Wednesday, November 4, 2009

GMA Issues Draft Industry Handbook for Safe Processing of Nuts

Recently, the GMA issued a draft document entitled "Industry Handbook for Safe Processing of Nuts". This 146 page guide explicitly details the processing procedures that the GMA members expect of their suppliers. As with many of the documents that we have seen recently it details what they want but it does not offer much in the way of "how" to achieve these goals. Alarmingly, while the requirements may be perfectly reasonable for US sourced commodities, many overseas facilities would fall far short of even the minimum standards.
At the core of the GMA's message is the emphasis that safety controls must be in place throughout the processing chain, and that accurate records must be kept.
"Today's nut industry relies on a web of inter-company relationships. Successful implementation of preventive food safety plans and supporting prerequisite programs are required at shellers, processors, and manufacturers to ensure effective food safety management. Preventing the production and shipment of contaminated or adulterated food is heavily favored over reliance on interventions once contaminated goods have entered distribution channels and, subsequently, the food supply" (Page 5, Industry Handbook for Safe Processing of Nuts)

Adapting to Changing Regulations

The standards for facilities that produce raw nuts are specifically detailed. As we move forward it is important for the industry to develop programs to address the conditions that exist in many overseas nut processing facilities so that roasters and processors can adapt to changing regulations. Without a doubt, in the near future there will be increased scrutiny of these facilities.
Even without knowing the specifics one can only speculate that cartons of imported raw nuts and seeds that frequently contain infestation, hair, foreign material, webbing etc. do not come from facilities that would pass the GMA's test. It makes sense to be proactive and begin now to identify those processing facilities that adhere to Good Manufacturing Practices, and to encourage those companies with compromising conditions to bring their facilities into compliance with 21st century food safety concepts.

Inspection and Assessment are the First Steps Inspection and assessment are the first steps towards a comprehensive food safety program. Many potential scenarios, such as salmonella contamination, cannot be dealt with on the basis of testing and corrective treatment. These problems will not go away without effort on our part. It's time for a change.

Wednesday, September 30, 2009

CCC Inspection Project.


It has been awhile since our last post but we're still here!

We've been working on a third-party supplier auditing program for the cashew industry. Audits are a huge and necessary step to ensure quality and food safety. Audits get us information about conditions and specific companies overseas. Audits funded by the right parties - the roasters and manufacturers in the USA - get us the RIGHT information about conditions overseas. Importers can't do it alone.

And, third party audits are soon going to be law. The Food Safety Enhancement Act of 2009, HR2479, has already passed. Page 51, section xii reads:

the qualified certifying entity shall not be owned, operated, or controlled by a trade association whose member companies operate facilities that it certifies

That's pretty clear. No trade association can do this. It must be third party.

Here is the program we are proposing:

We are all aware that significant quality problems are present in the cashew industry. There is a need to investigate conditions overseas so that manufacturers can come to grips with why problems are occurring, how they can be avoided, and who is reliable. We have assembled a program and with your support, are ready to go forward.

Using seasoned auditors, we will conduct audits of a representative sample of 20 cashew processing facilities at each major origin on an annual basis. Since Brazil has 9 facilities, we will perform at least 69 audits per cycle.

Supporters of this effort will receive, in a timely fashion:

· Access to an expanding data base of audited vendors

· A white paper summarizing the results and assessing the state of the industry, based on analyses from an inspector who has 30 years experience in food safety inspections with a concentration in nuts and dehydrated fruit.

· The full audit report from each facility

Prior to each round of audits (schedule to be announced), supporters will be able to:

* Submit questions for our inspector that directly relate to the issues they want addressed

* Submit specific shippers to be considered for inspection.

By utilizing the pooled support of the industry, the CCC inspection program can provide a world-wide audit program to its supporters at a fraction of what it would cost a single company. And, supporters are advertising themselves as companies that are taking steps to proactively improve the supply of raw cashews.

Our funding goal for this project is $235,000, which will be used to fund the audits, prepare and make available the reports, and for related ancillary expenses. Funds collected in excess of the goal will be rolled over to fund the next round of the CCC inspection project.

If your firm is interested in participating in this collective project, please contact us at , or 804-745-2848, for more information.

We can do this, and we can do it cheaply if all the stakeholders participate!

Our goal is 100 doners. At that level the cost to each is just $2,350.

Please fill out the non-binding form below and express you support (or tell us to go away).

Friday, July 10, 2009

President Obama Emphasizes Food Safety and Traceability

"Our food safety system must be updated."

President Obama has followed through with his pledge to address food safety, forming the
Food Safety Working Group in March. The project continues to gain momentum as a new, public health-focused approach to food safety is developed.

"One in four people get sick every year due to food-borne illness. Our food safety system must be updated" said Vice President Joe Biden. Secretary of Agriculture Tom Vilsack was even more forceful: "We owe it to the American people to deliver on President Obama's bold promise to greatly enhance our food safety system, moving our approach into the 21st century, employing the best surveillance techniques available, and ensuring that we are doing all we can to prevent illness before it occurs."
The growing concern with food safety and traceability will impact not only domestic production, but imported foods as well.

A New Three-Part Quality Initiative

The Commodity Concern Certification program, with its unique three part quality promotion initiative is an excellent, cost efficient resource for companies who need to take proactive steps to comply with the new, stricter requirements. The program benefits consumers, retailers, importers and quality producers.


Facilities carrying the CCC-CERT logo have been inspected to verify that they follow Good Manufacturing Practices proven to minimize cross-contamination, infestation, and the presence of foreign material. CCC-CERT inspections are carried out by industry experts using criteria specifically tailored to the nut and agricultural industry. Shippers that pass inspection are given the CCC-CERT and entered into our data base.


The CONCERNTRAK system documents that product sold with the CCC-CERT comes from certified facilities. Each case is stamped with a tamper proof label that includes a tracking number, lot code, and production date, and is traceable back to the supplying facility.


The PERFORMANCETRAK component uses the tracking and certification data, combined with reporting from roasters and importers, to create a performance history for each supplier. This summary data will be accessible online to subscribers and can be used to compare shipper quality. PERFORMANCETRAK empowers buyers by providing the data they need in order to make informed purchasing decisions.

Contact Us: We invite your comments, suggestions and questions regarding the program. Please contact David Rosenthal or Mary Smith at 804-745-2848 / .

Friday, May 15, 2009



Recently the Association of Food Industries held its annual convention in Naples Florida, and of course, issues regarding food safety were the running theme throughout the meetings. Speakers included legal and insurance experts who are keeping a close eye on impending legislation that will call for significant changes to the rules under which food is imported into the United States. All of the food bills under consideration include two major components that are lacking in the current importation process. First, the ability to track lots back to their origin production facilities and lot runs. Currently this is cumbersome and ineffective. Second, there must be verification that good manufacturing procedures are being followed by overseas suppliers. At this time, verification of any kind is difficult and many facilities have never been audited.
Who is responsible? During the meeting the question was asked: Are food suppliers throughout the distribution channel responsible for ensuring the integrity of the processing plants that the raw material comes from? The answer was a definitive YES! What was not clearly determined was how it could be done effectively and affordably.

Currently the Nut and Agricultural section of the AFI and Federal Government lack the human resources and funds to ensure that every facility overseas meets good manufacturing standards. Therefore, in an effort to ensure that there is integrity to the product being supplied to the roasting and manufacturing community it was decided to put together a working group to address the possibility of having mandatory certificates of analysis with every shipment of imported nut and agricultural commodities that currently fall under AFI guidelines.

A Certificate of Analysis Is Not Enough

A Certificate of Analysis is the final validation step of good manufacturing processes, but it is not a substitute for ensuring, through third party audits, that these processes are implemented. There is a saying among food safety experts regarding the accuracy of testing: "The absence of evidence is not evidence of absence". While there are no absolute guarantees, maintaining and verifying the integrity of each step of the process reduces the risk significantly
Some companies have begun to fund efforts to inspect facilities overseas on their own. This is very costly, time consuming and only benefits the company funding the effort. To date, there have been no feasible solutions offered to address the impending necessity to inspect overseas processing facilities that would be effective, meet the demands of legislators, and benefit the entire industry at a minimal cost.


It is a known fact that a large seagoing vessel cannot be turned around instantaneously; it must be turned in degrees. This holds true to turning our industry around as well. Change won't take place overnight but it does not mean that we should not begin to focus our efforts in the right direction. At present, we would not be able to effectively comply with the imminent legislation that would require third party inspections of ALL overseas food processing facilities. It is a big job but we have to start somewhere and figure out the most cost effective and efficient way to do it. The CCC has put together a group of industry experts in the fields of auditing, production, food science, food safety compliance procedures, along with legislative experts, to establish an organization that could effectively develop control systems to protect companies and provide the information needed to source from good manufactures overseas.


Currently the CCC has a database of over 200 active users of imported nut and agricultural commodities. Using our combined financial resources we can effectively begin the auditing process of overseas facilities, establish programs for track and trace procedures, and begin turning this industry around on the right course toward the future. The CCC as a Subscriber Based Organization? The CCC has the resources, infrastructure and willingness to make positive changes for the industry. Most importantly, we have time to dedicate 100% of our effort to address ways that our industry can adapt to unprecedented legislation that will change the way we do business. Our industry will have no choice but to change and as it stands now we are ill prepared for these changes. The current trade organizations do not have the time or resources to dedicate the amount of effort needed to effectively initiate programs that will be required to help us "adapt to the future" A subscriber based organization exclusive to roasters and manufacturers who use nut and agricultural products would represent an industry segment with the same common interests regarding issues pertaining to responsible sourcing and the auditing of overseas production facilities. We are not looking to replace the existing trade organizations, as they play a very important role, but this particular issue requires a special interest group.
Since CCC management is not involved in commodity trading, our approach is unbiased and focused solely on responsible sourcing initiatives to benefit its a subscriber base. The combined forces of a roaster/manufacturer exclusive organization would have a profound influence on the importing/commodity trading community to shift focus to responsible sourcing practices. The fact is that adapting to these unprecedented changes will require so much time and dedication that a special interest group with the sole purpose of protecting roasters and manufacturers must be developed. The CCC can help pave the way to make this happen.

We invite your comments, suggestions and questions regarding the development of such a program. Please contact David Rosenthal or Mary Smith at 804-745-2848 / . Also feel free to leave comments on our blog. We'd like to get a dialogue going.

Tuesday, April 28, 2009

A Certificate is not Enough

A Certificate is Not Enough

By Mary Smith

Whenever there is a consumer safety incident, the first impulse is to require a "Certificate" from the producer or manufacturer. During the uproar over Chinese goods, sparked by tainted toothpaste, adulterated dog food, leaded toys, etc., customers began demanding "No Chinese Origin" certificates. Now we are hearing of requirements for "Salmonella Free Certificates".

A Simplistic Approach to a Complicated Problem

The problem with this approach is threefold. First, a certificate, especially if it is not issued by an impartial third party, cannot always be taken at face value. Often the certificates are faxed or scanned, making alteration easy to do and difficult to detect. Secondly, what is there to guarantee that the certificate in question actually applies to the merchandise it is supposed to certify, if there is no tracking system? The third problem with solving safety issues through certificates is that it is a simplistic approach to a much more complicated question. In the case of the "No Chinese Origin" certificate, can we then assume that there are no problems in facilities in the rest of the world? For that matter, aren't there reputable facilities in China that have nothing in common with the substandard operations that cause the problems?

It was revealed that Peanut Corporation of America had actually issued a certificate stating that the peanuts that caused an enormous and costly recall, not to mention seven deaths, were free from salmonella. In reality, the batch of nuts had received a postitive salmonella reading from one laboratory, and a negative test from another. PCA's customers, who had relied on the certificate, nevertheless became embroiled in a difficult and cumbersome recall that strained resources and weakened consumers confidence.

The scenario was different for Nestle, who actually did inspect the plant. Nestle sent auditors to PCA plants in Georgia and Texas, and found "grossly unsanitary conditions" in both. The company did not do business with PCA, and consequently suffered no harm when the recall took place. Proper due diligence is the wisest course.

According to international food safety expert David Troster*, "Certificates are always open to question, scanners and copiers and unscrupulous people always ready to falsify things. The solution to this problem is to demand that all certificates be obtained from laboratories that have ISO 17025 certification, with a scope that covers the analysis. You need to extend this by including from time to time an audit of the laboratory and its certification. You must also audit your suppliers to see if they provide liquid bactericidal soap, non-perfumed, hot water and disposable towels to dry hands. Watch to see if people do clean their hands. Audit their cleaning methods. There are many factories that only clean when a vistor is coming. These are easily found and should be avoided."

The Need For Industry Standards

By David Rosenthal

At last year's Association of Food Industry Convention, I proposed as a topic for discussion at the Nut and Agricultural section meeting the need to establish protocol to address the increase in rejections due to microbial contaminants in nut products. I also stated that it was necessary to establish documented, industry wide accepted tolerance levels for microbial contaminants in raw nut commodities, and approved methods to reduce pathogens if they are above acceptable levels. At present, there are no established acceptable levels, and no industry wide standards addressing these issues. At that time the prevailing feeling at the AFI was that these were not priority issues, but recent events in the nut industry have made it urgent that ithey be addressed.

New Questions Are Surfacing

Last year at this time no one could have imagined that 700 people would have been sickened and 7 dead as the result of microbial contamination in a nut product. Nor would anyone have thought that just three months later another contaminated nut would be the cause of a massive recall involving products as diverse as energy bars and ice cream. Now questions are surfacing:

"What industry wide standards have been established for accepted microbial tolerance levels for raw imported nut products?"

"What are the accepted and effective kill steps for nuts in order to eliminate dangerous contaminants such as salmonella and e.coli?

Industry standards related to nut products have not historically addressed microbial tolerance levels as it has been widely assumed that the raw nut products would go through additional processing, such as roasting, that would involve a kill step. In recent years many of the nut categories that were traditionally consumed roasted are finding their way into consumer products in their raw form. This being the case, questions arise as to what steps have been taken to ensure that the raw material is within accepted microbial tolerance levels.

Is Testing Enough?

Does testing give us the assurance we need to omit a kill step? And here is the million dollar question "Who is responsible for the kill step when the raw product is distributed directly to consumers???" Many manufacturers have purchased raw imported nut products with the assumption that they were consumer ready from a microbial standpoint. This mindset started to change when some companies started to conduct their own testing, and now, in light of recent incidents, it has become a dangerous assumption.

There is no industry protocol to address what should be done in the event of a confirmed positive for salmonella, but the fact is that an adulterated product cannot be distributed in the USA. The following links provide some guidance:

Testing upon arrival is only one component of a food safety system, but it is not a substitute for the due diligence needed to ensure that the facilities at origin maintain good manufacturing practices. The testing is simply a final verification of the integrity of the process by which the product was manufactured. Therefore proactive measures to ensure responsible sourcing from good facilities overseas is the first step to ensure consistent product quality.

CCC Moves to New Offices

The CCC has moved to new offices. We are now located at 9509 Hull Street Road, Suite D1, Richmond, Virginia. 23236. Our phone and fax numbers remain the same.

*David Troster is a Food Safety Consultant with thirty years experience in many areas of the food and hospitality industries. David's areas of work include:
A practical approach to developing working HACCP systems integrated into your operating system.
Training Directors and Managers in Food Safety.
Supply chain auditing, identifying the hazards and helping you eliminate them.
Factory design.
Advice on European legal requirements.
If you need more details or have a specific question then please e-mail David at

Wednesday, April 8, 2009

Prison Labor - A Major Threat to the Nut Industry

Forced Labor is not Acceptable

Last year we spoke with a prominent representative of the Vietnamese cashew industry who asked us if it would be a problem if prison labor was utilized in cashew processing. Our opinion is that under no circumstances must we, as an industry, tolerate the use of forced or prison labor in the processing of any product, most especially not in products that are to be consumed as food items.
The reasons for this are twofold. Firstly, few would condone inhumane working conditions - and in the case of prison labor there is a strong possibility that working conditions would be at the extreme limits of marginality. Indeed, many of these people may not be 'criminals' in the sense that we would understand the term - some are imprisoned for their political or religious beliefs, and have committed no crime.
Secondly, anyone laboring under such extreme conditions could hardly be expected to have concern for the integrity of the products they are processing. In fact, the risk of purposeful contamination or sabotage is significant.

"Soft Terrorism"

The FDA has recognized the possibility of 'soft' bioterrorism, where food products could be discreetly contaminated with microbes that are not particularly life threatening, but their detection could have devastating industry effects. This section of ) explains the possible implications of this form of bioterrorism. But terrorists are not our only threat in the potential contamination of nut products.

One Prisoner's Story - Artificially Opened Pistachios in China

This article decribes the experiences of William Huang, a Chinese man who was arrested and imprisoned for practicing Falung Gong. He was placed in a facility where pistachios were artificially reopened by prisoners. (This is not meant to imply that such a situation was behind the recent pistachio recall - there has been no indication that the pistachios in question had been sent abroad for opening).

Here are some excerpts from his story:

" We had to put the pistachio nuts in water first so the shell became softer-some prisoners used urine for this step," he said. "Our cell was 10 meters squared for 20 prisoners and it doubled as our workshop." The bench they worked on became their bed at night. Huang said he and his cellmates had to pry the shells open for three months between March and June 2001. "We used very big iron pliers to open them ... My hands got blisters, bloody blisters, they were very painful," he said. But he could not stop working or heal his hands.The guards at the 2nd detention center in Zhuhai, China, told them that the pistachio nuts had come from the U.S. They got shipped back to the USA once opened. "We were warned not to use pork oil to help open the nuts because it would absorb bugs and become a problem to export back to the U.S.A,"

A related article proviides further information. Here are some excerpts from the second article:

"William (Kui) Huang is one of the people who spent their youth cutting open the nut shells with pliers. During an interview he told me that he had to work at least sixteen hours a day. The work was done in Cell No. 27 of Zhuhai 2nd Detention Center, which according to Huang was less than twenty square meters in size and was home to over twenty people. The room was full of products and the raw materials that they are made out of. To attend to natural calls one had to climb through these materials to reach the latrine pit in a corner which was not separated from the rest of the room. The room was never cleaned and the air was turbid. Huang witnessed a prisoner dying, not because he was beaten, but because he couldn't stand the environment."
An interview with William Huang can be found on this You Tube

Human Rights Watch - Forced Labor in the Vietnamese Cashew Industry

Unfortunately, there is evidence that in some cases forced labor is being used in cashew processing as well. Here is an excerpt from Human Rights Watch on the use of forced labor in Vietnam:

"More than 400 political and religious prisoners remain behind bars in harsh prison conditions. Prisoners are placed in solitary confinement in dark, unsanitary cells, and there is compelling evidence of torture and ill-treatment of political prisoners, including beatings and electric shock. Credible sources report the use of forced prison labor in a cashew processing facility at Xuan Loc prison, where many political prisoners are imprisoned." (Note that, according to this statement, the cashew processing facility is actually part of the infamous Xuan Loc prison)

We Must Source Responsibly

As the food chain becomes ever more global, it becomes more difficult to know our suppliers, and to monitor the conditions under which our food is produced.

The CCC can help. Please contact David Rosenthal or Mary Smith at 804-745-2848 for further information.

Wednesday, April 1, 2009

Peanuts, Pistachios...The Roulette Wheel is Spinning

Peanuts, Pistachios....The Roulette Wheel is Spinning

Once again our industry is in the throes of a massive, damaging recall. Details continue to emerge, but the source of the salmonella that contaminated pistachios has not been determined, nor has the full scale of the impact been gauged. Already, consumers are voicing reservations about eating nuts. They are alarmed and in need of reassurance that nuts are a safe food source.

Legislators and the Public are on Alert

This latest incident increases the concerns of legislators such as Rosa De Lauro, Bart Stupak, and John Dingell, who have been on the forefront of the movement for stricter food inspection and tracking requirements. Now that nut products are definitely on these legislators' radar, we MUST address the conditions under which imported nuts, seeds and dehydrated fruits are processed. We have stated that contaminants have been found on pine nuts, pepitas, and brazil nuts. What might be present in some of the nut products that are not routinely tested?

If we continue to ignore these warnings the collective wrath of consumers, retailers, and legislators will be astronomical, and justified. We need to address questions such as whether or not any imported raw nuts should be distributed to consumers without a kill step. Although imported nuts have not yet come up on the hit list we should not use that as a reason to ignore the need for taking proactive measures for responsible sourcing and initiating protocol to address possible microbial contaminants.

Can Imported Nut Facilities Withstand Tough Scrutiny?

I have been criticized by some for speaking out too forcefully in favor of proactive responsible sourcing, but for 12 years, since I visited overseas processors, I feared the day that issues would arise that would shed light on the blatant disregard for food safety practices in many of the overseas processing facilities. The globalization of today's society has made information instantaneously available to everyone. If a consumer safety incident were to arise involving one of our vulnerable commodities, an overseas facility would be investigated with the same zeal as a domestic processing plant.

Although the peanut recall, followed by the pistachio recall, have directed the focus to these specific commodities, we cannot afford to ignore the fact that the problems that caused the contamination occur throughout the nut industry and are even more severe in the case of many imported nuts and seeds where there is a lack of control. How would the scenario unfold if overseas nut processing facilities were subjected to the same scrutiny, vigilance and thoroughness as the domestic processors? Many questions would have to be answered. Keep in mind that although individual companies may carry out their due diligence, the industry will be judged based on the lowest common denominator.

The True Costs of a Recall are Staggering

Although our main concern in today's difficult economy may be our day to day existence, we cannot ignore the big picture. Recently, businesses that were economically healthy and viable have come to an end almost overnight as a result of the overwhelming costs involved in a recall. Keep in mind that it is not just the nut ingredient that needs to be recalled. It is every product that the ingredient is found in, and in many cases the full retail price plus fines will be levied. The amount of recall insurance that would be necessary in order to cover these costs would be staggering. And if, as in the case of the contaminated peanuts, lives are lost, the devastation cannot even be measured in financial terms.

The Challenge for Our Industry Leaders

Years ago, industry leaders paved the way to the future. As recently as a few decades ago, that road was not strewn with the roadblocks and concerns that must be dealt with today. This creates a whole new challenge for those who are trying to navigate through uncharted waters. On a daily basis we receive e-mails, news reports, editorials and articles calling for more regulation of the food importing process, yet the reaction to this has not been proactive. Has this been talked about so much that we've become desensitized ? This is dangerous, because the day that it really happens, when legislation is put in place and the industry is forced to comply, many will be ill prepared. Recent events in the nut industry make this all the more likely to happen, as nuts have certainly moved up on the list of suspect food products.

Responsible Sourcing - The Right Path to Take

We should all be sourcing responsibly because it is the right and moral thing to do. Let's not forget that lives were lost because of the salmonella contamination found in peanut butter. Those who believe that as an industry we can keep our dirty laundry in the closet are mistaken. Until we address these issues by developing and implementing a solution we will continue to be in a very, very vulnerable position. Most of the food legislation that has been proposed to congress tells us what we need to do, but in no way provides us with the means and the "how" to do it. We as an industry must find an acceptable solution that is effective and practical.

How Do We Enforce Responsible Sourcing?

A major industry buyer recently asked "How do we enforce responsible sourcing initiatives like the CCC?" My answer was : "Just insist upon it." The only way that we will be able to develop systems of responsible sourcing is if industry buyers demand it. Consumers need to know that their food products have been sourced responsibly. If buyers ask for responsible sourcing initiatives to be put into action, they will be. If importers demand certification from the overseas facilities they source from, they will get it. When it comes right down to it, if revenue hinges on taking responsibility for what they produce, they will do what they need to in order to make the sale. A monitoring agency with staff that understands the industry needs to be an integral part of this procedure.

The CCC Can Help

The CCC offers a system that addresses exactly what is soon to be be required of our industry. We are not saying that it is the only way to go, but it is a comprehensive, turnkey system which ensures traceability and responsible sourcing. We would be happy to discuss our certification/tracking program, and to provide a demonstration.

Please do not hesitate to contact David Rosenthal or Mary Smith at 804-745-2848.

Monday, March 9, 2009

More on "The High Cost of Saving Money"

On February 17, 2009, we published an article by food safety expert David Troster entitled "The High Cost of Saving Money". We received the following comment from a concerned buyer.

L.M said...
"What happens when you pay extra and are assured that product is inspected multiple times? Is that still the buyers fault? Going to the top packers paying extra and still having a problem?"

David Troster responded with further clarification on why it is so important that high standards be maintained at each processing step, and how this saves both money and reduces risk to buyer and seller alike.

Here is David's response:

"Dear LM,

Thanks for your comment.

What I am arguing for is actually a reduction in expensive post production testing: "Quality Control" as it is known. Rather, we should be using systems of "Quality Assurance".

Quality Control vs. Quality Assurance

Quality Control by its nature is expensive and not very accurate. Example, in a container we may have 1600 x 12.5kg cartons. Let's say that one of those cartons contains a defect that would cause a recall. The only way to find that carton is to test all 1600 cartons. Result: You find the problem carton but you have probably lost the entire load – Wonderful? Sampling say five or ten cartons would probably not find the defect, so do you use that lot and risk your reputation? Of course not!

In Quality Assurance we look to:

  • The systems of production;
  • Identify real potential hazards;
  • Make sure that proper preventative measures are implemented.

The way that you as a buyer would understand that these proper preventative measures are in place is to have your supplier(s) audited and to have a targeted regime of testing as verification that the systems are working.

Quality Assurance through Third Party Auditing

Your real problem is that without a third party audit you really have no way of knowing who are the good shippers in terms of food safety. I know many factories that are owned and operated by very good and honourable people. They never default, test result are always excellent. They are top packers, but their products still cause product recalls. Why? They may be good at business , but with regards to food safety they are only beginners.

Proper third party, independent auditing and the help and advice that can go with it can give both sides confidence. For the seller, they have increased confidence that their product is the right product for the buyer, and the buyer can understand that they have purchased the right product for them.

In many cases if I can get the factory 'sorted' the risk and therefore the associated higher costs can be eliminated without detriment to anybody's bottom line. So if we get it right, profits can be maintained or improved, costs lowered and that is a great help to sales. Not to mention happier consumers!


David Troster is a Food Safety Consultant with thirty years experience in many areas of the food and hospitality industries. David's areas of work include:

  • A practical approach to developing working HACCP systems integrated into your operating system.
  • Training Directors and Managers in Food Safety.
  • Supply chain auditing, identifying the hazards and helping you eliminate them.Factory design.
  • Advice on European legal requirements.

If you need more details or have a specific question then please e-mail David at

Wednesday, March 4, 2009

The Cashew Market...Not a Laughing Matter

This year's Cashew Market Update at the recent Peanut and Tree Nut Processors' Convention ended with a segment that included a tongue in cheek version of financial acronyms, substituting their meaning with phrases illustrating the recent debacles in the cashew industry: CD = Contract Defaults, MBS = Might Be Shipped, etc. There were also joking references as to what constitutes a "Top Tier Shipper", "Medium Shipper" etc. - "a top tier shipper ships good quality product that arrives on time..." No mention was made of the standards adhered to by the facility itself, in terms of sanitation, Good Manufacturing Practices, etc. This is certainly not the time to simplify the supplier selection and screening procedure.

$40 Million in Lost Trade Differentials is No Joke

Although presented in the spirit of comic relief, the reality is not a laughing matter. The fact is that over 2000 containers of cashews were defaulted on last year, which resulted in over $40 million in lost trade differentials during 2008. The dramatic price increases that resulted caused added problems in our industry at a time when we did not need another obstacle to dissuade retailers from purchasing nut products.

We have seen how devastating it can be if we are unaware of conditions in facilities that directly affect the integrity of the food products produced (the recent peanut recall is an all too painful example). We have seen the result of purchasing based on pricing only, with limited information on the caliber of the facilities or the integrity of the supplier.

It's time that we started to learn more about where and from whom we source our food products. We need to know our suppliers, and be certain that the agricultural products we import and offer for public consumption are processed under acceptable conditions. The fact is, conditions in these facilities directly affect the integrity of the food products we offer to consumers. We also have a moral responsibility to do everything in our power to ensure that workers who produce the goods we import are fairly treated and compensated.

A More Holistic Business Philosophy

The business models that have been recently in fashion have emphasized the maximization of short term profits. Perhaps it is time to revisit a business philosophy that is more comprehensive, one that has a basis in psychology, sociology, economics, and statistics. I'm referring to the teachings of the late Dr. W. Edwards Deming, who is widely credited with being a major factor in Japan's amazing recovery and rise to becoming a world economic power after the devastation of World War II.

14 Key Principles and The Seven Wastes

Dr. Deming developed a management system based on 14 key principles designed to increase business effectiveness. He also cited seven obstacles to development "The Seven Wastes" which could cause a business or business sector to stall. Among the most important of the 14 principles is "Build quality into a product throughout production". Another key principle is "End the practice of awarding business on the basis of price tag alone; instead, try a long-term relationship based on established loyalty and trust."

Impromptu Fixes Are Costly

Increasingly, in the cashew business, price became the driving factor behind every transaction. Even when there were quality problems, even when there had been devastating defaults, the supplier who could offer the lowest price was the one who got the business. Quality problems were common, but were dealt with on a case by case basis. Infestation? Freeze it for two weeks and hope you don't miss the retailers deadline. Scorched? Do your best to fix it in the roast. Foreign material? Hope that your added production costs for unanticipated refinement don't eat too much into your profit margin. You've been advised that your supplier will not ship the cashews you contracted? Quick, try to find some on the spot market (probably at a significantly higher price), or devise a delaying tactic and see how long you can keep your customer at bay. It's impossible to guess how much these impromptu 'fixes' may have cost the industry, but we do know that the price tag for the defaults, which were mostly by Vietnam, was in the neighborhood of $40 million.

Stop Stamping Out Fires

The second part of Dr. Deming's management system,"The Seven Wastes" contains another principle that could have avoided the default disaster ; "One of the worst mistakes a company can make is to focus on short term profits, as opposed to long term goals." In the short term, "buy cheap" may look like the way to go. But the road to true success lies in developing a steady, reliable supply, and consistently delivering high quality to our customers.
It is outside the scope of this article to delineate Dr. Deming's management principles in their entirety, but they merit consideration. It would be appropriate to end this article with one of his best known quotes "Stamping out fires is a lot of fun, but it is only putting things back the way they were." Many in the cashew industry have become adept at dealing with crisis after crisis. Isn't it time we became proactive and improved things at the source?

Forging Strategic Partnerships

The CCC is a means to forge strategic partnerships with quality overseas suppliers. It empowers the buyer with the knowledge that their product has been handled responsibly at the source, and can be traced back with accuracy.

The CCC has come under a great deal of resistance from segments of the American importing community. The next time you are on the phone with your importer, ask the question "Why would you be against an initiative to support responsible sourcing from facilities that maintain good manufacturing practices and fair labor conditions?". Let them give you an answer and feel free to post it in this blog .

If you have any specific questions about our program, please feel free to call either David Rosenthal or Mary Smith at 804-745-2848.

Tuesday, February 17, 2009

The High Cost of Saving Money

Food safety expert David Troster contributed the following article, which illustrates a common scenario - what initially looks to be a cheap price turns out to be an expensive problem.

Cutting Costs the Right Way

The Buyer's Dilema - Keeping Costs Down

"Stop the line, there's glass in the product!"
Production, Quality Control and Factory Manager all run to the line to see what's happened. There it is,a piece of glass, colorless, hard to spot in the fruit, with sharp chipped edges.
Where'd that come from?" They all ask. Everyone was sure it was not their factory. They had glass control systems in place. "It's in the raw material so it's a buying problem." The buyer was shown the glass and he shrugged. The story unfolded: Always under pressure to keep costs down he'd done just that and purchased a cheap lot from a trader. The information he had was that the fruit was the right size and color, plus QC had received a sample case and approved it. All in all it looked OK and the price was right.

Factory Manager's Dilema - Cleaning up the Buyer's Bargain

The Factory Manager then started to put the buyer right. "First thing to remember is that testing is just part of a verification process where we make sure that the people before us in the food chain have got it right. Testing cannot and never will tell you the complete story. With the cheap price we saved $100/tonne but what of the costs of using that material? The whole lot is suspect so it can't be used in case there's a product recall. It will have to be dumped and that will cost money. We need a replacement lot and buying spot is not going to make the Directors happy. The line is stopped till the replacement stock comes, so who pays the wages while we wait for it? Then there's the loss of profit on top of it all. Cheap lots can be very expensive and high risk."

"If the primary processor has problems then we all do"

It's happened like this many times before, but the clever ones learn. In today's high speed manufacture one must understand in detail the whole of the food chain, and that starts with the farmer or grower, who needs to provide quality produce. Primary processors are very important since it's their task to clean up and pack the product. Unfortunately this is where foreign bodies sometimes slip in. Fruit on trees does not have mineral stones embedded in its surface, nor are there glass windows in a commercial orchard. If the primary processor has problems then we all do.
The solution is very simple. In addition to product testing, audit the supplier and identify the potential hazards, then work with that supplier to eliminate or reduce those hazards. In many instances what is needed is common sense, and it need not be costly. For example to keep out flying insects along with cats, dogs, and rodents - close the doors and screen the open windows. To prevent glass shards, replace glass windows with plastic, cover lights and only allow essential glass on site. The cost of these sorts of controls are nothing when compared to having to pay for a line being idle because bad product was supplied, or being faced with the costs of a product recall. The price of a product recall is your reputation and your business.

The True Cheap Option

Prevention is always the cheaper option. There may be costs involved in setting up the system, but long term customer relationships with happy satisfied shoppers make it worthwhile to start your preventive works today. The peace of mind alone is worth it!

David Troster is a Food Safety Consultant with thirty years experience in many areas of the food and hospitality industries. David's areas of work include:

  • A practical approach to developing working HACCP systems integrated into your operating system.

  • Training Directors and Managers in Food Safety.

  • Supply chain auditing, identifying the hazards and helping you eliminate them.
    Factory design.

  • Advice on European legal requirements.

If you need more details or have a specific question then please e-mail David at

Tuesday, February 3, 2009

Action Plan for Food Safety and Responsible Sourcing

At the recent PTNPA convention, we gave a presentation entitled "An Ounce of Prevention or a Metric Ton of Cure". (CLICK to view) We would like to propose a solution. We have been working for the past two years on the development of a program that addresses the issues that make the nut and agricultural industry vulnerable, and offers a turnkey system to protect us from the kind of situation that has resulted from the recent peanut recall.

FDA Globalization Act of 2009

Although there has been heavy focus on domestic oversight, the fact is that we know even less about where and to what standards our imported food products are processed. Ignorance is no longer an excuse that will be tolerated. Legislators have come down very hard on the people they feel were responsible for ensuring public safety. Congressmen John Dingell, Bart Stupak and Frank Pallone Jr. have incorporated higher standards of accountability in their most recent draft of the Food and Drug Administration Globalization Act of 2009. This act can be viewed in full at the following link:

Now is the time for industry self evaluation. Would our current system stand up to government and consumer scrutiny? It doesn't matter if individual companies have this ability. We need to set standards for the entire industry. We are only as strong as our weakest link.

The CCC Solution

The CCC system presents a preventative approach to responsible sourcing and food safety and addresses many aspects of the FDA Globalization Act.

Step One: Identification - The CCC system first identifies those suppliers who subscribe to good manufacturing practices. Companies that need help in establishing GMPs can utlilize our consulting services to assist them in bringing their facilities up to the necessary standards.

Step Two: Inspection - Through a third party audit by independent unbiased inspectors using industry experts who have a background not only in Quality Control and production, but also a working knowledge of the industries being inspected.

Step Three: Certification - Once the identification and inspection process is completed, these facilities will be certified under the guidelines of the CCC.

Step Four: Tracking - The CCC has developed a user friendly, comprehensive tracking system software called CONCERNTRAK©. During the inspection process our auditor interviews two key production personnel. These individuals are fingerprinted via a biometric identification procedure. To ensure a higher level of security, only these prescreened personnel can enter data into the system. CONCERNTRAK© enables the end user to trace lots back to the production line and produces verifiable documentation, making this process quick and easy. Each carton is labeled with the tracking number and sealed to ensure a tamper resistant box that can be cross referenced with all documentation.

Step Five: Promotion - Our logos for Cashew Concern Certification and Commodity Concern Certification enable manufacturers to convey the message to consumers that they have done their due diligence to responsibly source the food products under their brand name.

Step Six: Protection - The integrity of our industry is protected when we take steps to adopt programs such as that of the CCC, to ensure the safety of our food production through a system of self regulation. If an incident should occur, at least we have a system in place to present to the authorities. Having no viable system to ensure traceability and responsible food sourcing will highlight our deficiencies, and would present an embarrassment to the industry.

The "Ounce of Prevention"

We can no longer assume that it will be "business as usual". With the current climate in Washngton we can be sure that sooner rather than later our industry will be called upon to explain the procedures and systems we have put in place to ensure responsible sourcing. We have two choices. We can start now to develop these systems using countless hours of time and energy or, we can adopt a turnkey system, such as that offered by the CCC where two years of research and development have already been done. This is our "ounce of prevention". It will certainly be more tolerable than a potential metric ton of cure.

Identification*Inspection*Certification* Tracking*Promotion*Protection

Building a Solid Foundation to Establish a Healthy Future for the Imported Food Industry

Saturday, January 31, 2009

Cashew Concern Certification Joins the African Cashew Alliance

Although Africa is an important source of raw cashew seed for India, Brazil and Vietnam, cashew processing in Africa has been sporadic and the potential has not been fully developed. The African Cashew Alliance (ACA) was formed in 2005 with the aim of
increasing cashew farmers' revenue, increasing cashew processing capacity, consistency and quality, improving the economic and regulatory environment of the cashew sector, and promoting African cashews internationally.

At the PTNPA Conference in the Bahamas, David Rosenthal and Mary Smith of Cashew Concern met with ACA representative Christian Dahm. We were impressed with the goals and methods of the ACA. The concept of developing the processing industry in Africa step by step by coordinating and leveraging resources, training and marketing is a logical and effective way of achieving a sustainable and responsible cashew industry.

We support the initiatives of the African Cashew Alliance, and are proud to be a member

Peanut Butter Recall Update

As the shock waves of the peanut butter recall reverberate throughout the nut and snack food industry, we are again reminded that there is no such thing as too much vigilance where food safety is concerned. As of January 27th, more than 500 people had been reported sickened, and the deaths of eight people in the United States and Canada have been linked to the outbreak, which has been traced to the Peanut Corporation of America (PCA) plant in Blakely, Georgia. The plant is now closed down, and its future is uncertain.

Wide Range of Products Implicated, Lawsuits begin

The recall has spread to more than 390 products, including cakes, cookies, brownies, crackers, ice cream, energy bars, ready-to-eat meals, and even pet foods. An updated list can be found at the FDA website.

The lawsuits have begun, as well. Relatives of a 72 year old Minnesota woman whose death may be linked to the outbreak have filed suit against both Peanut Corporation of America and its distributor, Ohio based King Nut. More suits are sure to follow.

Many Problems at Blakely Plant Detected

Federal health officials have reported that PCA failed to take some standard "Good Manufacturing" steps to prevent contamination within the plant. This was corroborated by Michael Rogers, director of FDA's Division of Field Inspection, who announced that an investgation had revealed numerous problems. Four different strains of Salmonella were detected, although only one strain was involved in the outbreak. The most serious finding was that Peanut Corporation of America had engaged in "lab shopping" - when salmonella was detected in samples sent to a contract laboratory, the company got a second opinion from another lab. After the secondary tests came back negative, the product was sold. The complete transcript of the January 27th FDA briefing is available at the following LINK.

Legislators Reaction

"Inspections are worthless if companies can test and retest until they receive the results they want" said Rep. Bart Stupak, D-Michigan, who was quoted in a recent Associated Press article. Congressman Stupak is heading a congressional panel that is conducting its own inquiry, and has introduced legislation to end such "lab shopping" and to require companies to submit all test results to the FDA.

Congressman John Dingell, D-Michigan issued a statement in which he affirmed that "People have reason to be angry about the quality of our nation's food supply" and vowed to introduce legislation to address these problems. "This legislation will grant FDA the proper authorities and resources it needs to ensure the safety of our food supply, as well as the safety of other products regulated by FDA, and restore American consumer confidence in the Agency. The American people deserve nothing less."
Food Safety Under the Obama Administration
If there was a chance that food safety and traceability would be ignored because of the overwhelming problems plaguing the economy, this high profile salmonella outbreak occurring in the first days of the Obama administration has put food safety and traceability back on the radar screen.

Now is the time to be sure we are implementing good manufacturing practices and sourcing our imported food responsibly. An ounce of prevention is surely better than a metric ton of cure

The CCC Exhibits and Presents at the PTNPA 2009 Convention

Commodity Concern Certification and the non-profit Cashew Concern Certification were very much in evidence at the recent Peanut and Tree Nut Processors Association convention held January 17-20 in Freeport, Grand Bahama. Over 300 representatives from the nut industry attended the event, which included two days of presentations and exhibitions and provided a forum to exchange ideas on the challenges and opportunities that lie ahead as we approach the end of the first decade of the 21st century. We would like to thank Russ Barker, president of the PTNPA, and his team for putting together a stimulating and informative meeting in a wonderful setting.

David Rosenthal, of the CCC, together with Merle Jacobs, president of The American Council for Food Safety, gave a presentation entitled "An Ounce of Prevention or a Metric Ton of Cure...It's Your Choice" during the General Session. David and Merle reinforced the importance of taking a proactive stance regarding food safety and responsible sourcing, and cited numerous industry examples to illustrate the devastating effects of product recalls. David Rosenthal's portion of the presentation can be viewed in full at The Responsible Source

Friday, January 23, 2009

An Ounce Of Prevention PTNPA 2009

Here is a copy of the presentation given by David Rosenthal, president of Cashew/Commodity Concern Certification, at the Peanut and Tree Nut Processors' Convention held January 19-21 in Freeport, The Bahamas.

Thursday, January 22, 2009

January 12, 2009, Cashew Update: Vietnamese Cashew Crisis and Chlorophenol Update

January 12, 2009

During the latter half of 2008, we published articles on two problems that had severely impacted the world cashew scenario: The increasing defaults by Vietnamese shippers that occurred during the spring and summer, and the disturbing reports of chlorophenol contamination that began surfacing around the same time. The cashew world has been on a virtual roller coaster ride since then, buffeted by the world recession and by industry practices that in some cases have backfired. Both of these articles can be accessed in the Newsroom section of the Cashew Concern website: .
Crisis in Vietnamese Cashew Industry

On June 20th, 2008, we published an article entitled "Unbridled Cashew Speculation - History Lesson 102" warning of the potential fallout from an overheated cashew market fueled by speculation and low price feeding frenzy. A recent article which appeared in VietnamNet Bridge describes the devastating effect that this "perfect storm" has had on the Vietnamese cashew industry. The complete article can be accessed at the following link:

Over the last decade, Vietnam quickly became the largest exporter of cashew kernels in the world, surpassing even India. Unfortunately, instead of healthy, managed growth, many Vietnamese cashew producers opted for the quick money to be had by offering cheaper prices than their global counterparts. Offers were made without a realistic assessment of production capacity. In 2008, as cashew prices soared, they did not deliver under the signed contracts, but sold to others as the price went up, with the intention of fulfilling the contracts later. However, material prices rose sharply, making it impossible to honor the contracts without devastating losses. To make matters worse, demand dropped and cashew prices fell dramatically.

The Vietnamese cashew industry is now in crisis and is scrambling to survive. Reports have begun to surface of Vietnamese cashew splits that have been adhered together with 502 glue in an attempt to disguise them as wholes, a practice that certainly cannot be tolerated.

Vietnamese cashew producers are now seeking help from the Vietnamese government in the form of loans and tax reductions, but it remains to be seen if the industry will be able to recover. Alarmingly, farmers in Vietnam are increasingly giving up on growing cashews in favor of more profitable crops, such as rubber and cocoa.

The speculation that has become rampant in the cashew industry has in the end benefited no one. Vietnam's cashew industry is struggling to survive, American cashew importers hit by the massive wave of defaults sustained significant losses at a time when the economy makes it difficult to absorb such a blow, and American roasters faced historically high prices during a brutal retail season.

Chlorophenol Update

On September 9th, we published an article about the detection of chlorophenol, mostly in cashews exported from India. In order to prevent contamination, guidelines have been established by the Cashew Export Promotion Council of India. The guidelines have been published by the African Cashew Alliance and can be accessed from their website. Alarmingly, however, there have been reports as recently as December 27th of containers being rejected because of chlorophenol contamination, and it is not at all clear that the source of the problem has been identified. An article published in the Indian Express states that the rejected cashews had been tested in India before shipment.

Every Link in the Global Food Chain is Important

Clearly more vigilance is needed. As we move further into the 21st century, better monitoring systems must be put into place, not only to ensure that suppliers follow good manufacturing practices, but also to understand the calibre of suppliers that we work with. Each link in the global food chain is important. We need to build strategic working partnerships between supplier, importer, roaster, retailer and consumer in order to ensure a better overall food product and foster the development of reliable working relationships that have a positive effect on food quality and on our business as a whole.

"An Ounce of Prevention or a Metric Ton of Cure" Peanut and Tree Nut Processors Association Conference - January 17 - 20

David Rosenthal will give a presentation entitled "An Ounce of Prevention or a Metric Ton of Cure - It's Your Choice" at the General Session of the PTNPA Conference, held at Our Lucaya Resort in the Bahamas, on January 18th. The co-host of this session will be Merle Jacobs, president of the American Council for Food Safety and Quality.

January 5, 2009, Responsible Sourcing - A MUST for the New Year

Commodity Concern Website Now Live

We have expanded our responsible sourcing, Track & Trace, and marketing initiatives to a broader range of imported nut and agricultural commodity categories with the creation of Commodity Concern Certification. Please take a moment to visit the new Commodity Concern website at

Working Towards a More Responsible Way of Sourcing
This was a natural extension of the concept that began two years ago, when Cashew Concern Certification Inc. was established with the goal of offering a better and more responsible way of sourcing cashews. At that time, the world seemed like a different place. Who could have anticipated the events that have had such a negative effect on the global economy? The collapse of trusted financial institutions, the closing of well established retailers, and the real estate debacle highlight the fact that although conditions may seem stable, awareness of the reality beneath the surface is crucial. Commodity Concern was created to not only bring about awareness but to also take action to address vulnerabilities that can have such a negative impact on our seemingly secure situation.
The events and upheavals of 2008 shook the public's confidence in the institutions, both governmental and private, that had previously been considered pillars of society and stewards of the economy. As we enter 2009, there is a growing consensus that the system of checks and balances must be restored and reinforced.

Food Safety and Responsible Sourcing to be Priorities under New Administration
Food safety and responsible sourcing will be a priority for President elect Barak Obama's FDA. "He thinks this is a fundamental role of government to ensure that people's food is safe and he has been concerned that we are not in a position to ensure that," said Neera Tanden, a senior campaign advisor, in November 2008. Self regulation and effective communication with legislators who will create new food import regulation is key to establishing food safety and responsible sourcing initiatives that are accepted by both government and private industry.

Commodity Concern has developed a system that not only brings about awareness but also takes action! We look forward to positive changes in playing an effective role to create a healthier food importing industry.

October 27, 2008, The CCC Announces the Formation of Commodity Concern Certification

October 27, 2008

Cashew Concern Certification, Inc. is proud to announce the formation of Commodity Concern Certification. We will apply the same basic principles of responsible sourcing, Track & Trace, and marketing initiatives to a broader range of imported nut and agricultural commodity categories. Our new website will be on-line soon.


Our country is in the midst of an extremely challenging and difficult economic storm. During such times of crisis, it is all too easy to panic and decide that the only way to market our products is to cut the price. Unfortunately, this can backfire and is not a viable long term strategy.
Regardless of economic pressures, the public still demands and deserves assurance that the food products consumed by their families are wholesome, sourced responsibly, and free from contamination.
Recent issues in the cashew industry, including the present chlorophenol problem, have made it more important than ever to know the standards and procedures maintained by the facilities you buy from.
Being able to effectively market your responsible sourcing procedures to retailers and consumers will give you a competitive edge over companies who don't.
Having detailed support documentation to verify that your cashews were processed in overseas facilities that have high standards for manufacturing and sourcing raw material is vital, and will become even more so.
For the benefit of our industry, and in light of the increasing number of food safety bills submitted by legislators in Washington, clear procedures and standards must be developed and adhered to in overseas facilities. This is part of the mission of the CCC. We also offer a full traceability system, a seal of approval which can be displayed on the packaging, and a marketing program for responsible sourcing.

September 8, 2008, Increasing Reports of Disctinct Chlorine Flavor Affecting Cashews

There have been increasing reports of cashews with a distinct "chlorine" flavor during recent months. Most of the affected cashews have been imported from India. While this does not constitute a crisis, it is important for roasters to be aware, as serious consequences can result. There is a theory that the "off flavor is caused by improperly applied Dichlorophenoxyacetic (2,4-D), which is used as a selective broad leaf weed control. There are various theories as to the origin of this contaminant, it has also been theorized that the chlorine flavor was the result of processors overseas trying to bleach scorched grade cashews to improve their appearance. Regardless of the theories, the fact is the cashews have a distinct chlorine flavor, and this has resulted in a number of consumer complaints.
Only through a thorough investigation can we identify the cause and the source and take proactive measures to ensure that contaminated product is not shipped to the United States. Several containers have been offered for sale that are a result of rejections due to this off flavor. Awareness of the problem is the best way to avoid a costly consequences. A test has been developed to determine the presence of 2,4-D, and a simple sensory evaluation can effectively detect the chlorine flavor. Addressing these issues while they are still a sporadic occurrence will help to prevent the situation from becoming more widespread. For more information feel free to contact us. David Rosenthal

June 20, 2008, Unbridled Cashew Speculation - History Lesson 102

"Enhancing" contracts?

On May 28th members of the Association of Food Industries Nut and Agricultural Section met with diplomats at the Vietnamese Embassy in Washington DC to discuss the magnitude of cashew defaults from Vietnam over the past several months. It is reported that approximately 2000 container loads have been defaulted on by Vietnamese cashew shippers between November 2007 and April 2008. These actions by the Vietnamese shippers have had a major impact on cashew prices with some grades increasing by over $2.00 per pound. Importers are being forced to pay 'enhancements' in order to have their contracted product shipped. This puts the importing community in a position to lose millions of dollars, depending on the volume of contractual obligations to roasters at lower market prices. Several importers who had agreed to these enhancements have been caught off guard when shippers again refused to ship already renegotiated containers unless they agreed to further increases to the enhancements as a result of higher market prices at the time of shipment. Diplomats at the Vietnamese Embassy gave very little hope to the importers and roasters who attended the May meeting. They asked for the AFI members affected by the defaults to have sympathy for the suppliers who have suffered due to higher production costs, increases in raw material and high inflation rates. One roaster commented that he could understand the plight of the Vietnamese cashew suppliers if the enhancements were a one time event, but that asking for further enhancements to release shipments was unsustainable. Three weeks have passed since this meeting and in this short time the FOB price on 320's has moved up by almost $0.35 per pound.
Flashback to 1999 Industry wide defaults by cashew suppliers are not new to the industry. In 1999 Indian shippers defaulted in unprecedented numbers, resulting in tremendous market increases, and huge losses were absorbed by the importing and roasting community. Ironically, these actions by Indian shippers resulted in increased support of the Vietnamese cashew industry. Now that we have experienced this behavior from both major cashew producing countries we may have to reassess the way we conduct business, as taking forward positions has proven to be a very risky venture. Understandably this is a difficult proposition since retailers continue to demand long term contractual agreements to lock in pricing, in some cases for more than one year. With a market certainty time frame of approximately 3 months, the speculative nature of the business has always presented a risk for the cashew commodity trader. Traditionally, if a trader called the market wrong he stood to lose a great deal of money. In today's environment, the trader runs the risk that, even if he calls the market right, his profitable forward position may turn out to be a worthless printout of uncollectible contracts.
Speculative Trading Now Riskier
The current conditions in the cashew market clearly indicate the high price paid for aggressive speculative trading practices from unreliable sources. The desire to get the lowest price sends many importers to small, poorly funded suppliers who not only have questionable manufacturing practices, but also have proven to be unreliable when markets go against them. The ripple effects of this behavior became so far reaching this year that even major Vietnamese suppliers that have been historically reliable caved in to the temptation to demand "price enhancements" in order to fulfill contractual obligations. Hard LessonsThe cashew industry has experienced the same devastating events twice within one decade. Price increases of over $2.00 lb. are bound to have a negative impact on business with retailers - indeed cashew consumption is already down as consumers, faced with increased fuel and food expenses, cut back on snacks and luxury items. No one in the importing or roasting sectors is benefiting from the present conditions. The great American philosopher, George Santayana once said "Those who do not learn from history are doomed to repeat it". We've had two hard lessons - do we really want to continue on this path?

June 8, 2008, The High Cost of Non-Traceability

June 11, 2008

The High Cost of Non-Traceability

News of a few cases of salmonella in New Mexico and Texas hardly caused a ripple in the beginning. From April 23rd through June 1st there were 57 reported cases of Salmonella Saintpaul in those states - and on June 3rd the FDA decided the situation was grave enough to issue an alert.

Florida Tomato Industry in "complete collapse"
Just one week later, on June 10th, the Florida tomato industry has been brought to its knees in what has been described in the media as "a complete collapse". The FDA stated in its release on June 3rd that "the source of the contaminated tomatoes may be limited to a single grower or packer or tomatoes from a specific geographic area". However, as of June 10th, the only progress that had been made was to establish the areas where the problem was NOT present. Florida , the largest tomato producing state in the nation, has not been cleared, and according to Reggie Brown, executive vice president of the Florida Tomato Growers Exchange "We probably have $40 million worth of product we can't sell. We've had to stop packing, stop picking. It fundamentally shut down the industry."
Tomato Recall Affects Retailers and Restaurants
The magnitude of the tomato recall has been staggering. Businesses affected include McDonald's, Wal-Mart, Burger King, Kroger, Outback Steakhouse, Winn- Dixie, Taco Bell, Whole Foods, Trader Joes, Kroger, etc. Without knowing the exact source of the outbreak it is too great a risk to the public to keep offering the affected types of tomatoes to consumers. The recall has now spread to Canada and the Caribbean , and until the source of contamination has been found all tomatoes except for cherry, grape and on-the-vine varieties will be off limits.

Tracing Commodities to the Source
Now, more than ever, it is imperative for every importer, roaster, distributor and retailer to know and be able to trace the origin of the products they source. The CCC system will serve as a model for other commodities and offers a viable solution to legislators looking for improved food safety initiatives.

Cashew Concern Certification, Inc.