Retailing Produce

Retailing Produce. I'm Greg Martin with today's Line On Agriculture. There is a lot that goes on in the produce department of your local grocery store. More than the average person will ever see. The retail side of the business is of course driven by supply and demand. Paul Kennedy formerly with Winn Dixie grocery stores describes how they look at it. KENNEDY: The issue about retail is all about sales and what leads to those sales are deflation and disinflation. Disinflation is a form of inflation so if you look at inflation over the long haul as being up about 3% per year then disinflation would be if you were at 1% positive inflation, not keeping up with the 3 year trend but still positive, that would be called disinflation. Deflation is when you go to the negative side. Kennedy says that is really where the rub comes in trying to make that a positive number. KENNEDY: The issue in produce typically would be the potato category might be up, the berry category might be down and you had these ups and downs throughout the produce department but inevitably you would be able to get through it such that there was some positive inflation. Today deflation is certainly evident and certainly in a lot of categories. Many factors are driving that deflation. KENNEDY: The issue not that produce is deflated, the issue is that all categories – the majority of categories that are sold in supermarkets are deflated and there's a lot of reasons for that. So that is really where the retailer has some major problems. He says that in today's economy it is really hard to stay on the positive side of those numbers in the grocery business. KENNEDY: Couple that with going into other areas of the business as in example, meat, if you talk to any meat producers and ask them how the pork producers are feeling, they are feeling the pain as well. And a lot of this is part and parcel to what's happening in the overall economy. Kennedy says that in many cases consumers are trading down. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.