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Bruce Peterson Focuses On Traceability

Jim Prevor’s Perishable Pundit, June 8, 2007

Since Bruce Peterson resigned from Wal-Mart, people have waited with baited breath to find out what his next step would be. So when the press release arrived advising that Bruce had entered into a collaboration with Michael McCartney, Principal of QLM Consulting, to promote a traceback effort for the produce industry, we wanted to find out more.

We asked Pundit Investigator and Special Projects Editor, Mira Slott, to speak with Bruce.

Bruce Peterson
President, Peterson Insights and
former Senior VP Perishables, Wal-Mart

Q: In our discussions going back several years, you were predicting food safety would be a paramount issue in the produce industry, long before the spinach E. coli crisis jolted the industry into a new sense of urgency. What triggered your foresight?

A: The way the industry has responded to food safety is by trying to improve how stuff is grown. It has focused on Good Agricultural Practices. That’s fine, a nice thing to do. Growers have been improving how they grow produce for the 30 years I’ve been in this business. The evolution of agriculture continues to improve from a food safety perspective. It always has, and it always will.

The spinach outbreak centered on the growing of spinach, and as a consequence the perception was that if the industry fixed how it grows spinach the problem would be solved.

Q: Where should the focus be? Growers say more responsibility should be placed on the processors, others say retailers and foodservice operators should be more discerning on who they buy from, and still others argue that without a kill step like in cooked products and processed goods, irradiation is the best alternative to alleviate food safety risks in fresh produce. Is the industry missing the big picture?

A: As Senior VP Perishables at Wal-Mart, a day didn’t go by… ok, maybe not every day, but some 250 times a year… where we had a product recall because of a wrong label, wrong code, a date-quality issue, it didn’t taste good, to more serious problems of E. coli, salmonella or lysteria, and most of these recalls were with products you’d know and trust.

Why aren’t these consumer products companies going out of business? There’s a really simple answer: What CPG companies like Proctor & Gamble, Sara Lee, and Kraft have that the produce industry doesn’t have is effective recall.

A CPG company says, “We have a problem with this lot of lunch meat,” then separates it and communicates that to the public in two ways. The company issues a statement, and secondarily FDA issues a statement. All these three things happen within hours, sometimes days, but usually within 24 hours.

Q: Contrast this to the spinach outbreak’s chain of events?

A: In the spinach crisis, it was weeks before the industry figured out they had a problem. To this day no one knows the source of the problem. In my mind, this is the key issue. You can have all the GAPs in place. No one can tell you that if the California Marketing Agreement were followed, another outbreak wouldn’t occur. What happens to consumer confidence the next time a food safety incident occurs in California and it becomes linked to a signatory of the Marketing Agreement?

I’m not suggesting that focusing on GAP is a bad idea. I will say it’s not the retailers’ job to tell growers how to grow stuff, but that’s another issue. What the industry needs to do is redirect its efforts to traceability and recalls in a monumental way, which it is not doing now. There is an urgency to establish a global network to improve supply chain traceability.

In the CPG industry, for manufactured goods, companies have the benefit of being able to implement HACCP and Good Manufacturing Practices (GMPs), but they still have food safety problems. Bottom line, if they didn’t have effective traceability, their businesses would be doomed.

Q: Is it really fair to compare P&G’s or Kraft’s prowess in tracking and recalling packaged products with the complexities and unique challenges the fresh produce industry must overcome? What are the biggest issues you see?

A: I think basically four issues are paramount that the industry gets focused on. Traceability and recall is number one. I suppose you’re going to ask me the other three: immigration, transportation and water utilization. Those are the four issues most important in the produce industry.

The produce industry is very different in a lot of ways from manufactured products. There is a seasonality component, a geographical factor, and you can’t easily apply HACCP-like practices to agriculture. It’s an open environment.

Q: Also, on the technology side, aren’t there obstacles to applying RFID technology to fresh produce that a CPG company would avoid? Couldn’t RFID be a powerful catalyst in building a seamless supply chain tracking information system?

A: When you get down to the item level, RFID is a problem, but at the case level it’s manageable. RFID plays a role but is not the whole picture. RSS (Reduced Space Symbology, now called GS1 DataBar) will open this area as well. RSS doesn’t provide unlimited information; it has its boundaries, but it is not as narrow as PLUs or barcodes. RSS can be used in conjunction with RFID and as an interim solution during the transition to RFID.

Here’s the other problem. The produce industry is fragmented. There’s a wide gamut of people that produce fruits and vegetables, from large corporations down to an individual corn grower in Florida. We have to come up with a process that includes the entire supply chain. This is difficult, yes, but impossible, no. There has to be a minimum set of standards. If a company is going to produce fresh fruits and vegetables, the FDA has to mandate these standards. It can’t be a voluntary system.

Q: How does one start the process?

A: It requires an industry initiative. There has to be an effort put toward traceability in the way a lot of people wanted to focus on the spinach crisis. The same way airlines think about flying safely. Years ago, the airlines got together and said they would never let air safety become a marketing issue.

Q: What are the pitfalls to marketing food safety?

A: Already in the produce industry food safety is becoming a marketing issue. If we say Texas spinach is ok and California spinach is not, the consumer isn’t going to only buy Texas spinach, the consumer just won’t buy spinach period. Marketing food safety is also irrational. It’s a complicated business, due to seasonality, weather, and products come from all over the U.S. and globally.

Q: During the spinach crisis, when retailers were allowed to sell spinach again, they carried spinach with signage that product was grown outside California, far away from Salinas, sometimes with inaccurate signage or merchandising that created consumer confusion. Are you finding incidents where marketing food safety is continuing?

A: Canada has put restrictions on California leafy vegetables. You have to be a signatory of the California Marketing Agreement. That only applies to California. You could have a California farmer growing in the same way as a New Jersey farmer, and Canada will accept the New Jersey product and not the California product. It has become a marketing issue.

produce statistically is one of the safest things you can eat. And this includes not just U.S. product, but product from Mexico and Canada and countries around the globe. Outbreaks are very rare in the big scheme of things. The way CDC keeps data on this, if someone gets sick from lettuce, that is what it reports. That lettuce could have been stored under hamburger that was tainted. The fact remains that fresh produce is one of the safest things you can eat.

Q: How does the industry’s safety record get so distorted?

A: Focusing on GAP becomes an issue because no one can tell if the product is safer because of a marketing agreement and to what degree. There will always be a risk. It might not have anything to do with the fields or production. It could be handlers or retailers or what the consumer does with the product at home.

That is why the industry has to have effective recall, the ability to isolate product and communicate to the public, and make it happen quickly. The longer the problem goes on, the bigger the problem it becomes.

Q: So lack of an integrated supply chain traceability system contributed to the spinach crisis escalating out of control?

A: Produce has become the poster child for unsafe food, which is ridiculous. It’s absurd. If the spinach crisis teaches us anything, it teaches us how vulnerable we are. This was an industry wake-up call that all the Good Agricultural Practices in the world won’t help.

Think of the millions and millions of dollars it affected with spinach. It can bring an industry to its knees. This industry was really rocked by the spinach crisis. Can you imagine if this was potatoes or tomatoes, billions of dollars instead of tens of millions?

All the efforts that are put into GAP now don’t address the traceability issue. There has to be a mobilized effort of this industry to get behind this and figure this out. It’s a monumental undertaking to cause this to happen.

Q: How will your new collaborative venture with Michael McCartney, Principal at QLM Consulting, help drive the process? Michael told me a couple of years ago he’s always seen RFID as the Holy Grail of the supply chain. Do you have benchmarks, an estimated timeframe of how a project of this scope could unfold?

A: In terms of a timeframe, a lot will depend on if the industry believes as I do that this is the biggest issue. If I can persuade enough influential people, then we can get some critical mass. It’s necessary to have global collaboration to get the job done. You can’t have Kroger, Safeway, and Markon doing separate programs. This has to be a shared industry effort. The key would be to get the buyer coalition for food safety to focus on the process of traceability and communication. Since our press release came out about our mission, I’ve gotten a lot of calls.

Significant retailers and significant growers/shippers have expressed great interest in this project. One advantage Mike and I have is the time to get involved. This will take a lot of coordination. Much of the groundwork has been set. It’s important to create a lot of energy behind this.

When I was at Wal-Mart and first started going on the road of RFID, I had coffee with Mike at FMI in Chicago. He was working heavy on the RFID side, and we were talking about the importance of traceability and the need to get the produce industry off the dime on this. What Mike brings to this is an in-depth understanding of what the supply chain can look like. We both bring different areas of expertise to a discussion.

Q: What steps are you facilitating near-term and further out?

A: I’d like to see the leadership group we pull together meet in July to drive this forward. The whole thing will depend on people believing this is the urgent issue I believe it is. It’s a monumental effort, but not insurmountable. People questioned whether the industry could agree on PLUs and standardized pallets.

Mike and I are spearheading several steps to get this done. In my mind the first thing we have to do is bring a large number of growers together. We have to get growers to agree on what records have to be kept in case of a food safety crisis, preferably electronically and readily accessible.

The second thing that has to happen is the process of connecting the dots. Find out the consumer bought tainted product at one end of the supply chain and connect the dots to the other end. RFID and RSS can help but there has to be a process.

Third is communication, precise and prompt and in connection with the FDA. Suppose Bruce Peterson’s broccoli has a problem. We need FDA to validate the industry claim — that’s critically important, plus that’s their job. The industry has to work with regulators to reassure customers. That’s what happens with other products, not produce.

We have to get food safety away from being a marketing issue. If we approach food safety like the airlines approach air safety we’ll be in business. It never enters the mind of airline executives to say American is safer than Delta.

What is nice about this interview is to learn that Bruce, after having left Wal-Mart, still continues to focus on industry-wide initiatives. What is important is that Bruce is suggesting a different type of solution to the food safety crisis that has beset the produce industry.

While supporting efforts to get both growers and processors to do things more safely, Bruce argues that since none of these initiatives can ever guarantee 100% effectiveness, there will still be future outbreaks.

His focus thus is on an industry initiative to constrain the effect or reduce the consequences of the next outbreak. To accomplish this, he is focusing on traceability and has formed a collaboration with Michael McCartney, who has long been active in traceability, RFID and related items.

Bruce’s initiative is important and a needed direction for the trade. In the heat of the spinach crisis, industry leaders had to basically run around to legislators, regulators and the media, promising massive efforts to make sure nothing like this ever would happen again.

Now, as we have more perspective, we can see that though this is a goal to be worked toward, we just don’t have the knowledge to offer such assurance.

What we do have the knowledge to do, however, is to limit the scope of any outbreak with effective traceback.

If the California Marketing Agreement had been in place last year and we still had the spinach outbreak, there is no particular reason to think that the FDA would have behaved any differently.

Yet, if, at the first sign of a problem, we could have instantly tracked all the product that could have been affected, recalled it all and thus assured the FDA that no further damage was going to be done, that almost certainly would have changed the FDA’s actions.

Now accomplishing all this is possible but not easy and involves more than just technology.

For example, one of the key things is that processors have to batch-process and then sanitize. In other words, if a processor just keeps processing, then identifying the time and date of a contamination does no good since the contaminated product may have contaminated the line and we can’t draw a stopping point.

If processors create discrete batches, then stop and sanitize the equipment, we can limit the scope of recalls.

It also remains problematic to trace back product when the supply chain includes spot buying. In other words, the path is pretty clear if a grower/shipper grows and packs produce and sells it to a retail chain. It gets much harder if you look at horizontal trading, say as is common in Nogales, or fill-ins from terminal markets. This strikes us a major gap because the FDA might not be satisfied with a system that can’t be inclusive of the whole trade.

Of course if it was easy, it would have already happened. Hopefully we will see the trade associations and others step up to the plate to try to make this happen for the trade. And we all owe thanks to Michael and Bruce for their efforts to move this along.

It is worth making a point about marketing. It seems to us inevitable that if safety is relative — that is if different programs will produce different levels of assurance of safety — and if buyers — trade or consumer — are focused on safety as an attribute they look for in produce, some sort of marketing is inevitable around this issue.

The key is to make sure it is done appropriately and in full recognition that it can come back to haunt the marketer.

Bruce’s reference to the airline industry is telling. As the jet plane came into use, bringing air travel to many more consumers, many of whom were afraid of flying and feared for their safety, Pan Am, then America’s flag carrier to the world, introduced a slogan: The World’s Most Experienced Airline.

This was a discreet but clear reference to the safety a consumer would seek in flying with a carrier that had safely transported so many people.

Of course, in light of Pan Am’s bankruptcy and dissolution, we suppose it is worth noting that its marketing didn’t do it much good.

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