Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Grape Shatter Issue
Hits Wholesalers Hardest

As technology and marketing change, long established industry norms are bound to be questioned. Such questioning is occurring now in the table grape industry.

The gist of the issue: Growers of table grapes point out that when grapes are marketed in bags or clamshells, retailers get paid for the loose grapes or shatter. Therefore growers seek changes in shatter allowances for grapes sold in bags or clamshells.

From our conversations with major retailers, most seem unconcerned, explaining that they have their own specifications that go beyond “good delivery” standards or a grade standard and have no intention to change those specifications.

The wholesale sector, lacking the market power of supermarkets to set standards independently, is in an uproar about these changes. The wholesalers allege both that bags and clamshells with excess shatter are less desirable and that the specific proposals being made go well beyond allowing for a little shatter but have the effect of increasing the allowance for other non-shatter defects.

We asked Mira Slott, Pundit Investigator and Special Projects Editor, to find out more:

Her first interview is with the owner of a large multi-generational wholesaler who thought the issue had become so contentious that he asked us to withhold his identity:

Q: Could you share your insight on the grape shatter allowance issues?

A: Grape growers are saying when stuff is in bag, what’s the difference, and consumers don’t care. They feel they’re being taken advantage of by some unscrupulous receivers.

Sometimes shattered grapes are healthy, sometimes they are old and drying out.

Right now you’re allowed a total 12 percent tolerance for minor defects before it comes out of U.S. #1. Anything with over 1 percent decay would make it not U.S. #1.

Most grapes are sold ‘good delivery’. The shipper has 15 percent total defects allowance for shatter and any other defects other than decay, such as discoloration and scaring.

Now we’re talking a separate 5 percent allowance for shattered berries. You could have 20 percent defects and still make good delivery, and up to 17 percent defects to make U.S. #1.

One out of five grapes can be defective and still make delivery — that’s an issue.

There have been shelf-life studies done on shattered grapes. Preliminary research shows shattered grapes have shorter shelf life and more likely produce higher bacteria counts than refrigerated grapes on the stem. NAPAR [North American Perishable Agricultural Receivers] commissioned the lab tests. [Pundit note: see Pat Davis interview below].

Here’s the most important point: As the receiver, I’m a middleman and quite often our customers have their own standards. This doesn’t mean major buyers from the chain stores — Wal-Mart’s and Costco’s of the world — and the large food service distributors are going to change their standards.

I have a load that comes in somewhere between the new and old standards that now makes the grade, but my customers say, ‘I don’t care. I don’t want them.’ Technically, legally, I could make them keep them, but I wouldn’t because I’d never be able to sell them again. The chain store that buys 500 loads a year says, ‘I don’t like the color,’ and the shipper says OK.

When you raise these tolerances to a higher level, they are not going to be accepted by most retailers in most cases and now there is no recourse. The USDA starts changing standards, and the retailer says I’m sticking to the old standards.

Our customers, being chain stores and mom-and-pop fruit stores, look at shatter and consider the product less healthy and in poorer condition, and more prone to cracking and decay.

Pat Davis Pat Davis
President North American
Perishable Agricultural Receivers (NAPAR)
Executive Director of Strategic Initiatives
Food Marketing Institute (FMI)

Q: I understand NAPAR commissioned studies to compare and analyze the microbiological content of shattered grapes to those on stems to learn if there were substantive differences in product quality and shelf life in different conditions and timeframes. Could you tell us more?

A: The issue of grape shatter allowance has been going on for more than two years now; in 2006 there were comments and in 2007 there were comments again, and USDA withdrew the proposed 10 percent shatter allowance, saying it felt it would dilute the grade and create uncertainty regarding quality of the grape — all good news from the receiver perspective.

Most recently, USDA came out for a proposed 5 percent shatter and is only allowing a 30-day comment period, rather than the previous 60-day comment period. NAPAR will be submitting its comments but there is a need for all receivers to make their comments known individually.

We feel shatter is an indication of age, and it very much reduces quality. When there is an overabundance of shatter, it is an indication that either the load was mishandled or grapes are getting older and shelf life is being reduced. NAPAR felt it important to look at microbiological content to analyze the susceptibility of shatter; once shattered, the skin is broken and vulnerable.

Q: Who did the testing?

A: NAPAR commissioned Deibel Laboratories, a very well established food safety company with labs across the country doing work for many, many organizations. We sent product from various sources to the Pennsylvania location, many members sent full flats of grapes to be tested, a variety of varieties.

With a wide selection to choose from, Deibel went about testing microbiological content both at ambient and refrigerated temps. Over the course of time, they began to see a difference in the bacteria content between shattered grapes and bunched grapes. Shattered had higher bacterial count than bunched.

Q: Was this the case in both ambient and refrigerated environments?

A: At ambient temperatures, both groups developed high counts of bacteria so rapidly, the growth of bacteria on both were extreme. Over time in the refrigerated conditions, it became much more evident that there was a difference between shattered and bunched… we will be submitting that report to the USDA as part of our comments. The contention is there, because of higher bacteria counts, shattered grapes are much more susceptible to decay and shorter shelf life.

Q: Could you provide a copy of the report we could share with our readers?

A: Once the report is filed with the USDA, it certainly will be open and public. This has to happen within the next couple of weeks because of the 30-day comment period. I’d like to hold off until then.

It’s astounding to us that USDA would even be considering this; shattered grapes have shorter shelf life, and increasing the shatter allowance is a definite dilution of number one grade from our perspective.

Q: Could you clarify how the percentage tolerances levels will be impacted through the distribution chain?

A: It would be 20 percent tolerance allowable for good delivery at the receiving dock, but by the time it is resold by the receiver and ends up at the supermarket, several more days have passed.

The retailers on there own have established their own specifications for shatter that are very much lower than the 12 percent USDA allows currently. They know that if they have more at point of delivery and those loads go through their distribution channels, the percentage becomes much higher. It wouldn’t be acceptable whatsoever.

Another point here is the larger supermarkets, and very large wholesalers are rejecting loads that are even lower than current USDA specs; they will continue to reject. This means independent receivers will be flooded with rejected loads. Frankly the mass majority of product is sold through large chains and wholesalers. This change is aimed at the terminal market and smaller receivers.

Q: What about from the consumer perspective?

A: I challenged the consumer research Barry [Bedwell, President of the California Grape and Tree Fruit League] presented to the USDA. [Editors note: see Pat Davis letter to USDA]. While it may be true that 10 percent shatter is acceptable to consumers, it doesn’t take into account the other tolerances, and I’ve already made the point that the 10 percent is allowable at point of receiving, but this could grow to as high as 30 to 40 percent in the further distribution process.

If the grapes are sitting on the bottom of the bag, they could be collecting bacteria. The issue boils down to the fact that consumers are buying the shattered ones in the clamshells or bags, picking them out and throwing most of them away.

Barry Bedwell Barry Bedwell
President
California Grape & Tree Fruit League
Fresno, California

Q: Industry opponents of the proposed ruling for a five percent grape shatter allowance say it will decrease the value of the product. Are they right?

A: We’re not lowering the standards. This recognizes the evolution of containers to bags and clamshells. The original rule was primarily designed when grapes were in lugs. Detached berries were considered a defect because they were unsalable. Loose berries in the box economically impacted the retailer.

With the high percentages of grapes in bags and clamshells, growers are still getting docked and not making the #1 grade because of shatter, even though the product is totally saleable to the consumer. Before we looked at proposing the change, we wanted to be sure there was no perception of quality reduction on the part of consumers.

The California Table Grape Commission did consumer research and surveys and found consumers still looked at the product as good to excellent quality with up to fairly mid levels of shatter. If all grapes are now being sold in bags and clamshells, and considering people are getting requests for de-stemmed grapes, this seemed reasonable to propose a 10 percent shatter allowance, which was our original request to the USDA.

We understand first and foremost that we don’t want to impact quality perception. The proposed 10 percent allowance rule was pulled last summer by the USDA. We said it was important to account for the evolution of packing styles and we wanted to propose the allowance again. We’re trying to be open and transparent; we all have the same goals to grow the table grape industry and sell more grapes.

Q: If grapes detach from the stem, couldn’t that in and of itself be a sign that the grapes were weaker or quality was lessened?

A: Opponents say loose berries are more susceptible to bacteria and decay. We are not trying to change defect tolerances if the shattered grape is wet and sticky or there is a problem with the individual berry. But if the shattered grape is good, it won’t change the ability to grade U.S. 1 status. The individual berries will still be graded on ability to be whole and sound.

Anyone that knows table grapes knows that in normal handling, packing and shipping movement, you’ll have some shatter. This allowance is only at point of destination; it’s on arrival. I don’t think 5 percent is a big number; even the best table grapes are going to naturally have some shatter. This is not indicative of grape quality.

Q: If a buyer is walking through a terminal market and has a choice between various suppliers’ bunches of grapes, all USDA grade #1, but some have five percent shatter, and others have virtually none, won’t the ones with shatter be a tough sell?

A: If you saw a bunch of grapes, keep in mind a bunch with 60 berries, allowing for five percent shatter, you’re talking about 3 berries. Anybody looking at a bunch is going to find it difficult to differentiate and notice 3 to 6 missing berries; if the bunch has 20 or 25 percent shatter there’s a visual difference. This is a technical inspection notice. Ten percent was more concerning to people than the reality.

Given historical reasons for shatter defects, how do we reconcile that with grower compensation now? Five percent is a very, very small number and recognizes the evolution of packaging without damaging the quality representation for table grapes.

Q: How long has this issue been brewing?

A: This issue first came to my attention in 2003 by some of our members, and here in 2008 we’re still trying to come to a resolution. The 5 percent shatter allowance is recognition of the issue and a move in the right direction.

Q: How would this fit with the current ruling of 12 percent tolerance for defects?

A: There is absolutely no change proposed to the 12 percent tolerance. In reality the first five percent shatter is not to be counted against defects. This does not translate to raising the defect tolerance to 17 percent.

Without any wet, stickiness, or decay, just shatter is very acceptable to the consumer. We shouldn’t penalize the grower for a healthy berry not on the stem. If the berry is discolored or decayed, it would be scored that way.

Q: If under present rules, grapes had 5 percent shatter and 8 percent various defects, they could not grade #1. Under the proposed rules, as you explain it, five percent shatter and 12 percent other defects still makes grade #1. Is that right?

A: It’s a matter of semantics. No one is changing the defect level to 17 percent. I don’t deny that if the only defect is shatter, it could be 17 percent. What the growers are saying is if you have whole sound fruit, they should not be penalized.

We’re trying to account for the evolution of packaging while maintaining quality of product. I’m trying to address concerns of members. This evolved from packaging changes. We don’t want to do anything unproductive or negative impacting consumer perception. In the final analysis the consumer is king. Everyone’s ultimate concern is to increase sales of table grapes. We don’t want to do anything to harm that.

Tom Oliveri Tom Oliveri
Director of Trade Practices
and Commodity Services
Western Growers Association (WGA)

[Pundit Note: Here is a link to the USDA PDF file for more detail on the proposed ruling and historical perspective]

Q: What is WGA’s position on the proposed five percent shattered grape allowance?

A: California Grape & Tree Fruit League as well as WGA requested a 10 percent grape shatter allowance, and USDA and NAPAR came out and said they didn’t think the standard should be changed and pulled the proposed rule back.

To change the standard, you have to have consensus. We submitted our request in 2005, and the USDA studied it and published what our request asked for, which was 10 percent shatter allowances. They withdrew the proposed rule and stated that they were going to talk to industry and see if something could be worked out. They came up with the 5 percent figure but I don’t know how they arrived at that.

The proposed rule is that the USDA won’t start scoring shattered grapes until there is five percent. We have a committee meeting in Sacramento on Wednesday [March 12] and the committee will make a recommendation to our board of directors and await their direction.

We want to make our members aware that there is something in the Federal Register and they can provide comments to the USDA. And if they have any questions they can call me.

Good healthy berries that are shattered are very merchandisable. Shatter is grapes that are not attached. This rule would only be for grapes in packages, bags or clamshells. It wouldn’t apply to grapes that are not in a consumer package. It only affects tolerances at destination.

If you were grading for #1 at shipping point, nothing is changing, just in route to destination. If damaged or decayed, shattered product would be scored for that. But if just detached, we don’t think that detracts from the product value. That is our opinion. We’re shipping grapes all the way from the west coast to the east coast; that’s lots of transportation and handling and sometimes the grapes detach. If a pristine grape in the clamshell gets detached and is saleable, the grower shouldn’t be penalized.

Matt D'Arrigo Matthew D’Arrigo
D’Arrigo Brothers of New York

Q: What is your opinion of the proposed five percent shatter allowance?

A: Basically, the proposal is to make it easier for table grapes to be delivered to purchasing customers and be considered US #1. The California Grape & Tree Fruit League, representing the grape growers, is promoting this and pushing for USDA to change the standard, and the USDA is following along. They’ll have a period of time for comments.

What the League is seeing is now that grapes are mostly shipped in bags, the shattered grapes will be contained and therefore grape tolerance is too harsh, and the growers are being punished too hard. They believe berries off the cap stem are just as good.

Q: Do you agree?

A: It is my opinion — and virtually everyone I know that buys table grapes and retails them — that shattered grapes are not as good, and we disagree with the League’s point. If they were as good, they’d still be on the stem.

Go to the real acid test: on a sales walk in Hunts Point Market, the more shatter in the grape box, the less valuable the grape is on the market. Something with 16 percent shatter will be US #1, and someone will have very little shatter, noticeably better product, and USDA says they’re the same value. The shatter berry grape bunch barely meeting the new tolerance would be significantly less value.

The plain and simple truth is shatter is a defect for a very good reason, and shatter in the box or bag is still shatter.

The USDA is soliciting comments. My opinion is the rules are proper the way they’re written at this point. And without question, the higher the shatter percentage the less value.

Q: Are you speaking from a consumer perspective or at the wholesale market buyer level?

A: It’s plainly obvious from the consumer to the retail merchandiser to the retail buyer to the wholesaler that a box with a lot of shatter is of less value. The consumer doesn’t want to buy those grapes.

This is based on empirical evidence. We wouldn’t be having this conversation and there would be no debate if consumers were paying the same price for bags with more shatter.

Q: Proponents of the rule don’t believe there is a quality issue because shattered grape allowances would only apply to healthy, good quality, detached grapes. Shattered grapes with problems, such as decay or discoloration, would be scored as defects. In fact, they believe that the current rule is outdated and needs to be changed to recognize the category evolution to bags and clamshells so that growers are not penalized.

A: Growers probably sustain a decent amount of rejections based on this shatter berry tolerance rule. They probably feel it is unjust. Still, there seems to be artificialness to the way of thinking. Dumb down the grade standards, put more shatter in the market and people will buy fewer grapes.

The marketplace is really stating that the consumer doesn’t like grapes with shatter; they prefer them on the cap stem. Shattered berries are not as appetizing. Market demand filters up through the chain back to the shipping point. The marketplace will dictate value. The consumer is creating the demand and value for grapes. The truth hurts but berries released from the stem are not as strong. That is why grapes with high shatter cannot demand the same price and value.

Q: So if the marketplace dictates value, and consumers don’t want shatter, won’t the retailer follow suit with what they order?

A: Retailers don’t need to rely on the USDA grading system. They can reject what they want. The rule falls between the retailer and wholesaler. My opinion is that major retailers are not really subject to USDA good delivery rules. The retailer basically tells the shipper to take out the shatter and the shipper usually listens.

This rule really applies to those shipping into wholesale markets and that’s where it will be felt. Well over half of all USDA inspections take place at wholesale delivery warehouses, not in retailers’ warehouses. This affects shippers selling to wholesaler business. It’s not about retailers.

All USDA good delivery standards and U.S. # 1 tolerances are basically made for the wholesale receiving part of the business. Historically shippers have been better organized to deal with this to plead their case to the USDA. As wholesalers, we’re better organized because of organizations like North American Perishable Agricultural Receivers (NAPAR).

Kathleen Nave Kathleen Nave
President
California Table Grape Commission

Q: What are the reasons for a grape shatter allowance?

A: What we’re proposing is something that brings regulations into the year 2008. The old rules have been in place forever, back to the times when grapes were shipped in 26-pound boxes without any bags; it was a very different deal. So what we’re attempting to do is recognize packaging and handling practices have changed significantly, and it is unfair to penalize the growers.

Frankly I think regulations should be 10 percent shatter before scoring starts. We’re talking about properly defining berries in the bottom of the bag; these are healthy berries.

Those that are in opposition to this — wholesalers, retailers — are trying to continue to categorize healthy fruit as defective fruit, to retain an old definition and define healthy shatter as defective. If wholesalers and retailers are going to be honest with this, the evolution of packaging allows them to sell everything in those bags and clamshells.

Q: What is the significance of the consumer research and surveys you conducted?

A: Often berries that are perfectly fine end up in the bottom of the bag or clamshell and don’t have defects. And consumers don’t consider them defects. Shatter is designed to measure defective product. We’re not raising the defect level at all. That is remaining unchanged. There are often shattered healthy berries, and we are just proposing an allowance for that, up to five percent.

Q: Have you done studies to determine the average amount of healthy berry shatter there is in bags and clamshells of grapes? How many are defective? How many other defects are there?

A: I don’t know of any studies like that.

Q: Would the allowance for the five percent shatter be limited to healthy berries? If not, hypothetically you could have an additional five percent unhealthy berry shatter on top of the 12 percent tolerance for other defects, increasing the amount of defective product tolerance to 17 percent.

A: We’re not looking at it that way at all. We’re assuming that a shatter allowance of 5 percent for healthy berries is a very low threshold.

Q: In your consumer survey, you say that over 80 percent of the 1,500 U.S. and Canadian participating shoppers considered grapes with shatter levels of up to 10 percent to be of excellent/very good/good quality. You lump those ratings together, yet my kids would say it’s the difference between an A (for excellent), B (very good) or C grade (for good quality) on their report card. Especially when the industry is making such a distinction between a U.S. #1 grade and a good delivery rating, is that fair?

A: Within the study, the distinctions were noted. The bottom line on why they were all grouped together is that whether they answered excellent, very good or good quality, it didn’t influence their decision to purchase the grapes and eat the shattered ones.

Q: You also note that there was no significant difference in quality perception of grapes with 3 percent, 7 percent or 10 percent shatter. How were these products presented? Were there no other defects other than healthy shattered berries?

In other words, would the consumer reaction be the same if the product they were commenting on had 10 percent shatter, with some of that shatter unhealthy product, and different percentages of other defects?

A: We did surveys on-line, where consumers were looking at very specific pictures of table grapes, with different percentages of berries detached from the stem and asked them to evaluate, we did 3 percent, 5 percent, 10 percent and could get up to 20 percent without consumers getting concerned.

The bag is split open and all berries are there, sitting next to the bunch. We ask, what do you think about this? We did the same in focus groups in three cities. In this case, there are products in bags where the appropriate number of berries are set aside to represent the percentages. In both quantitative and qualitative ways, consumers believed there was no difference with shatter levels of 3, 7 or 10 percent.

Q: Who participated in the consumer study?

A: The online and focus groups paralleled our target consumer; 70 percent women age 25 to 60, and 30 percent men. They said, ‘We don’t have a problem with berries detached from the stem.’ It’s common sense. If consumers see loose grapes that fell off and are clearly healthy and you ask what they do with them, they say they eat them.

Most women in our focus groups who are shopping for their families couldn’t believe this is an issue. They throw away ones that are not good. These are healthy, not collapsed or rotting. Some eat them immediately; others put them in their yogurt or in their children’s school lunches.

Q: NAPAR says it commissioned Deibel Laboratories to test and analyze the microbiological content of shattered grapes compared to grapes on the stem, and that testing showed in certain environments and timeframes shattered grapes were more vulnerable to increased bacteria counts and decay. Are you familiar with this study?

A: I can’t wait to see it. I look forward to reviewing the study and particularly looking at the methodology. Much depends on the definition of shatter. How were the shattered grapes starting out? How long did they conduct this test? If they started with damaged berries as opposed to healthy ones, it will obviously affect the results and conclusions. Did they use fruit that was decaying? We would argue that product needs to be stored properly. If they held the product for a long time for testing purposes, this is not reasonable. Grapes are a delicate fruit. You want to move them in the grocery store as quickly as possible.

According to University of California research, regardless of packaging, refrigerated or non-refrigerated, if moving grapes out within 24 hours there is no change in quality.

Q: Could you tell us more about this study. Do you have a copy of the report we could share with our readers?

A: The Commission funded a retail handling research study through the University of California, Davis, in the 2007-2008 season. We just received the final report and thus have not yet released the results to the industry, so I am not able to provide it to you at this point. However, I do want to provide at least some documentation of the information to be released this spring on best handling practices, according to the research study:

  • For bagged grapes: if grapes are refrigerated, they can be displayed for up to 48 hours before visible shrink occurs. If grapes are not refrigerated, grapes can be displayed for up to 24 hours before visible shrink occurs.
  • For two-pound clamshell grapes: If grapes are refrigerated, they can be displayed for up to 72 hours before visible shrink occurs. If grapes are not refrigerated, grapes can be displayed for up to 48 hours before visible shrink occurs.
  • And for four-pound clamshell grapes: If grapes are refrigerated, they can be displayed for up to 72 hours before visible shrink occurs. If grapes are not refrigerated, grapes can be displayed for up to 48 hours before visible shrink occurs.

We will be submitting this research with our comments to the USDA.

Q: Opponents of the proposal point out that defects at the receiving dock tend to increase as product makes it way through the distribution process, creating a greater likelihood that it will be rejected before it even hits the retail shelves.

A: Inspection takes place on the receiving end. That’s the final destination from the grower/shipper perspective. Everything’s scored and belongs to the receiver at that point. If the growers/shippers deliver good product, they should not be penalized for events that take place later.

Q: Independent receivers and terminal market operators say they will carry the brunt of this proposal with an influx of rejected loads from retailers and large wholesalers who have their own standards and are not bound to accept USDA tolerance increases.

A: In terms of retailers and large wholesalers ignoring or superseding USDA standards, we need standards. If what you say is true, why have regulations or inspections at all then? I think retailers follow rules and are reasonable.

It’s important that industries and government regulations keep up with the changes that have taken place in the world. This is an example of updating an old regulation based on changes that have occurred with packaging and arrivals.

And the good news for growers, shippers and retailers is that consumers recognize a healthy berry off the stem is healthy. Consumers are making this distinction, and it is up to the growers and the retailers, wholesalers and government to make sure regulations and practices are a reflection of the times we are in.

We appreciate the participation of so many important players in the grape industry in discussing this topic. Our sense is that with everyone’s studies, we may have all lost site of the important elements of the discussion. Here is what we take away from the controversy:

1. Grape Growers Deserve Fair Share Of Income

In the old days, retailers sold loose bunches of grapes, principally by the pound. Therefore grapes that fell off the bunch, either in the lug from California or on the retail display, were typically waste and not sold. Today, if a grape falls off the bunch it remains in the bag or clamshell and is sold to the consumer. This translates into additional revenue at retail and it is reasonable for growers to look for a share of this new income source. The industry cannot succeed if the producer cannot profitably produce and so our commitment to a sustainable industry starts with making sure growers get a fair return. Therefore this is an appropriate issue on which the grape industry should engage trade buyers.

2. Small Impact On Large Retailers And Foodservice Distributors But Big Impact On Wholesalers

However, going to the USDA is an odd way of doing that. In all likelihood, the vast majority of grapes are sold to major retailers such as Wal-Mart, Costco, Kroger, Safeway, Supervalu, as well as major foodservice distributors and buying groups, such as Sysco, US Foodservice, Pro*Act, Markon, etc.

All of these organizations have their own specifications, most of which are higher than US #1 or “good delivery” standards.

This means that a change in USDA standards has minimal or no impact on the major buyers but has a large impact on the wholesale/terminal sector.

After all, wholesalers buy grapes for one of two reasons: They are either going to sell them, perhaps on a regional or fill-in basis to one of those major retailers, or they are going to sell to independents who have to compete with these major retailers.

Grape growers have no economic interest is competitively putting this one customer sector at a disadvantage. Just as building a sustainable industry involves looking to make sure growers can survive, it also involves fair dealing with other sectors.

There is little question that the response to this grape grower initiative would be completely different if grape grower engagement with the large buyers had resulted in an agreement to change the retailers’ proprietary specifications. In the absence of this change, the growers need to recognize the unfairness of disadvantaging just one class of trade.

3. Unintended Consequence Is That Other Defects Will Pass Grade

It may have been inadvertent, but the practical consequences of the change proposed allow for enormous increases in non-shatter defects. Right now to meet “good delivery” standards, the allowance, leaving the issue of decay aside, is for 15% defects. So right now, if grapes arrive with 5% shatter, they can also have up to 10% scarring and discoloration, for example, and still make good delivery standards.

Under the new proposal, shatter up to 5% won’t be scored, so under this proposal up to 15% of the grapes could have scarring or discoloration and still make good delivery.

The consumer research done by the California Grape Commission doesn’t deal with this problem. It made no attempt to assess consumer attitudes toward scarring, discoloration or other grade faults, although the practical effect of this rule change would be to increase allowances for other defects.

It also doesn’t study the actual condition of loose grapes at retail. It is one thing to have researchers plucking good grapes off grape stems to see how consumers react to the concept of loose grapes; it is another thing entirely to judge actual loose grapes that have fallen off naturally, sitting on the shelf as consumers sort through the bags looking for the best for their families. It is reasonable to think that consumer reaction in a real-life store scenario is going to be significantly worse than in a controlled focus group.

The grape growers have a point about shatter, but they have no basis to increase the allowance for discoloration, scarring and other defects. So the proposal is not carefully targeted to achieve a reasonable aim. The grape growers would be wise to reassess the situation and submit a proposal that will not allow an increase in other defects under any circumstance.

4. How Much Shatter Is Too Much?

It is a subject of great contention as to whether or not, and to what extent, shatter represents an inherent vice in the product and to what extent it is simply to be expected. Without resolving that dispute right here, our sense is that this specific proposal is overreaching.

Five percent shatter is probably an amount the trade could live with, and if the “good delivery” standard was reconfigured to, say, reduce the allowance for defects other than shatter and decay and then set up a separate allowance for shatter of up to 5%, we could probably gain industry consensus.

The problem is that as the proposal is written, if the only defect is shatter, 20% of the grapes could be off the stem and it would still make “good delivery” — and remember that is 20% at a wholesale receiving point. If those grapes are going to a retailer from there, and grapes continue to fall off the stem, we are talking about consumers being confronted with grapes whereby one of every four grapes, say 25%, could be loose. Maybe more before a consumer gets it home and opens the bag.

We know of no grape growers who would feel proud to promote that one of four of their grapes will fall off the stem by the time the consumer opens the bag or clamshell.

The standard as proposed is over-reaching because it doesn’t head off this possibility.

5. USDA Needs To Be Fair To All

The USDA needs to table this measure and work with the grape industry and wholesale segment to see if it can’t find a way to address the grape growers’ legitimate concerns, while not placing the wholesale segment at a disadvantage and not allowing consumers to receive grapes with increased defects such as discoloration and scarring, nor ridiculous amounts of shatter such as 1 in 4 or 1 in 5 grapes.

In 2008, with chain retailers so dominant and with consolidation having given them such market power, an important role of the USDA is to create fair standards so that the independent sector of the industry can compete robustly.

Approving this measure specifically disadvantages the independent sector and so is inimical to USDA’s purpose.

Conceptually, the grape growers are correct; they deserve a share of the income that retailers have picked up by selling some shatter.

But it would be both anti-consumer and anti-independent sector to allow this specific proposal to be passed. The grape growers need to draft something that will A) Never increase other defects, and B) Cap shatter at a reasonable number.

Once again, we thank all our interviewees; through their passionate advocacy, they are helping the industry find its way to a solution to this problem.




Grandstanding Senator
To Grill Leafy Greens Board

It was almost exactly a year ago when State Senator Dean Florez grilled a produce exec at a hearing in California. The hearing was positively abusive, and we wrote a piece entitled A Tip Of The Hat For Tom Stenzel that included this note:

…when Tom Stenzel flew to California to testify before a joint hearing of the ag committees of the California State Assembly and Senate, one Senator, Dean Florez, who has been very active on these issues, was really out of line. He was positively abusive.

Florez wouldn’t let Tom get a word in edgewise, was ridiculously demanding some sort of guarantee of perfect safety in a world that just can’t deliver that and was rudely dismissive of Tom when he, very politely, tried to speak some sense.

If Tom had stood up and decked the guy, we would have given him an award, albeit in abstencia, while he served time in some jail in the basement of the California State Capitol.

But Tom did what we in the industry are fortunate to have many leaders do on our behalf. He swallowed hard and represented the trade the best that could be done under the circumstances.

As we all go about our business, it is worthwhile to note that we have people willing to do this work on our behalf. A tip of the hat to Tom and to the many leaders who work for the overall success of the industry.

Now we have word that Senator Florez is once again holding a hearing. This time it seems he has found two other industry leaders to be the targets of his abuse: Pundit Investigator and Special Projects Editor Mira Slott spoke with both today:

Scott Horsfall Scott Horsfall
CEO
California Leafy Greens Marketing Agreement (LGMA)

Q: We received a notice from Senator Florez about the hearing regarding the Taco John outbreak investigation that occurred back in 2006 (and was covered here and here). What is it all about?

A: The hearing is about an outbreak that took place before the Leafy Greens Marketing Agreement was in place. In our status report, we talked about the number of audits, and the number of citations we had made of our members based on those audits; there were 450 or so.

Senator Florez requested all the information related to all those citations. It was explained to him that specific audits were confidential. But once a company is charged with a flagrant violation, then we provide that information.

We have four levels of violations for citations, most involve corrective action. We don’t release the records unless they’re flagrant violations. Otherwise they are part of ongoing investigations.

Q: Florez says that not fully complying with the Committee’s request reflected a “lack of transparency”. How can LGMA alleviate that perception? Would there be any benefit or detriment to improving food safety by releasing all records?

A: We believe the program’s purpose and the interest of the public are best served by focusing on those companies we have to decertify.

The audits are intended to insure companies are in compliance with good agricultural practices and to allow them to take corrective actions. The companies have done a great job of working with us to do just that.

Q: What kinds of violations are you talking about and how complicated are the corrective actions?

A: The vast majority of citations we cite are very, very minor… a lot are paper work issues, involving missing paper work such as a misplaced water record, usually things the company can correct, and they do. These aren’t violations that have an impact on food safety. Otherwise they’d be considered flagrant violations.

Q: What do you hope to achieve in your testimony?

A: I’ve never had to do one of these hearings before, so I’m not sure what to expect. We welcome the opportunity to talk about the program. I’ve always said I believe the Senator and our industry have mutual interests and we are all coming from the same place, to put in the best program to minimize the chance of illness, but sometimes we might have different methods on getting there.

We’ll answer the questions and do the best we can. The industry has made really great strides in the last year, and Senator Florez acknowledged the progress in a speech he gave last week.

Joe Pezzini Joe Pezzini, Chairman, LGMA
Vice President of Operations
Ocean Mist Farms, Castroville, CA

Q: I understand you’ll be attending the hearing tomorrow [March 12] with Scott Horsfall. Could you share your perspective?

A: At the hearing, they will do a report on the investigation of Taco John’s, but we weren’t involved in that.

We all want the same thing; to produce the safest produce possible. We have a good story to tell. The industry has responded in a very proactive and positive way.

It doesn’t mean we can’t improve the program as we go along. This is brand new. It is a living document. The standards may change as science moves forward. This was the fastest way to something in place.

We’ll look at the senator’s input like everyone’s input. Our reputations, our livelihoods and the safety of consumers are all at stake. We all have a desire to make our food as safe as possible. We’ll answer questions in the best faith effort we can.

We’ve issued a status report. We wanted it to realistically portray what the program has done in the past six-month period. And three companies were cited for flagrant violations and decertified.

Knowing this company or that company had a minor infraction doesn’t help food safety. In any auditing program, documentation is critical. The auditor is looking to validate practices. It’s document-intense. There is a learning curve but by and large, people have gotten over that curve. The auditor will note if something isn’t right. Only those cases that potentially put safety at risk should be decertified. It has to be constructive.

The whole premise of the hearing is not merely ridiculous but dangerous. How could an event that occurred before the Leafy Greens Board was formulated even be relevant?

Besides if we want people to share information freely — and we certainly do — they have to feel that it will be kept confidential unless something egregious happens.

We wish Scott and Joe good luck and extend our condolences on having to waste their valuable time with people seeking headlines rather than to improve food safety.




Naturipe’s Executive Team Complete

With a little over a year having passed since Bruce Peterson left Wal-Mart, we’ve still had many occasions to think about Bruce’s role in the industry. We have, in fact, mentioned Bruce many times in pieces such as these:

Wal-Mart’s Bruce Peterson Resigns

Bruce Peterson Focus On Traceability

Bruce Peterson Lands At Naturipe As Its New President/CEO

Naturipe’s Peterson Builds All Star Management Team

Wal-Mart Post Peterson

Of course, since becoming CEO at Naturipe, Bruce’s attentions have been focused there. In recent days he has been especially engaged at building his executive team, now including a roster of industry luminaries such as Don Harris and Robert Verloop.

Michael McCartneyNow we have learned that Michael McCartney will be joining Naturipe Farms as Vice President of Operations effective April 1. He has been working with the company as a consultant since January 1, and that arrangement will end on March 31.

This mean’s that Naturipe’s executive team is now assembled.

Michael had been Bruce’s partner in the traceability initiative, which the two launched during Bruce’s brief retirement.

We had a discussion with Michael that we published under the title, Getting A Better Grasp On Traceability He is knowledgeable and able to find simplicity in complexity. We wish Michael, Bruce and everyone at Naturipe good fortune.




Pundit’s Mailbag — Organic Icon DiMatteo Weighs In On
Sustainability Standard

In the world of organic agriculture, few names are held in higher esteem than that of Katherine DiMatteo, the longtime Executive Director of the Organic Trade Association, so we are honored she has weighed in with a response to our Special Pundit edition entitled, Sustainability Standard Being Steamrolled — Does A Sustainable Vision Encompass Only Organics?:

I read with interest your March 6, 2008 Pundit on Sustainability Standards. I was pleased to read that you believe that sustainability and social responsibility are important issues for the fresh produce industry. I share this belief for all of the agriculture sector worldwide, which is why the ANSI initiative to develop a Sustainable Agriculture Standard is very important.

I attended the information meeting convened by the Leonardo Academy on February 29th and from that meeting I took away a different perspective than you have stated in this Pundit.

It is my understanding that:

  1. The committee that will develop the ANSI Sustainable Agriculture Standard has not yet been formed. The deadline for applications is April 7, 2008, and if the fresh produce industry wishes to have their viewpoint included then industry members must step forward. It is definitely not too late to have representation.
  2. The Leonardo Academy will select the 40 committee members and must, according to the ANSI protocol, select a balanced committee that represents the four sectors — producers, users, environmentalist, and general interest. This protocol is widely accepted among international standard-setting organizations. If the 1990 Farm Bill definition for sustainable agriculture is supported (as stated in the January 31, 2008 letter reprinted in your pundit), then it is justified that environmentalists are included as a stakeholder group.
  3. The draft standard is just that — a draft! The committee that will be formed after applications are reviewed will decide how the draft standard will be used to develop the ANSI Sustainable Agriculture Standard. The committee may decide to use it as the basis for their discussions or reject some or all of the draft. The committee will most likely form sub-committees to work on specific sections of the standard. The sub-committee members will be drawn not from the committee itself but from the pool of candidates that submit applications. The work of the sub-committees will have as much, or perhaps, more influence than the current draft standard. After deliberation and consideration, the ANSI Sustainable Agriculture Standard committee’s work will become the proposed standard that is posted for at least one round of public comment. These comments must be addressed by the committee before there is a final standard.

It seems to me that there is a process that will allow many voices to be heard and that to reject the ANSI Sustainable Agriculture Standard at this stage is just pre-mature.

Katherine DiMatteo — Katherine DiMatteo
DiMatteo Consulting

Katherine DiMatteo is a passionate advocate for her beliefs and for organic agriculture, a recipient of many accolades and awards, an icon of late 20th century agriculture and certain to be a powerful force long into the 21st. She is a gifted woman, and we share many beliefs on the importance of sustainability and social responsibility, but on this particular process and the way this is being conducted, we can only ask Katherine to apply the same sense of fairness and same skills at consensus-building as she has in shepherding the organic movement to its current place of prominence.

If she helps in this process, her influence is so vast and her guidance so respected, we may yet achieve an industry standard for sustainability. If she refuses to engage in a fight for an objectively fair and sustainable process, there is a major battle brewing.

Here are the basic principles of fairness that this process is violating:

1) The Neutral Party Must Be Agreed On By The Stakeholders

The first element of sustainability is stakeholder engagement. In acting on its own to select the Leonardo Academy to conduct this process, Scientific Certification Systems neglected to engage in this kind of outreach.

This is elemental. Imagine a husband and wife having difficulties; now imagine the husband announcing to the wife that he has selected a neutral third-party to arbitrate the couple’s disputes.

Surely we do not even need to write any more. The Katherine DiMatteo we have long respected would tell that woman that she is under no obligation to participate in that process. If there is going to be a neutral party helping resolve differences, both parties to the dispute need to agree on a neutral party to handle the process.

Without a doubt the Organic Trade Association, California Certified Organic Farmers and Scientific Certification Systems should be a part of this process. However, so should PMA, United Fresh, Western Growers, Florida Fruit and Vegetable Association, Texas Produce Association, Northwest Horticultural Council, Primus, NSF Davis and many other groups.

At this point, the only way to right this wrong is to take a step back, end the relationship with Leonardo and start again with the outreach to stakeholders with the goal of selecting a neutral facilitator AGREEABLE to the stakeholders.

No one party gets to choose who conducts the process.

2) The Scope Of The Project Must Be Agreed On By The Stakeholders

There are many options here. We can have a sustainability standard for all agriculture, for all crop-based agriculture, for all produce, separate standards for organic and conventionally grown produce, etc.

This program pre-supposes the proper extent of the standard. Once again, this is properly a subject of stakeholder engagement.

No one party gets to decide how broad or narrow the scope shall be.

3) No Thumb On The Scale

In an open process, you begin something like this with an exercise in stakeholder mapping to ascertain who the relevant stakeholders might be. This map is revised as we identify additional stakeholders through this process.

The Leonardo Academy practice of a priori reserving 25% of the seats on the decision-making body to go to environmentalists is a way of putting a “thumb on the scale” to bias the decisions in a particular direction.

There are direct stakeholders such as consumers and producers — these people could be environmentalists or advocates of economic development, we don’t know. And there are indirect stakeholders such as environmentalists or advocates of economic development.

We stand with Katherine DiMatteo in insisting that environmentalists have a seat at the table, but we hope she will stand with us in rejecting a priori allocations of seats on the Committee. These are not required by ANSI; they are required by Leonardo’s Constitution. With a different facilitator, we can engage in a proper stakeholder mapping and engagement process, defining who the stakeholders are and agreeing to an allocation of seats on this Committee.

No one party gets to put a thumb on the scale and weight the Committee in line with their predilections.

4) No Participant Gets to Establish Rebuttable Presumptions

It biases the process for one party to establish a draft and then tell the word that they are free to rebut its points.

A fair process starts out from a position of neutrality.

So after we map our stakeholders and engage them, we ascertain areas of interest for these standards to address. So if there is consensus that the standard needs to address GMOs, we start from a position of neutrality.

We ask all stakeholders for position papers and feedback on GMOs, then a subcommittee absorbs all this and drafts a clause taking this input into account.

We repeat this process on each aspect of the proposed standard.

To allow a draft at all creates, at best, a rebuttable presumption, but no stakeholder should be in that position of having to rebut any presumption.

No one party gets to establish rebuttable presumptions.

***

Katherine DiMatteo is, of course, correct that people can apply to be on the Committee, but if the process is inherently biased, as this one is, nobody wants to lend the credibility of their organization and person to such an unfair process.

We’ve never known Katherine DiMatteo to be unfair, we hope she will join with us to recognize that mistakes were made in the way this particular procedure has been conducted.

Fortunately, we can begin again, with a broad movement encompassing all stakeholders and conducted with stakeholder buy-in. Surely Katherine DiMatteo would recognize that such a solution is far more likely to be sustainable than one shoved down the throat of an unwilling industry.

We appreciate Katherine DiMatteo’s letter and look forward to engaging with her in building a sustainable future.

Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us