What used to be called the middleman is now referred to as the supply chain. The middleman has long been viewed as the bogeyman who steals from both the farmer and the consumer with a mere 30% or so of what the consumer pays ending up back on the farm. It is now becoming clear that the supply chain performs critical functions in getting fresh food from the farmer to the consumer and that the middleman is really composed of many workers, too many of whom are underpaid. Cutting out the middleman can actually hurt those workers who perform critical functions to get the food from farm to consumer. The lack of food available in the aftermath of Hurricane Maria in Puerto Rico was due to a breakdown in the supply chain. In this week’s post I will look at two supply chains—one for a fresh tomato and the other for processed cheddar cheese burrito.
A major thrust of my early research was to trace the quality of fresh vegetables from the field to market. Two items that the Postharvest Research Team studied were tomato and peach. In one study we followed tomatoes grown near Murphy, North Carolina to the Atlanta Terminal Market. The tomatoes were hand harvested at what is called the ‘breaker’ stage, just a little red color indicating that they could ripen up on their own after picking. ‘Mature green’ tomatoes will not ripen after harvest unless treated with ethylene gas. Ethylene is a natural plant hormone that is generated by the fruit once it reaches that breaker stage of development on the plant. Pickers in the field are told not to wear any red or pink clothing as the reflection in a green tomato could result in harvesting one that was not yet a breaker.
From the field the tomatoes travel to the packinghouse where they are washed, graded, sorted, and packed into fiberboard boxes. Since most tomatoes are grown on some type of trellis, there usually is not much dirt on them. Misshapen, damaged, rotting and over-ripe fruit are culled by human graders as the tomatoes go across the rollers on the grading line. Over-ripe is a relative term, usually connoting any one that shows more than the beginning of ripening. Growers are paid on the basis of the amount of fruit that was packed and not the amount received. It does not pay however for the grower to presort, however, as one of them learned the hard way. Graders get pickier when tomatoes are in better shape, culling out fruit that would normally pass inspection. We suggested that incoming loads be pre-graded and that the roller speed be adjusted accordingly. I do not believe that the packinghouse operator took our advice. Tomatoes in boxes were thus ready for their next stop in their journey.
We then followed our tomatoes in a mobile laboratory to a wholesale warehouse at the Atlanta Terminal Market which only dealt with those at under-ripe stages of maturity. As the truck was being loaded and traveling down the road, the tomatoes were becoming riper. The trip was about 125 miles. This house at the market supplied Atlanta area restaurants and smaller, independent supermarkets. Another warehouse on a loading dock not too far away accepted only mature green fruit from any number of states well beyond Georgia. Mature green tomatoes were stored prior to controlled ripening with ethylene gas produced by a catalytic generator using bottles of ethanol. These “gassed” tomatoes were also going to restaurants and some warehouses of larger supermarket chains. Before shipment from these houses, the tomatoes were graded and sorted and sorted by size and color. Once again tomatoes that were damaged, rotting or over-ripe were culled. In some houses sorting was done by sophisticated equipment which weighed and color-scanned each individual fruit and diverted them into the appropriate box for shipment to its retail destination.
It is important to note that tomatoes are sensitive to cold temperatures. They should NOT be stored below about 50ºF. At lower temperatures, particularly if they are not fully ripe, tomatoes will fail to ripen up properly and not develop a typical tomato flavor. It is not plausible to expect a tomato harvested at mature green or breaker stages to develop the full flavor of a backyard tomato picked at peak ripeness. Proper temperature control however, can help the fruit to achieve its best potential. Unfortunately, tomato varieties that are the better shipping tomatoes tend to be weaker in flavor. In most operations in the US we saw them stored at 45ºF or lower. Operations overseas tended to give the tomatoes more respect.
We also observed that the growers and the packinghouses we studied were working exclusively with tomatoes, at least during the tomato season. Once the fruit arrived at the wholesale warehouse, tomatoes were only one of several crops that were being received at this point in the chain. They do not get the special attention there that they received at the packinghouse. At the point of integration the buyer plays a key role in determining prices all the way back to the farm. Thus, the supermarket buyer can set the going price for all operators in the supply chain. Generally speaking it is not the middleman who gouges the system as it is the supermarket buyer who sets the price they are willing to pay. Everyone in the middle, aka the supply chain, must meet these demands or find another buyer. In addition to management, workers in the chain include farmers, pickers, loaders, graders, sorters, stackers, drivers, and numerous others who work at low wages to meet the demands of the buyers. Control of pricing in the supply chain is one of the many reasons why supermarket power matters.
We did not follow those tomatoes directly to the restaurant or supermarket, but we also worked with some supermarket chains to learn about their operations. We were surprised to learn that almost 30% of the tomatoes that were picked and arrived at the packinghouse never made it to the intended retail destination. Not all of this fruit was wasted, however, as tomatoes too ripe at a particular stage of the supply chain went to secondary markets. We never did quantify the amount of fruit that was actually wasted. In retrospect it would have been an excellent study to quantify the amount of waste generated and the flow of money through the chain of a single shipment of tomatoes out of Murphy to Atlanta and beyond. From the warehouse at the Terminal Market, tomatoes would go to the chain warehouse in the Atlanta area for shipment to individual stores in Georgia, South Carolina, Alabama and parts of eastern Tennessee and western North Carolina.
This particular supply chain was a short one and was observed over thirty years ago. There are many partially ripened, packaged, branded, fresh tomato products available now that were not available then, but I suspect that the distribution of the standard, fresh, unpackaged tomato has not changed that much in those thirty years. Our studies on tomatoes were completely funded by state and federal formula funds managed by me and a co-investigator. Because of the reduction in agricultural research funding, this type of research could not be conducted today.
Cheddar cheese burrito
Unlike the supply chain for fresh tomatoes, there are multiple supply chains for the cheddar cheese burrito. Each ingredient has its own supply chain. A few of the ingredients could come into the processing plant as raw, whole crops such as the pinto beans, onions and bell peppers. The cheddar and monterey jack cheeses are made of ingredients of their own as shown in parentheses behind them in the ingredient list and are probably processed at another plant. Most of the remaining ingredients have undergone some primary processing either prior to arriving at the processing plant or prior to making the burrito. Included in this list are the brown rice, tomato puree, starches, oils, flours salt, sugar and spices. Each ingredient arrives at the processing plant in the Receiving Department and must be checked for authenticity (are they really organic?), quality (do they meet company standards?) and safety (do they contain unacceptable levels of harmful microbes?).
The burrito manufacturer must also ensure that none of these ingredients contains traces of wheat which could contribute to the presence of gluten. Amy’s will have personnel who interact with these companies to make sure all suppliers know what is expected of them. There may be analysts at the manufacturing plant to test incoming ingredients or there may be a third party who runs tests to ensure that all company standards are met. Regardless, it is the manufacturer (in this case Amy’s) who bears complete responsibility for any unsafe, substandard or inauthentic ingredient or final product.
As mentioned in Supermarket USA, agricultural research has aided the breeding programs for raw crops like tomatoes, beans, onions, bell peppers, potatoes, milk, rice and sorghum. It has also supported work to better understand the supply chains between harvest and milling of grains or production of flours and starches, and between milking and the production of cheese. Most of the research in developing and manufacturing a gluten-free burrito primarily with organic ingredients, however, has been conducted by free enterprise with little or no help from state-sponsored agricultural research. Thus, it is research on raw, whole foods including fresh fruits and vegetables as well as whole grains and beans that have been primarily subsidized by university and federal research with little government funding for processed foods like the burrito.
Next week: Foodies vs. Aggies: Compromise for a New Food System?
7 thoughts on “How the middleman morphed into the supply chain”