During the many discussions regarding food safety in recent years, one recurring theme kept rearing its ugly head: there was no way growers could pass along the costs. After all, growers historically haven’t been able to pass down other costs, such as the rising price of inputs they need to produce quality crops. That’s why the recent news from Dole came like a bolt out of the blue. Beginning April 29, Dole informed its customers, it would be tacking a surcharge of 22¢ per carton to strawberries and vegetables to pay for food safety enhancements.
In a letter signed by Mike Cavallero, president of Dole Fresh Fruit North America, and Eric Schwartz, president of Dole Fresh Vegetables, the company informed its customers that the surcharge was necessary to recoup its investments in enhanced food safety in order to protect consumers. “All of us in the produce industry — growers, shippers, processors, food service operators, brokers, and retailers — took a tremendous hit last year from the spinach E. coli outbreak, both financially and in terms of consumer confidence in the safety of our products,” the letter begins. “In the consumers’ eyes, all of us are in a common arena when it comes to food safety, so we must continue to find ways to restore consumers’ trust and economic health to the industry.”
Dole states that the company took a leadership role in the development of the California Leafy Greens Marketing Agreement, which took effect April 1. The agreement puts a number of Good Agricultural Practices (GAPs) in place. Under the agreement, the California Department of Agriculture does charge a 2¢-per-carton assessment, but that is solely to cover the costs of a new government inspection program. “This 2¢- per-carton assessment is only a fraction of the incremental food safety costs we are incurring,” Dole states, adding that the expenses “are not limited to California or just leafy greens.”
In addition, the company states that it is “making substantial investments on our own in enhancements that go beyond the new GAPs and that we believe may eventually become industry benchmarks in the future. We are increasing research funding, increasing field buffer zones, adding field personnel, implementing raw material testing, and implementing RFID tracking of raw materials, among other efforts. These enhancements are not one-time events, but are a part of doing business — ours and yours — for the future.”
Dole’s Not Alone
Dole is not the only grower to begin charging a food safety surcharge. Just weeks before Dole made its announcement, another huge California grower announced it was implementing a similar assessment. Taylor Farms, a large Salinas, CA, vegetable producer, informed its customers it would begin tacking on a 20¢ increase. The increase would apply across the board on all products to all customers, including grocery stores, club chains, and food service outlets.
Large growers like Dole and Taylor have a lot more power, of course, than the average grower. Obviously, it would be a lot more difficult for smaller growers to simply make such an announcement to their customers. However, with all the calls for regulation in the food safety arena in the months since last fall’s E. coli outbreak, change is clearly in the wind.
For example, while a small individual grower might not be able to charge such an assessment, it may be able to as part of a marketing order, as called for in recent federal legislation. Both the Specialty Crop Competition Act of 2007, which was introduced in April, and the EAT Healthy America Act, which was introduced in March, have provisions that allow food safety rules to be used in marketing orders.
Regional, Crop-Specific Challenges
The Florida Fruit & Vegetable Association is encouraging all of its members to join together and follow the lead of organizations such as the Florida Tomato Committee and others in calling for legislation. The food safety regulations in such legislation needs to be tailored for certain segments of the industry, says Lisa Lochridge, the association’s director of public affairs. “They should vary by commodity and region; that just makes common sense,” she says. “There is no ‘one size fits all’ when it comes to standards.”
It’s in growers’ interests to institute such standards, says Lochridge, as any more foodborne pathogen outbreaks could be disastrous for them. “It’s not a new topic, it’s just that there’s greater urgency,” she says, referencing the deadly E. coli outbreak. “Stiffer regulations are going to dominate the discussion.”
Indeed, the E. coli outbreak will have far-ranging changes on the business of producing fruits and vegetables, changes that will forever change the face of the industry. As the Dole letter concludes: “None of us could have predicted the extraordinary events of the past seven months or the position we find ourselves in today"