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Perishable Pundit
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Produce Business

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American Food & Ag Exporter

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Pundit’s Mailbag — Last Chance

March 31, 2007, is the final deadline for eligible handlers to sign up for the California Marketing Agreement for this year.

You can read about the marketing agreement here, and you can read the Good Agricultural Practice Metrics that the CMA board accepted here.

We believe in fighting the good fight, so while the GAP metrics were in draft form we fought for tougher standards. We didn’t win that battle this year, so we will fight on for next.

But these are mere details. Now that the terms have been set, the Marketing Agreement is the trade’s primary response to the E. coli 0157:H7 outbreaks of last year and we have to join together to make it a success.

We wish Fresh Express would relent and join as well. It would help the industry to have a united front — but nothing stops a Fresh Express grower from signing up regardless of what Fresh Express does.

If 100% of the growers sign up, then the fields are all open to inspection by the state and the product is all grown to CMA standards regardless of what processor the product is sold to.

It is not too late. But anyone sitting on the fence has to act now.

Pundit’s Mailbag — On To The Next Stage

With the California Marketing Agreement deadline looming, it is time to focus on the next step. And that must be the processors themselves.

It is probably true, as the FDA stated in its report, that the E coli. 0157:H7 did in fact come from a field. It is simply terrific that we have so many initiatives designed to improve food safety at the grower level.

However, there is no reason to believe that any of these efforts will be 100% effective.

Therefore, we must operate on the assumption that “dirty” product will be delivered into processing plants — sometimes with E. coli 0157:H7 — and that it is the job of the processing plants to get it clean.

We ran an excellent letter on the subject some time ago from Dr. Karl Kolb of the High Sierra Group, entitled Pundit’s Mailbag — Farmers Are Not The Cause Of Food Safety Problems.

Certainly, as we need new GAP documents, we need new Good Manufacturing Practices documents that are, as the Buyer-led Food Safety Initiative requested of grower standards, “specific, measurable and verifiable.”

But we really don’t have to wait. The British Retail Consortium standards are commonly perceived as first rate for a processing facility. Why don’t our processors make sure they are audited to these world class standards right now?

When new GMPs are developed, meeting world class standards will only put processors one step ahead on meeting these new standards.

And buyers, constricting the supply chain isn’t only important as it relates to growers; it is probably more important as it relates to processors. Start pushing your vendors to move toward a BRC audit.

The big danger of the CMA is that now that it is up and running, everyone will think their job is done.

We have to deal with grower standards for next year, nationalizing the grower standards, establishing processor standards and work on tomatoes, green onions, melons and berries.

Processors are job one: if you look at the beef industry, you will see the big changes are in the processing plants, not on the ranch. In the end the produce industry is unlikely to be different.

Pundit’s Mailbag — John Krakowski: Buyers Hurting Themselves

Our piece Pundit’s Mailbag — Dole’s Schwartz Comments On Silent Buyers included this challenge:

Eric Schwartz says we should “… challenge the buying side of your readership to come forward and help us understand why a mandatory signature to the agreement is not in the best interests of the entire industry.”

And so we issued the challenge.

No buyers are speaking for the record yet, but a food safety expert sent this note along:

Thanks for posing the cogent inquiry. One would think the fresh produce industry would embrace efforts to clean up public perception. Caveat emptor as a prevailing standard likely needs broader media exposure than the Pundit fan club. In the long run, this will hurt the industry as well as national health goals to increase vegetable and fruit consumption.

Regards and thanks for a great website.

— John A. Krakowski, RD
Food Safety Coach
Flanders, New York

John’s letter is perceptive. One would think retailers would be rushing to demand compliance by suppliers with the California Marketing Agreement standards and inspection regimen — if for no other reason than so that retailers could help put the issue behind them in the minds of consumers.

Beyond this immediate concern — so much of the future of the industry hinges on our efforts at promoting the healthy aspects of eating fresh produce. Allowing food safety risks to hover above these efforts really puts them under a cloud.

And, as far as media coverage goes: if there should be another outbreak in which people die and a supermarket chain or restaurant chain that sold the product had refused to limit its supply chain to those who follow CMA standards and inspections, you can count on the media to hang the CEO of those chains in effigy.

We just hope that retailers and foodservice buyers have let their CEOs know of the enormous reputational risk they are taking by not constraining their supply chain. Next time, they will not be able to say that they did all they could do.

Pundit’s Mailbag — Dave Diver: Quality Assurance At Every Level

Our article entitled Insightful PMA Food Safety Sessions Reveals Buyer Hesitancy focused on the idea that we need to separate the buying function from the food safety assurance function through the use of Quality Assurance (QA) departments. The piece brought this comment from a veteran retailer:

Your thoughts about retail Quality Assurance takes me back over 20 years when a Quality Control department was set up at Hannaford. The inspectors formerly reporting to their respective departments were transferred to QC, where QC had the final word and responsibility for product acceptance.

Decisions were made based on fulfilling the corporate Mission Statement and everyone understood what we as members of the company stood for in relation to customers, associates and shareholders.

Nothing is perfectly implemented, but every level of the distribution system needs standards, and those levels above and below can create risk when not meeting Acceptable Practices. Someone will always be trying to beat the system because of greed. Hopefully there is sufficient fear to minimize those operators. Tides have a way of raising and lowering all boats.

— David Diver
Formerly Vice President of Produce
Hannaford Brothers

There are a lot of things that buyers can’t really be expected to negotiate. The fact that retailers and foodservice operators recognize this is at the root of vendor complaints that buyers won’t pay more for quality. This is not really true however.

What really happens is that the quality is determined by the buyer specification. So one chain decides it will only sell a Washington Extra Fancy apple, another sets its spec at U.S. Extra Fancy and still another says U.S. Fancy is acceptable.

Once that spec is set, the buyer takes it from there. No amount of selling will persuade a buyer, charged with buying Fancy grade apples to pay extra for Extra Fancy — the decision was made when the spec was set.

It is unrealistic to expect buyers to listen to random food safety standards and decide to pay a quarter more because one product is “safer” than another. So the food safety requirements have to be set up in the specs.

So retail executives could decide that they simply will not purchase from a fresh-cut processor who has not been audited to meet the standards of the British Retail Consortium.

Now that choice is out of the buyer’s hands. He simply can’t buy product that doesn’t meet that specification.

The problem in food safety is that the produce department has conflicting interests. Of course the produce executives want safe food but our knowledge here is imperfect so it is very easy to persuade oneself that a particular standard is unnecessary if it is going to cost money.

Especially if the chain is actually evaluating the produce executives based on sales and profits — not food safety.

And this is almost always the case.

So the logical thing to do is set up a separate department that is not invested in increasing sales or profits, except in the long term sense that safe food preserves and enhances a retailer’s reputation.

Now when confronted with an issue such as the California Marketing Agreement, there won’t be the same concern with how constricting a supply chain by limiting who one can buy from will increase cost of goods. Instead the focus will be, where we want it, on enhancing food safety.

Pundit’s Mailbag — Rick Eastes: Do The Right Thing With Food Safety

Rick Eastes last wrote for us when he was working with Sunkist, and you can see his letter here. Now he is out on his own and ready to share some perspective on our piece Tim York Points Out Buyer Commitment To Food Safety.

In this piece, we discussed why buyers were hesitant to constrain their supply chain and commit to only buy from those with high food safety standards, and we discussed the cultural preconditions of food safety.

Like many things, in concept, everyone knows and wants to do the right thing, especially with food safety and security. However, there is always the fear of, “what happens if one acts rationally and those who do not, end up with the advantage?”

Like many corporate policies, many are made in the rarified atmosphere of the ‘executive level’ and are handed down like dictates. What many management teams and companies fail to address are the incentives that go along with assuring that a well conceived policy will be embraced and followed by the employees who ultimately must carry out the proposed policies.

Many times the policy is ‘ok’, but the incentives to make the policy effective do not match or may be diametrically opposed to the concept being promulgated, and management cannot ‘figure out’ why thing are not progressing as ‘planned’.

Like beginning to address the underlying issues of ‘global warming’, until the incentives begin to match the stated policy, substantive progress simply will not happen. By the way, in my experience ‘incentives’ work best when they are positive, but sometimes, the reciprocal may be just as effective.

— Richard A. Eastes
Rixx Intl. Marketing Co.Inc.
Visalia, California

Yes, Rick is astute in his analysis. We’ve highlighted a piece we wrote about the Cheesecake Factory, which you can read here. What impressed us about this is not just that they did monthly audits of each restaurant’s conformance to food safety standards, but also that they actually tied bonuses of restaurant managers to their scores on those audits. That is a way of telling the managers what management really wants as opposed to what management wants to talk about.

And Rick is also right that sticks work along with carrots. How many buyers really fear that they will lose their job if they buy from a processor who, next year, has an E. coli 0157:H7 outbreak?

Years ago, Domino’s Pizza had to drop their 30-minute delivery guarantee as we mentioned here. Why? Because no matter how many times top executives said don’t speed, the whole economics of the business revolved around not giving away free pizzas. To be sincere, they would have had to pay managers not based on the sales or profits of the unit but on every staff member staying without a ticket or accident all year long.

There is a fundamental problem. If we don’t promote higher food safety standards to consumers, then they won’t pay for it — and if they don’t pay for it, who will?

Pundit’s Mailbag — Robert Stovicek: Trusting CDFA

In our piece, GAP Program Still Leaves Questions, we pointed out how difficult it has been to get a straightforward answer from the CDFA, particularly on the methodology it used to figure the percentage of California leafy green production that has signed up for the program.

In response, we received this pithy note:

If it is this hard to get CDFA to be honest and transparent at this stage, why are we being naive to expect the consumer or consumer advocates to trust CDFA?

— Robert F. Stovicek, PhD.
Primus Group

Bob makes a very good point. When we speak to the CDFA, they come across as having an agenda. One wonders if they are not intentionally trying to build up this number because they think that makes the program a “success.”

Whatever the reason they speak the way they do, it is a cause of concern.

Many consumer advocates and media representatives view departments of agriculture, including the CDFA, as in the pockets of growers. They want to see regulation by health agencies such as the California Department of Health Services and the FDA.

I think it is fair to say that although the CDFA is not in anyone’s pocket, the industry certainly feels more comfortable dealing with an ag agency than a health agency. In fact, one way to understand the whole CMA is that the industry wanted to head off a regulatory approach that would push industry supervision out of the CDFA and into the CDHS.

Be that as it may, we need the CDFA to deal with media and consumer groups in a straightforward, upstanding manner.

Otherwise, as Bob says, the CDFA will quickly lose whatever credibility it has on the subject of food safety.

Although he didn’t write us about it, another thing Bob could be legitimately peeved about is the implication in the CDFA press release that somehow government inspectors are superior to those retained by private industry. In the press release it said:

However, the California Leafy Greens Marketing Agreement program is the only initiative that will incorporate on-site field inspections that are conducted by a government inspection and verification entity.

Well, as we know from the Forbidden Fruit scandal on the Hunts Point market, in which USDA inspectors were on the take and, more recently, as we showed in our piece, The Rats Of New York Teach The Produce Industry Some Lessons On Food Safety, on the KFC/Taco Bell situation in New York City and The Rats In Los Angeles: The Produce Industry’s Shame, our piece on the 7th Street Market in LA, having government employed inspectors is no panacea.

Here at the Pundit, we are concerned that the CDFA won’t have enough trained inspectors to actually carry out all the inspections that could be done under the agreement.

Many thanks to Bob for his incisive note.

Pundit Travels

Had to swoop through New York to hit a conference on Internet Publishing and now will zoom to Florida to pick up Mrs. Pundit and Pundit Kids and head out for a week of hard skiing in Park City, Utah. Actually it will only be hard skiing to the Pundit family because none of us ski.

The Pundit brother, Pundit sister, Pundit brother- and sister-in-law, Pundit nieces and nephews and the Poppa Pundit and Momma Pundit will all be there as well. Few of them ski either.

Pundit Jr. Primo — aka William — and Pundit Jr. Segundo — aka Matthew — have never seen snow and so that will be a fatherly treat to see them when they experience that.

Athletics and the Pundit have a very distant relationship, so there is a limit to how much skiing will be happening. We’ll be doing store tours in Salt Lake and if any Pundit readers think there is something we should see while we are out there, please let us know.

We’ve ordered a room with a view and will continue to send the Pundit out with a new perspective.

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