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Pundit’s Mailbag — Chinese Produce Imports And Retail Responsibilities

Jim Prevor’s Perishable Pundit, August 15, 2007

We ran a short piece entitled, Garlic/Ginger Erratum, which explained that though an article we wrote under the name, More Food Safety Lessons From Chinese Ginger Recall, was correct, an e-mail announcement line mistakenly said garlic, not ginger.

We published the erratum to make clear that the recall dealt with ginger — not garlic. A produce buyer at one of America’s top food retailers sent us a note saying we might as well not have bothered:

There might not be a “recall” on garlic, but if it is from China, there might as well be one. I think you’ll find most retailers pushing away any produce supplies and/or suppliers shipping in product from China.

In light of the continued media exposure of all problems with products coming from China, it is only the safe thing for a retailer to do. Consumer confidence may be low with our own government, but that stems directly from the ease of market access that these tainted products from China have had in the United States.

Many would think it should be the government’s responsibility to keep these unsafe products out of our markets. In an environment where that control is not exerted, the retailers must stand up and take that responsibility. In fact, I think it should be the retailer’s responsibility to keep these off the shelves. Education must go along with that so that a consumer can understand why certain products are not offered.

We appreciate our correspondent taking the time to write. His letter reminds us of a piece we did with an executive at the British Retail Consortium in which we asked how it came to be that British retailers were so focused on food safety. Here is what we were told:

Q: What instigated the push for standards?

A: We had food scares that killed a few people in the U.K. Until then brand manufactures only had to produce a warrantee, saying, ‘our food is safe.’ A new law came in with a general food safety directive. It basically said you couldn’t just produce a warrantee anymore. What you have to do is demonstrate due diligence. In the event of prosecution, you would have to insure all possible precautions were taken to prevent a food safety incident. Suppose there was glass in a product. You would need to inspect premises to make sure of no foreign objects, register glass breakage, document how you cleaned the machine and cleared up the problem.

What happened was there was a huge employment of technology by retailers to inspect their suppliers. Really it only focused on retail private label products. Retailers wanted to insure their brand name was being protected. What ultimately happened was that select products needed to pass technical audits. When I worked in retail, I’d go down to do a technical once-over on safety practices. The retailer would only accept product on the condition the company passed an audit. Bigger companies were being visited by so many auditors it started to become a real burden.

The U.K. example makes us a tad skeptical that the Chinese problems will, long term, lead to retailers banishing the product. After all, in the U.K., the rise of a stern set of retail standards was driven by two factors: First that the product was typically placed under a private label — thus directly implicating the supermarket in any food safety outbreak — and then laws requiring due diligence were passed, meaning that simply getting a representation from a producer would not be sufficient to avoid liability.

In the short term, though, in produce, our correspondent is 100% correct. Very little fresh produce is imported from China, and when it is imported, it is solely to get a cheaper price and mostly on garlic, a relatively small item.

Whatever the truth about food safety standards in China, most reputable retailers are just not going to see enough upside in dealing with Chinese product to bother.

It is doubtful that this will make things much safer in the U.S. After all, garlic is typically a pretty safe product. It is almost always cooked to start with and mostly consumed in such small quantities — as a flavoring in sauces and what not — that it is hard to conceive of massive food safety problems with garlic.

Yet, in today’s world, it is not necessary for illness to occur for the food safety of a product to fall into question. Most of the time, in fact, we are now catching pesticide residues or bacterial issues through testing, not through people falling ill.

With all the consumer doubt that would arise right now from word that a Kroger, a Wegmans, a Safeway or a Publix was selling imported Chinese garlic — and the real reputational disaster that could come about if there was an actual problem — we suspect many retailers will simply walk away — at least until the problems are perceived to have passed.

Our correspondent’s reference to education is important, but it also shows the quandary the industry is in.

In the case of garlic, the issue, except perhaps in a transitory period, is not explaining to consumers why a retailer doesn’t have garlic — we can grow garlic in America, import it from Argentina, etc. The issue is how can a retailer explain that its garlic costs more than that at another retailer?

Our industry ethos is that a retailer shouldn’t promote food safety efforts. So a retailer, by this light, can’t tell the truth: “We decided to not handle garlic grown in China because we were uncertain as to the food safety standards being followed in China, so we are carrying garlic we feel confident in and that may cost more money. We think you will agree that peace of mind as to your family’s safety is worth the extra cost.”

To some extent, retailers could try to emphasize the flavor of California garlic or other qualities — but they may not be persuasive to consumers.

In effect, our letter-writer brings to mind the root cause of many of the food safety problems in the industry. In a variant of Gresham’s Law, unsafe or, more accurately, cheaply produced produce will tend to drive more expensively produced produce out of circulation.

The analogy is not perfect because Gresham’s Law functions in an environment where laws require people to accept money as legal tender — but the difficulty for a consumer of ascertaining the food safety status of any fresh produce item, combined with government pronouncements that the food supply is safe, functions in a similar way.

The desperation of the California Leafy Greens industry to get everyone “on board” with the California Marketing Agreement was not solely because of a feeling that the whole industry could be affected by any one player’s bad practices. It was also the certainty that non-signers would find plenty of markets for their sub-standard, but less expensive, crops.

The decision to not sell cheap garlic is relatively easy — how many consumers base their shopping patterns on who has the cheapest garlic? But it tells us little about how retailers would respond on higher volume items where they feel more of a need to be competitive.

Many thanks to our correspondent for his input from the retail side.

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