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Produce Business

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American Food & Ag Exporter

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Pundit’s Pulse Of The Industry:
Costco’s Dale Hollingsworth

Jim Prevor’s Perishable Pundit, February 8, 2007

Our piece Consumer Studies On Spinach Reviewed… And Costco’s Proactive Approach included a reference to a USA Today article in which Costco publicized its insistence that suppliers product test spinach:

Many retailers started reintroducing spinach in early October. Costco waited until this month. It now requires suppliers to random test spinach at the processing plant, including for E. coli 0157:H7 and Salmonella, another bacteria that can cause serious infections in some people. Within weeks, Costco expects similar testing for other bagged and ready-to-eat products, such as lettuce salads and baby carrots. “It’s another part of the food-safety process,” says Craig Wilson, Costco vice president of food safety and quality.

To better understand Costco’s product testing regimen, we asked Mira Slott, Pundit investigator and special projects editor, to find out more:

Dale Hollingsworth, corporate produce buyer, Costco, Issaquah, Washington

Q: Many retailers reintroduced spinach in October when the FDA lifted its restrictions. Why did you wait so long?

A: We were in no hurry to bring back spinach, and we continue to take a guarded approach moving forward. We’re only offering one spinach item, in conventional and organic form. The conventional is a 3.5-pound bagged “teen” [larger leaf] spinach and we also have organic baby spinach in a 1-pound clamshell. We just want to protect our members by doing additional testing and research.

Q: What kind of testing?

A: Costco is requiring all our spinach vendors, about eight different suppliers for the spinach product, to test product for E. coli 0157:H7 Salmonella, Listeria and dangerous levels of bacteria before it is shipped out. Everyone has to do the same thing.

Q: How long does that take? And how is it working out?

A: Each test is different. The one that takes the longest is for Listeria because of the culture incubation period. The other time-consuming test is assessing the total bacteria plate count. We have a range that is acceptable and if the product doesn’t meet that, we refuse shipment. We’re doing this for our members. Not one incident happened at Costco and we want to make sure we keep it that way. That’s our biggest concern. The press did no justice to covering the crisis, and Costco experienced problems because of it.

(For elaboration on how some members of the consumer media falsely accused Costco of selling spring mix with spinach during the spinach/E. coli outbreak, read our Retail Pulse Of The Industry published September 25 with Jeff Lyons, Costco’s senior vice president of fresh foods, here.)

Q: How are the vendors responding to Costco’s new testing requirements and precautionary measures?

A: They all have their reservations. They don’t mind doing the testing, but the test and hold concerns them. Some facilities aren’t big enough to put product aside in some instances. If we had every product being tested, that would be an enormous challenge for some vendors to hold such large inventories overnight.

Q: Are you considering similar testing on other product categories?

A: There is not enough evidence to ramp up testing yet, but we are researching it, cautiously examining options. Logistics could turn into a huge nightmare for a lot of our vendors.

Right now the program is going very well on spinach. Product is put on hold. The vendor can’t ship any product out until tests come back negative. We want to test other items, but also want more research to guide our actions. Costco is not backing down on its intention to expand the testing to other bagged and ready-to-eat products, but we want to be sure we’re taking actions that are necessary and that make sense. We are looking at where parameters are too lenient and we have to tighten up, and if we have measures that are too restrictive and should be loosened. We are only back into this five weeks, so we have much to learn.

Dale identifies one of the key problems as space to store all of this product while it is being tested — notably he didn’t seem concerned about giving up some shelf life. The space issue is a real one and reminds us of a U.S. Postal Service plan some years ago to reduce costs by eliminating Saturday delivery of mail. The project was abandoned when it was realized they would have to spend billions to construct warehouses to hold all the mail.

One wonders, though, if a good logistics approach couldn’t significantly ameliorate the problem. If the food safety system prior to testing is strong, very few samples should test positive.

So it would be worth it to send product out after testing, but before the results are in, if the destination were far enough away, that clearance could be expected before arrival.

For example, the product destined for San Francisco from Salinas would be held — but the product destined for Miami from Salinas would ship and get clearance for final release en route.

Once a year, someone will probably have to eat a trucking bill, but that is probably cheaper than building and operating cold storage capacity to keep all product held waiting for clearance.

There is some risk that shipped product would be unloaded and used without getting clearance, but an organization such as Costco, dealing with a limited number of stores and a restricted range of suppliers, should be able to effectively manage this risk.

Many thanks to Dale and to Costco for sharing this information. Frankness on this subject helps us build a stronger and safer industry.

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