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Pundit’s Mailbag —
Grower/Shipper Calls Buyer-Led Food
Safety Initiative Hollow Call To Action

Jim Prevor’s Perishable Pundit, November 14, 2006

Here at the Pundit we’ve been doing a lot of work on the Buyer Led-Food Safety Initiative. You can read here of the issues related to this important issue.

In response to our piece Buyer-led Food Safety Effort Leaves Open Question of Buyer Commitment, we received a number of phone calls and this letter from a well-respected member of the shipper community:

Great article!

I agree with you and share your frustration about the hollow call to action. It is the buyer that can truly force change by committing to align its supply chain with like-minded suppliers. Take a look at Nogales — ground zero of lateral trading. It is amazing how many of the companies who signed on to the letter rely on brokers who have no control over or interest in the core elements of food safety.

Food safety is like flavor; to successfully deliver it you must have commitment and control in an aligned supply chain. The commitment required is to hold food safety (or flavor) as a core value. The control can only be asset-based. The parties involved must have control over the assets necessary to execute daily. These assets are obvious from the shipper standpoint, and from the buyer side it is control over the PO’s.

Very often we see good intentions at the VP level vaporize by the time the buyer goes to work.

Trade associations and governmental regulations are not structurally positioned to deliver the commitment or control to raise the bar. Many commodity promotion boards are well aware of the consumer challenge, and they speak to the trade and the consumer as a producer promising to deliver solutions. As a marketing order, however, these groups can influence standards but clearly cannot do what is necessary to solve the consumer challenge.

At best, they have the commitment and control to deliver like a coop… defined by the least capable member, in reality they operate at the lowest common denominator.

Even in industries where there were players who controlled the assets and worked at the commitment, they could not address the eating quality challenge without the retailer.

There must be an aligned supply chain to solve these challenges. When the end is clear and the relationship is right, higher quality (safer food) can be achieved and total costs can be lowered, but only if we get out of the bid-ask environment where these elements are not valued.

This is where the retailers must step out of their ivory towers and get their walk (vendor relationship) to match their talk (aligned supply chain). Markon and Sysco are so much farther along than the retailers in this regard when it comes to food safety. This is probably a result of the development of foodservice-tailored products and the broad use of private label.

The challenge is that the whole industry must truly address the call but it can happen and must be lead by the economic incentive of the buyer. Look at what the suppliers of the UK chains have accomplished in the area of food safety because they had to. The producers in Chile are so far ahead of their California counterparts as a result of having to meet the requirements to have access to the chains in the U.K.

These requirements have limited the number of “qualified suppliers,” which has limited the supply of “qualified product” that has driven the prices to the appropriate level given the demand. If those who signed on to this letter would get committed to buying only from “qualified suppliers,” the laws of supply and demand will drive the solution and we will quickly catch up with the rest of the world in this critical area.

Thanks for your thoughtful insights.

The Pundit thanks our correspondent for taking the time to write. What an informative and insightful letter. Look at some of the key points being raised:

1. The same flaws in our procurement systems that make it difficult for us to secure food safety also make it difficult to secure good flavor and probably many other good attributes.
2. There is a disconnect between the VPs of Perishables/Fresh Foods, VP of Produce and other higher level executives and the actual procurement staff.
3. Foodservice does a better job than retail on most items.
4. Many foreign buyers, especially in the U.K., have higher standards than U.S. buyers. As a result, foreign shippers from markets, such as Chile and South Africa, that have to meet these international standards are ahead of U.S. shippers who do not have to meet the same standards.
5. Marketing orders are not well positioned to be the instrument by which food safety standards are enforced as they tend to operate at the lowest common denominator.
6. What growers and shippers need from buyers is not a committee to establish high standards; they need a commitment to align with vendors and not abandon them because someone is cheaper.

This is an incredibly valuable letter, and we are going to deal separately with each of theses six issues in the days to come.