Keynote by Oliver Weidner, Director International Quality Management, Lidl, Germany opening ceremony of FRUIT LOGISTICA 2010

Keynote by Oliver Weidner, Director International Quality Management, Lidl, Germany opening ceremony of FRUIT LOGISTICA 2010

Ladies and Gentlemen,
First of all, I would like to thank you for the opportunity to speak here today.

If you have followed the Fruit Logistica topics over the past five years, you may have noticed that many of the issues address quality assurance. These range from the certification of growers and the question of proper standards for good agricultural practice, to the intense debate focusing on the reduction of pesticides. In the fruit and vegetable market, quality assurance continues to face a number of special challenges.

What makes the fruit and vegetable market so special?

Everyone knows that consumer demand and the assortment of agricultural products are extremely dependent on weather conditions. Each day, market players have to accurately assess the market situation and take decisions under pressure. Otherwise, their products will spoil. Thus, along with the stock market and daily news, trading in fresh fruits and vegetables is one of the world's fastest-paced markets.

To achieve optimum freshness, we have established special logistics at Lidl. This enables us to bring fresh fruits and vegetables from the fields into our stores across Europe in the shortest possible time. We all know the key prerequisite in the fruit and vegetable market:

Freshness is crucial when it comes to customer acceptance and freshness means you have to be fast!

From the quality assurance perspective of a food retailer, if you look at the rapid global flow of goods from the field to the store shelves, you will clearly see the challenges quality assurance faces in the fruit and vegetable market today.

Trading in fresh produce is a formative part of the Lidl company history. We added fresh fruit and vegetables as an integral part of our product assortment in 1982. The contacts to many of our suppliers and producers in the fruit and vegetable segment were established back then – and still exist today. At that time, we had 120 outlets in southern Germany. Today, we operate stores throughout Europe. We will soon be opening our first markets in the Canary Islands.

I don't want to limit my focus to quality assurance today. I would also like to show the relationship to changing consumer expectations. These two issues are closely linked.

To survive in the market – no matter where you are in the supply chain: grower, supplier or retailer – you need to try and meet consumer expectations every day of the week. After all, consumers decide about quality when they purchase fruit and vegetables in the fresh produce department.

As food retailers, we are the consumer's point of contact. We represent the entire supply chain all the way back to the grower. Whether consumer opinions come from media reports or are based on well-founded information is not important. As partners in the fruit and vegetable market we have to accept consumer expectations and choices and to try to implement whatever is possible across the entire supply chain.

The fact that we are capable of this is impressively demonstrated in the fruit and vegetable market by the reduction of residues in recent years.

Let me briefly address the issue of consumer expectations in more detail. Residue from pesticides has not always been an issue that made consumers feel insecure. Only in the past 20 years has their uncertainty gradually increased. I would like to illustrate this with two images of consumers from the past.

In the 1960s, the focus was on the "Green Revolution". New chemical fertilisers and pesticides made it possible to double agricultural production on the same plot of land. Chemical plant protection is a technical innovation that ensures diversity on the consumer's table. The young woman in the picture clearly is not concerned about possible residues. Uncritical and carefree consumption was the main focus in this era. But how do things look 20 years later?

Things changed in the 1980s. The ecology movement created a demand followed by a supply of organic foods. Organic farming offers consumers an alternative in the market. An increasingly amount of criticism was aimed at the use of chemical pesticides in conventional agriculture. Ever since, the consumer's perception of risks has played an increasingly important role.

Today, the consumer's perception of risk is more pronounced than ever. At the same time, consumers admit that their knowledge of the risks is limited. In 2007, the EU surveyed citizens to determine which environmental issues they knew very little about. You can see that for 36% of EU citizens, the health impact of chemicals found in everyday products is something that consumers themselves report they know very little about. Things that consumers know little about, but perceive as risks, lead to fears. And fears lead to new consumer demands.

As we have seen, consumer expectations regarding food quality, particularly the reduction of pesticides on fruit and vegetables, are increasing. These expectations are almost completely fulfilled by the organic food segment. But today, consumers also have the same expectations when it comes to conventional products. So we see a clear direction in which the social trend is moving and how this influences consumer expectations.

Consumers expect those of us in the food retail business to create transparency and verifiability. They want to know more specifically what is contained in food products, what the food has been treated with, how it was produced and where it comes from. In many cases, this information is used as a basis for our customers' purchasing decisions. More than ever before, food retailers represent the entire supply chain when it comes to assuming responsibility for the residue quality of fruit and vegetable sold in stores. And this responsibility has led us to work together over the past five years to make significant strides in the reduction of pesticide residues on fruits and vegetables.

Two years ago, if you wanted to know the maximum residue limits for lettuce in the 27 EU member states, you were faced with the task of searching for the information in 27 different national regulations written in 23 different languages. Today we have a single EU regulation for maximum residue limits and a central database. As you can see, the authorities have also made things more transparent and simpler.

Growers are also working on the issue of transparency. Our supplies come from major producers in Spain, Italy and Germany. They operate their own labs on-site and develop their own knowledge and experience on the biodegradability of different pesticides in their fields. This information helps growers produce low-residue fruits and vegetables.

The entire fruit and vegetable market has worked extensively on reducing pesticide residues. I can only speak for our company: We have worked together with our producers and suppliers to significantly reduce pesticide residues.

We now have the option of using data from nearly 100,000 residue analyses conducted over the past few years to evaluate the residue quality of market channels, supplier countries, products and suppliers. As you can see on the chart, we were able to continuously and sustainably reduce the average utilisation of maximum pesticide residue limits in the years 2006, 2007, 2008 and 2009. The average utilisation of the maximum limit in 2009 was 8.7%.

This achievement would be impossible without the dedicated efforts of growers. As retailers we have created a framework that is being successfully implemented by the growers.

What does this framework look like? What are the essential elements?

Our objective was to establish a continuing improvement process with growers aimed at reducing residues. We identified three elements that have proven effective and, in our opinion, provide a modern quality assurance system:

1) Rigorous residue monitoring with a high numbers of samples
2) Feedback of analytical results to the producer
3) Traceability of each shipping unit to the producer. This serves as a binding element to enable the feedback of information in a global market with such a large number of producers
These three mainstays serve as the basis for the ongoing improvement process we have successfully implemented between fresh produce retailers and growers. We believe that residue analysis data from retailers and across the entire supply chain should be placed in the hands of producers who can use this information to compare pesticide use in the past with current residue figures. Using this approach, we enable producers to adapt future applications and continuously improve crop management.

The key here is that we know who produced the goods when they arrive at the central warehouses. Using this information, we can link producers with residue data and provide feedback to growers on the quality of their products. We provide the framework so that changes can be made on a local level.

The traceability system doesn't have to be complicated in all aspects. Transparency can be ensured with simple instruments, such as this label. The introduction of the transparency label undoubtedly involved costs in the supply chain. But it has enabled us to make a step closer to achieving our common goal of improving the quality assurance information.

I would like to emphatically point out that, as retailers, we have only created the framework with our three mainstays of quality. The real work lies in the hands of the growers. Thus, our success up until now has been mainly achieved by the producers. They are the ones who consistently implement lower pesticide standards in the fields on a day-to-day basis. This can only be achieved through transparency and an exchange of information between retailers and producers. As a retail company, we are convinced that the further development of quality assurance can only be successfully pursued if producers are consistently integrated into the processes of change and rethinking.

Changes are necessary because this is what consumers expect from us. No matter which trends are talked about today and tomorrow, or which issues guide society, one thing is clear: when they come into a store, people are looking for products that suit their individual lifestyle. Traceability is the key to determining whether consumer expectations are being met by food retailers. For companies operating in the fresh produce supply chain, traceability offers the chance to make their achievements transparent to retailers. This creates trust and ultimately guarantees sales.

Transparency is based on an obligation principle. Retailers need to have all relevant product information because, when it comes to responsibility, they are the ones who interface with consumers and need to be able to answer questions. Consumers expect transparent quality standards and proven product quality.

A modern quality assurance system must ensure that product quality information between retailers and growers is transparent at all times. We need to know specifically whether the supply chain actually complies with the quality commitment we give our customers. This is the basis for customer acceptance and guaranteed sales.

A key condition in the initial phase is the transparency between retailers and producers. At the interface between growers and consumers, retailers have a chance to secure the flow of information through the supply chain. Quality assurance is required to consistently focus on consumer expectations and continuously adapt standards accordingly. I hope it has become clear that we have developed systems designed to support growers in their efforts to meet the requirements.

Modern companies that focus intensely on the quality expectations of consumers and try their best to meet these expectations can secure their acceptance as trusted suppliers in the market – vis-à-vis food retailers and consumers. These companies respond to changing consumer expectations and ensure that their expectations and needs are met by the range of products on market shelves.

I am convinced that this year's Fruit Logistica is once again the right place to discuss these issues. With this in mind, I wish you a successful trade fair and thank you for your attention.