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dissertation entitled
INDUSTRIALIZATION OF THE FOOD SYSTEM: HOW DO MARKET
FORCES IN MICHIGAN '8 APPLE INDUSTRY IMPACT FARM LEVEL PEST

MANAGEMENT?
presented by

John Charles Wise

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6/01 cJCIRCIDaIeDuepss-p. 15

INDUSTRIALIZATION OF THE FOOD SYSTEM:
HOW DO MARKET FORCES IN MICHIGAN'S APPLE INDUSTRY
IMPACT FARM LEVEL PEST MANAGEMENT?

By

John Charles Wise

A DISSERTATION

Submitted to
Michigan State University
in partial fulﬁllment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY
Department of Resource Development

1999

ABSTRACT
INDUSTRIALIZATION OF THE FOOD SYSTEM:
HOW DO MARKET FORCES IN MICHIGAN'S APPLE INDUSTRY
IMPACT FARM LEVEL PEST MANAGEMENT?
By

John Charles Wise

It is the processor defect tolerance standards for raw product that determine the
range of pest management strategies available for a farmer to use in producing an apple
crop, therefore signiﬁcantly affecting our overall ability to implement Integrated Pest
Management at the farm level. It was proposed here that much of the difficulty that we
have historically had in implementing IPM is a consequence of the industrialization of
the food system and its affect on these standards. In this study, four factors, government
regulations, processing technology, c’ommo‘dity attributes and market coordination were
evaluated as to their level of inﬂuence on processor defect tolerance policies. This
investigation utilized quantitative data from a processor survey and qualitative data from
plant tours as the basis for analysis. Results from the study indicate that processing
technology and commodity attributes have a signiﬁcant inﬂuence on defect tolerance
standards for raw product. However, the inﬂuence of government regulations is minimal.
In addition, market coordination forces resulting from new products and market channels
are largely responsible for more restrictive defect tolerances. Lastly, Michigan apple
processors that disproportionately supply consumer goods for retail and wholesale private
labels, and producer goods for industrial bakery and food service stages of the food
system are more likely to have restrictive defect tolerance standards than those producing

predominantly their own branded or private labels.

To my wife Annabel and son Billy B.;
May our life together be a reflection of the abundant blessings that we have
received through our Lord and Savior, Jesus Christ.

iii

ACKNOWLEDGMENTS

There are several groups of people who deserve recognition for their participation
and support of the research and graduate school process leading to this dissertation.

First of all, the Department of Resource Development deserves credit for inspiring
me to step beyond my single disciplinary background and learn to think more broadly
than ever before. Their systems approach to problem solving allowed me to see many of
the higher-level interactions within the food system that I previously thought had no
relation to ﬁeld biology. I fully believe that this education has signiﬁcantly enhanced my
ability to excel in the ﬁeld of applied fruit pest management.

Next, I want to thank the members my guidance committee, Drs. Tom Edens, Jim
Bingen, Larry Olsen and Bill Haines. This diverse and well accomplished group of MSU
faculty provided the wide range of expertise necessary for me to build a solid foundation
for my research. My program advisor, Tom Edens, deserves special recognition for his
thoughtful guidance over the six years of my Ph.D. program. I particularly appreciate his
giﬁ for challenging students to make those difﬁcult intellectual leaps necessary in the
graduate school process. His patient persistence with me in this surely paid-off. I also
want to thank my previous employer and committee member, Dr. Jim Johnson, who
initially provided me with the opportunity to go back to school while maintaining my full
time research position at the Trevor Nichols Research Complex.

In addition, I appreciate that the Michigan fruit growers and apple processors were

willing to open their doors for me to do this research. In the early days of my program

Paul Rood would invite me to ride with him to the Hartford Hort. Group farmer meetings
on Wednesday nights. It was in these gatherings that by keeping my mouth shut and my
ears open I learned more about the real issues facing farmers than what I could ever
obtain from the academic literature. Many of Michigan's apple processors shared
invaluable information well beyond the strictly quantiﬁable data that I came to secure.
My desire is that in return the results from this study will contribute to the successﬁrl
future of the Michigan fruit industry.

Lastly, I want to thank my wife, Dr. Annabel G. Wise, for being so encouraging in
both mind and spirit throughout this whole process. Her insights, prayers and occasional

ﬁrm pushes were all appreciated and necessary to bring this effort to fruition.

TABLE OF CONTENTS

LIST OF TABLES .................................................................................. ix
Chapter 1. Industrialization of the Food System ................................................................ 1
1. Problem Statement ....................................................................................................... 1
II. Industrialization of Agriculture and the Food System ................................................ 3
What is Industrialization? .............................................................................................. 3

II. Industrialization of Agriculture and the Food System ................................................ 5
A historical context ....................................................................................................... 5

III. Problem Analysis ..................................................................................................... 12
Research done on Industrialization ............................................................................. 12
Relationship to farm level IPM ....... . ............................................................................. 14

Chapter 2. The Relationship of Market F orCes in Michigan’s Apple Industry

to Farm Level Pest Management ................................................................................. l6

1. Research Objectives ................................................................................................... 16
II. Linking processor tolerance standards to farm level IPM ........................................ 16
Integrated Pest Management ....................................................................................... 16
Pest management in Michigan's apple industry .......................................................... 17
The role of processor tolerance standards ................................................................... 19

III. Factors responsible for processor tolerance standards ............................................. 21
Government regulations .............................................................................................. 21
Commodity attributes .................................................................................................. 24
Processing technology ................................................................................................. 26

vi

Market coordination .................................................................................................... 29

IV. Research Hypotheses ............................................................................................... 33
Chapter 3. Measuring Constraints within the Apple Processing Stage
of the Fruit Industry ..................................................................................................... 35
I. A Systems Approach to Food Industry Analysis ....................................................... 35
II. Research Design ........................................................................................................ 36
Applying the S-C-P model .......................................................................................... 38
Operationalizing the causal factors ............................................................................. 38
III. Measurement strategy .............................................................................................. 39
Deﬁning target population ........................................................................................ 39
Processor tours ............................................................................................................ 41
Processor survey .......................................................................................................... 42

Chapter 4. Impact of Industrialization Forces on Processor Defect

Tolerance Standards in Michigan’s Apple Industry .................................................... 44
1. Description of Michigan apple processors ................................................................. 44
II. Tolerance for raw product defects ............................................................................. 48
III. Analyzing market factors ......................................................................................... 52
IV. Alternatives for processing raw product with defects ............................................. 66
V. Constraints to Implementing Alternatives ................................................................ 74

Chapter 5. Understanding How Market Factors are Responsible for the

Establishment of Restrictive Defect Tolerance Standards ........................................... 79
I. Defect tolerance standards for processing apple products ......................................... 79
II. Commodity attributes ................................................................................................ 81
III. Market coordination ................................................................................................. 83

vii

IV. Government regulations .......................................................................................... 86

V. Processing technology .............................................................................................. 86
New product development .......................................................................................... 88
Ownership characteristics ............................................................................................ 88

VII. Constraints to implementing alternatives to restrictive defect standards ............... 91

VIII. Testing hypotheses ................................................................................................ 94

IX. New coordination mechanisms for food system performance ................................ 95

X. The Information Era ........................................................................ 96

APPENDIX A. Consent form ...................................................................................... 100

APPENDIX B. Items to be documented on processing plant tours ............................ 101

APPENDIX C. Processor Survey .................. ......................................................... 102

REFERENCES CITED .................................................................................................... 109

viii

Table 1.

Table 2.
Table 3.
Table 4.
Table 5.

Table 6.

Table 7.

Table 8.

Table 9.

LIST OF TABLES

Representation of Michigan processors across ﬁve

like-product categories ................................................................ 45
Primary market channel for sauce/puree products ................................. 46
Primary market channel for slice/dumpling products ............................. 47
Primary market channel for juice/cider products .................................. 47
% total processing volume are apple products ..................................... 47

Level of difﬁculty processing slice/dice/rings with
raw product defects from the following sources ................................... 49

Level of difﬁculty processing sauce/purees with
raw product defects from the following sources ................................ ,- .. 50

Level of difﬁculty processing juice/cider with
raw product defects from the following sources ................................... 51

Relative product group ranking for processing difﬁculty
with raw product defects ............................................................. 51

Table 10. Inﬂuence of market factors on slice/dice/ring

defect tolerance standards ............................................................ 53

Table 11. Inﬂuence of market factors on sauce/puree

defect tolerance standards ............................................................ 53
Table 12. Inﬂuence of market factors on juice/cider defect tolerance standards ......... 54
Table 13. Critical attributes for deﬁning quality in sauce/puree markets .................. 55
Table 14. Critical attributes for deﬁning quality in slice/dice/ring markets ............... 56
Table 15. Critical attributes for deﬁning quality in juice/cider markets ................... 57

Table 16. Critical attributes for deﬁning quality in vinegar markets ....................... 57

Table 17. Crosstabulation of the sauce/puree apple products
marketed through "house" labels .................................................... 59

Table 18. Crosstabulation of primary market channel for
slice/dice/ring critical attributes ..................................................... 60

Table 19. Crosstabulation of primary market channel for
juice/cider critical attributes ......................................................... 60

Table 20. Product sequence crosstabulation of juice/cider critical attributes ............. 61

Table 21. Product sequence crosstabulation with the level of difﬁculty
processing juice/cider with raw product defects .................................. 62

Table 22. Processing technology crosstabulation with difﬁculty level
processing sauce/puree with raw product defects ................................. 63

Table 23. Processing technology crosstabulation with difﬁculty level
processing slice/dice/rings with raw product defects ............................. 63

Table 24. Processing technology crosstabulation with difﬁculty level
processing juice/cider with raw product defects .................................. 64

Table 25. Mean difﬁculty rating for processing sauce/purees with
raw product defects across technologies ........................................... 65

Table 26. Mean difﬁculty rating for processing juice/cider with
raw product defects across technologies .......................................... 66

Table 27. Potential of alternatives for processing sauce/puree
products after FQPA ................................................................ 68

Table 28. Potential of alternatives for processing slice/dice/ring
products after FQPA ................................................................ 69

Table 29. Potential of alternatives for processing juice/cider
products after F QPA ................................................................ 70

Table 30. Ownership crosstabulation with likelihood to
"rely on growers" after FQPA ..................................................... 71

Table 31. Ownership crosstabulation with likelihood to
"rely on growers" after F QPA ..................................................... 71

Table 32.

Table 33.

Table 34.

Table 35.

Table 36.

Table 37.

Table 38.

Table 39.

Table 40.

Table 41.

Table 42.

Table 43.

Ownership crosstabulation with likelihood to
"rely on growers" after F QPA ..................................................... 71

Ownership crosstabulation with likelihood to manipulate
technology for sauce/puree products after FQPA .............................. 72

Ownership crosstabulation with likelihood to manipulate
technology for slice/dice/ring products after FQPA ........................... 72

Ownership crosstabulation with likelihood to manipulate
technology for juice/cider products after FQPA ............................... 73

Ownership crosstabulation with likelihood to implement
IPM for sauce/puree products after FQPA ...................................... 73

Ownership crosstabulation with likelihood to implement
IPM for slice/dice/ring products after FQPA ................................... 74

Ownership crosstabulation with likelihood to implement
IPM for juice/cider products after FQPA ....................................... 74

Level of constraint that market forces are to manipulate
technology in response to FQPA ................................................. 75

Level of constraint that market forces are to changing
sensitive attributes in response to FQPA ........................................ 76

Level of constraint that market forces are to manipulating
market structure in response to F QPA .......................................... 76

Level of constraint that market forces are to switching
sources of raw product in response to FQPA .................................. 77

Level of constraint that market forces are to implementing
IPM in response to FQPA ......................................................... 78

xi

Chapter 1. Industrialization of the Food System

1. Problem Statement

The Michigan fruit industry has been the focus of research and target for
implementation of Integrated Pest Management (IPM) for over three decades now. Most
of the attention by land-grant University researchers and extension agents has been at the
production stage of the food system, looking primarily to manage the existing agro-
ecosystem to bear raw food products that “ﬁt” both the quality and quantity
characteristics that the food industry demands. The assumption is that those
characteristics are either unrelated to farm level implementation problems or they are
justiﬁed in themselves by the forces of the free market system. As a result, most IPM
research and problem solving has been disciplinary in nature and focused on ﬁeld level
pest management. This approach to pest management research has provided a wealth of
foundational information on pest biology and IPM strategies that legitimately deserves
credit for signiﬁcant progress in reducing the total use patterns of chemical pesticides in
fruit production. However, most IPM researchers will admit that Michigan fruit
production is still quite dependent on conventional materials, like organophosphate

insecticides, for the overall success of IPM programs.

In August of 1996 President Clinton signed into law the Food Quality Protection

Act (FQPA). This law amends the Federal Insecticide. Fungicide. and Rodenticide Act

(F IFRA) and the Federal Food, Drug, and Cosmetic Act (FF DCA), and fundamentally
changes the basis by which the EPA registers and regulates pesticides in the USA. The
law mandates a single health-based standard for all pesticides in all foods based on
aggregate exposure from diet, drinking water, and other non-occupational interactions
(USDA EPA, 1998). In addition it considers the effects of exposure to pesticides with
common mechanisms of toxicity, requiring a comprehensive screening for potential
endocrine effects, and provides additional safety factors to ensure that tolerances are safe
for infants and children. One result of this legislation is that the EPA is likely to
eliminate or severely restrict many of the conventional pesticides (i.e.; organophosphate
and carbamate insecticides) traditionally available for ﬁrm production. It is very difﬁcult
to know in the short run how states like Michigan, which have very high levels of
indigenous pests, will adjust to the loss of such pesticides and still maintain the high
quality standards expected in the fruit market. This legislation promises to bring the
Michigan Fruit Industry their greatest challenge in recent history to producing

economical, high quality fruit products in a global economy.

In this study, I propose that much of the difﬁculty that we have historically had in
implementing IPM, and will have after the F QPA in producing fruit without conventional
pesticides, is a consequence of the industrialization of the food system. The last 150
years has witnessed the gradual, yet successful application of industrial economic theory
to US. agriculture and food production. This process has required the manipulation of
many foundational elements of agriculture and food production in order to satisfy the

demands of an industrial model. Before we can hope to develop sustainable solutions to

the food production challenges that we currently face, we must understand how farm
level pest management is linked to the structural characteristics of the other stages of the
food system. To do so, it is necessary to identify which forces within this highly
integrated and industrialized market have a determining inﬂuence on farm level pest

management.

11. Industrialization of Agriculture and the Food System

What is Industrialization?

For this research it is important to ﬁrst understand what industrialization is as a
process and how it affects the inherent characteristics of any system that it is applied to.
Even though the Industrial Revolution was well underway, Adam Smith is often credited
as shaping modern industrial theory with his publication of “The Wealth of Nations” in
1776. It was his recognition of the division of labor as the basis for industrial economy,
and his vision to successfully employ it in the production of machinery, tools and textiles
that served as an important catalyst for the Industrial Revolution (Smith, 1910). The
Nineteenth Century advancement of commercial enterprise and capitalism fueled
manufacturing process and ﬁrrther mechanization of industry. From this emerged what
was viewed by industrial theorists as the four pillars of the Industrialization Era l)
specialization and routinization of production functions, 2) consistent supply of high
energy inputs, 3) large scale and centralized control of production, and 4) uniform, stable

product output (Giedion, 1948). From the rise of capitalism came a new mechanical

b)

philosophy in the matters of trade that transformed a previous view of nature and objects
as being inherently sanctiﬁed and complete, in favor of operating in a nature governed by
rational laws (Perkins and Holochuck, 1993). The merging of the mechanics of industrial
theory with a vision for transforming nature to the demand of marketable goods lay the
foundation for the development of the industrial “commodity”. The commodity as a
product became the most identiﬁable sign that the output yielding entity had been
successfully industrialized. Though technically a commwity is.simply anything that has
value and can be used for trade or exchange (Random House, 1984), within an
industrialized market place there are serious implications for the inherent character of the
good and for the practice by which the commodity is acquired. Kopytoff (1986)
identiﬁes commoditization as a “process of becoming” rather than a “state of being”,
which as a feature of exchange technology inevitably homogenizes value in context to its
usefulness in the commercial syStem. In addition, the functions of a good outside that
speciﬁed for exchange are immaterial, since its value as a commodity must be subject to
the forces supply and demand as measured by the market place (Polanyi, 195 7).
Kopytoff (1986) concludes by seeing commodity and culture as polarities, culture being
in essence singular and discriminatory, capable of maintaining some things as “sacred”.
This description effectively frames the problem that I intend to address, my study in

effect analyzing the compatibility between the industrialization process and agri-culture

and the resulting impacts from their forced assimilation.

II. Industrialization of Agriculture and the Food System

A historical context

Understanding how the Industrialization process penetrated American agriculture
and the food system is critical to recognizing the key forces impacting farm level pest
management? In the Eighteenth century industry and agriculture were seen as two
distinct forms of human production. Even though agriculture was considered the source
of all wealth and mainstay of economic life, it had at least initially been resistant to this

industrial inﬂuence (Giedion, 1948).

The nature of American agriculture for most people was self-sufﬁciency and until the
mid-nineteenth century was predominantly cbnﬁned to the forested regions of the east
and south. Farms were generally poly-cultural and limited by seasOnal climates, terrain
and availability of labor. This resulted in ﬂuctuating yields, limited scale and surpluses,
unpredictable quality and non-uniform product characteristics. Although some
mechanization had inevitably evolved to meet speciﬁc farming needs, the characteristics
of the system were seen as relatively incompatible with full industrialization. It wasn’t
until a greater inﬂux of pioneers colonized the Middle West that these barriers began to
fall. The prairies provided two things that the eastern US. could not; ﬂat fertile ground
and as much land as one had the power to turn. An earlier ﬂush of pioneers had moved
west upon the lure of Abraham Lincoln’s Homestead Act, providing 160 acres to any

person who had applied for citizenship and would bring the land under plow for a period

of ﬁve years (Giedion, 1948). The difference in mid-century was that the railroad

signiﬁcantly aided the transport of people and equipment west, as well as food and
livestock products back east. In the mean time, industrial entrepreneurs took advantage
of the Civil War’s demand for weapons, equipment and food, to move into food
processing in a way never seen before. Commercial canning companies made great
strides in processing techniques and acquired the necessary volumes of food stuffs by
establishing linkages with Middle West farmers (Levenstein, 1988). Farmers ﬂourished
as mechanization of plowing, tilling, harvesting, threshing and bagging liberalized the
relatively laborless farmers of the west, and eastern US. manufacturing demand rewarded

those who learned to specialize their farming for commercial market.

After the Civil War, food industries surged as. volumes of displaced people
entered the cities, serving both as a low price labor source for factories and target
consumers of their manufactured goods. Where canned goods were previously a sign of
elitism, now they were becoming a staple for the working class family. Though variety
was limited and not as healthy because of heavy salting or brining, canned and processed
foods quickly ﬁlled retail stores because of their shelf life and promotional support from
brand companies (Levenstein, 1988). The generally cramped and rudimentary housing
rented by most city dwellers was not sufﬁcient for putting-up foods for the winter, as was
traditionally done back on the farm. For farmers, the post war period brought a collapse
of farm commodity prices and the leveraging needed to acquire the newest available farm
machinery. Because of their more specialized production orientation, this placed them in
a very vulnerable position. Meanwhile, it was becoming increasingly important for the

giant food processors (and this industrial sector as a whole) to establish relatively low

food prices in order to maintain the low labor wage rates without incurring riots

(Goodman and Redclift, 1991).

So, as the nineteenth century migration of farmers to the plains offered the
structural characteristics necessary to enhance farm mechanization for commercial
production, the Civil War and railroad transportation opened the door for the large scale
supply and demand needed to justify industrial level food manufacturing. The turn of the
century marks a key step forward towards achieving further requirements for full

industrialization.

By 1900, the American food industry was large and powerful, accounting for 20
percent of the nation’s manufacturing. Meat packing, ﬂour milling, sugar reﬁning and
baking were the top four sectors of the industry and were driven more and more by the
stock exchange. Farm incomes ﬂuctuated accordingly. Where in the past a bumper crop
symbolized success, guaranteeing enough for the farm family to eat through the winter
and a surplus to sell in the market, now it signiﬁed ﬁnancial ruin. Agricultural pests had
always caused losses, but now that agriculture was commercialized any impact of a pest
was seen as a direct decrease in income, resulting in greater difﬁculty in repaying loans
(Perkins and Holochuck, 1993). This is when giant oligopolis food processors began
contracting farmers to plant and grow for them at prearranged prices. Under the present
atmosphere of ﬁnancial uncertainly many farmers gladly accepted the lower potential
proﬁts for the guaranteed wage. This completed yet another essential pillar for

industrialization of agriculture. Near complete control existed through the vertical

integration between farming contracts for raw commodity supplies and the strong

promotional and price control that they had over the generally small retailers of that day.

While large corporations used new investment methods for capital formation to
raise money for the technology of mass production and farm mechanization, including the
advent of the refrigerated rail car, the formation of the US. Department of Agriculture
provided the ﬁrst effort to organize agronomic research. . Corporate lobbyists encouraged
federal funding for experiment stations in each state, resulting in a nation wide surge of
improved and uniform seed stock for general farm use. Because of the rise in oligopoly
power and public outcry over unsanitary conditions in food processing plants, the federal
government also increased its involvement in the areas (of anti -trust and food safety
inspection. The Food and Drug Act was passed in 1906 regulating food additives and
compulsory labeling of ingredients, as well as the Federal Meat Inspection law to regulate
sanitary conditions of processors and the Sherman Act to regulate anti-trust activities in
private enterprise. It is commonly held that though the intentions may have been just,
these laws in effect gave the large corporations even more power by driving the smaller
processors out of business, who were not able to make the necessary organizational
investments to meet the new federal bureaucracy. The result was that in effect large food
processors found a way for the federal government to be responsible for quality control

standards and passed the cost of monitoring over to “the people”.

World War I like the previous war forced farm prices up, strengthening large

farms and food companies alike. The three most signiﬁcant products of the war came in

the form of nitrate fertilizers, pesticides and communication technologies. The
development of fertilizers and early forms of pesticides allowed a change in focus from
extensive agriculture technologies to that of intensive technologies. The rise of the
fertilizer industry in the 1920’s together with hybrid seeds provided a means for
proliferating high crop yields in the face of degraded farm soils resulting from the “soil
mining” practices from the period since the 1870’s (Goodman and Redclift, 1991).
Industry looked to agriculture to provide cheap raw materials for manufacturing goods,
while agriculture relied ever more upon industry for stable markets and needed inputs for
maintaining productivity. At the same time, communications technologies helped large
food companies develop brand distinction and customer loyalty for their mass-produced

goods through the persuasive powers of national advertising.

The inter-war period witnessed a continuation of low farm returns and
overproduction cycles, leaving farm producers as the most unstable and volatile segment
of the industry. New Deal politicians used farm price supports and the Copper-Volstead
Act to allow farmers to form cooperatives, in attempt to balance producer power with
industry and also put basic foodstuffs within reach of the masses throughout the Great
Depression. World War I] like the other wars eventually forced farm prices up, providing

substantial price relief to farmers.

The post WWII period was seen by many as the ‘golden age’ of Fordist
accumulation (Goodman and Redclift, 1991 ). In the food system capital was notably

absent at the farm level. but was concentrated in processing. trading and production-input

segments (seed, fertilizers, pesticides) of the industry. This furthered the large food
company’s ability to achieve product uniformity by eliminating most of the natural
genetic variation in crops and reduce the percentage of cull resulting from agricultural
pests, leaving the highest value added elements to be achieved within their industry
stages. A social trap began to develop for farmers. Hybrid seed was very attractive
because of its signiﬁcantly greater yield, but the more that it was used the more
dependent the farmer became on the fertilizer and pesticide inputs needed to maintain
consistently high outputs. The result was that much of the value added elements of the
hybrid technologies went to agro-chemical companies that provided the necessary inputs
into the system (Bird, 1993). None-the-less, because the institutional structures
supporting farm subsidies had become well established, new incentives for farm-level
accumulation began. The necessary farm equipment and facilities could now be acquired
to expand farm size, enabling the beneﬁts of scale economies to be attained. The food
surpluses resulting from this model were conveniently targeted for post-war
reconstruction, global trade and Third World aid. Farmers who didn’t or couldn’t follow
this model found it increasingly difﬁcult to survive. Some didn’t, and others shifted their
operations to part-time farming so that they could seek stable income and medical
beneﬁts elsewhere. In the mean time, the large food distributors and manufacturers have
continued to expand under the environment of the “Green Revolution” and global trade,
resulting in trans-national corporations controlling a signiﬁcant portion of the world’s

food supply (Heffeman and Constance, 1994).

The last thirty years has witnessed several important economic forces that have
aided the progression to a further industrialized state of agriculture and the food system.
First, federal deregulation has shifted market coordination structures from that primarily
of a vertical nature to horizontal conglomerates based on leverage buy-outs and hostile
take-overs. Second, consumer demand resulting from shifting US demographics, and
new lifestyle preferences for convenience, nutrition, food safety and environmental
compatibility have redeﬁned the commodity attributes under demand (Manchester, 1992).
Through this, the retail segment of the food industry has evolved from one dominated by
many small independent grocers to a more limited number of large national chains.
Information technologies in particular have provided retailers with a new competitive
weapon in the market, allowing access to more precise information about cOnsumer
demand. This evolution has been further aided by advancing communication,
transportation and electronic technologies that has served food manufacturers and
wholesalers in acquiring more discrete control over the characteristics of ﬁnal food

products than ever before (Barkema et al., 1991).

This provided an opportunity to gain efﬁciencies through two means that were
previously less available. First, vertical integration provided more efﬁcient coordination
of exchange between food industry stages, reducing transaction costs and increasing
stability through product control. Second, the power of advertising served to establish
strong new product lines for niche markets, using its persuasive power for product
differentiation to develop customer loyalty to degrees never realized before. This could

be seen carried out in two forms by two major players in the food system. First, many of

11

the well established national food companies who already owned brand labels and
processing operations began to integrate downstream into the distribution segments of the
system, and upstream into the production stages. The nature of this integration varied
from attaining ownership of farms, to contracting with farmers for the exchange of
commodities with strict corporate speciﬁcations. The second was in the appearance of
food retail conglomerates integrating upstream into distribution stages of the system as
well as into food procurement through the establishment of their own private labels. This
has resulted in greater competition with the previously dominant national brand
companies, but has also changed the lines of communication and authority that the food
industry traditionally relied upon. This new stream of demand side signals is now
responsible for driving most market decisions, and is affecting the inherent structure of

every stage of the system from the retailer all the way to the farm producer.

[11. Problem Analysis

Research done on Industrialization
Many suggest that this so called “Quiet Revolution” is in effect a fundamental

structural reorganization which deserves no less than our undivided acclaim for its shift to
a complete responsiveness to the all mighty and in-errant consumer (N agengast and
Appleton, 1994) (Manchester, 1994). These authors lift up recent examples of consumer
demand for nutrition, quality, safety and environmental responsibility as evidence that the

food system is responsively changing to mirror these images (Kinsey, 1994). Others refer

to the “Industrialization of the Food System” as just one more step towards complete
dominance by trans-national corporations over all aspects of the food system, their goal
being to “transform food as we know it” into whatever form will best serve their proﬁt
oriented industrial market structure (Busch et al., 1991). They provide as examples the
decline of family farms, decay of rural communities, homogenization of diets, a rise in
processed food diseases, loss of consumer sovereignty and exploitation of farm markets
in developing nations as serious problems linked directly to this industrialization process

(Goodman and Redclift, 1991)(Kneen, 1993).

Both groups basically begin with the same claim that consumers desire food that
is nutritious, economical, safe and environmentally responsible. They diverge severely,
though, in their conclusions about whether the present structure of the food system
successfully provides these commodity attributes and what social and environmental
extemalities exist as a result of its attempt to do so. The weakness of those concluding a
positive performance is that they are limiting their criteria almost solely to characteristics
of the end product, ignoring a multitude of direct and indirect extemalities further
upstream in the food system (N agengast and Appleton, 1994). In cases where latent
impacts to farms or environment are considered, their evaluation tends to be shallow or
selectively bias (Phillips, 1994). The weakness of those suggesting a negative
performance is that many of their conclusions are inadequately linked to speciﬁc
institutional structures or conduct resulting from the industrialization process (Kneen,

1993). In addition, accusations of negative environmental impact and questions of food

safety tend to be very broad and normative, without identiﬁcation of the speciﬁc socio-

economic forces responsible for each problem.

The problem is two-fold; ﬁrst it is not clear that what the consumer is demanding
is truly being delivered, and second that food industry actions to provide one commodity
attribute may cause in result a loss in another desirable characteristic. Whether it is
economical and nutritious food or environmental responsibility in the production of food,
the complexity of the food industry is such that if a negative extemality arises in the
system, it is very difficult to determine the real source of the problem. It is overly
simplistic to assume that the cause of an undesirable characteristic lay within the same
system stage that the symptom appears. If we want to understand the full impact of the
transformations occurring in our food industry today, a systems approach for analyzing

the performance of an industry is necessary (Boughton et al., 1995).

Relationship to farm level IPM
The evolution of agriculture and food procurement over the last 100 years has

been driven primarily by an industrialization process that has generated the market
beneﬁts necessary to maintain its dominance in the economy, but has likewise altered the
inherent characteristics of what food is and what it can be. The most important changes
resulting from industrialization are the standardization of product, functional
specialization of technology, and intensive vertical coordination of “productive inputs”

from farm to market. It is historically evident that much of this growth in terms of

product development, processing technology, market coordination and grade standards
has evolved with the assumption that farm level production will always have the pest
management tools needed to provide consistent blemish-free raw products. Therefore the
same market forces responsible for making the industrialized food system the dominant
paradigm in a global food economy have also become the determining factors in what
raw product must look like as it leaves the farm gate. To this end, I propose that speciﬁc
factors of the industrialized food system can be identiﬁed and positively linked to
restrictive processor defect tolerance policies for raw product, which are inevitably
responsible for the growers’ ability to reduce pesticide use at the farm level. In addition,
this exercise can serve as a basis for designing new coordination mechanisms that will
allow the food system to achieve higher levels of performance in terms of reduction of

agricultural chemicals in food production.

Chapter 2. The Relationship of Market Forces in Michigan’s Apple
Industry to Farm Level Pest Management

I. Research Objectives

The purpose of my research is to determine how the industrialization of the food
system is linked to the heavily chemical pesticide driven pest control in Michigan fruit
production that limits the implementation of Integrated Pest Management (IPM) at the
farm level. This work will be based on a description of the dominant market forces
driving industrialization of the fruit sub-sector and identifying speciﬁc factors responsible
for restrictive defect tolerance standards at the processing stage of the system. These
factors will be identiﬁed as to their source within the structure of the food system,
evaluated as to their level of inﬂuence on apple processor defect tolerance standards and
presumably its resulting impact on farm level IPM. I am proposing that it is the
processor defect tolerance standards for raw product that determines the range of
pest management strategies available for a farmer to use in producing an apple
crop, therefore signiﬁcantly affecting our overall ability to implement Integrated

Pest Management.

11. Linking processor tolerance standards to farm level IPM

Integrated Pest Management
Integrated Pest Management is a strategy for managing agricultural pests where

by direct control of a pest is performed only when it is determined that the imminent

damage from the pest will outweigh the cost of control in terms of time, money and
resources. This strategy also assumes that the farmer will consider a series of
management alternatives including cultural and biological control before selecting the
often less desirable synthetic chemical pesticide to prevent damage from a pest. The
result of using IPM over the conventional alternative of season long prophylactic
coverage of crops with broad spectrum pesticides is a reduction of farm production costs,
lower risk of environmental contamination, fewer chemical residues on raw fruit
products, and conservation of genetic and natural enemy resources for future use
(Kennedy and Whalon, 1995).
Pest management in Michigan's apple industry

Michigan's apple agro-ecosystem is composed of a wide range of
arthropod, fungus and bacterial organisms that make up the recognized pest complex.
The primary apple diseases include one that is bacterial in origin, ﬁre blight, Erwim'a
amylivora, and fungal diseases like apple scab, Venturia inaequalis (Cooke), ﬂy spec,
Peltasterﬁucticola (Johnson), and sooty blotch, Zygophialajamaicensis (Mason). The
insect complex is composed of direct pests that do damage directly to the fruit, and
indirect pests, which damage parts of the apple tree (i.e.; leaves, limbs, trunk, roots) that
are not destined for market. Among the direct pests include those that primarily damage
the surface of the fruit and those that penetrate below the surface, feeding internally
within the apple ﬂesh or seed cavity. Internally feeding insects for Michigan apples
include the codling moth, Cydia pomonella (L.), oriental fruit moth, Grapholita molesta

Busck, lessor apple worm, Grapholita prunivora Walsh, and apple maggot, Rhagoleris

l7

pomonella (Walsh). The insects primarily responsible for causing surface blemishes (and
in some cases misshapen fruit) in Michigan apples include the plum curculio,
Conotrachelus nenuphar (Herbst), rosy apple aphid, Dysaphis plantaginea (Passerini),
tarnished plant bug, Lygus lineolaris (Palisot de Beauvois), Japanese beetle, Popillia

japonica (Newman) and obliquebanded leafroller, C horistoneura rosaceana (Harris).

The backbone of Michigan apple pest management (excluding organic apple
producers) is the use of broad-spectrum pesticides like sterol-inhibitor and EBDC
fungicides, and organophosphate, carbamate, and pyrethroid insecticides. The standard
fungicide use-pattem for controlling fungal diseases is to follow a 7-14 day schedule
(depending on the product and/or product combination) of cover sprays for as long as
conditions for disease infection persist. For early season diseases like apple scab,
backing away ﬁom a full cover strategy will in most cases bring signiﬁcant risk of
damage from infection. Coverage for late season diseases is more variable and depends
on the disease inocullum level and susceptibility of the apple variety. The standard
insecticide use-pattem for controlling apple insect pests is to follow a 14 day schedule of
cover sprays throughout the period that direct pests are present in the orchard. For most
insect pests the Organophosphate (OP) insecticides are the product of choice, carbamates
and pyrethroids being used mostly for pests that have attained resistant to the OP's. In a
typical season, apple growers will make 5-7 OP cover sprays, 2-3 applications of
carbamates and 1-2 pyrethroids. The total number of sprays of conventional insecticides
is sometimes reduced by utilizing IPM principles, the most common being the use of pest

monitoring for determining the incidence of the pest and optimal timing for control. The

18

use of bio-rational alternatives such as pheromone, insect growth regulators and Bt's,
Bacillus thuringiensis, for pest management also serve to reduce the total number of
broad-spectrum insecticide cover sprays and enhance natural enemy populations.
Cultural and biological control have been implemented only to a limited extent. In fact,
the most successful example of biological control is the case where mite predators have
attained tolerance to OP insecticides, therefore being capable of establishing in orchards
even though heavy OP use for insect pest control persists. Those apple growers who
have been able to manage orchard insect pests with minimal use of carbamates and
pyrethroids have found that pest mite populations are often held below the action
threshold levels by these predator mites, which would otherwise require the use of
expensive miticides for control.

So whether it be for conventional season-long prophylactic pesticide coverage or
for more progressive integrated pest management strategies, the importance of OP
insecticides should not be under-estimated in importance to Michigan apple growers for
producing the raw product that the market demands. As was discussed in Chapter 1, the
Food Quality Protection Act (FQPA) will very likely eliminate or severely restrict many
of the broad-spectrum insecticides that apple producers presently rely upon to achieve

ﬂusend.

The role of processor tolerance standards
Establishing the role of processor defect tolerances as a determining inﬂuence on

farm level pest management is fairly straight-forward. All processors develop a set of

standards that for each commodity are used to judge how well raw product meets the

criteria needed for optimal production efﬁciency in the plant. These standards encompass
a multitude of characteristics, such as fruit size, color, shape, pressure, and defect level,
depending on the commodity. From these standards come grades that delineate tolerance
levels for defects such as insect, disease, and mechanical damage, which serve as a basis
for market pricing. Therefore with everything being equal, the grower is paid more for
fruit with no pest damage, than fruit with pest damage. If the cost to achieve this
standard outweighs the difference in payback between grades, then theoretically there
may be an economic advantage for the grower to tolerate a higher level of pest damage.
This is the basis of the economic threshold concept that was developed by entomologists
and agriculture economists to help assure growers that the cost of a pest management
action would not exceed the economic return in the market for the assumably higher
quality fruit. Unfortunately, the nature of the industrialized food system and global
economy is such that practically the only the top-level grades are utilized. In fact in our
present highly competitive fruit markets, when supply exceeds demand it is the cosmetic
blemishes that are often used to accept and reject raw product (Cartwright et al., 1993).
Therefore since a grower cannot perfectly predict which years will be lean and which a
bumper crop, there is intolerable risk to do anything but what is necessary to produce
blemish free fruit. In most cases this is done most assuredly with prophylactic
applications of conventional pesticides. Therefore it is these defect tolerances set by
packers and processors that is the driving force for excessive pesticide use at the farm

level.

The question of what market forces are responsible for establishing restrictive
defect tolerance standards in Michigan’s apple industry is the topic of this study and will
be further examined here. I previously proposed that speciﬁc factors of the industrialized
food system will be identiﬁed and positively linked to restrictive processor tolerance
policies for raw product. For the Michigan apple industry there are four industry factors
that I have explored as to their signiﬁcance as determinant forces to this end. Those four
factors are government regulations, processing technology, commodity attributes and
market coordination. The following is a detailed description of and literature review for

each.

111. Factors responsible for processor tolerance standards

Government regulations
The US. Governrhent (FDA and USDA) is mandated with the signiﬁcant

responsibility of assuring a safe food supply to the American consumer. It does so
primarily through strict regulation of how food is produced and by guaranteeing the
provision of necessary information about the contents of food products for consumers to
make educated choices on their own. The original legislation was passed by congress in
1906 as the Pure Food Act, which focused primarily on correcting the unsanitary
condition of US. food manufacturing plants (Sporleder et al., 1983). In 1938 this
legislation expanded in the form of the Federal Food, Drug, and Cosmetic Act, which
further deﬁned conditions of food contamination and was broadened to include

provisions for regulation of food additives and pesticide residues. From this legislation

21

came the FDA’s Food Defect Action Levels (DAL’s) which served as the primary basis
for the USDA to judge defect standards of fresh and processed food products. The
purpose of the DAL’s was to set limits to the levels of mites, insects, fungus and animal
parts or natural defects in food products, above which will activate FDA action against
the product and remove it from the market (US FDA, 1989). Though the rules were
originally established primarily in relation to issues of food safety, the FDA indicates that
compliance with DAL’s does not excuse food manufacturers, distributors and holders
from the requirement to assure “no hazard to health” through good manufacturing
practices. Rather, “the defect action levels are set because it is not possible, and never
has been possible, to grow in open ﬁelds, harvest, and process crops that are totally ﬁ'ee
of natural defects. The alternative to establishing natural defect levels in some foods
would be to insist on increased utilization of chemical substances to control insects,
rodents and other natural contaminants. The alternative is not satisfactory because of the
very real danger of exposing consumers to potential hazards from residues of these
chemicals, as opposed to the aesthetic unpleasant, but harmless natural and unavoidable

defects” (US FDA, 1989).

The FDA’s DAL’s therefore should have a determining inﬂuence on food
processors in establishing standards for grading raw product. Pimentel (1993) examined
these legal tolerance levels for insects and mites allowed in foods and found that over the
past 40 years the FDA has continually lowered the tolerance levels. This data also
correlated with the trend of increased farm pesticide use, assumably necessary to assure

that the crop would meet these stricter defect standards. In fact, though the FDA (1989)

22

indicates that DAL’s may be periodically lowered as technology allows growers to
achieve higher levels of pest control, it does not explain the logical basis for such action.
Pimentel (1993) concludes DALS to be largely responsible for the increase in “cosmetic
standards” and questions whether it is realistic for FDA to aim for ever-more-stringent
rules. Senuaer (1991) also quotes a recent study for the National Academy of Sciences
that identiﬁes government policies regarding grades, standards, and labeling as potential
barriers to producers’ ability to respond to consumer preferences. However, there are
also reports of fruit processors and distributors who have in many cases gone beyond
DAL standards by tightening restrictions on insect levels and even incorporating cosmetic
appearances for determination of their tolerance standards. In apples for example, there
has been discussion of reducing the toerance for apple maggots in apple sauce to zero,
which would force growers to increase insecticide’use to assure clean fruit (Pimentel et
al., 1993). In another case, though there is no evidence of reduced nutritional or ﬂavor
quality, orange growers regularly treat their crop with pesticides for rust mites because
juice processors require a russet-free external appearance (Ziegler and Wolfe, 1975). The

relative inﬂuence of DAL’s on apple processor tolerance standards, therefore, is not clear

and needs to be further investigated in context to other determinant market forces.

IQ
b)

Commodity attributes
Product quality has always been a key variable for successful merchandizing in

the ﬁ'ee market economy. To a consumer, it is not necessarily the objective
characteristics of a product that induce a sale, but the subjective qualities that exhibit
value from their own perspective. For example, an apple has certain inherent nutritional
and sensory attributes that can be measured in a laboratory, but the consumer may be
more interested in how the apple looks and tastes at the point of consumption. It is
important to note that the “point of consumption” is not the apple packinghouse or
processing plant, but most often in the conﬁnes of a consumer’s home or from the lunch-
box at a child’s school lunchroom. Lancaster (1966) developed models on consumer
theory based on the idea that products are composed of a bundle of attributes, from which
consumers seek to attain the speciﬁc qualities that satisfy their needs and desires. The
sets of attributes under demand evolve over time as consumers’ needs change and as
technology allows more desirable characteristics to be obtained ﬁ'om the same original
product. For example, as late 20th century society has moved towards a dual income
family structure, attributes of convenience and fresh-like quality have increased in
demand (Huxsoll and Bolin, 1989). This trend has spawned a whole new effort in the
food science industry to attach these value-added qualities to as many food products as
possible. Fred Waugh (1929) developed the early concepts of hedonic analysis in attempt
measure the relationship between the total cost of a product and the value that a consumer

places on an additional unit of a particular attribute.

Commodity attributes, however, are not limited to physically measurable
characteristics. Communications technology and the use of brand imagery have allowed
marketers to create psychological attributes to accompany a product’s objective physical
attributes (Senauer et al., 1991). Associating a product with attractive social images can
enhance the perceived value of a good and provide product differentiation from its

competitors.

With the great expansion of the food procurement and distribution segments of
the industry to attain any additional value-added attributes that could give companies a
marketing edge, concern arose over the potential of incurring unintended “negative
attributes” that the consumer may not be able to recognize upon purchase or
consumption. These “credence” attributes are things like pesticide residues, which are
not an intentional attribute, but may have long-range health impacts (Senauer et al.,
1991). Besides acquiring negative attributes, the potential of losing positive attributes in
exchange for newer value-added ones is a special concern if consumers assume that all of
the product’s original characteristics will always remain. An example of this would be
the use of fruit ripening agents to “color” fruit at the point of retailing, allowing raw
product to be harvested when it is green and ﬁrm, a more compatible state for long
distance transport. If this process is required to attain a bruise-free appearance for the
product, but in the process sacriﬁces certain nutritional qualities connected to vine
ripening, then the consumer may never know. Therefore, credence attributes are not
usually inherent in the original product, but are the by-product of an industrial food

system striving to attain attributes that are not natural to the raw produce or at least not in

25

the form or levels desired by the industry. This problem has prompted the US. FDA to
recently establish product standards called “standards of identity”, which set speciﬁc
performance, ingredient, processing, and quality requirements for food. Unfortunately,
when intervention is required, it is usually directed to the growers, rather than the entity
attempting to change the inherent characteristics of the good. Because of the structure of
the industrialized food system and its natural limits, these negative attributes are
inseparable from those value-added attributes that the industry is trying to attain.
Therefore for every product, along with set of quality attributes that consumers are
demanding comes a set of credence attributes, some harmful and some harmless in
nature. The quality attributes set for any processing apple product should therefore have
a determinant inﬂuence on tolerance standards of raw products entering the processing
plant. The nature of these effects on defect tolerance standards needs to be measured and

recognized in context to the whole food system.

Processing technology
In it’s earliest commercial inception, fruit and vegetable processing was

developed for the purpose of converting seasonal, perishable products into forms that are
stable and storable (Conor et al., 198 8). The nineteenth century being the infant stage of
food processing, emphasized the development of new technologies for existing processes
such as salting, drying, smoking and more importantly for new ones such as canning.

This period was based heavily on the application of technology to expand capabilities for

providing merchantable products to the growing cities of the industrial revolution.

26

Production economics and industrial theory fueled its growth through the late 1800’s and
early 20th century, and shifted food processors’ primary focus from one of technical
capability to that of technical efficiency. Whereas technology can be deﬁned as a speciﬁc
state of science used to transform a set of inputs into a set of outputs, technical efﬁciency
refers to the total productivity of its application in terms of the ratio of output to input
(Sundquist, 1983). As the commercial food market grew into the twentieth century,
processing technology expanded to more market oriented roles, such as cost reduction,
quality control, and providing product differentiation and uniformity (Grieg, 1983). The
greatest productivity gains in this period came at the farm level, from the application of
new fertilizer and pesticide technology as well as signiﬁcant horticulture improvements.
The processing stage of the food System responded with technologies to take advantage
of the resulting economies of scale, increasing volume capacities with capital inputs. By
the 19505 these technicalimprovements evolved into the modern “processing line”
through which the industry made great strides towards full mechanization, though human
labor remained as a necessary component of the system. In the fruit industry the 9
processing line is made up of a highly coordinated set of machinery, from dump tank to
conveyers to presses, peelers and ﬁnishers, designed to effectively draw in raw product at

one end and put out ﬁnished product at the other (Joslyn and Heid, 1963).

This core processing line technology has not changed signiﬁcantly in the last 25
years, except for developments in the areas of 1) technical efﬁciency, and 2) “value
added” technologies. There are several examples of new machinery that replaced the post

WWII standard components of the processing line to improve yields and therefore total

27

productivity. The primary advancements in technical efﬁciency have come from
adopting new machinery that increases the amount of apple ﬂesh effectively extracted
from each individual fruit for further processing into the ﬁnal product (Hanson, 1976).
The second means of increasing technical eﬁiciency in the apple processing industry has
been to simply ﬁnd ways to further utilize by-product of the processing line, such that
additional value is attained. Apple processors have done this by linking several apple
product lines together in such a way that the by-product of the highest grade product line
becomes the raw input of the second line, who’s by-product becomes the raw input of the
third product line. This highly linked product processing sequence has lead to a complex
array of inter-dependant technical components that together provide important gains in
technical efﬁciency. The other area of technological change is in “value-added”
technologies that have expanded greatly in recent years in established and new product
markets. Cold and modiﬁed atmospheric techniques and better packing techniques (i.e.;
vacumn packing) have increased the presence of good quality fruits in markets
(Cartwright et al., 1993). The replacement of conventional fruit preservative steps of the
processing lines (i.e.; brining and freezing) with new vacuum-pack technologies, have
been implemented by some apple processors to supply demands for like-fresh products.
These capital improvements are expensive and sometimes high risk, but provide

opportunities to compete for large buyer contracts that otherwise would not be available.

Sundquist (1983) indicates that though it is common to do so, no superiority
should be automatically granted to technology just because it possesses a single attribute,

such as efﬁciency. None-the-less, it is clear that there are two dominant forces driving

28

technological change in the processing stage of the apple industry. First is the relentless
search for any and all means to achieve the highest possible technical efﬁciency and
second is the pursuit of market expansion by acquiring the capability to supply new
value-added products for the retail and food service segments of the food industry. Even
though food producers have drawn ﬁre from safety-conscious consumers as a result of
implementing new technologies, namely those requiring the use of chemical processes
and additives (Burbee and Kramer, 1983), very little consideration has been given to the
impact that this technological direction has had on processor tolerance standards.
Williamson (1989) alludes to this possibility in his description of “secondary
uncertainties”, where extemalities can result from a non-strategic lack of coordination or
miss understanding of the potential negative impact of one party’s actions on another’s
interests. Therefore processing technology in Michigan’s apple industry needs to be
examined in respect to its inﬂuence on tolerance standards for raw apple products and

therefore its impact on farm level IPM.

Market coordination
Market coordination is the broadest of the four categories that I have identiﬁed as

factors responsible for higher processor tolerances for raw apples. This category is
intended to encompass the set of market coordination forces at the interface between the
processing and downstream stages of the industry which inﬂuence the scope of business
and operations that processors maintain. One distinctive characteristic of the

industrialized food system has been the development of an enormous number of highly

specialized food products and markets by which products can be sold. An increasing
array of market channels are now available for processors to sell their products including
brand and private labels, retail and generic labels, food service and industrial bakeries,
and secondary food manufacturers. In the midst of this, product proliferation industry
concentration is also on the rise, reducing the number of small, single plant processors
(Conor and Marion, 1983). This has been possible by maximizing the economies of scale
of producer goods at the processing stage through homogeneity of product characteristics,
then maximizing the potential for product development at the food manufacturing stage.
In this way, a low cost generic producer good can be ﬁt into as many different

manufacturer products as possible.

Another variable inﬂuencing this trend is the form of product differentiation
occurring between competing companies. Product differentiation is the degree to which
buyers perceive similar products by rival sellers to be different. Traditionally this was
done by means of the physical attributes of the product, but in the industrialized food
system this process is being slowly replaced with the use of product promotion. With the
exception of manufacturer brands, most products sold to food service and private label
and other unbranded labels are relatively undifferentiated “commodity type” producer
goods (Greig, 1983). The dominant avenue for creating product differentiation is through
TV advertising, which carries the least concrete information about a product, but is the
most effective medium for creating brand images (Conor and Marion, 1983). The
dominance of advertising as the basis for product differentiation ends up being a prime

barrier to market entry because of the huge ﬁnancial investment required to make a

30

promotional impact (Harnm and Handy, 1983). For processors this commoditization of
producer goods limits their options for competitiveness to that of maximizing economies
of scale, resulting in a social trap that forces them to standardize all of their production

according to the greatest common devisor among buyer speciﬁcations.

The wholesale and distribution stage of the food industry has grown tremendously
and has evolved to be an essential part of the industrialized system. Wholesaling bridges
the gap between processors and retailers by purchasing and moving food products from
the processing plant to supermarkets, food service establishments and in some cases food
manufacturers (Manchester, 1983). Their principle role is to enhance the marketing of
food products through efﬁcient coordination of the assemblage, storage, transport and
distribution processes. This stage has had several relevant effects on apple processors.
First, in order to provide large array of food products demanded by national retail and
food service chains, wholesalers have increasingly relied on processors that can provide a
continuous large volume ﬂow of uniform goods throughout the year. For products based
on perishable goods like fruits. this has required processors to invest in long-term storage
technologies that can allow near year around supply (Cartwright et al., 1993). An
inherent problem of CA. storage technologies in the apple processing industry is the
necessity of raw product to be defect-free when placed in long—term storage in order to
assure that the fruit will be in good condition upon removal. The “just-in-time”
management strategies that have been widely implemented to reduce labor and storage

costs for wholesalers and food manufacturers, aggravates this point even further by

requiring processors to provide food products in smaller quantities on a more frequent

basis (Senauer et al., 1991).

Michigan apple processors supply producer and consumer goods primarily
through one or more of the four major domestic marketing channels - national branded
labels, private labels, food service and industrial bakeries (and other secondary
processors). There is also variation on private label market channels depending on
whether the label is processor or retailer owned. Though it is technically possible, in
most cases processors do not sell products through all four channels. The range of
processed apple products generally includes sauces, purees, dumplings, vinegar, slices
and dices for pie and pastry ﬁllings, and a wide. range of juices and cider. For each
product there is a strict set of product speciﬁcations that varies across product labels and
markets. These speciﬁcations include product characteristics such as color, % acidity,
ﬁrmness and texture, as well as apple variety mix, additives and tolerances for pesticide
residues and defects. For the apple processor, these requirements have a signiﬁcant
inﬂuence on the plant’s choice of technology, raw product supply and overall production
efficiency. The combination of products and channels varies from processor to
processor, which has an important affect on the technical and operational structure and
inevitably their performance in terms of raw product tolerances. If an apple processor has
its own product labels it can maintain some ﬂexibility of how to manage defect tolerances
on raw product entering the plant. When a major portion of production consists of
“custom processing” for wholesale and retail labels, then economy of scale factors force

the processor to standardize its selection of processing line technology and commodity

32

attributes to that of the most stringent buyer (Marion, 1983). This leaves very little room
for managing the variation in raw product that‘comes with differing apple varieties,
growing regions and individual growers. Therefore the proportion of product volume that
processors contract with market channels like retail labels, food service and industrial
bakeries, should be a gauge of their relative reliance on these upstream segments of the
industry. One key indicator of the product and market channel choices that will likely be
available to an individual processor is its ownership characteristics. Whether the
processor is a private, public or cooperative organization inﬂuences the options that it has
in maximizing policies, technology and operations in relation to available markets.
Therefore the overall inﬂuence of downstream market coordination forces on defect
tolerances should be reﬂected in the selection of processing products and the market

charmels, which will depend in turn on processor ownership characteristics.

IV. Research Hypotheses

My primary research hypotheses are as follows:

Hypothesis #1: Industrialization of the Food System has resulted in government
regulations, processing technologies and commodity attributes in the processing stage of
Michigan ’s apple industry that are responsible for more restrictive defect tolerance

standards for raw product.

L»)
D)

Hypothesis #2: Industrialization of the Food System has produced market coordination
forces resulting ﬁom new products and market channels in Michigan '5 apple industry

that are responsible for more restrictive defect tolerance standards for raw product.

Hypothesis #3: Michigan apple processors that disproportionately supply consumer
goods for retail and wholesale private labels, and producer goods for industrial bakery
and food service stages of the food system are more likely to have restrictive defect
tolerance standards than processing plants producing predominantly their own branded

or private labels.

Chapter 3. Measuring Constraints within the Apple Processing Stage
of the Fruit Industry

1. A Systems Approach to Food Industry Analysis

The early roots of the systems approach to measuring performance in the food
industry are founded in Bainsian theory of Industrial Organization (Bain, 1968). Bain
was one of the ﬁrst economists to focus on vertical linkages between the structure of an
industry and speciﬁc ﬁrm conduct, which in turn resulted in a measurable performance.
Sosnick (1964) developed operational criteria to the Structure-Conduct-Performance (S-
O?) model for evaluating market performance for‘the agriculture industry, emphasizing
production efﬁciency, technical progressiveness, proﬁts, exchange efﬁciency, product
suitability, and conservation, although he did not ﬁnd the potential impact of extemalities
as an important element to be valued. Caves (1982) added descriptive process to the S-C—
P theory by presenting market structure as the economically signiﬁCant featLues of a
market that affect the behavior of ﬁrms in the industry supplying that market. Market
conduct then is the ﬁrm’s policies in regards to prices and product inﬂuences resulting
from the established market structure. Brandow (1977) presented the idea of
performance as being a measure of how well an industry does the things that society
might reasonable expect it to do, which opened the door for considering values which
were not traditionally included in ﬁrm ﬁnancial analysis. He made an important point

that performance is deﬁned in terms of society, such that the desires of the consumer are

important, and that it is also necessary to examine the activities of all who participate in
the industry. The S-C-P model was further advanced by Shaffer (1973), who introduced
sub-sector studies as a unique analysis, not so much in terms of a divergence of basic
methodology from traditional Industrial Organization theory, but in the scope and
comprehensiveness of the research. Sub-sector analysis, which he also refers to as a
systems approach, is designed to consider both vertical and horizontal relationships of an
industry, with the sequencing of physical transformations being the focal points. He
quotes Marshall (1949) to make the point that, “it is the systems orientation which allows
the economist to identify those causes of visible events which lie below the surface, and
those effects of visible causes which are remote or lie below the surface” (Shaffer, 1973).
This I think is of crucial importance to the work that I have done. The sub-sector is seen
as a framework around which techniques for problem solving within the modern
industrialized food and ﬁber sector are addressed (Shaffer, 1973). He explains further
that small, uncoordinated efforts simply do not provide information that is relevant to the
important and complex problems that can only be understood through systematic research
efforts. Since that time a whole series of national and international research projects have
emerged relying on this kind of systems approach for measuring performance and
identifying constraints to performance in various sub-sectors of the food system

(Boughton et al. 1994).

11. Research Design

la)
0‘

Analyzing the market factors responsible for restrictive processor defect tolerance
standards in Michigan’s apple industry is the speciﬁc focus of this study. This
investigation utilized both quantitative and qualitative information as the basis for
analysis, by which meaningful conclusions will be made. In general, the quantitative data
will be the primary basis for testing hypotheses, with the qualitative data being used for
added support and descriptive detail. However, if cases exist where the quantitative data
suggests a ﬁnding that is contrary to information collected qualitatively, those results will
be re-considered because of the possibility that respondents misunderstand the question
or that other secondary inﬂuences were at play. This type of “triangulation logic” for use
of qualitative data to support quantitative results and eventually conclusions is an
important strategy in this study (Singleton, 1993). The reason for its importance is that
many of the questions developed for the survey are fairly complex and require a thorough
knowledge of fruit industry dynamics at a theoretical level. Most of the processors that
were interviewed clearly had sufﬁcient knowledge, but there was some range of
understanding in this regard. Another important aspect of this study in relation to data
analysis is that since all of the primary apple processors in the state of Michigan were
toured and surveyed, the data set is an absolute measurement of the target population.
Therefore for most cases, sum and mean data are a sufﬁcient basis for the analysis and

evaluation of hypotheses and for making conclusions.

Applying the S—C-P model
The research design was based on a systems approach, speciﬁcally applying an S-

C-P model to the Michigan apple sub-sector and proposed problem. For this model, the
structure of the Industrialized food system leads to conduct in the four identiﬁed
categories, 1) government regulations, 2) processing technology, 3) commodity attributes
and 4) market coordination, which bear the performance of restrictive processor tolerance
policies. My research design consisted of Operationalizing the four conduct elements of
the model as independent variables such that their level of inﬂuence could be identiﬁed
and comparatively evaluated to the resulting performance in processor defect tolerance
standards. This model was applied to Michigan’s processed apple market, targeting all

primary processors of consumer and producer apple products in the state.

Operationalizing the causal factors
The four independent variables and their affects were operationalized as follows.

Government regulations were measured in terms of the FDA DAL’s (defect action levels)
set for products of apple processors. Processor technology was measured directly by the
array of machinery and operations technology utilized by each processor. Commodity
attributes were measured directly by the quality characteristics speciﬁed for each apple
product, and. indirectly through the inﬂuence of buyers and consumers in terms of
demand for apple product attributes. Market coordination was measured in terms of the
products and subsequent market channels selected by each processor. There was some

overlap of market channel affects with measurement of processor technology and

commodity attributes, the source and degree of inﬂuence also expected to separate

according to the processors’ ownership characteristics.

HI. Measurement strategy

Defining target population
The target population for this study was the Michigan apple industry, and in

particular the apple processors of the state. Since the term “processor” can generically
encompass a wide range of manufacturing entities, and a single processing company can
have plants across several different states, the deﬁnition of the target population is in
order. To be considered as a Michigan apple processor in this study, a food

manufacturing entity must meet the following criteria.

1) Be a processor of raw apples for consumer or producer goods.

2) Have at least one processing plant located within the state.

3) Utilize Michigan grown apples for at least 10% of its total apple production.

4) Be listed by MACMA on their 1998 apple sales list (one exception was made
with this to include a processor of organic apple products).

5) Without plant ownership, the processor must have direct involvement and
signiﬁcant control over both the production and processing stages leading to

the ﬁnal product.

39

A total of sixteen apple processors were identiﬁed, ﬁfteen of which through the
Michigan Processing Apple Growers Division of the Michigan Agricultural Cooperative
Marketing Association (MACMA). The MACMA is responsible for negotiating
minimum pricing for raw apple product with the state’s apple processors. It produces a
newsletter that includes the names and telephone numbers of every participating
processor, which was used in this study to make initial contact with the target population.
The sixteenth processor identiﬁed for this study did not show up on the MACMA list
because they process strictly organic apple products and therefore have their own network
of organic apple growers as sources for raw product and subsequent pricing
arrangements. They were also the only processor of the sixteen that did not own a
processing plant, but do in fact have intimate control over the production and processing

stages so as to meet the study deﬁnition of “a Michigan apple processor”.

Each processor was contacted ﬁrst by telephone in order for me to introduce
myself and the general scope of the study. Then a “consent form”, approved by the
University Committee on Research Involving Human Subjects (UCRIHS), was sent to
each for their consideration of participation. The consent form included a brief
description of the study, names of the principle investigators, expectations for
participation and a consent agreement explaining issues of conﬁdentiality and use of data
(Appendix A). Data collection for the study entailed both a tour of the processing plant
and follow-up interview (modiﬁed from a telephone interview to questionnaire format),
so contact was made again to set up meeting dates for each. The tours took place

between March and August of 1998. The signed consent forms were collected at the time

40

of the processing plant tours. The surveys were mailed with stamped, self-addressed
return envelopes in September of 1998. The initial mailing was followed up with a
reminder telephone call two, four and six weeks later to encourage the completion and

return of the survey.

Processor tours
The purpose of touring the Michigan processing plants was twofold. The. ﬁrst

was to simply familiarize myself with the overall operations of apple processing plants,
so as to aid the further development of the follow-up survey; second was to acquire
speciﬁc data relative to the hypotheses of this study. The processor tours consisted of
meeting with the production manager (and in some cases the addition of marketing
director and/or ﬁeldman) and discussing their plant Operations and then receiving a tour
of the facilities. The meeting was guided by a set of pre-designed questions that focused
on market, technical and operational characteristics of their plant, but also allowed for
discussion of issues not previously conceived (Appendix B). The plant tour utilized as
primary evidence any technological or operational elements observed during the facility

tours that could bring causal relationships to bear.

Items to be documented on processing plant tours:
- Company ownership characteristics (i.e.; privately owned, public, cooperative)
- Processed apple products (i.e.; slice, sauce, juice, etc.)

- Source of raw product (i.e.; contracts, free market; local, global)

41

- Raw product characteristics and quality attributes (i.e.; apple variety, size.
volume, timing)

- Procurement process (i.e.; organizational product stream within plant)

- Primary technologies used in procurement (i.e.; apple slicer, bater, peeler)

- Grades and standards for raw products (i.e.; food defect action levels, market
tolerances)

- Pesticide use and residue allowances (i.e.; FDA standards, company policies)

- Technology and policies developed to reduce pest / pesticide impact on ﬁnished

product.

Processor survey _
The purpose of the survey was to validate some of the fundamental items covered

during the tour, and to then present a series of hypothetical questions designed to help
determine the source and extent of impact of the four causal factors. Many of the
questions were couched in terms of the potential impacts of the Food Quality Protection
Act on the apple industry. This legislation was chosen because it provides the most real
and powerful auspices to induce a meaningful response from the processors. The
questionnaire includes a total of ﬁfteen questions (Appendix C). The questions follow
several formats, including nominal classiﬁcations, ratio measurements, ordinal ranking,

and Likert type scales (Hoover, 1992) (Singleton et al., 1993).

42

The ﬁrst four questions address product and market channel issues related to
market coordination. Questions 5 and 6 focus on deﬁning commodity attributes for the
processors’ ﬁnished products, and identifying the most inﬂuential sources for arriving at
these attributes. Questions 7 — 10 address raw product defects, ﬁrst in relation to how
processors deﬁne quality attributes in their raw product, then differentiate the severity of
tolerance according to the type of defect, apple product being processed, and source of
inﬂuence for the established policy. Questions 12 and 13 address issues of pesticide
residues in raw product, ﬁrst in relation to the severity of tolerance according to the type
apple product being processed, and then to identify the source of inﬂuence for the
established policy. Questions 1 1 and 14 are hypothetical questions that seek to determine
what avenues processors might have to produce apple products, if as a result of the Food
Quality Protection Act there were fewer pesticides available or more restrictive residue
standards. Questions 12 - 14 were not intended for direct use in this dissertation, but
rather for a parallel study focusing solely on the impact of the FQPA, to be competed at a
later date. Question 15 further addresses these potential avenues by attempting to identify
which factors stand as the most signiﬁcant barrier to producing apple products in a

system that allows for fewer pesticide tools for ﬁeld level apple production.

Chapter 4. Impact of Industrialization Forces on Processor Defect
Tolerance Standards in Michigan’s Apple Industry

1. Description of Michigan apple processors

The ﬁrst step in the analysis is to provide a description of the target population
and its meaningﬁrl characteristics. By the study deﬁnition there are a total of sixteen
apple processors in the target population. Though there were originally sixteen

processors agreeing to participate, one later declined because they had since that time

ﬁled for bankruptcy.

There are three basic ownership types that characterize the apple processors
included in this study: private, public and cooperative. Out of the ﬁfteen total processors,
seven are privately owned, two are public corporations and six are grower owned
cooperatives. Ownership characteristics were used in several of this study’s hypotheses

as an important variable for distinguishing the degree of inﬂuence of various industry

forces.

There are at least nine uniquely distinguishable apple products made by Michigan
apple processors, including apple sauce, purees, slices, dices, rings, dumplings, cider,-
juice and vinegar. No single processor produced all nine of the listed products, but the

industry ranged from a single product to a total of ﬁve apple products in one plant

44

 

 

(Appendix C, question #1). For the purpose of this study, these products were grouped
into ﬁve like-product categories, from which the frequency of representation for each

Michigan apple processor could be documented (Table 1).

Table 1. Representation of Michigan processors across ﬁve like-product categories.

 

 

Apple product category I Number of processors
1) Sauces/purees 8
2) Slices/dices/rings 9
3) Dumplings 4
4) Juice/cider 10
5) Vinegar 4

 

 

 

 

In addition-to the individual types of products made by a processor, the
combination of apple products chosen by each is an important industry characteristic. In
the case of a processor intending to market a branded product, the number and type of
apple products would be selected primarily on the basis of market potential of each
individual product. For processors acquiring “custom” processing contracts for private
labeled consumer or producer goods, the issue of processing efﬁciency must be more
critically considered. In other words, if the primary processed product is apple slices for
a retail label buyer, further proﬁt margins might be achieved by producing juice from the
cull apples, apple cores, peels and other “waste” products of the ﬁrst operation under a
Wholesale juice label. The sequence of apple products selected for an apple processing
Operation is important to a processor’s overall economic strategy and will inﬂuence the

type of markets, commodity attributes and technology to be incorporated. This industry

45

characteristic proved to be particularly interesting in that out of the sixteen processors,
there were a total of 12 distinctively individual product combination sequences. Each of
these was documented and separated according to whether its products were processed
relatively independently or as a highly linked sequence of processing operations designed

to optimize the overall processing economies of scale.

The market channels available to processors for their apple products were an
important factor for evaluating of the inﬂuence of industry forces on defect tolerances.
The market channels utilized by the processors for each of their products was documented
during the plant tours and in the questionnaire in the form of a “percentage distribution of
sales” across the potential channels for each product (Appendix C, question #3). For
analytical purposes these data were then transformed to represent a processor’s “primary
market channel” for each product. The frequency 'of market channels selected by

processors for each of these apple product categories was as follows (Tables 2, 3, 4, 5).

Table 2. Primary market channel for sauce/puree products.

 

 

 

 

 

 

No. of processors

"House" Brand label 3
Retail private label 2
Food service private
label 2
Industrial bakery 1
Total 8

46

Table 3. Primary market channel for slice/dumpling products.

 

No. of processors

 

 

Retail private label

Food service private
label

Industrial bakery
Total

 

l

2
6
9

 

Table 4. Primary market channel for vinegar products.

 

No. of processors

 

 

"House" Brand label 2
Retail private label 1
Food service private

1
label
Total 4

 

 

Table 5. Primary market channel for juice/cider products.

 

No. of processors

 

 

 

"House" Brand label 6
Retail private label 1
Food service private

1
label
Secondary processors 2
Total 10

 

47

 

 

 

II. Tolerance for raw product defects
In order to establish a linkage between processor defect tolerance standards and

pesticide use at the farm level, an assessment of the relative impact of the various types of
raw product defects is necessary. This issue was addressed in the survey by asking the
respondents to rank the level of difﬁculty that various types of defects cause them in
processing their apple products. Their response was requested for each apple product
grouping in the form of a score range of 1 -— 5, with 1 representing no affect, 2
representing minor difﬁculty, 3 representing moderate difﬁculty, 4 representing high
difﬁculty and 5 representing zero-tolerance (Appendix C, question #10). These data were
then summarized to provide mean difﬁculty values for each type of defect for the three

primary product groups.

For the slice/dice/ring product group, the data indicate that defects from internally
feeding insects ranks the highest in difﬁculty, receiving an industry mean score between
“high difﬁculty” and “zero tolerance” (Table 6). Internally feeding insects for Michigan
apples include the codling moth, C ydia pomonella (L.), oriental fruit moth, Grapholita
molesta Busck, lessor apple worm, Grapholita prunivora Walsh, and apple maggot,
Rhagoletis pomonella (Walsh). It is important at this time to point-out the difference
between defects resulting from internally feeding insects and the case of actually ﬁnding
a live “worm” in the raw product. From the processor tours it was made clear across the
board that there is no tolerance for “live worms” in processing plants. Finding raw
product with live “worms” results in automatic rejection of that load of apples. The next

highest source of difﬁculty was for those defects resulting from nutrient disorders, which

48

had a mean score of “high difﬁculty”, but is interestingly not related to insect damage at
all. Nearly the same mean score was given for misshapen fruit, which can be a result of
early season damage from insect like plum curculio, Conotrachelus nenuphar (Herbst),
rosy apple aphid, Dysaphis plantaginea (Passerini), tarnished plant bug, Lygus Iineolaris
(Palisot de Beauvois), and obliquebanded leafroller, Choristoneura rosaceana (Harris),
but is more often related to incomplete pollination resulting in poor seed development
within the fruit. The next two defect sources, surface blemishes from insects and surface
blemishes from diseases cause a similar level of difﬁculty, scoring about halfway
between moderate and high difﬁculty. Surface blemishes from insects are most often a
result of late season pests like Japanese beetle, Popilliajaponica (Newman), leafrollers,
plant bugs or skin russetting from apple rust mites, Aculus schlechtendali (Nalepa).
Surface blemishes from disease are primarily a result of the fungus apple scab, Venturia
inaequalis (Cooke), but could also include severe cases of ﬂy spec, Peltasterﬁucticola

(Johnson), and sooty blotch, Zygophialajamaicensis (Mason).

Table 6. Level of difﬁculty processing slices/dice/rings with raw product defects from the following sources.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InternaTE' feeding Surface blemish from Surface blemish from
"159915 insects disease Nutrient disorder Mishappen fruit
Count % Count % Count % Count % Count %
noWect l 1 1 1%
minor difﬁculty 1 11.1% 1 11.1% 1 ll 1%
moderate o
. ‘ “ ‘ / ° 2 22.2°/ 2 22.2°/
difficulty .3 3.3.30 4 44.4 /o o 0
high difﬁculty 2 22 2% 1 11.1% 2 22.2% 3 33.3% 4 44 4%
zero tolerance 6 66.7% 3 33.3% 2 22.2% 4 44.4% 3 33.3%
Mean difﬁculty 4.4 3 4 3.6 4.2 4.1

The results from the same question posed for sauce/puree products shows defects

from internally feeding insects again ranking the highest in diﬁiculty, receiving a mean

49

score between “high difﬁculty” and “zero tolerance” (Table 7). The next highest source

of difficulty was for insect surface blemish defects, which was scored between that of

“moderate difficulty” and “high difﬁculty. The next three defect sources, surface

blemishes from diseases, nutrient disorders and misshapen fruit all cause a similar level

of difﬁculty, mean scores being at the moderate difﬁculty level. It is interesting to note

for the signiﬁcant drop in difficulty score between the highest-ranking defect source to

the second highest score, as compared to the slice/dice/ring results. The nature of

sauce/purees products is such that more processing is required than for slice/dice/ring

products, therefore reducing the likelihood of minor defects being detectable as compared

to products that maintain a high degree of apple’s original character. There was,

however, much greater variation between responses on the sauce/puree questions than for

those of slice/dice/ring products. The source of this disparity may be important and will

be investigated in a later part of this chapter.

Table 7. Level of difficulty processing sauce/purees with raw product defects from the following sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defects from
internally feeding Surface blemish from Surface blemish from Defects from nutrient Defects from
insects insects disease disorder mishappen fruit

Count % Count % Count % Count % Count %
no Efect 1 12.5% 1 12.5% 2 2W7:
minor difficulty 1 12.5% 3 37.5% 1 12.5% 2 25.0%
32%.:th l 125% 2 25.0% 3 37.5% 4 50.0% 1 12 5%
high difficulty 2 25.0% 1 12.5% 1 12.5% 2 25.0%
zero tolerance S 62 5% 4 50.0% 1 12.5% 1 12.5% 1 12.5%

Mean difficulty 4.5 36 3.0 3.0 2.8

The results from the same question posed for juice/cider products shows a similar

trend in that defects from internally feeding insects ranked the highest in difﬁculty, but

mean score values were lower for all defect categories (Table 8). The mean score for

50

 

internally feeding insect defects was just above the “moderate difﬁculty” level, followed
by insect surface blemish defects as causing “minor difﬁculty” and the other three defect
categories scoring just above the “no affect”. For the internal feeding insect and the
insect surface blemish categories, there was signiﬁcant variation between individual
responses, indicating that there may be other important factors responsible for the
established defect tolerance standards for juice/cider products. The source of this
disparity may be important and will be investigated in a later part of this chapter.

Table 8. Level of difficulty processing juice/cider with raw product defects from the following sources.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internally feeding Surface blemish from Surface blemish from
insects insects disease Nutrient disorder Mishappen fruit
Count % Count “SI Count % Count % Count °/o
no affect 2 22.2% 44.4% 6 66.7% 5 55.6% 8 88.9%
minor difficulty 1 1 1.1% 2 22.2% 3 33.3% 4 44.4% 1 11.1%
mm" 2 22.2%
difficulty "" "
high difﬁculty 1 1 1.1% 2 22.2%
zero tolerance 3 33.3% 1 11.1%
Mean difficulty 3.2 2.3 1.3 1.4 1.1

These results coincide with a separate survey question asking for a general
ranking of apple products as to which require the most strict defect standards for the raw
product (ranking from 1 — 5 in order of strictness, 1 representing the lowest standards and
5 the highest) (Appendix C, question #8). Slice/dice/ring products ranked ﬁrst, followed

by dumplings, sauce/purees, vinegar, then juice/cider products last (Table 9).

Table 9. Relative product group ranking for processing difficulty with raw product defects.

 

 

Mean score
Sauce/puree products 4.0
Slice/dice/ring products 4.4
Dumpling products 4.0
Juice/cider products 2.4
Vinegar products 3.0

 

 

 

 

5]

 

III. Analyzing market factors
This study hypothesizes that the four market factors, government regulations,

processor technology, commodity attributes and market channels are responsible for
restrictive defect tolerance standards in processed apple products. To determine which of
these were important sources of inﬂuence relative to other market factors within each
product grouping, respondents were asked to rate the level of inﬂuence that each of the
listed factors have on establishing defect standards for raw product (using a score range
of l - 4, with 1 representing no affect, 2 representing little inﬂuence, 3 representing
moderate inﬂuence and 4 representing a highly determinant inﬂuence) (Appendix C,

question #9).

The results for slice/dice/ring products showed buyer standards, internal standards
and quality attributes to be equally inﬂuential, mean scores being between “moderate”
and “highly determinant” levels (Table 10). Next in order of inﬂuence were processor
yield target, consumer concerns, and processor technology, all having mean scores at or
slightly above the “moderate inﬂuence" level. While the structure of the market channel
fell well below the “moderate inﬂuence” level, government standards had the lowest

mean score, having less than “little affect”.

52

Table 10. Inﬂuence of market factors on slice/diee/ring defect tolerance standards.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buyer Internal Government Consumer Processor Processing Market Commodity
standards standards standards concerns technology yield target Channel attributes
Count Count Count Count Count Count Count Count
Wed 2
Little affect 1 1 6 3 2 2 4 1
Moderate inﬂuence 3 3 l 2 5 2 4 3
Highly determinant 5 5 4 2 5 1 5
Mean inﬂuence 3.4 . 3.4 1.9 3.1 3.0 3.3 2.7 3.4

The results for sauce/puree products showed buyer standards, internal standards,
customer concerns and quality attributes to be the most inﬂuential, mean scores falling
just below the “highly determinant” level (Table 1 1). Next in order of inﬂuence were
processor yield target, processor technology, and market channel structure, all scoring at
the “moderate inﬂuence” level. Government regulations scored the lowest, showing an
inﬂuence level between “moderate” and “little affect”. 9

Table 11. Inﬂuence of market factors on sauce/puree defect tolerance standards.

 

 

 

 

 

 

 

 

 

 

 

 

 

Buyer Internal Government Consumer Processor Processing Market Commodity
standard standards standards concerns technology yield target Channel attributes
Count Count Count Count Count Count Count Count
Wed 1 1
Little affect 3 l 1 3
Moderate inﬂuence 2 1 2 2 4 3 2 1
Highly determinant 5 6 1 5 2 2 2 6
Mean inﬂuence 3.7 3.9 2.4 3.7 3.l 2.9 2.9 3.9

The results for juice/cider products showed internal standards to have the highest
inﬂuence on defect standards with a mean score just below the “highly determinant”

level. Buyer standards, customer concerns, processor technology, yield target, quality

 

attributes and government standards all fell fairly close together with mean scores around

the “moderate inﬂuence” level (Table 12).

Table 12. Inﬂuence of market factors on juice/cider defed tolerance standards.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buyer Internal Government Consumer Processor Processing Market Commodin
Standard standards standards concerns technology yield target channel attributes
Count Count Count Count Count Count Count Count
‘mct 1 1 1
Little affect l 2 2 2 l - 1
Moderate inﬂuence 4 3 4 2 4 2 4 4
Highly determinant 4 6 2 5 4 5 3 4
Mean inﬂuence 3.3 3.7 2.8 3 3 3.2 3 3 3.0 3.3

Across all three apple product groupings it was clear that both internal and external forces
were inﬂuential for establishing processor defect tolerance standards. The signiﬁcant
internal forces came frOm internal product standards, processing technology, and
economic pressures in the form of processing yield targets. The signiﬁcant external
forces came primarily from buyer product standards and consumer concerns. Commodity
or quality attributes can be an internal or external source of inﬂuence depending on
whether the apple product is for a “house” brand label or is being produced for a
secondary buyer for retail or industrial labeling. In either case it was shown to have a

signiﬁcant inﬂuence on the establishment of defects tolerance standards.

The reason that commodity attributes are so inﬂuential is that they encompass the
characteristics within the ﬁnal product that are used to deﬁne quality. In most cases they

are linked closely to the consumptive features that provide value to consumers, like ﬂavor

and nutrition, but they also include characteristics that allow companies to bring products
to market in a proﬁtable manner, like uniformity. For each of the three primary product
groupings, respondents were asked to select those characteristics that are vital for
deﬁning quality in their ﬁnished product (Appendix C, question #5). A summary of
responses was made for each product grouping using combinations of attributes intended
to distinguish the relative importance of consumer values versus enhanced market
coordination. A common set of "primary commodity attributes" identiﬁed during plant
tours was used as the "standard comparison", upon which additional consumer and/or

market coordination oriented characteristics were added to distinguish choice preferences.

For the sauce/puree product group the primary commodity attributes, are color,
texture and consistency, which can be referredto as CTC. The addition of product
uniformity as an essential attribute is directly related to the enhancement of market
coordination. A category with ﬂavor as a dominant attribute emphasizes the importance

of consumer values (Table 13).

Table 13. Critical attributes for deﬁning quality in sauce/puree markets.

 

Attribute groups

CTC + uniformity CTCU + ﬂavor Flavor, texture, consistency
Count 3 4 1

Row % 37.5 50.0 12.5

 

 

 

 

 

 

 

 

55

The results show that 50% of sauce/puree processors select CTC + uniformity + ﬂavor as
their vital quality attributes. The next largest group, 37%, selected CTC + uniformity
alone for their vital quality attributes. Only one processor selected ﬂavor as their

dominant attribute, along with product consistency and texture.

For the slice/dice/ring product group the primary commodity attributes are color,
texture and ﬁrmness, which can be referred to as CTF. The addition of product
uniformity as an essential attribute is directly related to the enhancement of market
coordination. A category with ﬂavor as a dominant attribute again emphasizes the

importance of consumer values (Table 14).

Table 14. Critical attributes for deﬁning quality in slice/dice/ring markets.

 

Attribute groups

 

 

Color,texture,ﬁrmness CTF + uniformity CTFU + ﬂavor
Count 1 5 3
Row % 11.1 55.6 33.3

 

 

 

 

 

 

The results show that only 11% of slice/dice/ring processors selected CTF alone as their
vital quality attributes. The majority selected CTF + uniformity for their vital quality

attributes, and 33 % selected CTF + uniformity + ﬂavor.

For the juice/cider group the primary commodity attributes are color, clarity and

brix level, which can be referred to as CCB. Additional attributes for category

56

measurement CCB + ﬂavor, CCB + ﬂavor from whole apples only, and lastly ﬂavor +

whole apple processing alone (Table 15).

Table 15. Critical attributes for deﬁning quality in juice/cider markets.

 

 

 

Attribute groups
CCBF + Flavor and
Color,clarity.brix CCB + ﬂavor whole apples authenticity only
Count 1 5 3 1
Row % 10.0 50.0 30.0 10.0

 

 

 

 

 

 

 

The results show that only 10% of juice/cider processors selected CCB alone as their vital
quality attributes. The largest group selected CCB + ﬂavor, followed by CCB + ﬂavor +
whole apple processing. Only one processor selected ﬂavor + whole apple processing

alone for their vital quality attributes.

For the vinegar product group the primary commodity attributes are color, brix
level and % solids, which can be referred to as CBS. Additional attributes for category

measurement are CBS + uniformity (Table 16).

Table 16. Critical attributes for deﬁning quality in vinegar markets.

 

Attribute groups

 

 

 

 

 

Color,brix,%solids
Count 4
Row % 100.0

 

57

The results show that all processors selected the same generic set of attributes, color, brix
and % solids as being vital, the market apparently not supporting any additional value-

added elements for vinegar products.

One way to measure the impact of market coordination forces is to document its
inﬂuence on commodity attributes. Processors that contract a large portion of their
product volume to secondary market channels, like retail labels, food service and
industrial bakeries, should tend to select those attributes that enhance market
coordination. In contrast, those processors that primarily market their own products
through branded or “house” labels should tend to take higher consideration for consumer
oriented attributes like ﬂavor and product authenticity. This was evaluated by
crosstabulating the selection of vital attributes withpthe percent of production volume that
is marketed through branded or “house” labels as compared to external markets.
Processors were segregated into three categories according to the % product volume in

house labels; 0 —- 20%, 21 — 79% and 80 — 100%, to make these summaries.

The results show that in all cases, processors whose sauce/puree product volume
is over 80% “house” labels, that ﬂavor was selected as a vital attribute (Table 17). This is
likely because these processors must keep consumer preferences in mind in order to
successfully market their products. In contrast, the processors in the 0 - 20% and 21 -
79% “house” labels tended not to select ﬂavor as a priority, although not exclusively so.

The importance of consumer oriented attributes should theoretically be just as important

58

3

for these processors “house” labels as for the ﬁrst group. During plant tours, however,
those doing a large portion of “custom” processing indicated that in many cases they are

forced to compromise their own product speciﬁcations to achieve the maximum

econonries of scale for their operations.

Table 17. Crosstabulation of the % sauce/puree apple products marketed through "house" labels.

 

 

 

 

 

 

 

 

 

 

 

Critical attributes for deﬁning quality ‘
Flavor,
CTC + CTCU + texture,
uniformity ﬂavor consistency Total
Count 1 l 2
o _ 0
0/0 20/0 % within category 50.0% 50.0% 100.0%
Count 2 1 3
o _ 0
21/0 79/0 % within category 66.7% 33.3% 100.0%
Count 2 1 3
o _ 0
80A) 100/0 % within category ‘ 66.7% 33.3% 100.0%
Total Count 3 4 l 8
% within category ' 37.5% 50.0% 12.5% 100.0%

 

 

Since slice/dice/ring products are targeted primarily to secondary processors like
industrial bakeries and food service, the Crosstabulation was made by market channel and
attribute categories to investigate the same issues (Table 18). These data indicate that the
addition of ﬂavor as a vital attribute to CTF+U was selected by only 33% of processors
and exclusively by those targeting industrial bakeries. Those contracting with food

service and retail labels selected CTF + uniformity only as vital attributes.

59

Table 18. Crosstabulation of primary market channel for slice/dice/ring critical attributes.

 

Critical attributes for deﬁning quality

 

 

 

 

 

 

market channel

 

 

 

 

CTF + CTFU +
Color.texture.flrmness uniformity ﬂavor Total
Count 1 l
R tai ' 1 ° ' '
c lpma“ lab“ 3:323:18an 100.0% 100.0%
Count 2 2
F . . l 1 o . .
oodserv1ce pnvate abe Sggéhlérhamel 100.0% 100.0%
Count 1 2 3 6
Industrial bakery % within , ,
market channel 16.7% 33.5% 50.0% 100.0%
Count 1 5 3 9
T tal ° ' '
° /" ”"h‘" 1 1.1% 55.6% 33.3% 100.0%

 

The same summary was made for the juice/cider product, crosstabulating market

channel and attribute categories (Table 19). The results show that though all but one

processor selected ﬂavor as a vital attribute, that the Selection of “whole apples” was only

made by processors marketing their own “house” labels.

Table 19. Crosstabulation of primary market channel for juice/cider critcal attributes.

 

 

 

 

 

 

 

 

 

 

 

 

 

Critical attributes for deﬁning quality
CCB + CC BF + Flavor and
Color,c1arity.brix ﬂavor whole apples authenticity Total
Count 2 3 l 6
"H " B d l bel ° ' '
“5° '3" a :ngt'fhmcl 33.3% 50.0% 16.7% 100.0%
Count 1 1
Retail private label % within
market channel 100.0% 100.0%
Count I 1
F . . l o . .
ood serv1ce private abel gall/1.3321131...“ 100.0% 100.0%
Count 2 2
o . .
Secondary processors "n: :12: fume: 100.0% 100.0%
Count 1 5 3 1 10
o . .
Tm“ gafﬁg'ghmcl 10.0% 50.0% 30.0% 10.0% 100.0%

 

6O

 

 

The sequence of apple products selected for an apple processing operation was

evaluated as to its impact on juice/cider commodity attributes (Table 20). This was done

by crosstabulating commodity attributes with the product sequence characteristics

(relative product independence versus highly linked sequence of processing operations).

As was expected, those processors that are committed to acquiring the economic beneﬁts

of a highly linked product sequence in their processing operations were forced to give up

the added “customer valued” attribute of authenticity (attained with the use of whole

apples in juice products).

Table 20. Product sequence crosstabulation juice/cider critical attributes.

 

Critical attributes for deﬁning quality

 

 

 

 

 

 

 

 

 

 

CCB + CCBF + Flavor and
Color.clarity.brix flavor whole apples authenticity Total

lndependant product Count 1 4
processing % within category 75.0% 25.0% 100.0%

Highly linked product Count 1 5 6
processing % within category 16.7% 83.3% 100.0%

Total Count 1 5 3 l 10
% within category 10.0% 50.0% 30.0% 10.0% 100.0%

 

This same product sequence evaluation done for processors’ perspective on the level of

difﬁculty processing juice/cider products with internally feeding insect defects, resulted

in those with highly linked sequences tending to have greater difficulty (Table 21).

61

 

Table 21. Product sequence crosstabulation with the level of difﬁculty processing juice/cider with raw product defects.

 

 

 

 

 

Difficulty processing with intemally feeding insect defects
minor moderate high zero
no affect difﬁculty difﬁculty difﬁculty tolerance Total

Independant product Count 2 l 3
processing % within category 66.7% 33.3% 100.0%

Highly linked product Count 1 2 1 2- 6
processing % within category 16.7% 33.3% 16.7% 33.3% 100.0%

Total Count 2 l 2 l 3 9
% within category 22.2% 1 1.1% 22.2% I 1.1% 33.3% 100.0%

 

 

 

 

 

 

 

 

 

Processing technology as a market factor was viewed overall to have a moderate
inﬂuence on defect standards. To determine if some technologies are more of a constraint
than others, a comparison of processing difﬁculty levels for the most important defect
sources of each product grouping was made. The ﬁrst comparison was made between the
peeler, Baader, screw steamer and an un-named new technology used in processing
sauce/puree products (Table 22). This summary indicates that the screw steamer has the
greatest difﬁculty in processing sauce/puree from raw product with defects, allocating a
“zero-tolerance” for internal and surface blemish insect defects. The Baader and peeler
scored somewhat better, internal insect defects being between “high difﬁculty” and zero
tolerance” and insect blemish defects between “moderate difﬁculty” and “high
difﬁculty”. Information from processor tours suggest that although the Baader provides
very high yields, that if there are high levels of surface blemishes then the product must
be blended with peeler based apple pulp to attain necessary color standards. This is likely
the only way that the Baader was able to obtain difﬁculty scores equal to the peeler alone.
The un-named new technology appears to be the most capable of processing sauce/puree
from raw product with defects, scoring no more than “moderate difﬁculty” for any of the

defect categories.

62

Table 22. Processing technology crosstabulation with difﬁculty level processing sauce/puree with raw product defects.

 

 

 

 

 

 

 

 

 

 

 

 

 

Difficulty level with insect surface blemish defects
minor moderate zero
no affect difficulty difﬁculty tolerance Total
Peeler Count 2 1 3
% within technology 66.7% 33.3% 100.0%
Count 1 l T
333““ % within technology 50.0% 50.0% 100.0%
Screw press Count 1 l
% within technology 100.0% 100.0%
New Count 1 1
technology % within technology 100.0% 100.0%
Total Count l 1 7 3 T
% within technology 14.3% 14.3% 28.6% 42.9% 100.0%

 

The comparison for slice/dice/ring products was not in terms of primary

processing technology, since the peeler is used by all, but rather for final product

preservation techniques. Individual quick freeze (IQF) + brine, vacuum brine freeze and

vacuum fresh technologies were'compared for processing difﬁculty levels (Table 23).

There do not appear to be the same degree of differences seen in the sauce/puree

technologies, especially for raw product defects resulting from internally feeding insects.

Vacuum fresh technology did, however, have a tendency to be more tolerable to defects

than the others. The reason for this disparity is not clear and was not supported by

qualitative information collected during plant tours.

Table 23. Processing technology crosstabulation with difficulty level processing slices/dices/rings with raw product defects.

 

Difficulty processing with insect surface blemish defects

 

 

 

 

 

 

 

 

 

 

 

 

minor moderate high zero
no aﬁ‘ect difficulty difficulty difﬁculty tolerance Total
lQF - brine Count 1 l 2
% Within technology 50.0% 50.0% 100.0%
Count I l l 3
“mm ms“ % within technology 33.3% 33.3% 333% 100.0%
Vacuum brine-freeze Count 2 l l 4
% within technology 50.0% 25.0% 25.0% 100.0%
Total Count 1 l 3 l 3 9
% within technology ll.l% ll.l% 33.3% 11.1% 33.3% 100.0%

 

63

 

 

There were five different juice/cider processing technologies identiﬁed for
comparison. They are the Wilmes diaphragm press, Bucher press, hydraulic cider press,
screw press and an un-narned new technology. A comparison of these in terms of
processing difﬁculty scores indicates that the diaphragm, Bucher and screw press may
provide some constraint to processing raw products with defects from internally feeding

insects, but not so much across the other defect categories (Table 24).

Table 24. Processing technology crosstabulation with difﬁculty level processing juice/cider with raw product defects.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Difﬁculty level with insect surface blemish defects
minor high zero
no affect difﬁculty difﬁculty tolerance Total
. . Count 1 l l 3
w’lm‘s d‘aph’a’“ pres % within technology 33.3% 33.3% 33.3% 100.0%
Bucher ress Count I l l 3
P % within technology , 33.3% . 33.3% 33.3% 100.0%
. . Count I l
Hydml‘c “d" press % within technology 100.0% 100.0%
Screw ress Count ' V T l
p % within technology 100.0% 100.0%
Count 1 1
New '°°h"°'°gy % within technology 100.0% 100.0%
Total Count - 4 2 2 l 9
% within technology 44.4% 22.2% 22.2% I 1.1% 100.0%

 

The one technology, used by nearly all processors, that qualitative data strongly

supported as having a signiﬁcant inﬂuence on defect tolerance standards is the use of

long term storage facilities for managing raw product supplies. The demand for

uniformity in commodity attributes is particularly difﬁcult for processors to meet because

of the inherent seasonality of apple varieties. Even within the harvest season, different

varieties are ripe at different times, making it difficult to maintain an absolutely equal

blend to meet the prescribed quality attributes. After the thirty to forty days that apples

64

 

can be reliably held in cold storage, processors use controlled atmosphere (C.A.) storage
facilities for long term holding of raw product. C.A. storage works on the premise of
reducing the raw product’s natural production of ethylene through the manipulation of
carbon dioxide and oxygen gases in the room, thereby inhibiting the degradation
reactions related to respiration, senescence and tissue softening. If the raw product
entering the room contain any sort of “open wounds” by means of insect or bruise, the
apple’s natural response is the further production of ethylene. Not only will the “wound”
defects become a source of decay, but also the ethylene produced will increase the rate of

ripening for all other fruit in the room.

Possible sources for variation. within data (tables 7 and 8) for the “level of
difﬁculty processing juice/cider and sauce/puree when raw product has defects” were
investigated further by crosstabulating ownership, primary market channel, product
sequence and technology. Mean difﬁculty scores for technology were found, in both

instances, to best explain this disparity between respondents (Tables 25, 26).

Table 25. Mean difﬁculty rating for processing sauce/puree with raw product defects across technologies.

 

 

 

l lntemally feeding Insect surface Disease surﬁce Nutrient Misshappcn
insects blemish blemish disorder fruit
Mean Mean Mean Mean Mean
Peeler 4.7 3.7 2.7 2.7 3.0
Processing Baader 4.5 3.5 2.5 3.5 2.5
technologies: Screw steamer 5.0 5.0 4.0 3.0 2.0
New technology 3.0 Lo 20 1.0 1.0

 

 

 

 

 

 

 

65

 

Table 26. Mean difﬁculty rating for processing juice/cider with raw product defects across technologies.

 

 

 

‘— lntemally feeding Insect surface Disease surface Nutrient Misshappcn
insects blemish blemish disorder fruit
Mean Mean Mean Mean Mean
Wilmes “”9”“ 4.3 3.3 1.0 1.0 1.0
press
Processing Bucher press 3.7 2.3 1.7 2.0 1.3
technologies: Hydrolic cider press 1.0 1.0 1.0 1.0 1.0
Screw press 3.0 2.0 2.0 2.0 1.0
New technology [.0 1.0 1.0 1.0 1.0

 

 

 

 

 

 

 

 

The inﬂuence of government standards was not investigated further because it
was not shown to be a signiﬁcant inﬂuence on defeCt tolerance standards for any of the
product groupings. A likely reason that government standards scored above “little affect”
for juice/cider was that for this product group, processors were highly sensitive to recent
government pressures on the apple industry to manage E. coli problems. In the other
cases, processors referred primarily to DAL’s when relating government standards to

defect tolerances.

IV. Alternatives for processing raw product with defects
Investigating alternatives for processing apple products with higher levels of

defects was done in the context of the potential impact of the 1996 Food Quality
Protection Act (F QPA). This link was chosen to strengthen the depth and certainty of
responses to the hypothetical questions through the real and serious nature of this
impending legislation. There are far too many natural motivations for maintaining the
presently restrictive tolerance standards to simply ask processors to speculate about
hypothetical alternatives. Using the FQPA was the most effective way of acquiring

meaningful information about alternatives that might allow loosening of defect standards.

66

The ﬁrst question asked the respondents to rate the likelihood of implementing
each of ten alternatives if the Food Quality Protection Act results in the loss (or severe
restriction) of many of the pesticides that US. apple growers have traditionally relied
upon to provide blemish-free fruit (indicating the level of probability using a score range
of 1 — 4, with 1 representing no possibility; 2 representing some possibility but difﬁcult in
the short-run; 3 representing very probable but difﬁcult in the short-run; and, 4
representing very probable and immediately implementable) (Appendix C, question #11).
Processors were asked to answer the question for each of the apple products that they

represent, from which summary tables of mean score values was produced.

Results for the sauce/puree product group indicate that above all other options,
processors prefer to “rely on growers to maintain defect standards” over alternatives
requiring changes on their part (Table 27). The only competing alternative was that of
implementing IPM, which received a mean score between “very possible, but difﬁcult in
the short run” and “immediately implementable”. This option again would not require
any direct changes to the processing or upstream stages of the food system. The next
most probable alternative was to manipulate technology, which was seen to be “very
possible, but difﬁcult in the short run”. Working with ﬂexible buyers, adjusting
commodity attributes, and switching to other US. growing regions all received mean
scores between “some possibility” and “very possible, but difﬁcult in the short run”.
Adjusting market channel structure, switching to international sources, and switching to

less sensitive products all received mean scores between “no possibility” and “some

67

possibility, but difﬁcult in the short run”. Loosening defect standards scored between “no

possibility” and “some possibility, but difﬁcult in the short nm”.

Table 27. Potential of alternatives for processing sauce/puree products after F QPA.

 

 

Mean rating
Rely on growers to maﬁtain 3.50
Loosen defect standards 1.83
Manipulate technology 3.17
Switch to less sensitive products 1.00
Switch to other US fruit regions 2.17
Switch to international sources 1.50
Adjust market channel structure 1.67
Work with most felxible buyers 2.33
Adjust commodity attributes 2.17
Implement IPM 3.33

 

 

 

 

Results for the slice/dice/ring product group indicate again that processors rate the
Option to “rely on growers to maintain defect standards” over all other alternatives (Table
28). It was the only alternative given a mean score between the “very possible, but
difﬁcult in the short run” and “very probable and immediately implementable”. The only
two alternatives rating close to this were those of implementing [PM and manipulating
technology, which received a mean score between “very possible, but difﬁcult in the
short run” and “immediately implementable”. The next most likely options were to work
with ﬂexible buyers, adjust commodity attributes, or switch to other US. growing
regions, which all received mean scores at or very close to the “very possible, but
difficult in the short run” rating. Adjusting market channel structure, and switching to

less sensitive products all received mean scores between “no possibility” and “some

68

0M

possibility, but difﬁcult in the short run”. Loosening defect standards and switching to

international sources scored 'ust above “no ssibili ”.
J

Table 28. Potential of alternatives for processing slice/dice/ring products after FQPA.

 

 

Mean rating
Rely on growers to maintaﬁ 3.14
Loosen defect standards 1.38
Manipulate technology 2.75
Switch to less sensitive products 1.50
Switch to other US fruit regions 2.00
Switch to international sources 1.38
Adjust market channel structure 1.63
Work with most felxible buyers 1.88
Adjust commodity attributes 1.88
Implement IPM 2.63

 

 

 

 

Results for the juice/cider group show a third time that processors will prefer to
“rely on growers to maintain defect standards” over alternatives that require upstream
changes. The only competing alternative was again that of implementing IPM, which was
viewed as “very possible, but difﬁcult in the short run” (Table 29). The next most
probable alternative was to manipulate technology, which received a mean score between
“some possibility, but difﬁcult in the short run” and “very possible, but difﬁcult in the
short run”. The Options to work with ﬂexible buyers, switch to other US. growing
regions or international sources, or adjusting commodity attributes all received mean
scores at or very close to the “some possibility, but difﬁcult in the short run” rating.
Switching to less sensitive products and adjusting market channels all received mean

scores much below “some possibility, but difﬁcult in the short run”. This was the ﬁrst

69

case that the Option Of loosening defect standards scored higher than several other

Options, and rated as “some possibility, but difﬁcult in the short run”.

Table 29. Potential Of alternatives for processing juice/cider products after FQPA.

 

 

 

Mean rating
Rely on growers tO maintain 3.29
Loosen defect standards 2.00
Manipulate technology 2.43
Switch tO less sensitive products 1.14
Switch tO Other US fruit regions 1.86
Switch to international sources 2.00
Adjust market channel structure 1.33
Work with most felxible buyers 2.00
Adjust commodity attributes 1.88
Implement IPM 3.00

 

 

 

There were several important trends across all three primary product groupings
that bring further explanation tO these data presented on the potential avenues for
responding tO FQPA. First, within the responses tO "rely on growers tO maintain defect
standards", private and public processors were much more likely tO provide strong

probability Of this alternative compared tO cooperative processors (Tables 30-32).

70

Table 30. Ownership crosstabulation with likelihood tO ”rely on growers" after FQPA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rely on growers to maintain sauce/pure defect standards
some possibility, very probable and
but difﬁcult in the very possible, but immediately
short-run difficult in short-run implementable Total
Private Count 1 1
% within 100.0% 100.0%
. Count 1 1
Pub!“ . % within 100.0% 100.0%
pr Count 1 1 2 4
% within 25.0% 25.0% 50.0% 100.0%
Total Count 1 1 4 6
% within 16.7% 16.7% 66.7% 100.0%
Table 31. Ownership crosstabulation with likelihood to "rely on growers" aﬁer FQPA.
Rely on growers to maintain slice/dice/rinJg defect standards
very probable and
some possibility, but very possible. but immediately
no possibility difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count 1 1 2 4
% within 25 .0% 25.0% 50.0% 100.0%
CO-Op Count 1 2 3
% within 33.3% 66.7% 100.0%
Total Count 1 1 4 7
% within 14.3% 14.3% 14.3% 57.1% 100.0%
Table 32. Ownership crosstabulation with likelihood to "rely on growers" after FQPA.
Rely on growers tO maintain juice/cider defect standards
very probable and
some possibility. but very possible. but immediately
difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count . l 1 2
% withln 50.0% 50.0% 100.0%

. Count 1 1
FUN“ % within 100.0% 100.0%
CO-Op Count 1 2 l 4

% within 25.0% 50.0% 25.0% 100.0%
Total Count 1 3 3 7
% within 14.3% 42.9% 42.9% 100.0%

 

 

 

 

 

71

 

 

Second, in regard tO the probability Of manipulating technology, public companies ranked

highest, followed by cooperatives, and lastly the private processors in likelihood Of this

being an implementable alternative (Tables 33-3 5).

Table 33. Ownership crosstabulation with likelihood to manipulate technology for sauce/puree products after FQPA.

 

Manipulate technology tO maintain defect standards

 

 

 

 

 

 

 

 

 

 

very probable and
some possibility, but very possible, but immediately
difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count 1 1
% within 100.0% 100.0%
. Count 1 1
Pub“ % within 100.0% 100.0%
Coeop Count 3 l 4
% within 75.0% 25.0% 100.0%
Total Count j 3 2 6
% within 16.7% 50.0% 33.3% 100.0%

 

Table 34. Ownership crosstabulation with likelihood to manipulate technology for slice/dlce/ring products after FQPA.

 

Manipulate technology to maintain defect standards

 

very probable and

 

 

 

 

 

 

 

 

some possibility, but very possible. but immediately
difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count 3 l_ 4
% within 75.0% 25.0% 100.0%
Co-Op Count 1 2 l 4
% within 25.0% 50.0% 25.0% 100.0%
Total Count 4 2 2 8
% within 50.0% 25.0% 25.0% 100.0%

 

 

 

Table 35. Ownership crosstabulation with likelihood to manipulate technology for juice/cider products after FQPA.

 

Manipulate technology tO maintain defect standards

 

 

 

 

 

 

 

 

 

 

 

very probable and
some possibility. but very possible. but immediately
nO possibility difﬁcult in short-run difficult in short-run implementable Total

Private Count 1 1 2
% within 500% 50.0% 100.0%

. Count I I
Publ'c % within 100.0% 100.0%

Co-Op Count 2 2 4
% Within 500% 50.0% 100.0%

Total Count 1 3 2 1 7
% within 14.3% 42.9% 28.6% 14.3% 100 0%

 

A similar trend was seen in regard tO the probability Of implementing IPM in response tO

F QPA, where public companies again ranked highest, followed by cooperatives, and

lastly the private processors (Tables 36-38).

Table 36. Ownership crosstab with likelihood tO implement 1PM for sauce/puree products after FQPA.

 

 

 

 

 

 

 

 

 

 

 

Implement 1PM to maintain defect standards
very probable and
some pOSSlbility. but very possible. but immediately
difﬁcult in short-run difficult in short-run implementable Total
Private Count 1 1
% within 100.0% 100.0%
. Count 1 l
”"1” 0/0 within 100.0% 100.0%
pr Count . 2 2 4
% Wlthln 50.0% 50.0% 100.0%
Total Count 1 7 3 6
% within 16.7% 33.3% 50.0% 100.0%

 

 

 

Table 37. Ownership crosstab with likelihood to implement 1PM for slice/dice/ring products after FQPA.

 

Implement IPM tO maintain slice/dice/ring defect standards

 

some possibility, but

very possible, but

very probable and
immediately

 

 

 

 

difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count 2 2 4
% within 50.0% 50.0% 100.0%
CO-Op Count 2 1 1 4
% within 50.0% 25.0% 25.0% 100.0%
Count 4 3 l 8
Tm“ % within 50.0% 37.5% 12.5% 100.0%

 

 

 

 

 

Table 38. Ownership crosstab with likelihood to implement [PM for juice/cider products after FQPA.

 

Implement 1PM tO maintain defect standards

 

some possibility. but

very possible. but

very probable and
immediately

 

 

 

 

 

 

 

 

difﬁcult in short-run difﬁcult in short-run implementable Total
Private Count 1 1 2
% within 50.0% 50.0% 100.0%
. Count 1 1
PUbl'c % within 100.0% 100.0%
CO—0p Count 2 2 4
%within 50.0% ' 50.0% 100.0%
Total Count 3 1 3 7
% within 42.9% 14.3% 42.9% 100.0%

 

 

V. Constraints to Implementing Alternatives

The results from the previous section indicate that processors believe there tO be

at least some possibility Of making changes tO the existing industry structure tO allow for

greater defects in raw apple products. For those alternatives viewed as most plausible,

questions were developed tO further understand their potential. The respondents were

asked, in regards tO a list Of potential avenues for responding tO the FQPA, tO indicate

which factors stand as the most signiﬁcant barrier tO implementation? (Indicating the

level Of constraint using a score range Of 1 - 4, with 1 representing no constraint; 2

74

 

 

representing low constraint; 3 representing moderate constraint; and 4 representing a

highly determinant constraint) (Appendix C, question #15).

The Option Of manipulating technology was consistently given a relatively high
score for having, potential as an avenue for responding tO higher defect levels in raw
product (Table 39). Processing economics was the only factor viewed tO be a signiﬁcant
constraint, receiving a mean score between “moderate constraint” and “highly
determinant constraint”. Market structure, buyer standards, product quality, consumer
preferences, and government regulations all provided mean scores between that Of “low

constraint” and “moderate constraint”.

Table 39. Level Of contraint that market forces are to manipulating technology in response tO F QPA.

 

 

Mean rating
Buyer standards 2.36
Government regulations 2.27
Consumer preferences 2.18
Product quality 2.36
Processing economics 3.64
Market channel structure 245

 

 

 

 

The Option Of changing sensitive commodity attributes was consistently given a
relatively low score for having potential as an avenue for responding tO higher defect
levels in raw product (Table 40). Buyer standards, consumer preference, product quality,
and market channel structure were all viewed as signiﬁcant constraints, receiving mean

scores between “moderate constraint” and “highly determinant constraint”. Market

75

channel structure and government regulations both provided mean scores between that Of

“low constraint” and “moderate constraint”.

Table 40. Level Of contraint that market forces are to changing sensitive attributes in response tO FQPA.

 

 

Mean ratLq
Buyer standards 3.67
Government regulations 2.42
Consumer preferences 3 .58
Product quality 3.42
Processing economics 3.33
Market channel structure 2.75

 

 

 

 

The Option Of manipulating market structure was consistently given a relatively
low score for having potential as an avenue for responding tO higher defect levels in raw
product (Table 41). Processing economics and the market structure itself were viewed as
signiﬁcant constraints, receiving mean scores between “moderate constraint” and “highly
determinant constraint”. Buyer standards, product quality, consumer preferences, and
government regulations all provided mean scores between that Of “low constraint” and

“moderate constraint”.

Table 41 . Level Of contraint that market forces are tO manipulating market structure in response tO FQPA.

 

 

Mean rating
Buyer standards 2.78
Government regulations 2.44
Consumer preferences 2.67
Product quality 244
Processing economics 3.56
Market channel structure 3.22

 

 

 

 

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The Option Of switching sources for raw product was consistently given a
relatively low score for having potential as an avenue for responding tO higher defect
levels in raw product (Table 42). Processing economics was the only factor viewed as a
signiﬁcant constraint, receiving mean scores between “moderate constraint” and “highly
determinant constraint”. Buyer standards, product quality, consumer preferences, market
channel structure and government regulations all provided mean scores below that Of

“moderate constraint”.

Table 42. Contraint that market forces are tO switching sources Of raw product in response to FQPA.

 

 

Mean rating
Buyer standards 2.33
Government regulations 2.33
Consumer preferences 2.56
Product quality 2.89
Processing economics 3.33
Market channel structure 2.78

 

 

 

 

The Option Of implementing IPM was consistently given a relatively high score
for having potential as an avenue for responding tO higher defect levels in raw product
(Table 43). This was no surprise, since it is an Option that would not require any direct
changes tO the processing or upstream stages Of the fOOd system. Processing economics
was the only factor viewed to be a signiﬁcant constraint, receiving a mean score Of
“moderate constraint”. Market structure, buyer standards, product quality, consumer
preferences, and government regulations all provided mean scores at or just above the

“low constraint” level.

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Table 43. Level Of contraint that market forces are tO implementing IPM in response to F QPA.

 

 

 

Mean rating
Buyer standards 2.30
Government regulations 1.90
Consumer preferences 2.20
Product quality 2.50
Processing economics 3.00
Market channel structure 2.00

 

 

78

 

 

Chapter 5. Understanding How Market Factors are Responsible for
the Establishment Of Restrictive Defect Tolerance Standards

1. Defect tolerance standards for processing apple products
Defect tolerance levels varied for each apple product group as well as between the

defect sources. It was not a great surprise to ﬁnd that there is very little tolerance for
defects from internally feeding insects. Even with the distinction between damage from
this defect source and the case Of actually ﬁnding a live insect feeding internally does not
provide more than a very limited tolerance. The only exception was for juice/cider
products, in which case the difﬁculty Of processing raw product with defects from
internally feeding insects ranged widely from “no affect” to “zero tolerance”. The
processors that tended tO be more tolerant were generally the private and national brand
companies who’s processing volume was 80 — 100% “house” labels. This suggests that
the lower tolerance seen with processors that rely on “custom’ processing for product
volume experience a signiﬁcant amount Of external pressure from buyers tO maintain
more restrictive standards. In a highly competitive market place the risk Of losing face
with an important buyer, if a case Of ﬁnding a “worm” in the plant (or worse if found in
the product) were tO occur, is not worth the beneﬁt Of relaxed defect standards.
Conversations with processors during plant tours also suggests that large fOOd
manufacturers (secondary processors) and retail/wholesale private label companies are

taking a more intensive legal stance tO protect themselves from potential lawsuits

79

resulting from insects and/or insect parts being found in fOOd products. The level Of
concern is great enough that most sauce processors hire extra line workers to assure that

fragments Of calyx tips, which can lOOk like insect parts, don't end up in the ﬁnal product.

Another plausible explanation for these differences in tolerance standards is that
most processors that rely disproportionately upon buyer contracts are generally the same
ones that utilize more highly linked product processing sequences in their plants. An
example is that Of a processor who from one load Of apples will produce dumplings from
the best raw product, then sauce, and then combine the cull material with any remaining
raw product tO make juice. Under this situation, even though theoretically a higher level
Of defects for the juice portion Of the process could be tolerated, the raw product is graded
all together at the beginning, using a single grading scale. This explanation does not hold
for all, since some multi-product processors dO in fact blend lower grade raw product into

the juice line from separate sources.

Outside the internally feeding insect category Of defects the tolerance scales
diverge between product groups. Whereas for sauce/puree and juice/cider products the
next highest processing difﬁculty level is for defects from insect surface blemishes,
slice/dice/ring/dumpling products ﬁnd defects from nutrient disorders and misshapen fruit
the next most arduous. This disparity can be best explained by looking bOth at the
processing technology utilized for each product group and the commodity attributes
demanded by the market place. The primary reason that slice/dice/ring/dumpling

producers rate defects from misshapen fruit above that Of insect and disease surface

80

blemishes is that the peeler equipment used tO process these products is effective at
removing surface blemishes with the skin. Misshapen fruit, however, is much more
problematic for peeling equipment, Often leaving parts Of skin in with the apple ﬂesh. A
large proportion Of processors utilize Screw steamer and Baader technology for
sauce/puree products and various presses for juice/cider products deal with misshapen
fruit quite easily, but have more problems processing surface blemishes. Nutrient
disorders cause signiﬁcant difﬁculty for processing slices/dices/rings/dumplings
primarily because Of the commodity attributes that deﬁne quality in those apple products.
Nutrient disorders, like bitter pit, degrade the ﬁrmness, color and if in high enough
proportions the ﬂavor Of slice/dice/ring/dumpling products. Sauce/puree and juice/cider
products can tolerate higher levels Of raw product 'with nutrient disorders because Of the
mashing and cooking processes that take place in their production reduces recognition Of
these defects. All products, however, are affected by nutrient disorders if long term
storage Of raw product is required, because Of the propensity Of bitter pit tO worsen under

CA. or cold storage conditions.

Further consideration Of the roles that technology, commodity attributes and
market channels play in the establishment Of restrictive defect tolerance standards is made
hereafter.

II. Commodity attributes
The primary intention Of the commodity attribute analysis was tO compare the

relative importance Of product characteristics oriented tO consumer values versus those

81

that enhance market coordination, and from this identify any credence attributes affecting
defect tolerance standards. This evaluation was based on a set Of "primary commodity
attributes" that were identiﬁed during plant tours, upon which additional consumer and/or
market coordination oriented characteristics were added to distinguish choice preferences.
It is signiﬁcant to note that across all product groups, in all but one case, processors were
in complete consensus on what those "primary commodity attributes" should be. This is
important because this has not always been the case. At one processor tour, a plant
manager noted that years ago each processing plant had its own recipe for apple sauce,
based on various blends Of apple varieties, each being the basis for that label's trade-mark
ﬂavor. Now, all Of the recipes are essentially the same and based on selecting varieties
that can be processed tO provide the color, texture and consistency characteristics
prescribed by buyers. This indicates that a commoditization process has in fact occurred
in the apple industry and is now the basis for deﬁning} quality for apple products. The
one exception was the organic apple processor, who's deﬁnition Of quality for their apple
sauce and juice products emphasized ﬂavor, authenticity, nO additives or chemical

residues. They also allowed for more variability in product uniformity and color.

The result Of this commoditization is a set Of credence attributes that have effected
processor defect tolerance standards. Of the "primary commodity attributes" for
sauce/puree apple products, color is the attribute that has had the most signiﬁcant effect.
Product labelers specify a very distinct "cream" color for applesauce, with very little
tolerance for color variation or extraneous particles that might be misconstrued as dirt or

insect parts by consumers. This has resulted in a demand for nearly blemish-free raw

82

1

product for processing applesauce. Processors reported that even the use red skinned
apple varieties make this standard difﬁcult to achieve because Of the problem Of small
amounts Of skin "ﬂecks" getting into the ﬁnal product at unacceptable levels. The use Of
high efficiency processing technologies, like the Baader and Screw steamer, aggravate the
issue further. Rather than peeling the skin away from the apple ﬂesh, the Baader cuts the
whole apple into small pieces that ﬂow into a tumbler, which separates the ﬂesh from
skin and seed cavity through contact with a serrated drum surface. The problem is that if
the raw product contains any surface blemishes from insects or apple scab, the bond
between skin and ﬂesh changes such that defects remain with the ﬂesh and end up as
"ﬂecks" in the ﬁnal product. The Screw steamer similarly does not remove the skin by
peeling, but forces the ﬁ'uit through a ﬁne mesh screen that allows the ﬂesh tO gO through,
and the skin and seed cavity remain behind. It likewise has problems with performance
when surface defects are present. This has resulted in defect restrictions Of near zero for
raw product targeted for the Baader and Screw steamer processing units. Processors have
in response tended tO blend output from these technologies with parallel peeler processing

outputs, which can take raw product with a higher level Of surface defects.

111. Market coordination
Comparing the relative irnportance Of product characteristics oriented tO consumer

values versus those that enhance market coordination resulted in some interesting
differences between the product groupings. Responses for sauce/puree products showed

in addition tO the primary commodity attributes (color, texture, and consistency) a

0M

predominant selection Of both ﬂavor and uniformity as vital quality attributes, indicating
that both consumer and market coordination demands need tO be met in this market. In
contrast, for slice/dice/ring/dumpling products, the majority Of respondents selected
uniformity (in addition tO color, texture, and ﬁrmness) as the vital attribute, indicating
that market coordination issues are a higher priority. This difference between product
groups can be best explained by the fact that the slice/dice/ring/dumpling products are
marketing almost exclusively tO industrial bakery, fOOd service and Other secondary fOOd
manufacturers. Therefore, unless speciﬁed by the buyer, apple processors are not
motivated tO emphasize consumer oriented quality characteristics. For sauce/puree
products, a much larger proportion Of processors market them through their own "house"
labels, therefore tending tO take more direct concern for customer preferences. For the
juice/cider product group a majority Of processors selected ﬂavor as a vital attribute, in
addition tO the primary commodity attributes (color, clarity and brix level). A nearly
comparable portion Of respondents chose ﬂavor plus the processing Of whole apples as a
vital combination. This indicates that thereis some subjectiveness with the term "ﬂavor",
since those selecting "only whole apples" for processing juice/cider are Obviously doing
so tO achieve Optimal ﬂavor necessary to differentiate their product from the others. This
"One-upmanship" Of terminology essentially results in the addition Of "whole apple" as
the authenticity attribute ultimately representing consumer preference values. In this
light, the juice/cider products end up being very similar tO the sauce/puree product group
in that about 50% Of the processors selected consumer oriented commodity attributes.

The results for vinegar products show that all processors selected the same generic set Of

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attributes, color, brix and % solids as being vital, the market apparently not supporting

any additional value-added elements.

The factors responsible for this disparity between the priorities for consumer and
market coordination orientation Of attributes became evident by separating respondents
according tO market channel. As was hypothesized, those processors that contract a large
portion Of their product volume tO secondary market channels, like retail labels, fOOd
service and industrial bakeries, tended to select those attributes that enhance market
coordination. In contrast, those processors that primarily market their own products
through branded or “house” labels tended tO take higher consideration for consumer

oriented attributes like ﬂavor and product authenticity.

The signiﬁcant inﬂuence Of buyer standards and consumer preferences on defect
tolerance standards is well supported by results Of the survey. In nearly all cases, buyer
standards and consumer preferences ranked as the highest sources Of inﬂuence, their
importance for establishing defect standards for raw product ranging from the moderate
tO highly determinant level. It should be recognized that there is a fair amount Of overlap
between the scope Of content Of the terms internal standards and customer concerns as
market factors measured in these questions. As has been discussed, there is also an
association between quality attributes and either buyer standards or consumer

preferences, depending on the product and market.

85

IV. Government regulations
The overall inﬂuence Of government DAL’s on processor defect tolerance

standards was viewed as being little tO nO affect at all. As was stated earlier, the only
instance that government standards scored above “little affect” was for juice/cider, which
perhaps is related more tO government pressures on sanitation standards tO reduce the risk
Of E. coli contamination than any insect defect concerns. The results were the same when
analyzed across market channels and for ownership characteristics. During processor
tours the common response was that the market place, rather than government
regulations, drives grades and standards. Further comments were made that indicated that
DAL’s were outdated and based on Old technology. None-the-less, USDA inspectors are
still commonly used to maintain impartiality in the industry, especially in cases where

credibility Of judgement is needed tO resolve conﬂict or support contentious policies.

V. Processing technology
The results Obtained from the survey show that processing technology has had a

signiﬁcant affect on defect tolerance standards, regarded across all apple product groups
tO be a moderate inﬂuence relative tO all other factors. For sauce/puree products in
particular there seem tO be a wide variation in how easily processing technologies deal
with raw products with defects. It is interesting tO note that in comparing the “level Of
difﬁculty in processing raw product with defects” that there is a reverse relationship
between processing efﬁciency and ability to deal with defects. The Pertocchi screw
steamer has the least tolerance for defects, but is known tO yield up tO 8 % Over the

Baader. The nature Of the Baader is also such that it does not tolerate surface blemishes

86

very well (unless blended with peeler product), but is used because it can increase yields
up to 7 % over the peeler alone. The Atlas peeler is the conventional tOOl for processing
apple products, and provides the industry with versatility in use for sauce, slice, dumpling
and juice products. The problem with the peeler/corer technology is that Optimal yields
can only be achieved tO the degree that raw product ﬁts the model Of a perfectly uniform
sphere. The inherent characteristic Of an apple includes signiﬁcant variability Of size and
shape across varieties, seasons and even between growing regions. The result is that
whatever portion Of the fruit does not ﬁt the cutting pattern set for the peeler/corer is left
as by-product. The greater the variability in raw product size, shape and defect levels, the
deeper the peeler cut that is necessary to meet product speciﬁcations. As global
competition reduces proﬁt margins in the fruit industry, pressure tO maximize processing
yields has increased. Historically, the focus Of research and development for processing
equipment has understandably been on processing efficiency, with the assumption that
the supply Of blemish free raw product would always be available. In many cases it was
only after the higher yielding technologies were purchased and installed by processors
that their sensitivity to raw product defects was discovered. Conversations with these
processors reveal that they previously had more relaxed standards for surface insect and
disease blemishes because "the peeler would take care Of it". After investing in the new
higher yielding equipment, their tolerance for defects has been forced tO nearly zero. The
one exception is the new un-named technology recently implemented by a national brand
apple processor that is claimed tO have both the characteristic Of tolerating raw product

defects and attaining high yields.

87

New product development
The proliferation Of new products has exasperated these problems in several ways.

First, many Of the new products are simply based on adding a variety Of cosmetic changes
tO apple products, like adding artiﬁcial ﬂavors tO apple sauces, and fruit essences to
juices. These types Of changes tend tO enhance the demand for only the most basic
commodity attributes, because Of the masking capabilities Of the new product additives.
The second is the new development Of minimally processed “fresh-like” fruit products,
which has served tO intensify problems associated with long-term storage. Especially in
the case Of some high-end national brand bakeries, the attempt tO retain a “fresh-like”
ﬂavor in their fruit products has lead them tO request that primary processors replace the
freeze-brining process with the use Of “on-time” delivery Of vacutun sealed freshly
processed product. Though this reduces some costs on the processing line by eliminating
the need for preservatives, it essentially moves the storage responsibilities from the ﬁnal
product manufacturer tO the primary processor. In addition, not only does it increase the
grade standards for raw products, but also puts further reliance on CA. storage

technologies that require blemish-free ﬁ'uit for dependable performance.

Ownership characteristics
The ownership characteristics Of a processor appear tO be an important

determinant Of the likelihood for implementing the alternatives necessary tO tolerate

higher levels Of raw product defects. Though this was not exclusively shown from direct

88

quantitative comparisons, there are several indirect linkages that support this conclusion.
First Of all, it is clear from the commodity attribute results that even a moderate % Of
“custom” processing results in a tendency tO compromise their own standards tO whatever
buyer speciﬁcations will allow them tO achieve the highest economies Of scale. Because
the national brand companies tend tO have processing volume that is almost exclusively
their own “house” labels, they are sheltered from the inﬂuences Of retail and wholesale
buyers. Second, large publicly owned companies tend tO have the resources necessary tO
make large capital expenditures on the processing technologies necessary to differentiate
their products from private labels. As compared tO large secondary processors and retail
conglomerates holding private labels, national brand processors also tend tO have
sufﬁcient knowledge Of the production system tO support farm-level IPM and recognize
where strategic changes are possible within their own Operations. Though you might
expect cooperative processors, which are owned by growers, tO use their knowledge Of
farm-level issues tO orient their operations tO complement both processing and production
Objectives, it isn’t generally the case. Their dependence on “custom” processing
contracts has forced them into a relatively submissive posture in relation tO the buyers'
preferences. The one area that cooperative processors’ loyalty tO grower interests stands-
Out is in terms Of the "likelihood Of switching tO other US. or international growing
regions for sources Of raw product". In comparison tO private and public companies,

grower cooperative processors view this Option as having very low possibility.

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VI. Alternatives for processing raw product with defects

Responses tO the question Of the "likelihood Of implementing alternatives if the
FOOd Quality Protection Act results in the loss (or severe restriction) Of many Of the
pesticides that US. apple growers have traditionally relied upon tO provide blemish-free
fruit" indicated that processors would prefer tO “rely on growers tO maintain defect
standar ” over all other options. The fact that this alternative maintains the status quO
suggests a strong reluctance to make changes on their part. One important note is that
within the range Of this leading choice, private and public processors provided the
strongest emphasis on this as a probable solution, as compared tO cooperative processors.
The only competing alternative was that Of implementing IPM; but it tOO does not require
any direct changes tO the processing or upstream stages Of the fOOd system. These
parallel responses point out quite well the perception that "pest management" or "defect
management" is primarily the responsibility Of those at the production stage. This is a
cultural artifact Of the industrialization process within which Michigan's apple industry
evolved over time and reﬂects the assumption that farm level production will always have
the pest management tOOls needed tO provide consistent blemish—ﬂee raw products. TO
emphasize this point, the Option that was consistently shown to have very little if any

chance Of being a plausible solution was that Of "loosening defect standards".

The leading processor-oriented alternative tO show potential for implementation
was manipulating technology, but was seen tO be “difficult in the short run”. Within the
range Of scores for this avenue, public companies ranked highest in likelihood Of

implementation. There are several important advantages that publicly owned processors

90

(all Of which are national brand companies) have over smaller private and cooperative
processors. First Of all, it is these large publicly owned companies that tend to have the
resources necessary tO invest into research and development and subsequently make large
capital expenditures on the new technologies. Some national brand processors have
chosen tO make signiﬁcant investments into such immobile assets, in order tO
differentiate their products from the private label competitors. By prescribing strict limits
for pesticide use tO the growers contracted to supply their raw product and incorporating
new processing equipment that is more tolerant tO defects, they hope to develop a new
form Of brand equity. It is probably for these same reasons that public companies are the
most likely tO support implementing IPM in response to FQPA, as compared tO

cooperatives and private processors.

All the other Options; working with ﬂexible buyers, switching tO other US.
growing regions or international sources, switching tO less sensitive products, adjusting
commodity attributes, and adjusting market channels were seen tO have lower potential
for implementation, and varied depending on product, market and ownership

characteristics.

VII. Constraints to implementing alternatives to restrictive defect standards
Out Of the processor-related alternatives, processor technology appears tO have the

greatest potential as an avenue tO process apple products with less restrictive defect

tolerance standards. Among the factors that might prove the most signiﬁcant barrier to

91

implementation, processing economics was viewed as the only signiﬁcant constraint.
This is understandable, because traditionally, the dominant focus in designing processing
technology is increased product yield. SO in essence, polar forces challenge the role Of
processing technology in the fOOd system. One follows the conventionally singular focus
Of maximizing processing yields, while the other expands the role Of processing
technology tO include further elements Of quality control. TO be fair, there are in fact
several technologies in the processing stage Of the apple industry that presently deal with
quality control. They include the electric color sorters, which when used by apple
packers separate fruit that don't achieve color grade, but when used by processors are
used more tO eliminate defects from the line. In addition, most processors hire a
signiﬁcant amount Of human labor tO inspect the quality Of product being processed. But
economic efﬁciency remains the primary force in the plant Operations. If that were not
the case, the processing line could simply be slowed down tO a rate that defect tolerances
would hardly be necessary. In fact, adding more labor tO the processing line, tO remove
defects, is one Of the most important strategies used by. the organic processor for

maintaining their product quality standards.

The Option Of changing sensitive commodity attributes was consistently given a
relatively low score for having potential as an avenue for responding tO higher defect
levels in raw product. Buyer standards, consumer preferences, product quality, and
market channel structure were all viewed as signiﬁcant constraints for making such a
change. This is largely a function Of the role that commoditization plays in the fOOd

system. The only exception is again the organic processor who allows for more color

92

variation in sauce and cloudiness in juice, by focusing on ﬂavor and authenticity in their
apple products. Comments during the interview reveal that they are able tO tolerate
reduced visual attributes like color in sauce and clarity in juice by using intensive
advertising tO convince their customers that those characteristics are indicators Of the

wholesome nature Of their product brand.

The Option Of switching sources for raw product was consistently given a
relatively low score for having potential as an avenue for responding tO higher defect
levels in raw product. This I thought would be a stronger choice for private and public
companies, since there are other locations in the US. that have inherently lower pest
pressure, therefore would be more likely tO provide blemish-free raw product after FQPA.
Processing economics was the only factor seen as a signiﬁcant constraint, although I
believe that this view may change in time, depending on the ultimate severity Of the

FQPA legislation.

The Option Of manipulating market structure was consistently given a relatively
low score for having potential as an avenue for responding tO higher defect levels in raw
product. Processing economics and the market structure itself were viewed as signiﬁcant
constraints, receiving mean scores between “moderate constraint” and “highly
determinant constraint. The potential Of this Option is ultimately reliant on stages Of the
fOOd system further upstream from primary processing. If secondary processors, fOOd

service, wholesale and retail label companies were able tO recognize how their market

structure and conduct are inherently linked tO all other stages Of the fOOd system, then

potential for changing market structure would be accessible.

VIII. Testing hypotheses
SO reviewing the prOposed hypotheses, the results are as follows:

Hypothesis #1: Industrialization of the Food System has resulted in government
regulations, processing technologies and commodity attributes in the processing stage of
Michigan '5 apple industry that are responsible for more restrictive defect tolerance

standards for raw product.

Results from the study demonstrate that processing technology and commodity
attributes as key industrial market factors are largely responsible for the more restrictive
defect tolerance standards for raw product seen in Michigan's apple processing industry.
However, the inﬂuence Of government regulations, as represented by DAL's, have been

minimal in establishing current restrictive defect tolerance standards.
Hypothesis #2: Industrialization of the Food System has produced market coordination

forces resulting from new products and market channels in Michigan '3 apple industry

that are responsible for more restrictive defect tolerance standards for raw product.

94

Results from the study clearly show that the market coordination forces resulting
from new products and market channels are largely responsible for the more restrictive

defect tolerance standards for raw product seen in Michigan's apple processing industry.

Hypothesis #3: Michigan apple processors that disproportionately supply consumer
goods for retail and wholesale private labels, and producer goods for industrial bakery
and food service stages of the food system are more likely to have restrictive defect
tolerance standards than processing plants producing predominantly their own branded

or private labels.

Results from the study conﬁrm that processors that rely on buyer contracts,
supplying apple products to retail and wholesale labels, and industrial bakery and fOOd

service stages, tend tO have more restrictive defect tolerance standards for raw product.

IX. New coordination mechanisms for food system performance
I proposed that speciﬁc factors Of the industrialized fOOd system could be

identiﬁed and positively linked tO restrictive processor defect tolerance policies for raw
product, which are inevitably responsible for the growers’ ability tO reduce pesticide use
at the farm level. Commodity attributes, processing technology, and market structure as
factors within the Michigan apple industry were shown tO different degrees to have this
inﬂuence, government regulations having minimal tO no effect. There are several ways in

which this exercise can serve as a basis for designing new coordination mechanisms that

95

 

will allow the fOOd system to achieve higher levels Of performance in terms Of reducing
dependence on conventional agricultural pesticides in fOOd production. Of foremost
importance, all food industry entities from producer tO retailer must recognize that their
conduct has an effect on the performance Of all other stages Of the system. The ability to
measure the impact Of various industry forces will be Of little use if the parties involved
will not take responsibility for their role in the solution. If fOOd manufacturers,
wholesalers and retailers are truly committed in delivering the high quality, safe and
environmentally friendly food products that they claim consumers are demanding, then
modifying elements Of their Operations that stand in the way Of that goal should be Of

highest priority.

X. The Information Era
Though there is wide consensus that over the last one hundred years the

industrialization process has been the overall dominant force in the food system, some
have suggested the further designation Of the ﬁrst half Of the century being the
Mechanical Era and the second half Of the century being the Chemical Era (Phillips,
1983). In that same theme recent Observations by researchers and industry leaders
indicate that a new era may be underway in the fOOd system, which could provide
Opportunities for addressing some Of the system constraints docmnented in this research.

In the last twenty years information has played a greater role in the ongoing
development Of the fOOd system. Williamson (1989) ﬁrst identiﬁed transaction costs
within and between stages Of a subsector to be signiﬁcant in inhibiting the Optimal

performance Of an industry in terms Of production efﬁciency and measuring consumer

96

demand in the market place. Since then check-out scanner technology, transgenics,
computerized monitoring and control technologies have revolutionized manufacturers'
ability tO effectively coordinate new product development from farm tO niche markets
(Cook, 1993). Although most Of these information technologies have been used
primarily tO reinforce the existing industrial model, several cases have emerged which
reveal some fOOd processors re-addressing structural issues within their industry.

In recent years consumers have appeared tO show more concern over the processes
and technologies used tO produce their food (Conor, 1997). Resistance tO the use Of
biotechnology for manufacturing fOOd is one gOOd example Of where consumers have
taken speciﬁc interest in the production process, rather than simply focusing on what the
ﬁnal product "looks-like" on the retail store shelf. The introduction Of Calgene's
F lavrSavrTM tomato and use Of the genetically engineered bovine growth hormone for
milk production have in both cases resulted in the development (or expansion) Of
alternative markets for vine-ripened tomatoes and non-BST milk. Regardless Of whether
there is any scientiﬁc evidence Of deleterious effects from the biotechnology based foods
products, the Information Era is allowing consumer groups tO inﬂuence the "means Of
production". Food processors are in response becoming increasingly aware Of consumers'
attitudes regarding these technologies and are accounting for them in their R&D as well
as their marketing activities (Conor, 1997).

Integrating aspects Of the production processes into the market value Of fOOd is
occurring more slowly in the apple industry than other fOOd sectors, but there are cases
emerging in several forms. Probably the Oldest proponent Of this concept is the organic

apple industry, who's successful marketing Of a higher priced products is based almost

97

solely on the fact that the apples were grown without the use Of synthetic pesticides and
fertilizers. Some conventional fresh apple markets have made attempts tO increase
market share by identifying their fruit as grown under IPM, but the market advantage
from this has not been conclusive. Conventional apple processors have in general done
the least, although at a national level there are a few with efforts underway.

One Of the problems with using "grown under IPM" as a value-added element tO
apple products is that the deﬁnition Of Integrated Pest Management is so broad that it is
difficult tO effectively differentiate standard production from orchards managed under a
speciﬁc IPM program. Some have also warned that if separate markets for "IPM apple
products" are developed, then it is essentially admitting that the conventional production
is not safe or environmentally sound. Because Of this, most university and commodity
leaders have been reluctant tO endorse such an effort. I believe that this is shortsighted
and ignores how powerful the market place can be in transforming the fOOd system at
large tO be more compatible with farm-level IPM. The jury is still out on whether or not
conventional pesticide use carries a real threat tO human safety, but what we dO know is
that pesticides bring a signiﬁcant cost tO the grower and that the selection pressure from
continuous use eventually results in pest resistance. Therefore further progress along the
IPM continuum needs tO be our ensuing goal.

I believe that the most critical hurdle in transforming the fOOd system tO be more
compatible with farm-level IPM is in making pest management (or fruit quality
management) a fOOd system responsibility, rather than solely a farmer responsibility. It is
only after this occurs that structural elements Of the Industrialized F OOd System will

begin tO change in ways that will allow space for further implementation Of IPM by fruit

98

growers. There are in fact some cases Of this occurring already. The most progressive
example is that Of one national brand processor who has undergone major re-tOOling in
their processing plants combined with the development Of speciﬁc on-farm IPM
programs tO be implemented by their farm contractors. They are one Of the ﬁrst tO
recognize that in order tO fully incorporate the beneﬁts Of farm-level IPM into the brand
equity Of their ﬁnal product, they needed tO consider all Of the stages Of their processing
system tO understand what elements might be a constraint tO their Obj ectives. Their
analysis resulted with the identiﬁcation Of incompatibility between elements Of their
existing "industrial model" processing equipment and the increasingly high expectations
for farm-level IPM. In order tO fully incorporate the beneﬁts Of farm-level IPM into the
brand equity Of their ﬁnal product, they embarked on a comprehensive system analysis
that as a result identiﬁed the structural constraint in their own processing line. It is this
kind Of re-engineering, ﬁreled by the demand signals Of the Information Era, that I believe
will allow the food system to achieve higher levels Of performance in terms delivering a

high quality, econorrrically and environmentally sustainable fOOd supply.

99

APPENDIX A. Consent form

Dear Michigan Apple Packer / Processor,

The 1996 Food Quality Protection Act is promising tO bring the Michigan Fruit Industry their greatest
challenge in recent history to producing high quality fruit products in the most safe, efﬁcient and
economical means possible. It is very likely that Michigan fruit growers will be losing some Of the
historically most important pest management tools (i.e.; organophosphate and carbamate insecticides) for
fruit production. At the same time it is important to recognize that much Of the growth in the food system,
in terms Of consumer expectations, distribution systems, processing technology, etc., have evolved with the
assumption that farm level production will always have the pest management tOOls needed tO provide
consistent blemish-free raw products. It is very difﬁcult tO know in the short run how states like Michigan,
which have very high levels Of indigenous pests, will adjust to the loss Of such pesticides and still maintain
the high quality standards expected in the fruit market.

You are being asked tO participate in a study designed tO better understand the relationship between
structural elements in the packing / shipping and processing segments of apple industry and the potential Of
reducing chemical pesticide use at the farm level.

The study’s research title is:

Industrialization Of the Food System:
How Has Vertical Coordination Of the Michigan Fruit Industry Affected
Our Ability tO Implement Integrated Pest Management at the Farm Level?

John C. Wise, Michigan State University, Department of Entomology
Thomas Edens, Michigan State University, Department Of Resource Development

The study will entail:

1) Touring Michigan apple packing and processing plants for the purpose Of gaining a better
understanding Of how the apple subsector is structured in terms Of technological and Operational
characteristics.

2) Performing a follow-up interview with the facility managers, tO ask speciﬁc questions in
regards to market constraints, quality attributes and grade standards that result in their tolerance
policies.

Consent agreement:

Participation is completely voluntary and all data will be treated conﬁdentially. You may choose
not to participate or refuse tO answer any questions that you deem private. The intention Of the
study is tO collect data that will help improve the survival Of the Michigan fruit industry, and to
the best Of our knowledge will not bring any risk Of deleterious affects upon the participants. If
you have any questions on this matter, feel free to contact the University Committee on Research
Involving Human Subjects (UCRIHS) at (517) 355-2180.

Your signature and date represents your consent tO participate in this study:

Thank you very much for your help and participation.

Sincerely.

100

 

John C. Wise
Michigan State University

APPENDIX B. Items to be documented on processing plant tours

Processor name:

1) Company ownership characteristics (i.e.; privately owned, public, cooperative)
2) Processed apple products (i.e.; slice, sauce, juice, etc.)

3) Source Of raw product (i.e.; contracts, free market; local, global)

4) Raw product characteristics and quality attributes (i.e.; apple variety, size, volume,
timing)

5) Procurement process (i.e.; organizational product stream within plant)

6) Primary technologies used in procurement (i.e.; apple slicer, bater, peeler)

7) Grades and standards for raw products (i.e.; fOOd defect action levels, market
tolerances)

8) Pesticide use and residue allowances (i.e.; FDA standards, company policies)

9) Technology and policies developed tO reduce pest / pesticide impact on ﬁnished
product.

101

 

APPENDIX C. Processor Survey

Food System Coordination:
Impact of the Food Quality Protection Act on the Michigan Fruit Industry

1) Which Of the following apple products do you produce? (place a check next to each positive selection)

_ Sauce / purees
_ Slices/ dices/rings
__ Dumplings

__ Juice/ cider

__ Vinegar

2) Approximately what percentage Of your total processing sales volume do apple products represent?
%
3) For which Of the following markets do you produce apple products? (Indicate the percentage
distribution Of sales across markets for each apple product)

 

 

 

 

Sauce/puree Slice/dice/ring Dumpling Juice/cider Mr
“House” Brand label _ % __ % __ % __ % _ %
CO-pack for Brand label __ % __ °/o __ % _ % __ %
Retail Private label __ °/o __ % __ % _ % __ %
Food service Private label _ °/o _ °/o __ % _ °/o __ %
Industrial bakery __ % __ % _ % _ % __ %
By-product to processors __ % °/o % % %

Total percentage: 100 % 100% 100% 100% 100 %

4) Approximately what percentage Of your raw product comes from each Of the following sources?
(Indicate the percentage volume from the following sources for each apple product)

 

 

 

 

Sauce/puree Slice/dice/ring Dumpling Juice/cider M
Grower members (Coop) __ % __ °/o _ % _ % __ %
Annually contracted growers_ % _ % _ % __ % __ %
Independent growers __ % __ % __ % __ % __ %
Packing houses __ % __ % __ % __ % __ %
In house by-products _ % __ % __ % __ % __ %
Other processor by-products__ % __ % _ % _ % _ %
International sources _ % % % % °/o

Total percentage: 100 °/o 100% 100% 100% 100 %

102

5) Which of the following characteristics do you view as vital for deﬁning quality in your ﬁnished
product? (place a check next to each important “Quality Attribute”)

Sauce/puree:

Color

Texture (ﬁnish)
Consistency

Weep & Slump

Brix / acid ratio

Flavor

Uniformity (across lots)

Slices/dices/rings:

Color

Texture

Firmness

Flavor

Uniformity (across lots)

Juice/Cider:

Color

Clarity

Brix / acid ratio
% Solids
Flavor

Vinegar:

Color

Brix / acid ratio

% Solids

Uniformity (across lots)

 

6) What affect do the following factors have on determining the above “Quality Attributes” Of the ﬁnished
product? (Please indicate the level of inﬂuence using a score range of 1 - 4, with 1 representing no affect,
2 representing little inﬂuence, 3 representing moderate inﬂuence and 4 representing a highly determinant
inﬂuence)(Factors may receive the same ranking if they are equally inﬂuential).

Sauce/purees Slice/dice/ring Dumpling Juice/cider Vinegar

Buyer standards
Internal standards
Government standards
Consumer preference
Processing technology

Market structure
(i.e.; affect Of distribution system and retailing on storage time, product uniformity, etc.).

 

 

 

Inherent characteristics Of
available raw product (i.e.; seasonality, color, size, shape, ﬁrmness, etc.).

103

7) Which of the following characteristics do you view as important for deﬁning quality in your raw
product? (place a check next to each positive selection)

Sauce/puree:
Apple variety
Storage ability
Pressure / ﬁrmness
Shape
Size
Authenticity (fresh vs storage apples)
Defect level
Pesticide residue levels

Slices/dices/rings:

Apple variety

Storage ability

Pressure / ﬁrmness

Shape

Size

Authenticity (fresh vs IQF apples)
Defect level

Pesticide residue levels

Juice/Cider:

Apple variety

Storage ability

Pressure / ﬁrmness

Shape

Size

Authenticity (Fresh vs concentrate)
Defect level

Sanitation

Pesticide residue levels

Vinegar:

Apple variety

Storage ability

Shape

Size

Defect level

Sanitation

Pesticide residue levels

8) By ranking, please indicate which Of your apple products require the most strict defect standards for the
raw product. (By ranking from 1 - 5 in order of strictness, 1 representing the lowest standards and 5 the
highestXProducts may receive the same ranking if they require equally strict standards)

__ Sauce / purees

Slices / dices / rings
Dumplings
Juice / cider

Vinegar

104

9) What affect do the following factors have on establishing the above defect standards for the raw
product? (Please indicate the level of inﬂuence using a score range Of 1 - 4, with 1 representing no affect, 2
representing little inﬂuence, 3 representing moderate inﬂuence and 4 representing a highly determinant
inﬂuenceXF actors may receive the same ranking if they are equally inﬂuential)

Sauce/purees Slice/dice/ring Dumpling Juice/cider Vinegar

Buyer standards
Internal standards
Government standards
Consumer concerns

Processing technology
(i.e.; peeler, baader, press, etc).

 

Processing yield target

Market structure
(i.e.; affect Of distribution system and retailing on storage time, product uniformity, etc.).

 

 

 

Quality attributes for
ﬁnished product (i.e.; color, texture, brix, etc.).

 

10) Which of the following defects cause the most difficulty in processing the following apple products?
(Please indicate the level of difﬁculty using a score range of 1 - 5, with 1 representing no affect, 2
representing minor difﬁculty, 3 representing moderate difﬁculty, 4 representing high difﬁculty and 5
representing zero-tolerance)(F actors may receive the same ranking if they are equally inﬂuential)

Sauce/purees Slice/dice/ring Dumpling Juice/cider Vinegar

Internally feeding insects
Surface blemish insects

Surface blemish diseases (i.e.;scab)

 

Nutrient disorders (i.e.; bitter pit)

 

Mishappen fruit

105

11) If the Food Quality Protection Act results in the loss (or severe restriction) of many of the pesticides
that US. apple growers traditionally rely upon to provide blemish-free fruit, which Of the following are the
most probable avenues for your processing company to continue working within such new standards?
(Please indicate the level of probability using a score range Of 1 - 4; with 1 representing no possibility, 2
representing some possibility but difﬁcult in the short-run, 3 representing very probable but difﬁcult in the
short-run, and 4 representing very probable and immediately implementableXActions may receive the
same score if they are equally probable)

Sauce/purees Slice/dice/rino Dumpling Juice/cider Vinegar

 

Rely on growers
to maintain standards

Loosen defect standards

Manipulate processing
technology to eliminate defects (i.e.; peeler depth. ﬁlters, electronic sorter, etc.).

 

Switch tO less sensitive
products or commodity markets (i.e.; sauce vs juice, apples vs vegetables).

Switch to US. fruit regions
with less insect and disease pressure for raw product.

Switch to international
sources for raw product.

Adjust market structure
factors (i.e.; storage time, product uniformity, etc.).

Work with the most
ﬂexible buyers.

Change quality attributes
most sensitive tO defects (color, consistency, etc.).

 

Work with growers to __
implement new pest management techniques (i.e.; 1PM, new pesticide chemistries, pheromone, etc.).

Other:

 

 

 

 

12) By ranking, please indicate which apple products require the more strict pesticide residue standards in
your raw product. (By ranking from 1 — 5 in order of strictness, 1 representing the highest standards and 5
the lowest)(PrOducts may receive the same ranking if they require equally strict standards)

Sauce / purees

Slices / dices / rings

Dumplings

Juice / cider

Vinegar

106

13) What affect do the following factors have on determining the pesticide residue standards of the ﬁnal
product? (Please indicate the level Of inﬂuence using a score range Of 1 - 4, with 1 representing no affect, 2
representing little inﬂuence, 3 representing moderate inﬂuence and 4 representing a highly determinant
inﬂuence)(Factors may receive the same ranking if they are equally inﬂuential).

Sauce/purees Slice/dice/ring Dumpling Juice/cider Vinegar

Buyer standards
Internal standards
Government standards
Consumer concerns

Processing technology
(i.e.; peeler, baader, press, etc.)

 

Market structure
(i.e.; affect Of distribution system and retailing on storage time, product uniformity, etc)

 

 

 

14) If as a result Of the Food Quality Protection Act there are more restrictive standards set for pesticide
residues on US. raw product, which of the following are the most probable avenues to meet such a new
policy? (Please indicate the level of probability using a score range of 1 — 4; with 1 representing no
possibility, 2 representing some possibility but difficult in the short-run, 3 representing very probable but
difﬁcult in the short-run, and 4 representing very probable and immediately implementableXActions may
receive the same score if they are equally probable)

Sauce/purees Slice/dice/ri_ng Dumpling Juice/cider Vinegar

Restrict grower pesticide use

Manipulate processing technology
tO eliminate residues (i.e.; ozone bath, peeling. etc).

 

Switch to less susceptible products
or commodity markets (i.e.; sauce vs slices, apples vs vegetables).

 

 

Switch to US. fruit regions with
less pesticide use.

 

Switch tO international sources
for raw product.

 

Manipulate market structure
(i.e.; storage time, product uniformity, etc.).

 

Change quality attributes for
raw product.

 

Additional residue validation
techniques (i.e.; residue testing, product tracking).

 

Work with growers to implement
new pest management techniques (i.e.; IPM, new pesticide chemistries, pheromone, etc.).

Other: ___

 

 

 

 

 

107

15) For the listed avenues for responding to the potential impact Of the FQPA, which factors stand as the
most signiﬁcant barrier to implementation? (Please indicate the level of constraint using a score range of 1
- 4, with 1 representing no constraint, 2 representing low constraint, 3 representing moderate constraint,
and 4 representing a highly determinant constraint)(Factors may receive the same ranking if they are
equally inﬂuential).

Manipulate Manipulate Change sensitive Switch raw Implementation

Technology Market structure Quality attributes product source Of IPM
Buyer standards
Government regulations
Consumer preference
Reduced product quality
Processing economics

Market structure

108

 

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