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Pundit’s Mailbag — Wholesaler’s Struggle With PTI And Real Life Situations

Jim Prevor’s Perishable Pundit, August 11, 2009

Recently in Pundit sister publication, PRODUCE BUSINESS, Bryan Silbermann, President of the Produce Marketing Association (PMA), and the Pundit had an exchange on the issue of traceability and, specifically, the Produce Traceability Initiative (PTI). Whereas Bryan pointed out that “Traceability Is Fundamental,” we asked “Will Buyers Ante Up For PTI?” You can read the exchange here.

The piece brought this letter from a wholesaler in California:

I read your article, “Will Buyers Ante Up for PTI?” — and said to my pop, “This guy gets it,” so I am sending you this letter.

I’m 49, my pop is 76, my other partner is 63. They are old school… my father is a legend in the San Francisco Produce Terminal. I told them both a while back that this is the way to go, this is real: traceability, food safety, sustainability — if we do not get on this train in its infancy, we might get run over by it later.

Frankly, normally I would have little time for this kind of letter. But, I tweaked my back and am just answering phones for a couple of day’s…. and reading PRODUCE BUSINESS magazine cover to cover! I can truly say that over many issues, PRODUCE BUSINESS magazine has inspired me to take our company down this progressive road, along with the requests of some of our larger customers.

Officially, I am the Vice President of Galli Produce Inc., San Jose, California, incorporated in 1956. Unofficially, I’m also the self-proclaimed Food Safety Director!

In order to do business with many national restaurant chains and foodservice distributors, we have had to really take a look at who we buy from. Every grower we buy direct from, for example, Nunes and Boggiatto to name a couple, all have these Recall/Traceability procedures in place. As do our brokers as well.

We are a relatively small company, yet we conduct mock recalls and review each year to ensure our compliance with Good Manufacturing Practices.

I have developed Sanitation Standard Operating Procedures (SSOP) for every inch of our warehouse. It’s costly to say the least and hard to pass the costs on. Especially when the playing field is not level in regards to my competition, many of whom skip all these steps.

It used to be that in the summertime, Joe or Juan, the farmer who has 15 acres in Gilroy or wherever, would come to my dock with outstanding Roma’s or Cherry Tom’s. Maybe he wants $6 in a $10 market! It’s very difficult to pass that up and not put that extra $4 in our pocket or pass on the value to our customers simply because I know nothing about this grower and so can’t vouch for his food safety efforts!

My 76-year-old father and partner, who has 55 years of farming and wholesale experience, both look at me like I have two heads when I consider passing this up! That $4 covers a lot of sins such as what we throw away or lose in repacking. It can also be a powerful lure to attract customers who then also buy other items.

And if we do pass up the deal, the farmer is likely to just go down the street and my competition will gain the advantage. Not inconsequentially, if the product is going to be in commerce anyway, did our refusing to market it make the food supply any safer?

I know my competition is not passing it up! He is putting that $4 in his pocket or using it for a more attractive price on the price list he’s floating around to our customers.

What do I say when a customer calls and says “ Hey! Joe Blow’s Roma’s and Cherry Tom’s are $4 cheaper than yours — What’s up?”

I say well mine are inspected, I have transparency with my growers, I know what I am selling…… but many buyers just don’t care.

My point is it’s tough to tow the line on the wholesale level. If the buyers don’t value something, how can a supplier pay extra to provide it?

The problem I see with the Produce Traceability Initiative (PTI) is that it includes no mechanism to bring in these small buyers.

If you travel as much as I think you do, you realize that in Any Town USA, there is a restaurant on every corner. Chances are it’s not a chain either but a single- or family-owner.

Chain business is nice but single-owner or family restaurants are the bedrock of all wholesalers. These independents are probably struggling or at the very least feeling the pinch we all are.

And you know what else? Until they get bit by the “I got sick in your restaurant or cafe” pit bull, a Recall/Traceback Protocol in place by their wholesaler is not going to be a priority. Ever.

These independents want that Roma tomato from the 15-acre guy that’s $4 cheaper if they can, for sure.

What makes this even more real to me is that 45 years ago, my grandfather and father were that 15-acre guy!

They raised cabbage, radishes, green onion, red leaf, green leaf etc., in the Santa Clara Valley, never seeing any kind of inspector from the Food and Drug Administration (FDA) or California Department of Pesticide Regulation(DPR).

What has changed since then for that guy? Should it? The solution I think has to come from the wholesaler regardless of what the restaurant would like.

That being said, every day we have small one- or two-truck wholesalers and purveyors come to our dock and buy merchandise, haggle a bit, drink coffee etc. They back in with their rickety non-refrigerated trucks, vans and pick-ups. As I load them up, I have to wonder “hmm, wonder when the last time they washed this truck out with a 2% chlorine solution and documented it?” Like we do once a week as per Galli-SSOP #20.

I guess my point is how are these guys brought into an industry traceability initiative? PACA? Produce Associations? Half of them or more do not have membership in either one.

They function completely under the radar screen. A 100% solution seems unattainable, yet the whole industry will be vulnerable to its weakest link. I’m glad it’s not my job to bring compliance to this side of the industry because it would mean breaking someone’s toys.

PTI is also only an “after the fact” tool. Contamination can occur in many places from field to plate. PTI and plant sanitation go hand-in-hand. Who’s going to do the leg work on the ground to get everyone involved? And if everyone is not involved, how can wholesalers such as our own compete with those not spending the money and refusing the opportunities that we are?

— Jeff Pieracci
Galli Produce
San Jose, California

This letter strikes us as a particularly poignant and incisive window on an aspect of the industry often ignored in the councils that discuss industry affairs. We’ve run pieces such as Is Produce Traceability Initiative Worth The Investment, in which Gregory J. Fritz, President of Produce Packaging, Inc. in Cleveland, Ohio, pointed out the difficulty and expense of compliance. The piece brought a response from the associations, which we published under the title Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns.

We’ve written a great deal about traceability, and while recognizing the value of PTI, we have always seen it as more a start than a solution. Jeff’s letter points to small wholesalers and independent restaurants as just two of the big holes PTI leaves open in the traceability web of the produce industry.

We’ve recognized this before. In our piece Is Produce Traceability InitiativeWorth The Investment? we ran a classic note from a brilliant wholesaler about “Ken in the red truck” buying down on a terminal market:

Putting in a system to trace product gets more difficult the further down we go in the distribution chain. Stand on the floor on a busy Terminal Market and try and imagine where the product goes after it is sold by the Wholesaler. A customer known as “Ken, the guy with Red truck,” pays cash for a pallet of tomatoes. He takes the tomatoes to his garage where the boxes sit on the floor next to cleaning supplies, motor oil, and who know what else.

He and his kids (2 of whom just used the toilet without washing their hands) dump the tomatoes on a dirty tarp to sort them for color. The green ones sit in the garage for a few days to color up during which time one or two rodents snack on tomatoes. When they finally ripen, Ken delivers the tomatoes to some of the finest restaurants in town for all of us to enjoy.

Somehow I don’t think that Ken or even a legitimate small wholesaler or purveyor is interested in investing in a traceability system. They will have to be dragged kicking and screaming to the table. The problem is that the system is only as good as its weakest link, and unless Ken is a part of the system it doesn’t work.

What Jeff’s letter adds is the day-to-day dynamic — the guy offering to sell tomatoes at a bargain price — that drives decisions in one direction or another.

We suspect that there will be no “solution” to the problem. Private action is unlikely to drive universal traceability, and federal regulations are likely to exempt the specific small-scale players that Jeff wrote about.

The most likely outcome: A bifurcation of the industry. Some companies will operate in a sort of small-scale unregulated sector, and large players will conform to world class standards. Companies such as Galli Produce will either have to choose segments or they will bifurcate themselves. Perhaps one company buys from the top vendors, maintains total transparency and sells to those buyers who value such efforts. A totally separate company takes advantage of transactional opportunities and sells to companies that have customers heavily focused on price.

It is not an entirely satisfactory solution, but it may be the one we get.

Many thanks to Jeff Pieracci and Galli Produce for sharing their perspective on this important matter.

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