The U.S. Department of Agriculture (USDA), Economic Research Service (ERS), on Friday (26 Januray) released the publication, U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade Practices, Trends, and Issues, in an effort to identify and illustrate the types of trade practices used in the produce industry, including fees and services provided by shippers, contracts, and other marketing strategies.
“United has made building fair trade practices a major priority,” said United Fresh Fruit & Vegetable Association President Tom Stenzel. “We’ve been working with industry members from all parts of the distribution chain to focus on delivering the greatest value to the consumer to grow our business, not just fight over pieces of a declining business. Today’s USDA report is a critical tool for the industry, legislators and regulators to understand specific trends in the marketplace and begin considering how we might improve the practices presently in place.”
In June of 1998, United Fresh Fruit & Vegetable Association (United) and six other produce organizations sent a letter to then USDA Secretary Dan Glickman requesting that the ERS conduct a study of food retail consolidation and trade practices to determine the merits of arguments that certain aggressive buying practices are detrimental to our food production and marketing system. The letter also raised concerns about possible discriminatory trade practices, the most well known being slotting fees that are paid by the supplier to secure a place for a product in a retail establishment or chain. These fees are commonplace for drygoods suppliers and are beginning to be used in the produce sector, principally for bag salads and other value-added products.
ERS designed a series of three studies to understand the type, nature, and penetration of slotting allowances and other marketing practices, focusing on the economic rationale behind them; and, to examine the competitive effects of changes in retail trade practices like development funds, slotting fees, and contracting on producers and consumers.
The first report, Understanding the Dynamics of Produce Markets: Consumption and Consolidation Grow, was published in August 2000 and is a descriptive analysis of structural changes in the national market for fresh fruits and vegetables based on publicly available data, framing the issue in an economic context. Copies of this report are available from United.
Today’s report, U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade Practices, is the second in the series and assesses the nature and magnitude of slotting allowances and other trade practices for selected fresh fruits and vegetables. The third, and final, report due this spring will assess whether the market is competitive, and if “new” trade and marketing practices reflect the application of market power by buyers or suppliers.
Today’s report compares trade practices in 1999 with those that were routine in 1994. ERS staff surveyed shippers of seven commodities in different regions of the country, in addition to retail supermarket chains.
“It is imperative that the industry, Congress and related regulatory agencies continue to work together on the necessary research and investigation to analyze retail produce marketing trade practices,” continued Stenzel. “Our only goal must be for all parties in the produce chain to focus on adding value to the consumer, and increasing fruit and vegetable consumption and sales.”
The results of this study will be presented at USDA’s Agricultural Outlook Forum February 23 during the Emerging Market and Trade Practices for Fruit and Vegetables section. United President Tom Stenzel, Food Marketing Institute President Tim Hammonds and Roberta Cook-Canela, Professor, University of California will serve on a panel to discuss and comment on the report.
The ERS has published this study on its website and printed copies will be available next week.
Founded in 1904, United is the national trade organization that represents the interests of producers and distributors of commercial quantities of fresh fruits and vegetables. United represents the business interests of growers, shippers, processors, brokers, wholesalers and distributors of produce, working together with our customers at retail and foodservice, our suppliers at every step in the distribution chain, and our international partners.