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Perishable Pundit
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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Spinach Crisis Déjà vu:
Dr. Mansour Samadpour Retained By Chipotle To Boost Food Safety Efforts:
Increased Product Testing, Outsourced Processed Produce,
And New In-Store Kill-Steps Are Part Of New Moves To Keep Customers Safe

But Is Chipotle Over-Promising? Will Food Safety Be The Priority As Memories Fade?

The Centers for Disease Control and Prevention (CDC) issued its “final update” on the Chipotle E. coli 026 outbreak without identifying  a specific product that was at the source of the outbreak. Though finding a specific product at fault would have been satisfying, our experience is that it probably would have simply led Chipotle to change suppliers. Not finding a culprit may have helped the cause of food safety, as it has led Chipotle executives to order a comprehensive review of its operation, specifically focused on food safety. 

To help drive this process, Chipotle retained a brilliant, but controversial, food safety expert. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Dr. Mansour Samadpour
Founder, Principal
IEH Laboratories & Consulting Group
Lake Forest Park, Washington

Q: Chipotle’s multipronged food crisis (E. coli, norovirus, and salmonella outbreaks) has generated relentless coverage and lawsuits. This includes a strong counter offensive by Steve Ells, Chipotle’s founder/co-chief executive, apologizing and reassuring customers with a  vow to aggressively implement improved, system-wide food safety procedures to alleviate future outbreaks.  Your role at Chipotle in this multi-faceted food safety strategy is of great interest.

A: In this case, I was required to get the OK for our interview due to my proprietary client relationship and sensitivity of the issues.

Q: We first connected for an interview back in 2007, following the spinach E. coli crisis, where you challenged our readers with a complex and controversial Q&A discussion on food safety testing measures: A Closer Look at Finished Product Testing. The interview triggered a dynamic discussion across the industry, and we’ve referred our readers to that interview many times in our ongoing analyses of outbreaks, recalls and other food safety issues.  What is the scope of your responsibilities at Chipotle?

A: Chipotle needed help and asked me to become involved in different aspects. One area was with the investigation and trying to understand what happened, and then after that to design a new food safety system.

Q:  What did you learn through that investigation? Were you able to isolate key reasons behind these different outbreaks? Were these random occurrences or a systemic problem?  With divergent pathogens behind the outbreaks, does this raise red flags?

A:  The investigation is not something I can go into. I can talk about food safety measures at Chipotle in general, as opposed to discussing the specifics of the outbreak cases.  It’s important to realize the difference between an E. coli outbreak linked by the same strain, and norovirus, a highly contagious infection, and that these are separate, unrelated incidents.

Norovirus has nothing to do with food.  You know the expression, ‘once in a blue moon.’ You have an E.coli outbreak and then someone comes to work sick and you have a norovirus outbreak, two things happening at once that aren’t related, but an unfortunate coincidence, magnifying the proportion of response.  [Editor’s note:  Media coverage also can be influenced by a well-known consumer brand such as Chipotle being involved. During the same time period of the Chipotle food crisis coverage with 60 cases, a much less reported multi-state outbreak of Salmonella Poona linked to cucumbers was also being investigated. According to the CDC, as of January 26, that cucumber outbreak has infected 888 people in 39 states, and has been linked to several deaths – but it was not associated with a well-known consumer brand].

Q:  The reports on the Chipotle outbreaks certainly were unyielding, but also confusing. For instance, the initial E. coli outbreak linked to food served at Chipotle appeared to be contained to two states, and some pundits speculated a local sourcing problem. But starting several weeks later, additional cases with the same rare E. coli strain continued to surface in many more states. Then reports headlined a second E. coli outbreak, suggesting it was of a different strain than the initial one. However, according to the CDC, this second outbreak turned out to be a variant strain of the first.

A: I can assure you none of the issues were caused by local suppliers.  In the beginning, the E. coli outbreak was focused on Oregon and Washington, and people thought it was a local outbreak connected to a local supplier, but it turns out, no, it wasn’t.  A lot of people had the misconception. Oregon and Washington did an amazing job of detecting the outbreak.  

At the same time, the outbreak was happening in other states, but they were three to eight weeks behind in detecting the outbreak. So for a period of time, there was this misconception this was a local outbreak, and if you buy local foods, you get local outbreaks.  This is not the case.

Q: In terms of supplier sourcing, and the enhanced focus on local, what is your view of proposals to exempt smaller growers from some of the more rigorous, costly government food safety regulations?

A: Usually big food doesn’t like small food. That said, it is never a good idea to exempt small growers from the same food safety standards as large growers. The idea moving forward is all local suppliers will follow the same exact food safety protocols as the large suppliers. 

Q: What key food safety issues are you working with Chipotle to address? How did you determine which changes to prioritize and advocate in designing Chipotle’s new food safety system? 

A: It’s critical to take a holistic approach, evaluating all the elements of a food safety program through the supply chain and at the restaurant. For example, you could have a heavily contaminated ingredient or heavily contaminated ready-to-eat product coming into your restaurant.  So, the sourcing is very important, and that was one element.

Then after the product goes through the supply chain, what are the practices in the restaurant.  So we did a hazard analysis to determine what steps can be taken in processing, cooking, etc., and to identify places where we can minimize risk and introduce interventions.

Taking the food safety system to the next level, another issue is employee health; again this is really important, making sure employees understand what can happen if they come to work when they are sick, what are the symptoms and decision-making, things like that. 

Another element is the environment, the contribution of building infrastructure and equipment. When you come to work, there has to be an operational inspection. You have to make sure you didn’t have a leak or a sewer backup, equipment is working properly, the cooler didn’t die in the middle of the night.  There’s a huge check list you have to go through.  There are many environmental things that can result in contaminated products.

Q: While taking a holistic approach, where did you see the biggest concerns?

A: The way I look at it, things can go wrong at many different levels.  I tried not to miss anything, and identify all the elements. They are not equal. If you have contaminated product coming into your restaurant you’re going to have an outbreak; there is no way around it, right? But you can also bring in a relatively safe product and mess it up in your restaurant.  

So, you have to consider all the elements, and not have tunnel vision — this problem happened because of this one supplier, and I’m going to fire that supplier and all my problems are solved. My task force put together a food safety system that limits the risk to as close to zero as possible; zero risk is impossible, but you can put a system in place to make it tremendously safe.

Q: Ironically, Chipotle has pinned its reputation and popularity on “Food with Integrity”, contrasting itself from fast food competitors by promoting its use of fresh, natural, local, unprocessed produce and meats, preparing raw items in-house with traditional cooking methods, while shunning  processed foods, “chemical additives” and “cheap artificial ingredients.” Do your food safety recommendations change these ways of operation?  Can you hone in on produce-related food safety improvements and challenges in dealing with fresh produce?

A: Chipotle uses romaine lettuce, tomatoes, red onions, bell peppers, jalapeno, avocados, lime, lemon, and cilantro, and I believe that covers the fresh produce items. One thing is these fresh products are coming in raw form.  We put together a risk assessment of Chipotle’s suppliers, making sure these are good companies with good food safety systems, and we designed a finished product testing program, at very, very, high resolution.

Q: What does that mean?

A: Every lot is defined between 500 pounds to 2,000 pounds, depending on the product, with 60 samplings per lot, a very intense specification.  After passing that testing, product ships to Chipotle.  This is for raw, untreated products. Then there is beef and chicken that you buy raw and cook, but there’s always a chance of cross-contamination. Every 2,000 pounds of those products are tested, and if the product doesn’t pass, it’s not going to get shipped. Then with the raw meats, we are cooking them.

At the same time, we don’t want to be chopping a lot of raw produce in the stores.  Instead of buying items like lettuce and tomatoes in whole form from suppliers and chopping them in the store, now Chipotle is buying the items already processed to reduce the chance of contamination and microbial activity. Doing less handling of products makes it inherently a better place.  

Q: But not all raw produce will be purchased in processed form, right? What items will Chipotle still be handling in house, and how will procedures change to reduce the risk of contamination?

A: If you have onions chopped by an outside processor and use them five days later, they’re oxidized and tasteless. So a product like that is going to get processed in house.  Also, limes, lemons, jalapenos, cilantro and avocados are going to be handled inside the restaurants, but we’ve added various steps to significantly reduce risk.

When you go and look at the process, Chipotle was cooking the rice and waiting till it cooled off and then adding the cilantro. Why not add cilantro when the rice is hot, at a 190-degree temperature, which will kill any problem in the cilantro in a few seconds. These are not difficult things, but every step is one more safety assurance. 

In public health, you want redundancies and to have control at every possible step.  So, before the cilantro reaches the restaurant, you’re doing pre-harvest testing. Then after the washing and sanitizing, you’re doing the finished product testing for every 500 pounds at extremely high resolution. Then you’re bringing it in the restaurant, chopping it and adding lemon juice to reduce microbial counts, and then mixing it in the hot rice. It’s not to say a food safety problem will never ever happen with cilantro, but the likelihood has gone down so much it’s a remote possibility.

With onions, again you do pre-harvest testing and after-harvest testing, but that’s in conjunction with GAP and the grower’s own food safety system.  Then when product comes in the store, you’re putting the onions in a basket in boiling water for a minimum of five seconds. Now you know you’ve killed some contamination on the surface.  You peel and chop, and then you pour the lime juice over it to give you an extra level of safety. This needs to be combined with all the other steps. If you don’t take a holistic approach, one hole is closed, but another is open.

Q: Some of these in-house steps seem straight-forward to implement without much additional cost or training.

A: These are very simple steps, once having gone through intense finished product testing, and less chopping and processing. Another example is marinating the meat late at night and only once a day at the end of the operation, not multiple times during the day when doing other things.  

A lot of these changes together result in tremendous amount of risk reduction. Plus, now, for every shift there is a person in charge of food safety, and every restaurant has a food safety manager. Now with this structured food safety program, there is heightened attention to food safety, and employees get evaluated on the steps they are taking to create a safe food environment. 

Q: Would you say there is a cultural shift in the company?

A: There has always been an emphasis to use the best ingredients and fresh, natural products. Now food safety is on top and everything else follows after that.

Q: Would you recommend foodservice establishments move toward buying pre-processed fresh produce and away from in-house processing?

A: That has been our recommendation. I would much rather have product professionally processed and have an opportunity to do a finished-product testing. A lot of times when you buy things you could have contamination inside, but if a processor is sanitizing and doing chopping in advance, and the final product is being tested, you’re still able to detect it.

We have a lot of processors doing an amazing job, and the product quality and shelf life is good. One company chops for 5,000 restaurants, as opposed to 5,000 restaurants doing their own chopping. If they go with shorter shelf life and better logistics, they can use a product and have very good quality. Whenever the restaurant can start with processed product rather than chop it in house, the better.

Q: Isn’t this counter to Chipotle’s image and mantra of having everything prepared fresh in house?

A: Chipotle is still doing its own onions, limes, lemons and avocados in house, and there is still a lot of cooking going on. The other benefit Chipotle has is their supply chain is really good. They’re using the product up really fast.

Q: We’ve talked extensively about your product testing in the past, but could you elaborate on your recommendations for Chipotle, when and how often to do testing, what products to focus on, what types of testing, and why?

A: You are producing 100,000 tons of tomatoes, so every 2000 pounds is one lot; from that 2,000 pounds, you take 60 samples to send to the lab to get tested. We divided the universe into high risk, medium risk and low risk.  High risk are ready-to-eat that you’re not going to cook; those are tomatoes, lettuce, cilantro and things like that. Medium-risk products come in and can be contaminated but you’re going to cook them, but can cause cross contamination -- the beef and chicken. And low risk are things that come in already pasteurized, such as sour cream or cheese.  We’re focusing on the high- and medium-risk products.

Q: How do you determine recommendations on where, and how much money and resources to invest in different food safety enhancements, and what areas to prioritize?  Are there ways Chipotle operates that make the company unique in any way?  Are you customizing the changes to accommodate this uniqueness? 

A: There is not a single formula that fits all. For each type of operation, you have to look at things and manage the risks, and then there are other some other elements.  How do they do things, unique to their processes, but just as important is what is their risk tolerance. There are some companies that have higher tolerance for risk and then companies that don’t.  In the program we design, one of the first questions we ask is: what is your risk tolerance and what is your food safety objective?  And if anyone says, ‘We want a food safety system that eliminates all risk and no outbreak at all,’ I respond, ‘I can’t do that, but  you can tremendously reduce the risk.’

Q: How do the food safety improvements you’re recommending for Chipotle compare to those being done at other foodservice establishments?  Is there a way to put perspective and context to this? Are these food safety improvements at a higher standard than other restaurants in this category? Is there a way to measure how much these food safety improvements alleviate the chance of another outbreak?

A: I stay away from claiming A is the best. That is not the issue. Certainly this is a program that makes this company a food safety leader and one of the leaders in the field.

Q: How far along is Chipotle in implementing your recommendations?  

A: Some are being implemented very fast, like the tomato and cilantro program. I believe poultry is getting implemented as we speak. Marinating meat at the end of the day was immediately done. A lot of these things were pushed, and the rest of them are getting implemented very aggressively.

As far as product testing, I can tell you very few companies test the tomatoes and lettuce using lots of 500 pounds to 2000 pounds. Some may be doing testing with lots of 8,000 pounds, 10,000 pounds or 20,000 pounds. The smaller the size of the lot, the higher the chance of finding a defect through statistics of sampling.

Q: Has Chipotle already started doing this testing, and if so, have food safety problems been caught?

A: Yes. Products have been rejected.  There’s proof it is actually working.

Q: What advice can you provide to produce suppliers to help companies like Chipotle in food safety efforts?

A: I’ve learned years ago, in the food industry, companies only move when they experience major outbreaks or bad events. These things are rare events, and people often don’t learn from someone else’s experience. There are companies that have actually done that, but the majority waits to have their own moment of reality to take action. Food safety risk is something that can be managed. It’s very possible and companies should want to do that, especially before it’s forced upon them.   

*****

We sense a mellowing of Dr. Samadpour as he carefully urges a more holistic approach to food safety then was emphasized during the fiery battles over finished product testing in the immediate aftermath of the Spinach Crisis. He is careful to avoid excessive claims for the food safety system that is being implemented.

Unfortunately Chipotle executives have not been as cautious. Even after the CDC announced the end of its investigation, the Chipotle statement was discordant with what Dr. Samadpour has carefully explained. The New York Times detailed Chipotle’s reaction to the news that the CDC had concluded its investigation:

A Chipotle spokesman, Chris Arnold, said in a statement on Monday that the company was pleased that the C.D.C. had concluded its investigation.

“Over the past few months we have taken significant steps to improve the safety of all of the food we serve, and we are confident that the changes we have made mean that every item on our menu is delicious and safe,” he said.

Of course, this is incorrect. There are many very good things to say about the new food safety program, but, as Dr. Samadpour makes clear, none of it is a guarantee of safety. So when the company makes claims such as that “every item” is “safe” — that is simply irresponsible.

And it is not just unknown spokespeople saying things in this manner. As we point out in our piece titled Chipotle, Bill Marler And Black Swan Events — How Much Money Do We Want To See Spent On Food Safety? the most important people in the company are saying things they shouldn’t say:

So, Steve Ells, the founder and co-CEO of Chipotle, makes some unfortunate pronouncements and CNBC uses his comments in this headline: Chipotle Execs: There is no E coli in Chipotle Today:

"I will say though, that we can assure you today that there is no E. coli in Chipotle," Ells said.

Dr. Samadpour needs to give the top executives and the PR team a lesson on the realities of food safety — including that despite many efforts, food safety cannot be guaranteed.

There are really three points to this program and they have important implications for the industry:

First is the issue of finished-product testing. Nobody is opposed to testing per se, but it can lead to a false sense of confidence and thus lead to less rigor in procurement than would be desirable. And the marketing of such programs is questionable if one can’t show that the degree in testing is statistically significant.

Second, utilizing culinary methods to enhance food safety, as in putting the cilantro on the hot rice rather than waiting for it to cool. Again, it is difficult to measure the significance of these changes but consciousness about food safety at all phases of the process can only be a force for good.

Third, what may wind up being most important… a public recognition of the dangers of processing things at store level. It is not only a foodservice issue — how can retailers cut fruit at the store and also claim food safety is their top priority?

Still, there are many elephants in the room and there is a lot not being said.

On the procurement side, we are not hearing commitments made publicly, such as to only buy from Global Food Safety Initiative  (GFSI) certified suppliers. There also were indications of traceability issues in this case. Yet there is no public commitment to only purchase from Produce Traceability Initiative (PTI) compliant suppliers. Doing these things constrains a buyer’s supply chain and thus raises cost — but these are prices one has to pay to deal with the best suppliers.

On the store operations side, rather than vague promises that employees will be taught the importance of staying home when sick, etc. — how about a public commitment that all employees hired are hired on a probationary basis, and they lose their job if they don’t get certified by the National Restaurant Association’s ServSafe program for food handling.

The biggest issue is sustaining the emphasis on food safety. Right now, there is heightened sensitivity and good decisions are being made. God willing, there will be no more outbreaks for a while and time will pass. Inevitably over-confidence sets in, they will stop paying Dr. Samadpour, and Chipotle executives will think the problem is licked.

But it is not, and a lack of outbreaks may mean no more than the odds are playing out and such rare events just don’t happen on predictable and regular schedules. So the question is what is changing that will lead to a priority on food safety when memories dim?

It is great to learn that, as Dr. Samadpour mentions, now Chipotle “employees get evaluated on the steps they are taking to create a safe food environment.” We once wrote a piece titled, Pundit’s Pulse Of The Industry: Cheesecake Factory’s Kix McGinnis Nystron Everclean Services’ Jack McShane, which detailed how Cheesecake Factory incentivized managers based on the results of audit scores and that this was quite effective.

The more difficult issue, though, is incentivizing buyers and top executives. We still remember when Karen Caplan, CEO, President at Frieda’s Inc., listened to a panel of retailers expressing that food safety was their top priority, she then raised her hand and humbly asked how these retailers had changed their Key Performance Indicators (KPIs) to reflect these corporate priorities — the silence was deafening.

For all the talk of food safety cultures, we find that food safety is just not a part of day-to-day procurement decisions. A buying organization — retail or foodservice — sets a standard. That standard may be high or may be low — it may be GFSI Certification or just a GAP audit. But that standard being set, the buyer has no incentive to pay more to get any higher standard.

Years ago Costco, a real world-class company on food safety, had a problem on carrots in Canada. We wrote about it in a piece titled, Costco Recalls Mexican Grown, U.S. Packed Baby Carrots From Canadian Stores. Carrots are basically a duopoly with only two world class US shippers. Yet, even in a food-safety-sensitive company such as Costco, nothing compelled a buyer to pay a quarter more to get product from Grimmway or Bolthouse — and the company wound up with a food safety issue. Chipotle hasn’t laid out how it has changed executive compensation to incentivize the highest food safety standards.

Dr. Samadpour is a useful and important addition to Chipotle’s culture. There is a smidgen of anti-science gobbledygook in Chipotle, and we mentioned some of this in an assessment of the company’s stance toward GMOs in a piece we titled, Organics, GMOs And Irradiation: The Voice Of Science. Unfortunately, food safety is very much a scientific project.

This whole episode has been so damaging to Chipotle because it has raised the issue of what “food with integrity” actually means. Even today one looks at the Chipotle web site and sees things such as this:

…sourcing the very best ingredients we can find and preparing them by hand.

But Dr. Samadpour is saying the opposite: Prepare by hand in store only if it is necessary for good taste, only if it is low risk item, etc.

Lincoln, echoing Jesus, famously warned that a House divided against itself cannot stand. The question that is still open is whether there is a cultural split at Chipotle that, ultimately, will prevent the company from prioritizing food safety. Dr. Samadpour’s most important task is not any specific food safety plan; it is whether he can leave a long term imprint on the culture of the company.

Many thanks to Dr. Samadpour for sharing his thoughts with the industry, and many thanks to Chipotle for allowing him to do so.




SEA CHANGE IN SELLING PRODUCE:
Do Buyers Know How To Navigate In A Seller’s Market?

We recently wrote a column in Pundit sister publication, PRODUCE BUSINESS, that we titled The Produce World of 2016: Power Shifts To Producers. Here is an excerpt:

Want to know the state of the produce industry in 2016? True story: A California grower/shipper, one of the largest in the world, meets with an old friend who works for one of the largest produce buyers on earth. The buyer asks the seller: “So, what can I do for you in the new year?” The seller, without missing a beat, responds: “If you really want to do me a favor, then give me less business.”

He wasn’t joking. And the buyer was genuinely scared, because he knows there is no place to lay off a third of his order. There is no place to lay off 5 percent of his volume.

Some of this is temporary — a function of weath­er, which could be different next quarter or next year. But some of it is a function of the high cost of inputs leading growers to dramatically reduce the amount of product grown on speculation. It is increasingly the case that every acre planted is planted because the product expected to grow there already has a pre-committed home. That means that there is no product available for those who have not pre-committed.

Beyond costs, the reality is inputs are increas­ingly scarce. It is not easy for a grower to get more land that is suitable for growing, more water where it is needed, or more labor to harvest and pack when it is required.

Combined, this is a revolution in the produce industry, and for all the talk about how consolidation at retail gives buyers a stranglehold on producers, that notion is increasingly not aligning with reality.

You can read the whole piece here.

After years of hearing of producers being kicked around, the tables are turning. One big producer sent a gleeful note after reading the column:

“Your comments were SPOT ON! As always….the tide is finally turning in our favor. Not enough land to go around and no one has the margins to plant “insurance acres” for anybody. We are turning low to no margin business away.”

Another told us the story of a top-five buyer objecting to a price increase, but, begrudgingly accepting it when the producer wouldn’t back down — but explaining they would need to cut volume. The shipper whispered “Thank God” among its team and accepted the order cut. A few weeks later, the buyer returned asking to go back to its old volume. But the product was already committed elsewhere and there is no more product to be had.

This is a sea change. It means the old ways of buying and selling have to change. Shakespeare wrote most eloquently of the interaction between fate and free will by giving those words to Brutus in Julius Caesar:

We at the height are ready to decline.
There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures. (IV.ii.269–276)

No one’s position is permanent, and how we deal with the realities we are given is the key to success. As those realities change, we must as well or “our ventures” are bound to be lost.




Be Present At The Creation
A New Industry Institution To Be Born
THE AMSTERDAM PRODUCE SHOW AND CONFERENCE
Premiers This November At The Iconic…And Symbolic…Westergasfabriek

It was over 30 years ago, in launching PRODUCE BUSINESS magazine, that we set upon ourselves a special obligation—to “Initiate Industry Improvement.”

We had unveiled the first issue at the Produce Marketing Association convention in 1985 in San Francisco, so we celebrated by unveiling this brief video at the most recent PMA:

 

Time passes and the world changes, so while our goal of initiating industry improvement has remained fixed, the tools we use to help the industry are varied. We have print publications, digital publications, webinars, executive share groups, conferences, seminars, career fairs, trade shows and much more.

One way we have helped the industry is by identifying exceptional communities, making outreach to join together the produce industry of the local community with a global network of thought and practice leaders. In so doing, we have created fulcrums for the exchange of ideas, development of competencies, opportunities for commercial success and moments where people near and far join together to establish and deepen relationships… all while they get together to celebrate fresh.

First, we did this in New York:

New Event Planned For 2010: Eastern Produce Council And PRODUCE BUSINESS Announce The New York Produce Show And Conference

Then London:

New Event Planned for 2014: The United Kingdom’s Fresh Produce Consortium And PRODUCE BUSINESS Magazine Announce The London Produce Show and Conference

And now we announce another really extraordinary event:

The Amsterdam Produce Show and Conference

Why Amsterdam? Because the Netherlands is at the very heart of the global produce industry. Indeed, a quarter of all horticultural product traded internationally passes through Holland.

At this intersection between the Netherland’s massive vegetable production and the crucial role played by Dutch traders, the retail leadership of companies such as Ahold, with Holland’s new position as  headquarters for those looking to access Europe’s over 500 million consumer market – think of companies such as Driscoll’s, Robinson fresh and Mission Produce, the Amsterdam Produce Show and Conference will stand as a crucible through which a unique blend, different than anywhere else in the world, will emerge. At the very heart of the global produce industry, the local community, the European produce trade and a global industry will be enriched as they seek new ideas, new practices and new success.

Here are the objectives of this new industry institution:

• To reaffirm the position of the Dutch import and export industry for fresh produce and flowers at the very heart of the supply chain for the whole of Europe and beyond.

• To build relationships across the growing, shipping, distribution, wholesale, catering/foodservice and retail sectors that will enhance and increase the flow of fresh produce into and through the Netherlands.

• To re-instill a sense of justifiable pride within the Dutch produce industry about this position, to renew focus on the importance of their status as one of the world’s premier import/export hubs and to also provide a platform to promote Dutch-produced fruit, vegetables and flowers to an international buyer base.

• To bring the international fresh produce and floral communities to Amsterdam for a professional and cultural experience that will add significant value to their business and their careers.

• To bring thought and practice leaders to Amsterdam from around the world and create an educational program that both highlights the world-leading commercial, technical and scientific expertise that exists in the Netherlands, alongside some of the best examples from around the globe.

•  To link students and educational institutions in Europe with the produce industry and establish connections that will help the industry find its next generation of business leaders.

•  To showcase some of the world-class produce that is shipped into Rotterdam and Schipol for markets far and wide and to bring the shippers of that produce together with buyers in the key markets supplied by Dutch exporters.

• To focus on the food culture of Amsterdam and the rest of the country — promote the increasing diversity, creativity and progress of the Dutch foodservice market with tours and educational sessions in Amsterdam and Rotterdam.

•  To give smaller players in the global market the opportunity to get noticed at an influential international trade exhibition — each booth is the same size and offers a more accessible option in a more relevant location than any existing event.

On a wider scale, the event will be an opportunity to bring Benelux/European/international buyers, shippers and marketers of fresh produce together with produce thought and practice leaders around the world to move this great industry forward in a sustainable manner — with the Dutch industry retaining its place at the forefront.

The event will be held in a most interesting venue. For years, Holland had no natural gas and a large plant existed to convert coal to natural gas. When circumstances changed and natural gas was discovered in the North Sea, there was no need for this expensive process and the plant closed. It had no purpose. Yet, in truth, it was only in facing this adversity that the facility came to know a new purpose… The Westergasfabriek has become a hub of a creative district, and old resources in the form of land and buildings have been repurposed to serve as a park, a cultural and creative laboratory and place for extraordinary events.

So we stake our own claim at Westergasfabriek, both to celebrate and enrich the food culture of Amsterdam and to find in the journey of the Westergasfabriek an analogy for the ever-changing world of produce and how our industry can take the core resources we possess and use them in new ways and to new effect and, in so doing, bring us, individually, corporately and as an industry, to a new level of success.

The Amsterdam Produce Show and Conference kicks off with an Opening Cocktail reception on November 2nd, 2016, and the Perishable Pundit’s Thought Leader’s Breakfast follows on the morning of the 3rd, leading directly into an all day trade show. That evening is free for all to enjoy Amsterdam. On November 4th, there will be a series of industry tours.

We hope you will join us this year and seize this opportunity to be present at the creation of a new industry institution: The Amsterdam Produce Show and Conference.

If you would like information on exhibiting, please let us know here.

If you are interested in sponsoring a networking event, a school presence, a seminar, a tour or culinary presentation, please let us know here.

If you would like information on attending the event, please give us your contact information here.

Come to Amsterdam; come to Celebrate Fresh.




Chipotle, Bill Marler And Black Swan Events — How Much Money Do We Want To See Spent On Food Safety?

James B. Stewart at The New York Times wrote an article that ran under the headline, Chipotle’s New Mantra: Safe Food, Not Just Fresh, and it contained these comments from well-known plaintiff attorney, Bill Marler:

“I’ve been involved in every food-borne illness outbreak, small and large, since 1993,” said Bill Marler, a Seattle-based lawyer who specializes in representing victims of food-borne illnesses and has filed several recent cases against Chipotle. “I can’t think of any chain, restaurant or food manufacturer who’s ever reported that many outbreaks in just six months. Underlying that has to be a lack of controls.”

Bill Marler is smart and knowledgeable and, certainly, engaged — but, in this case, he is almost certainly wrong.

We have little doubt that in analyzing Chipotle’s operation, we would find areas for improvement. Indeed, already, Chipotle has found them on its own. On the production side, just as Natural Selection Foods did in the spinach crisis, Chipotle brought in Mansour Samadpour, chief executive of IEH Laboratories and Consulting Group, who we spoke to in a piece we titled, A Closer Look At Finished Product Testing. Chipotle is also shifting more food preparation out of the stores and into commissaries and utilizing a vaguely identified “sanitary kill step” on lettuce, tomatoes and cilantro. (editor’s Note: You can see our interview with Dr. Samadpour regarding his work with Chipotle right here.) 

This, however, does not mean that Chipotle’s controls were any weaker than those of other restaurant chains or flawed in some fundamental way.

The problem is that identified food safety outbreaks are extreme outliers, so rare in proportion to the amount of food consumed that there is no way to accurately predict their occurrence. One of the characteristics of so called “black swan events” is that only after the occurrence of such an event one rationalizes it could have been predicted.

Indeed the precise reason why Bill Marler — just one man — could have “been involved in every food-borne illness outbreak, small and large, since 1993” — is because, statistically, these outbreaks are virtually nonexistent.

Put it in perspective. The chance of winning the recent Powerball jackpot was only 1 in 292,201,338 — pretty steep. In contrast, the dietary guidelines call for people to consume roughly 19 servings of food a day. There are over 322 million Americans. Multiply today’s population by 19 servings and one gets about 6,134,226,350 servings of food — and this per day! Per year, we are talking roughly 2,239,000,000,000 — that is trillions of servings per year that we are talking about!

If we were to multiply that number by the 23 years that Bill Marler has “been involved in every food-borne illness outbreak, small and large, since 1993” we come up with roughly 51,497,000,000,000 — that is over 51 trillion servings of food in the USA.One can quibble — the number may be a little high as the population has grown or a little low as people eat more than their recommended serving number, etc.

The key though is that it is an enormous number, and Bill Marler couldn’t be involved in all the cases if even a small portion resulted in outbreaks of food-borne illness.

Now this is not to say that choices can’t be optimized toward one outcome or another. Chipotle is admirable as it is virtually the only large chain that has been for some time willing to pay extra to get product that it believes conforms to its values — others talk the talk but won’t pay up.

On the other hand, it is also true that one can only have one top priority at a time. And with its interest in artisanal, local and cooking in store, it is clear that Chipotle has not prioritized food safety as its Number One priority.

That sounds shocking, but we could say the same of almost everyone in the entire industry. At retail, we know many stores that cut fruit in the supermarket. Some do it for economic reasons — wanting an outlet for fruit approaching its useful life — some do it because they believe it tastes better or that the theatre of cutting in store will boost sales, There are many reasons.

But nobody who has visited a modern fresh-cut facility can believe that any store is cutting fruit in house because it has prioritized food safety. Indeed, it is the opposite. The supermarket chain that is cutting fruit in the store is specifically deciding that something else — money, flavor, theatre, whatever it believes — is more important than safety.

This is less shocking than it seems. When you have a very rare event, the occurrence of which is unpredictable in timetable, the high cost of preventing an incident leads to insufficient investment to prevent a problem.

This is why even in places where tornadoes are common, we still don’t build structures to withstand tornadoes. We can, but they are very expensive both in dollars and in design compromises. We just accept that every year roughly 80 people will die in America from tornadoes, with a total of almost 200 people in America dying from other storms.

Perhaps a more germane example is auto accidents. Driving is a very common activity, just like eating. It is exceedingly safe, if you look at the number of miles driven or trips taken. Yet over 30,000 people die in automotive accidents each year. Almost 100% of these deaths are preventable, as we know how to build cars that will withstand extreme impacts, and we can mandate lower speeds.

We specifically do not mandate these steps because of their cost. In contrast, the Centers for Disease Control and Prevention estimate that 3,000 people die as a result of foodborne illness — less than a tenth of auto accidents. If we don’t do it for autos, are we really going to demand that Burrito prices double to have an infinitesimal effect on food safety?

This puts businesses in a very difficult situation. The truth is these are low probability events; they occur unpredictably and therefore Chipotle, or any company, can have five outbreaks this year and then none for 100 years. The numbers are too small to be meaningful.

Which is why a bad year does not indicate a lack of controls, as Bill Marler asserts.

Executives don’t feel they can talk about the situation realistically with consumers. So, Steve Ells, the founder and co-CEO of Chipotle, makes some unfortunate pronouncements and CNBC uses his comments in this headline: Chipotle Execs: There is no E coli in Chipotle Today:

"I will say though, that we can assure you today that there is no E. coli in Chipotle," Ells said.

This is almost certainly not true, and in any case certainly nothing he would have any way of knowing to be true. Escherichia coli, typically abbreviated as E. coli is a diverse group of bacteria; some are harmless, and some can lead to kidney failure — but it is not uncommon. It lives in the intestines of humans and animals.

And pathogens are hard to find. It is not uncommon to test a field, get a positive and then retest a field and get no positives. Bob Whitaker, Ph.D., Chief Science & Technology Officer at the Produce Marketing Association, likes to point out that each acre of a spinach field has around 20 million spinach leaves. A typical field test will test 2,000 to 3,000 leaves. If a bird landed on one plant and caused contamination, the odds are not particularly good that bacteria from the bird’s feces will be found.

Although consumers may like absolute assurances, humility about our ability to manage food safety, in a consumer’s home or a restaurant, would be advisable and Chipotle would be contributing to the public interest by raising consumer literacy on food safety issues, rather than making bold claims it can’t substantiate.

Steve Ells also made a pronouncement claiming that only Chipotle itself would pay the costs of its new enhanced food safety program:

Chipotle will not raise prices to cover the cost of new food safety procedures put in place after an E. coli outbreak sickened more than 50 people, the company’s founder and CEO said Tuesday during a visit to Seattle.

CEO Steve Ells would not say how much the new testing along its supply chain and safety protocols inside its restaurants are costing the chain of more than 1,900 casual Mexican restaurants. Suppliers also would not be paying for all the new testing requirements started, he said.

“This is a cost that we will bear,” Ells told The Associated Press at the beginning of a day stopping by Seattle restaurants to talk to employees about new food safety rules.

Again, though, this really doesn’t make sense. Ells didn’t send a letter to shareholders announcing that from now to eternity, they should expect lower returns. These costs are costs of production and will have to be covered by consumers.

Explaining to consumers that there is a cost to food safety would, in fact, be a useful contribution to the public weal.

It is very unclear the degree to which any of Chipotle’s efforts will reduce outbreaks of foodborne illness. If this year the company has none, company executives doubtless will proclaim victory and that this proves the efficacy of its efforts. But it might just prove that Lady Luck decided to visit Chipotle in 2016.

We wish them good fortune in the year to come.




If One Wants To Evaluate The Impact Of Raising The Minimum Wage...One Has To Determine If It Actually Raises Compensation

Having studies of all kinds pass over the Pundit desk throughout the years has clearly established one thing: The answer you get depends on the question you ask. So when Michael Lynn and Christopher Boone of the Cornell University School of Hotel Administration published a study — titled Have Minimum Wage Increases Hurt the Restaurant Industry? The Evidence Says No! — one is left looking at the rather interesting phrasing of the study question.

Normally the argument against minimum wage increases is expressed in the form that higher minimum wages price out many employees whose value does not meet or exceed the new wage. This does not necessarily translate into damage to any particular industry. So, if gas station attendants, once ubiquitous, are a rarity today and, if, this is because rising minimum wages led gas stations to switch to a self-service model as consumers did not value the attendants sufficiently to cover higher wages, then low-skill workers suffer as a result of having their job opportunities constrained by minimum wages that priced them out of the market. It is not obvious at all that gas station operators have to suffer from these higher minimum wages.

This study looks retrospectively at the results of past minimum wage hikes — but that leaves a lot of questions unanswered. Most notably the authors fail to distinguish between minimum wage hikes that are significant and those that are not. Minimum wages are not increased in some random way whereby we can easily study their effects. There are powerful forces that resist seeing minimum wages rise, and political interest swings between interest in job creation — say during depressions and deep recessions — and interest in enhancing living standards for the working — typically at moments when unemployment is low.

As a result, it is perfectly reasonable to think that minimum wage hikes tend to occur when they are likely to impact few people.

The Pew Research Center published a report in 2014, titled Who Makes Minimum Wage? It defined recipients this way:

Given the continuing campaigns by unions, workers, politicians and others to raise the federal minimum wage, it bears asking: Just who are minimum-wage workers, anyway?

Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.532 million hourly workers earned the federal minimum of $7.25 an hour; nearly 1.8 million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.3 million hourly workers at or below the federal minimum.

That group represents 4.3% of the nation’s 75.9 million hourly-paid workers and 2.6% of all wage and salary workers.

So, studying past minimum wage hikes may just demonstrate that if you study the impact of laws impacting very few people, you will find it hard to identify very significant impacts.

There is always a problem with researching what is easy to research and, for the most part, there seems to be little effort to ascertain if minimum wage hikes have even resulted in higher wages at all.

Hourly employees such as those covered by the minimum wage get paid in six ways:

1) The legal wage.

2) Bonuses or Commissions

3) Official benefits – health insurance, paid vacation, etc.

4) Informal benefits – Can range from free food to how one is treated when one gets a serious illness.

5) Number of hours one is allowed to work.

6) How much, if any, overtime, an employee can put in and at what rate.

It is entirely possible that a legal requirement to increase minimum wages will  be completely countered by employer reactions that are just not being studied. An employer can increase health insurance co-pays or deductibles. At the Pundit office we have fresh fruit delivered twice a week; we could stop. Once we had an employee with cancer, and we kept paying the employee although the employee wasn’t working and we were under no obligation to do so.

In other words minimum wage laws can simply serve to shift compensation to the W-2 form from non W-2 forms of compensation. This may be good or may be bad but, in any case, if one is asking a question related to the impact of mandated increased wages, one needs to study whether the law actually led to increased wages at all!

We’ve discussed the minimum wage issue in pieces such as Krueger Appointment Does Not Bode Well For Industry’s Employment Concerns, and we would say that those who focus on claims that raising the minimum wage does not reduce employment rarely have confidence in the economics of their position. We say this for the simple reason that if they really believed this, they would argue for far higher increases in the minimum wage.

After all, if the principle is that higher wages can be mandated without job losses being experienced, shouldn’t we raise wages so everyone can have a vacation home?

Instead, advocates of raising the minimum wage count on the economic impact of raising minimums to get lost in the mist as the increase is small and impacts few people directly.

The other variable that seems to be missing from most studies of the impact of minimum wage hikes is time. Some impacts may come right away, but others may take years to filter through the system.

We just received word that the World’s Largest McDonald’s Shuts to Make Way for Even Larger McDonald’s:

The biggest McDonald’s in the world closed this week to make room for an even larger McDonald’s.

McDonald’s shut down the 12,000-square-foot location in Orlando, Fla. in order to open a 19,000-square-foot version of the fast-food restaurant next door in February, the Orlando Sentinel reports. The franchise opened in 1976 and has since become a popular tourist attraction, but McDonald’s decided it was time for a renovation.

The old restaurant was famously shaped like a box of French fries and didn’t just have a PlayPlace but also featured an arcade, animatronic robots, bowling and more.

Yet what we thought was most interesting in light of the ongoing minimum wage debates was this line:

McDonald’s hasn’t given word yet on what attractions the new location will offer, but there will be self-serve kiosks, allowing customers to order their own food.

Doubtless there were many motivations for introducing self-service kiosks such as higher order accuracy but, also, cost of labor may have played a part.

If minimum wages artificially raise the cost of labor — and if they don’t, they are just political theatre with little economic impact — then increases may lead to innovations such as self-serve kiosks. Such innovations take time though, sometimes years and years as mechanization techniques have to be researched and refined. Yet the research seeking to note the impact of minimum wages isn’t sustained for lengthy periods of time.

So minimum wage hikes may not hurt restaurants — perhaps because they are ineffectual or because restaurants automate and adapt to higher wages — but low-skilled workers can still lose out on the opportunity to begin climbing a ladder that can lead to prosperity. So focusing on the wrong thing can lead to bad results.

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