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How natural and political unpredictability impact demand for global produce

September 26, 2019
The Vanguard International Group recently posted an article discussing the impact uncertainties, especially political and natural events, have on the produce industry. FreshXperts thanks Vanguard for allowing us to share their article with our readers. Use this link to view their post.

In the fresh produce industry, unpredictability is a given. Early frosts, late frosts. Too much rain, not enough rain. Nature is unpredictable. Politics can also prove to be an unpredictable factor through levied tariffs. Let’s take a look at how these unpredictable factors may affect the demand of fresh produce in the global market. When it comes to the war on trade, a country may be frustrated with tariffs imposed on their exports by another country, and then retaliate. One strategy for this in the fresh produce industry is to heighten import inspections. How does this work? One country applies extremely rigid inspection protocol on another country’s imported produce, which may cause imported cherries, for example, to sit for 7 to 10 days awaiting inspection. With limited cold storage to keep these cherries refrigerated consistently, they would sit in the heat and other unfavorable conditions, becoming no longer fresh.

By the time the receiving country manages to inspect each and every single piece of fruit, they’re not viable anymore, get rejected, and ultimately thrown away.

This can be known as a deliberate slowdown and has a ripple effect all the way back to the importer, the shipper, the packer, and the grower who becomes then unwilling to take the risk of sending fruit to a market that might hold it for too long.

All of a sudden, there is a shift in the market and demand for fresh produce that is required from another global market.
 

As for nature, take a look at this historical example. In the late 1990s, California citrus growers were devastated by the unpredictable forces of nature. For a number of seasons, they had near back-to-back freezes, which meant their citrus wasn’t available to export. Until this point, California was leading in the citrus market. Everyone wanted their citrus crop! However, when California stopped producing, the world didn’t just stop eating oranges – they looked elsewhere to find them. Importers looked around to see what else they could find. Were they successful? Absolutely. They found citrus in Spain, Turkey, Australia, and other origins. With California benched, producers in both the Northern and Southern Hemispheres were suddenly in the game, and new supply chains were created.
 

What we find most fascinating is that regardless of tariffs, trade interruptions, natural disasters, or unpredictable outcomes, farmers continue to farm and marketers continue to market their fruit. They find ways to keep producing, exploring new markets, and pivoting to re-engineer their orchards. Vanguard will be there when they do.

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by Ron Pelger

How do people perceive your company?

When you enter a place of business such as an office, a warehouse, a retail store, or a farm, what does your brain focus on immediately? It's usually something distinct that catches your immediate attention. It sends a positive or negative message to your brain of an impression of a company or person.

For example, if an employee is chomping wildly on gum and blowing bubbles while handling fresh produce, how would you perceive that department or store.

What's your impression of a company whose sales rep calls on you at your office reeking with tobacco and wearing a coffee-stained shirt?

Suppose you are touring through a greenhouse and you spot untidy growing areas, damaged ceiling and side panels, shoddy equipment and carelessly stacked product on pallets.  Would you feel comfortable in doing business with that supplier?

Everything we do or say sends what I call a "perceptive peripheral message" to others. Something conspicuous usually pops out at individuals within an all-encompassing view of the surroundings. That something can lead a person to form a lasting impression, be it good or bad.

Likewise, how do people see your own company? What impression do you send to the industry? One thing is for sure, you must capture customer perception in a positive way. Otherwise, your company's reputation could be at stake and your business could suffer.

More and more retailers today send a "going out of business" message to their customers. It starts with out-of-stocks, one-layer stocking levels, old worn-out fixtures, missing signage, sloppy employee attire, etc. Would you continue shopping for food in that store environment? Probably not.

Would a retailer feel confident buying produce from a grower or shipper who has a shabby entrance lobby? How about a salesperson's disorderly office? Worse yet, what if the company president's desk is cluttered with distressed papers and spilled coffee cups? Could you instantly visualize your product arriving very much alike?

Suppose a new supermarket just opened down the street from yours. It promotes low prices, stocks product aggressively, offers free gifts, has superior service that draws away most of your customers.
What usually happens next?

In the produce department, a very common product reduction habit is to cease mass-merchandising of fresh-item displays in order to control shrink. Generally, a store will eliminate stocking fresh produce on a back table or two and filling in the space with bagged peanuts, dried fruit, candy, birdseed and items that have a longer shelf life. This is primarily to occupy the space. The next step is to remove some display fixtures altogether. Once again, this influences a customer's peripheral perception. If it looks like you're going out of business, then you most probably will go out of business.

To sum it up, it is important that you examine your company very carefully to make sure you are sending the proper message to your customers. Whether it involves product, a packing facility, distribution center, office, produce department, or a sales rep's attire —— recognize the message you are sending to people.

When customers enter your business establishment, think about the general overall "peripheral perception message" you convey to them.

Remember —— what they see is what they will get.

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A: Most FreshXperts consulting engagements begin with a site analysis visit. Before your doctor prescribes a medical course of action, you have a physical exam. Likewise, before your consultant proposes a path for your company, it is important that he/she has true understanding of your company culture, current situation, mission and goals, resources, strengths, and weaknesses. Only then can a specific plan that addresses your needs and goals be drafted.
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Interesting Reads

FORBES, Editor's PIck, Richard Kestenbaum, "Turmoil is Coming To The Grocery Business And Industry Leaders Don't Want To Talk About It", Oct. 2, 2019.

Supermarket Perimeter, Ryan Atkinson, "Engaging consumers with education", October 7, 2019.

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FreshXperts is a consortium of consultants in the fresh industry. 
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