Ready for regulation?

Add the financial services sector to the list of industries looking for greater government regulation, says this report from MSNBC headlined "30 year deregulation era dies a sudden death."

The produce industry is mentioned prominently in this news report. Here is an excerpt from the MSNBC story:

Certainly, there have been plenty of scares in the past few years. A series of food poisoning episodes — notably, the salmonella outbreak that sickened about 1,500 people earlier this year — made consumers worry about the safety of the nation's food supply. What's more, it became clear that the Food & Drug Administration had no easy way to trace tainted food back to its source.
Those incidents resulted in a major turnabout in the food industry's view of regulation. It once loved the fact that the FDA didn't have the money or inspectors to scrutinize it. "The reduction in regulation has made things worse, and industry recognizes it," says William K. Hubbard, a former FDA associate commissioner. "I think they really became aware of their vulnerability."


For obvious reasons then - and made more clear with subsequent developments - the fresh produce industry was the first to embrace their fate. Here is what I wrote for The Packer on Jan. 29, 2007:

WASHINGTON, D.C. -- In 230 years of fresh produce growing and marketing in the U.S., there has never been a system of strong federal regulation of produce safety. That may be about to change. United Fresh Produce Association president Tom Stenzel on Jan. 23 told the Fruit and Vegetable Industry Advisory Committee that the 40-plus-strong United board on Jan. 20 voted unanimously to advocate federal oversight of clear and strong produce safety standards based on the best available science.
"We want mandatory regulation, and that's a big sea change for us," Stenzel said. He said United will reach out to all elements of the trade, as well as regulators and members of Congress to discuss the issue. The scope of the regulations became an immediate question. Stenzel said it's not intellectually honest to look at one part of the supply chain only. It makes better sense to go from farm to table and reduce the risk wherever it is. He said he doesn't know what that will mean for terminal market, foodservice or retail operations.
As for growers, all U.S. producers would be included under the regulatory umbrella. "If we don't have mandatory federal regulation across all growing areas, we don't feel it will meet the confidence of consumers, and that's something that is very clear," he said. However, regulations could vary, he said, with commodity-specific guidance where needed. "Clearly lettuce and leafy greens are in the bull's-eye, but our board feels strongly that everyone is losing public confidence with every outbreak," he said.
Maureen Marshall, co-chairwoman of United Fresh and vice president of Torrey Farms Inc., Elba, N.Y., said the board felt the industry would have more input by taking the lead. "We know that the FDA wants to see something happen," she said. "I'd rather see us direct the process than have them give us something. … All the people, from large to small , the feeling (on the board) was the same."
Reaction to the United Fresh board decision was mostly supportive, although many industry leaders thought the issue needed more deliberation. "They sent us a copy of the letter, and it's a positive step," said Nega Beru, director of the Office of Plant and Dairy Foods and Beverages at the Food and Drug Administration's Center for Food Safety and Applied Nutrition. Beru said the agency was planning a couple of hearings on produce safety in the near future. No date has been set for the meetings, but he said they would be the venue to explore issues like commodity-specific guidelines and concepts of farm-to-table regulation.
He did note, however, that the Centers for Disease Control and Prevention says a select number of commodities account for the majority of foodborne illness outbreaks, suggesting that different standards could be place for different commodities. Relative to inspection of foreign farms, Beru said the FDA has conducted inspection at foreign farms, but typically in conjunction with trained personnel from regulatory authorities of those countries or using only those foreign personnel.
Kathy Means, vice president of government affairs for the Newark, Del.-based Produce Marketing Association, said that group's executive committee was to meet Jan. 27-28. "As we have said all along, we will side with what's necessary to bring confidence in produce for consumers and buyers." Tim York, chief executive officer of Salinas, Calif.-based Markon Cooperative Inc., said United's plan was bold, but he cautioned against overreaching by trying to include wholesalers and retailers. Grower-shippers should be where regulations start, and then later efforts would address each sphere of the supply chain sphere, York said. "Otherwise, we've got a battle on our hands with pretty powerful lobbying interests of retail and foodservice that could come up against that idea."
Matt McInerney, executive vice president of Western Growers, Irvine, Calif., said federal oversight can be complementary to California's work on a marketing agreement for leafy greens.
"There is life outside of California," added Mike Stuart, president of the Florida Fruit & Vegetable Association, Maitland. "Before we get too far down the road, we need to bring the industry together to talk about this."
One Northwest U.S. industry leader stressed that growers need to sort though the issue. "In 200 years, there has been no federally mandated food safety system in the industry in the grower-shipper chain, and to call for that is an incredibly huge deal," said Chris Schlect, president of the Yakima, Wash.-based Northwest Horticultural Council. "It will require more thought."
"I'm not prepared to pass judgment on it quite yet," added John McClung, president of the Mission-based Texas Produce Association. "It's a huge step for the industry." McClung said the call for federal oversight makes the controversy over country-of-origin labeling seem puny in comparison. "My concern is that the grower-packer voice not be lost in the shuffle," he said. A meeting of United's government relations council in mid-February may be an opportunity for more discussion among industry groups, Schlect said. Another concern is whether federal regulation is the appropriate response. "It might be the right decision, but it's a concern that a lot of the leafy greens issues in California are driving the food safety program for all of American agriculture and the produce industry," he said.

The United Fresh Produce Association says oversight must adhere to the following four principles:
* Standards must be consistent and applicable to all produce grown anywhere in the U.S. or imported into the U.S.
* Standards must be mandatory, with sufficient federal oversight in order to be credible to consumers.
* Standards cannot depend upon marketing programs or voluntary certification, although these programs can be helpful.
* Standards must allow for commodity-specific food safety practices based on the best available science.
Source: United Fresh Produce Association


TK: Both Republicans and Democrats are moving toward regulation, or reregulation, as opposed to deregulation. The loudest voices in the produce industry still wants regulation:

Greg Murray, a tomato grower from Georgia, told the House agriculture appropriations subcommittee this week this in a prepared statement:

"I ask for you to take swift action to pass a mandatory food safety program nationwide based on commodity risk that will insure our food supply is safe," Murray said.

If the entire industry is not "on board" with the idea of increased food safety regulation, they are certainly keeping quiet about it.

Yes, it is regulation that industry wants - both United and PMA - and that both parties seem prepared to embrace. The industry caveats remain, of course; the regulations must risk based, science based, commodity specific, providing the greatest consumer protection, flexible to account for regions, harvest and packing practices and applying to both domestic and imported fruits and vegetables.

Does the industry expect Congress - or even the FDA - create a list of "high risk" commodities that will meet industry satisfaction? How do you cut off that list? Is the 6th commodity appreciably more risky than the seventh?

Is asking for science-based regulation even realistic given the paucity of hard research about pathogen risks throughout the supply chain?

The Cornucopia Institute has filed a suit against the federal marketing order for almonds based on its pasteurization requirement. How will small farms and organic farms respond to greater regulation by Congress, the FDA or USDA marketing orders and agreements?

We continue to wait on how much regulation will be industry led and how much will be mandated by Congress or the FDA. For example, we are still waiting on a press release from the Produce Traceability Initiative describing their timeline for industry adoption of traceability standards.

Strong-willed members of Congress are working on delivering food safety reforms within the next year. The good news is that produce industry lobbyists are actively engaged with those lawmakers to shape the language of food safety regulation. The sobering news, perhaps, is that the industry is counting on government to fix a problem that it couldn't fix itself.

Food fears frustrate global trade

A disagreement pitting the U.S. against China and India over agricultural subsidies remains unresolved as the so-called Doha Round of World Trade Organization talks, which has been dragging on since 2001, has ended as a dud.


From a BBC report:


The main stumbling block was farm import rules, which allow countries to protect poor farmers by imposing a tariff on certain goods in the event of a drop in prices or a surge in imports. India, China and the US could not agree on the tariff threshold for such an event. Washington said that the "safeguard clause" protecting developing nations from unrestricted imports had been set too low.


An earlier Associated Press article detailed how rising food prices worldwide and concerns about food security, particularly among poor nations, were at issue:


China and India were not alone. Faced with rising food prices, a number of developing nations have sought wide loopholes against opening up their farm markets — either by blocking certain strategic products such as rice or grains or through rules that would allow them to raise tariffs sharply if faced with a sudden flood of imports. Farming in the developing world is "not like manufacturing," said Trade Minister Mari Pangestu of Indonesia, the world's fourth most populous country. "It's not a machine you can just turn on or off." Rich and poor countries have clashed repeatedly in the round that was once billed as a recipe for lifting millions of people out of poverty. The trade body is hoping for agreement this week on lowering farm subsidies and industrial tariffs, setting the stage for an overall trade accord by the end of the year. Signs of a breakthrough last Friday were followed by more entrenchment over the weekend."

Cotton, sugar and rice are among commodities China wants to protect with tariffs, no mention of fresh produce.


Finding common ground among nearly 140 WTO member nations is challenging even during times of stability and growth, such as the 1990s, when China's rise as a manufacturing and export power pulled globalization into the mainstream of economic and political debate. (U.S. produce firms in the apple or garlic trade surely remember well in the '90s when Chinese exports pulled down floor prices for their respective products.)


The past decade has seen the rise of resource nationalism, as energy prices have jumped nearly 15-fold since oil bottomed out at $10/barrel in the late '90s. Poorer nations have felt the bite of fuel costs more than developed nations, and no doubt have seen how Russia and Venezuela purged foreign control of their oil resources and boast cash reserves equivalent to hundreds of billions of dollars to show for it.

In a time of economic uncertainty worldwide, nations' inclination to circle the wagons to protect domestic markets is understandable.
But the advance of global trade is a marathon, not a sprint. As trade negotiators plan their next move, the smart money will bet on growing reliance among nations for products and services -- including food.

Produce in Europe may get ugly

Government regulation is often a curious thing. (OK, maybe that's a nice way of putting it.)

Case in point: Proposed changes to European Union vegetable grading are raising the ire of French, Italian and Spanish produce interests. From the Web site EuropeanVoice.com:

"From artichokes to watermelons, the EU has a whole raft of legislation governing how fruits and vegetables should appear from the outside. Never mind if they are more tasty, vegetables that are too long or too knobbly, slightly misshapen or blemished are, under current rules, consigned to the EU’s food dustbin. But the European Commission, conscious of the food shortages around the world and of rising prices in Europe, has now decided to edit the rulebook on fruit and vegetable and cut back on waste."

"The Commission is proposing to relax rules on 26 different types of fruit and vegetable, including Brussels sprouts, carrots, cucumbers, garlic, mushrooms, plums, spinach and walnuts, allowing under-sized or misshapen products onto supermarket shelves. They would, though, need to be labelled as “products intended for processing”.

"The proposals, if backed by EU member states, would mean that Europeans could soon be shopping for forked carrots, strings of onion with fewer than the until now mandatory 16 onions, bent cucumbers and green asparagus that are actually 50% white. Consumers should use these sub-standard products for cooking, salads or jams, the Commission advised."

France, Italy and Spain maintain the current regulations protect consumers from poor quality produce, the article states, adding that regulators are confident changes will be finalized by year's end.

Of course, because it's government work, there's a loophole:

"In a bid to sweeten the pill of reform, the Commission has said standards will remain for some fruit and vegetables: kiwis will still have to measure a specific diameter, and a bunch of table grapes will still not weigh more than one kilogram."

Cutting regulatory red tape is a serious issue to European produce firms and ultimately the public, but the issue conjures images of poker-faced men in in lab coats placing calipers around kiwifruit. Here's hoping business and consumers both benefit from the changes.