Blogger has a poll

Yee-haw. Blogger has a poll function. And I'm trying it out on blog readers over the next week. The question is about use of the terminal market inspection service, and you can find it in the right hand column.

Pamela, I think we still have time to run a poll about Whole Foods and Wild Oats. So give me your best wordsmithing for a poll question and I'll post it next, if it is not too late.

A Big hit or many little

TK: The Office of Management and Budget once asked the USDA to consider a one-time hike in destination inspection fees that would have more quickly bridged the gap between revenues and costs. The industry would have screamed foul, but it may have been easier than trying to chain together back-to-back-to-back incremental increases.
From The Packer archives,here is the backstory from a July 2005 industry advisory committee meeting:

ALEXANDRIA, Va. -- Industry fees for federal destination inspections likely will go up faster than anticipated.
The Office of Management and Budget has vetoed a proposal endorsed in 2002 by the Fruit and Vegetable Industry Advisory Committee that recommended a 15% increase on destination inspection fees every other year beginning in 2004, said Leanne Skelton, chief of the Fresh Products Branch for fruit and vegetable programs of the U.S. Department of Agriculture's Agricultural Marketing Service.
Instead, the OMB -- a part of the executive branch of government that evaluates spending -- at first suggested an immediate 47% fee increase was required.
After discussions with AMS officials, OMB has agreed annual fee increases of 15% will be required for fiscal 2006, 2007 and 2008, followed by two more annual increases of 10% before moderating back to 5% increases for fiscal 2011 and 2012.
The current cost of a basic terminal market inspection is $99, Skelton said, but she provided no projected costs in future years.
The fee increase for beyond 2012 is projected at 3% a year, Skelton said.
Fee background: In September 2002, the industry advisory committee recommended that the USDA raise fees for the terminal market inspection service by 15% by 2004, followed by planned increases every other year after that.
That proposal was the least dramatic cost increase of four options presented to the committee at the time by Skelton. Skelton said the USDA conducted rule making on the 2004 fee increase, and the 15% increase was put in place Jan. 15, 2004. The AMS then immediately started on the 2006 increase, because rule making for each fee increase can last about 18 months.
Before 2004, the federal terminal market inspection program received its last fee increase in 1998.
A planned fee increase of 18% was dropped after the 1999 Hunts Point bribery scandal, and Congress appropriated $29 million in 2001 to cover the cost of the program through 2005. That infusion of cash prevented fee increases for several years, because federal rules don't allow fee increases for programs with large surpluses.
Because the USDA rule making involves fees, Skelton said the OMB is required to review the regulations.
The latest review on the 2006 proposed increase raised red flags at the office. According to figures released by Skelton, the income for the fresh products terminal market program was estimated at $15.1 million in fiscal 2005, while its obligations were $20.7 million. The estimated loss for 2005 is $5.6 million, leaving a reserve balance of $16.7 million estimated by the end of the fiscal year.
OMB wanted AMS to close the gap sooner rather than later, Skelton said, and suggested an immediate 47% fee increase.
OMB officials insisted that AMS needed to cover the costs of the program quicker in order to maintain a four month reserve for the terminal market program. OMB suggested the inspection service should consider shutting its doors.
In the end, OMB authorized AMS to go forward with a 15% fee increase for 2006, accompanied by other cost-cutting measures and annual fee increases in subsequent years.
Skelton said the 15% annual increases will get the program back to healthy fiscal levels quicker than the previous plan of 15% increases every other year.

Fee increase for destination f/v inspections

Big Apple of the Fresh Produce Industry Discussion Group was first to note the final rule in the Federal Register today that raises the fee for destination inspections of fruits and vegetables.

From the Aug. 1 rule:

This rule would revise the regulations governing the inspection and certification for fresh fruits, vegetables and other products by increasing certain fees charged for the inspection of these products at destination markets for the next two fiscal years (FY-2007 and FY-2008) by approximately 15 percent each fiscal year. This rule would increase fees 30 days after publication in FY-2007 and again in March 2008. These revisions are necessary in order to recover, as nearly as practicable, the costs of performing inspection services at destination markets under the Agricultural Marketing Act of 1946 (AMA of 1946). The fees charged to persons required to have inspection on imported commodities in accordance with the Agricultural Marketing Agreement Act of 1937 and for imported peanuts under section 1308 of the Farm Security and Rural Investigation Act of 2002.
DATES: Effective Date: August 31, 2007

TK: Why the increase? AMS FPB reserve funds are dwindling fast. From the rule:

The Fresh Products Branch (FPB) has and will continue to seek out cost saving opportunities and implement appropriate changes to reduce its costs. Such actions can provide alternatives to fee increases. FPB has reduced costs by approximately $2 million. However, even with these efforts, FPB's existing fee schedule will not generate sufficient revenue to cover program costs while maintaining the Agency mandated reserve balance. Revenue projections for FPB's destination market inspection work during FY-2006 are $15.3 million with costs projected at $20.4 million and an end-of- year reserve balance of approximately $12.7 million. However, this reserve balance is due in part, to appropriated funding received in October 2001, for infrastructure, workplace, and technological improvements. FPB's costs of operating the destination market program are expected to increase to approximately $21.6 million during FY-2007 and $22.5 million during FY-2008. Revenues are projected to be $15.3 million for end of the fiscal year. The reserve balance for FY-2007 and FY-2008, will fall below the Agency's mandated four-month reserve level. The reserve balance is projected to be approximately $6.5 million for FY-2007 (3.6 months) and approximately negative $600,000 for FY-2008 (-0.3 months). This fee increase should result in an estimated average of $2.4 million in additional revenues per year (effective in FY-2007, if the fees were implemented by October 1, 2006). However, fees would not be increased until later in FY-2007. Further, as a result, the next fee increase is delayed until March 2008 instead of the start of FY-2008. These increases will not cover all of FPB's costs. FPB will need to continue to increase fees in order to cover the program's operating cost and maintain the required reserve balance. FPB believes that increasing fees incrementally is appropriate at this time. Additional fee increases beyond FY-2008 will be needed to sustain the program in the future. However, we will continue to reduce costs, wherever possible.

TK: The appropriated funding that Congress gave the FPB in October 2001 delayed the onset of fee increases for the industry, but now they come in rapid succession. Another increase of at least 15% is likely to be required for fiscal year 2009, based on my untrained assessment of rapidly dwindling reserves. Reducing costs - such as cutting overtime pay - may make the service less attractive and accessible to the trade. FPB is trying to sound out possible trade demand for GAP/GHP audits, reportedly distributing flyers about their service on wholesale markets. USDA comments welcome here....

Rosa speaks

TK: Rep. Rosa DeLauro, D-Conn., chairwoman of the House Agriculture Appropriations Subcommittee, delivered remarks on the the floor of the U.S. House of Representatives as the House began consideration of the fiscal year 2008 Agriculture, Rural Development, and Food and Drug Administration Appropriations Bill (H.R. 3161).

Below are some excerpts of her remarks that speak to food safety(provided by her office) :


“Mr. Chairman, I'm pleased to present to the House H.R. 3161, the fiscal year 2008 appropriations bill for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. This is a critical time for our nation, and we have a chance to acknowledge and honestly confront some our toughest challenges.

“Our top priority has always been to move with a clear purpose and direction toward several key goals: strengthening rural America, protecting public health, improving nutrition for more Americans, transforming our energy future, supporting conservation, investing in research, and finally, enhancing oversight.

“It begins with our Fiscal Year 2008 Mark providing a total discretionary resources of $18.8 billion -- $1 billion or (5.7%) above 2007 and $987.4 million or (5.5%) above the budget request. To be sure, a full 95% of the increase above the budget request or $940 million is used to restore funding that was either eliminated or cut in the president’s budget.

“Protecting Public Health is another of our priorities and our Subcommittee stepped up. The bill provides $1.7 billion for the Food and Drug Administration, that’s $128.5 million over 2007 and $62 million over the budget request. In addition, $7 million in the manager’s amendment in order for us to be able to inspect produce coming in from foreign countries. This is what the commitee hopes will be the first step in a fundamental transformation in the regulation of food safety at FDA. The Committee directs the FDA to submit a plan to begin changing its approach to food safety when it submits the fiscal year 2009 budget, giving the Committee time to review the plan before the funds to implement it become available on July 1, 2008. We can help with additional resources, but there also needs to be a corresponding commitment from management to perform its duties.


TK: We had heard about the plus spending for the FDA from DeLauro. However, the manager's amendment that provides $7 million to inspect produce from other countries is a new wrinkle and bears some investigation. Also notable is committee's direction to the FDA to "change its approach" to food safety.

More coverage from IFT

TK: I can't say I'm familiar with "IFT." But apparently they are putting on a pretty powerful conference this week. A press release from the Institute of Food Technologists with a July 31 release date:

CHICAGO—Once was the day that beef was considered the primary source of foodborne illness. Now fresh produce is increasingly responsible for the outbreaks, and receiving increased focus from people paid to protect public health.
“Produce is where much of the action has occurred,” said Michael Doyle, food safety expert with the Institute of Food Technologists and director of Center for Food Safety at the University of Georgia, speaking here today at the IFT Annual Meeting & Food Expo.
In the 25 years preceding 1997, there were 190 outbreaks of foodborne illness associated with fresh produce. In the five years that followed, that number jumped to 249. The list of offenders varied from lettuce, melons and seed sprouts to apple juice, orange juice and tomatoes.
Doyle predicts that produce and other foods from plants will be the dominant vehicles for foodborne illnesses, accounting for more than 50 percent of all illnesses currently estimated at more than 70 million cases a year.


TK: Again, foodborne illness numbers pulled from the stratosphere....70 million seems awfully high, doesn't it?


The current trend of cutting fresh produce before selling it raises questions about whether the process has an acceptable safety level, according to Doyle.
He explained that when fresh produce is cut, nutrients begin leaking and more surface area is created that’s attractive to harmful bacteria. The leaking juice can interfere with, and sometimes neutralize, disinfectants like chlorinated water that are applied to kill bacteria. If the product isn’t properly refrigerated, then bacteria are more likely to grow.

TK: Are we really reading this correctly? Cutting fresh produce before selling it "raises questions about whether the process has an acceptable safety level." No direct quote from Doyle here, but I hope Doyle isn't suggesting we go back to circa 1933.

“This is where I think there’s going to have to be more emphasis,” Doyle said. “We really don’t have a fully effective way to treat fresh cut fruits and vegetables.”
In 2006, 205 cases of E. coli O157:H7 illness were found in 26 states, all linked to bagged spinach and traced back to a central California ranch.
“The outbreak strain was confirmed in 26 of the 45 samples taken,” Doyle said. “This is as close to a smoking gun as I think you can get.”
Will Daniels, vice president at Earthbound Farm, which produced the bagged spinach implicated in the outbreak, says the company has instituted strong controls since that time that he believes are working.
“We came to the conclusion that, more than likely, we received a batch of contaminated raw product into our (processing) facility,” Daniels said.
For that reason, the company now tests lots of leafy greens before they enter the building. They are tested for two strains of E. coli as well as Salmonella , once before they enter the processing facility and once again as they are leaving. Daniels says the company also tests the seeds, soil and water for pathogens before the growing process begins.
“We don’t have the capacity to test every leaf of lettuce. What we’re looking for is gross contamination events,” Daniels said.
Daniels says the company has not looked at the financial impact of the testing which requires product be held in the processing facility for as long as 12 hours while awaiting test results. Whatever the cost, it’s certainly less than the price of a recall, he said.


TK: One certainly can't find fault with the diligence of Earthbound Farms in testing for produce pathogens, but would their approach be sustainable for the entire industry?