Impact of China the hot topic at annual garlic industry breakfast

ATLANTA -- Sal Vacca of A.J. Trucco seemed to speak for everyone assembled at the garlic industry's Nov. 6 breakfast at the PMA Fresh Summit when he referred to Chinese garlic as "a thorn in our heart."

Others in attendance at the breakfast echoed Mr. Vacca's lament, and few expressed hope of stemming the tide of Chinese garlic imports that continue to plague U.S. grower- shippers as well as those in Mexico.

Bill Christopher of Christopher Ranch said that efforts are ongoing to try to get tariffs in place, but that rallying the federal government around the garlic industry's cause is difficult because the garlic industry is small compared with other crops.

"Having a tariff in place is great, but if you don't collect the duty," it's unproductive, Mr. Christopher said. More garlic came into the United States in 2005 than before there was a duty, he said.

A laxity at Customs continues to hurt the industry. "Customs in New York is a lot easier to get through than Los Angeles," Mr. Christopher said. The garlic industry needs cooperation from buyers, he said.

Chinese garlic is dominant in the jumbo and super jumbo sizes, Mr. Vacca said.

Several industry members said that customers hold back from buying garlic in volume because they anticipate getting cheaper prices on Chinese garlic.

John Layous of the The Garlic Co. said that it is hard to plan ahead because it is hard to know how much Chinese garlic will flood the market. It's difficult to get a handle on how much consumption of homegrown garlic the Chinese are eating, he said.

Jeff Stokes of Christopher Ranch said, "Chefs like the flavor of California garlic better."

Jack Vessey of El Centro, CA-based Vessey & Co. brought up a separate problem - that of a labor shortage. He said that getting the crop out of the ground is going to be a challenge in the Imperial Valley and Yuma, AZ, when the harvest starts around early December.

"I have a serious labor issue," Mr. Vessey said. "Next year I may not get the crop out."

Miguel Usabiaga of GAB in central Mexico said that a lot of garlic is going to Mexico, especially from Argentina. "This is the first time in a long time I'm not optimistic about the Mexican market," Mr. Usabiaga said.

Javier Usabiaga, also of GAB said that the thrust is to differentiate products within the category and to educate the customer to those distinctions. At present, lower- quality products are competing with higher-quality products, he said.

"It's harder to get into the U.S. as a tourist [from Mexico] than it is to get garlic in from China."

Clara Shih of Los Angeles-based Best Buy Produce International - which works with a lot of Chinese shippers - said that for garlic shippers in China who are unscrupulous, it's easy to manipulate the system.

Best Buy works with TransHi, which this year is the only shipper with a zero-duty rate. Unscrupulous competitors jump on the zero-duty opportunity, Ms. Shih said.

"They steal our case numbers," Ms. Shih said. "We're [Best Buy], not the garlic police." Customs sees a zero duty and just give clearance without counting cases, she said. "We [Best Buy] have legitimate reviews," Ms. Shih said. "We work closely with China - we report to Customs."

Some Chinese shippers under-report the size of their loads and thus pay less duty, she said.

Branding keeps Pink Lady in forefront of marketing

As Pink Lady America continues to build on its success as the only apple variety approved by the American Heart Association Food Certification Program, Pink Lady Marketing Director Alan Taylor said, "We're very much interested in branding this product."

The unique characteristics of the apple include a striking pink skin, complex tart-sweet flavor and the ability to maintain a white flesh longer when cut, Mr. Taylor noted, and those attributes make branding a logical move.

Commenting on the American Heart Association certification, he said that it allows "Pink Lady" brand apples to incorporate the AHA Heart-Check into Pink Lady America's "Flowing Heart" logo. Mr. Taylor also noted that the "Flowing Heart" logo, which is used internationally, was established in 1999. The organization provides all partners an opportunity to establish uniform quality and packaging guidelines and creates a worldwide network to share information and promotional materials.

Also unique to the variety is its four-apple clamshell packaging, which provides consumers with nutritional information on the apple, such as its high fiber content and that fact that it has no cholesterol.

"That's something that doesn't come together easily," Mr. Taylor said of the packaging.

In 2004, Pink Lady America began to develop market segments based on consumer age, socio-economics and geography; Mr. Taylor said it was determined that the Pink Lady appeals to an upscale consumer who is unwilling to compromise taste and quality.

In addition, Pink Lady has made inroads with fast-food giant McDonald's. Mr. Taylor said that McDonald's, which is incorporating healthier food options into its menu, has included Pink Lady and Cameo apples in its choices.

This season, Pink Lady America is forming an advisory board with a membership of grower-shippers to better flesh out the marketing strategy. Mr. Taylor said that one important component of this board effort is scientific market data analysis.

Mr. Taylor added that informal research he has conducted at trade shows has indicated that Pink Lady apples are well received. "There's an emotional attachment to Pink Lady," he commented, and women in particular gravitate to the Pink Lady at trade shows when samples are offered.

This year's holiday season will see Pink Lady America collaborate with several other entities, including the AHA, on a special children's nutritional pilot program. Running from Thanksgiving to Christmas, the initiative will be promoted, and Mr. Taylor said that if it is successful, it will be expanded.

The 2005 Pink Lady crop looks good, said Mr. Taylor, who anticipates production of 2 million boxes.

"You don't know until it's in the bin," he said, adding that yields are expected to be comparable to 2004. "We had plenty of heat to grow some good fruit."

There were challenges with spring frosts, he said, and growers continue to deal with drought conditions and are hoping for a good snowpack this winter.

COOL bumped back two years, PMA proposes voluntary solution to USDA

ATLANTA -- With President Bush's signature, which is expected shortly, the start date of mandatory country-of- origin labeling for produce will be officially extended to Sept. 30, 2008.

In the meantime, the Produce Marketing Association has undertaken an effort to propose a monitored voluntary program to the U.S. Department of Agriculture to satisfy the COOL concerns based on the established efforts of retailers such as Save Mart Supermarkets of Modesto, CA, to promote the origin of the produce on its shelves, it was related in a session, here, at the PMA annual convention.

PMA, working with the United Fresh Fruit & Vegetable Association and 11 other groups, undertook a research effort to establish the level of country-of-origin labeling already practiced at retail today. The study found that about 60 percent to 65 percent of the top 20 fruits and the top 20 vegetables are already properly labeled with country of origin. Indications such as Jersey Fresh, California Grown or Pride of New York are common in produce departments throughout the United States.

The group's proposition to USDA is for a voluntary program that will maintain a labeling-compliant level of 70 percent, according to Kathy Means, PMA's vice president of government relations. She said that 80 percent of produce has some already-accepted mechanism in place through which country-of-origin labeling can be provided such as bag closures, twist ties and PLU stickers.

The plan proposes that after two years, a resurvey be conducted to ensure the 70 percent compliance is being met. Should there be a failure to meet the required level, another resurvey would be conducted. If that were to also fail to pass muster, the industry would relent to a mandatory program.

The plan would require the full support of the industry, Ms. Means said, noting that those produce companies committed to a mandatory program have "come a long way" and made a lot of concessions and compromises. This plan, she said, would allow marketers to determine how to deliver the country-of-origin information rather than regulators, referring to the USDA. She also added that because the industry is already within 5-10 percent of the plan's required 70 percent, it should not be a difficult proposition.

At this point, however, the plan is still only a proposition.

Robert C. Keeney, deputy administrator of fruit and vegetable programs for USDA's Agricultural Marketing Service, was quite restricted in his time at the podium regarding country-of-origin labeling applied to produce as the issue is ongoing and he is not permitted to comment. However, a mandatory country-of-origin labeling program has been put into place in the seafood industry, and Mr. Keeney spoke on that program, which has many parallels to the produce industry. He said that if a bagged medley of shrimp (read: fruit) is imported, the name of each country from which contents of the bag were caught (grown) must be listed. He did say, however, "If we do [get to the point of a mandatory country-of-origin labeling program for produce], it may or may not be similar" to the one in place for seafood.

"We believe we are strong enough to really govern ourselves" through a voluntary program, Rick Smith, director of produce and floral for Save Mart Supermarkets, said from the podium. "At least 95 percent of the product in the stores, particularly the key items, is labeled. We believe that we are well on our way to making a voluntary system that we think USDA is going to be happy with."

New CCM chairman stresses unity in addressing industry issues

"Never in the history of the [California citrus] industry have we been so united," said Philip LoBue, president of LoBue Bros. Inc., a citrus packinghouse in Lindsay, CA, who was elected chairman of the board of directors of California Citrus Mutual at the organization's recent annual meeting.

Speaking at the CCM annual meeting Thursday, Nov. 3, Mr. LoBue emphasized that "the industries we face require that we continue" to be united as an industry. He also stressed the need for the California citrus industry to work together with other commodity organizations because "most of the issues we face" are also issues of concern to fruit and vegetable producers in the country.

Farmers face a "hostile" attitude from legislators who single out "agriculture as the bad guys," Mr. LoBue said. Many of the issues relate to environmental policy. Typical of the hostility of legislators toward agriculture is the attitude that "if it rains on your property, you are considered a contributor to water pollution," he said.

The battle between environmentalists and farmers with regard to water use continues. Citrus growers and other farmers in California's San Joaquin Valley are currently engaged in a legal battle to maintain their water rights. "We are working to protect [the water] from those who would squander it," he said.

Another concern is labor shortage, said Mr. LoBue, who emphasized the need for a viable guest worker program. Inequitable trade policies are an ongoing challenge, he added, noting that the California citrus industry faces unfair competition from imports from several citrus- producing countries.

Food safety and food security are important, but sometimes the required protocols can put a burden on farmers without achieving their intended purposes. "Hopefully we can streamline these concepts," he said.

California Citrus Mutual, both as an organization and in concert with other produce industry organizations, is working with legislators and regulators on the state and federal levels, "trying to steer these issues in the right direction," he said.

Proposed table grape marketing order changes unlikely to affect Chilean shipments in 2006

On Oct. 31, ASOEX, Asociacion de Exportadores de Chile (also known as the Chilean Exporters Association), asked the U.S. Department of Agriculture to extend the comment period for an effort by the Coachella growers, known as the Desert Grape League, to change the regulatory periods for grapes that they grow and also for table grapes supplied from Chile and Mexico. This is USDA's Marketing Order 925 and Import Regulation 4.

In 1987, the USDA set April 20 as the beginning marketing order date, after which supply is restricted by grading requirements. The Desert Grape League has asked the USDA to move back the date another 20 days, to April 1. According to ASOEX President Ronald Bown, "The effect of the proposed change, if adopted by USDA, would stop shipments of Chilean Thompson grapes as of April 1, break the continuity of the supply and consequently deprive the consumer of a choice to buy Chilean fruit." Mr. Bown noted, however, that "delays in the regulatory process make it unlikely that the proposed changes could be made in time to affect Chilean grape shipments in April 2006."

Tom Tjerandsen, marketing director for the Chilean Fresh Fruit Association, said, "Under the current circumstances, our marketing plan will support sales of Chilean grapes through April 20 of 2006."

ASOEX asked the Marketing Order Administration Branch, Fruit & Vegetable Marketing Service, USDA, to extend the comment period for an additional 60 days, to Jan. 30 from Nov. 28. Two prior extensions were granted earlier this year.

In a letter on public file with the Agricultural Marketing Service, ASOEX gave four reasons for extending the comment period.

First, AMS had not released all the information that was cited in the proposed rule to justify the date change. Second, a Freedom of Information Act request was pending seeking release of the withheld information. Third, contrary to federal law, the agency had not cited any data in support of the date change from the season ending in April 2005. Fourth, the U.S. trade representative and its Chilean counterpart, Direcon, are currently reviewing the proposed rule as required by a provision of the U.S.-Chile Free Trade Agreement. "The discussions between the two governments are still ongoing," Mr. Bown said.

ASOEX represents Chilean interests that ship over 90 percent of Chile's exported fresh produce volume. ASOEX also coordinates with approximately 75 companies that supply Chilean fruit to U.S. retailers.

David Holzworth, U.S. general counsel for ASOEX, said, "I don't see the desert league effort as anything but a protectionist measure. [Protectionism] is not a legitimate reason to change the marketing order."

According to Mr. Holzworth, Chile and Coachella do not sell into the U.S. market at the same time, except for a very low volume of sales that do not have a statistically significant adverse effect on Coachella grape prices. "For example," Mr. Holzworth said, "Thompsons are shipped to the U.S. at the end of the Chilean season. Chilean Thompsons have been cleared out of the market every year, for the last five to 10 years, well before any Thompsons were packed from Coachella." Coachella, he said, typically begins to pack small quantities of Thompsons in mid-May.

In an Oct. 27 interview with The Produce News, Mr. Holzworth called the proposed marketing order "complex" and "fact-based."

"In our view, the proceeding will not result in a valid legal final rule if we do not have at least 60 days to analyze the data submitted by the Desert Grape League in support of the proposed date change," he said, adding, "As far as we're concerned the comment deadline can be no earlier than the first or second week of January at this point. And that is assuming that USDA gives the data to us today. There is no indication the data will come flying over the Internet to my computer any time soon."

According to Mr. Holzworth, after AMS receives all the comments, it will take the agency another two to three months to analyze the comments and prepare a make a final ruling. USTR also needs to sign off on any proposed changes. "Given the way the procedure works," he concluded, "there is not enough time to get this done to have any effect on the April 2006 shipments."