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Vendors Risk Much By Not Standing Up For Food Safety Premiums

Jim Prevor’s Perishable Pundit, October 23, 2011

It is often useful to look at related industries to see how they handle food safety issues. So, for example, we’ve looked at issues such as pasteurization of nuts in pieces such as these:

Pundit Pulse Of The Industry: California Almond Board

Point/Counterpoint: Raw Foods Advocates Get Steamed About Pasteurized Almonds

Now — after reflecting on our Cantaloupe Crisis coverage — a vendor of “organic, certified, pasteurized, walnuts” sends a note urging producers to stand up to buyers when it comes to food safety.

I have been a long time reader and love your insights. Being in the nut business, I often feel like a long lost cousin who is related to the produce industry but is overlooked and left off the mailing list for produce family gatherings. Although our less perishable nature puts us in a different set of circumstances for marketing challenges, the product still comes from the field.

I have been amazed at how weak some sellers are when it comes to dealing with buyers. While it may be the buyers of these products who pay the bills for the invoice, it is the packers and/or growers who pay the costs of the recall should there be an issue. For some reason, it appears as though people are too willing to let a buyer’s decision to push a price target allow themselves to be talked into putting their livelihoods at risk by cutting corners on food safety.

Our company has spent over 2 years bringing an organic certified pasteurization system into production in the walnut business. This is very important as Canada, Europe and other markets have either very restrictive or zero tolerance levels on residuals for Propylene Oxide, the most common pasteurization system for nuts. In the past 6 months, Canada has endured two recalls for E. coli in walnuts, and although many of my competitors are not convinced that pasteurization is necessary, our company has forged our own path down that road.

Recently, I was offering walnuts to a customer in Canada. This customer did not want to pay for pasteurization even with his competitors having 2 separate recalls in the prior 6 months on the same product. The immediate problem I saw was that the buyer was willing to gamble on food safety, yet I would be on the hook for the losses if things go badly, so I declined to sell him and offered to send him the phone numbers of 78 of my competitors who would ship unpasteurized walnuts to him because I would not.

He then changed his mind and paid the up-charge. While there are certainly those out there who would cut corners on safety to save $0.07/lb, if sellers are soft on demanding food safety be a shared cost, they run the risk of letting people who are willing to pay become free riders and do damage to the entire industry by hindering the progression of higher safety standards.

People go into business expecting that they can produce a product and sell it for a profit generally because they believe in the product and have faith in their ability to produce it. For some reason, they are not as sold on their ability to market the food safety aspect. While it is easy to point the finger at the buyers who are reluctant to pay the costs of higher food safety, it is the producers who have the most to lose and thus should be pushing back much harder to protect the reputation of their respective commodities and the produce industry as a whole.

Mike Poindexter
Poindexter Nut Company
Selma, California

We appreciate the letter very much. In general, we do think that vendors do need to state their case more strongly. Still, the letter brings a few points to mind:

1) This is the difference between a true perishable and a semi-perishable. Doubtless there are lots of reasons to want to sell walnuts now, not later. But there is nothing like the urgency to sell lettuce before the weekend hits.

2) It also is not necessarily true that vendors pay the cost of recalls. Sometimes they do, but true recalls often can be covered by insurance.

3) The pasteurization process is a case of an explicit charge — .07 cents a lb in exchange for a specific benefit — pasteurized walnuts. Most foods safety efforts in produce are along a continuum. So if company A tests its water monthly and company B tests it weekly, there is no known measure of how much additional safety that investment will produce. Or put another way, what is the buyer getting for his money? Implicit in this is that “cutting corners on food safety” is really not the right analogy because you can always do more — bigger buffers, more testing, more trapping etc.

It is actually an interesting question: Imagine a produce vendor having two different levels of food safety. A retailer calls to the vendor, who explains, “We have cantaloupes with a Good Manufacturing Practices audit for $10 and we are working a GFSI-audit cantaloupe for $10.50.” Which would the retailer buy?

And how would the retailer reconcile its choice with its self-proclaimed commitment to food safety?

Many thanks to Mike Poindexter for bringing a little “nuttiness” to this issue.

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