Jim Prevor’s Perishable Pundit
The Pundit just had an opportunity to spend a few days at Michigan State University. We’ve gone up every year for some time to lecture and this time we were honored to also have the opportunity to deliver — thanks to the generosity of the Ferris family — the John (Jake) and Maxine Ferris Global Agribusiness Lecture.
What an ego-enhancement to walk over the campus finding posters with the Pundit’s name on it urging attendance. We came home feeling mighty favorable to those Michigan folks.
So it was a special treat to receive a letter from the President of a prominent Michigan-based produce firm:
We would say that his letter exemplifies many of the issues that the industry has to deal with:
A) Randy points out that retailers who are short will buy what they need from a broker or wholesaler. So how can these buyers know they are buying acceptable product? There are only two ways: They can trust their vendor — so they can know that Superior Sales is on top of it. This is what people who buy from Sysco, US Foods or Supervalu are doing. But we know that the vast majority of intermediaries are not up to this task.
They could also rely on certifications. But audit reports are not generally in the public domain, and if you can’t read the comments, you really miss the full impact of the report. So Jensen Farms, if asked, presumably told people it received 96 out of 100 on its audit. Yet now we know that this fact didn’t give a complete picture of what someone interested in food safety would want to know.
So Randy’s accurate point about how shorts are filled leaves the industry with a food safety problem.
B) The obligation of the grower, packer, shipper and processor to follow through daily that Randy mentions is certain. But it is not clear what they are obligated to follow through on.
Produce is not a situation where there is a clear line between safe and unsafe practices. Many food safety experts would argue that Jensen Farms, in moving to a non-recirculating wash system, made a food safety advance.
Common issues such as water testing don’t provide automatic answers. Testing water quality is good. But should it be tested annually, quarterly, monthly, weekly, daily, hourly, etc.? There are no easy answers.
With the exception of sprouts where many producers feel the FDA standards damage the product and employee health, we know of very few situations where the FDA has established a clear standard and the growers, packers, processors and auditors have failed to follow through.
C) Whether Wal-Mart or Wegmans buys directly or through intermediaries doesn’t necessarily matter. Wal-Mart could tell Frontera what it wants, and you can be sure Frontera will make it happen. Wegmans can tell the fresh-cut processor that if it wants to sell Wegmans, it can only buy fruit from GFSI-audited firms or from a list approved by Wegmans.
Yet, as a practical matter, we would say that it is hard to sustain a food safety culture if one is always insecure in where the next order is coming from.
The FDA report indicated than an absence of pre-cooling may have contributed to this problem. Building these pre-cooling facilities, though, is a major investment. To finance their construction, Jensen may have needed to walk into a bank with a signed contract from Wal-Mart committing it to purchase these pre-cooled cantaloupes. Even if Jensen had the cash, it wouldn’t want to invest it unless it knew it had a market that would pay a premium for this particular food safety effort.
The issue is not intermediaries versus buying direct. In the UK, where supply chains are very aligned, retailers will often use a company such as Mack Multiples to handle logistics and other needed service between the grower/packer and the retailer.
The issue is whether the supply chain is 1) transparent enough that frank food safety discussions can be had, and 2) Committed enough that people can make investments with the confidence that the fruit of that investment has an appropriate home.
D) In fairness to retailers, very few simply buy the lowest price. The focus on price seems overwhelming, but that is because day-to-day discussion takes place in a world after all specifications have been met.
Although Jensen Farms is being demonized, in truth it met all of Wal-Mart’s standards. Maybe Wal-Mart did buy from Jensen because it was cheaper than California or maybe because Wal-Mart wanted local and regional product. We don’t know. But Jensen Farms had a Good Manufacturing Practices Audit — which was the requirement. If the company did not have this, then no amount of discounting would have likely gotten them through the door.
The question is whether this is simply an issue to be addressed through raising standards – so Wal-Mart has to require a GFSI-audit instead. Or is this an issue that has to be driven into procurement, that some mechanism has to be created to incentivize buyers to choose the safer option?
Right now, as long as the product meets the chain’s specifications, the buyer wants to buy the lowest cost item. Can we change this?
Many thanks to Randy Vande Guchte for weighing in on this important industry issue.