REBUTTAL: Recycling Food into Fertilizer Registered for Use in Organic Agriculture

November 9th, 2017

By Dan Morash Founder, California Safe Soil

 

We read with interest the July/August 2017 Western Growers article entitled: “Cause for Concern Over Organic Fertilizer Made from Food Waste?” by Stephen Meyer & Thomas Marrs of the Downey Brand law firm.  The article raises concerns for organic growers that may currently be using, or considering use of, registered organic fertilizer manufactured from recycled food. We think those concerns are unfounded. California Safe Soil, LLC (“CSS”) appreciates the opportunity to offer our point of view.

CSS was founded in 2012 to commercialize its patented technology to recycle food into fertilizer in only three hours, using enzymatic digestion. We located a pilot plant in West Sacramento, to pursue research with agronomic experts at UC Davis; interact with regulatory bodies in Sacramento; and establish relationships with specialty crop growers in California. By 2015, we had achieved promising research results; cleared all the regulatory hurdles; and were selling everything we could produce at the pilot plant. We had completed a published “challenge test” with experts at UC Davis, affirmatively proving that our process eliminates pathogens. This study became the basis for our permanent license from the California Department of Food and Agriculture (CDFA). We also obtained approval from the Washington State Department of Food and Agriculture (WSDA) to register our organic product, Harvest to Harvest Organic (H2H Organic), for use in organic agriculture. H2H Organic was also accepted for registration by CDFA. We reached food recycling agreements with Save Mart Supermarkets, Nugget Markets, and Sacramento’s Golden 1 Center. We joined Western Growers in 2014, received the 2015 Thrive-SVG Accelerator “Most Sustainable Technology” award at the Forbes AgTech Summit, and became a charter member of the Western Growers Center for Innovation and Technology in 2015. On the strength of these results, in 2016, we financed and constructed our first commercial scale plant in McClellan, California, which we have successfully operated ever since.

Meyer & Marrs call out CSS by name and warn that “food producers should use caution before buying organic fertilizer made from food waste,” based on the following arguments:

1. In 2016, a court invalidated National Organic Program (NOP) guidance 5016 allowing green waste compost because “composters cannot always control their green waste feedstock.”

2. Anaerobic digestion, a technology designed to produce energy from waste, has many synthetic contaminants, like cans, bottles and plastic bags; “most products derived from anaerobic digestion do not meet NOP’s criteria [for use in organic agriculture].”

3. Processed food, like butter, cereals, snack foods and beer, contain synthetic preservatives, like BHA and BHT.

4. Anaerobic digestion doesn’t mineralize synthetics, and may harbor pathogens like E. coli.

 

Our corresponding responses are:

1. We collect food previously offered for sale to the public after it has been culled for freshness by store staff. These are primarily fruits and vegetables, meat, fish, prepared foods and fresh bakery. This feedstock has been shown to contain no measurable levels of pesticides, especially considering it was offered to consumers immediately prior to culling.

2. Anaerobic digestion (AD) is primarily an energy technology. The CSS technology is enzymatic digestion (using food grade enzymes registered for use in organic agriculture). None of the comments about AD are relevant to the CSS technology.

3. We recycle the perishable food, like fruits and vegetables from the produce aisle. For a variety of reasons, processed foods containing BHA and BHT are typically not what we recycle.

4. As mentioned above, our process creates a pathogen free product and in the studies we have done at the request of organic producers there are no detectable pesticide residues.

 

H2H Organic was subject to exhaustive review by WSDA and CDFA for compliance with NOP standards before the product was successfully registered and approved for use in organic agriculture. It is erroneous to suggest this product may not fit organic systems.

The organic produce market continues to grow at a double digit rate, creating a great opportunity for members of Western Growers. Amazon’s acquisition of Whole Foods will only accelerate the trend.  Existing organic fertilizers, like fish fertilizer and other organic wastes, have a limited capacity to meet that need. Recycling food, in one form or another, is as old as agriculture. Today is the anomaly, with up to 40 percent of food production going to waste. Recycling food that would otherwise be wasted is an enormous resource that can fill the gap, and maintain competitive supply conditions for organic growers. We have done the research, met the regulatory requirements, and produce an effective, high quality, consistent product at a competitive price, to meet growing market needs. CSS is committed to providing the transparency in organic food production that growers and consumers demand and deserve.

 

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Public-Private Partnerships Key to AgTech Revolution

November 9th, 2017

On May 25, 1961, one month after Soviet cosmonaut Yuri Gagarin became the first human in space, President John F. Kennedy stood before a joint session of Congress and urged that “this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.”

In an effort to assert our space superiority over (and maintain a balance of power with) our Cold War foes, President Kennedy launched the Apollo program, one of the largest non-military technological projects ever undertaken by the United States. To achieve the aggressive timeline established by the president, substantial increases in NASA funding and personnel were required.

During the decade of the 1960s, NASA’s annual budget predictably grew —by more than eight-fold. Significantly, though, NASA leadership recognized that their internal brain power and production capability would not be sufficient to complete the Apollo project. Ultimately, to achieve this unprecedented feat, they would need to harness the talent and resources of the then-emerging aerospace industry. In total, between 80 and 90 percent of program spending was directed to private industry, research institutions and universities.

This emphasis on public-private partnerships resulted in the monumental triumph of the Apollo program, culminating with the first manned-landing on the moon by decade’s end. It also serves as an appropriate model for another technological frontier that we must overcome as a nation; one that may not be as daunting or dramatic as the moon landing, but will prove just as strategic for our future security.

I’m talking about the production of food, and the technology that will be required to continue producing a safe and affordable supply for our people. The challenges facing our farmers have never been more overwhelming: water scarcity, labor shortages and ever-expanding regulatory burdens, among countless others.

As in the past, our industry will need to innovate our way through these obstacles. Indeed, we are well underway. Private investment in agricultural technology—“agtech”—has increased dramatically over the past three years, with an average of $3.4 billion invested per year between 2014 and 2016, compared to just over $500 million per year between 2010 and 2013.

With the Western Growers Center for Innovation & Technology (WGCIT), we are facilitating the development of agtech for the fresh produce industry, with the goal of accelerating the time-to-market for solutions in areas ranging from biotechnology to robotics and mechanization to decision support software and big data analytics. In less than two years, we have already reached a milestone of 50 start-up companies that are current or past residents of the WGCIT. Several have matured to development stage and are headed for even greater growth.

Just as we saw an emergent aerospace industry following World War II, supported by NASA during the space race with the Soviet Union, we are witnessing the early stages of a technological revolution that will forever change the way we farm and feed the world. And I believe there is an appropriate role for the government to play.

Beyond the national security imperative of securing a safe and affordable domestic food supply, many public policy priorities embraced by both political parties intersect with agriculture, such as immigration reform, environmental protection and public health (which includes food security and nutrition). Our elected officials and government agencies should engage in the agtech space and work with the industry to cooperatively resolve both production and political challenges.

Currently, the federal government makes modest investments in agtech. For example, the specialty crop research initiative, a program established in the Farm Bill, provides nearly $50 million per year to fund the development of innovations and technologies in areas such as plant genetics and genomics, pests and diseases, and mechanization and food safety. These dollars require a 100 percent match from the private sector and serve as an example of the type of public-private partnership that can spur advancement.

Another Farm Bill expenditure, the specialty crop block grant program, has also been used to leverage public and private money to promote innovation. The Center for Produce Safety (CPS), launched seven years ago as a public-private partnership, has received significant funding from the block grant program. Built on the philosophy that industry-wide problems require industry-wide brainpower, the CPS brings together leaders from industry, government and the scientific and academic communities to advance real-world solutions to enhance food safety throughout the supply chain.

The programs are successful examples of the public and private sectors working together to advance agricultural science and technology. But, like the mission President Kennedy inspired, we need a “moon shot” to ensure the strength, resiliency, and superiority of our nation’s farms and food systems.

More can, and must, be done. We’re asking the federal government to double the current funding levels for the specialty crop research initiative and to prioritize technological advancement for American agriculture, in particular around mechanization. By expanding federal engagement in agtech, Washington can speed the development and adoption of critical innovations in the fresh produce industry, and help us ensure that American farmers meet the needs of a growing population with fewer resources and a smaller footprint, for many generations to come.

It’s not a moon shot, but it’s at least as important to America.

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When Food Disaster Strikes, Being “Shielded” Matters

November 9th, 2017

Food recalls, product defects, contamination events, oh my.

These are just a few examples of the potential food contamination disasters that can detrimentally disrupt the supply chain and quickly become a major financial nightmare for all parties involved. Costs from a product recall or contamination can easily cripple even the most conscientious organizations, and understanding the roles and purposes of the different types of insurance coverage involved can be the difference between losing money and losing your company.

A recent study by the Food Marketing Institute and Grocery Manufacturers Association estimated the average cost of a recall for food companies to be $10 million in direct costs, plus brand damage and lost sales. Take, for example, the salmonella contamination that triggered the peanut butter recall in 2009, costing peanut producers nearly $1 billion. Or the beef recall in 2008 in which Hallmark/Westland Meat Packing Company paid close to $500 million after recalling 143 million pounds of meat products, following an investigation into animal cruelty.

Having proper product contamination insurance coverage, product recall coverage and product liability coverage is crucial to surviving a contamination event. More importantly, these lines of insurance need to be tailored to fit the individual needs of each company. That’s where Western Growers Insurance Services’ (WGIS) latest resource in loss control and claims management, Western Growers Shield®, comes in.

The Shield is Western Growers’ (WG) newest solution that can guide food and agriculture companies through managing a recall-related event, mitigating exposure and preventing future recalls. Unlike other insurance brokerages, WGIS specializes in agribusiness and food clients, and knows exactly what the industry’s needs are when it comes to loss control.

“Many times, companies avoid getting coverage because they feel that the policies don’t apply to them, are too expensive or are simply just too complicated to understand,” said Jeff Gullickson, WGIS senior vice president. “The Shield is a comprehensive program and not an ‘off the shelf’ insurance policy.”

The program covers three distinct segments—pre-event planning, event response and post-event recovery—and also offers resources and expertise dedicated to assist members in those areas. The WGIS team of experts understands that each contamination event has a different fingerprint, and solutions must be developed based on the exact circumstances of a specific outbreak. Through a consultation process where specific business needs and risks are discussed, knowledgeable WGIS representatives assemble a complete and ideal solution.

There are multiple building blocks available in the Western Growers Shield®:

•  General Liability: Specific coverage for damage or injury to others caused by products and operations (i.e., someone gets ill from eating product).

•  Property: An insurance program where the client receives continuous and unbroken coverage for damage to the products, including shipments from all destinations, no matter where they are in the world.

•  Workers’ Compensation: A high-level solutions program that provides workers’ compensation policy coverage from A-rated carriers and specializes in loss prevention and claim cost mitigation services to ensure members have the right risk management strategy in place. The program helps minimize claims, reduce premiums and lower the costs associated with workers’ compensation.

•  Product Recall and Loss of Market (Contaminated Products Program): A recall and contamination coverage program that helps manages all risk related to a recall. WGIS walks businesses through the steps of understanding the costs of a recall, managing economic risk and planning for financial recovery.

With the last component of this comprehensive insurance coverage program finalized earlier this year, WG is currently working with members to develop the perfect solution for their business needs. The WGIS team worked with Harold McClarty, president of HMC Farms and WG board member, to develop a tailored Contaminated Products Program.

“Harold was committed to buying recall coverage from another vendor, but heard about the potential offerings of The Shield at a past Western Growers Board Meeting and decided to hold off. We went through a number of iterations to ensure that this was the perfect program for HMC Farms,” said Gullickson.

A turnkey solution was provided for HMC Farms, allowing McClarty to better prepare for, manage and recover from a contamination event.

“They did a great job, put a lot of hard work and research to give us a good product that I hope I will never use,” McClarty said.

WGIS leverages its proprietary approach, industry partnerships and access to multiple carriers across global markets to deliver a comprehensive recall management solution. For example, WG’s new strategic alliance with JLT Specialty USA offers customers direct access to international insurance carriers, provides the opportunity for clients to tap into 140 offices around the world and gives WG members the ability to meet specific company needs with the help of subject matter experts.

WG collaborated with JLT to create the “property” component of The Shield. This industry-leading cargo insurance coverage solution and administration platform is exclusively available to WG members and provides ag-related companies with an insurance program, as well as continuous and unbroken transit coverage for all product shipment to and from all points on the globe.

Mission Produce, the world’s leader in producing, distributing and marketing fresh Hass avocados, recently purchased the cargo protection program from Western Growers.

“The experience demonstrated WG’s knowledge in the field and their willingness to tailor a solution to meet our needs,” said José Maldonado, director of global logistics at Mission Produce. “We are very satisfied with the product and the experience in general.”

WGIS is taking it a step further and is collaborating with other agriculture organizations to bring the solution to the industry. WGIS recently entered into formal marketing agreements with United Fresh Produce Association and Almond Alliance of California. Under the partnerships, United Fresh and Almond Alliance will promote The Shield to their respective members and work together to provide several other proprietary WG solutions to the fresh produce industry.

Merely having insurance coverage, however, is not enough to eliminate the potential for disputes and litigation in cases of contamination disasters; nor does it guarantee a swift settlement of a claim. Companies need to have trusted professionals who can expertly navigate them through a crisis—as well as before and after an incident—to ensure that the policies in place address first and third party coverage. Experts on the WGIS staff are committed to working with agribusinesses to create a highly-customized solution to reduce exposure of a brand and balance sheet to losses.

The individual types of coverage under Western Growers Shield® fit together like a puzzle to create the right fit for each individual business. To take the next step in shielding your company from the vulnerabilities inherent in product recalls, call WGIS at 800.333.4WGA.

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Will ‘Bioponics’ Be Deemed Ineligible for Organic Certification?

November 9th, 2017

In early November, the National Organics Standards Board will meet in Jacksonville, FL, and on its agenda are proposals that will move the ball forward toward declaring hydroponics and other greenhouse-type growing methods as ineligible to receive organic certification from the U.S. Department of Agriculture. Observers think the series of proposals have a fairly good chance of passing.

The issue has been around for two decades and has been the subject of some intense debating. Since the organics law was passed in the early 1990s and implemented in 2000, this controversial issue has been kicked down the road several times by the NOSB. Now it appears to be coming to a head with long-time, in-the-field organic producers lobbying hard for elimination of these growing systems that take place outside of the earth’s crust.

When the National Organics Program was first passed into law, it contained language that promoted the concept that organic production was a systems approach that very much included improving the earth’s soil. But from the very beginning, hydroponic production, and other soil-less systems, were declared eligible for organic certification if they followed all the other regulations that eventually created the USDA organic seal and certification to use it.

Nonetheless, there were efforts to prohibit these alternative growing systems and task forces named to study the issue. Hearings were held, reports were written, recommendations were even adopted by the NOSB but the final step, which involves buy-in by the USDA, has never been achieved.

Several times, the idea was kicked back to a sub-committee, which was charged with coming up with proposals that could be adopted.

Once again that is where the industry is at. A subcommittee of the NOSB has put forth several proposals dealing with the issue. The NOSB is currently accepting written comments on the proposals and will also entertain industry viewpoints in several other ways leading up to its Fall Meetings in Florida. In fact, those meetings will also have a session devoted to the topic in which more opinions will be aired.

Presumably, the NOSB will vote on the proposals prior to adjournment on either Nov. 1 or 2. It will take a two-thirds majority—or 10 of the 15 members—to pass the proposals. Any proposal that passes the full NOSB will then be delivered to the USDA to begin what is often an arduous rule-making process.

Michelle Arsenault, the USDA’s advisory board specialist for the National Organic Program, said if the NOSB passes the proposals, the rule-making process can take from one year to 10 years. Or the USDA can study it indefinitely. In September, Arsenault said she did not have a sense of whether NOSB would actually vote on the most controversial proposals during these meetings. As it has done before, the board could ask questions and send it back to the subcommittee for further work.

Others in the industry, however, think the proposals will finally get an up or down vote.

Lee Frankel, CEO of the Coalition for Sustainable Organics—a group aligned with these “bioponic” growing methods—believes passage of the proposal will depend upon grower turnout at the meeting. His group believes these growing methods are consistent with what many believe is the key theme of organic production, and that is that it does not include the use of synthetic pesticides. Anti-bioponic folks argue that organic production begins with the soil and must include a system that improves the soil—thus making soil-less production techniques ineligible for organic certification.

Frankel said the NOSB has members on both sides of the issue. It will take 10 votes, representing two thirds of the committee, to pass the proposals and prohibit hydroponic, aeroponic and aquaponics production.

Frankel did note the some of the proposals appeared to offer a compromise on the issue so he holds out hope that the November meetings won’t result in the end of the discussion by the industry. Of course, in any event, the discussion will continue if and when the USDA moves to the rule-making process. That process includes many opportunities for comment, and it has been the USDA practice, if not policy, to continue the process as it seeks consensus.

 

Basic Proposal

Frankel shared with Western Grower & Shipper the formal recommendations by the NOSB Crops Submcommittee as he interpreted them from the website and relayed to his membership.

“The proposals would make aeroponics, aquaponics and hydroponics prohibited practices under Section 205.105 of the USDA Organic Regulations,” he wrote. “Aeroponics would be defined as ‘a variation of hydroponic plant production in which plant roots are suspended in air and misted with nutrient solution.’ Aquaponics would be defined as ‘a recirculating hydroponic plant production system in which plants are grown in nutrients originating from aquatic animal waste water, which may include the use of bacteria to improve availability of these nutrients to the plants. The plants improve the water quality by using the nutrients, and the water is then recirculated back to the aquatic animals.’ Hydroponics would be defined as ‘any container production system that does not meet the standard of a limit of 20% of the plants’ nitrogen requirement being supplied by liquid feeding, and a limit of 50% of the plants’ nitrogen requirement being added to the container after the crop has been planted.’ ”

Frankel said the proposals would allow for some types of container production systems, if they can meet the nitrogen formulas laid out by the Crops Subcommittee. However, he said the language implies that perennials would need to be transplanted each year to a new container.

Under the proposals, transplants, ornamentals, herbs, sprouts, fodder, and aquatic plants are exempted from these requirements.

Frankel, who has been intimately involved in the discussion for the last several years, opined that during a web conference call conducted by the Crops Subcommittee and attended by the full membership of the NOSB in August, it did not appear as if the board itself had the same level of support for the recommendations as the nine subcommittee members. During the subcommittee votes on the proposals each proposal was approved by six, seven or eight votes.

There is no doubt that the tremendous growth in the organic sector has been achieved in great part by the many firms that are producing organic crops in a soil-less or container system. At the summer Organic Produce Summit, a very lively debate on this topic was one of the highlights of the meeting. Articulating the anti-bioponic viewpoint was longtime organic grower Tom Beddard, president and founder of Lady Moon Farms. He argued that growing systems that are not soil-based, which he believes is at the core of organic production, should not be allowed organic certification. He calls these production techniques “pesticide free” but not organic. He argued vociferously that these production techniques water down the USDA’s organic seal and deplete its value.

Jessie Gunn, director of marketing for Wholesum Farms, is an outspoken advocate of these alternative growing methods and believes they are largely responsible for expanding organic production and allowing more people the opportunity to eat organic produce. She said everyone should have that opportunity arguing that outlawing specific NOP-compliant production techniques limits the supply of organic produce, and by definition, increases the use of pesticides on our planet.

Ed Horton is president of Urban Farms, a vertical farming operation that uses a substrate and liquid fertilizers to produce fresh, organic crops in a factory setting. Horton took a more pragmatic approach stating that the only-soil message is too limiting.

The subcommittee appears to mirror Beddard’s thinking. In its report for the proposals, it states that the USDA organic seal is “built upon the primacy of soil stewardship.” The report argues that other organic principles such as supporting and enhancing biodiversity, minimizing the negative effects of farming and producing safe, nutrition and tasty food are secondary to soil.

In early November, the full NOSB will be able to voice its collective view and let the industry know where it stands.

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FROM ISRAEL TO CALIFORNIA: FieldIn Brings Real-Time Spray Tech to Ag

November 9th, 2017

Last year, FieldIn saved specialty crop growers millions of dollars in pest management by monitoring spray applications and providing alerts, in real time, on more than 6,000 application errors. More impressively, this agtech start-up company has only been up and running for three years and it already monitors almost five percent of the almond crops in California.

FieldIn, one of the newest startups in the Western Growers Center for Innovation & Technology, offers specialty crop growers a data software service that provides automated traceability on pest management trends, patterns, usage and efficacy. The solution includes system dashboards and an innovative sensor that is installed on tractors to track spraying in real time. It was built by growers—for growers.

Data from more than 50,000 spray applications in 2017 revealed that one in four spray applications, on average, are not executed as planned. This is due to incidents such as speeding, missing rows and double spraying. These mistakes expose growers to costly risks, even if they planned their pest management correctly.

FieldIn’s suite of products allow farmers to benchmark and optimize performance and eliminate spray mistakes, improving the quality and safety of chemical applications. Detailed insights are combined and presented through system dashboards to support optimal pest management decision making.

 

THE BEGINNINGS

Boaz Bachar, co-founder and CEO of FieldIn, exited his trade in business law in 2013 after marrying into a family of avocado growers and realizing that there was a significant gap between entrepreneurs, technologists and growers.

“Back then, when I was working at a law firm, some of the biggest growers in Israel started investing in technology and purchased enormous amounts of irrigation sensors,” said Bachar. “I started seeing a trend. Growers were buying the sensors, but did not understand how to turn the data into action. There was a gap.”

Bachar decided he wanted to close that gap and create a solution that would help farmers translate data into action and ultimately improve field operations. “Growers couldn’t actualize the data because there were no action items. At that exact moment, I quit my job at the law firm and started FieldIn with one of my closest friends.”

His friend—and now FieldIn’s co-founder and COO—Iftach Birger, was born and raised on a three-generation farm on the eastern foothills of Mount Tabor, Israel. Versed in growing olives, almonds and wine grapes, Birger understood the real-world challenges that growers faced. His strong connection to the land and knowledge of agriculture has helped FieldIn deliver a solution tailor-made for growers—one that meets all of their pest management needs.

“Iftach has been a farmer since he was five years old, and we’ve taken that ‘by growers for growers’ model to be the foundation of our company,” said Bachar. The startup now employs nearly 20 engineers, agronomists and business development experts—all with a background in agriculture and a love for farming.

 

THE TECHNOLOGY

FieldIn offers software products and sensors that automatically record field data. These tools focus on four aspects to help growers and stakeholders manage and improve the pest control cycle:

•  Application: Growers and sprayers can track spray operations and respond to work inefficiencies in real time. This includes equipment tracking, real-time alerts on spray mistakes and spray application quality scores.

•  Intelligence: Field managers and executives receive performance reports that summarize activity trends and patterns to reveal the bigger picture on pest management.

•  Decision: Pest control advisers are provided a complete situational view of pest population hotspots, spray instructions with status tracking, application history analysis and pre-harvest and re-entry intervals, among other important tools.

•  Monitoring: Field scouts can record and organize notes on pest levels and trap status using a mobile app that is synced to the cloud and automatically funneled to fellow teammates.

 

FieldIn prides itself on developing each of its software tools from the bottom up. “We listen to growers and their day-to-day challenges,” said Bachar. “As part of our consultation process, we help build a plan for each and every grower. In less than 24 hours after our initial meeting with a grower, we offer them a zero-error strategy plan, utilizing our technology.”

Bachar and Birger are continually enhancing their current business intelligence tools and are now looking to help growers in the United States solve spray problems faster, better measure efficiency and connect their team more effectively.

 

EXPANDING TO CALIFORNIA

With considerable experience working with growers of different sizes and scale across Israel and Italy, FieldIn’s entry to the California market has so far been a sweeping success. FieldIn now supports almost five percent of the almond market in the state, 20 percent of the pistachio market and 25 percent of the pomegranate market.

The company currently monitors more than 5,000 fields, touting a customer base of some of the most prominent growers in the region such as Don Cameron of Terranova Ranch and Brian Palla of Palla Farms. They are also working with farm management companies including AgriCare and Pegasus Orchards, spray contractors like S&S Sprayers and SprayCo, and agricultural machinery companies such as John Deere.

FieldIn recently joined the Western Growers Center for Innovation & Technology in Salinas, California, to expand its reach and bring its products to more specialty crop growers in the United States.

“Through the Western Growers Center, we saw an opportunity to start working more with growers in California because, in the end, growers in Israel and California typically act and look the same,” said Bachar. “Agriculture is an international language.”

FieldIn expects to bring the service to other regions outside the state in the upcoming 2018 season. To learn more about FieldIn and its suite of products, please visit https://fieldintech.com.

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WGCIT SPONSOR: BioWorks: A Pioneer in Biologicals

November 9th, 2017

Twenty-five years ago, BioWorks Inc. was on the leading edge of the crop input market with an environmentally-friendly, biologically-based crop protection tools for the agricultural industry. Today, the landscape is far more crowded with some of the biggest companies in the ag chemical world participating in that sector.

But BioWorks continues to thrive with a number of core products for both the ornamental and specialty crop industries. “Technology developed at Cornell University was used to launch our core product and our company,” said President Bill Foster. “That mindset of offering products that are safe, proven and effective continues to drive us today.”

The firm’s top seller then and now is called RootShield®, though it has gone through a number iterations in those two and half decades. It is now available in granules and wettable powder—and in a new formulation called RootShield PLUS—with two active ingredients. Its preference with growers is that it prevents soil-borne Phytophthora, as well as other diseases. RootShield PLUS offers improved suppression of the hot-season Pythium. BioWorks has about other 20 products, most being certified for use on organic production but also highly efficient for the conventional grower who is managing resistance issues with standard chemistries. Other key products include MilStop® that controls powdery mildew and Verdanta®, a fertilizer line that is becoming quite popular. In 2017, the BioWorks introduced BotryStop, a product specifically for botrytis control. In 2018 additional products will be released, with more in the pipeline.

The company initially focused its business on ornamental and horticultural markets. Over the years, it expanded its offerings, which has led to today’s broad stable of products.

With many of the big players now offering biologicals, Foster said the initial reluctance of growers giving more sustainable crop protection tools a chance on their conventional crops has been eased, but there are still pockets of resistance from those that are not familiar nor highly informed about the products. He added that there is a generational component to how growers react to biologicals. As with many “new” ways of doing things in agriculture, younger growers tend to be more open to testing. And testing, he said, is key to expanding the use of biologicals. For the most part, he said growers are always interested in trialing something new. “We like to say every grower is from Missouri…the show me state.”

Joe Gionta, director of sales and marketing, said growers are concerned about the safety and resistance management, so more and more of them are looking at biological options. He added that consumers are also driving the move toward increased use of more sustainable products. Foster said the efficacy of any product is still critical in its adoption but ease of use is high on the list. The use of biologicals allow for immediate return to the field by the workforce.

BioWorks products are sold throughout North America through a distributor network. The firm is based in western New York, with each of the four owners also being integral employees. Marketing Manager Jeff Luke called the firm “a small to medium sized company that is ranked in the top 10 globally” in the biologicals sector. While that’s a fairly high ranking, the top few participants are multi-national, multi-billion dollar companies. Nonetheless, BioWorks is experiencing double-digit growth each year.

It has been actively selling its products into the western vegetable market for many years. Foster said that there are some inherent differences in this market including the extensive use of pest control advisers—which are not used in other states or markets.

BioWorks became familiar with the Western Growers Center for Innovation and Technology through a press release late last year and believed it was a perfect fit. The company sees itself as an innovator and the opportunity to collaborate with other innovators in the ag space was compelling. “We take a long-term industry perspective,” Foster said, adding that the company firmly believes biological crop protection tools will become increasingly important over time. Currently, he estimated that biologicals only account for 3-5 percent of the total market.

 

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Western Growers Named Tech Sponsor at Inaugural Organic Grower Summit

November 9th, 2017

Western Growers will serve as the “Ag Technology” sponsor for the Organic Grower Summit (OGS), which will hold its inaugural event in December in Monterey. As the Ag Technology sponsor, Western Growers has coordinated the attendance of technology companies as exhibitors, and helped facilitate elements of the technology area of the event.

The first ever OGS, a joint production between California Certified Organic Farmers (CCOF) and Organic Produce Network (OPN), will bring together organic growers, producers and processors for two days of education, information and networking opportunities with organic production supply chain and service providers. The event includes a series of educational sessions, keynote presentations, variety of meal functions and a trade show floor.

“Western Growers welcomes the opportunity to participate as the Ag Technology sponsor of the inaugural Organic Grower Summit. Our involvement in this visionary event reaffirms our commitment to driving innovation across all segments of the fresh produce industry,” said Matt McInerney, senior executive vice president for Western Growers.  “We look forward to working with the event partners, CCOF and OPN, as we mutually help the organic produce industry amidst challenging regulatory and marketplace demands, both now and into the future.”

Educational session panels at OGS will range in topics including farm soil management, environmentally-sustainable packaging, advances in agricultural technology, and a discussion with elected state and federal officials on key issues facing agriculture. Among confirmed speakers are Karen Ross, secretary of the California Department of Food and Agriculture; and Miles McEvoy, deputy administrator at USDA-AMS.

Another highlight of the summit will be an opportunity for growers to meet directly with buyers from Costco, reportedly the largest retailer of organic food sales in the United States. Costco, with annual fresh produce sales of $4 billion, will sponsor a half-day event during the December 13-14 summit. The “Meet the Organic Farmer” session will provides certified organic farmers and grower representatives the opportunity to meet face-to-face with Costco organic produce, dairy, meat and grain buyers to discuss their operations and products.

“Costco is committed to meeting directly with organic farmers, who are truly on the front lines of bringing top quality organic products to market. We appreciate the work OPN has done in putting together this unique opportunity to meet face to face with those responsible for actually growing organic products,” said Heather Shavey, Costco assistant vice president, said.  “Our buying team is looking forward to learning more about organic production, hearing about new product innovations and building new supplier opportunities to meet the growing demand for organics for our shoppers.”

Tonya Antle, cofounder of the Organic Produce Network, said “OGS is delighted Costco is coming to show their support of the certified organic farming community. This is a great opportunity to have organic farmers get in front of Costco to tell their story as part of the inaugural OGS.”

Certified organic growers, producers and processors interested in making an appointment to meet with Costco, can register as an attendee at www.organicgrowersummit.com/registration and click on the “Meet with Costco” tab for further information.

Among the inaugural Organic Grower Summit educational session topics that will be covered are: Issues Facing Organic Farmers Today; Organic Disruption—Cannabis: The Next Frontier; Clean and Renewable Technology; Tools for Plant and Soil Health; Essentials of Sustainable Packaging through the Supply Chain; and Leveraging Precision Agriculture. Each of the six sessions will feature leaders from the organic industry, as well as experts in the field of discussion.

“Over the past 25 years, I’ve seen the rapid growth in the demand for organics. We fully support the Organic Grower Summit as this will be an excellent resource for our growers to learn new and important information that they can bring back to our farms,” said Jeff Huckaby, president, Grimmway Farms.

Additionally, OGS is finalizing an educational outreach program for PCA, PRC, and qualified applicators to kick off the event. Attendees are eligible for two hours of approved continuing education credit and will learn about new requirements for pesticide use near schools and worker protection standards.

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LEGISLATOR PROFILE: Senator JEFF STONE — Represents California 28th District which lies entirely in Riverside County

November 9th, 2017

This January, the California Legislature will begin the second year of its 2017-2018 session. The first session, which adjourned in September, was one of the most colorful and contentious in recent memory. Marked by bitter, often personal, interparty and intraparty attacks, the session’s animosity was spawned by two key factors: a Democrat supermajority in both houses of the Legislature and the election of Donald J. Trump as president.

When the dust settled, several controversial legislative initiatives had been signed, or stood to be signed into law. Key immigration, environmental, labor, health care and housing bills—as well as a bill that levied a historic statewide gas tax and increased vehicle licensing fees—topped the list of major legislation. Some of the initiatives, like the gas tax, were rammed through simply because of the existence of the supermajority. Others were passed in response to President Trump and his administration’s agenda, which Democrats in California vehemently oppose.

The sole Republican on the Senate Labor and Industrial Relations Committee, Senator Jeff Stone (R-Murrieta) stood on the front lines as many bills affecting business and agriculture made their way through the committee and Legislature. Because of his unique perspective, Western Grower & Shipper broke from our usual profile format and asked Sen. Stone to recap the year and offer his thoughts about what we can expect from the Legislature next year.

 

WG&S: Give us your take on what it was like to be in the Legislature this past year.

It was a challenging start to the year, and a very lonely time to be a conservative in the state legislature. Members never dreamed they would be talking about a President Trump; they thought they would be talking about a President Hillary Clinton. As a result, there were frequent anti-Trump resolutions on the Senate floor. The majority party was upset about the president’s rhetoric and policies on a number of issues, including immigration and undocumented immigrants in this country. They wanted to do everything they could to portray him as a racist…and wanted to lump all Republicans together. That was disheartening and really set the tone for the year.

By making it personal with the president, majority leadership made it personal with Republicans—and that created a schism and ill feelings. It’s unfortunate because the Senate has always been a collegial place. Members respect one another’s opinions and efforts. This year however, several legislators attempted to get resolutions heard—ranging from religious persecution in other countries to congratulating the president on his election—but they were not allowed. The most egregious incident was when Sen. Janet Nguyen was censored and removed from the Senate floor. She was completely right in expressing herself and they were completely wrong for doing that.

For a majority of members, there’s still a lot of mutual respect between Democrats and Republicans. Most members realize that when we speak on the floor, we are trying to do our best for our constituents and what we think is right for the state.

 

WG&S: How did the supermajority affect the agenda of the Legislature?

Leaders in the Assembly and Senate certainly took advantage of their supermajority this year. They advanced bad legislation that was detrimental to the state and to taxpayers. If you add up all the taxes that our constituents will have to pay starting in November, you’ll see it’s the largest tax increase in the state’s history. It’s unfortunate since it’s the Democrats who routinely portray themselves as champions of the middle class and the working poor. But almost all of the taxes are regressive. Anybody who is upper class or wealthy is not going to be concerned about these increases. It’s the working class people who are going to get hit hard. I feel bad for them because I represent a lot of those people. In 2003, Governor Gray Davis was recalled because he allowed an increase in vehicle licensing fees. They not only increased those fees this year, but they also increased the gas and diesel taxes—all in one bill! In seven years, our budget has grown by 40 percent from $80 billion to $127 billion. But have our lives or roads gotten better? It all comes at a significant cost to individuals and businesses.

Speaking of businesses, let’s not forget about the burdens that were placed on or that they attempted to place on them and industries such as agriculture with things like Cap & Trade, and egregious labor, health care and pension bills. Some bills encouraged employees to file lawsuits against employers using the Private Attorneys General Act (PAGA). Democratic leaders were prepared to do everything they could to oppose the Trump agenda, especially when it came to climate change.

All Cap & Trade did was give government more money to spend on projects that have no nexus to climate change but that are being linked to climate change. When you look at the Cap & Trade program, there are an unlimited amount of credits you can buy, so where’s the cap? It’s really just Tax & Trade.

The same thing for the gas tax. Did we need that? No! We already had one of the highest gas taxes in the country, but we don’t use gas tax money to pay for roads. We use it to pay for other things. That’s why you are seeing the significant flight of businesses and individuals that are finally saying enough is enough and are moving elsewhere.

Another example is the single-payer health plan legislation. That was a horrible $400 billion plan to eliminate all private insurance in response to Trump saying he is going to eliminate Obamacare. It’s all reactive. How do you rationalize a bill with a price tag like that that? Yet it made its way through Senate appropriations with no appropriation and was sent over that way to the Assembly. Speaker (Anthony) Rendon was ticked off about that, as he should have been, and decided to table the bill for a year to let things quiet down. And what happened? He got the wrath of the California Nurses Association who made it very clear that if you don’t support the single payer plan, they will run someone against you in the primary. It shows the power and determination of some of these unions who really run the show in Sacramento at the expense of the taxpayers, who are never the priority unfortunately. The same was true with pension reform and what happened to the agriculture industry with the overtime bill, AB 1066.

Ag workers have always been in a separate working class when it comes to the laws of the state. They are very talented, hard working people. The farmers they work for are usually family farms, even large ones, and they really do try to assist them with things like housing, health care or help them in a crisis. The UFW bill didn’t help them though. They are now getting less hours and less money. And now the industry can’t find enough workers to work their fields and maintain their crops all because Sacramento and the unions got their way. When the legislature gets involved, it just complicates everything. The bill sounded righteous, but it’s not what the workers wanted and it ended up hurting instead of helping them. So now you see a lot of farm workers leaving the state and going to other places like Arizona because the laws are getting crazy here.

 

WG&S: Can you give us a few predictions of what you think will happen next year?

I think you are going to begin to see an assault on property taxes. There’s not a whole lot more they can do in other areas. With the sales tax, there is a statutory ceiling about what can be collected from local and state taxes—unless they choose to raise those thresholds, which is always possible. I also think they will potentially go after commercial property owners who are already struggling because of online retailers. And I think you are going to see more climate change adaptation laws, among other things.

I still think capitalism is a good thing. The majority party doesn’t think that way. They think we should be sharing all resources. But if we stifle investment, we are in trouble. Our economy has three legs that really keep us alive: agriculture, tech and entertainment. If any of those three fall, the entire economy of the state will collapse, especially with all of our mounting debt.

 

WG&S: What are your plans for next year and the future?

I’m going to stay right where I am because we need to continue to fight these battles, although I want to find ways to work together and to try to straighten the state out because it’s going down the wrong path. In the meantime, I am looking forward to visiting with my constituents and will share with them the horror stories from this year as well as some of the successes we had. And we did have some success. I’m happy about that.

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2017 Legislative Session Ends – A Year for the History Books

November 9th, 2017

By Matthew Allen and Gail Delihant

 

The California Legislature completed its annual business in the early morning hours on September 16 and have departed Sacramento for the remainder of the year. At the time of this writing, those bills that have passed out of the Legislature have now been submitted to Governor Jerry Brown’s desk for his review. He has until October 15 to issue his signature or veto.

This turned out to be an extraordinarily active year for the California Legislature. Longtime capitol insiders have said they cannot recall a session that has dealt with the same high volume of bills and contentious issues that have been a hallmark of this legislative cycle.

This frenetic pace was driven by several factors including the election of President Trump, a two-thirds Democratic supermajority in the Assembly and Senate, and the limited presence of the moderate Democratic Caucus bloc, as it continue searching for a way to redefine itself and its message. Each of these factors had a clear impact on shaping the issues and challenges that WG and our industry faced this year.

The reaction of California legislators to the election of President Trump was immediate and swift. Legislators introduced many bills to voice their opposition to his new policies and to “safeguard” California from potential federal rollbacks on environmental, immigration, labor and water policy.

The long-simmering debate on whether to make California a sanctuary state became a priority issue and led to the Legislature passing Senate Pro Tem Kevin De Leon’s SB 54, which places limits on how law enforcement agencies in California can work with federal immigration enforcement.

Unfortunately, the debate did not stop there. Assembly member David Chiu (D-San Francisco) authored AB 450 to force private employers to require immigration agents to have a judicial warrant prior to entering their worksites and to require a subpoena prior to granting those agents access to employee records. The bill was also layered with other requirements that would have put employers in direct conflict with federal law. Recognizing that there was no pathway to stop the bill in the Legislature (many moderate Democrats did not like the bill but supported it anyway), and the likelihood that AB 450 would be signed by Governor Brown, WG worked closely with other industry partners and the business community to amend the bill to eliminate the clear conflicts with federal law and to reduce liability exposure for our members.

WG was also part of a coalition that helped to defeat SB 49, which was another bill by Senator De Leon that would have blanketed many federal laws that were in effect under the Obama Administration onto California without a case-by-case analysis on the merits.

Although 2017 was not the first time that the two legislative houses have had a two-thirds supermajority of Democrats, it is the first time that the Governor and Democratic leaders actually utilized that supermajority to pass several bills on issues that likely would have failed in previous years.

One such example is the passage into law of the WG-opposed gas tax (SB 1), which increases several taxes and fees to raise the equivalent of roughly $52.4 billion over 10 years in new transportation revenues.

The Governor and Legislature also came to an agreement this year on renewing the Cap and Trade program in order to meet the state’s legally-mandated climate change reductions post 2020.

Unfortunately, the sheer number of two-thirds bills that legislators were forced to deal with, combined with a lack of prioritization by the Legislature concerning which bills had the most merit, was enough to overcome the tremendous amount of hard work and effort by WG, other agricultural organizations and the environmental justice community in fighting for the passage of SB 623 by Senator Bill Monning (D-Carmel). Through a modest fee on agricultural, urban and industrial water users, SB 623 would help ensure necessary upgrades to infrastructure and financial assistance for the operation and maintenance of drinking water systems in communities in need of safe and clean drinking water. This is a critically important issue for farmers because it would protect agricultural operations from being subjected to enforcement actions for exceeding nitrate levels in groundwater as long as the existing permit requirements are being followed. WG and the supporters of this bill will continue to work over the fall to garner more support for SB 623 and remain hopeful that the bill will proceed through the legislative process next year.

As we enter fall, we look back over 2017 trying to identify patterns that may help us decipher what the 2018 legislative year may bring. That has become increasingly difficult given that 2017 made the predictable, unpredictable. However, we welcome that challenge and look forward to continuing to represent your interests in Sacramento.

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The Evolving Landscape of California Meal and Rest Break Law

November 9th, 2017

Five years after the California Supreme Court in Brinker Restaurant Corp. v. Superior Court clarified standards regarding an employer’s duty to provide meal and rest periods, many employers continue to find these rules challenging to implement in the real world. Moreover, because the Brinker court was applying the law under a statute that until recently did not apply to agriculture (Labor Code section 512) and a different wage order than the wage order covering agricultural occupations, ag employers need to be aware of how ag may be treated differently in some respects. Finally, employers need to be cognizant of a recent California Supreme Court decision rejecting on-duty and on-call rest breaks.

Brinker clarified the rules… for some industries

In 2012, the California Supreme Court in Brinker clarified the obligations to provide meal and rest periods for most industries. With regard to meal periods, the Court ruled that employers are not required to “ensure” that 30-minute unpaid meal periods are in fact taken, but rather the meal periods must be “provided.” The Court clarified that to “provide” a meal period means that the employer must relieve employees of all duty, relinquish control over their activities and permit them a reasonable opportunity to take an uninterrupted 30-minute break. Moreover, employers may not impede or discourage employees from taking their meal periods.

As for the timing of meal periods, the Court explained that employers must provide employees a first meal period that starts after no more than five hours of work, absent a valid waiver. After 10 hours, employees are entitled to a second meal period.  The Court also rejected the plaintiff’s argument that employees are entitled to a meal period every five hours (a “rolling five-hour” standard). This means that assuming an employee who works more than six hours in a day starts work at 7:00 a.m., he or she must be provided a 30-minute meal period by no later than 12 noon. A second 30-minute meal period must be provided if the employee works more than 10 hours in a day, but the employer and employee can waive the second meal period by mutual consent if the first meal period is not waived and the total hours worked does not exceed twelve.

 

What about Wage Order 14 Employees?

While Brinker provides helpful guidance, it must be noted that the Court was applying the meal and rest obligations under Industrial Welfare Commission Wage Order 5 (the wage order governing the public housekeeping industry, which was at issue in that case) and Labor Code section 512 which codified the meal period requirements into statute. Ag had long been exempted from Labor Code section 512 as a result of the California Legislature’s enactment of AB 60, the Eight-Hour-Day Restoration and Workplace Flexibility Act.  However, AB 1066 (the new ag overtime law), which went into effect January 1, 2017, removed the Ag exemption from the Labor Code. AB 1066 directs the Department of Industrial Relations to update Wage Order 14 consistent with the Labor Code but that has not yet happened.  So ag employers must presumably still comply with Wage Order 14.

With regard to meal periods, Wage Order 14 at section 11 says:

“Every employer shall authorize and permit all employees after a work period of not more than five (5) hours to take a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day’s work the meal period may be waived by mutual consent of employer and employee. Unless the employee is relieved of all duty during a 30-minute meal period, the meal period shall be considered an “on duty” meal period and counted as time worked. An “on duty” meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to.”

First, while Wage Order 14 requires employers “authorize and permit” as opposed to “provide” a meal period (as stated in Labor Code sec. 512), most practitioners agree that this is a distinction without a difference. Ag employers have the same obligation to relieve its employee of all duty for an uninterrupted 30-minute meal period.

The question of timing of meal periods under Wage Order 14 is a bit more nuanced. The Brinker court ruled that the first meal period must occur no later than the end of an employee’s fifth hour worked, and a second meal break no later than the end of an employee’s 10th hour worked. Labor Code section 512 says that employees who work no more than 12 hours may waive the second 30-minute meal period by mutual consent of the employee and employer only if the first meal period was not waived.

But Wage Order 14 is still out there and it says “…except that when a work period of not more than six (6) hours will complete the day’s work the meal period may be waived by mutual consent of employer and employee.” This means that for an employee who worked from 7:00 a.m. until noon and took a 30-minute meal period to 12:30 p.m., the conservative view is that there can be no waiver of the obligation to provide a second meal period if that employee works past 6:30 p.m., since she would be working more than six hours in the work period to complete the day’s work. Conservatively speaking, this means that second meal period waivers may not be effective if an agricultural employee works more than 11 hours in a day. It is important to keep in mind that a second meal period waiver is a waiver from the employer’s obligation to provide a second meal period; the employee may always forgo her meal period, unless the company requires she take it. Hopefully, the DIR will soon comply with AB 1066 and reconcile Wage Order 14 to be consistent with Labor Code section 512 so that there can be more clarity as to the ag employer’s meal period obligations.

Potential issues arise when the “nature of the work” prevents an employee from being relieved of all duty for at least 30 minutes based on the necessary job duties. For example, truckers moving leafy greens from the field to the cooler are subject to strict “cut-to-cool” windows mandated by the product’s perishability and food safety protocols, and cannot leave their trucks to take a lunch break. While the Division of Labor Standards Enforcement (DLSE) has set a very high bar for finding when the “nature of the work” exception applies, this may well be a valid example. Nevertheless, an on-duty meal period should be used only in limited situations when an off-duty meal period simply cannot be provided, and only with the advice of experienced employment counsel.

 

What about rest periods?

Regarding rest periods, the Brinker Court clarified that employers must “authorize and permit” employees to take paid 10-minute rest periods, when practicable, in about the middle of each four-hour work period “or major fraction thereof.” Rest periods need not be given when the total time worked on a day is less than 3½ hours. The Court held that employers must make a “good faith effort” to authorize and permit rest breaks in the middle of each work period, but may schedule breaks at other times if it is impracticable to schedule them in the middle of the work period.

The court also provided a definitive meaning of “major fraction thereof,” (i.e., more than half) finding that 10 minutes of paid rest time is due for shifts of 3½ to 6 hours; 20 minutes of paid rest time is due for shifts of more than 6 and up to 10 hours; 30 minutes of paid rest time is due for shifts of more than 10 hours; and so on.

These rules regarding rest periods apply to virtually all employers, including ag employers, but may cause consternation with some employees. Take for example, ag workers who are scheduled to work a seven hour day. They begin work at 7:00 a.m., take their first rest break at 9:00 a.m., and their meal period at noon. They return to work at 12:30 and work to 2:30 when the shift ends. They must be authorized and permitted to take a second 10-minute rest period during the middle of that second two-hour shift. Many employees in this situation don’t want to take a rest period, and would rather work straight through to the end of the workday. While the law does not require employers to make their employees cease work for their rest periods (or their meal periods for that matter), many employers take the approach that breaks must be taken, lest they are accused in a lawsuit of having a rest period policy but not actually providing the rest periods. If all the employees on a crew routinely skip their second rest period, for instance, a disgruntled employee may say they were denied their rest periods, even if the rest period was actually authorized and permitted. This is a no-win situation for the employer.

 

California Supreme Court Rejects On-Duty or On-Call Rest Breaks

All employers should take note of the California Supreme Court decision in Augustus v. ABM Security Services, Inc. which held that California law does not permit employers to require employees to take on-duty or on-call rest periods. This is a very significant case for employers who require employees to monitor their email, phones or radios while taking on-call rest periods. Employers who cannot relieve non-exempt employees of all duties during required rest breaks may need to pay rest break premiums if they cannot provide an alternative off-duty rest break. Employers who use on-duty or on-call rest breaks should consult with employment counsel to mitigate potential liability in this area.

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CREDIT TECHNOLOGY: Automatic Aging Reports Improves Credit Accuracy

November 9th, 2017

It’s a very simple concept, but it can have a huge impact on business decisions when executed properly.

For more than 100 years, Blue Book Services has been the leader in providing credit and marketing information for the fresh fruit and vegetable industry. By synthesizing financial and rating information, Blue Book has continuously provided credit data to all segments of the industry’s supply chain so that well-informed business decisions can be made.

And now, they have come up with a better and faster mouse trap.

Jim Carr, president/CEO, recently explained the new effort by the Blue Book which gives members real time access to accounts receivable aging reports. The new feature has some bells and whistles but at its core any company that electronically submits its own AR aging reports to the Blue Book credit team receives digital access to the aggregate report. Of course, the creditors’ names and specific information are omitted but these real-time electronic credit reports offer the most up-to-date information available.

Carr calls it a win-win for the industry, as it allows a selling or buying decision to be based on current financial information He stands by the Blue Book’s traditional method of gathering information from thousands of businesses and said those regular submissions remain extremely valuable in creating an overall picture of any company’s financial health. There are literally thousands of companies in this industry and millions of transactions in almost any given time span.

The Blue Book staff continually gathers that information and uses various measurements from the aggregate information to determine a company’s financial credit worthiness, rating and pay trends. This system has worked well since the firm was founded in 1901 and continues to be the backbone of its business model.

In July of 2016, Blue Book Services unveiled this new effort to literally harness the power of AR Aging Reports  to deliver an instant snapshot of how a company is currently performing. The feature is fully functional with contributor growth on the rise. “We have major grower-shippers and distributors from throughout the country participating and giving their colleagues the benefit of AR Aging Reports.”

Blue Book typically receives these aging reports from participants on a monthly basis, at various times during the month according to each firm’s own accounting system. Usually they are received on the first of the month, the 15th or the end of the month. In turn, the Blue Book updates the aggregate AR Aging Report on a daily basis, and again any firm that confidentially shares its information with the credit service gets access to the report.

Carr reiterated that the report comes with no names affiliated with any specific debt to protect the seller’s anonymity. He calls it another tool to improve credit decisions.

“The ratings and financial information (in any edition or on the on-line version of the book) are very accurate but it’s a rear view mirror look,” he said. “It basically tells you how the company performed in the preceding months. The Aging Report can give you information on current trends.”

The Blue Book executive said it is a fair question to ask if a real time AR Aging Report challenges a rating. “I don’t see it that way. They, in fact, complement each other.”

He explained that while a real-time aging report does give a great snap shot of what’s happening with a company in the short term, it doesn’t replace the careful consideration that goes into creating a longer view look at the firm’s business practices and financial situation. Both are tools to gauge their credit worthiness and both are accurate, even if they sometimes paint a little different picture.

The new A/R Aging Report program has garnered quick support from the industry.

Linda Schroeder, credit manager for Church Brothers Farms, Salinas, California, called the effort “an important additional tool that we can utilize to make good credit decisions and also assign appropriate credit lines. She urged others to participate in the program, noting that the addition of this data allows everyone in the credit field to make smarter decisions concerning a customer’s credit worthiness.

Another Salinas Valley firm, Coastline Family Farms, has also been participating in the program. “It gives an up to date picture of how a company is paying,” said Accountant Kathy Hulette. “When a potential customer is applying for credit, it is a great tool to use when making the decision on whether to take them on or not. You can also check on existing customers when their payment practices start to fluctuate.

Salesman Jeff Walker of T C Marketing Inc., Napoleon, Ohio, commented on the ease of participation. “It takes me less than one minute, once a month, to fulfill our commitment to a better produce industry. Our hope is that more companies contribute so the Blue Book can grow and enhance this valuable resource feature.”

From Nogales, Arizona, Christopher Ciruli, chief operating officer of Ciruli Brothers LLC., summed up the new program and the importance of a robust credit system. “As a company, we have found Blue Book an invaluable resource to keep us up to date on trading member information and other relevant news that impact our business. We have relied on Blue Book for over 50 years and will continue to do so on account of the information and insights that Blue Book provides.”

 

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Distribution Uniformity Paves the Way for Advanced Water Management Technology and Profit

November 9th, 2017

This month, I have been thinking a lot about irrigation, irrigation technology and irrigation efficiency. One of the reasons this is preoccupying me is the recent publication of a March 2017 report entitled “Management of Agricultural Energy and Water Use with Access to Improved Data.” The report conveyed the research, results, findings and recommendations of the Center for Irrigation Technology at Fresno State and AGH2O on the topics of 1) information services, software and hardware available to growers 2) the adoption rate of these technologies and others and 3) the gaps, strategies and future technologies to improve water and energy management in agricultural settings. This report supported many of the observations from the “Deep Dive” on Water Management Technology that Western Growers, the Mixing Bowl, City of Fresno and others held earlier in the year, and expands immensely on the issues associated with new technology and its adoption to improve precision in water use. In the Executive Summary of the Report, the authors condensed responses from growers and others to the specific question: “Are there any barriers to you adopting new water management technology into the following: ease of use, costs (to install, operate, maintain), reliability of data, learning curve and practicality? This is consistent with concerns that surfaced in WG’s Deep Dive. While growers are wary of new irrigation technology, they still have a high level of interest in deploying technology that can increase irrigation efficiency and reduce energy costs.

Western Growers, through its Center for Innovation and Technology, has identified water efficiency as a priority and we are working with growers and startups in this space to help accelerate the availability of vetted tools that will help reduce costs and improve efficiency. But while these high-tech solutions for irrigation systems may be the next level for driving precision into agricultural water use, there is still plenty of blocking and tackling to do with today’s irrigation systems in California and beyond.

In the recommendations section of the CSUF Report, one of the first observations is that distribution (or emission) uniformity (DU) is of critical importance. This finding is consistent with Western Growers, Toro and Simplot research that was reported out May 2016 in “Irrigation System Evaluations (A Look at Distribution Uniformity)” where we evaluated the performance of four Western Growers companies that we considered to be leaders in irrigation efficiency. In that study, the average DU was just over 81 percent, which is considered good but more than nine points below the DU expected of a new system. We all know that the water, energy, fertilizer needed to produce a crop increases dramatically with the degradation of uniformity. AGH20 put numbers to this in a recent presentation to the California Agricultural Irrigation Association (CAIA) (see chart below). The AGH2O example: if a grower is attempting to apply three acre-feet of water to all parts of an 80 acre field at 85 percent efficiency, he would apply 17 pounds of fertilizer per acre, 17 acre feet of water and (assuming energy is $0.18/kwh) use $5 dollars per acre in energy costs. If efficiency drops to 80 percent, the costs escalate dramatically and with the same assumptions results in 35lb/acre fertilizer, 33 acre feet of water and $15/acre in energy costs. As goes your distribution uniformity, so goes your money—out the window.

But it doesn’t stop with just throwing money away on fertilizer, water and energy—Charles Burt (Chairman – Irrigation Training and Research Center at Cal Poly San Luis Obispo) says “approximately 55 percent of crop non-uniformity is caused by irrigation distribution uniformity” which underscores the notion that yield is directly influenced by DU as well. The effects of poor DU cascade into and contribute to other problems such as nitrate and ag chem discharge which are bringing regulatory regimes and penalties forward for growers in different parts of California. It is a simple and basic issue that often goes unnoticed. In fact, AGH2O estimates just under 60 percent of farms have actually had their irrigation systems evaluated for uniformity and that the biggest barrier to making improvements to reduce energy use and conserve water was that “investigating improvements was not a priority.”

While Western Growers’ mission is to help our members improve their competitiveness and profitability, at the Western Growers Center for Innovation and Technology we are likewise committed to assisting members to produce more food with fewer inputs. Encouraging members to investigate the performance of their irrigation systems as evidenced by uniformity will help to address those objectives. There are many technologies that will help with water management but they have to stand atop a well performing system.

Author’s Note: There are a lot of things I could write about in the Science and Tech Corner in Western Grower & Shipper and I would welcome input from readers on topics that might be of interest to you.

 

The following reports can be found online.

“Management of Agricultural Energy and Water Use”

http://www.californiawater.org/californiawater/management-of-agricultural-energy-and-water-use-with-access-to-improved-data/

 

“Irrigation Systems Evaluations”

https://www.wga.com/resources/irrigation-systems-evaluations

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Going Self-Insured: Another Option to Managing Rising Medical Costs

November 9th, 2017

Gone are the days when the only option an employer had to provide its employees with health insurance coverage was through a fully-insured health insurance policy. With this conventional health plan, an employer pays a fixed monthly premium to an insurance company to cover the anticipated costs of healthcare claims. The insurer collects the monthly premium for all participants enrolled on the health insurance policy, regardless of whether employees use the plan.

Today, employers have an alternative to providing healthcare coverage to their employees. It’s called self-funding, and its popularity is rising among employer groups of all sizes. This type of health plan arrangement allows employers to pay for employee health claims directly as these claims are submitted. The health insurance plan is typically administered by a third-party administrator, or TPA. A TPA facilitates the claims processing and payment, the healthcare network, and the financial reporting while providing various services for the employer on an as-needed basis. The company then undertakes the responsibility of managing the health of its employees by implementing wellness and disease management programs to keep health claim costs to a minimum.

If you are not familiar with self-insurance, here are just a few of the many benefits this type of health plan arrangement provides:

Cost Savings. Going self-insured gives employers control of their own healthcare claims, and the savings can add up dramatically if employees generally use fewer benefits. For example, employers automatically save on the costs of conventional insurance premiums that compensate for overhead, profits and commissions by paying only the direct costs of administering employee claims. If employees are relatively healthy, studies have shown that self-funding can save an employer 20 percent or more on healthcare costs and can be one of the best ways to manage inflation and the rising costs of healthcare. By reviewing the spending patterns of claims coming in, an employer can target the health conditions where their employees need additional support to improve their health and save both the employer and themselves costs over time.

Stop-Loss Protection. One aspect of going self-insured that employers are concerned about is how risky it can be. Yes, there is some risk involved when a company goes self-inured. To reduce the risk, employers can have their TPA coordinate the purchase and management of stop-loss insurance (also called reinsurance), which can help alleviate their fear of getting hit by high healthcare claims. This insurance limits the annual dollar amount of claims submitted against the employer’s self-funded plan and caps a specific limit to any one individual. Annual deductibles are established for both specific and aggregate stop-loss, and once those deductibles are met, the stop loss carrier refunds monies to the employer’s plans for any future claims submitted within the plan year. Although employers will pay a premium in a self-funded plan for stop-loss insurance, stop-loss premiums are typically much lower than medical insurance premiums for a conventional fully-insured plan.

Flexibility of Plan Design. A big advantage to self-funding is that an employer is given the additional control and flexibility of designing its own health plan to meet the specific needs of the company and employee population. Employers are given insight into their health plan with various claims, spend and utilization reports provided by the TPA, which allows the employer to analyze the overall health and utilization of the plan. The employer may then revise or reinforce components of the plan to account for plan needs that help to benefit the employer and health plan participants.

 

Steps to Going Self-Funded

Once an employer has decided to move to a self-funded plan, the first step is to retain the services of a qualified and experienced TPA. A TPA offers a variety of services including access to health care networks, administration and eligibility services, claims processing expertise, benefit plan design, legal and other services that employers typically lack the staff or expertise to provide on their own.

The second step is for the TPA and employer to develop a benefit plan that is designed to meet the healthcare needs of the employees and is concurrently cost-effective for the employer. TPAs can also provide consultation to ensure that benefit plans comply with current regulations.

The last step taken by the employer should be to obtain stop-loss coverage through a stop-loss carrier to protect against catastrophic claims submitted by an individual, as well as aggregate stop-loss insurance, which limits the annual dollar amount submitted against the employer’s self-funded plan.

Going self-funded is a viable option and one employers should not fear but look into if they are considering another alternative to providing health care coverage to their employees while saving on rising health care costs.

For more information or questions regarding third party administration or self-funding, please contact David Zanze, President of Pinnacle Claims Management, Inc., at (949) 885-2209 or [email protected]

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Posted in WG&S Magazine, November / December 2017 Issue | No Comments »

In Crisis and Disaster, Social Media Used as Beacon for Help

November 9th, 2017

Harvey, Irma, Maria and now Nate.

Major hurricanes have ripped through the United States and Caribbean these past months, leaving thousands of people homeless and millions of lives disrupted. Though the full extent of the damage is still unknown, social media has shed light on how victims have been affected and has acted as a mechanism to help those impacted by these tropical storms.

In late August when Hurricane Harvey’s destruction was at its height, real-time updates about the storm and calls for help filled social streams. Stranded Houston residents tweeted their address to emergency officials. Citizens organized rescue missions through Facebook groups. Friends and family were uploading heart-wrenching photos to emphasize how fast the flood waters were rising. Relief organizations posted information about resources they were providing by using identifying hashtags such as #harveyrelief and #harveySOS. News outlets offered minute-by-minute updates in 140-characters or less on Twitter.

As hurricane season continues, people will increasingly turn to their phones to get news quickly or ask for help through a convenient click of an app. Social platforms, such as Twitter and Facebook, are becoming the new 911.

Social media has assisted with emergency response in other countries previously, but never in the United States on this scale. In 2011 when a massive earthquake rocked Turkey, a local TV station tweeted to its followers asking for help in finding housing for quake victims who had been left homeless. Followers were asked to email the station with temporary housing opportunities. Within seven hours, the station received more than 17,000 emails from people willing to house displaced families.

The power of social networks goes beyond emergency response in natural disasters. It can also play a role in a crisis relating to the food and agriculture industry. Many times, consumers do not bother contacting their local health department when they start feeling ill from food they ate. Instead, they will turn to the internet and post comments on Yelp, Twitter or Facebook about what they consumed and what symptoms they are experiencing. In fact, some health departments are starting to comb through Yelp reviews to identify outbreaks of food poisoning and leverage Twitter to track foodborne illness.

Take, for example, Chipotle Mexican Grill’s contamination incident in 2015 where the food giant faced repeated outbreaks of norovirus, E. coli and salmonella within months of each other. Crowdsourcing, a social sharing model where information is obtained from large groups of people via the internet, was used to identify the start of Chipotle’s norovirus outbreak. Crowdsourcing website IWasPoisoned.com allows users to anonymously report their own cases of illness tied to restaurants, and the site received 70 reports from customers who were sick from eating at Chipotle’s Simi Valley location.

Though the U.S. Centers for Disease Control and Prevention declared the outbreak officially over in February 2016, Chipotle’s sales are still plummeting. Why? Because consumers are still speaking about the contamination event—which resulted in a total of 55 people in 11 states being infected with E. coli—and everything previously reported about the outbreak still lives online. In an era of social media, the history of the E. coli scandal will indefinitely loom over Chipotle, and it will be increasingly more difficult for food operators to overcome foodborne illness outbreaks.

For better or worse, social sharing has changed the game for disasters, crises and emergency response. Food and ag-related companies can take this opportunity to leverage the influence of social media to bolster their positive online presence before an incident occurs.

This can include activities including the following:

•   Sign Up: Make a company account on Facebook, Twitter, Instagram or Snapchat. Please keep in mind a company does not have to join all these sites. The target audience and company goals will dictate which social media platform is appropriate.

•   Update Consistently: Post content regularly, including videos from the farm, photos of team members working and articles relating the ag industry. Having a social page that is outdated is just as bad as having no social media presence at all.

•   Build a Following: Posting engaging content will help brands build a loyal fan base. These brand ambassadors will not only help promote your organization, but will be your key supporters when a disaster hits.

Additionally, in the case of a crisis, organizations can use social sites to help rebuild their brand. One such way would be to incorporate social media into risk and crisis planning.

Some tips on effectively integrating social media into the company’s crisis management plan are as follows:

•   Identify all Possible Incidents: Food and ag-related companies should identify all potential events that can be harmful to the brand, as well as develop responses beforehand that can be posted when the crisis hits. Catastrophic events can include food contamination/poisoning/illness, a sudden death of an executive or a natural disaster that destroys a food production facility.

•   Create a Team: Prior to a crisis, organizations should identify the person(s) who will be handling all social media communications. This person must be available 24/7 to respond to inquiries from the public and post continuous updates from the company about the event.

•   Be Responsive: The social media crisis team should consistently monitor websites and answer any questions about the incident that may arise. The more responsive and transparent a company is about an incident, the easier it is to bounce back.

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Posted in WG&S Magazine, November / December 2017 Issue | No Comments »

Financial Literacy: Are you prepared for retirement?

November 9th, 2017

By Chris Oerman

 

With low unemployment rates and all-time stock market highs, Americans have many reasons to feel confident in their personal finances. However, according to a recent survey from Financial Engines, America’s largest independent investment advisor, a majority of Americans lack the basic financial knowledge they need to properly prepare for retirement. A mere 8 percent of respondents were able to pass a quiz about the many financial decisions they will likely encounter during the course of their lifetimes.

Among the more challenging questions:

•   How much life insurance is adequate for my current salary?

•   What is the annual inflation rate for tuition at a four-year university?

•   How long do I need to delay claiming Social Security benefits to receive the maximum lifetime benefits?

•   How much do I need to save to cover out-of-pocket healthcare costs throughout retirement?

The pervasive problem of financial literacy in America is understandable, given the rapid pace of life and the rising costs of living. Additionally, many Americans still remember the stinging pains of the Great Recession that began nearly a decade ago. Millennials were particularly affected by the financial crisis, which took place just as they were coming of age. In fact, a Wells Fargo study revealed that 53 percent of millennials will never be comfortable investing in the stock market. This fear of investing will make it very difficult for this cohort to effectively grow their money, outpace inflation and adequately save for retirement.

While most Americans instinctively understand that preparing for retirement should be a priority, far too few are making real progress toward long-term financial health. How many people can answer (or have saved enough money to address) the following questions?

•   If I lose my salary, how many months can I live off of savings?

•   Once I’m retired, how many years am I prepared for with my expected cost of living?

•   If I suddenly pass away, do I have a plan in place for my family to pay off outstanding debts?

•   How much do I have to start saving to put my children through a four-year university?

If you are between the ages of 50 and 70, there are several major financial milestones you should be aware of and prepared for, including contribution limits and withdrawal requirements for 401(k) and IRA accounts, Social Security eligibility and benefits schedules and Medicare enrollment. Understanding these milestones may mean the difference in your quality of life during your retirement years.

At Western Growers Financial Services, we are in the business of helping you achieve financial literacy. For example, if you do not have access to a company-sponsored 401(k) plan, you can still save for retirement by opening up an IRA, or Individual Retirement Account. With an IRA, you can save up to $5,500 in pre-tax dollars per year. The logic of using pre-tax dollars is based on the assumption that when you withdraw your money at age 59½ or retirement, whichever is later, you will be taxed at a lower rate since you are no longer earning a salary. Thus, your current tax burden is eased, and your money is allowed to grow tax-deferred until withdrawal. Furthermore, once you reach the age of 50, there is an exception that allows for catch-up contributions that raises the maximum to $6,500 per year.

It is no secret: Poor decisions today can cost you later in life. We are here to simplify complex financial decisions and help you achieve your retirement goals. It is never too late to start the financial planning process. Give us a call to learn more about how we can help you along your journey toward a more confident and secure financial future.

Take the Financial Literacy Quiz to test your financial knowledge: https://financialengines.com/financial-literacy-quiz

Posted in November / December 2017 Issue | Comments Closed

No, Automation Does Not Mean Job Loss

November 7th, 2017

The inaugural AgSharks™ Competition took place last week at our Western Growers Annual Meeting in Las Vegas, and the outcome was both unexpected and sensational! Six agtech start-up companies pitched their technologies—everything from robots that cart berries up and down the field to little sachets that reduce decay and extend the shelf life of fresh produce—to a group of investors and farmers. The result? Two startups received a $2.25 million total equity investment offer from S2G Ventures to help bring their product from development to market.

AgSharks was our latest effort to advance agtech, and we will continue to implement these types of initiatives to bring about technology that will solve agriculture’s biggest issues, including labor. The U.S. Department of Labor recently reported that there has been a 15 percent increase in the number of H-2A (the temporary ag worker program) applications received, compared to the same time last year. In California alone, the number of jobs certified rose from 2,600 in 2006 to over 11,000 in 2016 and climbing. Given the significant expenses and bureaucratic headaches of the broken H-2A program, this is a clear indication that our industry is facing a severe labor shortage.

The fact is, agriculture has been at a labor deficit for more than a decade. Over the past few years, the number of farmworkers who are migrating to the U.S. from Mexico has dropped, exacerbating this shortage. It is a well-established fact that Americans will not work in our fields, regardless of higher wages. Absent an immigration solution that provides U.S. farms with access to a legal, stable supply of foreign workers—and no, the Goodlatte AG Act is not sufficient in its current form—farmers and ag-related businesses are looking into ways to support mechanization and automation to help solve their labor woes. If they don’t, there will be no such thing as local (or domestically-grown) fresh produce.   

In light of this drive toward mechanization and automation, there seems to be a myth floating around that technological advancements will mean the elimination of jobs in the fields. This argument is flawed. Sure, certain types of jobs will be eliminated, but mechanized labor requires a different set of skills in the field (related to science, technology, engineering and math) and actually creates more high-paying jobs. As Chris Rotticci of Automated Harvesting explains in this video, automation allows farmers to improve the working environment for their employees and attract and retain talented labor.

Who knows, these might even become jobs that Americans will want to do.

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