Food Logistics April 2015 by Supply+Demand Chain/Food Logistics

Food Logistics

COOL INSIGHTS: Cold Chain Visibility Tools Keep Making Great Strides Pg. 14 ®

Issue No. 165 April 2015

F&B Industry Supports Food Safety Improvement, But Calls For Changes To FSMA Pg. 16

Global Supply Chain Solutions for the Food and Beverage Industry

FDA Publishes Four Supplemental Proposals To FSMA Pg. 26

Best Safety Practices In Food Transportation And The Role Of ERP Technology Pg. 31

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ON THE MENU AP RIL 2015 • ISSU E N O . 165

COVER STORY

F&B Industry Supports Food Safety Improvement, But Calls For Changes To FSMA Industry stakeholders weigh in on several aspects of proposed law. By Elliot Maras

26 31

FEATURES

FDA Publishes Four Supplemental Proposals To FSMA

The agency seeks to make the original proposals more flexible, practical and targeted. By Smitha Stansbury

Best Safety Practices In Food Transportation And The Role Of ERP Technology

FSMA will require those who transport food to use sanitary transportation best practices to ensure food safety. ERP plays an important role. By Carl Iversen

COLUMNS

FOR STARTERS

The FSMA: A New Regulatory Landscape

Digesting the impact of the biggest U.S. food safety legislation in decades. By Lara L. Sowinski

COOL INSIGHTS

Cold Chain Visibility Tools Keep Making Great Strides New technology brings a host of tools to improve efficiency and safety. By Van Belle

FOOD (AND MORE) FOR THOUGHT

FSMA And Small Companies: Compliance Shouldn’t Be An Issue

The FDA’s Food Safety Preventive Control Alliance is a valuable resource for companies of any size that are looking to enhance food safety. By Elliot Maras

DEPARTMENTS 8 Supply Scan 12 Food on the Move 42 Marketplace

831

Published and copyrighted 2015 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published ten times per year in Jan/Feb, March, April, May, June, July, August, September, October and Nov/Dec by AC Business Media Inc., 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, PO Box 3605 Northbrook, IL 60065-3605. Canada Post PM40612608. Return Undeliverable Canadian Addresses to: Food Logistics, Station A, P. O. Box 25542, London, ON N6C 6B2. Subscriptions: US, one year $45, two years $85; Canada & Mexico, one year $65, two years $120; International, one year $95, two years $180. All subscriptions must be paid in U.S. funds, drawn

APRIL 2015

• FOOD LOGISTICS

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FOR STARTERS FROM THE EDITOR’S DESK

WWW.FOODLOGISTICS.COM

The FSMA: A New Regulatory Landscape

Published by AC Business Media Inc.

SOWINSKI

201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

he U.S. FDA’s Food Safety Modernization Act (FSMA) is the most comprehensive legislative reform of the food supply chain in decades, and not surprisingly, it’s taking a while for the federal government and the private sector to finalize and implement various rules associated with the legislation. Overall, the trade community gives the FDA satisfactory marks for their attempts to improve food safety in the U.S., including closer monitoring of U.S. food imports. Admittedly, the FDA missed some major deadlines since the FSMA was signed into law in January 2011. However, it’s generally agreed that the agency is doing its best to keep the channels of communication open with the trade community in order to hammer out final rules that are effective and achievable on both sides. This special edition is devoted to the FSMA. It includes information on details of the legislation, industry feedback, and the most recent updates on pending rules. Our coverage starts on page 16 with an overview of the FSMA, followed by a collection of comments from the trade community that illustrates the occasional disconnect between theory and practice, or in this case, legislative intention and what’s actually doable in the real world. Next, Smitha G. Stansbury, a partner with the FDA & Life Sciences Practice of King & Spalding LLP (and a member of Food Logistics’ editorial advisory board), delves into the FDA’s “supplemental notices of proposed rulemaking” that the agency released last September, following an initial review of public comments (page 26). The proposed rules represent FDA’s attempt to make the original proposals more flexible, practical and targeted. Equally important, it offers clues as to how the FDA interprets its mandate to improve food safety and what the final rules will eventually look like when they’re issued this year. Guest contributor Carl Iversen, vice president of product development at LinkFresh, concludes our FSMA coverage with a look at how ERP systems are playing a role in providing a single, focused and centralized solution for improving visibility and regulatory compliance throughout the food supply chain (page 31). Enjoy the read.

LARA L. SOWINSKI, EDITOR-IN-CHIEF LSOWINSKI@FOODLOGISTICS.COM

APRIL 2015

• FOOD LOGISTICS

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PRINT AND DIGITAL STAFF Publisher Jolene Gulley Editor-in-Chief Lara L. Sowinski lsowinski@ACBusinessMedia.com Managing Editor Elliot Maras emaras@ACBusinessMedia.com Assistant Editor Eric Sacharski esacharski@ACBusinessMedia.com Ad Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Crock Senior Audience Development Manager Wendy Chady Audience Development Manager Tammy Steller ADVERTISING SALES (800) 538-5544 East Coast Sales Manager Judy Welp (480) 821-1093; Fax: (480) 240-4897 jwelp@ACBusinessMedia.com Midwest/West Sales Manager Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 201 N. Main Street, Fort Atkinson, WI 53538 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040; tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Smitha G. Stansbury, partner, FDA & Life Sciences Practice, King & Spalding Raymond J. Segat, director, cargo & business development, Vancouver Airport Authority Dr. Barbara Rasco, professor and interim director, School of Food Science, Washington State University Adriano Melluzo, Vice President, National Sales, Rydery CIRCULATION & SUBSCRIPTIONS PO Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (800) 543-5055 Email: circ.FoodLogistics@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com REPRINT SERVICES Nick Iademarco, Wright’s Media (877) 652-5295, ext. 102 | niademarco@wrightsmedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich Executive Vice President Kris Flitcroft CFO JoAnn Breuchel VP Content Greg Udelhofen VP Marketing Debbie George Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2015 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

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Pallet Flow

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Wide Span

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Warehouse Racking

SolutionS 8 7 7. 6 3 2 . 2 5 8 9

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SUPPLY SCAN

D A I LY U P D AT E S AT WWW.FOODLOGISTICS.COM

NE WS FROM ACROSS THE F O O D SU PPLY C H AIN

Heinz, Kraft Agree To Merge, Expect Synergies Will Deliver Funds For Innovation H.J. Heinz Co. and Kraft Foods Group, Inc. have agreed to merge and create The Kraft Heinz Co., forming the third largest food and beverage company in North America. Under the terms of the agreement, Kraft shareholders will own a 49 percent stake in the combined company, and current Heinz shareholders will own 51 percent on a fully-diluted basis. The aggregate special dividend payment of approximately $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital. The combination of these companies brings together two portfolios of brands, including Heinz, Kraft, Oscar Mayer, OreIda and Philadelphia. Together the new company will have eight $1 billion-plus brands and five brands between $500 million and $1 billion. The complementary nature of the two brand portfolios presents substantial opportunity for syner-

gies, which will result in increased investments in marketing and innovation.

California Gov. Brown Orders Water Use Cut; Farms Exempt California Gov. Jerry Brown, in his most sweeping action to combat a devastating multi-year drought, ordered residents and businesses to cut water use by 25 percent in the first mandatory statewide reduction in California history, according to Reuters. Farmers, already making do with less water for irrigation, will be exempt. The move comes as California’s snowpack, which generally provides about a third of the state’s water, is at its lowest level on record in a sign the state’s drought, now entering its fourth year, is far from over. Meanwhile, California, spurred by the drought ravaging the state’s

agriculture for a third year, is refocusing its water conservation efforts. Agriculture’s unrelenting exploitation of groundwater has diminished its ability to be tapped during dry years and serve as a buffer against drought, said Richard Walker, professor emeritus of geography at UC-Berkeley. Even though the groundwater extraction rate jumped by 50 percent over the past few years—a typical response to drought—it is still insufficient to meet the demand of the agriculture sector.

Labor Group Charges McDonald’s With Safety Violations A union-backed group is calling for McDonald’s Corp. to be held accountable under federal rules for worker-safety violations at its franchised restaurants, expanding a continuing effort to reduce historical protections for corporations

operating under franchise arrangements. The group, Fast Food Forward, backed by the Service Employees International Union, announced a series of complaints it has filed to the Occupational Safety and Health Administration (OSHA) alleging violations by 19 McDonald’s franchisees and nine McDonald’s Corp.-owned stores. The group has prepared a detailed legal argument that it hopes will persuade OSHA to cite McDonald’s Corp. for violations that OSHA might find at independently-owned restaurants.

Sanderson Farms To Build $139 Million Poultry Plant in North Carolina Sanderson Farms will open a $139 million poultry complex in North Carolina, to be located in St. Paul’s and Robeson County.

U.S. IMPORTS AND EXPORTS OF POULTRY Poultry is a unique commodity traded in the U.S. because it is one of the few products that’s exported much more than it’s imported… in fact, much, much more. In 2014, the U.S. exported $4.9 billion worth of poultry and imported only $218 million. The export market for U.S. poultry spreads across 152 countries worldwide with top importing nations being Mexico, Canada, China, and, once upon a time, Russia. In 2013, Russia was the fourth-largest importer of U.S. poultry, though since its ban on certain U.S. food items, it now imports exactly $0. The ban didn’t have much effect on poultry exports, which declined only 1 percent from 2013 to 2014.

Exports $4,939,517,917

by Total Value in 2014

by Total Value

$5 $4 $3 Billions

U.S. POULTRY TRADE

U.S. EXPORTS OF POULTRY

$2 $1 $0 2007

Imports $218,862,135 Source: Zepol, www.zepol.com

APRIL 2015

• FOOD LOGISTICS

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2008

2009

2010

2011

2012

2013

2014

All data provided by Zepol. Visit zepol.com for a Free Trial

www.foodlogistics.com

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The facility will house a processing plant and water treatment facility, and boast a capacity to process 1.25 million birds per week. The complex will employ approximately 1,100 people and will be equipped to process and sell approximately 500 million pounds of dressed poultry meat at full production.

Local Food Sourcing Drives Growth For ‘Urban Farms’ In Rural America While food hubs and farmers’ markets have sprouted up in urban areas, the local food economy has taken off more slowly in most of rural America. However, there’s been an unexpected push recently to create hyper-dense farms in the land of wide open spaces, according to reports.

One example is Bright Agrotech. The company’s CEO, Nate Storey, operates a greenhouse in in Laramie, Wyo. that is packed with vegetables growing in long, upright plastic towers. The waste from fish tanks fertilizes the crops through plastic tubing that drips water onto the vertical garden. The greenhouse is small, but produces a lot of food, and is well suited for the state’s climate, which poses difficulties for conventional farmers due to its harsh winters and poor soil.

Safeway To Launch First Fair Trade Certified Seafood Safeway and nonprofit organization Fair Trade USA announced a partnership to launch Fair Trade Certified™ seafood into the North American market. Beginning with wild-capture tuna from small-scale fishwww.foodlogistics.com

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ermen in Indonesia, this program is the first of its kind to address both social and environmental responsibility in fishing communities across the globe. The world’s first Fair Trade fish will debut in Safeway stores in the Northern California, Portland and Seattle divisions this spring. As additional supply becomes available, the tuna will be introduced in other operating areas.

FDA Approves GMO Apples And Potatoes As Safe For Consumption The Food and Drug Administration (FDA) has approved apples and potatoes which are resistant to bruises and don’t go brown as safe to eat, according to the Associated Press. Consumer and environmental groups are concerned that such products could have unknown risks to human health. The FDA said the genealtered apples and potatoes are good for commercial planting since they are “as safe and nutritious as their conventional counterparts.” The decision increases these products’ chances of finally appearing on the grocery stores’ shelves. The approval covers six kinds of potatoes by Boise, Idaho-based J. R. Simplot Co. and two types of apples by the Canadian company Okanagan Specialty Fruits.

Food Industry Shares GMO Labeling Concerns With House Agriculture Committee Logistics remain a key concern of any mandatory GMO labeling bill, several panelists at a House Agriculture Committee hearing on biotechnology agreed recently, reported Farm Futures Magazine. Six panelists, representing several facets of the food and feed supply chain, discussed with committee members their take on labeling GMOs and legislation to provide standards for labeling. Such a bill was tossed around in the

previous Congress. Offered by Rep. Mike Pompeo, R-Kan., the Safe and Accurate Food Labeling Act of 2014 would have established voluntary GMO labeling standards, required a federal standard for the term “natural,” and would have required Food and Drug Administration approval for genetically-modified ingredients before they were brought to market. While it wasn’t approved last year, proponents of the bill felt it could provide consumers with information they desired, without a negative view of products that were made with GM ingredients. Additionally, supporters said voluntary labeling would protect farmers’ and manufacturers’ ability to select ingredients and products they want to use or grow. Several panelists were concerned that competing state bills to mandate labeling may have a trickledown impact on the economics of their businesses.

Halal Market Expands; Dubai Seeks To Play A Key Role The global value of the halal food market will hit $10 trillion by 2030, according to a Harvard Business School case study. Malaysia, whose population is more than 60 percent Muslim, exported nearly $10 billion worth of halal food products in 2013, making it the largest halal exporter in the world. Global halal trade was much lower than global trade in, for example, kosher products. For each halal product available in an American grocery store in 2013, there were 86 different kosher products. Dubai-based Al Islami Foods reported that U.S. Muslims spent about $16 billion on kosher products annually because similar halal products were not available. The Harvard team was briefed by Al Islami about halal food production and the vision of Sheikh Mohammed Bin Rashid Al Maktoum, prime minister and vice

president of the UAE and ruler of Dubai, to establish UAE as the capital of the world halal economy.

Frozen Food Sales To Rebound Through 2019 After several years of declining sales, the frozen foods segment is expected to climb from $22 billion in 2014 to $23 billion in 2019, according to Packaged Facts, a Rockville, Md.-based market research firm. New natural and organic innovations are adding appeal to a category previously plagued by negative perceptions of quality, taste and healthfulness. Sales of frozen dinners, snacks, side dishes and pizzas were just over $22 billion in 2013, down about 1 percent from 2012. Sales in 2012 slid 1 percent from 2011. In addition to concerns over nutrition, the category has been challenged by increased availability of ready-toeat and heat-and-eat meals created daily in grocery stores that offer the same convenience but with a fresher appearance.

Grocery Shopping Apps Gain Traction Grocery shopping apps are moving beyond the test phase. The Piggly Wiggly supermarket in Mayville, Wis., recently introduced the new Fetch Rewards app that aims to simplify grocery shopping by making it more efficient and convenient. The Fetch app is being tested in 10 stores, according to the company, with plans to develop partnerships with about 150 new retail stores this year. After downloading the free app, available on the Apple App Store and Google Play, customers can use their mobile phones to scan the items they wish to buy as they shop. The app is designed to eliminate the time and energy required to remove items from a cart, scan them and place them back in the cart during checkout. Test stores have several checkout lanes that accept Fetch and some even have dedicated checkout lanes for app users. The Madison, Wis.-based startup has received a $500,000 loan from the Wisconsin Economic Development Corp. FOOD LOGISTICS

• APRIL 2015

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FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

FedEx To Acquire TNT Express To Boost International Reach FedEx Corp. and TNT Express N.V. reached an agreement whereby FedEx will acquire TNT Express at an implied equity value of approximately $4.8 billion. The combined companies will be a strong global competitor in the transportation and logistics industry, drawing on their complementary strengths. The combined companies’ network would benefit from the combined strength of TNT Express’ European road platform and Liege hub and FedEx’s strength in other regions globally, including North America and Asia. TNT Express customers would also benefit from access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities.

of 2013 because of increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region, Cold Train claims.

Jet Airways Launches Cargo Service To And From India

Cold Train Officials Sue BNSF For Ruining Its Intermodal Service

Indian passenger airline Jet Airways will launch dedicated freighter operations (subject to regulatory approvals) in April, becoming the first private Indian passenger airline to offer all-cargo services, the company announced. The freighter services will operate using an A330-200F aircraft wet-leased from strategic partner Etihad Airways and will have an operating base in New Delhi.

Steven Lawson, the former president/CEO of Cold Train, and Mike Lerner, the former managing member of Cold Train, have filed a $41 million lawsuit against Burlington Northern Santa Fe (BNSF) Railway in the U.S. District Court in Spokane, Wash. as a result of damages incurred for having to shut down the Cold Train Express Intermodal Service in August of 2014. The shutdown of Cold Train was caused by a significant slowdown in BNSF’s service schedules on its Northern Corridor line beginning in the fall

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Load Volume Up 26% in March

oad volume for truckload refrigerated freight jumped 25.9 percent in March compared to February, according to DAT Solutions, which operates the DAT network of load boards. The number of trucks posted increased 9.1 percent during the month, for an average load-to-truck ratio of 8.9. That means there was an average of almost nine reefer loads for every available reefer vehicle on DAT load boards in March. Load-to-truck ratios indicate market demand and capacity, and changes signal shifts in spot market rates. Rates, meanwhile, remain firm as fuel prices fall. In March, the national average spot rate for reefer freight was $2.15 per mile ($1.84 line-haul rate plus a 31-cent fuel surcharge). That’s up 4 cents compared to February when the line-haul rate was $1.81 and fuel surcharge was 30 cents. When fuel prices slip, the surcharge drops and the total rate tends to decline. In March 2014, the line-haul rate was $1.73 but the fuel surcharge was 52 cents, for an average overall rate of $2.25 per mile. This 10-cent difference illustrates how declining fuel prices affect spot-market truckload rates which, unlike contract rates, are one-time rates based on current market conditions with the fuel surcharge seamlessly factored in.

APRIL 2015

• FOOD LOGISTICS

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NATIONAL REEFER LOAD-TO-TRUCK RATIOS, MARCH 2015 Darker shades indicate more outbound loads, greater demand for trucks

REEFER RATES - MARCH 2015 $2.20 $1.93 $1.65 $1.38

Spot

$1.10

Contract

$0.83

Fuel

$0.55 $0.28 $0.00 Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

www.foodlogistics.com

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FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

Chinese Slowdown Drives Bulk Shipping Rates To All-Time Low Dry bulk shipping charter rates remain well below break-even levels, pushing vessel scrapping to record highs, though some market improvement is expected in the second quarter, according to Herman Billung, the CEO of shipping firm Golden Ocean, reported The Maritime Executive. Day rates have plunged as China’s slowdown reduced its iron ore imports while the market is flooded with brand new vessels entering the market, sending the Baltic Dry Index to an all-time low of around 500 points in February from around 1,600 points a year ago.

Port of Portland Loses Container Business; Will Puget Sound Boost Carrier Rates? Container business at the Port of Portland may take a serious hit as the port stands to lose another major container carrier, according to reports. Although German-based Hapag-Lloyd has not made an official announcement that it will no longer call on Terminal 6, the company’s current schedule contains no calls for the port in the near future. This comes shortly after Hanjin Shipping, the port’s largest carrier, pulled out in February, leaving the port with 80 percent less business. Hanjin stopped calling on Terminal 6 in the midst of the continuing labor disputes and backlog it caused. Hanjin was the only shipping company exporting Oregon goods directly to some of the state’s biggest clients.

How Will Panama Canal Expansion Impact The Cold Chain?

he $5.25 billion Panama Canal expansion project, when completed and operational in 2016, will add a deeper and wider third lane and a new system of locks to accommodate the new massive vessels that steamship lines are increasingly deploying, according to the Global Cold Chain Alliance. Transship- This is an artist’s impression of the Panama Canal expansion on completion. ment activity through Panama will grow strongly once the canal expansion is completed. The expanded canal is also expected to benefit shipping lines by reducing transportation costs per cargo unit. What remains uncertain, however, is how much the shifts in trade patterns will impact new business.

Holdings Plc. Average yields for some offices in Europe stand at about 5 percent.

Penske Logistics To Acquire Transfreight North America Penske Logistics has reached an agreement to acquire Transfreight North America, a provider of third-party logistics and supply chain solutions, from Mitsui & Co., Ltd. Financial terms were not disclosed. Transfreight North America currently operates from 27 locations across the Midwest, Canada and Mexico with headquarters in Erlanger, Ky., and in Kitchener, Ontario, Canada.

APRIL 2015

• FOOD LOGISTICS

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U.K. Port Expansion To Make One Of Europe’s Largest Reefer Facilities A specialized, $29.6 million, state-of-theart, temperature-controlled, refrigerated distribution center will be built at London’s Port of Tilbury, according to reports. Port owners Forth Ports Ltd. and NFT Distribution are developing the facility which is scheduled to open in late 2015.

Port Strikes Help Drive Air Cargo

E-Commerce Drives Investment In European Warehouses European warehouses attracted record investment last year as Internet retail growth boosted demand for storage space close to the homes of online shoppers, Reuters reported. Investment climbed by 28 percent to 21.7 billion euros ($22.9 billion), according to Jones Lang LaSalle Inc. Anticipation of a prolonged rise in Internet retail has sparked competition for assets, causing average yields to narrow to 7.8 percent last year from 8.9 percent in 2013, according to broker DTZ

sels of 5,500 TEUs, according to Lloyds List. “Partner carriers believe that the introduction of this new service will improve transit times and provide extensive port coverage from Asia to the West Coast of Latin America including Mexico, and vice versa,” HMM said in a statement.

Three Asian Container Lines Unveil Latin America Service Three of Asia’s leading container lines will launch a new service linking Asia and Latin America this summer in spite of the recent fall in freight rates, according to reports. Hyundai Merchant Marine (HHM), Hanjin Shipping and Yang Ming Marine Transportation Corp. are due to start the West Latin Express (WLX) service on July 11. It will operate with 10 ves-

Global air cargo traffic surged in February as a result of the timing of Chinese New Year, coinciding with congestion at U.S. West Coast Ports, according to the International Air Transport Association. Air cargo traffic increased 11.7 percent in February this year over 2014. North American carriers grew 8.7 percent, driven largely by congestion at West Coast ports, while Latin American air freight volumes fell 9.6 percent. www.foodlogistics.com

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COOL INSIGHTS BY KEVIN VAN BELLE

Cold Chain Visibility Tools Keep Making Great Strides New technology brings a host of tools to improve efficiency and safety.

here is a turning tide from customers who demand to know the source of their food. Restaurants and grocery stores often list the farms and fisheries where their products are sourced, and voluntary labeling descriptions are adapting to this demand. Food traceability is as much about building relationships with customers as it is about identifying the roots of the food people eat. There’s certainly a sales incentive in providing food origins, and governments may soon demand it. But there’s a professional advantage in knowing the exact location of your inventory while it’s making its way from farm to fork. Within your production facility or grocery network, you know your specific inventory levels. Your ERP and internal scanning system can pinpoint the moment supply thresholds are breached and additional orders can be sent to replenish stocks. And while inventory is within your network, you’re confident that recalls and holds can be managed – you can protect your brand.

Is there enough visibility? On the other hand, your network only accounts for a small fraction of your inventory – you likely have a significant volume of inventory with a third party, temperature-controlled warehousing and distribution 14

APRIL 2015

provider. Exactly how much of your inventory are they holding? Where is it? Has it just arrived or is it ready to ship? Is it being stored at the right temperature? Is the service provider maintaining your KPIs and ensuring that your supply chain spend is being utilized

Can you have too much data?

as cost-effectively as possible? Supply chain visibility and reporting is an essential element to your overall supply chain management process, and since your provider is likely already using RF scanning or something similar to manage inventory in-house, making that information available to you should be straightforward. So what exactly can a robust supply chain visibility and reporting system do for you? System capabilities will vary by provider, with the best sys-

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tems offering you a view of your inventory throughout a provider’s network. What inventory is currently on trucks and due to be received? When is freight coming in? What’s in stock and at what temperature? How much total inventory do you have on hand? What’s being readied for shipment? Will your JIT shipments connect via cross-dock, etc.?

Top-of-the-line systems will also offer scorecards and KPI reporting so that you can track picksper-hour or de-vanning rates, and even exception management. Instead of monitoring each pallet, you set milestones and alerts to notify you of a threshold variance. If you don’t receive any alerts, then your supply chain is humming along nicely. Need to suspend distribution in the event of a hold or recall? This is easy while inventory is within your network. But if you could catch the hold closer to your product’s source, then you could save significant sums in transportation costs. Robust supply chain visibility and reporting systems can offer this feature too.

VAN BELLE

Does the system have to integrate with the ERP? Complex EDI integrations can channel this information directly into your ERP, but maybe you don’t have the time or resources to implement it. A dynamic application should be available for not only desktop computers, but for tablets and smartphones with Internet connections too, and it should offer you a full suite of products just as an integrated system would. This can empower you with accurate information leading to more qualified decision making by providing direct access to inventory levels, ordering, reporting, pallet tracking and alert management from the palm of your hand.

What does it cost? There are certainly setup and integration costs, and innovation takes money. But basic systems may be included in the rate agreements with your providers. Insight into your supply chain from farm-to-fork is possible and it can be highly useful. You should be having a visibility and reporting discussion with your warehousing and distribution services provider so that you can fully understand capabilities and start taking advantage of the opportunities it presents. ◆ Kevin Van Belle is vice president of IT Applications at Americold, based in Atlanta,Ga. www.foodlogistics.com

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F&B Industry Supports Food Safety Improvement, But Calls For Changes To FSMA Industry stakeholders weigh in on several aspects of proposed law. BY ELLIOT MARAS

h e Food Safety Modernization Act (FSMA) will change some aspects of how the food supply chain operates. That much can be assumed, based on the Food and Drug Administration’s (FDA) statements about the biggest overhaul to food safety law in 70 years.

Among the most significant changes under FSMA is the shift towards preventing problems rather than reacting to them after they occur. The FSMA gives the FDA new enforcement authority to achieve higher rates of compliance with prevention- and risk-based food safety standards and to better respond to and contain problems when they arise. The law also gives the FDA new tools to hold imported foods to the same standards as domestic foods and directs the FDA to build an integrated national food safety system in partnership with state and local authorities. The FSMA contains seven separate sets of standards: produce safety, preventive controls for human food, preventive controls for animal food, foreign supplier verification for imports, accreditation for third-party auditors to conduct safety audits, sanitary transportation, and strategies to prevent intentional adulteration.

APRIL 2015

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After a review of public comments in September 2014, FDA released “supplemental notices of proposed rulemaking” that propose modifications to the original proposed rules. FDA accepted comments on the

Industry stakeholders think the FSMA sanitary transport rule errs in applying quality standards to safety practices. issues raised in the supplemental notices until Dec. 15, 2014. Under a court order, FDA is required to issue the final rules in 2015. The FDA has proposed the effective date to be 60 days after the final rule is published. Recognizing that

small and very small businesses may need more time to comply with the requirements, the compliance dates are adjusted accordingly. A business that has less than $10 million in total annual sales of food would have to comply within three years after the publication of the final rule. A business employing fewer than 500 persons would have to comply two years after the publication of the final rule. A business that does not fall under the two conditions listed above and does not qualify for exemptions would have to comply one year after the publication of the final rule. Some aspects will take effect quickly, such as mandatory recall authority, while others will take longer because the FDA is working on technical guidance documents to provide advice on how to implement food safety preventive controls.

Industry stakeholders weigh in Industry stakeholders have worked with FDA on all aspects of the law as the agency has undertaken the process of establishing rules for safe practices. But as this article will explain, the FDA is far from finished with several aspects, particularly those that govern food transportation. While it is not known specifi-

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cally when the rules will take effect and who will be enforcing them, stakeholders naturally want to know 1) who is responsible for meeting the rules, and 2) what are the specific requirements?

Comments prove revealing Supply chain decision makers support the goal of FSMA and give the FDA high marks for working with industry on the requirements. Many who took the time to comment commended the FDA for using a risk-based approach in the rule making. In reviewing more than 100 comments submitted to the FDA about the proposed rules, Food Logistics observed many stakeholders are concerned about how the law assesses who is responsible for meeting safety standards while product is in transport. Stakeholders also want clarification over what types of shipments are covered. A lot of concern has also been raised about temperature control requirements for perishable food in transit. From reviewing stakeholders’ comments, it is clear that food supply chain managers are concerned about specific wording of many of the rules. Comments sought clarification of terms such as “shipper” and “farmer.” Given the number of comments and the amount of detail provided to the agency, it is clear that the food supply chain community recognizes the farreaching impact the law will have on their operations.

A major concern: the sanitary transport rule While the food supply chain community commented on all aspects of the FSMA law, the sanitary transport rule drew the most concern. The FDA claims the proposed sanitary transport rule builds on current food transportation best practices concerning cleaning, inspection, maintaining, loading, unloading, and operating vehicles and transportation equipment. Industry stakeholders raised questions about temperature monitoring, how the law defines a shipper, the extent of the shipper’s responsibility for subsequent shipments, responsibility for short distances, and the overlap in enforcement between FDA and other agencies. The requirements for continuous temperature monitoring of shipments drew the most comments. Some

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expressed concern that the proposed that the proposed rule could be underwording of the rule could give enforcestood to suggest a requirement ment officials the idea that temperature for continuous monitoring of recording devices are needed and that temperature regardless of the certain items, particularly fresh produce, food safety need, which could need to be refrigerated in transit. add considerable cost without The American Trucking Associaa corresponding food safety tions (ATA) claimed temperature monibenefit,” Roger Lowe, executoring requirements are unneeded and tive vice president of strategic the existing regulations are doing the communications, told Food job. “ATA believes ‘the goal’ is already Logistics. “We believe that being reached,” the ATA’s letter states. FDA’s sanitary transportation Several stakeholders felt the agency requirements should align with was basing temperature monitoring leading industry practices, which requirements on quality control stanis FDA’s stated intent. GMA believes dards, not safety standards. that FDA should revise the temperature “The agency should be cognizant of monitoring practices to be in alignment the distinction between temperature with current and effective industry praccontrol requirements for food safety and tices that ensure food safety.” temperature control requirements for Carriers can – and often do – engage food quality control and avoid any lanin continuous temperature monitoring, guage which would tend to conflate the but there are some parts of the industry two often quite disparate requirements,” where continuous temperature monitorwrote England Logistics. “If safety level ing is not the norm because there are requirements are used interchangeably other methods to ensure safe transportawith quality level requirements, a flood tion of food, Lowe says. “As one examof unnecessary cargo claims and mounple, sometimes the temperature of the tains of wasted food will result.” product and/or cargo area is checked Lance Jungmeyer, president of the upon departure and arrival; this can be Fresh Produce Association of the sufficient to demonstrate that the food Americas (FPAA), wrote that fresh remained safe,” he says. produce is transported under tem“GMA contends that, instead, FDA perature control to preserve quality, should further tailor the regulation so not to ensure safety. “Additionally, no that it affects only the key areas of pubfoodborne illness investigations linked lic health concern—safety of shipments to fresh produce have identified lack subject to temperature control to preof temperature control during transportation as a likely contributor to causing the incident. Foods should not contain human pathogens when placed into commerce, and FDA does not designate allowable limits he American Frozen Food Institute requested FDA revise its proposed for human pathogens. animal foods rule under the FSMA. Donna Garren, Ph.D., senior vice presiTherefore, time and temdent of regulatory and technical affairs, points out the need for the FDA to perature controls for safety consider diverted food for animal consumption. She notes that diverting food in seems overly protective this way makes sense practically, economically, and environmentally. “Diverted and a redundant prevenfood production materials may not be acceptable for use as human food, but tive control.” this does not mean these materials are not safe for animals,” Garren told Food Jungmeyer added that, Logistics. “As a practical matter, it would be extremely difficult for a frozen food “Minor breaks in the cold processor to develop and implement a food safety plan to address food producchain do not definitively tion materials that may be diverted to animal food.” mean that a food is unsafe The National Council of Farmer Cooperatives (NCFC) said excessive regulafor human or animal contions should not be applied during the transportation of an animal feed that is sumption.” ultimately going to be deposited on the ground and exposed to the elements. The Grocery ManuNCFC said the transportation of byproducts from processing facilities used for animal feed should not be subjected to the same requirements applied to the facturers Association transport of human food. ◆ (GMA) voiced a similar view. “GMA has concerns

FDA Should Reconsider Diverted Food For Animals

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vent adulteration, bulk shipment where the food comes into direct contact with the vehicle, and food not fully enclosed by a container,” says Lowe. “This is preferable to some aspects of the proposed approach, like the suggested need for continuous temperature monitoring that is routinely communicated to the shipper by the carrier. That would add considerable cost in this area – but there is no demonstrated food safety problem that needs to be rectified.” Meanwhile, “We do not believe that it is necessary for the FDA to mandate continuous monitoring of temperature during transport as we believe that existing procedures, documentation of temperatures on loading and receipt with inspection of the condition of products upon receipt, are sufficient for most of our products,” Edie Burge, Nestle USA’s corporate communications manager, told Food Logistics. A carrier must already demonstrate to the shipper that the temperature conditions during transportation are consistent with those that the shipper specified, says Donna Garren, Ph.D., senior vice president of regulatory and technical affairs at the American Frozen Food Institute (AFFI). Such demonstration “may be accomplished by any appropriate means agree-

Companies active in food transport are concerned about having to install temperature recording devices in vehicles’ cold storage compartments. able to the carrier and shipper such as the carrier presenting printouts of a time/temperature recording device or a log of temperature measurements taken at various times during the shipment,” she says. “We are concerned that this proposed requirement does not align with current industry practices that are established as adequate

Railroads Raise Concerns About Sanitary Transport Rule

he Association of American Railroads and the American Short Line and Regional Railroad Association listed numerous problems with the sanitary transport rule. They claimed the rules are based on fundamental misunderstanding of the functions of the railroad carrier with regard to transportation of commodities, including food. They noted that the railroads have sound practices in place to ensure the safety of the country’s food supply. “The lack of instances of contamination associated with the transportation of food by rail is also indicative that railroad customers are utilizing appropriate practices and procedures,” wrote Keith Borman, counsel for the ASLRRA and Louis Warchot and Sarah Yurasko, counsel for AAR. The associations said the rule should clarify that “transportation operations” not include the transport of food that is completely enclosed by a container and can be stored in ambient temperature and humidity conditions. The associations also noted that railroads have no way to segregate to protect food from contamination by raw food or non-food items on the same load. They noted railroads accept loaded railcars, often sealed by the shipper, and haul them as instructed. ◆

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for food safety.” AFFI maintains that carriers should only be required to demonstrate compliance with the shipper’s temperature conditions on an exception basis—if there is a question about the condition of the food—not on a routine basis. Moreover, FDA’s requirements should make clear that a deviation from the shipper’s temperature requirement does not necessarily make the food adulterated, AFFI noted.

Mandatory temperature devices? The International Foodservice Distributors Association (IFDA) urged FDA to make clear that the use of temperature recording devices is not mandatory, and that the requirements of the rule may be satisfied in a variety of ways. “If this flexibility is not made more explicit, IFDA is concerned that inspectors may insist on the use of such devices, or that carriers and shippers may feel that the only way to satisfy the rule and agency expectations is by the use of such devices,” wrote Jonathan Eisen, IFDA senior vice president of government relations. One industry expert, Jeff

Leshuk, vice president of strategic marketing and business development at Sensitech Inc., warns that the rule as written would make both the shipper and the carrier responsible for temperature control. “On a more technical level specifically related to temperature, there are many factors that influence good temperature management,” Leshuk told Food Logistics. “All of the parties involved have some role in ensuring proper practices are followed, so again, responsibilities need to be allocated in a manner that is logical. The industry has been doing this well for many years.” He said the proposed rule would create a disconnect from practices successfully employed today. “Portable temperature monitoring devices have been used successfully for many years with placement of the devices handled by the shippers upon loading, and recovered, downloaded and acted upon by the receiver,” he explains. To address this disconnect, Leshuk says the rule should be revised to allow for flexibility to allow suppliers, carriers and receivers to allocate the various responsibilities for the safe transportation of food among themselves in the manner that is best suited to their particular situation. Several groups, such as the National Restaurant Association, opposed the requirement that cold storage compartment in vehicles that can support the growth of microorganisms have temperature recording devices. NRA felt trailer-gauge monitors that record temperatures twice per route day should be acceptable. The United Fresh Produce Association (UFPA) said the rule should allow for shippers’ procedures to include temperature measuring/recording devices instead of requiring carriers to have such devices installed. “In other situations, produce companies may ship product in small cooler boxes with icepacks, relying on such for temperature control, not the carrier; the rule should allow the shipper to employ such options,” UFPA wrote. The American Meat Institute (AMI) and the North American www.foodlogistics.com

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For several years, retailers and major food processors have been asking suppliers for certification to GFSI standards to ensure safety of the products they supply. And as many of those suppliers have complied with the request, there was another gap noticed – storage and transportation. US Foods, in their quest to be an industry leader and prove to customers that they have the systems and processes in place to ensure storage and delivery of safe food, began implementing the IFS Logistics certification standard in their facilities. In 2014, The Acheson Group, led by Dr. David Acheson, a strategic consulting firm for food and beverage companies and those providing technical support to the food industry, released a case study on the success of US Foods outlining their reasons for certification and their experience with FSMA compliance. These results were significant.

But now, US Foods has gone a step further and commissioned the business department at the University of Michigan to study the business effects of certification pre- and post-certification. The results of this study, one that was designed to understand the business value of certification, has yielded valuable results. These results will be delivered at the Food Safety Summit in Baltimore, Maryland. As the gap in storage, distribution, and transportation certification narrows, more and more companies providing these food services will look to global standards. And understanding the value of the chosen standard is very important.

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• APRIL 2015

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Meat Association (NAMA) firmly opposed the requirement that certain transportation equipment “must be equipped with an indicating thermometer, temperaturemeasuring device or temperaturerecording device so installed as to show the temperature accurately within the compartment,” wrote Barry Carpenter, CEO of the NAMA and Mark Dopp, senior vice president of regulatory affairs at AMI. “Currently, it is not a routine practice for carriers to demonstrate to shippers (or receivers) that the shipment met the shipper’s temperature requirements. Rather, such records generally are only provided if there is an indication of a problem (i.e., signs of temperature abuse) upon receipt of the load,” they wrote. The Juice Products Association (JPA) requested that FDA modify the rule to provide that carriers only are required to engage in continuous temperature monitoring if specified as necessary by the shipper. “Correspondingly, carriers should not be required to demonstrate compliance with the shipper’s temperature requirements unless requested to do so by the shipper or receiver,” noted Patricia Faison, JPA’s technical director. The FDA has emphasized its interests in developing rules that are consistent with industry practices to ensure food safety. The temperature control requirements for transporting food remains an area that needs clarification.

nization receiving the order is responsible for freight costs and liability for the product, thereby giving the shipper little control,” Leshuk told Food Logistics. The International Warehouse Logistics Association (IWLA) took issue with the FDA’s definition of “shipper” as “a person who initiates a shipment of food by motor vehicle or rail.” Steve DeHaan, president and CEO of IWLA, gave the example of a warehouse-based 3PL that removes three pallets of packaged frozen shrimp from the warehouse and prepares it to be loaded on

even though the warehouse owner does not have the knowledge or control over the product to assure its safe transportation. “We think the definition of a ‘shipper’ should be clearly defined as a person with ownership of the food product,” DeHaan wrote. While the FDA proposes to define a shipper as a person who initiates a shipment, “there are many different parties, however, who could be said to ‘initiate’ a shipment of food,” wrote Carol Freysinger, executive director of The National Pasta Association (NPA).

Who’s a ‘shipper’? Another aspect of the sanitary transport rule that raised concern is who is responsible for food safety. The proposed rule puts much responsibility for safe transport on the shipper. Several stakeholders said the FDA must clarify how it defines “shipper.” Sensitech’s Leshuk notes that under many circumstances, the shipper does not have much control over the transport once it leaves their facility. “As one very simple example, most of the domestically-grown, fresh perishable produce is shipped FOB (free on board), which indicates that the person or orga-

APRIL 2015

Industry stakeholders believe the FDA must define a “shipper” more clearly and reconsider the scope of the shipper’s responsibility in meeting food safety standards. to a truck arranged for by the owner of the product. Who in this example is initiating the shipment, he asks. “What if the 3PL calls for the truck at the direction of the product owner? And, what if the 3PL is listed as the shipper on the bill of lading? Under the current definition, we do not think the answer is clear,” DeHaan wrote. A 3PL warehouse could be interpreted as “the initiator,” i.e., the shipper,

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On this point, the American Trucking Associations (ATA) noted the regulatory definition of “shipper” should clarify that it does not directly include logistics providers who merely arrange for transportation services on behalf of clients, and who are not necessarily knowledgeable about the products being transported, or the conditions required to protect individual products. “How can the first shipper know what happens at the next

warehouse?” asks the FPAA’s Jungmeyer. “There’s only so much that a shipper can be responsible for after it leaves his warehouse.”

Shipper responsibilities Regardless of how a shipper is defined, some stakeholders feel the proposed rule holds the shipper unduly responsible for subsequent additions to their trailers by other shippers. “It is imperative that the agency adequately address shipments of this type, recognizing that while the first shipper may take every precaution necessary to remain in conformance with the rule, they should not be responsible for subsequent additions to the trailer by other shippers,” Peter Chaires, executive vice president of Florida Citrus Packers told Food Logistics. The Global Cold Chain Alliance (GCCA) commented that the rule needs to do a better job clarifying the responsibility of 3PLs. “Given the new responsibilities proposed for shippers, there should be additional clarity regarding the role of third-party providers and under what circumstances they will and will not be considered shippers for purposes of the rule,” wrote Corey Rosenbusch, president and CEO of GCCA. Requirements for carriers also raised objections. The National Council of Farmer Cooperatives (NCFC) noted that the proposed rule would require a carrier to disclose the previous three loads to the shipper, so that the shipper can confirm that the vehicle is sanitary. However, in situations where there is a dedicated truck moving the same commodity or byproduct, this requirement is unnecessary and overly onerous. NCFC also noted the FDA uses the term “sanitary” within the rule yet fails to adequately define it.

Intra-company and short distance shipments Another area many industry players objected to was the rules for short and intra-company shipments. The Grocery Manufacturers Association (GMA) has requested that FDA modify the rules for shorter distance shipments because they do not need the same level www.foodlogistics.com

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GAO: FDA Not On Track With Foreign Food Inspections

he FSMA requires the FDA to inspect foreign food facilities to protect domestic food supply. According to a recent U.S. Government Accountability Office (GAO) report, the FDA is not meeting its objectives. As a result, GAO recommends that FDA complete an analysis to determine the annual number of foreign food inspections that is sufficient to ensure comparable safety of imported and domestic food. The GAO report, titled “Additional Actions Needed to Help FDA’s Foreign Offices Ensure Safety of Imported Food,” was submitted to Congress by J. Alfredo Gomez, GAO’s director of natural resources and the environment. Under FSMA, FDA was required to inspect at least 600 foreign food facilities in 2011 and, for each of the next five years, inspect at least twice the number of facilities inspected during the previous year. The FDA is not currently keeping pace with the FSMA mandate. FDA officials told GAO that they do not plan to meet the FSMA mandate because of funding, and they question the usefulness of conducting that many inspections. FDA has not conducted an analysis to determine whether the number of inspections in the FSMA mandate or the lower number of inspections it is conducting is sufficient to ensure comparable safety of imported and domestic food. Without such an analysis, FDA is not in a position to know what is a sufficient number of foreign inspections and, if appropriate, request a change in the mandate, the report noted.

of oversight as transportation that covers longer distances. “Under the proposed rule, all transportation would be regulated in the same manner—regardless of the distance,” the GMA’s Roger Lowe told Food Logistics. “GMA does not believe that the same longer distance regulations need to apply in situations such as food transported only a few miles between a manufacturer’s production and storage facilities, between a production facility and a customer’s facility, or in situations where a company’s fleet of trucks run a continuous loop throughout the day between two local facilities.” The National Pasta Association raised a similar concern. “This approach is not risk-based, as shorter distance shipments may not require the same level of oversight as longer distance transportation,” wrote NPA’s Freysinger. “For example, if a company runs a shuttle service between its manufacturing facility and a warehouse a few miles away, it may not be necessary to have written documentation addressing previous cargo loads or www.foodlogistics.com

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FDA has initiated a review to determine how to better reflect the value of the foreign offices in the agency-wide performance systems. Until the offices’ contributions are provided, FDA will have less information to effectively measure their progress toward meeting agency goals. FDA has taken some steps to address recruitment challenges, but it still does not have a strategic workforce plan. GAO says such a plan for the foreign offices is critical to FDA’s ability to address staffing challenges, especially since 44 percent of foreign office positions were vacant as of October 2014. The U.S. reliance on imported food as a percentage of all food consumed has grown from about 9 percent in 2000 to more than 16 percent in 2011. Some food categories are now more likely to come from foreign sources than domestic ones. For example, about 91 percent of seafood consumed in the U.S. was imported in 2011, according to the National Marine Fisheries Service. The U.S. also imported $4.6 billion in fresh vegetables and $3.1 billion in fresh fruit (excluding bananas) from Mexico in 2013, according to the Office of the U.S. Trade Representative. GAO’s 2013 High Risk List included the need to revamp federal oversight of food safety and cited, as a major food safety challenge, the substantial and increasing portion of the U.S. food supply that is imported. The GAO analysis showed that the number of

cleaning of the vehicle.” Walmart wants the FDA to reconsider the rule governing intra-company shipments. “Retailers who maintain control over the movement of food once it reaches a company-owned DC or other retailer-controlled intermediate destination should be dealt with separately in any rule and be subject only to good sanitation practices and procedures and adequate training, all of which are current industry standard practices,” wrote Frank Yiannas, vice president of food safety and health. “Retailers’ track record of handling food is exemplary and does not need to be subjected to rules that apply equally to means of transportation that are not under the control of a single entity.” He suggested an exemption for intra-company transportation. Walmart also took issue with the requirement to isolate or segregate ready-to-eat from raw foods. “If the language of the proposed rule is not clarified, there is the potential for an interpretation requiring the complete isolation

inspections performed by the foreign offices has increased since in 2010 but remains a small part of FDA’s total number of foreign food inspections. During 2014, the foreign offices completed 140 of FDA’s total 1,323 inspections of foreign food facilities—66 in China, 67 in India, and seven in Latin America—a 10-fold increase in the four years since 2010. In its most recent report to Congress on food imports and foreign offices, FDA estimated that the average cost of a foreign inspection was $23,600, compared with $15,500 for a comparable domestic one. By that estimate, FDA would have needed at least $113 million to complete the 4,800 foreign inspections that it has reported were required in fiscal year 2014 to meet the FSMA mandate. For 2014 and 2015, FDA requested funding for 1,200 foreign food inspections for each year. For fiscal year 2014, FDA received a total of about $138 million to implement all provisions of FSMA, including training, rulemaking, and foreign inspections. FDA officials noted that given limited funding, the agency determined that additional foreign inspections were not the best use of FSMA-related funds. FDA officials said they were focusing resources instead on technical assistance to the domestic and foreign food industry to help manufacturers comply with new FSMA rules, as well as training for FDA investigators and other agency staff to modernize FDA’s food inspection program. ◆

of raw foods from ready-to-eat foods during transportation. This interpretation has the potential to significantly impact current industry processes used to ship foods, resulting in reduced food chain efficiency, an increase in the carbon footprint (and food miles) for retailers as additional shipments of product would be required to accommodate these shipping requirements, and increased fuel usage,” Yiannas wrote.

definition would continue to describe a farm as an establishment devoted to the growing of crops, the raising of animals, or both, but would no longer limit a farm’s ability to pack and hold raw agricultural commodities (RACs) to the farm’s own RACs. An establishment would now remain within the “farm” definition even if it packs and holds RACs grown on another farm not under the same ownership. The Fresh Produce Association of the Americas (FPAA) applauds the clarification of the farm definition. “Just because a packing house is attached, it’s still a farm,” says FPAA’s Jungmeyer. The FDA created some confusion when the farm definition in the original preventive controls and produce safety rules differed from the one in the sanitary transport rules. “When the FDA released the

‘There’s only so much a shipper can be responsible for after it leaves his warehouse.’

What is a ‘farm’? Establishments that fall within the definition of “farm” are exempt from FDA’s food facility registration requirements. Hence, the definition of “farm” drew a lot of stakeholder interest. FDA revised the definition in its supplemental proposed rules. The revised “farm”

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supplemental proposed rules for preventive controls and produce safety, the definition of ‘farm’ was modified from the original proposed rules,” says Tim Slawinski, emerging issues specialist for food and dairy at the Michigan Department of Agriculture and Rural Development (MDARD). “The new definition of ‘farm’ is now much closer to the definition that is in the proposed sanitary transportation rule. Therefore, the MDARD concerns about the consistency of the definition seem to have been addressed with the release of the supplemental rules.” Chiquita Brands International Inc. requested the FDA further revise the sanitary transportation rule to provide that all transportation activities for raw agricultural commodities (RACs) from a farm are exempt, regardless of who performs the transportation. Courtney Parker, Chiquita Brands vice president of salad quality and global food safety, noted that her company hires third-parties to transport RACs from the farm to its cooling facility. Under the proposal, this transportation would not be exempt. But, if a farmer engaged the same third-party to transport the produce, the transportation would be exempt because the farm is performing the transportation by initiating the shipment. “These distinctions seem arbi-

trary and could encourage unnecessary restructuring of contracts to fit within the exemption (e.g., purchasers requiring growers to hire the third-parties to transport the produce, rather than hiring the third-parties themselves),” wrote Parker. “Our proposed approach is more risk-based than the proposed rule, as the safety of produce does not change based on whether or not a farmer performs or contracts the transportation,” Parker wrote.

Company size exemption One area that drew nearly unanimous concern among stakeholders was the exemption of small shippers in the sanitary transport rule. The proposed rule contains an exemption for any shipper, receiver, or carrier engaged in food transportation operations that does less than $500,000 in total annual sales. “We do feel that all carriers should be subject to any proposed rule, for several reasons,” says Tyler Hayes, associate general counsel at England Logistics Inc. One reason relates to the reality of the motor carrier market, he says. “The vast majority of the motor carriers authorized by the FMCSA (Federal Motor Carrier Safety Admin-

Exemptions Sought For Alcohol And Microbials

he Wine & Spirits Wholesalers of America and the National Beer Wholesalers Association (NBWA) say alcohol products should be exempt from the FSMA sanitary transport rule. Beer, wine and spirits wholesalers already comply with these requirements of the Department of the Treasury’s Alcohol and Tobacco Tax Bureau, the associations claim. “The concerns FDA identifies about safety of ‘food’ in transit really don’t apply to beer, and NBWA hopes that as the FDA refines the rules, they understand how beer is different than something like strawberries,” Kathleen Joyce, a spokesperson for NBWA, told Food Logistics. Ecolab Inc. took issue with including EPA-registered antimicrobials and pesticides in food contact substances which have “no ongoing intended technical effect in the final finished food.” “We believe that, by not exempting EPA-monitored antimicrobials and other substances that have no ongoing intended technical effect on finished food, the FDA is creating an undue burden on food manufacturers,” Leanne Hanson, Ecolab manager of external communications, told Food Logistics. “For the FSMA to be effective, it should focus on consistently addressing the most vulnerable aspects of the nation’s food supply and the related risks.”◆

istration) operate six or fewer trucks, which would likely result in those carriers being exempt from the sanitary transport rules.” Hayes further notes the exemption would likely have the effect of tightening capacity in an already tight carrier market. “This exemption is a major concern, because 90 percent of licensed motor carriers operate six or fewer trucks, and might, therefore, not be subject to these requirements,” Robert Voltmann, president and CEO of the Trans-

portation Intermediaries Association, told Food Logistics. “If food safety is the main concern, what does the size of the company matter in ensuring that the specific product reaches its end user in a sanitary and unadulterated state? There are many misnomers circulating around the industry, about how modern technology typically utilized by the larger motor carriers somehow improves safety and the integrity of the product, but we do not believe that strong enough evidence exists to make that correlation.”

Electronic record keeping irks some companies

The FSMA defines a farm as an establishment devoted to the growing of crops, the raising of animals, or both. The rule no longer limits a farm’s ability to pack and hold RACs to the farm’s own RACs.

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Several companies think the sanitary transport rule’s requirement for electronic recordkeeping will be onerous. Robert Hirst, vice president of education, science and technical relations at the International Bottled Water Association (IBWA), says his organization opposes the proposal to require records to be compliant with the electronic recordkeeping requirements. “Consistent with our support for practical recordkeeping requirements, we urge FDA to reconsider this issue,” Hirst says. “As we have noted with respect to other proposed rules issued under FSMA, it would be extremely burdensome for our members to comply with www.foodlogistics.com

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Part 11 requirements. FDA should exempt sanitary food transportation records from compliance with Part 11 and should take a practical and simple approach to ensuring the authenticity of electronic records.” Ecolab Inc. does not agree with the electronic recordkeeping requirements described in the proposed rule. “We believe it is not necessary to require electronic recordkeeping because the same recordkeeping principles that apply to electronic systems also apply to hand written records,” says Leanne Hanson, Ecolab manager of external communications. “It would be more beneficial to adopt a principle-based approach. Requiring all food manufacturing facilities to produce electronic records may create an undue burden on smaller facilities that may not have the resources to implement such systems. In addition, allowing both electronic and hand written records would align with FDA’s goal to provide flexibility in the FSMA regulations.”

also requires information that often is not in the importer’s control because the broker or trader from whom they receive the ingredient often is unwilling to disclose the identity of their own supplier.” The Agriculture Transportation Coalition (ATC) wants the FDA to clarify that exports are exempt from the sanitary transport regulation. ATC noted that food that moves under U.S. Customs and Border Protection (CBP) export

reporting procedures is neither consumed nor distributed in the U.S. “We think it doesn’t make sense for exports to be a part of this,” Abigail Struxness, ATC program manager, told Food Logistics. The rule implies exemption, but since exports are not comprehensively listed as an exception to the rule, interpretation has been varied and a source of confusion in the agriculture exporter community, Struxness notes.

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Foreign supplier verification Stakeholders also are seeking some changes in the foreign supplier verification requirements for imports. For the first time, importers must verify that their foreign suppliers have adequate preventive controls in place to ensure safety, and FDA will be able to accredit qualified third-party auditors to certify that foreign food facilities are complying with U.S. food safety standards. “Importers are going to have to make more trips to foreign suppliers to audit their activities or have people that are going to do that for them,” says Barbara Rasco, Ph.D., director of the School of Food Science at Washington State University and the University of Idaho. FDA should simplify its approach to supplier verification by eliminating the requirement to conduct a hazard analysis of the imported food and food ingredients, observes AFFI’s Garren. “Instead, importers should take a more holistic approach and consider both ingredient risk and supplier risk for the foods that they import,” Garren told Food Logistics. “This does not need to be a formalized hazard analysis, like that conducted under a food safety plan, as proposed. Rather, the requirement should be to consider and document the ingredient risks and supplier risks. The evaluation of ingredient risks would include the full range of biological, chemical and physical hazards so the importer can be assured that those risks are being adequately controlled.” FDA should also revise the definition of “foreign supplier” so that supplier verification is only needed for the entity one step back in the supply chain, Garren says. “As proposed, there are situations where an importer may need to verify the harvester of a commingled raw agricultural commodity that could be several steps back in the chain. This requirement exceeds FDA’s legal authority for traceability. It www.foodlogistics.com

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Agency overlap and enforcement concerns Several stakeholders raised concern about the FDA’s ability to enforce the rules. Many noted that to make enforcement work, the FDA should reduce areas where its enforcement authority overlaps with other agencies, such as the Department of Transportation (DOT) and the Department of Agriculture (USDA). “FSMA is the greatest food safety reform to occur since 1938,” Joe Corby, president of the Association of Food and Drug Officials (AFDO), told Food Logistics. “The many regulations that will go into effect will be meaningless if they are not enforced and that will require resources. I am pleased about current discussion in Washington to increase FDA funding, but I am not sure it will be sufficient. Time will tell.” Corby adds that, “It is only logical for FDA to integrate resources with those that exist at state and local levels in order to meet the demands set forth through FSMA. While it is possible FDA may also partner with the U.S. Department of Transportation, we are reminded that previous food transportation regulations were in place under that agency and they indicated they did not believe they were qualified to conduct food safety inspections and any resulting enforcement activities. We believe a better partnership would exist with states and locals.” The produce safety rule will require regulatory officials to inspect farms—something that has not traditionally been done, although states do have some experience with conducting agricultural practice audits on farms. “FDA should—with stakeholder input—develop and implement a comprehensive program to train investigators about a wide range of issues, including what the regulations require, how the regulatory requirements can be met through contractual agreements, how and by whom inspections will be conducted, and what types of observations are appropriate to include on the FDA forms,” says Roger Lowe at the Grocery Manufacturers Association.

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“We’re concerned what enforcement is going to look like,” says Tim Slawinski at the Michigan Department of Agriculture and Rural Development. He told Food Logistics the DOT will enforce the rules working with the states, but he is not sure how much communication has occurred. “We’re not sure what interactions they’ve had.” Several stakeholders noted that under FSMA, FDA is duplicating some areas handled by USDA’s Food Safety and Inspection Service (FSIS), which oversees the safety of domestic and imported meat, poultry, and processed egg products, while FDA is responsible for the safety of virtually all other foods, including milk, seafood, fruits, and vegetables. The American Meat Institute (AMI) and the North American Meat Association (NAMA) objected to the sanitary transportation rule on the basis that it is aimed at establishments already inspected by the USDA’s FSIS. The meat associations further claim there is no demonstrated food safety problem related to the transportation of food. “Although there have been isolated occurrences of food safety issues related to food transportation, such occurrences are rare, limited in scope, and do not justify the proposed prescriptive and rigid requirements,” wrote Barry Carpenter, CEO of the NAMA and Mark Dopp, senior vice president of regulatory affairs at AMI. At the same time, the AFFI asked the FDA to reconsider its conclusion that it is necessary to include products regulated by FSIS under the scope of this regulation (i.e., meat, poultry, and egg products) simply because they fall within the definition of “food.” “In particular, we disagree with

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FDA’s conclusion that the FSIS guidance on the safe transportation of foods is not adequate to ensure their safety,” the AFFI’s Garren told Food Logistics. “FDA’s regulation is duplicative and unnecessary given that FSIS has jurisdiction over the transportation of these foods.” Garren says transportation safety is not the FDA’s area of expertise and hence, FDA should not attempt to take an active role in inspecting shipments. “Even with a rational set of risk-based rules that are consistent with the FSMA statutory framework, FSMA’s implementation will not be successful unless FDA can ensure that its inspection and enforcement program is applied consistently across the country and effectuated in a way that promotes food safety,” says Garren. “This means that extensive attention will need to be given to training inspectors. Similarly, FDA must provide food companies with a ready mechanism to appeal inspectional findings that are felt to be inappropriate, not required by the statute or regulations, and/or not consistent with promoting food safety and protecting public health. We urge FDA to maintain a high level of transparency and collaboration with the food industry during this transition process.” The Global Cold Chain Alliance (GCCA) noted that government inspectors will need to understand the food supply chain. “Appropriate training will be criti-

cal for inspectors to understand the complexities of the supply chain, (and) include the unique aspects of the third-party logistics,” wrote Corey Rosenbusch, president and CEO of GCCA. “Training will also be critical should FDA rely on other agencies to enforce the rule.” “That (enforcement plan) is still under development with the states,” says Peter Chaires, executive vice president of the Florida Citrus Packers. “It’s very vague on enforcement in general,” Chris Burroughs, senior government affairs manager for the Transportation Intermediaries Association, told Food Logistics. “Our biggest concern is adequate funding to achieve implementation of these rules,” Joe Corby, executive director of the Association of Food and Drug Officials, told Food Logistics. “It will take a fully-integrated system to get this done along with a great deal of training.” The Association of American Railroads and the American Short Line and Regional Railroad Association noted that the FDA has not provided sufficient information on how the agency will enforce the regulations. They are concerned that misguided enforcement of the requirements could cause delays in transit and in delivery of rail cars to customers. “The FDA needs to provide more detail on which government agencies would be responsible for enforcing the rule, and the consequences of government enforcement actions,” the two associations wrote in a joint letter to FDA.

‘The FDA needs to provide more detail on which governmment agencies would be responsible for enforcing the rule.’

Industry remains optimistic nonetheless Despite all the concerns, stakeholders give the FDA high marks for its efforts. “Based on where it started, I think this was an amazing process,” says Chaires of Florida Citrus www.foodlogistics.com

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Packers. “I give FDA a lot of credit in not only seeking input before the rule was published, but after the first phase of comments. They were really making an effort to get it right.” The FPAA’s Jungmeyer concurs, “They’re trying to put in place reasonable rules.” Sensitech’s Leshuk adds that, “I can imagine two general alternatives for addressing the issue of flexibility. One is to require the parties involved to maintain and follow a transportation food safety plan based on industry best practices that they create/select based on their commercial and physical distribution scenarios. “The other alternative is that the FDA, working with industry, creates a much more detailed rule that addresses the many commercial and physical distribution scenarios and that accommodates the complexity and diversity of the food industry.” What impact the industry's input will have on the final FSMA rules remains to be seen. Industry

stakeholders think some areas such as temperature monitoring and electronic recordkeeping need significant change. Many also feel the the law needs to be more flexible in how companies meet food safety goals.

Industry can act now to meet safety goals Industry observers also point out that many of the FSMA requirements are already being met by voluntary safety standards, such as those outlined within the Global Food Safety Initiative (GFSI) standards. Moreover, some industry observers believe the voluntary standards are even stricter than what FSMA proposes. Overall, industry observers agree that FSMA marks a significant turning point in food safety. While discussions will continue on how food safety goals will ultimately be achieved, most stakeholders agree the goals are critically important in a food supply chain that continues to grow more complex and global. ◆

For more information: AGRICULTURE TRANSPORTATION COALITION, 202-783-3333, agtrans.org AMERICAN FROZEN FOOD INSTITUTE, 703-821-0770, affi.org AMERICAN MEAT INSTITUTE, 202-587-4200, meatinstitute.org AMERICAN TRUCKING ASSOCIATIONS, 703-838-1700, trucking.org ASSOCIATION OF AMERICAN RAILROADS, 202-639-2100, aar.org ASSOCIATION OF FOOD AND DRUG OFFICIALS, 717-757-2888, afdo.org ECOLAB INC., 651-293-2233, ecolab.com ENGLAND LOGISTICS INC., 801-656-4500, englandlogistics.com FLORIDA CITRUS PACKERS, 321-214-5219, flcitruspackers.org FOOD AND DRUG ADMINISTRATION, 888-463-6332, fda.gov FRESH PRODUCE ASSOCIATION OF THE AMERICAS, 480-731-8720, freshfrommexico.com GLOBAL COLD CHAIN ALLIANCE, 703-373-4300, gcca.com GROCERY MANUFACTURERS ASSOCIATION., 202-639-5900, gmaonline.org INTERNATIONAL BOTTLED WATER ASSOCIATION, 800-WATER-11, bottledwater.org INTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION, 703-532-9400, ifdaonline.com INTERNATIONAL WAREHOUSE LOGISTICS ASSOCIATION, 847-813-4699, iwla.com JUICE PRODUCTS ASSOCIATION, 212-297-2162, juiceproducts.org MICHIGAN DEPARTMENT OF AGRICULTURE AND RURAL DEVELOPMENT, 517-284-5771, Michigan.gov NATIONAL BEER WHOLESALERS ASSOCIATION, 703-683-4300, nbwa.com NATIONAL COUNCIL OF FARMER COOPERATIVES, 202-626-8700, ncfc.org NATIONAL PASTA ASSOCIATION, 202-591-2459, pastafits.org NATIONAL RESTAURANT ASSOCIATION, 202-331-5900, restaurant.org SENSITECH, 800-843-8367, sensitech.com TRANSPORTATION INTERMEDIARIES ASSOCIATION, 703-299-5700, tianet.org UNITED FRESH PRODUCE ASSOCIATION, 202-303-3425, unitedfresh.com WINE & SPIRITS WHOLESALERS OF AMERICA, 202-371-9792, wswa.org

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FDA Publishes Four Supplemental Proposals To FSMA Agency seeks to make the original proposals more flexible, practical and targeted. BY SMITHA STANSBURY

he Food and Drug Administration’s (FDA) Food Safety Modernization Act (FSMA) was signed into law on Jan. 4, 2011. This legislation is aimed at improving FDA’s capacity to prevent, detect, and respond to food safety problems and foodborne illness outbreaks. FSMA provides FDA with new enforcement authorities such as mandatory recall authority and the authority to suspend a food facility’s registration, gives FDA the ability to hold imported foods to the same standards as domestic foods, and places a number of new food safety obligations on food manufacturers, farms, handlers, and other entities involved in the food supply chain. Congress established specific implementation dates in the legislation. Some of the provisions went into effect quickly, but others required FDA to promulgate regulations. Notably, in 2013, FDA issued four key proposed rules governing: 1) “Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption”; 2) “Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food”; 3) “Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Food for Animals”; and 4) “Foreign Supplier Verification Programs for Importers of Food for Humans and Animals.” The comment periods for these original proposed rules closed in late 2013 and early 2014. After an initial review of public

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comments, on Sept. 19, 2014, FDA released four long-awaited “supplemental notices of proposed rulemaking” that propose modifications to the original four proposed rules. The latest round of proposed changes are based on extensive public input, and are intended to make the original

proposals more flexible, practical and targeted. The public comment period on the supplemental notices closed on Dec. 15, 2014. Under a court order, FDA is required to issue the final rules in 2015. Provided below is a topline overview of three of these supplemental proposed rules that highlights some of the more notable proposed changes.

Supplemental Proposed Rule on Produce Safety FDA’s rule on produce safety is intended to establish science-based standards for growing, harvesting, packing and holding produce on certain domestic and foreign farms. The original proposed rule focused on the commonly identified routes of microbial contamination of produce, and proposed new standards in the following major areas: 1) farm The FSMA rule on produce safety has scientific standards for holding produce on domestic and foreign farms.

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This legislation is aimed at improving FDA’s capacity to prevent, detect and respond to food safety problems and foodborne illness outbreaks.

worker trainactions, including ing, health, and conducting a risk hygiene; 2) agriassessment on the safe cultural water; use of manure in fields 3) biological and working with USDA soil amendand other stakeholders ments of anito conduct research to mal origin and supplement the currently human waste; available research on this 4) domestimatter. The agency anticicated and wild holding of pates that these actions would take animals in covered produce roughly five years to complete. In the growing areas; on a covered farm meantime, FDA would not take excep5) equipment, would be subject to the tion to farmers complying with USDA’s tools, buildings produce safety stanNational Organic Program standards, and sanitadards, as opposed to which generally require a 120-day intertion; and 6) the preventive controls val. FDA also proposes to eliminate the sprouts. In the requirements, even requirement that farms apply a 45-day supplemental if the produce were interval between the application of comproduce safety grown or harvested post and the harvesting of a crop. proposal, FDA on another farm that Domesticated and Wild Animals in is proposing, is not under the same Growing Areas. The original proposed among other ownership. rule included standards for farmers to things, the Agricultural Water. minimize the potential for contaminafollowing key FDA proposes a numtion of produce with biological hazards Farms can use their own test results to changes: from domesticated and wild animals. meet water testing requirements under the ber of revisions to FDA’s supplemental proposal. Scope of the agricultural water Many commenters expressed concern the Proposal. standards conIn the original tained in the proposed rule, farms or farm mixed-type original proposed rule. These Facility Manager Philip Lee, what facilities with average annual food sales revisions would, among other of $25,000 or less over the previous things: 1) update and provide 3-year period were excluded from coveradditional flexibility for meeting age of the proposed rule. After receiving the microbial quality standard comments expressing concern that this for water that is used during standard would unnecessarily require the growing of produce (other “Knowing farms that primarily raise food grains or than sprouts) using a direct dairy cattle to comply with the produce application method; 2) provide when one of safety standards, and would make it a tiered-approach to the testing my coolers difficult for midsize farms to diversify of agricultural water that would is about their operations, FDA now proposes enable testing at a reduced freto fail – or to revise this rule to base the threshold quency than that proposed in already has.” on produce sales rather than food sales. the original proposed rule; and As such, covered farms with an average 3) enable a farm to meet water annual monetary value of produce sales testing requirements using the less than $25,000 would not be subject farm’s own test results or data to the produce safety provisions. FDA collected by a third party. also proposes to make corresponding Biological Soil Amendrevisions to the definitions of “very small ments of Animal Origin. business” and “small business” so that Many commenters expressed the monetary value thresholds would concern about FDA’s proposed Introducing the Cellular Machines temperature monitoring kit! apply to the average annual sales of “pro9-month minimum wait period Knowing when temperature-critical equipment failures occur can duce” instead of all “food.” Moreover, between the application of prevent devastating losses for your retail, wholesale, or distribution facility. With our temperature monitoring kit, you can: as discussed in more detail below, FDA raw manure and the harvestWirelessly monitor key cooling/warming assets 24/7 is proposing to revise the definitions of, ing of crops. In response, FDA Receive text alerts and performance stats right on your phone among other things, “farm,” “harvestplans to defer its decision on Even store data on the cloud for easy reporting to management ing,” and “holding.” Under the revised the appropriate time interval or regulatory authorities definition of “farm,” the packing or until the agency pursues certain

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over the impact of the proposed rule on wildlife. The supplemental rule clarifies these standards, making it clear that this rule would not authorize farms to take actions that would constitute a “taking” of a threatened or endangered species, in violation of the Endangered Species Act. Farms also would not be required to take action to exclude animals from outdoor growing areas, destroy an animal’s habitat, or clear farm borders. Withdrawal of a Qualified Exemption. Farms that meet certain requirements are eligible for a qualified exemption from certain elements of the proposed rule. FDA proposes to make modifications to the procedure by which the agency may withdraw a farm’s “qualified exemption” status (for example, FDA proposes that it would need to notify a farm of its risk of losing its qualified exempt status and provide the farm an opportunity to respond), and to add a new procedure for reinstating a farm’s exempt status. The proposed deadline for compliance with the final rule would be four years after the effective date for “very small businesses,” three years for “small businesses,” and two years for all other farms. All farms, however, would have two additional years beyond the compliance dates to meet the water quality standards and related testing and recordkeeping requirements.

Supplemental Proposed Rule on Preventive Controls for Human Food In the original human food preventive controls proposal, FDA proposed to: 1) modernize the current good manufacturing practice (CGMP) requirements for human food; 2) require registered food facilities to establish and implement hazard analysis and risk-based preventive controls for human food; and 3) revise certain definitions in the existing regulation on the registration of food facilities to clarify the scope of an exemption from the registration requirement for “farms.” In the supplemental human food preventive controls proposal, FDA is proposing, among other things, the following key changes:

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requirements that are conditional on facility registration. The revised “farm” definition would continue to describe a farm as an establishment devoted to the growing of crops, the raising of animals, or both, but would no longer limit a farm’s ability to pack and hold raw agricultural commodities (RACs) to the farm’s own RACs. An establishment would now remain within the “farm” definition even if it packs and holds RACs grown on another farm not under the same ownership. A “farm” would also now be permitted to dry/dehydrate RACs to create a distinct commodity (such as the on-farm drying of grapes into raisins), and package and label such commodities, as long as it does not engage in any additional manufacturing/processing activity (such as the cutting of fruit or applying sulfites). Importantly, FDA has indicated that the revised definitions “would not create any new circumstances where a farm that would not have been required

A farm is permitted to dry raw agricultural commodities to create a distinct commodity under the revised proposal. Definition of “Farm”. FDA is proposing to revise the definition of “farm,” and to make certain conforming changes to the definitions of “harvesting,” “holding” and “packing.” By way of background, establishments that fall within the definition of “farm” are exempt from FDA’s food facility registration requirements, and are therefore excluded from the proposed requirements for hazard analysis and risk-based preventive controls for human food as well as certain other

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to register under the previous proposal would now be required to register.” Definition of “Significant Hazard”. In its original proposal, FDA drew on terms used in the Hazard Analysis and Critical Control Point (HACCP) regulations for seafood and juice, using the term “hazard reasonably likely to occur” to define those events that a facility should anticipate. FDA is proposing to remove the term “hazard reasonably likely to occur” throughout the proposed requirements “to reduce the potential for a misinterpretation that all necessary preventive controls must be established at critical control points.” The revised regulations would instead use the new term “significant hazard,” which would be defined as “a known or reasonably foreseeable hazard for which a person knowledgeable about the safe manufacturing, processing, packing, or holding of food would, based on the outcome of a hazard analysis, establish controls to significantly minimize or prevent the hazard in a food, and components to manage those controls (such as monitoring, corrections or corrective actions, verification and records) as appropriate to the food, the facility, and the control.” This term is intended to better reflect the risk-based nature of the preventive controls requirements. Product Testing, Environmental Monitoring and Supplier Controls. In its original proposed rule, FDA requested comments on the appropriateness of requiring product testing, environmental monitoring and supplier verification, but did not propose specific provisions. The supplemental proposed rule contains new provisions regarding product testing, environmental monitoring, and supplier programs that are intended to be flexible and www.foodlogistics.com

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risk-based. Specifically, in order to verify the implementation and effectiveness of preventive controls, the new provisions would require registered food facilities to conduct “as appropriate to the facility, the food, and the nature of the preventive control”: 1) “product testing, for a pathogen (or appropriate indicator organism) or other hazard”; and 2) “environmental

FDA revised a proposal that drew on terms used in the HACCP regulation for seafood to avoid misinterpretation.

monitoring, for an environmental pathogen, or for an appropriate indicator organism, if contamination of a ready-to-eat food with an environmental pathogen is a significant hazard, by collecting and testing environmental samples.” The facility would be required to have written procedures for such product testing and environmental monitoring, corrective action procedures to address any identified issues, and any associated records. The supplemental proposed rule would also require a written supplier program that would require supplier controls when the facility’s hazard analysis identifies a significant hazard for a raw material or ingredient, and where the hazard is controlled before the facility receives the raw material or ingredient. The proposed provisions related to supplier programs are quite detailed, and appear to generally align with the foreign supplier verification program (FSVP) requirements which are discussed in greater detail below. Economically-Motivated Intentional Adulteration. FDA is proposing that facilities be required to consider hazards that “may be intentionally introduced for purposes of economic gain”

in their hazard analysis (e.g., the addition of melamine to certain food products). FDA has indicated that facilities would be expected to focus on circumstances where there has been a pattern of adulteration in the past, and the focus of the potential requirement would be on those economically-motivated adulterants that are reasonably likely to cause illness or injury in the absence of their control. Withdrawal of an Exemption for a Qualified Facility. FDA’s original proposed rule provides for an exemption for certain facilities defined by FSMA as “qualified facilities,” and includes an administrative procedure by which FDA could withdraw that exemption under certain circumstances. FDA is now proposing a number of modifications to the original withdrawal provisions that would, among other things: 1) describe the steps FDA must take before it issues an order to withdraw an exemption; 2) provide a process for reinstating an exemption that has been withdrawn; and 3) pro-

vide an expanded timeframe for a facility whose exemption has been withdrawn to come into compliance with the hazard analysis and risk-based preventive controls requirements. Definition of “Very Small Business”. After requesting comments on three different revenue thresholds in the original proposed rule, FDA is now proposing to define a “very small business” as a business that has less than $1 million in total annual sales of human food, adjusted for inflation. This definition has implications in terms of eligibility for certain exemptions, and the timeframe for compliance with the final rule. The proposed deadline for compliance with the final rule is one year from publication for most businesses, but two years for “small businesses,” and three years for “very small businesses.”

Supplemental Proposed Rule on Foreign Supplier Verification FDA’s rule on foreign supplier

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verification programs is intended to strengthen the oversight of food imported into the U.S. As required by FSMA, the original proposed rule would require importers of human and animal food to conduct certain risk-based verification activities on their foreign suppliers to ensure that the foreign suppliers produce food in compliance with certain safety standards, preventive controls, and processes that meet U.S. food safety requirements. In the supplemental FSVP proposal, FDA is proposing, among other things, the following key changes: Food and Foreign Supplier Compliance Status Review. FDA proposes to delete the previous freestanding section on food and foreign supplier compliance status review, and instead incorporate some of these provisions and requirements (for example, the evaluation of wheth-

FDA’s rule on foreign supplier verification programs is intended to strengthen the oversight of food imported into the U.S.

er the foreign supplier is the subject of an FDA warning letter or import alert) into a section governing the risk factors that should be considered when determining the appropriate supplier verification and related activities. This proposed change responds to public comments stating that “industry best practice” is to base supplier verification activities on information about the risks presented by a food and its supplier instead of focusing primarily on hazards inherent in a food. Supplier Verification Activities. In FDA’s original proposed

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rule, the agency proposed two different options related to supplier verification activities, including one that would have required annual on-site auditing of foreign suppliers under certain circumstances. The supplemental proposed rule contains a single, flexible standard that would generally permit importers to determine an appropriate verification activity (i.e., onsite auditing, sampling and testing, review of supplier food safety records, or some other risk-based verification activity) based on their evaluation of food and supplier risks. Annual on-site auditing would only be required when there is a reason to believe that a hazard will cause serious adverse health consequences or death to humans or animals, the hazard is controlled by the foreign supplier, and the importer did not establish that some other supplier verification activity and/or less frequent auditing would adequately address the risks. List of Foreign Suppliers. FDA proposes to replace the original proposed requirement that importers maintain a list of foreign suppliers with a requirement that importers instead establish and follow written procedures to ensure that foods are imported from foreign suppliers that the importers have approved. FDA also proposes to permit the use of unapproved foreign suppliers on a temporary basis when necessary and appropriate (e.g., a problem due to equipment breakdown or weather-related crisis), provided that the importer subjects the food from such suppliers to adequate verification activities before using or distributing the food. FDA requests comments on issues including: 1) under what circumstances it might be necessary and appropriate for an importer to receive food from unapproved foreign suppliers; and 2) what types of verification activities and documentation the importer should complete concerning food from an unapproved supplier.

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Farms Not Subject to Produce Safety Regulations. FDA proposes to specify that if a foreign supplier is a farm that is not subject to the produce safety regulations, the importer of food from such farm would not be subject to the standard verification requirements, but would instead be required to document that the food is not subject to the produce safety regulations, and obtain written assurance that the farm is producing food in compliance with the Federal Food, Drug, and Cosmetic Act. Documentation of Supplier Verification Activities. FDA is proposing to specify the documentation requirements for certain supplier verification activities. With respect to onsite audits, FDA agrees with many commenters that importers should not be required to make full audit reports available to FDA during an FSVP inspection. FDA instead proposes to revise the proposed provisions regarding onsite auditing of foreign suppliers to require importers to retain documentation of the following: 1) the audit procedures; 2) the dates the audit was conducted; 3) the conclusions of the audit; 4) any corrective actions taken in response to significant deficiencies identified during the audit; and 5) documentation that the audit was conducted by a qualified inspector. Alignment With Other Supplemental Proposed FSMA Regulations. Many of the proposed modifications in the supplemental FSVP proposal are intended to align the FSVP requirements with those of other FSMA regulations (such as the supplemental proposed rules on preventive controls for

Under the FSMA, FDA now has authority over all players in the food supply chain.

human and animal food). These proposed modifications include: 1) changing the requirement to analyze “hazards reasonably likely to occur” to a requirement to analyze “known or reasonably foreseeable hazards” to determine if they are significant; 2) requiring importers to consider hazards that are intentionally introduced for purposes of economic gain as part of their hazard analysis; 3) increasing the annual sales ceiling used in the proposed definitions of “very small importer” and “very small foreign supplier” from $500,000 to $1 million; and 4) specifying that, if an importer is required to establish and implement a risk-based supplier program under the preventive controls regulations, and the importer is in compliance with those requirements, the importer would be deemed to be in compliance with any parallel FSVP requirements. The proposed deadline for compliance would generally be 18 months after the publication of the final FSVP regulations. For the importation of food that would be subject to the preventive controls and produce safety rules, however, the importer would be required to comply with the FSVP regulations six months after the foreign supplier is required to comply with the preventive controls or produce safety regulations. ◆ Smitha Stansbury is a partner in the FDA & Life Sciences Practice, King & Spalding, based in Washington, D.C. www.foodlogistics.com

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Best Safety Practices In Food Transportation And The Role Of ERP Technology FSMA will require those who transport food to use sanitary transportation best practices to ensure the safety of the food. BY CARL IVERSEN

ach year, 48 million people, or one in six Americans, suffer from foodborne illness. More than 100,000 are hospitalized and thousands die, according to the Centers for Disease Control and Prevention. Foods most associated with foodborne illnesses include raw foods of animal origin, e.g., raw meat and poultry, raw eggs, unpasteurized milk, and raw shellfish. Fruits and vegetables can also be contaminated with animal waste when manure is used to fertilize produce in the field, or unclean water is used for washing the produce. In addition, the food supply chain delivers a myriad of food types with many container, temperature and handling requirements and various modes of transportation, therefore it’s easy to see that foods and ingredients are susceptible to abuse and/or contamination during transportation and storage. The much publicized FSMA proposed rule on Sanitary Transportation of Human and Animal foods will require those who transport food to use sanitary transportation best practices to ensure the safety of the food. The goal of the proposed rule is to ensure that transportation practices do

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not create food safety risks. Practices that create such risks include: • Failure to properly refrigerate food. • Inadequate cleaning of vehicles between loads. • Failure to properly protect food during transportation. Specifically, the proposed rule would establish requirements for: • Transportation operations. • Information exchange. • Recordkeeping. Briefly, the requirements in these areas under the proposed rule will include: • Documentation of the inspection of a vehicle for cleanliness prior to loading. • Verify and document that adequate measures are taken to maintain the transportation cold chain for foods that require time/temperature control. • Shippers must specify to carriers in writing the sanitary requirements for a vehicle or transportation equipment and shippers must maintain records to demonstrate that they provided this information to carriers. • Carriers will be required to demonstrate to shippers and, upon request, to receivers that they have maintained appropriate temperature control for the food during the transportation operation. • Carriers will need to provide information to shippers about previous cargo hauled in bulk vehicles used for the transportation of food and the cleaning of those vehicles. • Carriers will need to develop and implement written procedures that describe

how they will provide these items of information to shippers and receivers. • Carriers must develop and implement written procedures that specify its practices for cleaning, sanitizing, and inspecting vehicles and transportation equipment.

ERP and food safety Enterprise Resource Planning (ERP) solutions and information technology will play a vital role in helping to ensure shippers, receivers and carriers who transport food in the U.S. meet and maintain compliance to these regulations in the most efficient manner possible. Systemized recording of information exchange and recordkeeping are particularly key to these requirements. Organizations involved in the transportation of food will not only need to develop and implement best practices, processes and procedures, but they will also need to record data on what happened and when – similar to the requirements for a food traceability audit solution. Modern food industry business management solutions coupled with mobile electronic data capture technologies provide the ideal solution for a comprehensive food safety quality assurance solution. For example, the required shipping conditions, such as type of vehicle, vehicle preparation (cleaning, pre-cooling), temperature, packaging, etc., can all be stored electronically in a single, central database against the individual food item and/or the customer. These requirements stored as “rules” can automatically generate a series of tests and checks to be carried out by personnel during the loading and unloading

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operation. The tests or checks to be performed can be presented and results recorded electronically in real time via a mobile handheld PC or tablet device, and stored directly within the ERP system for easy retrieval, reporting and full audit trail and compliance with regulations. In addition, these devices are designed to operate in challenging conditions such as shipping containers, trailers or cold storage facilities. “Store and forward” data capabilities mean that data collection can continue even when there is no data network available in remote locations.

Collaboration among parties is critical Collaboration between shippers, logistics providers and receivers will be essential to this initiative, and the sharing of data and information through electronic data and Web technologies will become the predominant method used to meet the requirement to share information between shippers, carriers and receivers on vehicle sanitary requirements, previous usage, cleaning and temperature or packing requirements. A single, focused, centralized ERP and food safety traceability solution will provide one coherent record of the origins, movement, usage and destination of all produce throughout the entire supply chain along with a record of transportation and sanitary conditions. This data and information can then be shared to inform and drive all relevant areas of the business, such as; internal audits, Hazard Analysis and Critical Control Point (HACCP) policy requirements, quality assurance, and traceability or external supply chain audits. This data can be held centrally and captured electronically. Manual, paper-based audit processes are time consuming and carry a high risk of error and non-compliance compared with using an automated, electronic data capture solution. Other information vital to a safe and compliant supply chain, such as supplier accreditation information, labelling requirements, shelf life, storage conditions, etc., can also be centrally held within the ERP solu-

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Data recorded in real time can be stored in the ERP system for easy retrieval, reporting, and full audit trail and regulatory compliance. tion and automatically applied as part of operational processes. It is important to note that for forward-looking businesses that wish to maintain a competitive advantage in a challenging market space, compliance will not only be a requirement to be fulfilled, but an opportunity to compete and excel. The more comprehensive the solution they provide will see them gain competitive advantage with their customers. It is clear today that the most proactive business within the industry are well aware of this and are actively investing in the latest ERP and technology solutions to meet the ever-increasing requirements of the market.

Consider data benefits The impact here in terms of compliance and competitive advantage can be appreciated easily. However, the advantages are not limited only to compliance. The data made available allows business managers to understand their business in far more depth, and this additional information is being used to further drive operational efficiencies and drive down costs. Modern ERP solutions provide for real-time business intelligence reporting, key performance indicators (KPI’s) and dashboards. These can be set up to further monitor progress against goals and targets and also focus and drive personnel towards consistent achievement. Efficiency measures include: the number of quality checks, vehicle inspections, trailer hygiene, temperature checks, and target times for vehicle load and dispatch. All of these can provide real-time information to ensure compliance

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and safeguard against errors, drive efficiency and reduce cost. Awareness and understanding of the specific and general food safety legislation or industry requirements are important in protecting a business. The effective handling of issues arising in the supply chain, customer and consumer complaints, and being able to issue full product recall and all food safety and quality documentation with full audit trail and batch traceability is paramount.

ERPs and food recalls Utilizing the latest ERP systems, the information required in the event of a product recall or a food safety issue can be queried and collated in minutes. Manual systems typically require hours to sort through hundreds of paper-based records, which can be inaccurate or misplaced. Time saved here is vital to ensuring the rapid identification of the cause of the issue, and that the contaminated product is removed from sale as quickly as possible. Today’s food transporta-

tion organizations need to be flexible and agile. They must be able to react rapidly to changing regulatory or customer requirements. They will have eliminated time-consuming and error-prone, paper-based procedures in favor of real-time, centrally stored information. In addition, they should have well-practiced “what if” scenarios in the event of a food safety issue or emergency product withdrawal. Modern ERP facilitates the provision and implementation of these improved procedures. In summary, a comprehensive food safety quality assurance solution facilitated using the latest ERP solutions and mobile technologies will help the food industry overall to reduce the number of product recalls due to food safety issues. This, in turn, will help reduce the risk of adverse health effects resulting from contaminated food. In terms of environmental concerns, waste is also reduced when food reaches its final destination in pristine condition because of the food transportation best practices applied by the shippers, carriers and receivers. When these factors are taken into account, it is clear that utilizing the latest ERP solutions can not only ensure food safety and regulatory compliance, but can also provide a competitive advantage, drive business efficiency and profitability, but also address growing environmental concerns and enhance customer and consumer confidence and provide benefit to the industry as a whole. ◆ Carl Iversen is vice president of product development at LINKFRESH.

ADVERTISER INDEX ADVERTISER...................................................................................................... PAGE Anaren, Inc.......................................................................................................................27 Cubic Designs, Inc...........................................................................................................25 Food Logistics Magazine.................................................................................................33 Ford Motor Media............................................................................................................2-3 Great Dane Trailers Inc.....................................................................................................36 IFS Management GmbH...................................................................................................19 Interlake Mecalux...............................................................................................................7 MercuryGate International Inc..........................................................................................35 Mitsubishi Caterpillar Forklift America Inc........................................................................15 Mitsubishi Fuso................................................................................................................11 System Logistics..............................................................................................................23 Uline.................................................................................................................................29 Utility Trailers......................................................................................................................5 Witron...............................................................................................................................13

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With bilateral trade reaching $2 billion daily, markets in the U.S. and Canada are goldmines for food and beverage companies that seek trade and investment opportunities on both sides of the border. Hear a diverse panel of experts discuss strategies for getting in on the game.

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