Pundit Interviews

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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Got Produce? What Is PBH’s Purpose If Not To Promote Consumption?

We’ve been wrestling with the pros and cons of the proposed fruit and vegetable generic promotion effort, so we were very pleased to receive a letter from a thoughtful member of the trade:

I am forwarding this notice to you because I think it gives a different perspective to the discussion concerning a National Fruit and Vegetable Research and Promotion Program.

The driving point for this discussion is the PBH Mission Statement. As the name implies, the PRODUCE FOR BETTER HEALTH FOUNDATION’s mission is to promote the consumption of fruits and vegetables in order to BETTER THE HEALTH of the American people. It is my opinion that, starting a discussion about an industry-funded national promotion program is exactly what PBH is for.

Your comments on the economics of agriculture are probably correct (I am by no means an economist), but I think they can also be applied to many aspects of agriculture. Farmers go out of business all the time because of an increase in production efficiencies or lower cost imports. We cannot control the amount of product a farmer grows or where a farmer grows his product, but we can try to promote a good reason for people to consume his products.

Thanks for giving the industry an outlet for discussion.

— Kevin Donovan
Sales
Phillips Mushroom Farms
Kennett Square, Pennsylvania

We appreciate Kevin’s letter because it gives us an excellent opportunity to analyze a few key points:

First, we have no disagreement with Kevin on the matter of PBH starting a discussion on generic promotion. There are, however, better and worse ways of starting such a discussion.

In this case, we never said that PBH was breaking the law by funding this campaign. The law is pretty flexible: As a 501(c)3 organization, PBH cannot advocate for candidates. So even if Barack Obama had built his entire campaign around increasing produce consumption, if PBH had advocated for him, it would have lost its tax-exempt status. But there seems to be no prohibition on advancing policy arguments.

Sometimes, however, there are things one is allowed to do legally that are not the best way to proceed.

In this case, years of fundraising were built around the notion that donations to PBH would be used for programs to increase the health of Americans by convincing and inspiring them to eat more produce. Never was there an inkling that if you donated money to this charity, it would be used to wage a lobbying campaign to get the produce industry to do a mandatory assessment.

Remember that this is a deeply controversial subject. After all, in Glickman v. Wileman Brothers & Elliott, four of nine Supreme Court Justices once judged the whole concept of mandatory assessments for marketing to be an unconstitutional abridgement of the right to free speech. The argument didn’t carry the day but just by one vote — and the vote was from Sandra Day O’Connor, who isn’t on the Court any more.

Many in the industry, who love the produce business and desire good health for all, oppose this measure as a matter of principle. They are horrified at what is being done with their donations because believing in the principle of good health through produce consumption is not the same as believing in the constitutional principle of mandatory assessments. The message being given — don’t count on your donations going specifically to PBH programs — may well lead to reduced donations in the future.

And it was all completely unnecessary. This is not a billion-dollar campaign. Surely those who endorse the idea of having this discussion would have gladly contributed to a special dedicated fund set up to pay the expenses.

In fact, if the plan ultimately is defeated, one reason it will have lost is because, in their rush to do things in the easiest possible way — take the existing pool of money and divert it to the lobbying campaign — the advocates did not submit their proposal to the rigorous scrutiny of individuals who have to dip into their pocket and fund the advocacy program. Had the advocates done so, we submit they would have wound up with a better plan, with more committed supporters and a program far more likely to win industry support.

It is simply too easy to say, “Yeah, let’s start a discussion… with someone else’s money.”

Second, money aside, the problem is not PBH’s involvement. It is the dual role PBH has taken upon itself. Had PBH decided to stay neutral as to the desirability of a generic promotion program but simply wanted to facilitate an industry discussion, that would have been reasonable.

Equally, had PBH decided it wished to advocate for this program but allowed others, without such a bias, to decide how the discussion should be conducted, that probably would have worked as well.

But one cannot be both one of the candidates and the League of Women Voters arranging the debate. One can’t be a Judge and a Prosecutor. One can’t be both a neutral arbiter arranging for a fair industry dialog in a non-partisan way and also be the primary advocate for the program.

Some of the advocates may think we are an enemy of the program but that is not true. We are actually the best friend the program has, because instead of looking at the situation from the vantage point of advocates who think they can slip this one by, we are telling them the truth: That their decision to take on both roles has made neutral parties into skeptics. They should decide which role they really want and limit themselves. They would be more likely to succeed.

Third, if you are going to start a discussion, there are two ways to do it and, unfortunately, the advocates took the wrong path. It is precisely the same mistake that Scientific Certification Systems made when it wanted to start an industry discussion on an ANSI Standard for sustainability.

SCS could have called for open dialogue and allowed all parties to pitch in their ideas; instead SCS elected to submit a predetermined proposal that others could try to rebut.

We campaigned vigorously against the idea that the advocates of that sustainability effort could create a presumption in favor of their own program and that somehow it was the obligation of those who disagreed with them to rebut their proposal.

Rebuttable presumptions are a phony kind of dialog; they bias the process.

Why was it necessary to have secret committees, with members selected by the advocates, meeting behind closed doors? What was gained by this? Nothing, except it allowed the advocates to keep control.

It is really a shame because all the new work in sustainability talks about how one reaches out to stakeholders without preconditions, that one gets them involved at the earliest possible stages.

It is also much more effective. The final generic marketing proposal would have been so much stronger if it had endured the rigorous scrutiny of adversaries.

This is just not the way to run a dialog. The advocates are making enemies, not friends.

Fourth, the whole issue of PBH being involved does have one big complication: PBH is a charity; its goal is to promote health through getting people to eat more produce. There is nothing in there about increasing the profitability of produce companies.

Yet a generic promotion effort is not a charity. It is a legal construct that allows commodity producers to market their commodity collectively in a way that, normally, would probably violate our anti-trust laws and, even if that obstacle was overcome, would suffer from free-rider problems. It is a business tool. In fact, the ideal thing for the industry would probably be not to increase production (and production pretty much equals consumption) at all, just increase demand through marketing and then control production so that prices will rise.

As a business tool, the decision to deploy a generic marketing program depends on getting a return on investment higher than alternative expenditures. In other words maybe the money would get better returns if we boosted the budgets of commodity-specific generic promotion efforts or boosted branded marketing or did something else with the money.

This kind of business analysis as to the efficacy of a major expenditure is completely absent from the advocates’ proposal. We don’t think that was a mistake; it is because their mindset is focused on increasing consumption — not maximizing return on investment.

Look, charity is charity and many in the industry support PBH when they have funds available to do so. We suspect that a completely different mindset — one rigorously focused on maximizing return on investment — will be applied to a mandatory program, which means they have to pay whether they have spare cash or not.

Fifth, when it comes to economics, Kevin is right on. People go out of business for all kinds of reasons, all the time. Here, though, there are three complications: A) The dialog includes people who won’t get a benefit from increased consumption.. They have the right to vote in their own self interest and say they elect to not support a program that will not deliver any benefits to their own operation. They are not charities obligated to help other for-profit produce companies. B) Some would even go further and say that even if their company, or they personally, will benefit from the program, a stalwart farmer, with his 200 acres, just should not be disadvantaged by paying for a program to benefit others. And they won’t vote for a program that doesn’t deliver for that good farmer. They consider it ethically wrong. It is their right to express this viewpoint through their vote as well. C) Benefits and costs do not fall equally or randomly around the industry. As we discussed in our piece on the rent dissipation hypothesis, what benefits that exist seem highly likely to fall to the producers of crops that take many years to grow to maturity — such as some pear varieties. Those who produce annual crops are less likely to see any benefit.

Which is kind of ironic because it means that the growers of commodities that do not increase production rapidly — meaning those that do not increase consumption rapidly — will get all the benefit of this program. Those growers who rapidly increase production to meet all the new demand created by this program for their commodities, the growers who do all the heavy lifting to increase consumption, will make little or even be worse off as prices drop and production costs increase.

**

We appreciate Kevin Donovan’s writing and the opportunity he provides the industry to help us all think through this issue.




Straight Talk Needed At Tesco

When, after so many pieces analyzing Tesco’s journey to America as Fresh & Easy, we ran a piece titled, Tesco’s US Losses ‘Unnerving.’ It brought a thoughtful response from one of the “partners” in Tesco’s roll out:

I appreciate your well written post as always. I thought today’s was especially insightful, particularly to someone who has been working with Fresh & Easy for the past three years on the rollout of their program.

Their results are getting better since January. The basket sizes are small and their trips are growing. They are increasing SKU’s by 20% with a refit program while lowering build costs through competitive actions (vendors and consultants rebidding services and scope). I believe these measures bode well for their survival (increasing sales and lowering costs), except for the pesky issues surrounding their concept problem. Are they Aldi? Perhaps that is really where they are going but don’t know it yet. I think they are evolving in that direction.

I would challenge you on your response to Sir Leahy’s comments. How should he position the results as the CEO of a major corporation? How do other CEO’s act? I would say he does exactly what his peers do. That is, he calls the recession the problem while taking little responsibility for performance of the concept. Find another CEO that would not have it both ways. OK — Jim Sinegal, but nobody else.

It should be interesting to see how they adapt.

— John Craig
Director of Development
Drake Real Estate Services
Denver, Colorado

For those not familiar with the company, Drake is actually quite fascinating. It is called a “Neighborhood Market Preferred Developer” and has on its website links to photos of some of the Fresh & Easy stores:

Green Valley and Horizon Ridge, Henderson, NV

Centennial and Simmons, Las Vegas, NV

Tropicana and Jones, Las Vegas, NV

Nellis and Desert Inn, Las Vegas, NV

Boulder and Racetrack, Henderson, NV

Plus the company’s website posts its Fresh & Easy Marketing Package, which is apparently used to entice shopping center owners to lease to Fresh & Easy in the context of redevelopment of dated centers. Of course, most centers can’t be too choosy today, but many must have concerns that Fresh & Easy has been leasing and building stores but not opening them. Although centers like the rent revenue, even on closed stores, they also need traffic, and closed stores don’t contribute to traffic, which can weaken the entire center.

Indeed, it is interesting, perhaps even telling, that this brochure hasn’t been updated to include lots of great statistics on the power of Fresh & Easy to draw shoppers.

It is, of course, good news for Tesco if Fresh & Easy is experiencing better results — and not really surprising. Retail concepts generally go through a maturing process — as we pointed out here. With the rollout of new stores slowed significantly, Tesco benefits from this natural growth.

The problem is that Fresh & Easy started from a low base, so exceptionally large increases are required to reach the $200,000 per week per store number that Tesco had been talking about at the launch, much less the expected growth from that base.

Although John’s news that sales are going up and expenses down is certainly encouraging for Tesco, the base is so low and the losses have been so great, it will be hard to make a great success out of it.

We found John’s letter particularly intriguing, with his comments that “The basket sizes are small and their trips are growing” indicative of what we have often expressed: That a key problem is people are shopping Fresh & Easy as a convenience store, not a supermarket.

John also raises two separate and, possibly, contradictory points. He says that Fresh & Easy is expanding its range, increasing SKUs by 20%. Yet he also theorizes the company may be becoming more like Aldi. Yet if Fresh & Easy were going to become a deep discounter such as ALDI, we would expect Fresh & Easy to reduce its range so as to both simplify its operation and concentrate its buying power.

We have suggested that the right course for Tesco is to split in two, with some stores reopened as an Aldi clone and some stores reopened as a Trader Joe’s clone, so if Fresh & Easy is morphing into an Aldi it would halfway be going where we think it could. But it would seem as if a strategic decision would cost less and be obtained sooner than sort of drifting to find a place.

As far as Sir Terry Leahy’s comments go, we were merely pointing out that they made no sense. He spent the first part of the earnings conference call explaining that for a well capitalized company such as Tesco, the recession was a great opportunity as the company could build stores so much cheaper. Then he explained, in direct contradiction to what he had just said, Fresh & Easy had to slow down store openings because of the recession.

We’re not Sir Terry’s PR agent, but we do think that credibility with the investment community is important. We would worry less about “positioning” the results and more about admitting mistakes and moving on. If Jim Sinegal of Costco isn’t an acceptable model, how about Warren Buffett of Berkshire Hathaway? Here is an excerpt from the Berkshire Hathaway annual report, where Mr. Buffett explains some mistakes he made:

…there’s another less pleasant reality: During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. I will tell you more about these later. Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action….

I told you in an earlier part of this report that last year I made a major mistake of commission (and maybe more; this one sticks out). Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.

I made some other already-recognizable errors as well. They were smaller, but unfortunately not that small. During 2008, I spent $244 million for shares of two Irish banks that appeared cheap to me. At yearend we wrote these holdings down to market: $27 million, for an 89% loss. Since then, the two stocks have declined even further. The tennis crowd would call my mistakes “unforced errors.”

For a CEO, honesty is the best policy. Yes, because one owes it to stockholders, and one will lose credibility on Wall Street without it. Mostly though, straight talk is wise because we may talk ourselves into believing our own propaganda — then we don’t act with alacrity to fix the situation. Then it gets worse. There is more than a little bit of that in Tesco’s Fresh & Easy saga.

Many thanks to John Craig and Drake Real Estate Services for weighing in on the issue.




Discussion Of FDA’s Unclear Sprout Guidelines By Jonathan’s Sanderson And Rutgers’ Schaffner

We’ve written previously of the tendency of the FDA to provide vague, almost meaningless, guidance. For example, as part of our extensive coverage of the alfalfa sprout recall, we ran a piece titled, Recommendation For An ‘Appropriate’ Seed-Screening Program Shows FDA Unwilling To Take Responsibility For its Recommendations, which pointed out that by recommending an “appropriate” seed screening program the FDA gives itself an “out” and would declare any future food safety outbreak as ipso facto proof that the seed screening program was not appropriate.

Equally, we’ve been getting e-mails and calls as one sprouter after another points out that some other sprouter is not following FDA guidelines. Yet, when we get down to details, it turns out that the guidelines are not quite clear.

Bob Sanderson has an inventive mind and often contributes to the Pundit, you can see some of his work here:

Pundit’s Mailbag — The Acceptance Of Risk

Pundit’s Mailbag — Sprout Lessons Echo Food Safety Dilemma

Pundit’s Mailbag — More On Manure

Pundit’s Mailbag — The Tyranny Of Economics And The Goals Of Fairtrade

Pundit’s Mailbag — Can Irradiation Follow The Path Of Pasteurization?

Pundit’s Mailbag — A Look At Organic Versus Conventional Yields

Pundit’s Mailbag — Irradiation, Pasteurization and Labeling

Pundit’s Mailbag — Pesticides And Cancer

Pundit’s Mailbag — Food Prices And Free Markets

In addition to running his own company with his wife, Barbara, this year Bob functions as President of the International Sprout Growers Association. Together they are working on a seminar/convention to be held in Chicago on June 17-20. You can register here.

We asked Pundit Investigator and Special Projects Editor Mira Slott to see if we could get some clarification on FDA guidance for sprouters:

Bob Sanderson
President
Jonathan’s Sprouts
Rochester, Massachusetts

Q: Could you shed more light on the issue of decontaminating seeds with an antimicrobial treatment before sprouting? Do you agree with FDA’s recommendations? Why or why not?

A: In its 1999 Guidance for Reducing Microbial Food Safety Hazards for Sprouted Seeds, FDA recommends a rigorous seed wash. At the same time, it is not definitive on what kind of treatment.

Q: Are you saying the FDA guidance is unclear?

A: There are three interventions — one is a treatment, one is preproduction testing, and one is every-batch production testing. The treatments don’t have consistent effects. Different people have different views on this. I joined the International Association for Food Protection (IAFP) originally, in part, to hear Dr. Donald Schaffner speak on the subject, and became immersed in the food safety establishment and the research.

Bob Rust of International Specialty Supply (ISS) has made a terrific effort of putting together a complete library of research that exists on sprouts. His website is comprehensive. Not everyone in the industry is well-versed on these complex issues.

Q: In a study simulating pathogen behavior during the sprout production process, Dr. Donald Schaffner concluded: “Seed disinfection is a highly variable process, with no method yet proven to completely eliminate pathogens.” He continued, “In our simulation, seed disinfection alone was unable to guarantee safe sprouts. Seed disinfection can reduce the percentage of contaminated batches, particularly when prevalence and concentration are low, but it can also reduce the likelihood of detecting positive batches with postproduction sampling. Because of this finding, we wish to stress that having data on the prevalence and concentration of pathogens in implicated seed lots is imperative to truly evaluate the effectiveness of seed disinfection. Data on the effect of disinfection on naturally contaminated production-sized batches are also needed…” [Editors note: You can read further analysis by Dr. Schaffner of published sprout seed sanitation studies here.

A: The way it’s phrased makes all the difference. Someone could say questionable effectiveness. Someone else could say not 100 percent effective. The truth is, no one really knows. In certain instances lab research shows that it works, and in others it doesn’t.

The way FDA worded the recommendation is problematic. It says treatments shown to reduce microbial levels in seeds should be used prior to the sprouting process, and then FDA adds parenthetically, “such as 20,000 ppm calcium hypochlorite”. This is not a requirement or regulation; it is guidance. FDA is just recommending this procedure. “Such as” implies choice. Yet in 10 years, FDA hasn’t revised this and hasn’t given other “such as” examples of treatments.

Q: While FDA singles out the example of 20,000 ppm calcium hypochorite, it also seems to give companies wiggle room to utilize other antimicrobial treatments that have been approved for reduction of pathogens in seeds or sprouts. However, FDA does not provide a list of those approved treatments in the guidance document. How is the industry responding?

A: There is some fine print in the guidance that you can use something else if it’s legal.

If you look at the wording in the guidance, FDA is flexible in terms of its position. But in the market, it’s become almost like regulation. The quandary is that some customers say if you’re following FDA’s guidance you have to use the 20,000 ppm calcium hypochlorite treatment. Their lawyers in turn advise clients; retailers require an affidavit or evidence to asscertain a company is following the guidance. FDA’s guidance can be interpreted in different ways, but some buyers are insisting you use the 20,000 ppm calcium hypochlorite treatment. In certain cases, people view it as a violation of FDA recommendations and you’re out of compliance if not following the “such as”.

Q: How widespread is use of this treatment? What other options are there?

A: There have probably been 30 or 40 different chemicals they’ve tried, and a number of them seem to show effectiveness comparable to this chlorine, but FDA hasn’t said you can also use these. It’s a can of worms for them.

For many sprout producers, they get the bag, put the seed in a tub and use the 20,000 ppm chlorine treatment, while some are using other treatments, no one really knows. FDA isn’t always inspecting. There is some state inspection, as well as some third party auditing. In Massachusetts, it’s different than in California.

Q: What kind of treatment is Jonathan’s Sprouts using? What is your assessment of a 20,000 ppm chlorine disinfectant?

A: We all feel the treatments and their effectiveness are all over the map. That’s why my tendency is to plead the fifth. The question is too narrow in scope and the answer may be meaningless in evaluating the effectiveness of a company’s food safety interventions.

The question reminds me of how people must have felt when they were asked, have you ever been member of the communist party?! If Jonathan’s ever had an outbreak, God forbid, I envision lawyers would try and use my comments to argue negligence, even though we are abiding by FDA regulations and taking the most scientifically prudent food safety actions to reduce the risk of pathogens.

The problem is that because FDA’s guidance is nebulous, a retailer might conclude that a company using a 20,000 ppm calcium hypochlorite seed wash produces a safer product, where the opposite might in fact be true. For example, a company conducting comprehensive post production testing has a high statistical probability of catching pathogens. Ironically, a seed disinfection treatment decreases the likelihood that a problem could be caught in post production testing.

I’d rather go on record to say the science behind the treatment is not what it might be. It was put through in a hurry, and known to be inconsistent in its effectiveness. Another thing I find troubling is that the seed disinfection is only a recommendation, but FDA doesn’t require it. We’re definitely using a chlorine wash. Remember if you asked a sprouter if he follows FDA recommendations and he ever said no, it would be like if you asked Obama if he went to church and he said no, the world would come apart.

We’re going to address FDA’s recommendation at the International Sprout Growers Association (ISGA) Convention later this month [June 17-20] in Chicago.

Q: What do you hope to accomplish at the convention?

A: Many business people want to know conditions for doing business. I want to know reasoning behind the conditions, the science and whether it makes sense. The challenge we’re facing is whether the industry can set its own standards. Someone has to sign on the bottom line, this is OK; this isn’t OK. I’m also trying to get legal expertise and learn the consequences based on different scenarios and on what food safety standards a company has implemented.

Q: Is there something unusual about the recent finding of lysteria monocytogenes in Chang Farm bean and soy sprouts? Aren’t most sprout recalls related to salmonella contamination? In any case, The FDA doesn’t require testing for listeria in sprouts. Sidney Chang, owner of the Whatley, Massachusetts company, emphasized that it followed FDA guidelines to test for salmonella and E. coli 0517:H7, but in the future will expand its pathogen testing.

A: Sprouts are getting a lot of scrutiny. Lysteria monocytogenes is a very dangerous organism. For years, it’s been known this could be a problem with sprouts, but never has it been until recently with the Chang Farm bean and soy sprouts recall. Why the change? I don’t know if it’s a worse problem or just looking that way. I don’t see why something wouldn’t exist 20 or 30 years and is now popping up. You expect sampling for listeria in display cases and cold wet places, or where people are handling product. You could find all kinds of pathogens there.

I believe the lysteria monocytogenes discovery in the Chang Farm case was in a retail warehouse. Lysteria is very common in the environment so people don’t want to do a lot of testing because they’ll find it. It doesn’t necessarily mean there is more on sprouts thananything else. I say this with a lot of apologies and ask to be corrected. Some of these discoveries are one-in-a-million, or at such a low level it wouldn’t make anyone sick.

There have been a number of sprout recalls in the past year or two where no one got sick but salmonella was found in product, and also some outbreaks where people got sick. In two or three instances, samples from retail or distribution warehouses tested positive for pathogens. If you just take a package at random, and it tests positive, either you’re finding a needle in a haystack or these are common.

Q: Jonathan’s Sprouts undertakes extensive testing measures, both pre- and post-production. Based on his laboratory work, Dr. Schaffner concluded testing seeds prior to production proved mostly ineffective in detecting pathogens. However, he emphasized that post-production testing of sprouts or irrigation water appeared to have a very high likelihood of detecting contaminated batches of sprouts. Could you tell us more about your testing procedures and the rationale behind them?

A: At Jonathan’s, before we even bring that seed into production, we take a sampling to grow and test for pathogens. With a needle a foot-and-a-half long, we stab every bag and get seeds. We require a minimum sample of 3 kilograms (about 6.5 pounds); some from every bag. We won’t use the seed until we get the lab results back.

In the study, it mentioned that pre-production testing was not very productive overall. However, it noted it was quite effective if the seed lot was heavily contaminated. Still, something could get through it. The preproduction testing will reduce the likelihood finding it in post-production. I invented a probability chart, but put a note on the bottom: "If contamination is uniformly distributed through the seed lot."

It’s not difficult or expensive to test seed, but the process does not absolutely eliminate the possibility that contaminated seed will be missed. The sad part of it is there is no way to scientifically or statistically know how effective it is. In the real world, you never know distribution of pathogens. On the one hand, if they are hidden in the corner of one bag, you could easily miss them in testing, and it will spread in the particular batch that contains that bit. On the other hand, chances are not nearly as bad as if the pathogens are spread through the whole seed lot, yet if they spread, you would probably catch it.

Q: How do you determine a statistically valid sampling program? And how do you know a company is doing one?

A: The problem is some grower says, “I test seed, and the bag comes in ‘tested pathogen free’.” It’s nonsense! There is no statistically valid program. If pathogens are distributed in such and such a way and you take such and such a sample, the statistic is X… How big is the sample? What is the distribution? It really bugs me.

In a number of outbreaks in the past, people tested the seed and found pathogens in it. It stands to reason if they tested seed before sprouting, the results would be questionable. Testing of seed in pre-production is not in the guidance.

We grow using a microbial enrichment process. If pathogen is present at low levels in the seed, it will get much higher in the sprouting process. If you just take some of the seed before sprouting and test it, you almost never find anything. Testing wasn’t done right. Some epidemiological investigations are suspect because those involved didn’t know how to test.

We test every bag in the lot, a minimum total of 3 kilos, which we put in a bucket with water, drain and grow for a few days. After 48 hours of growth, we test the water. Most seed sampling done in the past hasn’t had the growing stage. If you just take a tiny bit of seed and send it to a lab and crush it, you most likely won’t find pathogens.

Q: Beyond questions of effectiveness, do you have any other objections to treating seeds with 20,000 ppm calcium hypochlorite?

A: It’s very rare that we find anything, and there are downsides. It’s very irritating to people using it, skin gets hot, and it affects eyes and respiration. It’s a very dangerous substance. In the FDA guidance, it says to use protective clothing, and results of using it are very inconsistent. Will it really reduce likelihood of making anyone sick? The question needs to be answered in the context of other intervention methods.

In addition to testing seed before sprouting, FDA also recommends testing every batch, taking irrigation water and testing that. If you have contamination in sprouts, which is a small likelihood, will you find it anyway? If you have very low levels of pathogens and use very strong treatment, it may get rid of it or knock it way down and you’ll miss it with your testing. If you miss it in testing, will it make anyone sick? Studies are examining other types of treatments. I’ve read about hydrogen peroxide instead of chlorine.

These pathogens have zero tolerance, but hardly anyone in the fresh produce business is testing for them. No other fresh product can even begin to get the kind of detection we can get from sprouting because the irrigation water has run over the batches.

With carrots, for example, hundreds of gallons of water are used, but if you had a positive in the water, you would never know which batch of carrots it was in.

Earthbound Farms was a great company before they were involved in the spinach outbreak, and is a great company now. They do sampling, and they find things occasionally. Not everyone does testing. In the meat business, when they do testing and find a problem, they cook the meat. In the produce industry, where product is normally eaten raw, we don’t have a kill step.

Q: What about irradiation?

A: If you irradiate to the point you’ve got everything, the seed won’t grow. You can irradiate sprouts, but they will be sterile. It can be done. If irradiation wouldn’t damage the seed at all, I would have no basis of opposing it. I don’t like the idea. Once it becomes the standard, then everyone has to do it.

The stronger the dose, the more damage to the seed. Some have recommended lower dose with other treatments; maybe chlorine in addition to irradiation. Another part of this is the problem with drug-resistant organisms out there. You go to the hospital and get sick…

If you succeed in sanitizing the seed without killing it, it’s still wide open to workers’ hands, or contaminated clothes and other potentially contaminated areas through the distribution process. Once you create a sterile situation, you have to maintain it.

It could require sprouts grown in a clean lab.

Back when we started growing sprouts in the first 5 or 10 years, big corporations like Campbell’s Soup showed interest, and then said it’s not worth it because of the food safety issues.

I know that there have been lab experiments where chlorine has not eliminated pathogens and some growers that said they used chlorine still experienced an outbreak.

As far as I know, there have been no outbreaks from companies that have tested the seed pre-production and every batch post-production. If you do all this testing, the chances of having a problem are very, very small. I feel pretty strongly that one seed company might be doing a better job than another, and growers have to do the testing. If a problem happens again from that company, they need to say they will do business with someone else. Until much better treatments are available, the industry has to have rigid testing. FDA is too busy and too poor. I’ve made it my thing to follow the science on it.

The way I’m hoping to get around this issue is by bringing people together at this convention in Chicago June 17 through 20.[Editors note: You can see details on the agenda and register for the convention here].

The convention will be a great place for networking; FDA people will there, state health inspectors, third-party auditors, and we’re going to focus on this testing and put some teeth into it. FDA just isn’t in a position to take this on. When we get inspected, it’s a state inspector; he may send his results to FDA, but FDA is not able to get into that detail. My goal is to put together an inspector’s checklist to make available to all state inspectors and third-party auditors; here’s what should be included in the testing program.

Ideally, testing will be audited and companies can receive some type of verification seal. It wouldn’t be able to say guaranteed clean, but it would be inspected to a certain standard. I’m not assuming that the idea will be that well-received because for a lot of smaller growers it will require major costs. Sprouters get tired of people telling them what to do.

Q: Could you provide some perspective on the financial investment?

A: Probably between 5 and 10 cents a package to do a really good job. The buyer may have two companies saying they’re doing everything right for food safety, but they don’t know, and neither does the sprout grower. There needs to be a third-party who knows how to evaluate a program.

This is not simple. It’s difficult to do a good sampling. Generally FDA recommends sending samples out, unless a company has a professional lab in-house. But even sampling details on how to do it right need to be spelled out. If you’re doing the sampling wrong, the results will be skewed. TJ Fu from the National Center for Food Safety and Technology developed testing protocols for sprouts. She’ll be at the convention to talk about sampling and what we can be doing better.

The conference may draw people that wouldn’t ordinarily come. A lot of the Leafy Greens people are very worried about food safety issues and don’t have a kill step either. In the washing process of lettuce, the levels of chlorine are tiny. The whole subject of sampling and testing is extremely timely.

It is amazing sometimes to think that 5 or 10 cents a package is a big part of what causes so much trouble.

We think the industry conference is a great idea and encourage people to register here.

We also remind everyone of the piece we ran yesterday in which we requested one retailer and one grower (not a sprouter) to be willing to work with us on a pilot project to learn what is involved both scientifically and cost-wise in growing alfalfa seed specifically for human consumption. Primus has been kind enough to donate its services and ISS has agreed to process the seed.

Don’t feel intimidated… it is just a pilot project so the acreage required is small and the retail commitment very moderate. It is, however, a chance to enhance industry learning and participate in advancing the industry and consumer interest in food safety. If you are a grower or retailer interested in working with us on this exciting project, please e-mail us right here.

Many thanks to Bob Sanderson, President of Jonathan’s Sprouts and this year’s President of the International Sprout Growers Association, for helping to clarify such murky issues for the trade.

***************

At Bob Sanderson’s advice, we wanted to learn more about the work that Professor Donald Shaffner is doing in this area at Rutgers. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Donald Schaffner, Ph.D
Extension Specialist in Food Science/Professor
Rutgers University
New Brunswick, New Jersey

Q: What are your key findings in studying pathogen behavior in sprouts?

A: I need to break the topic into two issues: disinfection and sampling. Scientists are continuing to work on disinfection treatments. Nature is a logarithmic function; you’ll never get complete elimination of pathogens. You may get 90 percent reduction, or 99 percent, but you can add as many 9s as you want and you’ll never get 100 percent elimination. You may drive the level so low it’s no longer of practical importance. It’s a good thing that scientists are going to continue to look at disinfection treatments across the board, not just for sprouts but for many commodities.

Q: Your comments here on pathogen reduction through disinfection treatments sound much more hopeful than in your earlier study conclusions, where you describe treatments as “highly variable.

A: The nature of the sprout production process is you put these seeds into a warm moist environment with ample nutrients. If even a single salmonella cell is present, it will multiply, its progeny will divide and its progeny will survive and you’ll find significant salmonella cells present.

We concluded that there may be situations where sampling is a more effective control measure than disinfection. It goes against conventional wisdom. What makes testing so beneficial in the case of the sprouting process is two fold: it causes multiplication of the pathogen, plus it’s an aqueous environment, where you can take a large sample of irrigation water and the sample improves the probability of detecting a pathogen.

That disinfection is not 100 percent effective, whereas we know the sprouting process 100 percent is increasing any pathogens to higher levels. This amplifying and multiplying of the cells allows us to detect any pathogens and throw the contaminated batch out. It is not conventional food safety wisdom to focus on the testing rather than the prevention. FDA did come out with guidance for both disinfection and testing. Most people in the industry focus on the first part disinfection and not as much on testing.

Q: Bob Sanderson of Jonathan’s Sprouts, and Bob Rust of International Specialty Supply are strong advocates of stringent testing measures. However, both are concerned that the industry is all over the board when it comes to the kinds of treatment protocols and testing methods being employed, creating an additional challenge in determining the most effective strategies for reducing the risk of pathogens.

A: One of the things we can all agree on — Bob Rust, Bob Sanderson and the collective community — is that we care about the safety of sprouts. When people say they are disinfecting, we must ask exactly what protocols are they using, and in testing the same question must be asked.

It is incumbent on FDA and CDC to ask in-depth questions to companies, down to the nitty gritty gory details of their disinfection approach and the equivalent on sampling approach. Until we know exact methods of the testing — how much seed did you use, was it irrigation water, was it in advance of sprouting — it is not possible to perform a meaningful investigation. We’ll never get away from subjectivity, but we can conduct a scientific risk-based analysis to determine the most effective food safety strategies.

Q: How do you translate advances in technology and simulated, controlled lab analysis to the real volatile world?

A: With respect to disinfection and testing, the technology is constantly changing. There are better chemicals and approaches for both, new ways to concentrate water, more advanced genetic methods to look for DNA. Technology is a moving target.

If we knew the prevalence and concentration of the pathogen in the seed, and we had information on the effectiveness of disinfection and sampling techniques, we could compare one technology to another. Using a risk assessment or computer model, we would be able to determine relative levels of risks of different schemes.

It is complicated, but it is understandable and it is quantifiable. If we knew more about the disinfection techniques and sampling techniques being used, we could begin to say, out of the five different sampling programs out there, don’t use number three and number five because they really don’t work and this is why. The problem is we don’t know what the industry is doing.

Two companies say they’re sampling, but could you tell which protocol is more effective? How can we get a heterogeneous industry to step up and talk about the different protocols for disinfection and sampling to develop the most effective standards?

The issue is not so much that sampling of seed is ineffective. We ought to really harness the actual simulation that sprouting has for pathogens. To sample seeds like billiard balls is silly when we could use the sprouting process to increase the concentration of pathogens that might be present.

One of the findings of our analysis is that if seed disinfection is strong, it may drive levels down to a point where you don’t pick up pathogens in later testing. But realize the consumer will test every bite. If we feed 10,000 people, and only 10 get sick, that’s a rate of 1 in a 1,000, but even a low fraction of contamination is serious.

Q: As a scientist, what is your take on irradiation?

A: It’s a great technology, but expensive and not always appropriate. Even irradiation is not 100 percent effective. I think it’s a tool. The sprout seeds are living entities that maintain biological activity so they’ll sprout when you apply appropriate processes.

With irradiation, you could end up having sterile seeds. It may still be cost prohibitive. Ideally, you want to treat with irradiation at the end of the pipeline in the finished product stage. It might be easier and more cost effective to treat at the seed level, but it raises the issue that sanitized seeds could become contaminated later. It’s complicated.

Q: Are you involved with new technologies that could help the sprouting industry reduce contamination in the production process?

A: In the work we do, we’re much more interested in doing an analysis, comparing the effectiveness of different technologies and relative variability. We’re not involved in the primary work. New compounds are being developed all the time. Chlorine is nasty stuff, it’s great at killing bacteria but it doesn’t like human skin. People are always looking for compounds not dangerous to humans. Both are living things, so this is the problem.

We looked at published data in literature on the degree of inactivation of different compounds. Our analysis showed sprout seed decontaminates are highly variable.

In the studies we looked at, investigators deliberately contaminated seed with pathogens. In the real world, pathogens are not homogeneously distributed, they may be sporadic.

Q: In this regard, doesn’t it become exponentially more complicated if a company mixes seed lots?

A: If a company blends lots, it must keep good records. You could get one big dirty lot if blending contaminated seed into non-contaminated seed. Clearly seeds grown for planting should have a different microbiological standard than seeds for food people are going to eat.

FDA doesn’t want to endorse a particular alternative. A lot of methods are endorsed based on research studies, but it can become another issue when looking at how to translate those methods to industry applications. In other segments of industry, companies have resources to do that. Sprout growers are not large multinational corporations.

Financial investment seems daunting to many. It’s very much the concern of the folks in the sprouting industry. Often what happens, the larger players put pressure on the entire industry. Everyone suffers if the whole industry is not behind the food safety program. The sprout industry has struggled, in part because many small sprouters don’t have the technical savvy of a Bob Sanderson or Bob Rust.

How do you motivate people to change? An excellent meeting to go to is the International Association of Food Protection in Dallas this July where you’ll find the food safety movers and shakers.

We thank Dr. Schaffner and find his thoughts intriguing. What a fascinating paradigm shift for food safety. Whereas everyone has been focused on decreasing pathogens, he is suggesting a second look. Maybe we should allow pathogens to multiply so we could catch them through rigorous testing programs. Certainly not applicable to all items but one wonders if controlled environment agriculture, if structured with this paradigm in mind, couldn’t be effective on things such as tomatoes?

Certainly worth further investigation as in the wake of Salmonella Saintpaul outbreak last summer we learned that certain greenhouse varieties grow for such extended periods that the industry is losing its traditional protection that most fields only grow for a few weeks.

We applaud Dr. Schaffner’s remarks about attending IAFP in Dallas and think that the ISGA sprout specific conference, for which you can register here is another good option.

We also appreciate Dr. Schaffner’s remark that “Clearly seeds grown for planting should have a different microbiological standard than seeds for food people are going to eat.” — This gives us an opportunity to remind growers that we are still seeking a grower who will grow some alfalfa under conditions appropriate for human consumption. We have arranged with Primus to give you, as a grower, the tools you need to do this. Please join us in this effort by asking for more information right here.




Sharing The Joy Of The Nolan Victory…Plus A Note From One Of The Jurors!

We’ve been covering the issues in the dispute involving both Jim and Theresa Nolan and their company, The Nolan Network, with Ocean Spray for a long time.

Our recent pieces, Nolans Victorious In Lawsuit vs. Ocean Spray: This One’s For You, Jim and Nolan Triumph Example Of ‘Standing Up For What’s Right In Face Of Overwhelming Might’, continue to bring forth testimonials and commentary.

This note came from one of many people who interacted with the Nolans on a professional basis:

Thank you for that great article on the outcome of the Nolan/Ocean Spray trial. Theresa and Jim were always friends first and business associates second to me and everyone they had dealings with over the years.

We all shared in Theresa’s loss of Jim but can never and will never know how deep that loss really was and is to her. They were true soul mates.

We also share in the joy of the outcome of this trial but again, can never and will never know the true meaning of this outcome to Theresa. We can only hope and pray that she finds some sort of peace and closure to this difficult period in her life.

— Jeff Shilling
Vice President Procurement
RLB Food Distributors
West Caldwell, New Jersey

And this note was from a competitor of the Nolan’s who found inspiration in their battle:

Over the many years have I been in the industry, The Nolan Network was often in direct competition for accounts with the agencies I worked for — including my own!

However, I have always felt they were hard-working and honest folks, and our motto regarding competitors like that has always been “may the best man win.”

It was heartening to see that in a battle against a “Goliath” client, they prevailed because they stood up for what was right, questioned what they were told to do, and ultimately stuck to their guns. It gives any small company hope in these tough times.

Many thanks to the “Pundit” and keep up the good work!

— Veronica Kraushaar
VIVA Marketing Strategies
Nogales & Scottsdale, AZ

We also heard from a juror on the trial whose name we are withholding:

I was a juror on the Nolan Network v Ocean Spray trial and I was crying as I read your story. I am so happy I was part of this victory for Mrs. Nolan and her late husband Jim. God Bless.

We find it interesting that this case has attracted so much interest. Partly this is explained by Theresa and Jim’s longevity in the business and the nature of their business which led to contact with so many retailers, wholesalers, brokers, commodity boards and shippers.

Yet, we also think there is something more. We wrote recently that the nature of the business has been shifting and, instead of rewarding good work, it was increasingly rewarding a kind of craftiness at manipulation of retail rules. The yeoman farmer, who raises good fruit from the earth, seems not as likely to win as the wheeler-dealer who knows how to work the system.

It is still not 100% clear why Ocean Spray wanted to deviate from its fixed price list. It is a co-op, so one can’t even say that the personal profit motive was at stake. Fresh cranberries have often been on allocation, so it isn’t even clear that losing a customer would have done more than rearrange the volume. Apparently, and for whatever reason, someone thought it a terribly clever move.

Perhaps the outcry of support for the Nolans is another way of saying we need less cleverness in our industry and in our lives.




Pundit’s Mailbag — Poor Management Attitude Leads To Food Safety Failures

Our piece, Economic Reality Trumps Official Policy Every Time, wrestled with the disconnect between official policies businesses adopt and the incentive structures that often lead to different behavior than the policy seemed to require.

Richard Yudin, working with the very international Fyffes organization, has often contributed insightful work to the Pundit. You can take a look at some of his contributions here:

Why Don’t American Retailers Just Standardize On EurepGAP?

Pundit’s Mailbag — Fairtrade And Harsh Capitalism

EU’s Banana Policy Breaks WTO Rules

This particular Pundit piece led Richard to share some of the insights gained from setting up farm audit systems:

This is a vital piece. Without question, it is this “disconnect” between the buyer’s incentives and the proclaimed high principles of those interfacing with the stakeholders that is the main reason all the food safety programs are prone to fail, worldwide.

As an example, note the “damn the torpedoes” attitude displayed at Peanut Corporation of America (R.I.P.)…

Over my last ten years of setting up and running farm audit systems, I have learned that the main reason for failures is a poor management attitude.

If all the shop floor people are wearing boots, caps, gloves and tunics, and the boss wanders in to meet the visiting auditor wearing his Hugo Boss suit and Gucci loafers, the message conveyed is that the whole program is just a piece of theatre, and then the people actually handling the product stop paying attention to the rules, and contaminations happen.

Keep up that message, please!

— Richard Yudin
Fyffes Tropical Produce
Coral Gables, Florida

Richard, come on; it is common knowledge that one ought to meet auditors in Brioni suits, not Hugo Boss!

Seriously, we used to watch great presentations, even linked to one here that Frank Yiannis, now Vice President of Food Safety at Wal-Mart, but for many years Director of Safety & Health at Disney, used to give about developing a food safety culture.

Some of this is leading from the top with the kind of behavior you want mirrored in the organization.

We remember visiting the Hunts Point market as a boy and noting how ostentatious the Pundit Poppa would be if the Pundit Momma had requested — OK, insisted — that he bring home some cases of produce for some purpose or another. He made sure everyone saw him standing on line at the cashier booth and opening his wallet to buy the product.

There was no way that any employee was going to think it was OK to just walk out with a box.

So personal example is crucial.

Even harder, though, is finding ways to get the incentives right. Just recently a friend working at a Wal-Mart told us that the manager, frustrated at how slowly a crew was working, ordered everyone to clock out and then finish the work.

Now this violates lots of laws and, there is simply no question that all Wal-Mart policy strictly forbids such a thing.

When he was CEO of Wal-Mart, Lee Scott sometimes would say that the problem at Wal-Mart is that they were known for their exceptions. So one rogue manager such as this could cause so much trouble. Not only would there be fines and back pay but the workers go on “60 Minutes” and the reputational cost is great. So Wal-Mart doesn’t want this.

But there are dozens of smaller policies that lead up to this. For example the employees, in this case almost all poor immigrants, can have their hours cut or be assigned bad hours arbitrarily. So they are afraid to speak up.

And the manager, although certainly told not to do this, may have some incentives perhaps tied to the profitability of the store or to reducing labor hours. So, though told not to do it, he may have reason to do it.

This is a difficult dynamic to overcome. You need profits to pay bills, so you want to incentivize based on profits or things that lead to profits. Yet this type of incentive system can lead individuals to take short cuts.

Now if Wal-Mart can’t balance things enough to stop the rogue store manager we just mentioned, who is doing something clearly against the law and against policy, how much harder is it in food safety, where the buyer is not doing anything illegal — he is buying legal product — but he’s just not willing to pay extra to buy from the guy with the top food safety program? And the policy is often vague. Few are going to say, “Always buy from the one with the best food safety program — quality, service and cost mean nothing!”

Yet if one gets away from that absolutism, you enter a realm of judgment calls.

And within the allowable judgments, the financial incentives are almost always to place a priority on something other than safety.

It is the core food safety problem in the industry and one for which no fully satisfactory solution has been found.

Many thanks to Richard Yudin and Fyffes Tropical Produce for contributing to the industry dialog.

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