Farmers seeking more sales clout A new produce marketing group, consolidating the crops from six coastal farms, has passed its first summer successfully in what may be a trend in the industry: small to medium-size growers setting up a single marketing arm to create marketplace clout.
They figure if the supermarkets can consolidate and more closely control purchasing prices, they could do the same thing to control selling prices.
"We felt it would be better to have a bigger produce base," says Steve Church, who with brother Tom, are the general managers of Fresh Kist Produce. They are Fresh Kist co-owners with five other producers in Santa Maria, Calif.
Fresh Kist, an LLC company is the sales representative for growers with a combined 20,000-plus acres of vegetables. Is it the sole sales outlet for these individual farms which have disbanded their own sales forces and in most cases sent their salesmen to work for the common marketer.
"There's been a huge consolidation of buyers on the chain store and food service side," says Church, whose office is in Salinas and is the only Salinas-based grower in Fresh Kist.
Joining Church Brothers in the alliance are Santa Maria-based producers Teixeira Farms; George Adams' A & A Farming; Joe Jorge and Chad Smith of Byrd Produce; Ron Burke and Bon Espinola of Gold Coast Produce; and Dick and Jim Donati of Pack Fresh Produce.
"Fresh Kist was designed to get the most money back to the ranch," says Glenn Teixeira, sales manager for
Growers all neighbors Teixeira Farms. He noted that although other growers were contacted and invited to join, the ones who ultimately made the decision were all old acquaintances and neighbors.
Teixeira Farms, a company that last year had a sales force of five, joined Fresh Kist because of the recent history of produce marketing for Teixeira and other growers in Santa Maria.
"In the `70s and `80s we sold a lot to the brokers and the Los Angeles market," he recalled. Those included both national supermarket chains and small local chains such as Williams Brothers Markets. Williams and many other retailers like it no longer exist.
"They got bought out by Vons. Vons got bought out by Safeway." It was worse for the small wholesalers who used to buy a lot of Santa Maria veggies, Teixeira notes. "The little wholesalers around in the 70s have gone out of business."
In addition, Teixeira says, the market has changed. "If you had a field that was a bit off-quality, you could sell it to somebody who was looking for a bargain. Not any more.
"It all has to be No. 1 quality now," he says.
"We were beating ourselves up competing with each other," Teixeira says. Buyers, who would play them against each other, forcing prices down even in strong markets would batter all the Santa Maria growers.
"With the consolidations on the store side, we thought it would be nice to join with other entities and get a broader shipping base," Teixeira says.
Church says discussions had been in the works informally between some growers for months, but the deal finally coalesced last spring. Church Brothers was the only Salinas grower to join the group.
"I would say Glenn Teixeira and my brother Tom have had a good relationship for a long time," Church says in explaining how the idea came to pass. "It came from those roots."
A major reason that Fresh Kist was formed was that growers felt that Santa Maria produce was getting generally lower prices-in competition with Salinas and other large summer production regions.
"They felt that was pretty much unfair, because they felt they had as good a quality or better than Salinas," Church points out. He adds that because of Santa Maria's long history of shipping to Los Angeles, which generally provides lower prices than for vegetables shipped to eastern markets, it had suffered from lower prices. Fresh Kist will probably ship more east now.
Church says the food service industry is a huge fresh produce market, and that too has become consolidated. About six major players now control the bulk of the market, and growers need volume and clout when they deal with them.
Shipper consolidation Tom Oliveri, manager of marketing services for the Western Growers Association, confirmed Church's and Teixeira's analyses of recent marketing history. He says Fresh Kist may be the start of a trend to consolidate produce shippers.
"We've seen some of that, and we're going to see a lot more," Oliveri says. It is a step taken for survival in a difficult marketplace.
"They've taken a big step forward," he says, and other growers around the west are watching to see how it works.
Church said Fresh Kist's primary focus since it was formed was on quality.
"We're a bigger company, but we feel people are going to buy better produce from us," Church says. The company, which has over 50 employees in Santa Maria and Salinas offices, has 19 sales people.
The quality specs outlined to Fresh Kist growers are still in the evolution stage, but already the company is insisting on growing, harvest and packing standards for each crop. For head lettuce, for example, there are specs on weight, color and number of wrapper leaves. And company inspectors check it. A former grower, Gary Anthony, is the head of quality control.
"He goes around and makes sure the produce is done right," Church says. In addition, there is a manager for each of the five major crops that Fresh Kist is focused on-head and leaf lettuce, celery, broccoli and cauliflower. Those managers follow their crops from acreage planning to shipment.
"We're shipping around 100,000 packages a day," and crop managers work very closely with each grower/owner to ensure quality. Jim Storm in Salinas is head of production, and John LaGrandeur is chief financial officer.