The economy may be the worst since the Great Depression, but some industries are doing better than others.

How the produce industry can beat the recession
Larry Waterfield

Take the food industry, for instance. Food is the ultimate necessity and the last to be sacrificed. In fact, it’s not sacrificed. People may switch from steak to green peppers, onions, corn tortillas and refried beans. But they don’t switch to nothing.

That does not mean that food companies are doing great. But at a time when giant companies, household names, are folding up and falling away, the fact that an industry is surviving is worth a lot.

These are the days of toughing it out, hanging in and hanging on. We know that companies that emphasize “value,” such as Wal-Mart and McDonald’s, are doing OK in the recession.

The stock of public companies in the food industry has not set the world on fire, but they have not faded into penny stocks either.

Many of the companies are making a profit, paying dividends and giving investors some cash flow. That’s true of some of the supermarket companies and large food distribution firms.

Supermarkets are busily remodeling stores, updating the decor to make them more consumer-friendly, appealing and less institutional. Store private labels are thriving. These companies are voting on the future.

Stock prices for a number of food and supermarket firms have fallen 20% to 50% over the past year or so. However, most are creeping back up, along with the broader market.

Contrast that with banking, where stocks fell into a swamp. Some people who held bank stocks lost 95% of their money as banks failed or merged. Banks begged for bailouts, stopped lending money and are now busily cheating their customers through fees, penalties, arbitrary changes in interest rates, sinking lines of credit and declining grace periods.

They claim they need to do this so they will have money to pay back the taxpayer bailouts.

Talk about adding insult to injury.

Oh, and we have to pay for their incompetence in backing bad bets on risky mortgages.

By comparison, the food business is transparent. You buy a load of apples, oranges, potatoes. If they look good, and taste good you sell them and with luck make a few bucks. If they are rotten, you cannot sell them or hide them. They go to the dump. You cannot get a bailout and then double the price on the next load.

Some think that what is happening in the economy is the inevitable result of globalization. Americans lived beyond their means on borrowed money and cheap imports, not realizing that bubbles must burst. It was a heck of a Saturday night party, but Sunday morning rolled around and gave us the world’s biggest hangover.

Part of the hangover will be a declining standard of living, the fulfillment of what some of us predicted. Globalization will lift standards in developing countries and pull down standards in developed nations, except for the most technically skilled and highly educated.

General Motors vice chairman Bob Lutz, who is pushing the Volt electric car, said almost the same thing a few weeks ago on the “David Letterman Show.” The party is over, as other countries gallop up behind us and try to overtake us.

No matter what happens, the food business will be a good one to be in. Food might even see its share of the income pie increase, after years of decline.

The demand will certainly be there. The U.S. population continues to grow. The health recommendations to increase fruit and vegetable consumption continue. Any health reform, with prevention as a key component, will undoubtedly promote more produce consumption.

Worldwide demand will also increase, as population pushes toward 7 billion people. The latest issue of National Geographic devotes a  section to world food production. The news is not good. Productivity is down and has fallen below the rate needed to keep up with population growth.

A billion people do not get enough to eat.

The magazine calls for a second Green Revolution, like the one of the 1950s and 1960s, when new growing techniques and better seeds pushed up yields and staved off starvation.

A new revolution is likely to rely on biotechnology, smarter growing methods and ways to irrigate with as little wasting of water as possible. There will be less need for heavy input use of pesticides and fertilizers.

 Agriculture will be more sustainable, but not to the point of organics. As of right now, the world’s 900 million farms cannot feed everybody.

So the short-term outlook is mixed, with an economy that is down but not out. The long-term picture looks good, with plenty of mouths to feed, plenty of need for fruits and vegetables.

Growing demand for better diets in many places, and incentives to increase productivity, exports and to build markets at home and abroad.