Our article, FMI Meeting On Food Safety: More Questions To Be Answered, sought to find the substantial issues raised by a retailer’s take on the meeting. One of the issues was that of increased costs. Here is what we wrote:
The constant reiteration by grower groups that retailers (read as the consumer) must be prepared to pay higher prices for food safety is not necessarily true and is really not the point.
Then we heard from the scion of a well known, long-established, farming family:
Let me point just one increased cost out to you: “Trapping Stations.”
Some processors are requiring trapping stations every 50 ft. for rodents. I grow 7,500 acres of vegetables. This would equal approximately 16,000 stations. So, 16,000 stations X $30 = $480,000. This isn’t a one-time cost. Now the stations need to be monitored 2X/week, and logged. I ask you, Mr. Pundit, how many people do you think that will take? I’m pretty sure that will be more than one person!
In summation, “trapping stations” alone would increase my costs by $100 / acre, representing a $.015/pound increase on items like spinach and spring mix. A minimum of $.125/carton on other items. I am not even mentioning any other costs at this point!
— Jack Vessey
Vice President/Marketing Director
Vessey & Company
The name Vessey brings back a lot of memories to the Pundit. My family sold Vessey’s garlic out of Hunts Point for many years, and we exported it around the world. So when we read Jack’s letter, we remember the family and we really feel the pain.
We give a special Pundit thanks to Jack because his real-life example is precisely what is needed in these discussions.
In speaking to some of the “experts” advising the various food safety initiatives, you quickly become aware that expertise in this area is a peculiar thing.
To use Jack’s example, traps every 50 feet are just a number. You could have traps every 40 feet, and be a little more effective or every 60 feet and be a little less effective. The real reason for 50 is probably because we have five fingers on each hand and five toes on each foot so in our species-centric perspective; fifty seems like a nice round number.
It is not as if traps every 50 feet guarantee against a food safety outbreak — even one caused by rodents.
Nor is it that a scientific cost/benefit analysis determined that the cost of food safety expenses outweigh the food safety benefit at 51 feet.
The real problem is that there is no standard because there is no science.
There is no science because nobody is willing to step up to the plate and say that any foodborne illness is acceptable. If no level of contamination is acceptable, but we are not prepared to demand a “kill step” such as irradiation on all product, then each time there is an outbreak, the outbreak serves ipso facto to prove we are doing an insufficient job and so the standard will get raised.
In Jack’s example, if a rodent were found to cause a foodborne illness outbreak and the field had trapping stations 50 feet apart, the processors would, henceforth, demand trapping stations 25 feet apart.
Now to the financial implications:
Barring mandatory regulation, there are three ways this could go. Two will work out fine for Vessey; the third is the catastrophe all good growers are fearing.
1) PERFECTLY ALIGNED SUPPLY CHAIN
Under this scenario, a processor who wants particular standards goes and contracts with Vessey & Company for exactly what it wants. The processor will now know exactly where its product is growing, it will dictate the standards, and it will pay for them. It may have to guarantee a long enough contract to amortize certain investments or it may finance those investments itself. This works out fine for Vessey as any additional costs are paid by the buyer who wants these services.
2) PERFECTLY RIGID FOOD SAFETY STANDARD
This scenario calls for a buyer to enunciate a standard… and stick to it. So in Jack’s example, it means a buyer declares they need trapping stations every 50 feet or they won’t buy the product. This would probably work out well for producers. These buyers are intentionally putting themselves into a severely constricted supply chain. In all likelihood, they will wind up paying enough to justify the food safety demands they may make.
3) THE NIGHTMARE SCENARIO
Now suppose a buyer demands Jack’s 50-foot trapping standard — but in mid-season, the severely constrained supply chain is offering product at $2 a box higher price than conventional product. The buyer, unwilling to pay the premium, abandons the standard, which is not legally required and buys conventional product. Now the grower is stuck with substantial food safety investments on which he can make zero return.
The Pundit’s sense of where this has to go is to the Perfectly Aligned Supply Chain. The Rigid Food Safety Standard puts both buyer and grower at too much risk. The buyer, functioning with so few options, may find itself completely non-competitive and the grower always runs the risk of buyers abandoning standards.
Also it is, to Jack’s point, too easy to dictate standards if you aren’t directly paying them. In a fully aligned supply chain, the idea of traps comes up and the teams work together to figure it out. When it is pointed out that a 50-foot standard will cost .125 cents per carton, that 100-foot standard will get looked at closely. How do we quantify the safety benefit of the closer traps? Could we gain safety in another way? The aligned supply chain model turns buyer and grower into allies looking for agreed outcomes, such as safe food and reduced costs.
Food Safety efforts will have costs, but outbreaks have big costs as well. Aligned supply chains should be a tool by which we can both look for routes to safety and to cost reduction.
You can’t blame Jack for being skeptical. There’s been too many years of too many buyers talking the talk on partnership but never really walking the walk.
It is happening every day, right now, as we discussed here.
