retail news in context, analysis with attitude

On the subject of whether we are in a recession or a transformational economy, and the impact of the rising cost of food, one MNB user wrote:

Those of us on the procurement side have seen this coming for quite some time and there does not appear to be much relief in sight. Factors such as “fuel for food” are driving up the cost of all crops. Hit especially hard are soybeans and wheat. Other crops are feeling the pinch as farmers switch to higher revenue corn. Of course the corn debate will drive much more conversation after the election as the candidates do not want to risk upsetting middle America by pointing out (rightly so) the folly of using corn for fuel. Then add the burgeoning economies in China, Russia and India whose imports of agriculture are unprecedented. While China is rapidly adding new farmland they are having trouble meeting demand. All this being said the US still has among the lowest food prices in the world. You can argue all you want that much of this is supported through various government subsidies and that these will not be supportable going forward.

Perhaps it wouldn’t be such a bad thing to make food a bit less affordable. There might be a pleasant unintended consequence and could be the single best chance we have to reduce obesity.

Another MNB user wrote:

Over the past few months the projection that we're in a recession or we're heading into one is everywhere. All the mediaspeak, conjecture and speculation is tiresome. It taints the public's understanding and often instills fear unnecessarily. This weekend a financial educator who's been on the radio for the past 20 years, commented that few are using the term recession correctly: a recession is classically defined by economists and financial educators as two quarters in a row where there is a decline in the Gross Domestic Product (GDP). So far, it looks like the 1st quarter of 2008 may be a decline.

However December although weak was still on the plus side and the end of the 2nd quarter is a long ways away with economic initiatives being taken to stimulate the economy. Granted, we'll have to wait and see, but we're not there yet!

Actually, the point made consistently here on MNB has been that while we are not in a recession in terms of how an economist might define it, consumers perceive that we are in a recessionary environment – and they don't need the media to alarm them…they only need to pay close to four dollars for a gallon of gasoline.

The bigger discussion is whether “recession” is a word that is not appropriate to what is happening, and if perhaps there is a broader transformation taking place. This doesn’t strike me as fear-mongering, but rather talking about something that needs to be addressed.

MNB user Bev Bennett wrote:

Thank you for bringing the Boston Globe piece on rising food prices to my attention in your recent column. As a food and nutrition writer and consumer I've been concerned with this issue.

While I hope that shoppers will make healthier choices to compensate for increased costs, I'm not sure this will be the case. I also hope manufacturers will strip their products of some unnecessary and expensive flourishes, such as the reusable plastic packages for lunchmeat.

The article in the Friday (3/07) Wall Street Journal on how food companies are dealing with rising prices also piqued my interest. According to the Journal, General Mills, Inc. reduced the number of Hamburger Helper varieties to about 40 from 75. That's astonishing. Why do consumers need even 40 packaged, boxed ways to enhance ground beef?

MNB user Greg Seminara had a thought:

Wall Street evaluates retailers based upon “same store sales” trends. If retailers can pass along price increases while maintaining unit sales, price increases can help a retailer’s same-store sales numbers. Commodity price increases and transportation costs are driving manufacturer’s price increases. I can’t help but wonder, if retailers are more open to price increases now than in the past partly to boost their own sales numbers?

MNB user Gary Wagner wrote:

The leaders of our country need to take notice of how this reality is affecting the families in our country. If this continues, and there's every indication that it will to at least the end of the year, there could be a lot more hungry and homeless people in this country.

MNB user Michael F. Parker offered:

Few people in retail have been through a significant downturn. I have and so have many people, my age. We are not valued and yet we can help. It is a sad reflection on the American economy when we can help and no own cares. I believe all the young turks will fail. No experience, only ego.

Michael makes an excellent point…and if you want to talk to him about how he can help you, shoot me an email and I’ll forward it to him.

MNB had a story yesterday about a New York Times piece saying that an advocacy group called American Farmers for the Advancement and Conservation of Technology, which in fact is closely affiliated with Monsanto, “has started a counteroffensive to stop the proliferation of milk that comes from cows that aren’t treated with synthetic bovine growth hormone. According to the story, the group “says it is a grass-roots organization that came together to defend members’ right to use recombinant bovine somatotropin, also known as rBST or rBGH, an artificial hormone that stimulates milk production. It is sold by Monsanto under the brand name Posilac. ”

My comment: Shame on this group for pushing for laws that would, in essence, prevent transparency on the part of retailers and suppliers,

I understand the business case. But I do not understand, for the life of me, why a company or organization would hit the bricks with a campaign that is designed to prevent disclosure about ingredients. It doesn’t make sense, It doesn’t even make business sense, not in the long term, because it undermines the credibility of the people and organizations that promote such efforts.

MNB user Bill Bodine disagreed with me:

These labels don’t inform the consumer about the ingredients in the milk, because the composition of milk with the same fat content is the same. There is absolutely no distinguishable difference between milk from cows given rbST and cows not given rbST. The “ingredients” are actually the same, only the production practices on the farm are different.

What these labels do is confuse the consumer. I have had the opportunity to view some consumer research done for AFACT. In it, one mother in a group of consumers is visibly upset that she can’t afford to purchase organic or non-rbST milk for her children. She feels that providing conventional milk might somehow harm her children because of what it might “contain”. When she is told that conventional milk and organic or non-rbST milk products only differ in the farm practices used and are compositionally the same, she was greatly relieved. I doubt she is the only consumer to share this concern or to misunderstand the labels.

This demonstrated to me the power of these labels and their ability to mislead consumers. The labels don’t provide more transparency for the consumer, but often more confusion.

So we’re trusting as objective research done by the very group that wants to prevent transparency?

MNB user Tom Kroupa wrote:

Of course the reason that Monsanto doesn't want labels to disclose rGBH in milk is because they stand to lose a lot of money. If consumers don't want Posilac in their milk their bottom line is affected greatly! But they are the ones who got the government to approve rGBH (and GMO foods too) without listening to the science behind it! Is Monsanto using the same tactics that tobacco companies used when they denied their product impacted health in a negative manner? As you said so well, "shame on them".

MNB user Jerome Schindler wrote:

The answer is "desperation". Monsanto's rbST business is going down the tubes. Not so much because that many consumers actually care, but because the retailers think they care and therefore these retailers are insisting that the milk sold in their stores be from cows not treated with rbST. The mainstream milk collection system, largely run by the farmer owned cooperatives, cannot accommodate two different milk supplies, one from cows not treated with rbST and another from cow's that may have been treated with rbST. For that reason many/most of these cooperatives have announced they will only handle milk from dairy farmers that have agreed not to treat their cows with rbST. That leaves dairy farmers using rbST no place to market their milk. These dairy farmers are forced to discontinue the use of rbST.

As a lawyer-pharmacist involved in dairy economics and regulation for over 35 years I have read about and listened to all of the pros and cons of rbST and am 100% convinced that there is absolutely no human safety issue associated with consumption of milk from cows treated with rbST. No country has denied approval to rbST based on safety. They have declined to approve rbST for economic reasons - essentially to protect their dairy farmers from price depressing excess milk production. No country has refused imports of U.S. dairy products because of the use of rbST. Faced with two containers of milk at the same price, one labeled "rbST Free" and the other not, I would buy the one with the longest expiration date. Nevertheless, no matter how much money Monsanto spends on lobbying, they are never going to be successful in this labeling ban. Politicians are not going to deny the right of consumers to information with which to make decisions, even if those decisions are flawed and irrational.

While economics is a less certain science than determining the safety of rbST, the prevailing opinion is that without the ability to use rbST milk prices will be higher over the long run. That will affect the price of any food using a dairy ingredient, not just fluid milk, and this increased cost will have an adverse impact on our dairy product exports.

By the way, this is not about ingredient disclosure, but rather about production practices. In theory there is rbST in milk from rbST treated cows but all milk contains bST and there is no way to distinguish between the bST made by the cow and the bST (called rbST) that is made via recombinant technology. Mainstream science is overwhelmingly in agreement that there is essentially no difference in naturally produced bST and rbST. The total bST (bST and rbST) content of milk from cows treated with rbST is no higher than the milk from many cow's not treated with rbST.

Then explain that to consumers and let them make the choice.

I object not to the use of rbST, but to the inclination on the part of some folks to hide its use.

KC's View: