Challenges, opportunities confront processors in 2017

February 4, 2017

Despite many business challenges, produce processors and their trade associations look forward to what the new year could bring the industry.

The supply of challenges rarely lessens, and the same issues the fresh-cut and processing industries battled in 2016 are expected to continue to be pressing concerns in 2017.

As numerous issues pressure all businesses in today’s economy, many processors are optimistic that the Trump administration will try to reduce some of the governmental regulations that hamper business movement.

On the state and regional levels, regulations and water pose the biggest tests.

“There’s no shortage of regulatory challenges in (California), but I think the ongoing issues of water availability and conservation will affect everyone in the food supply chain,” said Rob Neenan, president and chief executive officer of the California League of Food Processors (CLFP). “From the growers to the processors, it’s still an evolving situation. Everyone’s cognizant that long term, it will be on everyone’s minds as a major concern.”

Neenan expects Gov. Jerry Brown to continue pushing an aggressive environmental agenda including air, water and labor rules. He hopes the state’s businesses can inform lawmakers on how regulations affect the costs of doing business.

Water issues dominate the work of the Midwest Food Products Association (MWFPA).

“There’s just no end to (regulations),” said Nick George, executive director. “Besides the challenges we all have on consumer perception, which is always a given, some of the tougher things we are running into are environmental regulations, which tend to be around water. Water seems to be the big issue.”

While Illinois, Wisconsin and Minnesota offer favorable water access, governmental regulations don’t reflect that reality, he said.

Food safety is one of the issues the American Frozen Food Institute (AFFI) expects to tackle in the new year.

As part of the Alliance for Listeriosis Prevention, the organization plans to lead collaborative and educational efforts to reduce the incidence of Listeria monocytogenes, which has been associated with frozen foods and beverages.

In Washington, Oregon and Idaho, the Northwest Food Processors Association (NWFPA) works with state departments of agriculture and health to make sure regulators and industry are collaborating on issues, including the Food Safety Modernization Act (FSMA), said David McGiverin, president.

“What I see is people upgrading equipment and facilities,” he said. “I see people changing the way they view the supply chain. I see a lot more sharing going on, the sharing of ideas and ways to improve the supply chain and the effectiveness of their food safety plans.”

Creating higher consumer demand for its members’ products is the biggest goal of the Produce Marketing Association.

“Because almost no one in the U.S. or globally eats the recommended amounts of fruits and vegetables, our challenge – and our opportunity – is to apply proven business skills, especially marketing, to change that,” said Cathy Burns, president.

Ready Pac Produce continues to explore ways it can distribute products into consumers’ hands.

“The challenge is how best to work with our customers and retail partners to better reach consumers in food deserts – those in remote areas or within densely populated city centers without access to fresh foods,” said Alan Hilowitz, director of corporate communications of the Irwindale, California-based fresh-cut processor.

At Natalie’s Orchid Island Juice, the biggest obstacle is maintaining access to quality fruit. The citrus greening disease, which has devastated Florida’s citrus groves, has reduced production and kept demand and prices high, said Natalie Sexton, director of marketing of the Fort Pierce, Florida-based manufacturer.

“The disease is compromising quality,” she said. “Prices have increased, but we are still able to source high-quality citrus that passes our specifications without having issues.”

In the frozen foods sector, AFFI plans to promote the positive story of frozen foods and beverages and their manufacturing companies with the new administration and policy makers.

Among frozen produce’s many benefits is helping reduce consumer food waste, said Alison Bodor, president and chief executive officer. The organization expects food waste to be a topic of considerable attention in 2017.

AFFI plans to work with supermarket dietitians to help consumers understand how frozen foods can be easily incorporated into meals as part of a balanced diet.

New industry product offerings, including buffalo cauliflower and sriracha green beans, are viewed as another opportunity for 2017.

“With innovations such as these in mind, AFFI will work with influencers to rethink the frozen food aisle while educating consumers on incorporating the incredible variety of convenient frozen foods into a balanced diet,” Bodor said.

Responding to consumer preferences where many dislike the term “processing,” MWFPA recently removed “processors” from its name. That accompanies the industry’s need to better promoting processed vegetables’ nutritional benefits and publicizing how the industry has become more productive and efficient through improved packaging and using fewer chemicals in vegetable production.

Shoppers are demanding more fresh food options.

“Consumers are seeking bolder flavors within convenience fresh meal solutions, salads and fresh-cut produce,” said Ready Pac’s Hilowitz. “Their demand for flavorful experiences doesn’t stop at the chip aisle. We continue to see consumers who are variety-seeking, looking for ethnic and regional flavors, as well as seasonal and limited-time offerings.”

Organics will also continue to be a focus for consumers, particularly among millennials and Generation Z, he said.

Industry groups including MWFPA look to the new presidential administration to roll back some of the regulations that have strangled business activity.

FSMA has been a challenge, but the industry can deal with laws supported by science from regulators who genuinely want to do the right thing, George said.

Other regulations, including product labeling and nutrition rules, are problematic, he said.

“If the administration is truly able to roll back or cut back on regulations, or make regulations more common-sensical, it would be a wonderful thing,” George said.

“After 30 years of working in the governmental arena, one thing I’ve learned is that bureaucrats are forever. They’re not an easy group to cut back on.”

While AFFI is assessing the election’s impact on the frozen food industry, it views the new administration as being a positive for business. As president-elect, while Trump has declared his initial policy agenda will include infrastructure investment, repealing the Affordable Care Act and addressing immigration laws and tax reform, the association expects his administration to eventually focus on food issues.

“In general, the food industry should expect the Trump administration to issue fewer regulations and potentially modify or roll back regulations issued under President Obama,” Bodor said. “The Trump administration can be expected to show greater regard for business practicalities.”

The answer to how the new administration may affect business isn’t clear to CLFP’s leaders.

“There was very little said in the last election by any candidate about agriculture and the food industry. It was almost nothing,” Neenan said. “It’s hard to say what their priorities will be. It’s too soon to tell what impact it will be and if it will be positive or negative.”

The industry won’t know until it sees the changes playing out, said NWFPA’s McGiverin.

“We don’t see where there will actually be too much reversal from the new administration, especially in the FDA,” he said. “They won’t likely be meddling with things that have to do with human health as much as people think they would. We think enforcement of the FSMA may be a little different, but we will move ahead.”

— Doug Ohlemeier, contributing writer

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