On The Safe Side

Industry leaders explore the challenges and opportunities for the produce business.

Food safety and trace-ability is one of the most talked about topics in produce today. To gain perspective and insight on this compelling and complex issue, Progressive Grocer hosted a Food Safety & Traceabil-ity Roundtable at the San Diego Hilton Hotel Bayfront on May 14.

The event, moderated by PG Chief Content Editor Meg Major, brought together retailers, suppliers, shipper/growers and food safety experts for a dynamic exchange about where the produce industry stands — and where it's headed — with regard to the Food Safety Modernization Act (FSMA), supply chain transparency and Produce Traceability Initiative (PTI) compliance, among related issues.

Tracea2bility Today

According to the Centers for Disease Control and Prevention (CDC), millions of Americans are affected by foodborne illnesses each year. CDC data indicates that 48 million people (one in six Americans) get sick, 128,000 are hospitalized and 3,000 die from foodborne diseases every year.

In an effort to reduce or prevent such illnesses, the FDA Food Safety Modernization Act (FSMA) was created and signed into law by President Barack Obama in 2011. But it wasn't until January of this year that the FDA proposed the first two of five rules in accordance with the law that will establish requirements for farmers, food companies and importers to prevent foodborne illness.

The first two rules had to do with Preventive Controls for Human Food and Produce Safety, with the latter requiring that science-based standards be set for the production and harvesting of fruits and vegetables. In response to numerous public requests, the public comment period on the rule has been extended until Sept. 16.

PG's Major opened the discussion by asking roundtable panelists for a progress report on food safety and traceability compliance from their respective perches.

"The last 12 months have been interesting," said Elliot Grant of HarvestMark, "because the IFT [Institute of Food Technologists] published their report [Pilot Projects for Improving Product], and what was striking about it was that it wasn't very specific about what the industry should do. It didn't say PTI is good. And I think that's a challenge, because I see a lot of folks standing on the sidelines waiting to see what the FDA is going to say."

Through warehouse and distribution center visits, HarvestMark has gained a sense of both the progress and gaps in compliance. "A year ago, there was momentum," said Grant. "We were anticipating a 2012 deadline for retailer compliance. At that point, maybe 20 percent of the market was compliant, give or take. I don't think it's moved beyond 20 percent. In fact, it may have fallen back a little bit."

On the other hand, Grant added, a number of progressive trading partners aren't waiting, but are instead taking the lead with innovative platforms and stringent food safety practices, including the participants in the PG roundtable.

"Our company has been focused on food safety for many years," asserted Jackie Caplan Wiggins of Frieda's. "I think the Food Safety Modernization Act is trying to make a level playing field and define what that field looks like." While she doesn't anticipate significant changes resulting from the act, Wiggins does expect that a better definition of food safety will be one positive outcome.

Time is of the essence when it comes to an industry standard for food safety and traceability, according to Jim Heil of Giumarra Cos.: "I think we need to get this down. I think we need to perfect it. And I think we need to make it simple, affordable and standardized."

But who sets the standards? "If companies really determine that compliance is what represents good traceabil-ity standards, it's going to be a very low bar," said Rich McKeown of Park City Group and Leavitt Partners. "Consequently, I think that it has to be the industry that drives this. If the industry drives it to a higher standard and demands it, either from the retailers down or the wholesalers down, we'll have safer food products."

Green Giant Fresh understands what it takes to implement a fully traceable food supply. James Strachan shared a relevant, related reflection about his experience in 2006, when the LGMA [Leafy Green Products Handler Marketing Agreement] formed in response to the spinach outbreak. "We had a lot of the same issues in terms of an uneven playing field," he said. "Now we all know we're doing exactly the same thing that our neighbors are doing."

Leafy green producers are now audited by the government, noted Strachan, who explained that the initial implementation of a traceability program represented a substantial investment for all of the growers and suppliers involved. "Over time, we've gotten more efficient so that it's now truly a shared cost and shared infrastructure."

Green Giant Fresh chose to implement PTI at the same time as LGMA. "I felt strongly that we should be labeling our cases with a standardized license plate that could be viewed downstream at retail," Strachan observed. "We implemented traceability on every case two years ago."

Know Your Partners

From large-scale produce companies like Green Giant Fresh to smaller, local suppliers, traceability has become top of mind. "I've seen a huge growth in produce companies taking the initiative with trace-ability," said Robin Harris of Longo's. "Even the smaller farms I visit are going with GFSI [Global Food Safety Initiative] programs, and they have that traceability component."

Like all of the retailers at the roundtable, Longo's requires that its suppliers meet certain food safety standards. For Harris, the next steps will aim to dig deeper into the supply chain. "I want to expand more into not only looking at our suppliers, but our supplier's suppliers," she said. "It's going upstream versus just downstream."

Whenever possible, Harris gains firsthand knowledge of Longo's suppliers. "I go up to the grower's site, the producer, the orchard — wherever the produce is coming from — to make sure we're not just getting the paper information, but we're also seeing it," she explained.

At the end of the day, food safety and trace-ability is about "knowing who you're doing business with," said Hy-Vee's Mike Orf. But while Hy-Vee builds long-term relationships with its produce suppliers, it also has its eye on innovation.

"We have a cantaloupe supplier that we buy from, and we do business with them because we think they're reputable. They've got good third-party audits, they grow well and they really grow flavor-based [fruit] that tastes good," said Orf. The supplier recently tested a pilot program for the government that involved using a heat wash on its cantaloupes, which gave Hy-Vee even more reason to source its product. "There's all kinds of innovation out there," noted Orf.

For retailers, it's not only important to know whom you're sourcing from, but also to make it clear what you want from them. "A lot of it comes down to communication of expectations," said Frieda's Wiggins. "Let your suppliers know what you expect."

Call for Education

If the roundtable's perspective is any indication, the various participants agree that the need for food safety education has reached a tipping point.

"This is not about compliance for us. It's about providing a safe food source," said Wiggins, who was recently in charge of Frieda's second GSFA audit. Prior to the audit, Wiggins met with every employee and talked about what food safety meant to Frieda's, and why things like hairnets and sanitizing one's hands were important. "My talk was food safety is 365 days a year," explained Wiggins. "We're not preparing for an audit. We are always prepared."

Retailers grapple with two sides of food safety education: educating their employees and their customers. Alfonso Cano of Northgate Gonzalez Markets expressed the need to create a culture of food safety with employees so that it becomes second nature. "In retail, you have to deal with practicality, efficiency and functionality. And sometimes food safety is none of those. [Food safety] isn't what you see. It isn't what a customer sees. It's what the customer doesn't see."

Cano further noted that customers most readily associate food safety with clean stores and appealing products while noting that the overarching topic is not necessarily the easiest to promote with customers. "We don't want them to even worry about it."

The solution may be to tout traceability with consumers more than food safety, suggested Harris of Longo's. During a demo, as you tell the story behind the product, explained Harris, you could say, "We know the half-acre lot this zucchini came from. Just as a quick comment. You don't have to get into the nitty-gritty with the customer, because they won't necessarily understand that."

Other education-related challenges for retailers stem from how consumers choose to handle their food. Raul Gallegos of Bristol Farms talked about California's ban on bags and the implications associated with customers' reuse of bags that aren't sanitary.

"All these other issues come into play, and it is a growing challenge for retailers," said Gallegos. "There has to be consumer education on what food safety is all about. It's not just from the source, from the ground — it's all the way through the supply chain.

"How do we address that with the consumers so that they understand it?" Gallegos asked the group. "It's not just a food industry issue, it's a health issue."

The Social Media Solution

Adding to the education challenge, said Gallegos, is the brief window of time that the majority of consumers spend during a typical visit to the supermarket. "When they come in to do their shopping, it's not a two-hour journey. They want to get in and get out as soon as they can," he noted.

Social media may offer a solution, Gallegos continued. "I know that's a growing opportunity for us. We're starting to utilize those vehicles to a greater degree, and understanding our customer base. They are computer-savvy, technology-savvy, and they want to know. But again, they're very busy individuals, so we need to grab their attention in the small span that we have it."

As millennials continue to exert their tremendous buying power, technology will be one of the most important ways to reach them. "With smartphones and their capabilities, these kids are getting very bright," said Heil of Giumarra. "They're going to know where to buy, how to buy and where to look for assurances."

Heil also suggested that the produce industry take a cue from the restaurant industry, which has a grading system for health standards. He thinks a similar grading system for produce suppliers and retailers might have legs in a tech-aware age.

"We have the ability to educate them through technology," Wiggins concurred regarding millennials. "Whether it's looking at YouTube video on your smartphone or on television there at the checkout, if we give them the tools, they'll see the benefit."

And smartphones are just the tip of the iceberg. "Something like 60 percent of shoppers go online and research," noted HarvestMark's Grant. "They're getting information from friends on Facebook and Instagram. They got a tweet that said, 'Come and get their grapes,' so by the time they shop the market, they've already made their decisions.

"I think it behooves the industry to get ahead of that and anticipate," Grant continued. "I guarantee when someone walks in the grocery store a few years from now, they're going to be streaming information [through, for example, Google Glass]: 'Hey, should I buy this head of lettuce, or should I buy the strawberries?'"

Devil's in the Data

Where is traceability headed? "I would suggest that this is an industry that has played a lot of defense, and that the creation of a strategic offense relative to traceability is going to be essential in the future," asserted McKeown of Park City Group and Leavitt Partners.

"I think what we'll see is some retailers moving ahead with using the platform to drive quality and freshness," affirmed Grant. "They will recognize it as an opportunity to distinguish between suppliers. They'll recognize it's an opportunity to see what stores are performing well, and they will start using that data to make behavior decisions.

"Those retailers are going to be the ones that will say they want traceability because it's a benefit to them, not because the FDA said they had to do it," he added.

Some retailers, like Costco, already employ exceptional trace capabilities, in part because their membership-based model allows them to reach out to every shopper who bought a particular SKU, he noted.

"Costco has driven their suppliers in the produce department to go to item level, because they believe that's part of their value," said Grant. "I also think it's the future. Shoppers are going to use that information. Retailers are going to use that information, and I think it's inevitable that we're going to have that level of transparency."

The devil is in the data, and the retailers and suppliers that grab it by the horns have an opportunity to stand apart from the competition in food safety and more.

"I think what's going to happen is that retailers, wholesalers and everybody in the system is going to have more data to deal with than they ever had before, and it's going to drive decisions away from intuition and towards solid assumptions upon which people begin to make decisions," noted McKeown.

While the idea that a consumer armed with a smartphone has access to more information about his or her local supermarket and the products within may be scary to some, PG's roundtable participants framed it as a blessing rather than a liability

"There's an opportunity to use traceability to improve communications between suppliers and retail, so this isn't about food safety as much as performance," noted Grant. Looking at how long products are spending in the supply chain and where quality issues arise is how Grant believes companies create value on top of traceability

The ultimate value proposition, as Grant sees it, is trace technology's ability to gather shopper feedback. "What do they like? What do they not like? Was it out of stock? Would they buy it again? That closes the loop on shopper engagement. And trace-ability is underneath all of this," he explained. "This is not a traceability problem. This is an opportunity to market to shoppers."

"This is not about compliance for us. It's about providing a safe food source."

—Jackie Caplan Wiggins, Frieda's

"There's an opportunity to use traceability to improve communications between suppliers and retail, so this isn't about food safety as much as performance."

—Elliott Grant, HarvestMark

"I want to expand more into not only looking at our suppliers, but our supplier's suppliers. It's going upstream versus just downstream."

—Robin Harris, Longo Bros.

"At the end of the day, food safety and traceability is about knowing who you're doing business with."

—Mike Orf, Hy-Vee

"I would suggest that this is an industry that has played a lot of defense, and that the creation of a strategic offense relative to traceability is going to be essential in the future."

—Rich McKeown, Park City Group and Leavitt Partners