An Ounce of Prevention or a

Metric Ton of Cure

It’s Your Choice…

David RosenthalPresidentCommodity/Cashew Concern Certification

January 19, 2009

PTNPA Annual Convention and Trade Show Grand Bahama Island

1970’s disaster movies had a running theme that saving money by cutting corners and ignoring warnings led to events that ultimately cost far more than what would have been spent to do things right from the beginning.

History proves that the efforts to save money by ignoring

vulnerabilities ends up costing BIG BUCKS

Mortgage Industry Collapse Bernard Madoff

Scandal

Hurricane Katrina

I 35 W Mississippi River Bridge Collapse

This does not only happen in the movies – here are a few recent examples of the consequences resulting from ignoring warning signs.

In 2007 we dealt with….

Seafood Recall

Toy Recall

Pet Food RecallToothpaste

Recall

These incidents happened in 2007 and cost their respective industries millions of dollars.

And in 2008……

Tomato Recall

Melamine in Baby Formula

It even hit the nut industry !

Chlorophenol in Cashews

In 2008, the trend continues and even hit the nut industry. The chlorophenol issue did not become a public incident, but serves as a warning sign to our industry that there are vulnerabilities in overseas processing that must be addressed.

This was a warning sign

As opposed to the recent peanut butter recall, the chlorophenol issue did not become a public incident, but serves as a warning sign to our industry that there are vulnerabilities in overseas processing that must be addressed.

We have a two choices:

• Ignore the issues and hope they go away

• Take proactive measures to avoid potential consequences

Know where your product is coming from

• Expand your sources of information

• Know your ultimate supplier

Right now, the only source of information on conditions in overseas processing facilities is from the importing sector, who have historically given few details.

All terms buyers hear, but what do they mean?

Small Shipper Good

ShipperGroup Packer

Top Shipper

MediumShipper

Reliable Shipper

Buyers hear various terms relating to the caliber of shipper. These are clearly arbitrary and have no clearly defined criteria.

How can we ensure that we are buying from facilities that subscribe to Good Manufacturing Practices?

This can be accomplished through verifiable third party certification.

Do we have verifiable information to document Good Manufacturing

Practices?

At present, certifications are difficult to verify.

Documentation

What’s more important?

The certificate, or what it represents?

Is what it represents verifiable?

As buyers, are we more concerned about getting the certificate or what that certificate actually represents? We put our companies in a vulnerable position if the certification that we are relying upon proves to be unfounded.

Right now there is no industry wideprotocol to track productfrom the source

Tracking

Recently food safety incidents have revealed the necessity for traceability. At present there is no way for us to effectively track imported food products back to their source of production.

What measures has the importing sector taken to ensure responsible sourcing practices?

At present, the importing sector has no industry-wide program to ensure responsible sourcing practices.

In the past problems have been dealt with then the product reaches our..

•Borders•Warehouses•Production Lines

Why not take measures to prevent problems before product is shipped?

This costs $$$$ and wasted time because the product is

already here!

IT’S TIME TO ADOPT A PREVENTATIVE APPROACH!

A great deal of money and time is spent dealing with problems when the product is already here. A preventative approach would save companies needless expenses and significantly reduce the chances of a consumer incident.

Everyone in the food chain takes responsibility for their own part and checks their suppliers.

Authorities can then carry out surveillance of the system and effectively investigate incidents if they should arise.

If an incident should occur, at least the industry has a system in place to present to the authorities. Not having a system in place to ensure traceability and responsible food sourcing will highlight our deficiencies, and would present an embarrassment to the industry.

Other commodity issues…..

Are these products at risk?

Brazil Nuts PepitasPine Nuts

Right now rejections on Brazil nuts, pepitas and pine nuts have resulted from manufacturers’ testing for microbiological contaminants. This indicates some area of vulnerability in the processing. It is essential for the industry to find out what these vulnerabilities are and how we can overcome them.

What do we do now?

NOTHING if we don’t know about it

We don’t know if no one talks about it

What do we do if we find out about it?

STERILIZATION – is this the best defense?If we are not aware of these issues there is no way for us to take measures to protect our companies, and the ultimate consumer. Addressing the problems and not being afraid of them will put us in a stronger position. Sterilization is a partial solution to some food borne contaminants.

We have two choices…

• React to problems when they get here…will this be acceptable practice in the future?

• PreventionAdopting policies for a mandatory kill step when these contaminants are found will ensure industry-wide protection. However adopting a preventative approach at origin to ensure the integrity of the product and the facility where it is manufactured is a more complete solution.

Prevention…

• Thoroughly know where product is sourced through effective 3rd party audits.

• Implement industry wide tracking procedures to trace product back to source.

Working with Food Importers who care about responsible sourcing,

not just Commodity Traders.

IT’S YOUR CHOICEHistorically these imported products have been viewed solely as a traded commodity. We must not forget that these commodities are ultimately consumed by the public.

We need to act now, and not wait.•New Democratic executive branch who has more concern about food safety and responsible sourcing issues

•Increased consumer concern about the origins of food products

•Increased legislation with stiffer penalties and more restrictive food importing procedures.

•Working with legislators to develop systems that satisfy both government and business.

Although the economy is on the forefront of legislators’ agenda, this does not mean that we should ignore responsible sourcing initiatives. Having a system in place will put us ahead of the game. Keep in mind that food safety and responsible sourcing are still in the top five priorities of the new administration.

January 2009 FDA issues Draft of Good Importer Practices.

•Establish a Product Safety Management Program

•Knowing the Product and Applicable U.S. Requirements

•Verifying Product and Firm Compliance with U.S. Requirements throughout the Supply Chain and Product Life Cycle; and

•Taking Corrective and Preventive Action When the Imported Product or Firm is not Compliant with U.S. Requirements

This draft of Good Importer Practices, issued by the FDA in collaboration with several regulatory agencies, shows the necessity of an industry-wide responsible sourcing campaign and attention to preventative action when vulnerabilities are detected.

Change is imminent

Let’s be a part of it !Commodity Concern and Cashew Concern have been developed to address these very issues, and to help the importing community to adapt to these changing conditions through a turnkey program designed specifically for our industry. Call David Rosenthal at 804-745-2848 if you have any questions, comments or suggestions.

CONTACT:

David RosenthalPresident

Commodity Concern Certification/Cashew Concern Certification9947 Hull Street Road

Unit 112Richmond, VA 23236

Tel: 804-745-2848 (office) 804-240-4237Info @cashewconcern.com

www. cashewconcern.com www. commodityconcern.com

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