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Grocers Sour on Proposed Packaging Rule for Grapes

By Cindy Skrzycki
Tuesday, April 1, 2008

Just how many "shattered berries" -- or loose grapes -- should be allowed in the bag you pick up at the grocery store?

For the past three years, California growers and produce wholesalers have been feuding over whether the standard for U.S. Grade No. 1 should be changed. Buyers say permitting more loose grapes will lower the quality and make the fresh produce harder to sell.

Now Department of Agriculture officials, who set quality standards for 240 food products, are proposing to increase the number of loose grapes without considering them defective. The debate is over image and the bottom line in the $2 billion fresh table-grape market, which has grown as Americans each eat 7 to 8 pounds of grapes a year, up from 2 pounds a person in 1970.

"Our experience has consistently shown that our customers seek out the bags with the most berries still attached to the stem," Brendon Cull, Kroger's director of government and regulatory affairs, said in comments, telling regulators that loose grapes don't sell.

Cull said the proposal would be "unacceptable to many customers and families who want their grapes to be fresh." Cincinnati-based Kroger operates 2,400 grocery stores.

A change in the tolerances for defects mostly would affect growers in California, who will sell about $1.1 billion worth of table grapes this year, according to industry estimates. Another $1 billion worth of table grapes are imported, mostly from Chile and Mexico.

Under the Feb. 26 proposal by the Agricultural Marketing Service, an additional 5 percent of loose grapes in containers wouldn't be counted as defects. Comments closed March 27, and regulators are reviewing them. Currently, loose grapes are counted toward a 12 to 15 percent "tolerance" for imperfections under the No. 1 standard. If approved, the change would allow imperfect grapes to total up to 20 percent of the berries in a container.

Those grapes would still earn the U.S. Grade No. 1 stamp, and shippers would expect top dollar for them. Growers said their research showed consumers don't mind a few loose grapes. "This proposed allowance recognizes the reality that even the most pristine bunch of grapes has some amount of healthy and sound berries that are not attached to the stem," Barry Bedwell, president of the California Grape and Tree Fruit League in Fresno, said in his comments. "To unfairly profile berries without defect would deteriorate grading standards."

The California growers have been pushing to increase the limit on loose grapes since 2005, when they petitioned the USDA requesting that an additional 10 percent be allowed.

Rulemakers proposed such an expansion, then withdrew it last year, citing a lack of consensus in the industry. The growers filed another petition last October, again seeking the additional 10 percent figure.

The government's current proposal said the growers' 10 percent figure was "too high and would not appropriately reflect what is expected by industry and consumers in a U.S. No. 1 table grape." The higher figure, it said, "would weaken the standard and reduce consumer confidence in the grade."

The growers said better packaging over the past decade meant less damage to the grapes, making them easier to sell. Before containers became common for packaging, retailers displayed mounds of grapes that customers could sort though and bag themselves. Inevitably, there were loose grapes left at the bottom of the display and supermarkets took the loss.

"The retailer used to have to figure out what to do with them," said Leanne Skelton, chief of the fresh products branch at the Agricultural Marketing Service. "Now, the consumer takes them home and decides what to do with them."

That is, the consumers pay for the loose grapes.

"This translates into additional revenue at retail and it is reasonable for growers to look for a share of this new income source," Clint Young, of Pitts Family Farms near Fresno, said in a comment.

Wholesalers, who regard a loose grape as a weak grape that can spoil faster, don't even like the 5 percent proposal.

"Once this hits, the damage will be done," Patrick Davis, president of the Arlington-based North American Perishable Agricultural Receivers, said in an interview. "I can't imagine consumers would want what this will bring."

The trade group represents 60 of the nation's produce wholesalers who sell to retail outlets and food distributors.

Defects in grapes include softness, stickiness, discoloration and shattered berries -- the term for grapes detached from the mother bunch. Shipments that don't make the grade don't command as high a price and are harder to sell.

Jay Rosenstein, whose family has been in the wholesale produce business for 90 years in Scranton, Penn., said he thinks allowing more "shatter" would increase health risks and open the door for more defects in other commodities.

A California grower who opposes the change, Dan Gerawan of Gerawan Farming, told regulators it would be better to create a new grade for loose grapes: "U.S. No. 1 High Shatter."

Cindy Skrzycki is a regulatory columnist for Bloomberg News. She can be reached atcskrzycki@bloomberg.net.

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