MARKET REPORT - JUNE 16TH, 2017

As if money was edibleAlong with many changes I had intended on talking about today, I’ll hang on until mid- week for the produce news, and instead talk about the biggest shake-up in our industry, like forever.   Most of the news across the media today is all about the money – Billions and Billions of dollars – as if money was edible, but the most concise story that is a little on the alt-left, talks more about choice, supply and an increasingly narrowing profile of corporate control of our entire food chain.Amazon Extends Tentacles Further With Purchase of Whole FoodsBy Andrea Germanos, staff writer, Common DreamsOnline behemoth Amazon is acquiring Austin-based Whole Foods Market for $13.7 billion, the companies announced Friday—a development that watchdogs say will pad billionaire pockets and spell bad news for consumers.Jim Cramer expects the deal to make Amazon, headed by Jeff Bezos, "dominate food within the next two years." He added: "I'm taking down numbers for everybody who sells food. Everybody. Because you can't compete [with] Amazon. They will not let you compete."It's already "rattled the retail sector." Indeed, writes Bloomberg, the acquisition "sends shockwaves across both the online and brick-and-mortar industries. Grocery chains (share values) plunged on Friday—Wal-Mart Stores Inc. fell as much as 7.1 percent, while Kroger Co. tumbled 17 percent—as investors worried that woes will mount in the increasingly cutthroat industry."(Amazon's stock, meanwhile, was up 3.3 percent—making the acquisition "essentially free" for the online giant.)According to Wenonah Hauter, executive director of Food & Water Watch, "Too few companies already exert outsized influence over our food choices. This is extreme consolidation of the food system in action, which will lead to higher prices, fewer choices for consumers, and bigger profits for billionaires like its owner, Jeff Bezos.""Consumers already face substantially reduced options for grocery shopping because of a wave of mega-mergers that have swept the supermarket and grocery manufacturing industry. In recent years, more than 4,000 grocery stores were joined under two owners after the Albertsons-Safeway and Ahold-Delhaize mergers. The proposed Amazon-Whole Foods deal only further curtails consumer choices and raise prices," she said.A report last year from the Institute for Local Self-Reliance outlined the "extending tentacles" of Amazon, which "controls the underlying infrastructure of the economy."The company's already increased dominance, the report warned, is "eroding opportunity and fueling inequality, and it's concentrating power in ways that endanger competition, community life, and democracy."Speaking to that control, Barry C. Lynn, director of the Open Markets Program at New America, stated Friday that the "private corporation already dominates every corner of online commerce, and uses its power to set terms and prices for many of the most important products Americans buy or sell to one another. Now Amazon is exploiting that advantage to take over physical retail.""But this is just part of America's Amazon Problem," he added. "The corporation wields vastly too much power over America's markets for books and music, and is fast consolidating control over other key flows of information and ideas." The flow of this article simply underlies some very real fears in the retail food sector, whether organic or conventional.  It used to be that a retailer had a choice of suppliers, choice of brands, and choice of product, and paid what the food was worth.  Today, the number of suppliers is shrinking, the choice of brands is not only shrinking, but top brands are disappearing from the overall selection, now going exclusively to the largest chains - and pricing is now controlled by the big box, not producers.And I’m not singling out Whole Foods by re-printing this here.   It isn’t about them, it’s about control of seed, farms, pricing that is falling into the hands of fewer and fewer multinationals.  Some of these .com companies like Amazon, Facebook, Google, Microsoft now have bigger economies than most countries in the world.Ultimately, smaller retailers, locally-owned shops, and non-franchise independents will continue to take it on the chin – losing any possible competitive edge on pricing against major national chains.  Oh, and who else suffers?  Farmers.  Farmers who can no longer indicate their selling price, but pack and ship on contract, at ‘barely survivable’ pricing, or risk it all walking away from contract sales to majors. The farmers who have to grow for ads, grow and pack for price point, yet also have enough spec product set to harvest to meet the ‘just in time’ shipping cycles that are now required, no matter how stressful, not to mention serving all their other customers.Luckily, we’re a little safer, and in a business where farms and their sales organizations are more deeply steeped in the buy and sell traditions of the organic produce sector, have longer standing relationships, and are not willing to walk away from good customers to move the majority of their business over to serve one corporate giant or another.But we do see it – we are often told  “oh, that’s done for the season” or “nothing on the floor to ship today”, and we know full well that the full truckload that was likely available this morning went to Krogers or Walmart to meet commitments much larger than ours.We also see it even in our own grower community – farms or added-value operations gearing up, expanding, and increasing infrastructure to meet large orders from huge retailers.  As often as not it can be very risky business.We watched these changes in the fresh fruit and vegetable business back nearly 2 decades ago when we started contracting crops from B.C. based growers – many of whom continue to be the backbone of our business – farms whose names have been on 2000 of our price lists over the years.  Initially we started spreading our contracting to different regions as a safe bet against climate change and ongoing droughts.  We didn’t realize that fostering relationships across the Americas, through Mexico, Peru and Chile was also going to help us maintain as complete a supply line as possible for our customers because there was less chance of these farmers deserting us for the perceived upside of opening up to any number of mega-retailers.  Even then, we have watched a few long term relationships ‘go south’ with the promises of huge sales, guaranteed sales and great prices over the years.   More to come………..…….and back to Whole Foods – consider that customers will likely be able to order on-line from Amazon and have their organic goodness order delivered by drone!  (Hope it doesn’t land in the swimming pool!)