Blood, Guts, and Truth From Red Tomato - wholesale moment
On August 29th, after 13 years of supplying their regional apple program, Red Tomato received notice from our largest customer that they would be sourcing 4 of 5 apple varieties elsewhere. The harvest was underway. Shipping and warehousing contracts were in place. More than $100,000 of custom packaging sat in inventory. The news came in an email. To this day, our voicemails and meeting requests remain unanswered. Through the grapevine, we learned that we were underbid on one variety by $.01 per pound. This is today’s wholesale market. Red Tomato will survive this setback. Our packaging has been resold. Our growers remain loyal. And, in more bountiful years, we built up a reserve for moments such as this. True resilience in this moment, though, will require reinvention. For the last several years, we have been observing an increasingly competitive and rapidly consolidating market. In response, we’ve tested updates and tweaks to the strategies that have enabled Red Tomato to scale local into the mainstream market over our 20 year history. It wasn’t enough. Fortunately, our finger on the pulse of the market had the Red Tomato team at the planning table this past winter and spring to identify new strategies that better support mid-size growers in the Northeast. The challenge of losing a significant customer only strengthens our resolve and speeds up our timeline. The road forward requires a clear-eyed and unsentimental view of the Good Food Movement and the challenges we face collectively. Can the Good Food Movement Make it to Market? Perusing the menu of a high-end restaurant or the aisles of farmers’ markets and specialty stores, it would be easy to think that the Good Food Movement has accomplished what it set out to do: build consumer awareness so purchasing behavior shifts and local farmers are protected and rewarded. The reality is: we’ve only shifted the tip of the iceberg. In the meantime, the market is changing around us. We’ve all seen the headlines: “Amazon to Buy Whole Foods for $13.4 Billion.” “Royal Ahold, Delhaize Agree to $29 Billion Merger.” “Supermarket Bankruptcies Are Beginning to Pile Up.” Grocery retail, which anchors the wholesale market, is fighting for its bricks-and-mortar life in the face of competition from e-commerce, urban migration, and increasing income inequality. As retailers cut and consolidate to bring remaining profits in, they are pushing business externalities up the supply chain – rock bottom prices, inflexible start and end dates, zero tolerance for regional weather or production trends, 100% fulfillment rates, proprietary food safety certifications, lengthy payment terms and sky-high insurance thresholds. It’s true that consumer demand for local, ethical, sustainably grown products has grown year over year. And yet the wholesale buyer’s focus on short-term survival makes it nearly impossible for small and mid-size suppliers to bring to market the very products their shoppers seek. The result? Consumers can’t find what they’re looking for and are distrustful that mainstream brands can authentically match their values. When product does make it to market, the benefits rarely trickle down to the grower – especially wholesale growers who do not have the benefit of direct contact with the end consumer. Is the Second Farm Crisis Upon Us? All of this comes at a time when farmers and advocates are observing waves of farm loss and farmer suicide rates reminiscent of the 1980s. For decades farmers have been urged to maximize their production on the false assumption of a limitlessly expanding global market. The investments and ingenuity farmers employ to produce more with less has generated oversupply, now exacerbated by the emerging trade war, that enables a race to the bottom pricing mentality. In February the USDA projected an $11.4 billion decrease in net farm income for 2018, the lowest real dollar value since 2009 when adjusted for inflation, putting the median farm income for the year at negative $1,691. Siena Chrisman’s recent article in Civil Eats “Is the Second Farm Crisis Upon Us?” goes into further detail about how these trends are particularly stark for black farmers, who hold just .4% of all farmland due to systematic discrimination across decades; and in the dairy industry, where 17,000 farms have closed in the last decade. At Red Tomato, where apples are 50% of our sales, we see the most talented and progressive apple growers in the region struggle to compete against ever-expanding West coast and global production. They have developed expertise in sustainable production focused on careful monitoring, natural predators, beneficial insects, and targeted, limited use of lowest-risk treatment specifically adapted for the Northeast region. Consumers are more familiar with the organic certification even though most organic fruit is grown on the west coast. The share of Northeast apples sold wholesale in the Boston Terminal Market has declined from 50% in 1980 to 20% in 1995 and that number continues to drop. After many, many years of working the crisis hotline at Farm Aid, before joining Red Tomato, I thought I truly understood how devastating a crisis can be for a family farm or business. That was naïve – that pit in my stomach, which landed with the email informing us that our sales would be substantially reduced, was deeper and more overwhelming than I ever imagined. Fortunately, when the financial picture was fully fleshed out, I was able to move past that intense uncertainty. For so many, a passion for the land and financial insecurity are one in the same. Some farm families live this way for years, forging ahead with that unique combination of ingenuity and resilience that inspires our movement. Join Us and Fight Like Hell! The survival and well-being of farmers depends on our ability to make authentic, systemic and lasting connections with the shoppers and eaters who share core values of thriving family farms, fairness and trust, sustainability and innovation. Doing so will require organizations like Red Tomato to be transparent and forward thinking about our boldest ideas and our most difficult challenges. It will require all of us in the Good Food Movement to collaborate beyond our comfort zones and navigate difficult conversations. And, it calls on anyone who has been a supporter of any version of ‘thriving family farms and good food for all’ to dig in their heels and fight like hell. If we don’t, the culture shift we fought so hard to create over the last 30 years will have only served the elite consumer, not the family farmer.