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PBH spearheading national promotion program for fruits and vegetables

by Tim Linden | April 05, 2009
A national fruit and vegetable promotion program that would utilize mandatory industry assessments is being explored by industry leaders with the Produce for Better Health Foundation taking the lead role.

The concept was scheduled to be presented to the full PBH board on the afternoon of Friday, April 3, but prior to that meeting, PBH President Elizabeth Pivonka shared it with some industry leaders, and The Produce News.

According to Ms. Pivonka, while the idea is only in the beginning stages, much work has gone into the notion, and a framework has emerged. As currently offered, the proposal would assess the first handler of all forms of fruits and vegetables marketed in the United States at a rate of a little less than 0.005 percent, which would raise about $30 million annually.

For example, a first handler doing $50 million in business, measured at net f.o.b., would pay about $23,000 annually.

In addition, the program would be designed with the expectation that some federal funds could be accessed. Ms. Pivonka said that there have been indications that if the produce industry contributed significant dollars of its own, it could make a good case for some type of matching funds program from the federal government as exists with the export-oriented Market Access Program.

Ms. Pivonka and the foundation have developed a presentation that outlines the work currently done on the project, but the PBH executive readily admits that the plan could go through major reiterations as it is analyzed and more input is received.

If the industry shows enthusiasm for the effort over the next six months, PBH is prepared to present a proposal to the U.S. Department of Agriculture, which will then write a proposal, publish it in the Federal Register, accept comments and come up with a final proposal before eventually holding a referendum to gauge industry support. In the PBH presentation, a program would begin in 2012.

Ms. Pivonka said that the concept of a national promotion program for fruits and vegetables has been bounced around for years, but it has not advanced because of hurdles too great to overcome. Perhaps the biggest hurdle was eliminated in 2005 when the U.S. Supreme Court ruled in a case involving the beef industry that mandatory assessments for generic advertising were not a free speech violation.

"That meant a program could be developed without worrying about a lawsuit," Ms. Pivonka said.

Another important hurdle was cleared with the passage of the Commodity Promotion Research & Information Act of 1996 that streamlined the effort needed to authorize a program. Prior to that, any new program would literally need an act of Congress for enactment.

Soon after the Supreme Court decision, Ms. Pivonka said that a conversation with Bob Keeney, deputy administrator of fruit and vegetable programs for the USDA's Agricultural Marketing Service, who has long and deep ties with the fresh produce industry, led to the beginning of the process that developed the current proposal.

The PBH executive committee discussed the idea and agreed with Mr. Keeney's assessment that for such a program to be accepted, it would need a broad-based group like PBH to lead the effort.

The PBH executive committee formed a task force that consisted of Dan Duda of Duda Farm Fresh Foods Inc. in Oviedo, FL; Kevin Moffitt of the Pear Bureau Northwest in Milwaukie, OR; Kathleen Nave of the California Table Grape Commission in Fresno, CA; Paul Palmby of Seneca Foods Corp. in Marion, NY; Roger Pepperl of Stemilt Growers Inc. in Wenatchee, WA; William Watson of the National Mango Board in Orlando, FL; and three USDA advisers: Mr. Keeney, Sonia Jimenez and Enrique Ospina.

Ms. Pivonka said that the group met numerous times throughout 2008 to discuss the concept and work through some of the natural impediments to establishing such a program. It presented its work to the PBH executive committee in February, which agreed to move forward with the project by presenting it to the full PBH board and to other industry groups over the next six months.

Of key concern to the task force was how and who to assess to make it both equitable and manageable.

Ms. Pivonka said that because the program intends to include imported produce and exclude exported produce, it was important to develop a system that would take that into account. That basically ruled out assessing at the producer level, since it would be difficult to collect on imports and just as hard to exclude exports. Assessing imports would have to be done no sooner than the first handler within the United States. Hence, that became a workable model for all assessments.

Ms. Pivonka said that there was discussion of assessing at retail and foodservice outlets, but the sheer number of them would make that unmanageable. Assessing first handlers, on the other hand, is very manageable since they are typically going to be a shipper, processor or importer.

Mr. Pepperl, who is marketing director for Stemilt Growers, said that moving the consumption needle on fruits and vegetables is vital. He said that something has to be done, and he believes a national promotion program is a viable option.

Mr. Pepperl agreed that it would take a great deal of industry agreement and commitment, but he said that the task force did more than just float an idea. "To get industry support, we knew we had to do more than just come with an idea, so we came up with a workable solution."

While there is certainly room for the plan to be tweaked and altered as other stakeholders examine it, Mr. Pepperl also clearly believes that the task force proposal presents a clear path to increased consumption and a recipe to get there. He said that a very important element to establishing some type of self-funded national program is the ability of the produce industry to access additional federal funds.

How to assess product also required much thought. The presentation makes the case for assessing by market value, which allows dollars in the program to fluctuate based on market conditions. During a low market, the assessment would be less, but a high market would result in more funds. Per-package or per-pound assessments were deemed inequitable because items using those markers cannot be compared.

For the presentation's sake, the committee figured a budget of $30 million. Ms. Pivonka said that the number did not just come out of thin air, but rather the task force studied a fruit and vegetable promotion program carried out in western Australia. That program has raised consumption of fresh fruits and vegetables by 19 percent in a three-year period.

"We asked advertising experts how much it would cost to duplicate that program in the United States," she said. "They told us we could do it for $52 million."

So the task force looked at what might be a reasonable contribution from the federal government. At a dollar-for-dollar matching program, $30 million in industry assessments would produce $60 million. At a two-for-one rate that same $30 million would equal $45 million.

Ms. Pivonka said that $30 million is close to the minimum that would be needed to truly launch an effective program that could change consumption habits in a fairly quick fashion.

PBH Chairman Mark Munger, who is vice president of marketing for Andrew & Williamson Sales Corp. in San Diego, CA, characterized the effort "as looking toward the future" to determine how the industry as a whole "cannot only get brand recognition but move the mark" on fruit and vegetable consumption. He said that the foundation has accomplished a great deal over the last two decades with a limited budget.

"I am confident that with $30 million, a national program would be very [effective]," he said.

"It all depends on how quickly you want to have an impact," Ms. Pivonka said. "USDA tells us that fruit and vegetable consumption in the United States has increased 19 percent over 30 years. Western Australia achieved the same increase in three years."

Although the report indicates that the committee did do a credible job working through some of the major barriers, there will no doubt be much more debate on all of these details over the next several years if this effort continues to move forward.

Ms. Pivonka said that topping the agenda over the next six months will be the effort to determine if the proposal should be presented to the USDA. By the time of the April 3 PBH board meeting, she had met with numerous individuals, commodity groups and associations to assess their interest.

"The board asked me to score the reactions, and I have been doing that," she said. "On a scale of zero to 10, 10 being most favorable, we are collectively at about a six. I have had one zero and a couple of threes, a 10 and some nines, but most of the people have been right around a six."

Mr. Munger was quick to point out that this program will be separate from PBH and may very well affect the makeup of that program. "This is not a self- serving effort but one to help the entire industry increase consumption of fruits and vegetables."

Mr. Munger said that the work of the PBH task force is only a first step. But he said it also represents a lot of hard work, and the fact that this idea is being put in front of the industry means it has "passed the first litmus test. The task force members were picked because we knew they would examine this idea with lots of critical thinking."