Business Matters
Tomato officials weigh in on salmonella outbreak
By David Mitchell, The Packer
(June 4, UPDATED 12:12 p.m.) The New Mexico Department of Health is looking closely at Mexico as the source of the tainted tomatoes in the outbreak that has sickened at least 40 people in New Mexico and Texas.
Retailers are pulling round red and roma tomatoes off shelves after the Food and Drug Administration warned consumers in Texas and New Mexico against eating those tomatoes raw.
Following the June 3 FDA announcement, at least two retailers, San Antonio-based H.E. Butt Grocery Co., and Cincinnati-based The Kroger Co. pulled implicated tomato varieties off the shelves in Texas locations, according to the Houston Chronicle.
"Ensuring the safety and quality of products sold in our stores is a top priority for HEB," Winell Herron, HEB Group vice president of public affairs and diversity, told the Austin American-Statesman. "We continue to monitor the situation closely and will return the product to our stores once it is absolutely safe for our customers."
"It's really preliminary at this point, but New Mexico gets most of its tomatoes from Mexico at this time of year," says Deborah Busemeyer, the New Mexico Department of Health's communication's director. "Preliminary indications are that the tomatoes are from Mexico."
Busemeyer says that 19 people in that state have suffered Salmonella Saintpaul infections with the same genetic fingerprint as 21 victims in Texas. She says New Mexico is investigating 17 other cases that could be related.
Food and Drug Administration spokesman Sebastian Cianci says there have been a total of 17 hospitalizations in Texas and New Mexico. Federal and state agencies also are investigating whether 30 cases in Arizona, Colorado, Idaho, Illinois, Indiana, Kansas and Utah are associated with tomatoes. No deaths have been reported in any of the states, Cianci says.
Cianci says it was too early to point blame squarely at Mexico.
"We don't have traceback information that indicates whether it was domestic product or imported product," he says.
Reggie Brown, manager of the Maitland-based Florida Tomato Committee and executive vice president of the Florida Tomato Growers Exchange Inc., says grower-shippers are working with the FDA, The Centers for Disease Control and Prevention and state agencies to bring the investigation to a speedy conclusion. Brown says the outbreaks and ensuing media attention could lead to lower demand and prices.
"The level of public awareness and industry awareness is rising by the hour," he says June 3 after a conference call with other tomato industry representatives and officials from the federal agencies.
Ed Beckman, president of the Fresno-based California Tomato Farmers cooperative, says growers in that state had not experienced any pushback from customers as of June 3. He pointed out that the state didn't begin harvesting tomatoes until May 15. The first reported illness was April 23, according to the CDC.
Cianci says June 3 that new cases had been reported as recently as June 1.
"What everyone would like to see is that it's narrowed down," Beckman says. "As it is, a number of statements that have been made have been very broad."
That, Beckman says, would include an advisory from the federal agencies for consumers in Texas and New Mexico not to eat raw red plum, roma or full-sized round tomatoes other than those sold on the vine or grown at home. The CDC said in a news release that the specific variety and the origin of tomatoes are still under investigation, but that "preliminary data suggest that large tomatoes, including roma and red round, are the source."
Cianci, however, stressed that cherry tomatoes, grape tomatoes and tomatoes on the vine had not been implicated.
The first illnesses in New Mexico were reported May 6 and have been linked to tomatoes purchased at Wal-Mart, Basha's Supermarkets and Lowe's Markets, Busemeyer says.
"We bought a ton of tomatoes, and we're in the process of testing them," she says. "We're testing all different kinds. We tried to take a wide sample."
Brown says that narrowing the cause of the outbreak to a certain variety might not be enough to protect grower-shippers.
"Unfortunately when you have the word tomato associated with a health risk, there's a significant possibility that consumers will back away from the category," he says. "Even though the FDA will eventually identify a specific portion of the category, the public will react more broadly than the advisory. Our partners in the industry might also react more broadly than the advisory calls for."
Industry to consider more shipments by rail, ocean
By Tom Karst, The Packer
With truck shipping rates increasing, companies are considering other options.
Dan Sumner, professor of agricultural economics at the University of California-Davis and director of the university's center for agricultural issues, says shippers might move to rail, possibly culminating in a facility in the central coast region that would allow for greater consolidation of rail shipments. No large vegetable shippers in the Salinas Valley have rail sidings now, he says.
In view of energy price shocks, some suppliers are preparing for big changes.
"My opinion is that (the cost of energy) will never be what it once was," says David Mixon, senior vice president and chief marketing officer for Seald Sweet International, Vero Beach, Fla.
Mixon says Seald Sweet is seeking to consolidate locations as much as possible. Taking costs from the system is essential to ensure that consumers won't be priced out of the market.
With trucking costs adding 15 cents per pound for apples delivered to the East Coast, Roger Pepperl, marketing director of Stemilt Growers Inc., Wenatchee, Wash., says shippers will be looking to optimize transportation efficiencies, including greater use of options like Railex LLC, the Rotterdam, N.Y.-based rail service with a facility in Wallula, Wash.
Mixon said the market of tomorrow won't look like today.
"We as marketers, we as retailers, we as producers have to do more to reduce truck miles or food miles," he says. "I see this industry changing drastically over the next five years due to this issue."
While social responsibility can be credited as one reason for coming changes, he says common sense and reducing costs are front and center.
Mixon says consumer choices of fresh produce might be reduced in the future, with less California product shipped to Florida, for example. Or when product is imported, that produce might stay on the East Coast rather than be transported to the West Coast. For imports, different ports of call may be used to reduce mileage, and Mixon says options like rail and shipments by ocean from Florida to East Coast markets would be examined. However, he says, options like rail may be slow to develop.
"Without a doubt we are looking at rail. Without a doubt we are looking at container services and bulk vessels," he says. "We are trying to gear up the supplier base for that process so we can meet the demands the industry is going to place on them."
Strong demand predicted for July 4th holiday
By Andy Nelson, The Packer
Supplies of high-quality summer produce favorites should be abundant this Fourth of July.
And while the economic downturn could put a dent in demand for some commodities, most grower-shippers expect strong pull for the holiday.
Heading into summer, Sunny-Cal Fruit Sales Inc., Reedley, Calif., is enjoying strong demand for peaches, nectarines and plums, and Chris Symank, sales director, is hopeful that will continue into the holiday.
"Demand's extremely good, probably the best in several years," he says.
With gas prices high and the economy slumping, more people are eating at home, which is helping stone fruit sales, Symank surmises.
He says there should be promotable supplies of high-quality peaches, nectarines and plums for the holiday.
"The quality looks extremely good," he says May 28. "There was some rain damage last weekend, but it should be minimal."
Rains May 24-25 hit cherries and strawberries harder than stone fruit, which could give the category an extra boost for Fourth of July pull, Symank says.
On May 28, the U.S. Department of Agriculture reported prices of $22.05 for two-layer tray packs of yellow-flesh peaches 48-50 from California, comparable to last year at the same time.
The May rains shouldn't affect holiday strawberry supplies for California Giant Inc., Watsonville, says Cindy Jewell, marketing director.
The company expects excellent quality and ample promotable supplies for the Fourth, with strong demand thanks to Cal Giant's Wimbledon sweepstakes promotion this summer, which so far has been a hit, Jewell says. The grand prize is a trip to Wimbledon 2009.
"We're getting about 3,000 to 4,000 entries per day," she says.
On May 28, the USDA reported prices of $11.90-12.90 for flats of 12 one-pint baskets of medium and large strawberries from California, comparable to last year at the same time.
Once soggy South Florida cleared out of the deal, watermelon quality has improved dramatically, says Brent Jackson, owner of Jackson Farming Co., Autryville, N.C. The company expects to have ample supplies for its customers for Fourth of July, he says.
"The quality has been really excellent out of central and northern Florida," he says.
The economic downturn may weaken demand around the holiday, Jackson says, but movement has been decent so far this year.
On May 28, the USDA reported prices of $15-16 per cwt. of 24-inch bins of red-flesh seedless watermelons from Florida, down from $22-23 last year at the same time.
Sweet corn volumes targeted for Independence Day are expected to be down this year for Mendota, Calif.-based Stamoules Produce Co., says Demetri Karabinis, salesman.
"From what we hear, we'll be down a good amount going through the holiday," he says. "There will still be promotions, but there will be a lot less for us."
The company has cut back on sweet corn acreage in an effort to grow more profitable crops, Karabinis says.
Karabinis expected good quality on corn shipping for the holiday.
On May 28, the USDA reported prices of $10.95-11.95 for cartons of four dozen white and yellow sweet corn from California, up from $9.95-10.95 last year at the same time.
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