Confidence-Building Information

By Jim Prevor, Editor-in-Chief, Produce Business

It is terrific that PMA has funded a study to ascertain the size and scope of the produce industry. This data is intriguing to all who toil in this trade and essential to those looking to make the case for federal or state action to help the industry.

PMA certainly attempted to create a “gold standard” study and deserves praise for that high standard. It is, however, in the nature of these things that differentiate industries to be inherently duplicative in these types of studies. So although it may be true that we account for 2.7 percent of all U.S. jobs, it is also true that if you add up all the studies done by all the industries, the percentage of jobs accounted for by all the different industries would substantially exceed 100%.

Why? Well, if the supermarket industry does a study of its impact, it will count many of the “produce” employees as supermarket employees. If the restaurant industry attempts to quantify its impact, it will count employees and sales as “restaurant-related” that PMA counted as “produce-related.” If the transportation business wants to showcase its significance, it would count all those produce hauling trucks as “transportation,” although they fall into the PMA study as part of the impact of the produce industry.

The fact that states with high populations but small produce production bases often counted as substantial parts of the produce industry in the PMA study is really a testament to the value added in marketing and distribution. If nobody lived in California and nothing was processed in the state, so California only contributed raw product, this production colossus would drop quickly and substantially in the rankings of the states.

Of course, this is just the flip side of the grower’s common lament that they receive too small a percentage of the retail price for their produce.

Although one can imagine all kinds of uses for this data, such as persuading the federal government to invest in updating a half-century-old water infrastructure, this study is really an investment by PMA in arming the trade’s public policy advocates with additional data.

When it comes to individual companies, it is more important to pay attention to the micro than the macro. In fact, this subject was recently brought up in a joint presentation this author conducted with Steve Lutz, executive vice president of the Perishables Group, anchoring PMA’s Produce Solutions Conference. In the Dick Cavett-style discussion with industry consultant Kevin O’Connor filling the Dick Cavett role, we tried to emphasize that the prospects for most produce companies are far more influenced by what those companies do than by changes in the gross domestic product.

Sure as John F. Kennedy reminded us a “rising tide lifts all boats,” if you have a two-percentage-point share of the national market for, say, cucumbers, it is nice if cucumber consumption is on an upswing and if all your existing cucumber customers just buy more cucumbers than they did last year. That makes life easy.

But the truth is that cucumber consumption probably doesn’t correlate with Gross Domestic Product increases and that, even if it did, different retailers are going to grow at different rates. So, even in boom times, one’s growth is heavily dependent on how one has positioned oneself. For example, is the supplier consciously aligned with retailers that are gaining market share? If not, if one is aligned with a stagnant or declining chain, then the economy could boom, cucumber consumption could boom and one’s own market share could still fall.

Aside from helping lobbyists for the trade, the PMA study has another benefit: It helps to build the confidence of an industry that, though one of the world’s oldest and one newly invigorated by the emphasis on health, has often thought of itself as old-fashioned and not very sexy, compared to computers and semiconductors and all kinds of high-tech industries.

Yet, now we have good evidence that the trade is critical — that we matter. We already knew that we mattered to 300 million Americans because we provide healthy sustenance, but we also provide good jobs, economic heft and make a real contribution to the economy.

Now, hopefully, each firm will take this shot of confidence and use it to build up its own business in these recessionary times and be a bit more aggressive about trying to boost business. After all, recessions are part of a business cycle, which means there may be lows, but there are new highs yet to come, as executives in the produce industry plan for how to come out of this downturn positioned to win. Thanks to the new PMA research, they know they won’t be charging into the post-recession future all alone. They now know they are part of a mighty army charging forward, together.

For delivering that realization through funding this study, PMA certainly deserves high kudos.