The Global Fresh Fruit and Vegetable System: An Industrial Organization Analysis

1. The Global Fresh Fruit and Vegetable System: An Industrial Organization Analysis William H. Friedland

2. Goals Restructuring of an industry as it globalize To understand the process in which firms, originally local, regional, nation in scope, become transnational in character

3. History • Before the Industrial Revolution • Most people produce their own food • Population increase in urban area • Limited amount of land • Food had to be brought in from rural agriculture • New production locations- California, the U.S. Midwest, Argentina, Canada and Australia • Globalized food system appear

4. Food Processing, Packaging& Preservation • Development of frozen food technology • Taste more like fresh food • Canning industry declined • Technology improve food preservation • Canning

5. Change in Eating Food • 19th century • Urban population ate fresh food seasonally only until the turn of the 20thcentury • Started with bananas and tropical fruits that could withstand long transportation~ the idea of “good-looking” fruits • Banana industry grew

6. Year-Round Food • Population of urban cities grew • Started with lettuce~ producing in different location • Later tomatoes also became part of the year-round line • Produce in different location • Harvest when it turn “mature green” • Heat tomatoes& gas it with ethylene gas, • which is a natural • Fruits turn red and look ripe

7. Year-Round Food Cont.… • Supermarket demand steady and predictable stream of • fresh produce • Possible because lengthen production season through • plant-breeding program • Change in agriculture • Produce in different location

8. Food Miles • The health-food movement and concern about • food safety • The development of production capacity through • the export of capital and technological expertise • The establishment of capital-intensive “cool chain” • Maintain a certain temperature from origin to • consumer

9. Food Miles Cont.… • Distance in which food travel stretch over thousands • of miles and across continents • South America, Africa and Asia transporting food to • North America, Europe and Japan and Hong Kong in • Asia • “Fresh food is consume worldwide, but in countries, • with large population, such as China, India, and • Nigeria, there is only local production for • local consumption.”

10. Industrial Organization Structure • Three segments of the fresh fruit and vegetable industry • Marketing • Production • Both lean towards transnationalization but, more towards localized, regional, or national character

11. Distribution • Transnational • Advertising and news report in trade publications • News reports on financial pages • Word-of-mouth of individuals involve in the industry

12. Connections • Dumbbell metaphor • Production and marketing involve more people • Distributors are involve in both in production and marketing to some degree Production Marketing Distribution

13. Chiquita • Banana history • 1969 • Bought seven lettuce producing firm in California • combine into one, Interharvest • Single largest firm in U.S. lettuce production and • distribution • Fail~ close down in 1983 • Competition • Dole and DMT

14. Polly Peck/ DMT • Some banana history • Started as small firm in British “rag trade” in clothing • 1980, Asil Nadir took over and change it to Polly Peck International • 1989 • DMT (Del Monte Tropical) and Sansui moved Polly Peck to top hundred British corporation • Flourish • Citrus base unlike Chiquita and Dole

15. Albert Fisher Group • Started off as small operation in Great Britain • 1982 • Bought by Tony Millar • Expand in least than a decade • How is this possible? • Bring in capital, one’s own and other investors • New capital are needed continuously so that firm grow • Target firms that have established earnings pattern and • potential for improvement