Tom Stenzel, President and CEO of the UnitedFresh Produce Association, has a message for you – “While business in thefrozen foods sector is flat to declining, we’re seeing a boom in fresh foodsacross multiple retail channels,” Stenzel says. “Today’s growth opportunitiesare in fresh, refrigerated foods, with sales continuing to expand intraditional grocery stores and also pharmacies, convenience stores, farmmarkets and wherever consumers shop.” United Fresh is the pre-eminent tradeassociation for the produce industry in shaping legislative and regulatorypolicies, providing scientific and technical leadership in food safety andnutrition, and developing educational programs for its members. Founded 110years ago, United Fresh represents the interests of companies from small familybusinesses to the largest international corporations throughout the globalfresh produce supply chain—and those companies are doing very well.

        United Fresh’s FreshFacts® on Retail report,which examines overall retail trends in produce for the past year, shows thatduring 2013, the produce department averaged more than $47,000 per week perstore, which was up 4.8 percent over the previous year. The report alsomeasures retail price and sales trends for the top 10 fruit and vegetablecommodities, as well as value-added, organic and other produce categories.Highlights of the 2013 report include:

·      During 2013, allof the top 10 fruits posted volume increases.
·      Fruits’ averageweekly dollar sales increased 4.5 percent versus 2012.
·      All of the top10 vegetables posted increases in weekly dollar sales.
·      Amongvalue-added fruit categories, value-added fruit and fresh-cut fruit both postedincreases in weekly dollar sales.
·      Snackingvalue-added vegetables posted an increase of 15 percent in weekly dollar sales.
·      Avocadoes postedthe highest growth in the fruit category, with dollar sales increasing 11.7percent and volume increasing 10.3 percent.
·      Packaged saladand tomatoes, the two top-selling vegetable categories in 2013, increaseddollar sales 6.7 percent and 3.4 percent.
        In addition, recent trends in organic produceshow that even with increases in retail prices, volume sales continue to growin all organic fruit and vegetable categories. The growing demand for organicproduce resulted in dollar and volume increases, roughly 20 percent for bothorganic fruits and vegetables overall.

        The Invitation

        “I encourage GCCA member companies to reach outto produce partners to share their expertise to help deliver the very highestquality produce to consumers, 100 percent of the time. That’s how we’llcontinue to grow our business together,” says Stenzel. He emphasizes there arenew opportunities for GCCA members in temperature controlled produce, fromimport/export cooling facilities to forward distribution and cross-dockingarrangements.

        Why does Stenzel care to share these freshopportunities? Because at the end of the day, he believes, “it’s all about whatcan we do to get the freshest and highest quality produce to consumers.” “Webelieve cold chain management is a critical function to sell more produce.” Heexplains that the whole movement towards locally grown produce simply meansmaking available to consumers the highest quality produce as quickly aspossible, and in top condition, after harvest. “Maintaining the cold chain isabsolutely essential and is our critical window to improving produce quality.Who has the expertise to maintain and enhance the cold chain for fresh produce?If our members can do that—great. If GCCA members, including third partytransportation services, have that expertise to maintain the cold chain—that’salso great and you have a ready customer in produce growers.”

        Growers

        How important is cooling to fresh produce? If apiece of fruit is 10 degrees too warm for an hour, it’s an issue because thatpiece of fruit could lose several days of shelf life, Stenzel reports. Becausethe most important thing after harvesting a crop is to get it refrigerated,there are always cooling warehouses near crop fields, says Stenzel. He addsthat while there is still a huge volume of fruit and vegetable productioncoming from traditional growing areas like California, the increase in thelocally grown movement means growth in produce production is coming fromeverywhere, including around urban centers.

        “Those tend to be smaller farms that areproducing locally grown produce and while their logistics needs are the same asthe larger farms, they might not have cooling facilities,” Stenzel points out.“Currently smaller farms might have to go to a wholesaler for theirrefrigeration needs. If 3PLs can fill that need on a regional basis, anaggregation service with shared warehouse space could be very attractive to agrower.”

        Imports

        Another need in the produce supply chain thatcould be met by 3PLs is refrigerated warehouse space at ports and borders,according to Stenzel. “There is a tremendous amount of imported fruits andvegetables entering the country, especially through the ports in winter,”reports Stenzel. “And there is a lot of competition and investment to haveenough refrigerated warehouse space to be the port selected to offload thatproduce.”

        The U.S./Mexican border is the point of entryfor more produce than any other land border and another area that 3PLs could lookto for future growth, according to Stenzel. “Mexican trucks still have to stopshortly after crossing the border and everything is offloaded, goes into coldstorage and then is reloaded,” says Stenzel. “There already exists a tremendousamount of warehouse space run by growers or wholesalers in towns like Nogales,AZ and McAllen, TX, but more will likely be needed.”

        Wholesale

        Stenzel also points to opportunities to servetoday’s produce wholesalers. Thousands of produce wholesalers have warehousesand storage facilities and sooner or later these wholesalers will have todecide whether they’re going to invest capital to improve and update existingfacilities, build new state-of-the-art storage facilities or turn their storageneeds over to a third party, and that, points out Stenzel, is another growthopportunity for 3PLs. “A produce wholesaler’s expertise might better be focusedon buying and selling, rather than designing cold storage facilities. If theycan partner with a 3PL for their warehouse needs, that’s one thing they don’thave to be expert at,” says Stenzel. “It’s an attractive proposition if thewholesaler can have their own sales expert in the warehouse managing the flowof produce in and out of the facility, talking to the customers, and designatingwhere the product is going to ship.”

        Another increasing phenomenon in the produceindustry, Stenzel notes, is the crossdocking and forward distribution function.“A grower in California may have 10 truckloads of leafy greens that will takefour to five days to reach customers on the East Coast. So, instead of shippingdirectly, they’re shipping to various forward distribution centers closer tothe market.” Stenzel explains the forward distribution center is basically aholding facility and the grower or wholesaler is just renting the facility andholding the produce as a value added service to its retail customer. “Some ofour traditional produce wholesalers are starting to take on the role of thirdparties and offering this service to other growers. It puts them in competitionwith traditional public refrigerated warehouses. That’s probably a goodthing—there’s lots of room for competition.”

        FSMA

        “Our producers already have lots ofrefrigerated space and maybe that’s why 3PLs haven’t been that interested incompeting for this business,” Stenzel said. “But with the implementation of theFood Safety Modernization Act, having the expertise to be FSMA compliant ishugely important to United Fresh members,” points out Stenzel.

        With regard to the rules regulating facilities,Stenzel said the FSMA proposals deal with all operations the same whether it isa processor of fresh-cut produce or a warehouse that merely is a transferstation for fresh produce. The initial proposals require all facilities,regardless of purpose and level of risk, to put the same action plan in place.Stenzel said this will be extremely burdensome on the industry. On thefood-safety issue, Stenzel has implored all members to get their own facilitiesin order. Stenzel revealed that produce industry recalls have becomecommonplace. He said the industry has to improve its recall systems, which toooften result in after-the fact pulling of product from shelves that is notcontaminated. By the time most recalls are initiated, the offending product hasalready moved through the system. The only result is a consumer that shies awayfrom the recalled commodity.

        “Growers have enough challenges dealing withFSMA on the farm without having to deal with facilities,” says Stenzel. “If3PLs can take the hassle of FSMA compliance off our members’ hands, there willbe a significant opportunity for 3PLs to partner with our industry.”

        In summary, Stenzel says that if GCCA membersoffer expertise in quality control, cold chain management, regulatory assurance,strong traceability and state-of-the-art facilities, UFPA members would have toquestion whether to tie up capital in building or updating their own facilitieswhen they could partner with an expert.