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Pundit’s Mailbag — The Deadline Approaches

Eric Schwartz, the President of Dole Fresh Vegetables, sent a letter with his thoughts on the current state of industry in reference to the California Marketing Agreement:

One of the biggest misconceptions is that signing the CA leafy greens marketing agreement means a company will be lowering their food safety standards. Voluntary signatories are only agreeing to maintain at least a common floor when it comes to the standards. These standards are being developed by some of the leading experts in the food industry as well as academia, verified by the California Department of Food and Agriculture, and subject to enforcement by CDFA. There is nothing in the agreement that precludes or stops any shipper from implementing a higher standard in any area that they see fit.

If a company truly is operating above the standards recommended then the only reason not to sign the agreement is to avoid the assessment fees, or the inspections themselves which will be performed by a state agency. The reality is not everyone is practicing what they preach and inspections are an integral part in making sure that individual programs are more than just great marketing ploys.

We also need to stop associating the word “minimum” as having a bad connotation when it comes to the agreement. Minimum only identifies the floor that signatories are agreeing to never go below. Everyone must build their own final firewall with the marketing agreement as the minimum foundation. The height and look of the wall is still up to each company.

Another misconception is that the advisory board will take over marketing for individual companies. The primary use for the assessments will be to fund state inspection services and board administration. Board activities will not be a replacement for the marketing arm of any individual company.

Normally I would argue industry can do a better job policing itself rather than having mandatory regulations. But the reality is there are estimated to be at least 170 growers and processors of leafy greens in just the state of California. It’s naive to believe that they all have the expertise or resources to implement appropriate auditing systems to assure a comprehensive food safety program. Ultimately, we need to have a federal marketing order that ensures guidelines are met, no matter what area leafy greens are sourced from. Based on last year’s spinach outbreak, it was made very clear by the regulatory agencies that one company’s problem will be the entire industry’s problem. In the eyes of the consumer, we are already there.

At least three separate legislation bills were introduced in California to address leafy greens food safety. Part of the expedience of the marketing agreement was to address the issues based on science instead of getting guidelines based on everything but sound science. If the industry can’t show solidarity now, and continues to address this oncoming tidal wave by trying to make each other appear to be one step above the other, the CA legislature is going to step in and hand us something that will not make sense.

This is where retailers can force a fundamental shift in the industry right now. There has been a groundswell for solidarity of action from retailers, and for good reason. The proverbial ball is now in their court. If retailers let their big suppliers off the hook because they have rationalized their programs are already better, then they not only misunderstood the marketing agreement, but they cannot expect the little guys to change either because they will not be able to compete. Again, the marketing agreement sets a floor, but does not preclude any company from implementing a higher standard in any area that they see fit. This agreement alone is not going to resolve the fact there is no “kill step” in the produce industry. It could however, make sure the floor is raised by several notches for everyone.

We are running out of time. By statute, no new handler can sign onto the agreement after a fiscal year starts, which for this agreement is April 1, 2007. Only the retailer community can ensure that a handler sitting on the fence now does not decide to have a change of heart on April 2, when it’s too late for this year.

There are a lot of legislators and media watching this closely to see how industry responds. Retailers have demanded a change and now that first step is here. However, only they have the power to force their suppliers to sign on to this agreement.

— Eric Schwartz
Dole Fresh Vegetables

We know that CDFA keeps saying that they are told that the reason people aren’t signing up for the California Marketing Agreement is that these handlers tell CDFA they don’t want to lower their standards.

But we don’t believe there is any significant confusion, we think that is just what they think is a good thing to say to CDFA.

A more realistic assessment is that most companies that don’t sign, don’t do so for one or more of three reasons:

  1. They don’t want to pay the assessment. It is a lot of money; they prefer not to pay it. Perfectly understandable.
  2. They don’t want state inspectors on their property. Honestly, who does?
  3. Their customers aren’t demanding it, so why should they pay assessments and deal with inspectors?

The bottom line is that this is the moment of truth for the buyers listed in the Buyer-led Food Safety Initiative As we mentioned here, only a willingness by buyers to constrain their supply chain to those following safe practices will result in an assurance of safe practices being followed.

Many thanks to Eric Schwartz for his important letter.

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