Fresh produce businesses hoping to ride the locally grown trend into huge profits in 2011 could be in for a rude awakening.

Locally grown produce trend could backfire

Dan Galbraith
Sections Editor

Yes, the National Restaurant Association and various national media are reporting that the “go local” trend should continue through this year and may even grow, but looking into retail projections with more depth, it seems reasonable to suggest that locally grown produce could wind up as a double-edged sword.

While catering to consumers’ cravings for locally grown produce has helped companies trim losses or even make profit during the recession, as the U.S. emerges from the economic doldrums, something called “hyper-local” could trim produce companies’ profit margins in 2011.

Hyper-local, which has restaurants growing gardens and even butchering meat in some cases, is expected to fuel the local food trend this year, according to the NRA’s “What’s Hot” chef survey.

While hyper-local certainly should keep increasing fresh fruit and vegetable consumption, if too many foodservice outlets try to do the “go local” route themselves, it will mean a drop in sales for traditional fresh produce grower-shippers.

Chris Moyer, who leads sustainability programs for the restaurant association, told the Associated Press the hyper-local trend is on the rise because it allows restaurants to cut costs and provides them a perceived greater control over quality than traditional purchasing from traditional produce providers.

For example, The Blue Water Grill in Grand Rapids, Mich., has tripled its garden to about 3,000 square feet in the last year, according to the AP.

False perception

While the association doesn’t collect any data from restaurants on whether or not they have or are planning to use their own gardens, this hyper-local development is troubling for fresh produce companies — not only because of the probable compromise in sales but also because it could lend credence to the perception that traditionally produced and shipped fresh fruits and vegetables are not as safe as those produced in a small local garden.

So, while the fresh produce industry works hard on food safety legislation and traceability, investing millions of dollars, the power of hyper-local, if it takes off, could negate everything.

Let’s hope not because it would be a travesty if America, as a whole, bought into the nonsense that produce from a small restaurant garden is better and safer than that from a grower-shipper fully dedicated to food safety concerns, backed by staff and a food safety-specific budget.

Positive take

Fortunately, much of fresh produce business is retail-oriented, and the produce business lost to restaurant gardens could be minimal, for those on the optimistic side, such as Steve Lutz, executive vice president of the Perishables Group, West Dundee, Ill.

“My feeling is that anything that encourages consumers to want to eat more produce is ultimately a good thing. Plus, I guarantee you that those restaurants won’t be growing many vegetables during the winter,” he said.

More good news for the produce industry: Prepared fruit and vegetable volume exploded in 2010 after two years of declines, the Perishables Group reports. Prepared fruit volume increased 11% last year, while vegetables rose about 5%.

“Consumers were willing to spend more for convenience in 2010,” according to the Perishable Group’s January 2011 newsletter.

“However, to the extent that food prices rise in 2011, prepared produce sales could be impacted. The emphasis on health will keep consumers in the produce department, but they may opt for more affordable whole fruits and vegetables.”

The Perishables Group report said total U.S. fruit and vegetable sales were up about 1.6%, continuing the upward trend that started in 2009, following two straight negative volume years.

E-mail dgalbraith@thepacker.com

Do you think a trend toward hyper-local produce could jeopardize traditional produce sales for foodservice? Leave a comment and tell us your opinion.