Like it or not, produce growers in California and elsewhere who plan to remain in business need to be prepared to invest swiftly in production and processing, and perhaps even new alliances, to claim seats at the table of supermarket globalization. That was the main message from Tom Reardon, professor of agricultural economics at Michigan State University, in his talk in Fresno recently before the 22nd Annual Agribusiness Management Conference. The "window of opportunity" to grasp a share of the "wildfire" proliferation of supermarket networks around the world could remain open for no more than three years, he said. Those outlets want lowest-cost, year-round supplies of fruit and vegetables with quality standards dictated not by governments but by the retailers themselves. While supermarkets in food retail make up three-quarters of the volume in the U.S. and Europe, in Latin America they grew from 15 percent in 1990 to 55 percent in 2000. Three of every 10 pesos spent by Mexicans on food go to Wal-Mart. In Central Europe, supermarkets held 25 percent of the volume in 1999 but 50 percent by 2003. Reardon, a native Californian who holds a Ph.D. from the University of California, Berkeley, specializes in produce markets in South America and Asia. Guatemalan example He said ASUMPAL, a produce cooperative in Guatemala, is a prime example of how a role in the retail revolution was lost by some. In 2001, the co-op, composed of 330 small- and medium-sized farmers, was faced with a critical decision about whether to continue production of roma tomatoes, their only crop for the past 15 years. "By 2001, there was a glut of roma tomatoes and prices for their commodity product were plummeting. The growers looked for a new market among the ‘winners’ on the buying side. In the case of Guatemala, the answer was McDonald’s, which had begun rapidly taking over the food service sector," he said. A price 20 to 30 percent higher than that of the terminal market and much greater price stability were significant attractions in dealing with the fast-food giant. The catch: McDonald’s didn’t want roma tomatoes. It wanted salad tomatoes, the same amount consistently every week, with its quality standards, including color, size, shape, allowable blemishes, pesticide residuals, and temperature at delivery. To cut a deal, ASUMPAL members would have to install drip irrigation and redesign packing sheds and vehicles, costs of which would require substantial investment by each member, plus a tripling of co-op dues. "Of the 330 members, the 30 medium-sized farmers chose to stay, and the remaining 300 small farmers left the group. A year later, only six of the medium-sized farmers remained after having bought up the land of the other small and medium operators. Those six growers made the necessary investment to succeed and are now working into value-added activities," he said. Quick changes The "knife edge of globalization," he continued, applies to a dramatic change in the market everywhere. "Tremendous amounts of attention to the change, as well as substantial investment, have to be made, all within a window of one to three years." World-class suppliers are aggressively seizing the prize, but Reardon still sees opportunities for California producers to take a considerable share in the new market. Yet producers can’t afford to lose sight of the opportunities that masquerade as threats and challenges to making changes. The broad, centralized procurement systems of Wal-Mart or other international supplies are what Reardon called "a hittable target, rather than trying to get your market with street-to-street fighting." At the same time, participating is a challenge because sources include several regions and multiple seasons to sustain fresh, year-round availability. And there is a quantum leap in competition, "as strong gladiators stride into the stadium," he said. It is driven by one billion people who are emerging as consumers and is curtailing stable "home markets" or "captive niches." While U.S. standards may seem high, Reardon said, Chinese and Chilean producers are sprinting to meet certification in the safe-foods market with "top, equal-to-the-U.S. standards of hygiene and quality in processing plants." So who is making the adjustment most successfully? Foreign countries once having cattle wading in streams flowing through farmland, he said, are making improvements to confine animals and eliminate disease contamination in the field. "And top-flight roads and other infrastructure are going in at lightning speed" by governments in Chile, China, Mexico, New Zealand, Australia, and South Africa. Distance conquered "Long distance supply has been opened up by trade liberalization and improved technology in cooling and handling." The key winners around the world, Reardon declared, "are people who are listening and asking what their buyers want. They are quickly adapting to changes as they create a diversity of products having year round availability at low cost." One example of emerging massive outlets is XinCheng Foods in Shanghai. Supermarkets in China, where half the retail food sales are in the 60 largest cities, expanded from 200 in 1992 to 6,000 in 2002. XinCheng Foods’ fresh-cuts tonnage ballooned from 150 tons in 1997 to more than 2,000 tons, with high quality standards, presently. Meanwhile, on the domestic scene Global Berry Farms in Florida formed a new operation from Michigan Blueberry Growers, Hortifrut in Chile, and Naturipe of California to meet expanded contracts for berries with Kroger Foods.