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Perishable Pundit
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Call For Stronger FDA

The Food Products Association and the Grocery Manufacturers Association joined together to announce with other founders the formation of a new organization, the Coalition for a Stronger FDA. The organization explains its purpose as follows:

The Coalition for a Stronger FDA is a broad and diverse coalition calling for a renewed public commitment to the Food and Drug Administration and its unique role in protecting American consumers and patients.

The Coalition brings together patient groups, consumer advocates, public health organizations and innovative companies to work together to increase support for the FDA.

The Coalition is designed to be a multi-year effort with the following goals: (1) making sure the FDA has sufficient resources to protect patients and consumers and (2) maintaining and building public confidence and trust in the FDA.

Over a multi-year period, the Coalition plans to build public support and work productively with the executive branch and Congress. The Coalition welcomes and seeks to work in concert with the important ongoing efforts of individuals, companies, patient and consumer advocates and other groups to convince our policymakers of the importance of increasing the FDA’s entire budget, including oversight of therapeutics, foods, cosmetics and medical products.

The FDA needs increased support to continue its mission as it faces a revolutionary new era of scientific innovation and advancement. Renewed public support will enable the FDA continue to build upon its historic global position as the leading regulatory science and consumer protection agency in the world.

The new organization is backed by an eclectic group:

MEMBER ORGANIZATIONS
Patient Groups

Alliance for Aging Research — www.agingresearch.org

Alzheimer’s Association — www.alz.org

American Heart Association — www.americanheart.org

American Liver Foundation — www.liverfoundation.org

Cancer Research and Prevention Foundation — www.preventcancer.org

Friends of Cancer Research — www.focr.org

Institute for African American Health — www.kakarigi.net/iaah

Juvenile Diabetes Research Foundation — www.jdf.org

Leukemia & Lymphoma Society — www.leukemia-lymphoma.org

Lupus Foundation of America — www.lupus.org

National Alliance on Mental Illness — www.nami.org

National Kidney Foundation — www.kidney.org

National Minority Health Month Foundation — www.nmhmf.org

National Osteoporosis Foundation — www.nof.org

Parkinson’s Action Network — www.parkinsonsaction.org

RetireSafe — www.retiresafe.org

Society for Women’s Health Research — www.womenshealthresearch.org

Consumer Groups

Center for Science in the Public Interest — www.cspinet.org

Consumer Federation of America — www.consumerfed.org

Industry Groups

Animal Health Institute — www.ahi.org

Biotechnology Industry Organization — www.bio.org

Food Products Association — www.fpa-food.org

Grocery Manufacturers Association — www.gmabrands.com

Advanced Medical Technology Association — www.advamed.org

Consumer Health Care Products Association — www.chpa-info.org

Former Government Officials

Tommy G. Thompson, HHS Secretary 2001-2005

Donna E. Shalala, HHS Secretary 1993-2001

Louis Sullivan, HHS Secretary 1989-1993

And it draws its strength from a perception that a weakening of the FDA may be contributing to food safety outbreaks and a concurrent loss of confidence in the food system. On its web site, the coalition points out that:

FDA funding has lagged behind appropriations for other public health agencies over the last two decades. For example:

  • In 1986, FDA’s budget was $416.7 million — or 97 percent of the CDC’s $429.4 million budget and 8 percent of NIH’s $5.1 billion budget.
  • In 1996, FDA’s budget was $865 million — or 39 percent of CDC’s $2.2 billion budget and 8 percent of NIH’s $10.2 billion budget.
  • In 2006, FDA’s budget was $1.5 billion — or 28 percent of CDC’s $5.2 billion budget and 5 percent of NIH’s $27.7 billion budget.

In a sense, the coalition members are on the right track. If you accept the notion that it is the FDA’s responsibility to make sure that all our food is safe, then the budget they have is ridiculously and disproportionately small for the task at hand.

The problem with this line of thinking is that even if you doubled, tripled or quadrupled FDA funding, it would still be ridiculously and disproportionately small compared to the task at hand.

After all, the FDA regulates roughly 25% of all consumer spending in the US.

If anything the spinach outbreak indicates that the FDA creates a false “comfort zone” that allows operators to compete with each other on price because the FDA has already established the legal requirements to create safe food.

If every meeting with a potential co-packer began with a discussion of how do we make this safe, big buyers would quickly insist on tougher standards than the FDA has required. As it is, big buyers are happy to let the FDA determine the standards and then look for the low-cost producer.

Big branded producers would invest in higher food safety standards but hold off because the FDA standards are the legal requirement and thus make investment in stricter standards seem superfluous. In a sense, the existence of FDA standards devalues branding.

So far there is no finding in the spinach crisis that someone has been violating FDA regulations, so no number of additional inspectors would have made a difference.

The core of the problem is not low FDA funding. The core of the problem is this: If, prior to this outbreak, Natural Selection Foods had sent a memo to all the people it co-packed for and said that to increase food safety, it was going to take a variety of steps such as testing water, testing product, etc., and that the cost of these measures meant that every bag would cost an extra quarter, do you think that its business would have increased (because clients would seek it out in pursuit of better safety) or decreased (because other vendors who met all FDA requirements could sell for a quarter less)? No question in my mind that the answer is the latter. That is the real problem.




Will Tim Lindgren Go To China?

The Pundit wishes to extend congratulations to Timothy J. Lindgren, who has been elected as President and Chief Executive Officer of Sunkist Growers, the nation’s oldest and largest citrus marketing cooperative.

Mr. Lindgren had been brought out of retirement to aid in the transition when Jeff Gargiulo, Sunkist’s former President, announced his intention not to renew his contract.

For 26 years, Mr. Lindgren had been President of Fruit Growers Supply, which is an affiliate of Sunkist involved in agricultural supplies, packaging and timberland management.

It was an unexpected choice. Sunkist ran a national search with an expensive headhunter. It spoke to 200 candidates, did multiple interviews with many and ultimately selected the man they had called out of retirement.

The Pundit has previously dealt with the issues confronting Sunkist here, here and here.

Basically, as a co-op Sunkist confronts a great structural dilemma in that its ownership has interests other than increasing the value of Sunkist. I’ve proposed, numerous times, that the solution is to end the co-op and turn it into a stock company. By separating the growers’ interests in their citrus growing operations and the value of their stock in Sunkist, the board of directors of Sunkist would be free to build a much more successful and valuable organization.

Specifically, the management of Sunkist would be untethered from the demands of many specific growers and could act in a way that would maximize the value and returns from the Sunkist brand.

Several of my friends participated in the Sunkist CEO search process and all told basically the same story. At some point in the process, they were asked to evaluate Sunkist’s current efforts and, when they replied that Sunkist was not maximizing the value of its brand and dramatic change was needed, they were never called back.

Only the board knows why it selected Mr. Lindgren. Some claim he is a placeholder waiting to see if some internal candidates are ready for the job in a couple of years. It is also possible that a board of growers who knew Mr. Lindgren for many years liked, respected and felt comfortable with him.

It is fair to say that those who were looking for Sunkist to move ahead progressively are disappointed.

But we have to give Mr. Lindgren his chance. Perhaps he will surprise everyone. Indeed, perhaps only someone from his background could do what needs to be done.

I’m reminded of the Nixon-Kennedy debates. The first televised Presidential debates were heavily dedicated to the subject of whether or not the US would go to war with communist China to protect Quemoy and Matsu — two small islands off the coast of China that are controlled by Taiwan. Nixon was prepared to swear to defend the islands. Kennedy wanted to defend them only in the context of an invasion of Taiwan, then known as Formosa.

It was the pinnacle of Nixon’s anti-communist career, built on fighting communists in the 1940s and 1950s, especially his part in the congressional hearings on Alger Hiss.

As President, when Nixon went to the Peoples Republic of China in 1972 and officially recognized the government in Peking — now Beijing — as the official government of China, Nixon was not vulnerable to attacks from the right that he was soft on communism.

So only the rabid anti-communist could, politically, make peace with the communists.

Perhaps Mr. Lindgren, so close to the grower/owners of Sunkist, is the one who can convince them that their interests lie in separating their ownership of Sunkist stock from their business of selling their crops. If so, he will have provided a value far beyond what any produce marketer could have done.

The China analogy is apt in another way as well. The great strategic issue confronting Sunkist is what to do about massive plantings of citrus in China. Already Sunkist has virtually lost its European outlets. Inevitably this Chinese citrus will drive Sunkist out of its important Asian export markets.

The Pundit has urged Sunkist to open packinghouses in China. It could save the Asian markets for Sunkist, provide inexpensive fruit for sale in Europe and position Sunkist as a multi-national producer.

So as Nixon going to China came to both be a literal, physical step and an analogy for doing what others couldn’t, so Mr. Lindgren has a chance to go to China both literally, to announce a China strategy, and figuratively, to lead Sunkist in a direction that only his long grower-friendly credentials may make possible.

May the wind be at his back.




Pundit Mailbag: Frustration On
The Buy Side

What does the buy side think about the E. coli/spinach situation? The Pundit has been reaching out to a lot of buyers, and this important and knowledgeable buyer expressed the consensus:

On the buy side — frustration. Not so much at the FDA, but at the situation in general. We feel like we’re on tenterhooks, waiting for the next shoe to drop. We’ve heard rumor this morning that FDA is investigating an outbreak on leafy greens from………….the Salinas Valley.

All buyers are absorbing the cost of recalls, and transportation, we’ll get reimbursement for FOB. But that’s just a little bit of salve on a big problem we see — spinach paranoia. It reminds me of back when the anthrax contamination occurred and companies and organizations received calls from hysterical people concerned that the dust off the paper that can accumulate in the bottom of an envelope was anthrax and that corporate correspondence had anthrax. Just stupid hysteria. And we’re bordering on the same with items in spinach-free spring mix that look like spinach — tat soi, arugula, baby chard.

Frustration that perhaps the point of contamination won’t ever be pinpointed.

Frustration that people — including large, reputable processors — were cutting corners. You talk to key players and they are very excited about all the new food safety protocols they are putting in place. Leaves one wondering, of course — why weren’t they doing them before? I’ll deny ever saying this, but testing field water and remedying contamination is expensive, and some organizations skipped that step; sometimes players get to be the low-cost leader because they don’t do everything they could have or should have done to protect the product. And because of it, they have ground the industry to a halt.

Frustration at what appears to be a terrible PR response to the problem. Where are Drew and Myra, the poster children for the organic movement and the faces of Earthbound Farm? They were ubiquitous, now they’re nowhere to be found. Leadership means not hiding — no matter what the lawyers say — and stepping out to face the public.

How powerful it would have been for them to be on camera saying: “We don’t know what happened, we care about people, as we demonstrate through our commitment to a healthy earth and healthy wholesome fruit and vegetable products. And we don’t know what went wrong, but if something did go wrong in our system, we are going to fix it, so that it never happens again. And we care about the people that are sick, and wish them well, and grieve with the family for the woman that died. We promise to make things right, and ensure that our customers can once again eat our products with the same confidence they have for the last 25 years.”

Instead we get some woman we’ve never heard of, and that presents a terrible impression on the public.

An FDA standard will surely come. And the packers and processors that complained about the different buyers’ audits will long for that day.

For the most part, I will let this commentary stand on its own. However, when it comes to Earthbound Farm’s PR response, I would caution that effective PR is often a matter of timing. The most respected spokespeople are sometimes best reserved for when the spokespeople can do the most good and get the product moving again.




Spinach Crisis Summary Rewind IV

With so much having been written in so short a time, thought it would be helpful to publish a sort of round-up of available material to help people understand the whole situation regarding spinach and this E. coli breakout:

The Perishable Pundit itself has dealt extensively with the subject in several major pieces. On September 15, 2006, we published Spinach Recall Reveals Serious Industry Problems, which addressed the implications of this crisis for the fresh-cut industry. You can read the piece here.

On September 18, 2006, we published Organic Dodges a Bullet, which deals with the implications of the outbreak for the future of organic farming. You can find this piece here. Also on September 18, 2006, we ran a piece called Ramifications and Reflections on the Spinach Recall, which provided our first 10-point analysis of the situation. You can read it here.

September 19, 2006, we asked Is FDA’s Concern Now an Obsession? — a piece in which we assessed whether a national recommendation to not eat spinach made any sense. You can review this here.

On September 20, 2006, we noted 10 Peculiarities about the E. coli Outbreak and reviewed why certain aspects of the situation are unlike past food-safety challenges and other unanswered questions regarding the outbreak. Read this one right here. Also on September 20, 2006, we did our third 10-point list, calling this one “Spinach Recall Begs for Solutions”, where we reviewed how the trade can deal with this issue for the future, including looking at the meat industry, the prospect of universal testing and the use of RFID and GTIN. You can read all this here.

On September 21, 2006, we asked Is FDA Causing Long-term Damage? Here we posed the question of whether punishing the innocent and the guilty alike doesn’t reduce incentives to invest in food safety. You can read this piece right here.

The September 25, 2006 edition of the Pundit includes our fourth 10-point list entitled Though Not ‘All-Clear’, Consumers Can Eat Spinach Again, which reviewed many issues facing the industry as spinach begins to reenter the market, including the FDA’s announcement, PMA consumer research, the behavior of industry association, battles over fresh-cuts and organics, the reintroduction of Salinas Valley production, the FDA’s capabilities, and more. You can read this piece here. Also on September 25, 2006, we reviewed The Role of Retailers And The Future Of Food Safety, which pointed out that buyers have an important role in insuring food safety. Catch this piece here.

Additionally, on September 25, 2006, we ran the Pundit’s Pulse Of The Industryin which a panel of retail pundits gave us insight into the way the spinach issue played in store and with consumers. You can read it here.

The Pundit on September 26, 2006, included an articled entitled The California Department of Health Services Owes People An Explanation in which the question was raised whether certain parties received preferential treatment in the current spinach/E. coli outbreak. Read it right here. Also on September 26, 2006, we did a piece questioning the efficacy of our trace-back systems. The piece was titled More Recalls Trickle In, and you can read it here.

On September 27, 2006, the Pundit analyzed the bad publicity that the Salinas Valley has received and asked Is Salinas Getting A Bum Rap On Food Safety? The piece can be read right here.

In addition, the Pundit did several smaller pieces that touched on various aspects of this crisis. On September 18, 2006, we raised the issue of whether food safety outbreaks such as this raise long-term issues about the viability of cartoon character tie-ins in Who Has Marketing Fortitude? You can read about it here. Also on September 18, 2006, we dealt with the way some companies have little sense of decency when it comes to marketing their products in the midst of a crisis. You can read this one right here.

Additionally on September 18, 2006, our Pundit’s Mailbag focused on letters received by United President/CEO Tom Stenzel and incoming Chairman Emanuel Lazopoulos of Del Monte Fresh, which dealt with the confluence of United’s Board Meeting and the spinach crisis as well as issues of industry leadership. You can find this one here.

On September 19, 2006, we noted that there might be a Greenhouse Opportunity in all this. Read this here. Also on September 19, 2006, we noted that, though fruits and vegetables are healthy, fresh produce is not necessarily the best choice for those with a compromised immune system. The piece is called Marketing Nightmare and you can find it right here.

On September 21, 2006, we did a piece called Wal-Mart Deli/Bakery Has Crisis Of Its Own that draws a link between the difficulty of preventing a Salmonella outbreak at one store with the difficulty of preventing an E. coli outbreak on an industry-wide basis. You can read this piece here.

On September 25, 2006, the Pundit noted Another Oddity In Spinach Crisis and raised the question whether some or all of the product being marketed as conventional might not be organic. Read it right here. Also on September 25, 2006, we ran a Pundit’s Mailbag which dealt both with the utility of loyalty card programs and with the nature of large, multi-line fresh-cut packing facilities. You can read this one right here. Also we did a short piece on what change was actually necessary if consumers were to be reassured of the safety of spinach. Read it here.

On September 26, 2006, we discussed the issue of recalls and how insurance plays into that. You can read this here. Also had an unrelated piece on Wegmans that included a video clip on how consumer media is dealing with the reintroduction of spinach. You can catch it here.

Additionally on September 26, 2006, we ran a Pundit’s Mailbag exploring the causes of the outbreak. You can read this piece here.

September 27, 2006, we focused on a piece in the Washington Post that helps us in Putting Things In Perspective. How does the Spinach/E. coli outbreak relate to the total numbers that get sick and die each year from foodborne illness? You can read it right here.

Several additional pieces appear in the Perishable Pundit on September 28, 2006, and they will be incorporated into future iterations of this Spinach Crisis Summary.

In addition to our own work, there are many excellent sources of information out there that do not require payment, membership or registration. Three of the Pundit’s favorites:

The U.S. Food and Drug Administration has offered daily information on the crisis right here.

The Centers for Disease Control and Prevention deal with the outbreak here.

The Produce Marketing Association has maintained an excellent industry resource on the subject right here.

Please feel free to write or call if you are looking for specific information not included here. Note that many of the articles and websites have links to other resources.

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