During the panic-buying phase in the early spring, few experts in the food industry would have predicted the unprecedented levels of vertical co-ordination and incredible support food companies offered to one another. Everyone worked for one shared purpose.

Before COVID-19, things were tense between processors, grocers and farmers. But it was particularly brutal between processors and grocers. Grocers delivered constant unilateral notices through fees and fines. Processors just accepted it, one notice after another. This industry-wide practice has been going on for years.

However, a recent decision by Walmart may be the last straw.

Walmart Canada announced in July that it will require more than 3,000 Canadian suppliers to finance its expansion by charging extra fees for every shipment. Walmart argues that its strategy is about helping consumers save.

In addition to some standardized fees, some items must be delivered in their entirety on the correct date 75 per cent of the time. If items are late or missing during a one-month period, the processor will be fined three per cent of the value.

Your truck is stuck in a snowstorm?

Tough luck.

Even early shipments will incur a fine of three per cent of the value.

New fees could jeopardize the profitability of many Canadian food processors. Some multinationals are among the 3,000 suppliers on Walmart’s list, but there are also several small and medium-size family-owned companies trying to keep jobs in rural communities across the country.

Food manufacturing is dying a slow death. The sector has lost 12 jobs a day every day since 2012. And although it’s one of the largest sectors in the country, things may get even worse. We’ve seen recent success stories in parts of the country where new plants have been built, but failures and closures are numerous.

Many factors are contributing to the sector’s demise, the most significant being the ailing co-operative spirit between grocers and vendors.

Undermining food manufacturing is to deny the agri-food sector its strategic foothold. Innovating and growing an economy, especially in rural communities, becomes more challenging.

Recent economic studies suggest that seven jobs can be added just by creating a single food-manufacturing job. That ratio is unmatched by any other sector of the food supply chain.

Growing your own food is a good start, but without processing, a nation’s food security remains highly vulnerable. Over time, consumers will pay a hefty price for their nation’s inability to process its own agricultural commodities. With less processing, uncontrollable factors like currency wars, embargoes and tariffs will threaten our food security, one way or another.

Walmart and others can try all they want to make us save, but less procurement control will eventually lead to extremely volatile – and likely higher – retail prices.

The companies that mostly dictate how and what we eat are grocers. Processors and farmers have little say in what Canadians eat.

But that may change, partially due to COVID-19. E-commerce is providing processors with broad access to consumers. And many companies have pivoted in that direction in recent months, avoiding the oligopolistic nature of Canadian food retailing. Wholesalers like Sysco, Gordon Food Service, PepsiCo Canada, Saputo and many more are either doing it or considering it.

Just five companies sell 80 per cent of all the food Canadians eat: Loblaws, Sobeys, Metro, Walmart and Costco. They have great power, but protecting food manufacturing has never been a real priority for them even though they say it is.

A more democratized supply chain would cause food companies to share more with the public in the exchange for precious information about the market and future trends. As grocers try to get a better sense of what the post-COVID-19 market will look like, processors are contemplating options to get to us.

Walmart is making the life of food manufacturers miserable because it can. The food-manufacturing sector has no voice and is rarely given any attention by governments, starting with the federal government.

If COVID-19 failed to change anything, there’s little hope.

There is, however, one solution. To counter abusive behaviour by grocers, establishing a publicly sanctioned code of conduct for grocers should be considered.

The post Comment: Walmart flexes its muscles and food processors suffer appeared first on Manitoba Co-operator.

This year, he fears uncertainty around Britain’s departure from the European Union will keep his eastern European workers away and the asparagus will stay in the ground.

Asparagus grown in Britain is feted by chefs as among the world’s best but the seasonal worker shortage threatens the country’s asparagus industry and the viability of Chinn’s Cobrey Farms business.

It is a predicament shared by many British fruit and vegetable farmers, almost totally reliant on seasonal migrant workers from EU member states Romania and Bulgaria taking short-term jobs that British workers do not want.

At Chinn’s farm, which turns over more than 10 million pounds (C$17.7 million) a year, the workers pick the premium asparagus spears that can grow up to 20 cm a day by hand. Sometimes they pick them twice a day before dispatching them to customers such as Marks and Spencer, and Britain’s biggest supermarket, Tesco.

“It is incredibly clear cut — there is no U.K. asparagus on your supermarket shelves without seasonal migrant workers,” Chinn, whose great grandfather started as a tenant farmer in 1925, told Reuters.

“We’re really at the point where we either import the workers or we import the asparagus.”

Britain’s asparagus season is short and early — traditionally running from April 23, known as Saint George’s Day, to Midsummer’s Day in mid-June. It will be the first big test of the 2019 seasonal labour crisis.

No-shows

This year Chinn’s team has had to work much harder to recruit Romanians and Bulgarians who are perplexed by the long Brexit process as Prime Minister Theresa May seeks parliament’s approval for a divorce deal with the EU. They are also wary of the welcome they will receive from Britons, who voted in 2016 to leave the EU.

Though Cobrey Farms has signed up 1,200 workers who are due to start arriving at the end of this month, Chinn fears many will not turn up. He does not think he will be able to harvest the entire crop, meaning valuable asparagus will be left in the fields.

“If we’re 20 per cent short of people then we will harvest 20 per cent less asparagus,” said Chinn. “U.K. agriculture’s not a high-margin game, so 20 per cent less means we’re in loss-making territory. Fifty percent could sink us.”

Chinn’s concern grew after 20 of the 100 or so workers due to help cultivate the crops in January failed to turn up.

Of 247 workers due to arrive between March 31 and April 6, 125 are yet to book flights, he said. They include 38 who have worked at Cobrey Farms before and stayed in the dozens of static caravans that stand at the foot of the hills on the farm.

Chinn, who voted Remain in the 2016 Brexit referendum, said uncertainty over eastern Europeans’ employment rights and how long they can stay, combined with a fall in the value of the pound, meant Germany and the Netherlands were now considered more attractive destinations.

“They go somewhere which is most straightforward and any, even minor, hurdles you put in their way is just nudging them ever closer to going somewhere else,” he said.

With just 11 days to go until Britain is due to leave the EU, the government is yet to agree a withdrawal arrangement or an extension, meaning the risk of a disorderly “no-deal” Brexit cannot be ruled out.

If Britain agrees on a divorce deal, a transition period will kick in, maintaining freedom of movement until the end of 2020. In the event of no deal, EU citizens arriving after March 29 would need to register to work for more than three months.

Elina Kostadinova, a 28 year-old harvest manager at Cobrey Farms who is from Varna on Bulgaria’s Black Sea, said many workers were worried about coming to Britain because of Brexit.

“They don’t know if they will be welcomed in the country, how long they may be able to stay, how they may be able to travel and what the future may hold,” she said. “It would be wonderful if the U.K. government could make a decision, so we can relay this message.”

British farms typically pay workers the national minimum wage of 7.83 pounds (C$13.90) an hour plus performance-related bonuses.

Chinn said the idea of British workers plugging the gap was fanciful. He does not expect much help from the supermarkets, where sales volumes have already been negotiated for the season and prices have been fixed, barring exceptional circumstances.

Permit trial

Britain’s fruit and vegetable sector relies on up to 80,000 seasonal workers from the EU each year. Having previously been inundated with applications, labour agencies say interest dropped off in 2017 and 2018 as workers from Romania and Bulgaria opted to go elsewhere in the EU.

For the last two seasons, Britain has been short by around 10,000 workers, threatening the food supply and forcing farms to pay higher wages and bonuses. At the end of the summer as workers want to leave, farms will offer free accommodation and to pay the cost of flights to try to persuade them to stay on.

Concordia, a labour agency charity that finds EU pickers for British farms, said it now has to work much harder to recruit.

“U.K. agriculture is definitely entering into a crisis. No labour means no harvesting, which means no fruit and no vegetables on shelves in British supermarkets,” Chief Executive Stephanie Maurel told Reuters.

She was speaking in Moscow after the British government sanctioned a pilot trial for 2,500 workers to enter the country from Russia, Ukraine and Moldova for up to six months over the next two years.

Chinn, who has 3,500 acres of land, wants the government to increase the numbers to 10,000 this summer and over 50,000 in the next couple of years.

“We can’t change this natural cycle of the crop… the crop will come out the ground when it warms up,” he said. “So the key is about not waiting for a total disaster that wipes out large swathes of UK horticulture.”

— Reporting for Reuters by James Davey and Kate Holton.

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Where in years gone by there were nothing but barriers, now more grocery stores are keen to stock locally produced products, says a Manitoba Agriculture business development specialist.

Gone are expensive listing fees to buy shelf space in stores, and you won’t find yourself facing daunting presentations with skeptical category managers either, Jeff Fidyk told St. Jean Farm Days.

The whole process has become very friendly for small-scale companies, with stores across Manitoba now actively looking for entrepreneurs with a product to sell, he said.

[AUDIO CLIP below] Many think selling to a store is expensive and difficult to do, but Jeff Fidyk, business development specialist with Manitoba Agriculture tells St. Jean Farm Days it’s not nearly as complicated or costly as it might seem.

“This is actually a wonderful time for someone to sell a local product,” he said.

“Safeway and Sobeys stores have initiatives right now where they’re actively looking for new, local food products to bring into their stores,” he said.

Red River Co-ops in Winnipeg and the Federated Co-ops throughout the rest of Manitoba likewise are very keen to hear from new product makers, he said.

Fidyk is with provincial Food Commercialization and Agri-Product Processing Branch and gave a talk at the early-January farm show on some of the reasons farmers in Manitoba should think about starting up a secondary value-added business on their farm.

These stores recognize that locally grown and processed foods are in high demand, and are keen to stock them for customers, he said.

Their staff are more than willing to work with new entrepreneurs, he told the farm meeting.

You also needn’t be producing large volume of products to get a meeting, he said. They’ll be interested to hear from you even if you have limited product to sell.

“If your capacity right now is such that you can only supply one store, they’re perfectly happy to work with you and to get your product into that one store,” he said, adding the goal there is to help you increase sales and production capacity so you can supply more in the longer term.

Sales in stores have specific food safety, packaging and labelling requirements which Manitoba Agriculture staff can help you figure out, Fidyk added

Fidyk will conduct several workshops in February on how to set prices, decide how much to produce, plan for associated costs, create sales materials and make pitches to stores for your product.

Dates and locations of workshops is found at the Manitoba government website (PDF).

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Picking up groceries and lugging them back home is work, something most would rather avoid. On the other hand, many of us do enjoy visiting food stores and discovering new products or new flavours. But most Canadians would agree on one thing. Waiting in line to pay for your items, no matter how patient you are, is the single most frustrating part of grocery shopping.

For decades, the most mismanaged part of the grocery experience has always been leaving the store. As you enter, many stores have greeters, sometimes even the owners, who go out of their way to make sure you feel welcome. There are usually staff available, somewhere, when you need help finding what you are looking for. But leaving the store, and specifically going through the checkout, can often turn into a nightmare.

To avoid getting stuck in line waiting to pay for their items, all the while being forced to take in the news of the latest Elvis sighting in the National Enquirer, Canadians will opt for the often dysfunctional self-checkout machines. Poorly designed self-checkout lanes have been a source of frustration ever since the technology first appeared in Canadian stores in 2000.

Something always goes wrong, which then requires an employee with a portable scanner to come to the rescue. The experience is, most often, embarrassing and annoying. But, despite all the flaws, Canadians are still using self-checkouts. According to a recent survey by Dalhousie University, a full 66 per cent of us have used self-checkout lanes at some point in the past, and 11 per cent use them consistently.

Grocers have had a love-hate relationship with technology in general for decades. Most feel that technology gets in the way of connecting with customers inside the store. It has long been believed that the only way to build customer loyalty and increase foot traffic is to interact with visiting customers, as much as possible.

Many of us have wondered whether the poor quality of self-checkout machines was by design, to force customers to interact with staff in the end. Grocers also feared losing sales by going virtual. But the time pressures of our modern lifestyle and our constant quest for convenience have not only forced grocers to think differently about how they manage the grocery experience, but have also compelled them to seek different channels to reach more customers, such as online delivery and meal kits — it’s just not as simple as it used to be.

Wanting to humanize the grocery experience is just one thing grocers grapple with. Encouraging impulse buying is an art that grocers have mastered in the brick-and-mortar environment. While you wait in line to pay for the items in your cart, you’re surrounded by candies, gum, magazines, and other small temptations. These bring much-needed additional revenues to retailers who are desperate to increase their razor-thin profit margin. However, getting customers to buy on impulse in front of a screen is another story.

But grocers recognize what’s coming. According to the same Dalhousie University survey, nearly two per cent of Canadians buy food online regularly, and more than 34 per cent are thinking about doing so. This is an astonishingly high number compared to just a few years ago. This means Canadians are paying attention and are slowly being drawn to solutions which can save them time, and avoid the hassle of grocery shopping. Meal kitting is also on the rise in Canada, as more than 14 per cent of Canadians have ordered ready-to-cook products from meal kit providers, a number which is likely to increase.

External disruptors like Amazon want to remind Canadians that technology can serve a purpose in the grocery business and make any visit a civilized endeavour. Amazon Go is a store in which you don’t need to talk to or even see anyone. You essentially get your groceries and walk away without paying.

Sensors detect what you have picked up, and the appropriate amount is automatically deducted from your bank account. No waiting, no browsing through tabloids, none of that. Lessons such as this are being given by non-traditional grocers that there is a better way to implement technological solutions to enhance our shopping experience.

The industry is going through a significant transition period in terms of enhanced technology, whether it is in store or online. Canadians are demanding more convenience, and not just the younger generations. People with children, married people, divorced people, boomers, the middle class, anyone who doesn’t want grocery shopping to be a slog.

Grocers know that consumers are expecting seamless solutions that will make grocery shopping a pleasant experience for all. But grocers also recognize that no one wants to pay more for better technology, or delivery for that matter. So, patience is a virtue.

Grocers will get there, but it may take awhile. If you opt for that self-checkout aisle, you can expect the dreaded “wait for an assistant” message to keep popping up on that screen for a little while longer.

Sylvain Charlebois is senior fellow with the Atlantic Institute for Market Studies, dean of the faculty of management and a professor in the faculty of agriculture at Dalhousie University.

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A powerful constituency in French politics, farmers have long complained of being hit by a price war between retailers, which has benefited consumers but hurt producers.

A “field-to-fork” law adopted early last month sought to ease the burden. One of the key measures, a 10 per cent increase in the price floor for food products, was initially due to be adopted at a cabinet meeting on Wednesday.

But Agriculture Minister Didier Guillaume said mass demonstrations led by the so-called “yellow vest” movement, convulsing the country since Nov. 17, had forced the government to postpone the decision.

“This was postponed because of other issues,” Guillaume told CNews TV, referring to the widespread protests over fuel taxes which have dominated the government’s agenda.

The minister said the decision would be implemented by the government in January or February, before the end of annual price negotiations with supermarkets that started last month.

The government’s spokesman later said the measures would be presented again “in the next weeks,” with one government source citing the date of Dec. 19.

It remained unclear when the measures could be implemented.

Farmers to protest

France’s largest farm union FNSEA had warned farmers would see a delay in the adoption of the measures as a “disastrous signal.” The union on Wednesday called for protests all next week to denounce the delay as well as excessive taxes and what they call increasing hostility towards farmers.

“We are not joining the movement of yellow vests, we will express the difficulties specific to the agricultural sector,” an FNSEA spokeswoman told Reuters.

French retailers federation FCD, which includes big names like Carrefour and Casino, also urged the government to adopt the measures as fast as possible because they needed time to adapt, stressing the need to implement them before the close of negotiations with suppliers.

The “yellow vest” protests began last month with the aim of highlighting the squeeze on household spending from increased taxes on fuel, but have tapped into growing discontent over President Emmanuel Macron’s leadership.

Selling at a loss is forbidden in France. It has set a level, called “resale at a loss threshold,” below which retailers are not allowed to sell a product.

The government intends to raise that floor by 10 per cent and limit discounts to 34 per cent of a product’s price and to 25 per cent of available volumes.

Analysts say the measures, to be applied for a two-year trial period, would reduce aggressive price competition among French retailers and accelerate food inflation.

However, many retailers said the final impact on consumers’ total spending would be minimal.

— Reporting for Reuters by Sybille de La Hamaide; additional reporting by Pascale Denis, Bate Felix and Dominique Vidalon.

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My husband and I had just completed a hearty breakfast at a nearby restaurant. We followed our breakfast with a trip to a warehouse-type grocery store.

“I don’t think I need this huge cart. Nothing looks appealing right now,” I noted as I slowly pushed the jumbo grocery cart around the store.

The cart was large enough to fit my tired hubby. That would have been photo worthy, but he gradually awakened as we shopped.

I often recommend that people have a snack before shopping, but we went overboard with our breakfast. We still needed to buy some food for the week, despite our disinterest in food. We practically ran away from the people offering food samples throughout the store.

I thought I might never be hungry again. However, after a few laps down the long aisles, I managed to pick out some groceries to get us through the week.

Have you ever thought about the psychology of grocery stores? These businesses are not random displays of foods.

Warehouse food stores are a little different from regular grocery stores, and food sampling plays a fairly significant role in promoting food sales. When people have the opportunity to taste a food, they are more likely to purchase that item.

We usually shop at “regular” grocery stores, especially when we need only a small amount of specific items. In many warehouse stores, you do not have the option of buying one can of beans, for example. You usually need to buy a multipack of most foods.

Large grocery stores have thousands of items. The store layout is designed to promote buying more food, sometimes more than you plan to buy.

Usually you arrive at the produce aisle or bakery first. These departments offer sensory appeal with colourful fruits and vegetables or the aroma of freshly baked items. You might find bouquets of fresh flowers near the front of the store, too. I have been enticed to fill a vase for myself, on occasion.

If music is playing, you may walk more slowly based on the tempo of the music. At least one study has shown that music enhances sales; the more you dawdle, the more you buy.

If you want to buy some milk and eggs, you probably need to walk through all the aisles and temptations to reach the dairy case. If you’re like me, a trip through the store often inspires more than milk in my cart.

You might be tempted by the “end caps.” These items are parked at the ends of aisles, which are premium spots that encourage shoppers to purchase foods.

Food-marketing researchers have shown that setting a limit on the number you can buy often prompts people to buy the larger number of items. Be aware that when a grocery store sign lists “Two for $1,” you usually can buy one item for 50 cents, unless the sign says “must buy two.”

If you have raised children or are in the process of raising them, you also might have noticed that the smiling cartoons on the front of cereal boxes often are at kids’ eye level.

Look at the eyes on the cartoons. When children make “eye contact” with the characters, they are more likely to use their “pester power” to get you to buy the cereal, snack or other item. My oldest child had more success with asking for food than his younger siblings; parents can learn, too.

When you reach the checkout stand, be aware that all the gum, breath mints, magazines, soda pop and assorted items are there to promote impulse purchases as you wait for the person in front of you to unload and pay for his or her groceries.

Be aware of supermarket psychology so you can be a savvy shopper. Plan menus and make a list so you are less likely to need to run to the store for just one or two items.

Visit “The Family Table” website for more tips about feeding yourself and/or a family. Sign up for the monthly newsletter and visit the Facebook site, which has prizewinning options.

Here’s a delicious recipe that was a big hit when our student intern tested it recently. Be sure to add these items to your grocery list.

Beef and rice Mexican skillet

• 1 tbsp. cooking oil1 large onion, chopped
• 1 lb. lean ground beef
• 2 c. brown rice, cooked
• 1 fresh tomato, diced
• 1 (4-oz.) can green chilies, drained
• 1 (15-oz.) can black beans, rinsed and drained
• 2 c. frozen corn
• 1 (1-oz.) packet low-sodium taco seasoning
• 1-1/2 c. low-sodium chicken broth
• 1 c. shredded Colby and Monterey Jack cheese, reduced fat
• Cilantro for garnish

In a large skillet over medium heat, heat cooking oil. Add onion and cook two minutes, then add ground beef and cook, breaking up with a wooden spoon, until no longer pink, six minutes. Drain fat. Add brown rice to skillet, then add tomatoes, chilies, black beans, corn and taco seasoning packet. Stir to combine, then add chicken broth. Bring to a simmer, cover and cook 20 minutes. Top with 1 cup shredded Colby and Monterey Jack cheese and cover to let melt, two to three minutes. Garnish with cilantro and serve.

Makes 10 servings. Each serving has 240 calories, 9 grams (g) fat, 19 g protein, 19 g carbohydrate, 2 g fibre and 410 milligrams sodium.

The post Be aware of grocery store psychology appeared first on Manitoba Co-operator.

Statistics Canada’s data for August may indicate the start of significant ongoing deflation in food aisles across the country. Most observers knew it was just a matter of time. This could result in more profit-eroding promotions and a tempered outlook for the rest of 2016, and perhaps beyond the end of the year. If prolonged, this will likely put a significant strain on the entire industry, including producers. This phenomenon is the result of excess inventories for many products across the system and a more competitive food distribution landscape.

The drop in food prices is not just happening in Canada. The situation just south of us is even worse. The U.S. is on track to see the longest stretch of falling food prices in more than 50 years. In some parts of the U.S. beef prices have dropped by more than 40 per cent since last year. The decrease in eggs is down by an average of 40 per cent. Dairy and bakery products have dropped by more than 15 per cent in many regions as well. Coupled with high food inventories is a surprisingly sluggish demand from export markets like China. A relatively strong U.S. dollar is discouraging countries from buying overseas. Europe is also dealing with deflationary headwinds and many countries have seen food prices drop. Unexpectedly, many believed Brexit in the U.K. would lift food prices higher and make the pound weaker, but it didn’t.

The Canadian dollar, on the other hand, has held steady over the last few months, which is also keeping prices for fruits and vegetables lower in Canadian stores. Canadian shoppers who see a cauliflower priced at $8 right now should walk away and leave the premises immediately.

Commodity prices in most cases are half of what they were in 2012. Corn, soybeans, oats, beef, and pork are but a few examples of products that have decreased in price. As North American agriculture is performing well, high yields tend to keep prices lower. Farmers with less capacity will be affected by cheaper bushels. However, not all commodities are created equal. Cattle have been challenged of late by lower futures and unpredictable demand patterns. Western Feedlots, one of the largest operators in the country, announced recently that it was shutting down its operations in Alberta, which is a sign of things to come for the cattle industry.

Of course, processors are benefiting from lower input costs, but are now hard hit by highly demanding grocers wanting to pay less for products and looking to remain competitive. Some processors can mitigate these undesirable requests coming from down the food chain, but the smaller outfits may not survive. For grocers, lower prices will likely keep the rumour mill at bay for potential mergers, acquisitions or new entrants. In the U.S., given how different the architecture of the industry is, it could lead to more consolidation.

So Canadians should continue to save for some time in grocery stores, but not with all products. At the meat counter, for example, poultry is at odds with other meat products. Chicken prices increased while beef and pork prices are dropping and that trend may very well continue. With prices regulated at farm gate and high tariffs on imports, the supply-managed poultry sector is almost immune to what is happening right now. Poultry will obviously remain a popular source of animal protein for most meat-eating Canadians, but it will be interesting to see if some conversations will occur about the choice in meat products.

A backdrop story to deflationary prices is a changing consumer. Canadian consumers are slowly drifting and changing locations where they buy food. Food sales were up in convenience stores while sales for food specialty dropped by more than 1.5 per cent. Economic headwinds are discouraging consumers from trading up. Supermarket sales remain robust with an increase of 1.6 per cent since last year. Yet gains by traditional grocers are likely due to creative and novel ways of adding value to food products. Offering more single servings, promoting more functional foods for health-conscious consumers or even sales of ethnic foods have picked up in recent months. Increased volume sales are not helping grocers grow their top line, so they need to find other ways.

What is unfortunate though is that it could bring our society back a few decades when food was inexpensive, undervalued, inconsequential and frankly, uninteresting. We should hope that lower food prices will not compromise a vastly improved Canadian food marketplace. We will have access to lower-priced foods, but let’s not marginalize the importance of our food in our daily lives.

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365, which debuted on Wednesday with a bright and airy store in Los Angeles’ Silver Lake neighborhood, is critical to Whole Foods. In the fiercely competitive market for fresh fruit and vegetables, Sprouts Farmers Market, Trader Joe’s and other rivals are taking sales from Whole Foods by undercutting it on price, if not always matching it on quality.

Even among shoppers seeking goods promoting health and wellness, “I don’t think we can underestimate the power of frugality,” said Richard Vitaro of consultancy AlixPartners.

365 president Jeff Turnas said reducing overhead and increasing convenience are part of the new chain’s DNA.

“Our goal is to compete in the marketplace without lowering the Whole Foods standards,” Turnas told Reuters during a recent store tour. He said 365 stores would complement the Whole Foods premium, full-service brand, which is fighting to shake its “Whole Paycheck” nickname stemming from the perception that it charges high prices.

The company, whose Whole Foods Market chain includes 11 stores in Canada, said recently that it had signed 19 leases around the U.S. for 365, without disclosing financial goals for the new chain.

Turnas said 365, which targets busy, value-minded shoppers, would carefully curate and price products to avoid undermining Whole Foods and keep the two chains distinct.

Shook Kelley principal Kevin Kelley said 365’s challenge is to avoid being labeled “a cheaper Whole Foods.” His strategy and design firm has worked with Whole Foods and other grocers.

Air guitars, foodies

365’s messaging is breezier than its serious elder sibling’s. One sign offers “free air guitars”, while a “silver kale” mural next to the meat case is a fun, foodie nod to the chain’s first neighborhood, known for a hipster feel.

About half of the brightly colored fruits and vegetables at 365 are non-organic, a greater proportion than at Whole Foods. Produce is priced per piece or per package, rather than by the pound as at cult discounter Trader Joe’s.

365 stores will be about a third smaller than the average Whole Foods outlet and carry roughly a quarter the number of products, reducing real estate and merchandise-related costs.

Staffing is leaner and no longer specialized. An iPad app replaces wine experts, while meat and cheese are in “grab-and-go” packages, eliminating the need for staff like butchers and cheesemongers.

While 365 takes aim at budget gourmets and cash-strapped “millennial moms,” grocery experts said it also must appeal to people who buy from a range of other food sellers, including Kroger, Walmart and Amazon.com, as well as restaurant delivery companies and meal kit providers such as Blue Apron.

Some are skeptical that 365 stores will hit the mark. “I don’t see them generating the efficiency they need to balance value and quality,” said Bill Bishop of retail consultancy Brick Meets Click.

But Kevin Kelley disagreed, saying Whole Foods has the experience to successfully choose what goes on 365’s shelves.

Roger Davidson, a consultant who has held key positions at chains including Wild Oats, which was acquired by Whole Foods, is also betting on 365’s success.

But he said the intense competition in the sector leaves little room for error.

“They have to make it work.”

— Lisa Baertlein is a Reuters correspondent covering the U.S. retail grocery and restaurant sectors from Los Angeles.

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Ernie Jeffries, who operates Jeffries Brothers Vegetable Growers with his brother Roland and father Dave, wants permission to sell carrots rejected by Peak of the Market outside of the regulated system.

Jeffries said Peak’s unreasonably high grading specifications mean up to half of their crop winds up as cattle feed.

“Peak’s grades (for carrots) have been tightening up,” Jeffries said during an interview with his father Dave at their packing shed Aug. 13. “And as they tighten up we have to throw out more carrots.”

Last year about 5,000 tonnes of food-quality carrots were picked up from Jeffries Brothers by local cattle farmers, according to Dave, who served as Peak’s chairman for 20 years until he resigned in 2010. That was 50 to 60 per cent of their marketable crop from 300 acres, excluding culls, costing an estimated $500,000 in lost revenue, he added. (story continues below)

Jeffries Bros. wants to be able to sell themselves what Peak won’t.

“What we’re pushing for, but not getting anywhere on, is to be able to sell anything that Peak refuses to or can’t sell,” Ernie said. “We want to sell it because it’s the only way we’ll survive.”

Dave Jeffries and his brother Albert are the original Jeffries Brothers, starting the farm 47 years ago. Albert has retired and Dave, who was inducted this year into the Manitoba Agricultural Hall of Fame, is working towards it. There are two other commercial carrot producers in Manitoba.

Quota control

All commercial Manitoba carrot production of one acre or more requires a production quota and the crop must be marketed through Peak of the Market. According to the Jeffries, last year Peak required all carrots meet a premium grade — a higher standard than the traditional Canada No. 1 and Canada No. 2 established by the Canadian Food Inspection Agency (CFIA).

According to the Jeffries, Peak refused to sell what they believe should have graded No. 1 or 2, leaving farmers no choice but to give it away as cattle feed.

They were also prevented from marketing small carrots that, because of their size, would not make Canada No. 1 or 2 grade, but were still food quality, Ernie said.

Not only is their own farm at risk, but the entire Manitoba carrot industry, he said.

Small carrots could be sold to roadside operators or farmers’ markets, he noted. Jeffries Brothers also wants to process some of their carrots and is applying for an exemption from Peak to do so.

Rejected loads

Growers are fined $100 for each rejected load. After Peak rejected 10 pallets of carrots, a CFIA inspector came to the farm and graded them Canada No. 2, but Peak still refused to take them, Dave Jeffries said.

“Nobody (at Peak), as far as I’m aware, has had any training through CFIA, to grade to the CFIA standards,” he added.

Peak president and chief executive officer Larry McIntosh says Jeffries Brothers’ claim that all carrots had to meet a premium grade last year is “absolutely false.” Peak had one customer requiring a premium grade, but delivery to that market was optional, McIntosh said in a telephone interview Aug. 14.

Ernie Jeffries says the premium grade was only made optional after his company complained about it.

McIntosh said if carrots are rejected, it’s because they failed to meet the CFIA requirement that carrots sold in stores or to food services must grade Canada No. 1 or 2.

The Canada No. 1 and 2 grades are set by CFIA and haven’t changed substantially in 20 years, McIntosh said.

“Last year I can tell you when Jeffries Brothers complained we were too hard on one of their loads here and we called a Canadian Food Inspection Agency inspector in… he inspected them independently and they failed Canada No. 1,” he said.

“Peak doesn’t set the standards (CFIA does),” he said.

However, Ernie Jeffries said when Peak runs short of Manitoba carrots it imports them and often they don’t appear to grade No. 1 because of irregular sizes and breakage.

Peak doesn’t sell small carrots to roadside stand operators and farmers’ markets so as not to harm small carrot growers, McIntosh said. Such sales could also undermine Peak’s sales to supermarkets, he said.

“Having said that, Jeffries Brothers, or any grower, could make a request to the (Peak) board (made up of nine farmer-elected vegetable growers) to entertain small carrots being exempted or being sold. But that request has never come forward,” McIntosh said.

Dave Jeffries said he met with the board, but felt he couldn’t fully make his case because some Peak staff were present and he claims they are part of the problem.

Besides the financial hit from feeding human-quality food to cows there’s a moral issue, Dave said.

“It’s a crime against humanity, in my mind, to throw that food away,” he said.

Ugly fruits and vegetables, which are misshapen but still fine to eat, are becoming popular in some supermarkets. But McIntosh said it’s not working out for farmers because ugly produce sells for less and it’s reducing sales of higher-priced, nicer-looking produce.

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