At my house, Art does the grocery shopping! “Art is well- trained,” you say ... well, maybe I am. But as one of the few “farm boys” left residing in my town these days, I find the grocery market to be a source of information. It stokes my imagination. Mostly, I see real, fresh fruits and vegetables conveniently bundled with energy-intensive packaging. I see evidence of energy-intensive produce storage systems, energy-intensive sanitation systems and energy-intensive transportation systems. I see neatly packaged ready-to-eat cereals and baked goods. I like what I see.

I see abundance in food, abundance in healthy dietary inputs and the evidence of an abundant economy.

I also see what may be an Achilles’ heel. Product bundling. The combination of food and energy bundled into the hundreds of product offerings may be the focal point of the next advance in food inflation.

We know that food prices are increasing around the world. In fact, basic U.S. commodity prices took a beginning bump in 2008, i.e., corn up 63 percent, wheat 84 percent, soybeans 24 percent and sugar up 55 percent. What happened last year?

Russia had another crop failure and consequently banned grain exports. The Moscow News reports that global food inflation has reached 25 percent year on year, up from a low of 7.5 percent before the 2008 drought.

Oil prices also hit a peak in 2008. “Light sweet crude” exceeded $100 a barrel – up from about $50 in 2007. By the way, oil prices have hit a similar peak in February 2011! The scary thing is that the oil supply seems to be more and more unstable, with prices going even higher.

What a concept: Food supplies going down and oil prices going up!

What can we do? I don’t think I can do much about oil prices, but I may have an influence on food supply. I can also have an influence on energy consumption, at least in terms of how I consume the energy required for my business.

On a personal level, I drive nearly one thousand miles each week. Fuel expense in the golden state of California is a major issue.

More or less by “accident,” I recently found myself in a completely new vehicle … a fairly conventional type of car which happens to get nearly 30 miles per gallon on regular gas. What a difference!

My old vehicle was getting about 24 miles per gallon and crying out for premium grade. The differential in mileage and grade brought my direct transportation cost down by about 15 percent. Sadly, this big savings came just in time for the new gasoline prices!

Despite the increase in price at the pump, my current on-the-road fuel expense hasn’t gained or lost any ground. What an advantage compared to the situation that would have been without the change in vehicles. It’s nice when good luck, even if it is disguised as bad luck, lets me brag about my good judgment!

“Your transportation expense is a puny example,” you say. Right! But the savings may allow me to buy a few more tomatoes at the supermarket.

Moreover, I can drive my business travel costs even lower with one of the several available Internet meeting services. No travel, no travel cost. The Internet meeting services which I have considered would cost about as much as one tank of gas … monthly!

The point really is this: Most of my personal influence on the “big picture” energy issues comes from my daily business decisions. My decisions are not really big. But some of my clients do make “big” decisions.

For example, many of my clients in the produce packing business consume substantial amounts of electricity. Much of the power is consumed in the process of providing refrigeration to large, flat-roofed, refrigerated storage facilities. What a spot for solar panels!

Given the fact that our electrical power comes mostly from petroleum, but also comes from hydro and solar, maybe we need make an effort to integrate solar collection into the operation.

Even a small change in the amount of electricity being supplied from the “variable cost” petroleum-based source to a “fixed cost” solar-based source would stabilize a portion of the power bill. As the years pass, the cost of power from solar collectors invested today is likely to seem smaller and smaller.

Moreover, the amount of energy produced by solar panels does not have to be small. One of my acquaintances in the produce business produces 3 megawatts per hour from solar collectors on the roof of his facility.

This is a fraction of his business’ power consumption, but on an absolute basis, that’s a lot of power. Think about it!

An ordinary home situated in central California might consume about 10 kilowatts in 24 hours. That means that if the 3-megawatt solar panel operates at full steam for 10 hours per day, it can produce enough power for a lot of houses!

What about petroleum-based packaging options? I’ve confessed how much I appreciate beautiful retail packaging in my supermarket. Much of this packaging comes from oil.

Clear plastic covers and clam shells sitting on shelves next to colored plastic trays enhance the appeal of some of the world’s most wholesome produce.

For competitive reasons as well as reasons related to produce shelf life, we may be forever committed to this type of packaging. But we will certainly be paying with increasing amounts of real dollars. As time goes by, the absolute cost of petroleum-based packaging will become greater and greater.

Certainly packaging is attractive and lends beauty to the produce itself. Appearance enhances retail produce sales. Enhanced produce sales translates into benefits for everybody’s diet and subsequent standard of living. And so on and so on.

But what does this packaging actually do for produce? There are the obvious benefits related to the processes of materials handling. Materials handling is a very big deal in the produce business.

So is produce freshness and shelf life. Packaging has a direct impact on each of these parameters. These impacts directly benefit the retail customer.

In fact a University of California economist estimated the 2008 financial loss due to lack of freshness, wholesomeness and direct spoilage in U.S. domestic fresh produce at more than $100 billion.

If our national food chain lost that much value when we were investing all of the energy and technology inputs we were able to do at the time, then we had best be cautious about rushing to eliminate inputs.

We are dealing with complex systems when it comes to refrigeration, packaging, materials handling, transportation and the like. A short-term achievement in energy savings may actually be more costly than we imagine. PD

References omitted due to space but are available upon request to editor@progressivedairy.com .

Art Dawson
President
Dawson Company
art.dawson@verizon.net