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Perishable Pundit
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COOL Compromise Shows Association Leadership But Battle Scars Remain

Country-of-origin labeling has long been a contentious issue in the produce trade. We still remember the phone call from a key retailer after the Pundit wrote a cover story in PRODUCE BUSINESS called Nothing Cool About It in which the retailer said he thought the issue was lost after the law passed in the dark of night in 2002 but that our piece motivated him to lead a fight against COOL — a fight that culminated in a delay of over half a decade and a new agreement on a much improved bill:

Industry Negotiates Key Improvements to COOL
in U.S. House Farm Bill Country of Origin Labeling
to Go Into Effect September 30, 2008

As part of the 2007 Farm Bill to be considered by the U.S. House of Representatives tomorrow, the produce, meat and retail industries have negotiated important improvements to reduce the regulatory burden and cost of the country-of-origin law now on the books.

United Fresh and PMA have worked together for the past several years with a coalition of produce associations and the retail supermarket industry to find common ground that would deliver country-of-origin information to consumers, without the burden of the law first passed in 2002.

Implementation of that law had been delayed twice by Congress based on industry concerns about its unintended consequences and cost. In September 2006, these organizations reached a compromise agreement that we have advanced with Members of Congress.


Since that time, the environment to consider country-of-origin labeling has changed significantly, fueled by recent food safety issues such as the Chinese import situation. Many key members of Congress have made known that they would not allow further delay in the 2002 law, and instead urged all parties to negotiate any improvements that they felt needed in the law. Their bottom line was that mandatory COOL for meat and produce would go into effect on September 30, 2008, but they were willing to consider improvements in the law if consumer groups, meat and produce suppliers, and retailers could agree.

With the oversight of the House Agriculture Committee, representatives of the meat, produce, and retail industries have negotiated over the past week a series of compromises with consumer and farm groups. Yesterday, a number of produce stakeholder organizations reviewed the proposed changes to the law and endorsed an agreement to move forward with mandatory COOL with the following changes that will be included in the Farm Bill:

  1. Significantly reduced penalties for mistakes in labeling at point of purchase, including a “good faith” standard that reduces the liability for retailers unless shown to be disregarding or willfully violating the law. This helps ease the burden on retailers, so long as they are working to comply with the law. Note that produce suppliers must provide country-of-origin information to retailers, and the truthfulness of that declaration is still subject to PACA law.
  2. Retailers would not be liable for misinformation provided by suppliers, which should eliminate the need for retailers to audit their suppliers to ensure compliance.
  3. No new record-keeping. Normal records kept in the regular course of doing business are sufficient to comply with the law. This is an important relief from the original law that threatened an extreme cost burden on the total supply chain.
  4. A specific provision to allow labeling of a U.S. State, region or locality in which a product is produced to meet label standards as product of U.S. Therefore, a descriptor such as Minnesota Grown or Pride of New York would be sufficient labeling to comply with law. Produce suppliers and retailers across the industry strongly advocated for this change due to the many marketing programs and state/regional affiliations currently appearing in produce labeling.

With these provisions agreed to through tough negotiations with farm and consumer groups under the direct supervision of Congressional leaders, our associations will support these changes throughout Farm Bill consideration. Of course these changes are not law until finally passed by Congress and signed by the President, which we expect to occur by the end of the year. But, given the current state of negotiation on these issues, all parties believe these agreements are likely to hold through the process.

Because our associations have worked closely on this issue for several years, we are issuing this joint information alert to members of both associations. We would like to publicly acknowledge the work of United Fresh in negotiating these agreements with other stakeholders in Washington, DC, and PMA in assessing the impact of various specific proposals considered throughout the process.

In addition, we would like to thank the many produce associations and the Food Marketing Institute for working together to find common ground on what has been one of the more contentious issues facing the produce supply chain in many years. The next step will be to focus on the regulatory process at USDA as the Department develops the “rules of the road” to implement COOL in a way that provides useful information to consumers with minimal cost and negative impact on the total produce supply chain.

Tom Stenzel
United Fresh Produce Association
Bryan Silbermann
Produce Marketing Association

In politics, as in Train Surfing, timing is everything, and the fact that the Farm Bill came up in the aftermath of the Chinese food safety problems, which we dealt with many places including here, here, here and here defeated any chance of killing the bill.

Still the negotiations were mostly successful in eliminating the most egregious problems with the bill — although we don’t see any relief for fresh-cut manufacturers mentioned. This is a problem because blends can use product from different sources on different days, and fresh-cut processors will now have to either restrict their purchases or maintain stocks of many packaging iterations.

We were hoping for an allowance that packaging could contain a generic phrase such as “may contain product of Canada, Mexico, Italy and the United States,” but though the meat people negotiated some leeway on this, there is no mention of give in the produce category.

The real issue is how much work is going to be done for no benefit. Growers who have been pushing for this are going to be shocked at how little consumers care.

The reason is that geography is a feature and not a benefit, and features are a hard sell.

Yes, more than 70% of consumers say they want this information — which shows the kind of answers you get when you basically ask consumers whether they are concerned consumers who want information to make informed decisions or are they ignorant and lazy people who couldn’t care less. For the most part, this information will have no effect, and when it does have an impact, it will often tell you as much about people’s prejudices as about any nation’s food safety system.

In light of all the controversy over talks between PMA and United regarding a merger, one can’t help but get a chuckle out of these lines from the release:

Because our associations have worked closely on this issue for several years, we are issuing this joint information alert to members of both associations. We would like to publicly acknowledge the work of United Fresh in negotiating these agreements with other stakeholders in Washington, DC, and PMA in assessing the impact of various specific proposals considered throughout the process.

Of course, the associations deserve a high-five for working together and not duplicating effort, but still, the paragraph reads like a carefully choreographed scene from a Kabuki Opera with each party bowing to the other over and over again.

The COOL issue shows both that the line between marketing and government relations is blurry — which seems to add weight to calls for a merger and, also, that we did just fine with the two national associations, which argues against a merger.

But the battle over COOL left scars in the produce trade which may mean that things won’t go as smoothly next time. The initial falling out between United and WGA was, at least nominally, over the way COOL was handled.

In the aftermath of that fallout, many grower groups put together an ad hoc organization to keep an eye on events from the perspective of growers.

WGA’s new D.C. office, which we dealt with here and here can find its origination in the discussions held at that time in which growers talked about opening a D.C. office if United became insufficiently grower-oriented.

Although many thought that WGA and United had mended fences, the WGA Washington office is a lineal descendent of the battle over COOL.

United and PMA can co-exist because PMA does not lobby. PMA may provide information, and will review proposals; it will fund coalitions, but it doesn’t put a separate produce industry position before legislators.

Next time an issue like COOL has to be fought out, the lobbyists from United will say one thing and the lobbyists from WGA will say another — and WGA won’t be looking to agree with United, because then what is the point of having a DC office? WGA will be looking for ways to disagree with United because that establishes a need for the WGA office.

It is this division of the industry — between WGA and United, not the division between PMA and United — that threatens the trade’s “united” position on Capitol Hill.

Carrefour Judgment In India May Be A Good Sign For Wal-Mart

We’ve been discussing Wal-Mart’s efforts to move into India in many articles including here and here. Now comes a small bit of news that indicates India is really changing and Wal-Mart may be correct in its judgment about the direction of Indian society:

Chennai-based furniture retailer
restrained from using Carrefour name;
High Court upholds French retailer’s plea

In an interesting trademark-related judgment that in future could have far-reaching consequences, the Honourable Madras High Court has agreed with the prayer of French retailer Carrefour that it is the legal owner of the registered trademark ‘CARREFOUR’ and that the public could be deceived into believing that products offered by others with similar names have a connection with the former.

Founded in 1960, the €94 billion Carrefour is the world’s second biggest and Europe’s biggest retailer. Apart operating in France, the retail chain operates a total of about 7,000 outlets across the world. Carrefour in French incidentally means “crossroad.”

Carrefour had filed the application for restraining the use of its name in the Madras High Court against the Chennai-based Carrefour House of Interiors and its owners. The Honourable court ruled that the applicant would suffer irreparable injury if injunction was refused.

The respondents pleaded that the applicant was not entitled to prevent them from using the brand name, which they were using from the year 2000, and their use of the trademark was an ‘honest adoption’ of the name. They had applied for the registration of the name in respect of furniture items in 2001 and that no one had opposed their application for registration.

However, Carrefour rebutted the argument saying that use of Carrefour name could not be considered as ‘honest adoption’ as it had secured registration of the ‘CARREFOUR’ trademark way back in 1995.

Progress is often not based on big decisions but on small ones. Trademark protection is one of those small things that enable investment as it allows the investor to reap the benefit of that investment by selling trademarked items.

We don’t hear much about Carrefour in the U.S., but it is bigger than Tesco. Carrefour had a setback in the U.S. when it opened hypermarkets in both Philadelphia and Voorhees township in 1988 and 1992, respectively. It won consumer interest with associates on roller skates but union opposition, including constant picketing, hurt sales. Mostly, though, it was a French store on U.S. soil, not an American store owned by the French.

Maybe “once burned, twice shy” will keep them out of America, but if Tesco succeeds, it will quickly outrank Carrefour in sales and thus push Carrefour down to third place among global retailers. That would be an assault on Gallic pride so Carrefour might be tempted back to the U.S. — perhaps they could buy Wild Oats if that deal collapses. That fits with the French sensibility.

Of course, Carrefour will need to be careful as mistakes have consequences… part of the old Philadelphia Carrefour store is a Wal-Mart Supercenter now.

‘More Matters’ — Not When Counting Calories

Fruits and Veggies — More Matters features this prominent line on its website:

Fresh, Frozen, Canned, Dried or 100% Juice

When it comes to good nutrition, all forms of fruits and vegetables matter.

This seems to suggest an equivalency between the options. Yet 100% juice often provides very concentrated calories, and here is a study finding that drinking less soda and more juice doesn’t seem to do much as far as obesity goes:

Fruit juice fueling childhood obesity: study

A new study says fruit juice is contributing to childhood obesity.

The Deakin University study surveyed the diets of more than 2,000 primary school children across Victoria.

It found that children were not drinking as much soft drinks, but fruit juice was being consumed by most at least once a day.

Study author, Dr Andrea Sanigorski, says the calorie content of juice is being overlooked.

“On a day-to-day basis, the energy-in needs to equal the energy-out, so whether they are coming from fruit juice, packaged snacks, carbohydrates, wherever the excessive calories are coming from, is going to lead to increased weight,” she said.

Just as 5 a Day had to be changed because the science changed, one wonders how long Fruits & Veggies — More Matters will be current. There is increasing evidence that we need to be focused on total calorie intake and expenditure if we wish to deal with obesity.

Pundit’s Mailbag — Job Well Done On COOL

The news that PMA and United worked cooperatively to bring about a reasonably successful conclusion to the COOL debate brought warmth to the heart of even this one-time stalwart COOL opponent:

Kudos to United and PMA for a workable compromise solution to the COOL issue. No, I haven’t gone “soft” on COOL! What the proponents for COOL believe will happen in the marketplace versus the reality makes it a needless burden on the supply chain.

But with that said, it is clear that this Congress would absolutely impose some sort of COOL legislation. And the work that United and PMA did to propose a reasonable approach to an inevitable COOL legislative package deserves praise from the industry.

I was very critical, and sometimes vocal, of how this was approached during the first go-round. Frankly, I felt we had a real shot of enacting V-COOL, or even repealing COOL altogether. But that was highly unlikely in this Congress.

So for United and PMA to craft a compromise that made the best of a bad legislative initiative deserves commendation.

It’s great to see these two trade associations making a positive difference on the legislative front.

— Bruce Peterson
Peterson Insights

(Pundit Note: Bruce Peterson is the former Senior VP Perishables for Wal-Mart and has served as Chairman of the Produce Marketing Association. He is now working on a traceability project for the trade which you can read about right here.)

V-COOL refers to voluntary country-of-origin labeling, and important grower groups, such as the Florida Fruit and Vegetable Association, switched support to V-COOL when the operational difficulties of COOL were pointed out.

To us the key factor is that this is all a colossal waste of time. As Bruce explains: What the proponents for COOL believe will happen in the marketplace versus the reality makes it a needless burden on the supply chain.

That, though, will play out over the years, for today, the Pundit joins Mr. Peterson in commending our associations for a job well done.

Pundit’s Mailbag — California Leafy Greens Audit Should Weed Out The Weak

Our piece, California Leafy Greens Audit Means Some Will Pass And Some Must Fail, suggested that the industry was in a Catch-22. In order to prove we have tough standards and thus gain consumer and regulatory confidence, we better have a bunch of handlers fail the new inspection regime; yet if they fail the inspections, their sub-standard product will still go to market, thus reducing consumer and regulatory confidence.

In response, we have a letter from Bob Martin, General Manager of Rio Farms. Bob has written us previously regarding the Leafy Greens board, and we published his comments under the titles, Pundit’s Mailbag — WGA’s Ambiguities and Pundit’s Mailbag — Marketing Agreement Board And The Future Marketing Order Board.

Bob was also kind enough to contribute to our Freeze Report after the California freeze earlier this year.

Bob is always perceptive as are his comments today:

Very few handlers will reach the “A+” level of compliance, so I don’t think the perception will arise that the LGMA standards aren’t rigorous enough.

Most will have some, if not many, minor infractions on their audit results. This doesn’t mean that the LG food supply is at risk. Most of these non-compliance issues will be “paper work” and “documentation” problems.

Some may be considered major infractions and those will need immediate attention, but again, these major issues probably won’t threaten the food chain.

The current level of awareness regarding the safety of our products has never been this high, and I don’t see anyone dropping the ball any time soon!

I honestly believe that this program will work to weed out any possible non-compliant handlers and growers.

Somehow the public needs to know that handlers and growers are at this much higher level of food safety awareness and they shouldn’t fail this audit, although, the audit procedure is no “slam dunk” by any stretch of the imagination.

— Bob Martin
Gen. Mgr.
Rio Farms
King City, California

Bob does suggest a possible route out of the Catch-22 we identified for the industry — but one with its own risks.

If the first round of inspections comes out with almost everyone passing but with many still having a lot of work to do to reach full compliance, it will show that the standards aren’t a cakewalk. That is good.

Yet, it is hard to predict how consumers will respond, though, to less than sterling grades by all participants. Which consumer will volunteer to eat the greens from the guy with the “Gentleman’s C” on his report card?

As Bob points out, a lot of the auditing process involves record retention and a less-than-sterling grade does not mean that the food is unsafe. Still, it is a complicated argument to make for consumers — and consumer media — that compliance with these new standards is going to substantively improve food safety but imperfect compliance doesn’t affect food safety.

The folks at the California Leafy Greens Handler Marketing Board need to be prepared to make this complicated case to the consumer media.

We actually think things are much better in Salinas than they were and not only because of the Marketing Agreement — peer pressure is a very effective motivator and Salinas is a small town. And it really is true that if anyone messes up, everyone else will kill him.

It is an unconventional food safety system, but it just might work.

Many thanks to Bob for his letter.

Pundit’s Mailbag — Getting The Facts Straight On United’s Global Outreach

We’ve conducted long ranging discussions on the subject of a possible merger between PMA and United. When the associations confirmed that new talks were being conducted to explore a merger, we ran a substantial piece entitled, An Industry Discussion: Pros And Cons Of A PMA/United Merger, which attempted to analyze the basic issues at stake in these discussions.

This article led to many responses and we dealt with two of them in a piece entitled, Pundit’s Mailbag — Finding The Right Answers For Possible PMA And United Merger, which was quickly followed by Pundit’s Mailbag — PMA And United Need To Remain Separate.

Today we will pick up an additional letter, which comes from a United board member. In our initial piece, we identified one of the major obstacles to combining an association based on marketing with one focused on government relations as it relates to international members. We illustrated the point with a photo of Nancy Tucker, Vice President for Global Business Development of PMA. Here is what we wrote:

PMA especially has seen its future in tying together the world of produce marketing. And, today, that really is a world. So PMA does seminars in Chile, has an Australia-New Zealand Country Council and sends its Vice President For Global Business Development, Nancy (have-briefcase-will-travel) Tucker to every corner of the globe to woo members for PMA. Yet the dilemma is obvious. Surely there is an inherent friction between having a fully functioning international membership and having a core function that includes lobbying the Federal government of the United States.

Our correspondent thought our readers might draw the conclusion that PMA did international activities and United did not and so sent the following letter in order to correct the record:

There are tremendously different perceptions out there on the issue of the discussions between PMA and United — some based on reality and many based on incorrect facts.

I hope the dialogue you are running in The Pundit can generate a factual basis to inform opinion. It’s probably useful to have thoughtful analysis in the industry based on fact rather than perception or past history.

A good example of the difference between fact and perception would be in the international area. Not many people in the industry know that 10% of United Fresh’s membership is now international, with three non-U.S. Board members.

PMA has done a great job in international circles and everyone thinks the world of Nancy Tucker, PMA’s Vice President for Global Business Development, but the industry needs to begin to recognize that while United will not give up its 100% commitment to shaping U.S. public policy, United is also moving aggressively into international circles.

United co-hosted a conference last fall in London that drew 180 people from 30 countries. In addition, Lorelei DiSogra, United’s Vice President Nutrition and Health, testified a couple months ago before the European Parliament in support of increasing fruits and vegetables in schools.

Jim Gorny and David Gombas — from United’s food safety and scientific team — have long been working on international food safety standards through CODEX, along with other partners.

United has formed a new educational/marketing partnership with Fruit Logistica and will coordinate the educational conference at the Berlin FreshConex event in February, along with meetings of United’s European members.

United had a leadership group tour to Chile this year, not only to learn about this important market but to build ties in that sphere of the produce world. Interestingly, it was a week-long trip to Chile that Tom Stenzel, President and CEO of United, and Reggie Griffin, Vice President of Produce at Kroger, who, at that time, was a United board member, participated in a couple years ago that introduced United to Gustavo Yentzen.

That meeting encouraged Gustavo’s participation the next year as a United Leadership fellow and helped bring the United leadership team back as a group to Chile this year. Gustavo, of course, is now contracted to represent PMA in Chile, but his involvement with the industry includes plenty of contact with United.

In other words, old perceptions about United are probably not accurate. The industry needs, and United has, both a domestic and international agenda — strongly shaping U.S. policy, while reaching out across a global produce world to enhance our industry’s success.

We thank our correspondent for his fact-filled note. We did not mean to imply that United did not have international members, board members or engage in international activities. Indeed, this has never been the case. Twenty years ago, the Pundit was giving speeches at United’s International Trade Seminar.

Indeed the Pundit Poppa, who attended the United convention every year for decades before that, was always of mixed feelings about the event. Dad was an importer and exporter and always thought United did an excessively good job of getting his suppliers and his customers together!

Clearly United does have international activities and members. In fact, the Pundit even has received fan mail for Tom Stenzel from overseas as you can see in this letter here.

Yet all this being true, this does not really answer the question we raised.

David Barney of Bakkavor in the United Kingdom, Robin Poynton of One Harvest in Australia and Alessandro Turatti of Turatti Srl in Italy serve on the United board and, doubtless, they can add perspective and advise on activities and suggest opportunities for United. In that sense they are important and fully contributing board members.

Yet there is a real sense in which their position on the United board — to the extent United is an association dedicated to US government relations representing domestic growers and shippers — is analogous to the role of retailers on United’s board. They are valued, they have things to contribute, but United does not represent them.

In a sense, the only reason United can allow retailers and foreign representatives to have a vote on the board at all is because that vote is ineffectual. There are not enough retailers to change United’s position on PACA and not enough foreign members to make United shift its spending priorities from lobbying Congress.

As we mentioned both here and here, Rob Robson, Chief Executive Officer of One Harvest in Australia is now on the executive committee of PMA. If tradition is followed, Rob will go through the rotation and become Chairman of PMA.

And why not? It is a supply chain and marketing association. It is an international world. There are logistics issues for an association based in Newark, DE, but, substantively, there is no reason someone from outside the U.S. couldn’t be chairman of PMA.

Yet for any association focused on testimony before Congress, lobbying for legislation, etc., it would be problematic at best to entertain the same idea.

We know and like Rob Robson, but, as a non-U.S. citizen, it is probably a bad idea to have him as our lobbying representative before the U.S. Congress.

Which brings us to this point: Our correspondent’s letter points out that it is possible to both have a robust domestic political and policy agenda and engage in international efforts. Point well taken.

But is it desirable? Is it necessary? Is it sustainable? Is there not an inherent conflict in asking foreigners to pay dues to support a U.S. lobbying effort?

Isn’t there a distinction in which a U.S. lobbying association invites foreigners to engage as guests of the association, yet a marketing association can offer a full partnership?

One thing we can all agree on is that knowing the facts is essential for making the correct decision on this matter. So we thank our correspondent for his useful letter.

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