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Pundit’s Mailbag — Increasing Concern Over Food Safety Vulnerabilities

Jim Prevor’s Perishable Pundit, August 31, 2007

We last heard from Jon Schwalls when he sent us a quote from Theodore Roosevelt in the midst of the immigration debate. We called the piece Pundit’s Mailbag — English and Immigration.

Now it was our piece Costco Recalls Mexican Grown, U.S. Packed Baby Carrots From Canadian Stores that brings another correspondence:

As Food Safety continues to be a hot topic and Food Security continues to receive its fair share of attention, many questions arise. As an industry, we either grope in the dark for answers or choose to ignore the questions.

The recent Costco recall adds to these mounting concerns. Concerns that raise questions of where the responsibility and liability lie such as who will absorb the costs, and how far reaching will the effects be in the event of failure?

We want an economical food supply that is safe from microbial concern and malicious tampering. In the late 1990s the Food Safety push began. Food safety programs have since been put in place in a large percentage of operations.

The primary segment of this chain for many commodities is the packing house, which is often grower owned. As the spot light becomes brighter on Food Security, frenzy ensues from pressure to fence in packing houses and shipping points in rural areas. These facilities are often not listed on a local map, much less an atlas. Generally speaking, in the end the man at the bottom of the totem pole (the grower) absorbs the cost of the initiative.

However, an entire industry will likely absorb the cost of any mishap. There is a daunting question within these companies, ‘What is the real value of this investment and what exactly it is buying?’ There is certainly value in moral and social responsibility, value in customer confidence, and value in industry goodwill.

These all become faint in the wake of a fiasco such as the fairly recent disaster faced by the leafy fresh cut industry. All of the business acumen in the world will do you little good in the tidal wave of the FDA announcing on Fox News that a triple-washed, cello-packed, bagged commodity, which you also happen to grow, is the suspected source of a bacterial outbreak.

From consumer response to the latest outbreaks, it becomes evident that during that kind of publicity, labels and packaging have little to no value in the eyes of the public. Panic sets in and it will take time to regain consumer trust. No one will be able to prevent the mass exodus of the consumer even if the source is confirmed as an isolated incident.

Microbial testing conducted personally by Dr. House and the Surgeon General, and frequently aired commercials of Andrew von Eschenbach and the entire CDC leadership board eating the product will likely not convince the consumer that the product is safe. Food Safety certifications from every major certifier in the US and Canada have little to do with the trial in the court of public opinion and fear.

No mother wants to chance feeding her child something that may be tainted. At that point it is just a matter of hours until the offending commodity is sent to the gallows. If history repeats itself, other items resembling the questionable commodity will be ousted as well.

An entire sector of the industry is left with a better chance of finding Jimmy Hoffa than a customer.

While we struggle with these issues we must remember that the last segment of the supply chain, in many ways, remains the most exposed. If that exposure leads to a compromise, whether unintentional or malicious, it will be followed by crisis.

There are many vulnerabilities where no real viable, economical solution has been found. These vulnerabilities can lead to scenarios resulting in a collapse of the industry. A company can invest until it has the greatest Food Safety program in the nation. However, the company will strain to see the value when a customer with an existing E.coli infection shops for fresh fruits or vegetables at a retailer who has been supplied by that company.

A grower may be able to fence in a shipping point, run thorough background checks on personnel, and control access from every angle. Where will that grower find value in his diligence when it is his name attached to a product that is tampered with by someone like the Tylenol Terrorist?

We can all be assured that it will not be the type of situation that will just affect a particular label or where a solution like the Tylenol recall of 82 will fix the problem. The whole industry would be in jeopardy of toppling down and all of the king’s horses and all of his men would have quite a task to put it back together again.

— Jon Schwalls
Southern Valley Fruit & Vegetables

We appreciate Jon’ s letter which articulates the way many growers feel about these issues. It is very easy for easy for others to direct growers and packers on how they should spend their money putting up a fence or engaging in some other food safety or food security effort.

Yet we do not think the industry finds itself with a need to “grope in the dark” yes, we have imperfect knowledge — but the direction is clear, including the need to pursue more knowledge. That is what has given birth to new industry initiatives such as Fresh Express establishing an independent scientific advisory panel and PMA shepherding the establishment of the Center for Produce Safety.

A willingness to “ignore the questions” is a big problem with too many commodity groups still thinking themselves exempt from possible problems. Carrots, implicated in the Costco recall our correspondent refers to, are not included in the FDA’s list of highest concern items — so it is a reminder to us all that food safety problems can happen to anyone and we should not be so secure in our positions. Still, even here, we have spoken to people from the California strawberry industry, the watermelon industry, the almond industry, the Florida tomato industry, the California tomato industry plus state authorities such as the New Jersey Department of Agriculture and found a great deal of pro-active work being done on food safety.

The real question of interest in this letter is Jon’s assertion that, “Generally speaking, in the end the man at the bottom of the totem pole (the grower) absorbs the cost of the initiative.”

It certainly must feel that way to a grower as he is, generally speaking, the one who writes the check. Yet, in the end, all costs of production, including the cost of food safety systems, must be paid by the consumer.

In fact the more expensive and difficult to implement are the required food safety standards, the more profitable grower and shipper operations — that can meet the standards — are likely to be.

Why? It is just supply and demand. Let the standard be anyone who can grow cucumbers can sell them to a chain and the competition is vast, let the standard be that only EurepGAP certified product will be purchased and the competition just got much reduced.

The risk for the grower or packer is NOT higher standards, it is INSINCERE standards. If buyers promulgate a standard and stick to it — growers that meet the standard will probably do better than they would have without the standard. If, however, retailers set up a rule that they will only buy EurepGAP certified product processed in a facility with British Retail Consortium accreditation — but then buy other product because it is cheaper — the investment by the grower or packer would have been made in vain or, at least, without, earning an economic return.

This is why growers, packers and processors either need buyers to agree to constrain their supply chain to those who meet standards — thus explaining the effort to get retailers to only buy from those who signed the California Leafy Greens — or to have agreements or marketing orders or laws that require all growers, shippers or processors to meet a standard — thus explaining the strong push to get Fresh Express to join the California Marketing Agreement.

Although we agree with Jon that food safety efforts produce “…value in moral and social responsibility, value in customer confidence, and value in industry goodwill…” the specific answer to Jon’s question: ‘What is the real value of this investment and what exactly it is buying?’ — is that the grower, shipper or processor is buying either the “right to stay in business” if the investment is in response to regulatory demands or the investment is buying “access to certain customers” if the investment is necessary to secure access to certain retail chains, foodservice operators or wholesalers.

Jon’s assessment that “From consumer response to the latest outbreaks, it becomes evident that during that kind of publicity, labels and packaging have little to no value in the eyes of the public. Panic sets in and it will take time to regain consumer trust. No one will be able to prevent the mass exodus of the consumer even if the source is confirmed as an isolated incident.” — does not strike us as the whole story.

People didn’t stop buying dog food during the recent crisis. We have had many food safety outbreaks on produce since the spinach crisis and we didn’t see panic in the streets. The spinach crisis was unique precisely because our public regulators presented it to the public as a crisis of unknown origin and advised consumers not to consume the commodity. Since few retailers or restaurants are going to sell product that the FDA is recommending people not consume it constituted a de facto recall of all spinach in the United States.

As Bruce Peterson pointed out here it is not necessary for the whole industry to collapse or even for a whole commodity to collapse because of a food safety crisis. The key is improved traceability solutions so that regulators and consumers will feel comfortable that any known problem is contained. Spinach from New Jersey did not collapse last fall because there was a problem in a processing plant in California — it collapsed because the FDA told consumers not to eat spinach.

In pieces such as here, here and here in which Gary Fleming of the Produce Marketing Association helped guide the industry to a better understanding of traceability, or in this piece in which Jane Proctor of the Canadian Produce Marketing Association also helped advance industry knowledge on this topic, or here in which Bruce Peterson’s associate, Michael McCartney, helped guide us further — we have extensively pointed out the importance of this issue.

Nothing the industry will do is likely to prevent all future outbreaks of food borne illness. But while acting to minimize outbreaks, we can do many things to improve traceability and thus limit the impact of any issues that may arise.

Jon explains his expectation: “No mother wants to take the chance feeding her child something that may be tainted. At that point it is just a matter of hours until the offending commodity is sent to the gallows.” Yet this is not the way these things have played out.

First the use of the term “gallows” is overstating things. Even spinach — at least before the Metz Fresh recall — was back to around 90% of its pre-crisis sales. And, typically, Moms pay attention to public health advisories. All during the Taco Bell crisis people kept going to Taco Bell — why? Simple. The FDA did not issue an advisory that people ought not to eat at any Taco Bell because there was an unknown systemic problem in the Taco Bell system.

So the key is really for the industry to A) Maintain regulatory confidence so that their inclination is to think that any problem is limited in scope, and B) maintain effective traceability systems so that we really can limit the scope of any problem.

Food security is related but its a different issue than food safety. We think Jon is a tad too pessimistic when he writes: “A grower may be able to fence in a shipping point, run thorough background checks on personnel, and control access from every angle. Where will that grower find value in his diligence when it is his name attached to a product that is tampered with by someone like the Tylenol Terrorist?”

First, all those fences and background checks are designed to reduce the likelihood of a food security problem. The fact that they don‘t provide 100% protection isn’t a good reason not to do them.

Second, we think regulators and the public are perfectly capable of distinguishing a malicious act of terrorism from a product flaw. If we heard a company’s product had been attacked by terrorists, our inclination would be to support that company because we wouldn’t want to let the terrorist win and drive out of business a good company. We doubt we would be alone in that opinion.

Apocalyptic scenarios are easy to draw up. Yet although a food safety or food security problem is never a good thing, we are fortunate to live in a country in which the public health authorities carry a lot of weight. Our job is to keep them on our side. We do that by operating a fundamentally sound food safety system, by keeping them apprised of all our efforts and by maintaining effective traceability protocols.

If we do all this, the odds are that, though we will have food safety issues — and indeed individual companies may be severely damaged — we will not have a food safety crisis that would put the industry at risk of “toppling down.”

We appreciate Jon Schwalls for speaking out on an issue of such important industry concern.

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