WASHINGTON, DC - After 22 years, the Tomato Suspension Agreement has officially been terminated. According to The Washington Post, this means the United States will impose a 17.5 percent tariff on Mexican tomato imports, which could lead to price increases of up to 85 percent and a shortage of goods. Many in produce have been preparing for the end of the agreement since the news first arose earlier this year.
“We are disappointed that the Department of Commerce did not work more aggressively with both parties to come to an agreement that would have prevented this unfortunate action. It’s simply poor public policy to reinstate punitive tariffs from a preliminary 1996 determination from more than 20 years ago,” stated Tom Stenzel, President & CEO of United Fresh, following the news . “American consumers would be better served by a new agreement that ensures a fair, reliable and cost-effective supply of high-quality fresh tomatoes. We urge the Department of Commerce and the interested parties to re-engage in urgent negotiations to reach a fair settlement.”
The Fresh Produce Association of the Americas (FPAA) agreed with United Fresh. In an official statement titled, “FPAA Disappointed that Commerce Has Ended the Tomato Suspension Agreement,” the association outlined the efforts of its members—its growers, the Congressional Delegation, Arizona Governor Doug Ducey, and more—and made known its advocacy for a new agreement.
“The Fresh Produce Association is disappointed the Department of Commerce has terminated the Tomato Suspension Agreement. The agreement has been an important tool in protecting over 33,000 American jobs and creating stability in the market,” the FPAA wrote. “It is our understanding that the Mexican growers put several proposals on the table to improve an already-effective agreement. Despite the fact that the agreement has been terminated, our hope is that Commerce continues to work in good faith with the growers in Mexico to negotiate a new agreement that balances concerns of growers in Florida with the need to protect our robust trading relationship… The FPAA is working closely with our members, CBP, and Commerce to ensure that the termination of the agreement and imposition of duties is as seamless as possible. We again thank our members, our industry allies, and our elected officials for their tireless efforts in this process.”
In a press release, the U.S. Department of Commerce noted that despite the termination of the 2013 Suspension Agreement, negotiations will continue regarding a possible revised agreement acceptable to Mexican signatories, which also addresses the concerns of the U.S. industry to the extent permissible by the U.S. trade law.
“The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” said Secretary of Commerce Wilbur Ross. “We remain optimistic that there will be a negotiated solution.”
The Produce Marketing Association released its own official statement, adding: “Trade is critical for the produce and floral industry, as the buying and selling of these products—including tomatoes—occurs in a global marketplace. The impact of the previous agreement for U.S. consumers has been year-round availability of fresh produce at an affordable price. We understand that there are different perspectives on the success of the suspension agreement on tomatoes among market participants. What everyone should be able to agree upon is the need for transparency and predictability.”
AndNowUKnow will continue to closely follow any and all news related to the Tomato Suspension Agreement.
MINNEAPOLIS, MN - You aren’t the only one scratching your head and wondering if someone pulled a fast one on you over the weekend. Cub Foods, one of UNFI’s banners, does indeed have a new CEO. Mike Stigers stepped into the new position in the last few weeks, in the wake of UNFI losing some of its top executives, Anne Dament, Executive Vice President of Retail, and Chad Ferguson, President of Retail Operations.
Cub Foods has been in the news recently due to the recent opening of its small-format store, at which Stigers greeted customers and explained the current state of Cub Foods’ potential sale.
“We’re looking at which stores are going to get remodeled next fiscal year. There’s no slowing down the growth of this brand as we look for the correct suitor in the future,” Stigers said, as reported on by The Star Tribune. “The strength of Cub as a strong regional brand is its totality. We’re 100% focused on running Cub Foods. When the timing is right, we’ll be able to move forward.”
He also explained that UNFI might run the stores indefinitely if no buyer comes forward.
Stigers comes to his new role with plenty of experience under his belt. He was President of Cub Foods in 2014, before being promoted to Executive Vice President of Wholesale and Supply Chain for SuperValu. Once SuperValu was acquired by UNFI, Stigers became the Executive Vice President of Fresh.
For the latest in retail shakeups, stick with us at AndNowUKnow.
LA CAÑADA FLINTRIDGE, CA - The Allen Lund Company has recently announced two high-profile promotions from within the company. John Ryan has been promoted to Manager of the Boston office, and Joe Brindle has been promoted to Manager of the Los Angeles office.
"It was really important because those are big offices for us, so their leadership will be counted on for sure," Eddie Lund, President, said about the promotions.
Serving with Allen Lund since April 2013, Ryan previously held the position of Transportation Broker. He earned a Bachelor’s of Science degree in Criminal Justice from Salem State University.
"I want to thank the Executive Team for the opportunity they have afforded me. Additionally, I want to thank Lenny for the last 16 years of guidance,” Ryan said in a press release. “Finally, I would like to thank our team in Boston without whom none of this would be possible."
Lenny Sciarappa, VP Sales and Operations, also had high praises for Ryan, adding: "John has been an incredible asset to the Boston office and to ALC for the past 16 years. From day one, he has been fully committed to learning and growing the business. He is a perfect example of what dedication and hard work will do for you. He is well respected by the team and has played an integral role in the success of the Boston office. It has been a pleasure working alongside John on a daily basis, and I am excited to continue to work with him as he assumes his new role."
Brindle has been with Allen Lund for 13 years, serving as Assistant Manager of the Los Angeles Refrigerated Division before his recent promotion.
"Equal parts excitement and gratitude meet me in taking on the role of manager of the LA office,” Brindle said. “I'm excited to be able to continue to work with the LA team as their manager while also being very grateful to the company for this opportunity. With the help of my team, I look forward to helping to continue to build on the success that this office has seen over the years. I work with the best group of people and I'd be nothing without them. Thank you!"
"Very early on in his ALC career, Joe stood out as a leader,” Tracey Lewin, VP Sales and Operations, commented on Brindle's promotion. “For thirteen years now, he has been hungry for knowledge and experience and has proven that he is capable and willing to reach for the stars. His tireless work ethic, get-it-done attitude, and commitment to always do the right thing will take him and the LA office very far. I'm grateful for all of the support Joe has provided over the past eight years in his Assistant Manager role and I'm thrilled for him to take the wheel and lead this office to the next level. Congratulations Joe!"
"Joe has tons of produce experience and the LA office is one of our biggest offices and we’re excited about his promotion," added Lund.
Brindle graduated from National Polytechnic College of Science (College of Oceaneering).
For more information regarding the promotions, watch our exclusive video above! And for more fresh produce news, stay tuned to AndNowUKnow.
IRVINE, CA - Good morning, AndNowUKnow readers!
Today, I am bringing you some of the category and weather news from around the industry. Check back twice weekly to see where the rain is falling, the sun is shining, and everything in between.
MORE CALIFORNIA RAINS
Yesterday, a storm came through California, bringing light rain and wind to coastal growing regions from Santa Maria south through San Diego. And there is another storm coming later in the week. The San Jose Valley is expecting more rain this Thursday and Friday. Bakersfield and Fresno can expect .75” over the two-day period. Further north into Sacramento, they will see rain but totals are not expected to be as high.
Cherries and blueberries are currently coming from these areas. You may want to check with shippers to see if harvests will be affected.
The coastal regions of California have a 20 percent chance of rain during these same two days.
The desert growing regions did not see any rain but did experience winds of 25 mph yesterday and also today.
FLORIDA RAINS
Florida and Southern Georgia can expect six consecutive days of rain starting this Friday. Over this six days, Bainbridge can expect a total of over 2” or rain. Quincy, Florida, can expect about 1.25” over the same period. Further south, all growing locations up and down the Florida peninsula can expect multiple days of rain over the next 10 days. Please check the app for specific locations and amounts.
MICHIGAN
Asparagus has started in the Wolverine State. Yesterday and today, Michigan growing locations will see light rain, but come Wednesday and Thursday the rain will intensify, dropping about 1.25” over the two-day period. Friday will be the coldest day of the week with a maximum temperature of 53° and a minimum temperature of 39° before beginning to warm again heading into next week, reaching a high temperature in the mid-60°s.
HEAT WAVE IN THE NORTHWEST
Starting today, the Walla Walla and Yakima valleys in Washington will experience an eight-day heat wave that will see temperatures rise from a high yesterday of 79° to a maximum temperature of 89° on Sunday before cooling again next Wednesday down into the 70°s. The lows during this heat wave will remain in the mid-50°s.
Oregon will also experience the same heat wave with the Willamette Valley, reaching a high temperature of 89° on Saturday and Sunday.
Asparagus is currently coming from Washington and blueberries are about a month away in both Washington and Oregon.
HERMOSILLO MEXICO UNSEASONABLY COOL
The grape region of northern Sonora will experience cooler than normal temperatures over the next eight days. The normal temperatures for the month of May are 96°/62°. Starting today, maximum temperatures will remain in the 80°s and will only get to 82° on Friday, with a low of 57°. This area was experiencing highs in the low 100°s only a couple of weeks ago. By Tuesday, May 14, maximum temperatures will be back into the mid-90°s.
BAJA CALIFORNIA, MEXICO
Veg has started out of Baja California, Mexico, with tomatoes to start later this month. In the northern part of the state, in the region of San Quintín, the climate is very stable with daily highs reaching between 66° and 69° with lows in the mid-50°s. There is a 50 percent chance of light showers this Friday.
Further south in the region of La Paz, you can expect temperatures to cool throughout the week, with Sunday and Monday of next week being the coolest days only reaching a maximum temperature of 80°. The normal high temperature of May is 92°.
EASTERN MEXICO HEAT
The eastern coastal regions of Veracruz and Tamaulipas, which are big citrus regions, will experience warmer than normal temperatures later this week, with highs reaching into the low 100°s. Currently, maximum temperatures are in the low 90°s. The minimum temperatures for the same time period will be in the high 70°s. There is also the possibility of daily thunderstorms.
Thanks again, and we'll be back later this week with another weather report!
NEW ENGLAND - The New England Organic Produce Conference showcased for the first time at Gillette Stadium where more than 200 produce industry members from the greater New England area gathered last week. The day-long event featured a series of educational sessions focused exclusively on organic fresh produce and culminated in a featured keynote presentation from Shannon Allen.
“Great presentation and very informative,” said Mike Maguire, Director of Produce, Market Basket Supermarkets. “It was nice to focus specifically on all aspects of organics. We highly recommend a repeat performance next year!”
According to a press release, the educational sessions started off with a data dive into the growth of organic fresh produce. Organics fresh produce sales could easily grow to 15 prevent of all fresh produce sold—and result in more than $10 billion within the next few years, as stated by presenter Matt Lally, Associate Director for Nielson.
Noted by Lally, organic fresh produce sales in the greater New England area are near or above the national category in many products. He said an opportunity exists to significantly grow the overall organic fresh produce category by capitalizing on some key items. Specifically, Lally said kiwifruit, herbs, and both blueberries and blackberries have strong growth opportunities in the region for retailers.
Further, Lally’s presentation was followed by an Organics 101 session featuring Tonya Antle, Co-founder of the Organic Produce Network, and Johanna Miranda of the Organic Trade Association. The pair provided an overview of what constitutes an organically grown item and discussed the rules and regulations to be followed throughout the supply chain.
“It was a power-packed day with lots of great information on the trend of organics and, as a retailer, how important it is to stay on top of this growing segment,” said Jodie Reardon, Produce Procurement Manager for Shaw’s. “Shannon Allen was amazing and so inspiring with her story; it brought tears to my eyes.”
Antle talked about the importance of protecting the integrity of the organic brand and the role of the brand in the eyes of the consumer. Miranda also discussed some protocols that go into the rules and regulations of developing organic standards—and opportunities for the fresh produce industry to have their voices heard.
The Retailer Roundtable was the final educational session. Co-moderated by Matt Seeley, Co-Founder of the Organic Produce Network, and Mark DeMichaelis, Founder and Owner of State Garden, the panelists included Brian Fleming, Director of Produce for Stop & Shop; Mark Jewell, Category Manager for Produce, Hannaford Brothers; and Kevin Barry, Director of Produce for Big Y. The session featured engaging discussions on the role of organics in each of the retailers operations—in both the produce department, and its impact on the rest of the store as stated in the press release.
Each panelist noted the double digit growth of organic fresh produce this decade and how it has provided a gateway for consumers to try other organic items. Moreover, the organic shopper produces a larger basket for each retailer, enhancing the bottom line. Each of the retail panelists’ believes organic fresh produce will be between 25-30 percent of their total sales within 10 years.
“I was excited to see the great attendance from retailers and suppliers,” expressed Jewell. “For our first Organic Produce Network event, we have built a base to build on.”
Conference attendees were treated to a keynote presentation, following lunch, from Shannon Allen, Founder of Grown, a 100 percent USDA-certified organic fast food restaurant.
For updates on the first ever conference and anything fresh produce, keep reading AndNowUKnow.
WASHINGTON, DC - As part of its efforts to enforce the Perishable Agricultural Commodities Act (PACA) and ensure fair trading practices within the U.S. produce industry, the Department of Agriculture (USDA) has imposed sanctions on C & D Produce Outlet Inc. (C & D Produce), W. Palm Beach, Florida, for failing to meet its contractual obligations to the sellers of produce it purchased. These sanctions include barring the business and the principal operators of the business from engaging in PACA-licensed businesses or other activities without approval from USDA. By issuing these penalties, USDA continues to enforce the prompt and full payment for produce while protecting the rights of sellers and buyers in the marketplace.
According to a press release, C & D Produce failed to pay $104,595 to seven sellers for produce that it purchased, received and accepted in interstate and foreign commerce from May 2015 to October 2016. This is in violation of the PACA. As a result of these actions, C & D Produce cannot operate in the produce industry until April 20, 2021, and then only after they apply for and are issued a new PACA license by USDA.
The company’s principals, Carol Saldana, Collyn Saldana, Daniel Saldana, Jr., Cirilia Saldana-Barazorda and Luis Paula, may not be employed by or affiliated with any PACA licensee until April 20, 2020, and then only with the posting of a USDA approved surety bond.
USDA is required to publish the finding that a business has committed willful, repeated and flagrant violations of PACA as well as impose restrictions against those principals determined to be responsibly connected to the business during the violation period. Those individuals, including sole proprietors, partners, members, managers, officers, directors or major stockholders may not be employed by or affiliated with any PACA licensee without USDA approval.
The PACA Division, which is in the Fair Trade Practices Program in the Agricultural Marketing Service, regulates fair trading practices of produce businesses that are operating subject to PACA, including buyers, sellers, commission merchants, dealers and brokers within the fruit and vegetable industry.
In the past three years, USDA resolved approximately 3,350 PACA claims involving more than $63 million. PACA staff also assisted more than 8,000 callers with issues valued at approximately $156 million. These are just two examples of how USDA continues to support the fruit and vegetable industry.
PHILADELPHIA, PA - Procacci Holdings’ Garden State Farm’s recently acquired its competitor and neighbor, A. Vassollo. The two companies, owned respectively by the Procacci and the DiPascale families, have worked together over the years to serve the needs of the produce market. By combining the two, both hope to expand and increase product quality and availability.
“It was a natural expansion to our Garden State Farms operation,” said J.M. Procacci, CEO of Procacci Holdings, in a recent press release. “As we continue to expand, our commitment to the market is integral to our growth.”
The press release noted that with this acquisition, Procacci Brothers’ Garden State Farms has four units at the market.
“Philadelphia is seeing more local crops coming in from the New Jersey, Pennsylvania, Delaware, Maryland, and New York,” stated Mike Maxwell, President of Procacci Brothers. “PWPM [Philadelphia Wholesale Produce Market] is the ideal location to distribute produce, and acquiring A.Vassallo makes Garden State more efficient for its customers.”
Maxwell also remarked on the hard work and dedication seen in David DiPascale, Co-Vice President of Terminal Operations for Garden State Farms.
“He has built a great team over there, and we are excited about the future of our market,” he concluded.
For the latest in acquisitions, sales, and more, keep reading AndNowUKnow.
SAN ANTONIO, TX - After much anticipation and educated guessing, today is the day in which the Department of Commerce will announce whether or not it has officially withdrawn from the 22-year-long Tomato Suspension Agreement. Discussions continue for it to have a successor, as Mexican Deputy Economy Minister Luz Maria de la Mora told Reuters.
“We’re very disappointed but the good news is that negotiations continue, looking for a solution. And we hope that in the coming weeks we can in fact reach an agreement,” said de la Mora.
In Part One of Viva Fresh’s April 26 panel discussion of Congress’ withdrawal, we covered the anticipated duty price and ways tomato suppliers and buyers could prepare. To take it one step further, experts Lance Jungmeyer, President of the Fresh Produce Association of the Americas (FPAA); Jason Klinowski of Wallace, Jordan, Ratli & Brandt; and J.O. Alvarez of U.S. Customs House Broker J.O. Alvarez, Incorporated dove into anticipated changes, history, and influences of the current tomato climate.
“I would say that if we go to a duty situation, the small and medium companies are the ones that are hurt the most, and we’ll see some consolidation in the industry,” Jungmeyer shared at the time.
When later asked about pricing, he said that the FPAA worked with Arizona State University Economist Dr. Tim Richards, who has done Tomato Price Impact studies previously.
“It was found that consumers would pay up to 40-85% more for vine-ripened tomatoes if duties go into place, and that’s based on the assumption that duties would cut the Mexican tomato supply by half. That’s just based on Mexican supplies alone," Jungmeyer explained. "You start to get into other scenarios that could really bring up the price ... We might see a hurricane in Florida, we might see a freeze in Florida, we might see a frost in Mexico like what happened just a few years ago. What happens when one or both the suppliers is impacted?”
A historic reference for the scenario Jungmeyer is painting is the 1989-90 season, when tomato prices soared due to bad freezes and “the shelves were bare.”
“I think everyone in this room wants to see people eat more tomatoes; we are in the business of volume and we don’t want to see higher prices. So, to me that is one big take home from the study: It would harm consumers as they try to bring tomatoes to the table,” he concluded.
Klinowski agreed there’s going to be some consolidation and moves in the small to mid-cap section on both the U.S. and Mexican side, and reminded the room that reorganization will be necessary. He emphasized that consignment will continue and the right fit will vary from company to company. It all comes down to what mitigates or enhances audit risk.
“Just changes on who’s on what role in the supply chain matters when it comes to audit risk. Out of the gate compliance is going to mean something a little bit different to every person in this room,” Klinowski shared.
Those differences lie in capital structure, financial wherewithal, relationships with the growers, or just the position in the supply chain. And when coming into the regulatory compliance standpoint, those differences matter in the form of what the contract looks like.
“When they have a construed export price, and that number, which we don’t know what it is, becomes the yardstick upon which we govern ourselves while we are trying to hit this moving target, that, in summary, is kind of what this audit risk looks like. And the risk is held by the person that is the importer of record. Not to get on my soapbox, but that affects how your contracts look. At the end of the day, I’m hoping nobody is sitting on a contract that covers the majority of this year with fixed prices from a retailer that is going to absolutely cripple you when you add on an anti-dumping duty, even if it’s only for a 30-day period,” he stated.
These changes affect whether or not someone is a Mexican grower versus a U.S. subsidiary versus an unrelated entity as the importer of record, putting weight on decisions that might not have needed much thought over the past 25 years.
There were several moving pieces to understand, and one more that Jungmeyer posed for consideration was the timing of the request for Commerce’s immediate withdrawal from the Tomato Suspension Agreement.
“One other thing that was interesting here about the political timing of this, and it is always political, is that the ITC was scheduled to make a determination as to whether the suspension agreement was providing the protection necessary and whether we needed to continue, or whether we could go to absolutely no duties, free market, no suspension agreement, and that decision was set to come May 9. So, you’ll notice that by the petitioners seeking an early exit and requesting Congress to do that, and Congress giving the statutory 90 days ending May 7, that stopped the process that, in our opinion, would have shown the industry to not be dumping and would have put us in a completely free market. And that’s where we would like to be—I don’t think anybody likes having the suspension agreement or duties, but right now, the suspension agreement is what keeps things going," Jungmeyer shared.
He broke down for the room the current demands of both sides conveyed through public letters: that of those against the Tomato Suspension Agreement released in November of 2017 and those of the Mexican growers involved in the agreement released April of 2019. Both letters can be found below.
FTE Submission of Letter to Commerce
Proposal of the Mexican Signatories to U.S. Commerce Department
“I think [the Mexican growers] have gone a long way in transparency. They’ve gone a long way in meeting Florida proposals, and so far we are beyond three weeks later and still don’t have an answer. So, while we’re hopeful that there will be a new suspension agreement, we’re preparing people to pay duties and that’s what you need to be thinking about right now,” Jungmeyer related.
Alvarez posed the question of the door that might be opened should no agreement be reached.
“Last year, Mexico exported just about $2 billion-worth of tomato product to the United States. Add to that 17.56% duty, that’s a whole lot of money. I’d say be prepared. Let’s hope it doesn’t happen and that they reach an agreement to keep the suspension alive," Alvarez said. "This goes back to ‘96, they reviewed it every five years, and I know we don’t want to talk about politics up here but it is pretty much about politics, and we do hope it doesn’t affect this industry. Because this whole produce industry...they do it on tomatoes, they’re going to do it on lettuce and other types of commodities as well, if we don’t take care of this. So, what I’d say is be prepared, talk to your customs broker, talk to your bank, and just be ready.”
While there were still many questions left and much to discuss, at least one thing is certain: It won’t be a proverbial shoe-drop today, May 7, but rather a new normal for this branch of our industry to adjust to as we see what awaits on the other side of this chapter.
DETROIT, MI - Kroger is making its presence in Michigan known, with a new plan to invest $97 million into the Great Lake State. This week, the retailer announced that this investment will include two new stores, 11 store remodels, and three new fuel centers, all completed during 2019.
“Kroger is among the largest employers in Michigan, with over 18,000 associates assisting customers in 120 stores,” said Rachel Hurst, Kroger’s Corporate Affairs Manager, according to the Detroit Free Press. “We feel honored to serve the people of southeast Michigan and to implement the Kroger Purpose to feed the human spirit through food, inspiration, and uplift.”
Along with Kroger’s major investment announcement, the retailer also revealed that it is closing one of its locations in Metro Detroit. The news source reports that the two Kroger stores on Michigan Avenue “will soon be down to one” due to financial reasons. The store at 23303 Michigan Avenue will remain open, while the store located at 23000 Michigan Avenue will close on May 18.
“The store has been losing money for some time, and we do have a store across the street we are looking to serve all our consumers at,” Hurst continued.
In addition, 20 stores across the state of Michigan will also now offer Kroger Pickup as part of the retailer’s $97 million investment.
A complete list of the 11-store remodel has not yet been disclosed.
For more breaking grocery retail news as it relates to fruit and veg, keep reading AndNowUKnow.
TORONTO, ON - The votes are in, electing a slew of directors to Loblaw’s board. The retailer announced 12 nominee directors confirmed by votes that took place at its Annual Meeting of Shareholders late last week.
With more than 2,400 corporate, franchised, and Associate-owned locations, Loblaw, its franchisees, and Associate-owners employ approximately 200,000 full- and part-time employees, making it one of Canada's largest private sector employers. All votes for each member were at 97 percent or greater. Among them are:
- Paul M. Beeston
- Paviter S. Binning
- Scott B. Bonham
- Warren Bryant
- Christie J.B. Clark
- William A. Downe
- Janice Fukakusa
- Marianne Harris
- Claudia Kotchka
- Beth Pritchard
- Sarah Raiss
- Galen G. Weston
In the announcement, Loblaw Companies said that “all of the nominee directors listed in the management proxy circular dated March 22, 2019, were elected as directors of Loblaw.”
One of Canada's largest retailers, including leading in food and pharmacy, the company's purpose—Live Life Well®—puts first the needs and well-being of Canadians who make one billion transactions annually in its stores.
According to the release, Loblaw is positioned to meet and exceed those needs in many ways: convenient locations; more than 1,050 grocery stores that span the value spectrum from discount to specialty; full-service pharmacies at nearly 1,400 Shoppers Drug Mart® and Pharmaprix® locations and close to 500 Loblaw locations; PC Financial® services; affordable Joe Fresh® fashion and family apparel; and three of Canada's top-consumer brands in Life Brand, no name®, and President's Choice.
Congratulations to the newly-elected members of Loblaw Companies’ Board of Directors on this next step in the retailer’s business.