Got Produce? Will Big And Small Producers Ever
Agree On Generic Promotion?
Our analysis of the proposal for a
National Fruit & Vegetable Research & Promotion Board brought this
thoughtful commentary:
I wanted to
add my two cents regarding the issue of a possible generic promotion
board for the produce industry.
I write this
as one who has worked for myriad commodity groups over a 20+ year
career. The “big guys” are typically not behind generic programs
because they believe that, with their sizeable marketing budgets, they
can do a better job of building their own brand.
The “small guys” need help because, with small to no marketing budgets, they believe that generic promotion is the only way they can do promotion of a scale large enough that they can really benefit. Shall the twain ever meet?
Also, I am a surprised that the Produce for Better Health Foundation — key word here being “Health” — is navigating away from its core business and strengths into an area that is not their expertise, and which is apparently not helping their reputation, either.
We do need
advocates for better HEALTH AND NUTRITION to help build produce
consumption. Who will now take that role??
— Veronica
Kraushaar
President
VIVA Marketing Strategies
Nogales & Scottsdale, AZ
We thank Veronica for her note as it raises
several important issues.
As
we mentioned in our piece focused on
sufficiency, the plan, as proposed, may not include enough money to move the needle on consumption, and this assumes the money will actually be
there, when it actually
may not.
Now the advocates for this plan have said that
they believe the new media environment, where consumers can be
accessed with
viral media and on Facebook, MySpace, etc., will allow for a less
expensive, but still effective, program.
Yet this idea, if true, may actually cut the
other way, against this proposal. After all, if what one needs to
communicate effectively to consumers is access to “social media,” this
means that produce companies that previously couldn’t dream of
reaching consumers now can do so all on their own.
Bryan Silbermann of PMA has made a
big point of the importance of industry firms telling their story
to consumers, and this fits in with our work on
sustainability, where we have pointed out that much of the
consumer interest in “local” is really an interest in authenticity. It
is quite likely companies, as they become aware of the possibilities
of reaching out to consumers via social media, will prefer to keep
their funds at home and use the money to reach out to consumers via
these new technologies.
Put another way, the leveling effect of the
Internet may be making more produce companies “big guys” defined as
those capable of reaching consumers directly.
Veronica is correct that those boards that have
failed tended to fail because large players didn’t feel they were
getting value. Which raises the question: If major industries such as
Washington Apples, California Iceberg Lettuce and California Tree
Fruit have either eliminated or substantially reduced funding for
their own industry marketing efforts, how likely is it that they will
want to be assessed for a board that promises a much more indirect
benefit?
One wild card in this matter is USDA. Although
many such boards require a dual approval, say at least 50% of the
growers representing at least 50% of the acreage, the law under which
the advocates are proposing to act has no such requirement. Each
“first handler” gets one vote.
So the mighty Dole has exactly the same voting rights as a two acre blueberry farm in upstate New York, as long as the farm meets the definition of a first handler.
This may defeat the project because companies of
large size may say they will oppose it unless the voting rights are
refigured to correspond to volume. Otherwise, they could be “dictated
to” by large numbers of small “first handlers” even though it is the
big guys who are paying the bill.
Although the law gives every “first handler” one
vote, it does give USDA enormous discretion. So, although
theoretically an industry of one producer with a million acres and 999
producers with one acre each could approve a board with 501 votes
constituting 501 acres on a million-plus acre industry, USDA retains
the right to not approve it.
In the end this is a serious matter. We are
talking about calling in the police powers of the state to compel
people to contribute against their will. If one doesn’t pay, one will
lose one’s PACA license or be fined; if you don’t pay the fine, you
may get jailed. It is not something you do without overwhelming
industry support from the full range of commodities and businesses of
all sizes.
On Veronica’s other point, the role of PBH, we
agree. One of the sad things that is coming out of this is that the
esteem in which PBH is held is declining. The executives there didn’t
realize that many view a proposal to mandate payments as outside of
the range of what they supported PBH for. Many who are happy to
contribute to the Red Cross would object strongly to a special tax
compelling them to do so.
By deciding to leap into the middle of a political battle, PBH will inevitably, and unnecessarily, alienate supporters and potential supporters. That is a sad byproduct of the way this issue has been presented to the trade.
To clear up a related point, even if the generic promotion board was approved, it seems silly to us to think that an industry promotion group could replace PBH. Much of the work the Produce for Better Health Foundation does involves interaction with government agencies on both the State and Federal level. These agencies simply won’t interact in the same way with a commodity promotion group as they do with a non-profit foundation dedicated to public health.
This means the industry will need, and should be prepared to support, PBH for a long time. This is regardless of what happens with this proposal.
Many thanks to Veronica Kraushaar and VIVA Marketing Strategies for weighing in on this important issue.
Tesco’s ‘Poor Service’ Record
And Out-Of-Stocks
Our extensive coverage of
Tesco’s Journey to America as Fresh & Easy brought this note from
an American who spent a couple years in the United Kingdom:
I have been
following with mild amusement your series on Tesco, and thought I
would take a moment to share my humble perspective.
Having lived
in Bristol, England, for two years (from 1999-2001) I shuddered to
think that Tesco might actually grace us with their presence here in
America.
The attitude
you report does not come at all as a surprise when you are familiar
with the common mindset toward the standard treatment of customers —
at all levels and areas of an organization — that exists in jolly old
England.
A major focus
of the MBA program I did there was on Human Resource Management, and I
can tell you, generally speaking for the average organization, the
customer is not at the top of the priority list of people to please.
How to satisfy
the workers’ individual rights in the most cost effective manner is
typically of much higher concern for upper management. And it shows in
the quality of service... most employees I encountered in any
department store seemed to be more concerned that I might require more
time than was allocated to their shift rather than being concerned
with actually solving my problem.
During my time
in England, I avoided Tesco stores like I would a plague, preferring
to spend my time and money at Sainsbury’s, Waitrose, or any one of the
small neighborhood produce/butcher shops. I found the Tesco stores to
be crowded and difficult to navigate.
Most produce
was unattractively displayed to begin with, and sold (although this is
typical in Europe) in pre-packaged quantities, such as a 3-pack
multi-colored bell pepper assortment, so it was impossible to inspect
the texture and quality of the product. Overall, while of lesser cost,
the quality of fruit and produce was of considerably lesser quality
than at their competitors.
I categorized
them in my mind as a high-volume, low cost, catch-the-cheap-bargains
this week kind of retail outlet. And the sloppiness of their stores
was reflected in the sloppiness in the way one was treated by their
employees.
Of course,
they may have changed in the past 7 years, but change is notoriously
slow in England. Taking into account the impossibility of even
purchasing a 20th century water spout that mixes hot and
cold water lines at a home-improvement store, I very much doubt it.
And given the
English superiority complex toward Americans, it is no surprise they
are behaving as they are. They are approaching the “lower class” here
in the US as they do in England — not realizing the standards are much
more level here, that stores are much more likely to cut across
socio-economic groups, and that generally, here in the US, the
customer comes first — no matter what their socio-economic status may
be.
I will further
venture a guess that few of their executives ever visited an
Albertsons, Safeway or Kroger store — their nemesis is Wal-Mart.
—Theresa
Willerup
Business Development Manager
PakSense
Boise, Idaho
We certainly appreciate Ms. Willerup sharing her
perspective. We think, however, that, mostly, the market is the best
judge of the quality and appropriateness of offering that any business
makes.
If Tesco offers poor service in the United
Kingdom, then it must offer other values that have allowed it to
obtain over a 30% market share, by far the largest, in the UK.
Of course, the strict land use rules in the UK
have made it difficult for chains such as Wal-Mart’s ASDA subsidiary
to compete effectively because it is so hard to get site approvals.
That is why so much of the battle against Tesco in the UK has focused
on practices such as “land banking,” by which it is alleged Tesco
acquires sites simply to prevent competitors from opening.
Still, there is something odd about the
willingness of Tesco to tolerate the out-of-stocks that are common at
Fresh & Easy.
We do know that many years ago, it was
acceptable in the UK to run out of fresh items at the end of day. This was supposed to “teach” shoppers to come in early in the morning. But we have been assured by many executives at UK retailers that this is no longer the case, and out-of-stocks are, today, unacceptable.
Yet, as late as last week, we were walking
through a Fresh & Easy that, supposedly, was their very top store and
saw out-of-stocks that would give any executive at Kroger or Safeway a
heart attack.
Some of this is hubris. At an early stage of the
roll-out, the out-of-stocks were a big problem and the Fresh & Easy
executives blamed a software program that didn’t have historical data.
When one of the vendors suggested that they issue a clipboard to every
store and have them manually call in any out-of-stocks so that they
could be delivered the next day, he was treated as if he insulted
their technological prowess.
Still, at base, the tolerance of these
out-of-stocks is a cultural matter. Whatever the reason, there is a
sense that they can disappoint customers and the customers will become
“trained” to come back the next day or come in earlier. That is, as
our writer notes, not a very American attitude and helps to explain
Tesco’s failure in the US market.
Many thanks to Theresa Willerup for sharing her
British experience.
FDA’s Pistachio ‘Warning’:
The Other Side Of The Story
Although our coverage of the recent issues with
pistachios and salmonella has been
extensive, we haven’t felt it necessary to mention
every one of the now 664 recalls, though these continue to drip-in
as various repackers continue to announce recalls. Then, for the first
time in memory, we received a “warning”
notice from the FDA advising that consumers not eat the product of a
specific company:
FDA WARNS CONSUMERS
NOT TO EAT CALIFORNIA PRIME PRODUCE AND ORANGE COUNTY ORCHARDS BRANDS OF
PISTACHIOS
Products linked to the previous recall by
Setton Pistachio
of Terra
Bella Inc.
The U.S. Food and
Drug Administration is warning consumers not to eat California Prime
Produce and Orange County Orchards brands of pistachios repacked by
Orca Distribution West Inc., Anaheim, California, Orca received and
repacked pistachios recalled by Setton Pistachio of Terra Bella Inc.,
Terra Bella, Calif.
The pistachios may
be contaminated with Salmonella, an organism which can cause serious
and sometimes fatal infections in young children, frail or elderly
people, and others with weakened immune systems.
Healthy persons
infected with Salmonella often experience fever, diarrhea (which may
be bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the organism
getting into the bloodstream and producing more severe illnesses such
as arterial infections (infected aneurysms), endocarditis and
arthritis.
The FDA visited
Orca as part of its audit checks to follow up on Setton Pistachio’s
recall. The FDA found that products subject to Setton Pistachio’s
recall had been repacked and distributed by Orca under the California
Prime Produce and Orange County Orchards brands. Orca has not made a
public announcement regarding these products. Therefore, the FDA is
issuing this press release to alert consumers so that they can take
appropriate action.
The products were
distributed to retail locations in airports and hotels nationwide. The
California Prime Produce and Orange County Orchards brands of
pistachios were packaged in clear 6 ounce flexible plastic Ziploc
bags, UPC Number: 8 10826 01116 2 with Sell By Dates of 7/30/09 and
8/30/09.
Consumers who have
purchased these products are urged not to eat them. They can also
report problems, including adverse reactions, to the
FDA district office consumer complaint coordinator in their area
of the country.
To date, more than
660 product entries have been included in the FDA’s list of recalled
products because of their association with the recall by Setton
Pistachio of Terra Bella Inc. For the most updated list of all the
recalled products and pistachio products not subject to the recall,
please
visit: http://www.fda.gov/Safety/Recalls/MajorProductRecalls/
Pistachio/default.htm
Basically, this appeared to be one of the rare
cases in which a company was refusing to issue a recall despite FDA
pressure. It is such a rare occurrence that we asked Pundit
Investigator and Special Projects Editor Mira Slott to find out more:
Jan Caselli
Owner
Orca Distribution West
Anaheim, California
Q: FDA said it
released a warning to consumers not to eat California Prime
Produce and Orange County Orchards pistachio brands because Orca did
not comply with its request to do so. Is this correct, and if so, why
did you choose not to issue a consumer alert?
A: This consumer warning was totally
vindictive on FDA’s part. We have been vilified by FDA. The FDA press
release is erroneously worded to make it appear that Orca did not
comply with FDA. I don’t have any recourse. I could hire the best
attorney and nothing will change. We are wholesale distributors, and
on April 6, I got notified from one of my suppliers,
Specialty Commodities, that Orca received 50 pounds of
Setton product in January and another 100 pounds in February that
could have been contaminated with Salmonella.
It came to our supplier’s attention in
their audit with the FDA. At that point, I did my own audit and
learned a total of 340 bags were produced from those lot numbers. I immediately contacted our accounts that we sent this product to and they did a full blown recall at the retail level. In fact we not only recalled the 340 bags we believed contained the Setton product but, in an abundance of caution, we recalled all our pistachios that had a sell by date of 8/09 or 9/09 even though many of these came from other sources unrelated to Setton. This was a voluntary recall and still remains that way. I’ve had no reported incidents of illness nor have my customers.
At the end of April, FDA contacted me
because they had been given a customer list from Specialty
Commodities. I gave my customer list to FDA as they requested. FDA
asked me to do a press release and I explained that my customers
pulled everything from the shelves. I replaced the recalled product with new product at my own expense. Mind you, I didn’t know the exact origins of those 340 bags in question.
Q: Why not? Don’t you keep records?
A: I place a master order for pistachios
from my supplier. I pulled every pistachio from that time frame. FDA
implied I intentionally repacked contaminated pistachios. When I sent
out product in January and February, I didn’t even know there was a
problem. I was only notified from my supplier in April.
Q: Wouldn’t there have been a possibility
that some of the products from your shipments could have ended up in
consumer homes? Did your customers catch the products early enough in
the process where consumers wouldn’t have had a chance to buy them?
A: To clarify, once my supplier,
Specialty Commodities, notified me that I had received 150 pounds of
Setton product, I notified my customers to pull all product with the
sell-by date of 8/09 or 9/09 as those could have contained Setton
pistachios. The small amount of Setton product we had received from
our supplier was in that period.
Q: What percentage of your pistachios during
that period came from Setton?
A: I had received other types of
pistachios, not just from Setton. I have another supplier,
Garvey Nut & Candy, that does not buy from Setton… ever. I gave
FDA information on all orders that had pistachios and all the ones we
recalled. There were pistachios that I didn’t need to recall, another
75 pounds I purchased in January and February in addition to that 150
pounds from Setton.
Garvey Nut & Candy has dealt with the FDA
on this issue and assured me I did not receive product from them
related to the recall. I pulled everything on the shelf with those
sell-by dates regardless.
We use a six-month shelf life on our
packages. We took no chances on whose product they may have received,
so I instructed them to pull all pistachios shipped during that
period. I instructed them to destroy and give me a count of product on
hand and we did replacement. My audit says there were a few bags
purchased.
Q: For perspective, how many bags did
consumers purchase before product was pulled from the shelves? Not to
belabor the point, but before this FDA consumer release, how would
consumers, who may have purchased product from those January/February
shipments, learn that these products were involved in a recall? How
many consumers could have been at risk of eating contaminated product?
A: Out of the 340 bags shipped, our
records document we recalled and destroyed 272. Potentially there
could have been 68, six-ounce bags floating around out there. This is
the basis for all the hype. We have no reported incidences of illness.
I’m all for protecting our consumers… my God, I’m in a business where
it’s so important to me.
Q: Isn’t it also relevant where these bags
were sold and the fact they were travel-size, snacking portions,
rather than large packages that might be stored for extended periods
in a kitchen pantry? In other words, would it be possible or even
likely, especially at this juncture, that any bags unaccounted for in
the recall have already been consumed?
A: These are single portion, six-ounce
bags. They are sold in hotel lobby shops and airport gift shops in
individual serving size. If you had a bag in the pantry, you’d throw
it away, but these are the kinds of bags that would be consumed right
away. These items would not likely be brought home and stored for
future consumption. These products are carried in travel gift shops.
They are in one airport, Palm Springs airport, and the rest are hotel
lobby gift shops. I handled things correctly, especially in this
context.
By the way, FDA said “various airports”,
when it was only one. People were looking at other airports to see if
my products were there.
Here’s little Orca, and they used
pictures showing pallets of Setton product. It doesn’t make any sense
at all. They showed the boxes, which had nothing to do with our
product. That doesn’t help the consumer. We’re wholesalers. When we buy Setton product, we put it in our own package. Consumers don’t see the Setton brand on a retail shelf, they see our brand.
Q: Earlier you pointed out that the
pistachio recall was voluntary. Yet, many companies say they feel
compelled to abide by FDA’s recommendations for fear of retribution.
Are you claiming that FDA’s June 22 news release warning consumers not
to eat your brands of pistachios was only done to punish you?
A: I’ve been maligned by the FDA because
I said I didn’t know what good it would do to issue a press release. I
was cooperative. It’s not like I refused in a belligerent way; I just
didn’t see the value in it. What chance would there be of someone
having the equivalent of four handfuls of pistachios from January or
February? FDA’s actions were way overkill. I was shocked when FDA put
out that release.
Of course, if it’s one bag or 1,000 bags
that could be tainted, it’s just as important to take action, but it
seemed too long in the stream of things to issue a consumer warning
that would have any benefit. If this had anything to do with saving
someone’s life, I wouldn’t hesitate to do a press release.
Q: When you asked your customers to destroy
product, did you get a dump certificate or another type of official
receipt to verify they actually did it?
A: I didn’t get a dump certificate, but I
did get a dump list.
Q: The Western Pistachio Association (WPA)
was quick to disassociate itself from your company by releasing its
own
statement June 23 following FDA’s press release:
“This is not a new recall.
Rather, it is an announcement due to a company that apparently did not
comply with the FDA’s original recall requirements…The WPA does not
condone any entity that knowingly shipped recalled product or withheld
information related to the product recalls…” How do you reply
to this?
A: I’d like you to make it obvious I did
not knowingly repack contaminated product. I learned two months after
it had been shipped. The source of the pistachios depends on the
supplier I use. One of my suppliers doesn’t even buy from Setton. In
those two months -- January and February — I had received product from
Specialty Commodities, and Setton is who they were buying from at the
time. They ship me whatever product they have in the warehouse and I
don’t care where it originated because I have confidence in my
suppliers that I’m getting quality products.
Q: What you receive is not labeled
delineating the product’s origins?
A: I receive bulk product from Specialty
Commodities, which purchased it from Setton Pistachio. It doesn’t even
say Setton on the labeling. By the time Specialty notified me that
they had shipped me that product, it was April.
Q: Why the big time lapse from that time
forward? FDA didn’t issue its press release warning consumers about
your brands until June 22.
A: My customers are supporting me. They
saw these reports and starting calling me asking, is this something
new? And I said no. I feel like FDA is using me to put out another big
blurb disparaging Setton. There had to be another agenda because this
action wasn’t done for public health. The implications are nowhere
near the facts. I have customers that can stand behind that. These are
very large companies that don’t mess around. We don’t use pistachios
in any other form except in shell; not in our mixes. There are other
major suppliers that utilize Setton pistachios as an ingredient in a
wide range of products.
The fact is that FDA didn’t contact me
until April 21, and the day they came, I started turning over records.
When they came to my door, it was the first time I heard from them. I
had all the supporting documents, recall letters and evidence of the
replacement shipments. I had already done my business with the
pistachio recall and I thought this was all in the past.
I have a cover letter stamped May 20,
2009, from Alonza Cruse, District Director, FDA, that states they’ve
completed their investigation and the agency concludes the inspection
from April 21 closed under Title 21.
Q: What changed since that time?
A: On June 12, a Friday, the Los Angeles
County investigator from FDA with the title of Consumer Safety Officer
came back to my facility demanding more information. I was not there
at the time. My employees said she barged her way in here to the
packing room and demanded employees speak with her. She made them
nervous.
My manager took her on a tour of the
facilities. According to him, she said that our facility was
immaculate and she couldn’t find anything wrong with it, but that’s
not why she was there. My employees totally cooperated. She told me
she interviewed my manager who said he didn’t have any science
background.
I was actually out of the Los Angeles
area, but my employees called me to let me know she was there. I asked
her, what is the nature of your visit? I thought they were done with
the investigation. She said they’ve expanded the recall, and your
employees don’t have access to the records I need. I said my customers
didn’t inform me of that, but I would fax her all the information she
wanted, and she made an appointment for the following Monday (June 15)
to meet with me at 1 pm. I pulled all the records and faxed them to
her.
A series of unfortunate events followed.
Apparently, she called on Saturday to change the time of our meeting
to 10 am on Monday. She received everything from me on Friday night,
and decided she’d just come earlier instead. I didn’t get the message
because I was in the desert at the hospital because my father had a
heart attack.
That Monday, I got a call from my
employee that she arrived at 10 am. He put her on the phone and I
said, I thought our appointment was for 1 pm. I can’t get there for a
few hours because of the situation with my father, but she insisted,
we have to do the meeting now.
She decided she wanted my customer list
of anyone receiving product from September, 2008, to date. I explained
that my supplier told me I didn’t receive any of those products until
January 2009. It didn’t make sense. I wasn’t buying product from
Setton in September 2008. I only got Setton product in small amounts
in January and February of 2009.
Q: I’m so sorry to hear the news about your
father… This must have been particularly trying while you were going
through such personal trauma.
A: Thank you for your concern. My father
is 82, and the surgery was complicated and painful but he survived it.
It’s a miracle.
My conversations with the FDA consumer
safety officer were frustrating to say the least. She seemed to be a
young woman, although she said she’d been with FDA six years. She
couldn’t answer even the most basic questions. When I tried to get
clarification, she was curt: FDA isn’t obligated to tell you anything,
she said.
She also intimidated my employees. At one
point she entered the building at lunch time so most employees were
out because the operation shuts down from 12 to 1. She took one of my
Hispanic workers, having his lunch with another employee, out of his
break. He was insulted. She ordered him to show her around the
facility, that she had already visited at another time and grilled him
about our customers and pistachios, none of which he is savvy to
because he is a packer.
Then she pressured him into signing a
document, which looked very legal in type, swearing to his statements.
The employee phoned me, concerned about this. He put her on the phone.
I asked her not to involve my employees. I would meet with her another
day. She told me she had a right to be there and to conduct her
business however she wanted.
Q: Doesn’t FDA have certain limitations on
its legal authority during investigations?
A: My attorney, who deals in FDA cases,
said FDA has the right to come into my facility anytime to
investigate, but doesn’t have the authority to take workers off of
their lunch break and require them to give a tour. And FDA does not
have the authority to take photos without my permission, and I asked
them not to.
I tried to protect my employees’ and
customers’ privacy. She wanted private cell phone numbers and I didn’t
think that was necessary. I had already provided her with sufficient
contact information for the customers who got product. My customers
told me another FDA representative contacted them and supported the
fact I did exactly what I was supposed to do.
Q: Media across the country picked up on
this story, questioning your company for withholding information from
the public about possibly tainted product. Reports also suggested that
you consciously sent recalled product that could have been
contaminated into the marketplace. What impact is this having on your
reputation?
A: After the news broke, Fox 11, Channel
4, Channel 7, and other media were staked out at my facility here at 7
in the morning. I came in at 8, showing the Fox 11 reporter all my
supporting recall documents and my complete customer list, explaining
that FDA had contacted them. She told the studio to correct the
earlier coverage; that this was not a new recall, and that I never
shipped Setton product since early this year.
Local news people were saying to me they
were appalled by how my company had been presented, but unfortunately
they were not rushing out to air the rebuttal interview. Fox 11 came
back at 10 am to do another interview. I had them film in the factory,
and they did show it that night, commenting that it had to do with the
earlier recall and how we handled it.
The initial negative story got so much
hype that it didn’t seem to matter. My Fox LA just continued to have
the original bad news story on — the one they got at 7 in the morning
when they didn’t have a chance to get comments from Orca. Later that
day, at 8:30 in the morning, Fox 11 did air my interview, which
vindicated me. The studio reporter told viewers, you can go eat your
pistachios now. But the other stations were just airing the original
inaccurate 7 am report. I understand the bad report was repeated again
on the next day’s news cycle and had continued to remain on the
websites.
At this point, I’m not sure how much
damage this may have caused to my business and reputation. My
customers are supportive and believe my brands will be OK.
I sense FDA’s actions were an attempt to
prove their power. FDA has been heavily scrutinized for how it has
handled food safety, and it wanted to show it was doing something.
Even if FDA felt compelled to do a press release, they didn’t have to do it in such an inflammatory way, with a headline that implied that all our product should be avoided whenever it was produced. They took this to the
fullest, like they were out to get us. I wonder if this FDA woman had
a problem with me because I’m a woman in business and I know what I’m
doing. She thought she had the right to intimidate my employees and to
treat people however she wanted without any recourse. The way she
spoke to me was disrespectful. I’m proud of what I do here. I operate
my business with integrity, and I believe FDA’s behavior was absurd.
It is actually a very fascinating story with
several key points:
First, on the substance of the matter, Jan Caselli is wrong, particularly when you consider that pistachios are a semi-perishable item that can be kept for an extended period. No matter what she did, no matter what her customers did, as long as
even one packet reached consumer hands, there is the possibility that
the pistachios are sitting in a purse or a pantry. Pistachios are
semi-perishable, not a product like spinach that just rots. These
consumers certainly should be informed of known risks — including that
these pistachios may be part of the Setton Pistachio recall.
Second, on a food safety basis, Jan Caselli is
right: The FDA’s action are absurd. As we mentioned
here, the FDA makes the ridiculous assumption that its mere
knowledge of a problem with one firm’s production of a product means
that this particular product is more dangerous than some competitive
product. In fact, discovery of such a pathogen is such a
Black Swan Event that its discovery means nothing. You might test
that firm’s product for a hundred years and never get another positive
or, you might test its competitor’s products and find you receive
positives just as frequently or more frequently. In either case,
recalls do nothing to enhance food safety.
Add in the fact that this particular repacker
sells only small bags at airports and hotel gift shops — so these are
not giant bags or jugs that people are likely to keep for extended
periods — and the fact that FDA issued its “warning” almost four
months after the last of these baggies were shipped and that there are
only 68 bags unacounted for and presumed sold and only a portion of the repacker’s pistachios during the period in
question came from Setton — and the risk from this repacker’s products
is exceedingly small. We must have a safe food supply indeed for FDA to bother with such a small matter. Indeed, next time FDA is crying about its lack of resources, we might remember that it sent staff not once, not twice, but three times to this little repacker who sells six-ounce packages in hotel gift shops. If the FDA uses its resources in this way, the FDA will never have adequate resources.
Third, Jan Caselli’s experience with the FDA
field office operation adds to the experience we found with the
Honduras Cantaloupe matter that local FDA officials are often
tyrants. We have been told by leading experts in epidemiology that
many border on incompetent and are unable to understand their own
epidemiology, so they seem to fall back on bullying tactics. We have
suggested that trade associations consider having epidemiologists
and attorneys on retainer so that when confronted with a local FDA
official, companies have a competent team pre-assembled to help them.
At very least it points to a neglected portion
of crisis management programs most of which start with the food safety
crisis — how about the crisis starting when FDA shows up at your door.
What to do then?
Fourth, Jan Caselli is quite right about FDA
being vindictive. The very headline of its release, “FDA Warns
Consumers Not to Eat California Prime Produce and Orange County
Orchards Brands of Pistachios,” is very different from the actual
message in the release: “The
California Prime Produce and Orange County Orchards brands of
pistachios were packaged in clear 6 ounce flexible plastic Ziploc
bags, UPC Number: 8 10826 01116 2 with Sell By Dates of 7/30/09 and
8/30/09. Consumers who have purchased these products are urged not to
eat them.”
Blaring a blanket headline “not to eat” two brands, when the actual advice is very circumscribed, is clearly FDA’s way of saying
that companies better obey FDA or FDA will make things much, much
worse for the firms that don’t go along..
The problem is, of course, that Congress has, to date at least, specifically elected to not give the FDA the authority to order recalls and FDA’s own regulations state that it will only request a recall in “urgent situations” – a difficult case to make in this situation. The agency can scream “public health” all it wants. The odds that by issuing this warning, several months after the event, someone was saved from salmonella are, for all practical purposes, zero.
FDA seems to view the law and its own regulations as not so much a limitation on its powers but as an inconvenience, and it is prepared to come down hard on anyone who thwarts its will, even if it has no statutory or regulatory authority to act in a particular arena.
If FDA is aware of any product that is
adulterated, it has authority to seize such food. Normally, it uses
that lever to “persuade” companies to make recalls. In this case, all
the product is long gone and there is nothing for FDA to seize.
Still, in America, just because an agency is
powerful, it should not use its powers to threaten law-abiding
citizens, and Jan Caselli was well within her rights in deciding not
to issue a press release. There is something uncomfortable about FDA
officials believing their role so important that they are prepared to
go around the plain language of the law to find ways to “punish” those
who refuse to comply with the desires of the FDA.
Many thanks to Jan Caselli for sharing her
story.
Pundit’s Mailbag – Setting Policy vs. Setting Incentives
We have run
many pieces related to Wal-Mart. Recently one of the pieces drew
on an anecdotal experience whereby a manager, in complete
contravention to company policy, demanded that employees work off the
clock. The piece brought this note:
I am a regular reader and very pleased with the in depth analysis of the produce industry that you provide for such a great price.
I was so
surprised this year when I called my regular salesman at Ballantine to
place my initial order. I had bought from Ballantine for many years
and had come to rely upon their quality to make sure none of my east
coast customers were ever hurt by poor arrival. It simply never
happened. The fact that they only shipped, for me at least, the best
quality I could find indicates they had very high standards. I was
very sad to hear what happened to them.
In your piece,
Pundit’s Mailbag — Poor Management Attitude Leads To Food Safety
Failures, you refer to Wal-Mart and their rogue managers that
sometimes cause such heartache for the parent company. It reminds me
of a truism. Have you ever entered a store and find that the employees
are surly or rude or conversely very happy to help you? The attitude
of the employees can almost always be traced back to the owner/manager
of that establishment.
If there were
no shortcuts taken by the top echelon of the store, the employees
would never think to emulate those same shortcuts. If there is honor
and loyalty on top, it always finds the way to the lowest employee. It
is time for Wal-Mart to realize that the leaders set the examples. It
doesn’t matter if their employee can speak English fluently; they can
watch and learn. How they learn is up to the leaders. If you cannot
practice loyalty, you must never expect it from your own employees.
The old ”We
have always done it this way” has to be shown the door and a new
mindset established. This pertains to all produce. Food safety has to
be sought over the lowest price and safe food handling practices have
to be respected as the new “bargain”.
— George
Worthy
Proprietor
Worthy Enterprises
Gonzales, California
Much of
our coverage of the struggle between Jim and Theresa Nolan and
their company, The Nolan Network with Ocean Spray, has focused on
issues of ethics and morality.
This letter points to the undeniable point that
attitudes are set from the top and that leaders that behave in an
ethical way set a tone for the employees and the company.
Yet this admonition to be ethical and not take
short cuts, though good advice, strikes us as incomplete.
In the Wal-Mart situation, it still doesn’t
answer the question as to what motivated the store managers to behave
in violation of not only ethical behavior and company policy but in
violation of the law. Certainly we have no reason to believe that the
top executives at Wal-Mart in some way modeled that behavior.
As we discussed in the piece, the more logical
assessment is that although the policy is clear, the incentives are
divergent from the policy.
We discussed this issue in
this piece in which we discussed how Domino’s Pizza had a clear
policy that pizza delivery drivers should not speed, but also had an
incentive structure and culture built around getting the pizza there
in 30 minutes. In the end, the incentives to get there in 30 minutes
won out over the admonitions not to speed, and someone died.
In business we find that employees listen
carefully to ascertain what really matters to their bosses. In the
Domino’s case, they heard that whatever the policy, there was no
reward for not speeding and lots of reward for getting the pizza there
on time.
When it comes to food safety, the problem is
that outbreaks are so sporadic. All the produce out there is very safe
by any rational standard, so the decision to adopt a higher standard
than that the product must be legal is a somewhat arbitrary judgment
call.
If we have a buyer and tell him to make food
safety our top priority, what are we actually telling him? If a vendor
walks in and says, “I have a 100-yard buffer around my farm,” and the
next vendor says, “I have a 200-yard buffer around my farm” — all other things being equal, is the buyer obligated to buy from the
vendor with the largest buffer?
Isn’t there any requirement to prove efficacy in
enhancing safety?
And what about price? Suppose we acknowledge that a 200-foot-buffer vendor is safer. That whereas a 100-foot buffer will produce one illness every 100-million packages, the 200-foot buffer will produce one illness every 200-million packages. Does that simply disqualify the 100-foot buffer vendor? Does it mean we prefer the 200-foot-buffer vendor unless he is more expensive? How much extra should we pay for this additional margin of safety?
We were out in Los Angeles recently and had an
opportunity to visit a lot of the ethnic independent markets, often
selling produce for a fraction of the cost of the big chains. Even if
we could demonstrate that the produce being sold by these independents
was less safe than that sold by the major chains, it is not obvious to
us that consumers, even if we sat them down individually and fully
explained the matter, would not elect to take some additional risk in
order to get their produce at half price or less.
Outbreaks have such catastrophic impacts on the
industry that it is hard to imagine any price not worth paying to
avoid the business disruptions and reputational harm caused by these
outbreaks. Yet, at some point, someone will have to ask whether what
consumers want is to pay higher and higher prices to make
infinitesimal improvements in food safety. We somehow doubt it.
Many thanks to George Worthy and Worthy
Enterprises for weighing in on this important issue.
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