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Pundit’s Mailbag — How About Subsidy Money For GTIN Conversion?

Jim Prevor’s Perishable Pundit, February 19, 2009

We have run many pieces on traceability and most recently ran two articles based on a letter that Greg Fritz, President of Cleveland, Ohio-based Produce Packaging, Inc. sent to United Fresh Produce Association regarding the Produce Traceability Initiative and the response from United, PMA and CPMA to that letter.

The two pieces — the first titled Is Produce Traceability Initiative Worth the Investment? and the next run under the title Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns — dealt specifically with the cost concerns for many companies of adopting the PTI.

Now we have a letter from a frequent Pundit contributor suggesting an alternative:

Here is a thought. Why not have the federal government (USDA) subsidize the conversion to GTIN as the global traceability standard?

If the USDA can subsidize crop farming, surely they can subsidize traceability?

If the federal government can find funds to switch television to digital, they can find the funds to implement a traceability standard.

My point being is that we need a standard, and GTIN is an already universally understood and accepted method. However, the cost of conversion is substantial, and for many small shippers, it will not be feasible.

I suspect many shippers don’t have any idea what a common standard would mean from a financial or a skill set implementation standpoint. Knowing how archaic a lot of computer systems are in this industry, the cost of conversion will not only surprise many, but simply be out of reach financially.

Is a common standard the right thing to do? Most definitely. However, it’s easy to be idealistic when you can afford it or don’t have to pay for it.

— Eric Schwartz
President
Salyer American Fresh Foods
Monterey, California

Eric has been an outspoken leader on many issues important to the industry. Here at the Pundit, we’ve spoken with him or he sent a note to us many times, including these examples:

Pundit’s Pulse Of The Industry: Dole Vegetables’ Eric Schwartz

Single Step Award Winner — Eric Schwartz Of Dole Vegetables

Pundit’s Mailbag — Dole’s Schwartz Comments On Silent Buyers

Pundit’s Mailbag — More Questions About Leafy Greens Board

Pundit’s Mailbag — The Deadline Approaches

Dole Hit With Another Recall

Dole’s Schwartz Sheds More Light On Recent Recall

Pundit’s Mailbag — Lesson From Avocadogate: You Get What You Tolerate

Pundit’s Mailbag — Organic Industry’s ‘Situational’ Standard

Why The Secrecy On Inspection Agency Lab Results?

Inspection Agencies Could Assist In Traceability

Ocean Mist’s Joe Pezzini Honored

Now his point today gives us a chuckle simply because in light of all the bailouts and the stimulus package, we’ve reached the point where one feels slightly ridiculous in arguing against the government paying for anything. So, sure, if in Stimulus Bill II someone can slip in a little technology money for the produce industry well, why should the produce industry be left out?

We would, however, say two things:

First, we have to be careful about struggling to preserve a produce industry from days gone by. Food safety, traceability, sustainability… all these, plus customer needs such as vendor-managed replenishment, create the need for different competencies, a different scale of operation and different levels of managerial depth. It is not surprising that businesses that grew up in a time with different demands should sometimes be ill-suited to the new environment. Some of them won’t make it and, although we may lament that, it is actually not clear we can or should do anything to prevent this transformation.

Second, although Federal money would certainly make things easier, it shouldn’t be necessary. Although Greg Fritz pointed out the investment required, his real concern was that the investment would not be required of everyone:

…I would wholeheartedly support the PTI effort, given the assumption of a level playing field. If, as in your example, “Ken” has to pay for the fees, systems, and record-keeping that Produce Packaging will have to pay for, then that’s fair, and good for the industry. However, if the small, “local,” or “seasonal” boys get a pass (or an “exemption” from the government), then it’s no longer fair, and not a significant benefit to the public.

If buyers actually constrain their supply chains to only purchase from vendors compliant with the PTI, in all likelihood they will have to pay higher prices as that will exclude the more informal sector of the industry. These higher prices will probably justify the investment required to be PTI-complaint. The big risk is that buyers will be unwilling to constrain their supply chains and will just buy from the cheapest vendor.

If vendors preach high standards but purchase based on price, those vendors who take supply-chain responsibilities — such as traceability — seriously and invest to fulfill these responsibilities will lose money or earn inadequate returns. That can only go on for so long.

Many thanks to Eric Schwartz and Salyer American Fresh Foods for helping us think through such an important issue.

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