(Aug. 5) MONTEREY, Calif. — Produce industry executives spent much of the morning of the first day of the 2008 Produce Marketing Association Foodservice Conference lamenting several economic barriers stacked against the fresh produce industry and trying to determine how to overcome them.

After PMA president Bryan Silbermann opened with an overview of economic trends such as sustainability, the movement to locally grown produce and the overall U.S. downturn, members of an informational discussion group panel provided hope produce companies could increase profitability by working smarter and leveraging foodservice trends heading in their favor.

While many consumers and produce industry officials may consider sustainability and local-grown as positive trends, Silbermann noted they are costing many produce companies big-time money, labeling them as “market disruptors” causing an “unprecedented” situation “compounded by … serious market forces … (coming) all at once.”

Throwing in the recent salmonella outbreak originally linked to tomatoes and now peppers, Silbermann said it’s imperative the industry adapt quickly.

“This is a perfect storm that is changing the industry forever,” said Silbermann, noting the average grower in 1950 earned a 41% return while the average grower now earns only a 17% return and saying the situation could get even tighter, with fresh produce prices forced up 6% already this year.

“We’re seeing some close their doors and others change their business fundamentals,” said Silbermann, who later noted innovation with menu items has created “a time of great opportunity for us” despite the salmonella outbreak delivering “a blow to consumer confidence” with regard to fresh produce, which Silbermann called “perhaps even bigger than the money we’ve already lost.”

Panelists provide pointers

Despite reporting cost increases of 6% to 46% in his company’s various business sectors during the last three years and projections of 28% to 30% cost increases overall for 2008, panelist Bob Gray, chief executive officer of Duda Farm Fresh Foods Inc., Oviedo, Fla., remained optimistic. “We’re hoping for a market response to pay for this,” he told the audience.

Richard Dachman, vice president of produce for Sysco Corp., Houston, agreed, saying the industry will recover and will be better than it was even before the economic downturn after addressing inefficiencies.

However, Bruce Taylor, chairman and chief executive officer of Taylor Farms California Inc., Salinas, cautioned against using the same business practices and ideas and hoping for a miracle.

“That model’s not going to work, so figure out a better model — (for instance,) create a partnership when a partnership will help you,” he said.

Gray noted the fresh produce industry should take better advantage of the U.S. obesity epidemic by making sure produce takes over some of meat’s share of the restaurant plate.

“The obesity epidemic has increased and it’s severe,” he said. “It’s very important to be able to control that portion size and try to introduce fresh produce back onto menus.”

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