprouts Farmers Market, which seems to be doing very well. There’s enough interest at the consumer level,” she notes, “and they’ll respond by purchasing more organic products.”
ACROSS THE INDUSTRY: Commodities & Innovation W hich new fruit or vegetable varieties or specific trends do you expect to take off in 2015?
Roger Riehm, president Blue Creek Produce
Over the last three years, a major trend in growing and selling tomatoes has been demand for organics. Stores are starting to give organics more shelf space and the increased use of greenhouses has helped ensure better quality in both appearance and taste. Pricing is also getting closer to conventional, making organic tomatoes more competitive and attractive to consumer budgets. This growth in organic tomatoes is also evident with the increase in farmers’ markets throughout the country.
Karen Caplan, president & CEO Frieda’s, Inc.
Many of our trends in packaging come from Europe, so I think we need to take a page from what’s happening in Europe and Canada right now in allowing “not perfect” produce into supermarkets. I believe the USDA and farmers alike should consider relaxing grades and standards for defects on fresh produce to allow more edible produce to move to market. Allowing misshapen, nonstandard-shaped fruits and vegetables into the market will reduce food waste and provide access to affordable food to more shoppers.
Jin Ju Wilder, director of corporate strategy Valley Fruit & Produce Company
In the recent Baum & Whiteman report, they refer to our “restless palate syndrome” and it’s a great way to describe current fruit and vegetable trends. Our customers are reacting to consumers wanting the maximum hit of flavor and nutrition found in items like beets and bitter greens or a super nutritional base they can add spicy, sweet, and sour flavors to like kohlrabi or cauliflower (what’s the next hummus?). Local is now “wild” and “foraged” on items like mushrooms and greens. And, Asian fruits and vegetables aren’t just for “fusion” cuisine anymore and can be found in more mainstream markets.
Transportation & Regulation
Kenny Lund, vice president of support operations for Los Angeles-based Allen Lund Company, says the top transportation concerns in the coming year will be hours of service, electronic logging devices, and regulations tied to the Food Safety Modernization Act (FSMA). Lund believes the 34-hour restart rule continues to affect cross-country drivers, delaying on-time deliveries.
Tara Smith-Vighetti, vice president at Smith Packing Inc. in St. Augustine, FL, agrees. “Substantial changes imposed on the trucking industry have already slowed delivery times and increased costs on produce nationwide. I expect this challenge to continue in 2015, and both buyers and shippers will need to continue to adapt.”
Hours of service restrictions are further exacerbated by the upcoming mandate for electronic loggers, which Lund feels will unfairly impact produce shippers. For trucks running behind due to any number of reasons—from traffic jams to inspections—an hour here or there can push a four-day run into a five-day delivery, with produce sitting in a truck that almost reaches its destination.
Such delays, Smith-Vighetti confirms, impact the entire supply chain from field to fork. “Restricted hours of operation have decreased truck availability,” she says, often to the extent that it is “necessary for us to notify retailers of more time needed between order and delivery.”
The recent spending bill passed by Congress in December, however, may help—as enforcement of some parts of the 34-hour restart rule will be put on hold.
Another issue concerns temperature monitoring, related to potential new shipping regulations from FSMA. The current proposal is for shippers to keep temperature monitoring information for two years. “Right now, if you put a temperature monitor on an incoming truck and they check it and everything’s fine, they throw it away,” Lund explains. The bigger question, he insists, is “who has to retain that data—the trucker, the shipper, the receiver? The technology will have to change, because you can’t use a simple recorder that’s thrown away at delivery.”
Ed Treacy, vice president of supply chain efficiencies for the Produce Marketing Association, sees the very real possibility of a shift in the trucking industry. As an industry so heavily reliant on over-the-road trucking to ship its products, he suggests some carriers may stop hauling produce altogether, as perishables “put the most onus on transportation companies.” He agrees with Lund that proposed FSMA regulations may make things even more difficult, placing “more responsibility on truckers than they currently have today.”
Water, Immigration & Food Safety The ongoing California drought is a source of frustration and concern as suppliers and legislators alike argue about ways to remedy the situation. Bob Rinker, managing partner at Bakersfield-based Fresh Link Group, LLC is fed up with what he characterizes as “bad policy and the wrong priorities” by state legislators, hampering efforts to find a workable water solution.
Rinker does see some hope in the Water Quality, Supply, and Infrastructure Improvement Act of 2014, which passed with a whopping 67 percent of the vote in November. The proposal authorizes $7.12 billion in general obligation bonds for state projects including water recycling, treatment, management, and conveyance, as well as water storage and watershed protection and restoration. “As far as being a prompt response to the water supply crisis,” Rinker asserts, “it’s going to take ten years probably, at a minimum. California water consumers, whether agricultural or domestic, really aren’t going to see any kind of immediate, positive impact on current conditions.”
When it comes to immigration, Tom Nassif, president and CEO of Irvine, CA-based Western Growers Association, predicts dire consequences if the nation’s immigration problem isn’t solved soon. As grower-shippers continue to struggle without steady labor, many are planting fewer acres, abandoning or fallowing fields, or switching to crops like wheat or alfalfa.
Others, Nassif says, “have opted to move their labor offshore where governments try to help farmers instead of impede them.” Outsourcing, however, creates its own set of worries, including what Nassif calls the ‘multiplier effect.’ If every outsourced farm job creates two to three nonfarm jobs, he explains, “you’ll also see the price of produce going sky high because of limited supply,” which will then be followed by lower-priced imports, further disrupting the market.
Nassif is well aware of immigration reform’s complexity, citing “dozens of issues to negotiate” from guest worker caps to pathways to citizenship, but insists it can be done. And there is a glimmer of hope: President Obama’s November promise to begin reform through executive action, perhaps ushering in the most dramatic immigration changes since the Reagan era.
Food safety and traceability are also constant companions to most within the industry, and Miguel Gomez, associate professor at Cornell University, believes the pressure will continue to mount as both consumers and regulators are increasingly intolerant of foodborne illnesses and recalls. Unfortunately, there is no fast fix. “I don’t think we’ll find a silver bullet,” he says, “it is a problem with many complications.”
Elliott Grant, founder and chief technology officer of Redwood City, CA-based YottaMark, agrees but is content with the progress of the Produce Traceability Initiative (PTI) so far. “We’re in the execution phase,” he notes, “which is a bit less exciting than the innovation stage. As an industrywide shift in behavior, it’s going to take time.” It was crucial, however, “to see someone like Walmart step up,” he points out, which turned traceability from an ‘if this will happen’ to a ‘when this will happen’ scenario.
In the more distant future, Grant predicts other food sectors will look to PTI as a model. “If I could put my finger on anything, it’s the leadership of the trade associations,” he says. “It was pretty chaotic until they stepped in and created industry-led committees for each of the key areas.” Although PTI is a U.S. initiative, Grant predicts it will spark a “global awakening.”
Growing & Shipping
Consumers demanding year-round availability of a wide assortment of produce is not new, at least not in high-end retailers. But Gomez finds that shoppers at all levels are expecting such access and grocers, whether chains or independents, as well as discounters, are heeding the call.
ACROSS THE INDUSTRY: Game Changers W hat one word would you choose to describe the fresh produce industry in 2015?
Douglas H. Fisher, New Jersey Secretary of Agriculture
The one word that describes the fresh produce industry in 2015 is diversification. New Jersey’s produce farmers are known for growing multiple crops. It’s said that retailers could fill all their produce-aisle needs with just a few farm stops in the Garden State. These days, it’s not just mass-produced quantities of fruits and vegetables associated with New Jersey; today, we’re likely to see growers dedicating micro portions of their operations to highly specific kinds of peppers or ethnic vegetables or fruits that a local restaurant or retailer requests. Continuing to diversify, catering to a changing palate—that’s key for 2015.
Jerry Butt, president & CEO MIXTEC Group
An apt word to describe the fresh produce industry in 2015 is sophistication. Companies are growing, our global marketplace is expanding, and new technological advancements are changing the way we operate. Consolidation and private equity firm involvement continue to be additional factors in creating larger organizations. Doing business today is more complex than ever; as a result, companies are facing these challenges utilizing higher levels of talent, outside expertise, and new professional practices from within the produce industry as well as seeking innovation externally.
Lori Taylor (aka ‘The Produce Mom’), consumer consulting manager Indianapolis Fruit Company
There is no greater word to describe the fresh produce industry right now than progressive. As world food demand increases, resources decrease, and technology evolves, everyone in the supply chain is challenged to be broadminded. Consumers are so connected and social media allows audiences to be ambassadors. It’s really inspiring to see our growers and shippers embrace the digital age. Moms want to know the story of the products we’re purchasing for our households. No industry has more culture behind the goods produced. The values of agriculture should never change: this industry is honest, wholesome, and hardworking. It’s truly heartwarming to join forces with brands as they advance their means of communication and sales tactics with today’s consumers. Progressive marketing is a gateway to our industry’s sustainable future.
In a recent study on the rising demand for broccoli, Gomez and his colleagues researched the costs and production challenges of growing outside of California and Arizona, which produce 85 to 90 percent of domestic broccoli. And although it is certainly more costly to grow broccoli on the East Coast, expenses can be offset by reduced shipping costs. “If you have the right varieties, you can start in the winter, generally in Florida, and move to Georgia, South Carolina, Virginia, and Maine in the fall—a system able to offer produce year round.”
This is backed up by Smith-Vighetti: “As an Eastern grower-shipper of broccoli, traditionally considered a Western vegetable, we have grown our business because of the value East Coast retailers find in our proximity.” This proximity can be critical in a transportation industry battling tighter hours of service and a driver shortage. “Receiving product quicker, and therefore fresher, has now become even more imperative with the challenges in the trucking industry. Organizations able to find affordable solutions and increase efficiencies under these conditions will be in high demand.”
Game Changers
A number of issues facing the industry could be considered ‘game changers’ and our experts point to transportation, regulations, and the federal budget to name a few. The midterm election proved to be a game changer itself, though few can gauge how the results will impact perishables.
Kenny Lund sees technology as a big game changer in transportation, ranging from platooning and driverless trucks to new equipment both inside and outside of the cab. Tim Rose, vice president of sales for Tom Lange Company in Dallas, TX, is excited about the capabilities of devices like the “SmartTraxx GO,” which he says can “track real-time location and temperature within the trailer, and could really reduce stolen loads, late deliveries, and temperature issues upon delivery.”
On the political front, Hunt Shipman, the Produce Marketing Association’s Washington, DC representative, is taking a wait-and-see approach to what will happen with the new Congress. “The real challenge is going to be if Republicans can achieve what they want and demonstrate their ability to govern and find issues of common agreement, so Democrats don’t feel their only option is to filibuster bills and shut down debate. It’s up to Senate Democrats to figure out if they want to be a party of ‘getting things done’ or a party of ‘doing to the Republicans what was done to them’,” he says.
Regarding the federal budget, the new Congress could affect the Farm Bill. “Republicans have always been fiscally-minded; to achieve a budget in 2015, do they embark on a path of budget reconciliation—examining mandatory programs for potential funding cuts? What does that mean for the industry?” Several of the Farm Bill’s new programs have yet to be implemented, and may be on the chopping block to reach savings targets. Programs that aren’t up and running yet are often more difficult to defend.
Concluding Thoughts
One thing everyone can agree on is that anything can change in a year. While many of these thoughts and predictions may come to pass, as long as the crystal ball continues to elude modern science, new developments and unforeseen circumstances may change the game along the way. Check back with us next year to see how our experts and pundits fared, and to get a vibe on 2016.
