Thursday, March 29, 2007

Western Pistachio Association Committed to Filling Void Created by the Termination of the California Pistachio Commission
At its Annual Membership and Board of Directors Meeting in Monterey, California, the Western Pistachio Association’ s Board of Directors expressed its concern about the void in leadership created by the termination of the California Pistachio Commission. The Board solidified its commitment to help fill this void.
“The termination of the California Pistachio Commission was a disappointment for all of us,” said WPA Chairman Mike Woolf. “Despite our disappointment, we must focus our energies on moving this industry forward.”
WPA Board Member Corky Anderson stressed, “Given the amount of pistachios we have and the expected record crop coming this fall, we need to unite under the banner of WPA and start working to ensure that this industry is meeting the many challenges it faces.”
The Western Pistachio Association was originally formed as the California Pistachio Association in 1978. With the fonnation of the California Pistachio Commission in 1981, the California Pistachio Association ceased operations until it was restarted as the Western Pistachio Association in 1989. WPA was formed to support the efforts of the CPC and to undertake functions CPC was legally prohibited from performing — like lobbying and making contributions to federal candidates. For politica! purposes, WPA has also reached out to pistachio industry members outside of California and, now, has grower members from Arizona, Nevada, New Mexico, and Texas.
With the termination of the CPC, the WPA Board of Directors has been working to see how WPA can make the transition from CPC as seamless as possible. WPA has conunitted to continuing CPC’s highly successful govermnental affairs program, its production research, the popular annual meeting, the annual report, and market development efforts. WPA will continue its work on federal legislative efforts, managing the PistachioPAC, and hosting of the International Outlook Conferences.
“I am saddened by what happened with CPC,” said WPA Board Member and former CPC Chainnan Brian Blackwell. “Karen Reinecke and the entire staff at CPC have made this industry what it is today. There is no debating this point. Karen has been with this industry almost from the start, and under her guidance, the growers have prospered. The CPC will be missed. I am hopeful, however, that the reorganization of WPA will help us move away from some of the internal battles that have been paralyzing this industry and allow us to focus on the real issue — selling our ever increasing supply of pistachios.”
The independent processors have started to look at how best to transition CPC’s marketing programs, and the WPA Board has indicated a willingness to assist with the marketing programs ifit is decided to be in the best interest of the industry.
Contact:Western Pistachio AssociationPO Box 2395Washington, DC 20013-2395USATel: +1 202 266 3902Fax: +1 202 266 3922

Tuesday, March 27, 2007

Pecan Market Update March 26, 2007

The cold storage holdings for the period ending February 28th show 201 million pounds. This is almost exactly the same as the period that ended January 31st. In reality, you might say the peak that normally comes in February really peaked in January. This has occurred before, but too long ago to remember exactly when – 15 or 20 years ago.

The reasons for this crop peaking earlier than normal are as follows:

The total supply picture, as we all realized, was short with this being the off-year.
The commerce numbers released for imports at the end of January shows that we will end up importing approximately 65 million pounds – if we are lucky (See below)

2004 Crop September – January 92,286,513
2005 Crop September – January 80,864,939
2006 Crop September – January 56,942,923

· The other contributing factor is that China obviously has created a market for inshell pecans that is substantially more than any of us realized. An interesting figure in the January commerce exports shows total export of inshell to China of 7,698,460 pounds by the end of January 2007.

Trust me, this has been one of the most confusing years we have seen in my years as a pecan sheller. It’s no wonder why the estimates and guesstimates by the USDA (and all the other organizations) were all over the board. As you can see, all it does is badly confuse the market.

At one time, total supply appeared as though it could have been nearly 433 million pounds. One thing we know for sure is that we all know we must not forget that 20 million pounds one way or the other on a short year can and will effect the market more than when there is an ample supply.

As always, proceed with caution.

Sam DiGregorio

Friday, March 16, 2007

India: Almonds fall to snowfall
Heavy Snowfall has destroyed the almond crops and other fruit bearing trees in the Valley causing loss to the growers.“The late snowfall has destroyed the almond crop in the valley particularly in the lower belt of district Pulwama and upper areas of Pampore, where the crop is grown profusely,” Chairman All Valley Fruit Growers Association Mir Muhammad Amin told Greater Kashmir.He said the almond trees were in full bloom in these areas but now most of the crop has got destroyed. “Koel, Nui, Wader, and Zadoora areas of the Pulwama also known as the Badam Wari and famous for soft and hard shelled varieties of the almond have suffered most,” Amin said Experts believe that more damage to the crop was caused by the chilling wave and sudden drop in the temperature.“The sharp decline in the temperature injured the flowering and sprouting buds which resulted in the drop of the bloom,” experts said.They said due to long dry winter season and increase in temperature, the almond trees witnessed an early bloom and fruit growers were expecting good produce this season but now their hopes are dashed and crops ruined. They said more than 60 percent of the expected crop got destroyed due to the heavy snowfall. “Now the remaining crop will be prone to the diseases and low in quality as well as quantity.”Almond Industry, experts said is a major source of revenue in different districts of Kashmir and yields crore of rupees every year. “Almond industry has always been an important sector of fruit industry in Kashmir but this year the snowfall has ruined the expectations of growers and the turn over will be low,” they said.Experts said besides almonds, apricots, cherry and peach crop has also been affected though to less extent.“Although there wouldn’t be huge damage to these crops but the drop in the temperature and chilling wave would have left their effect on the sprouting buds of these fruit bearing trees.” In the hilly areas of central Kashmir district of Budgam, the snow has caused minor to heavy damage to different fruit bearing trees. The almond crop in Wadri, Nagam, and Charar-I-Sharief has suffered the brunt of late snowfall. “Most of the flowering and sprouting buds of the almond trees in these areas have fallen and more than 70 percent of the crop is lost,” said Ghulam Muhammad of Nagam, an almond orchid owner.The heavy snowfall (3-4 feet) in these areas has ruined their dreams of growers of qualitative and quantitative fruit. “First the long dry season for two months of winter was a cause of worry for fruit growers and now the untimely snowfall has dashed our hopes of good crop,” Muhammad said. Lamenting over the damage caused by the snowfall to the almond orchids, the growers were haplessly cutting down the broken branches or erecting the almond trees.“It is all Allah’s will and who knows the best for us might be hidden in the damage,” said Ghulam Rasool while sawing a half-broken almond tree.In the fruit belt areas of Budgam including Zinpanchal, Kanidajan, Tilsora, Pakherpora and other areas which witnessed four to five feet of snow, fruit bearing trees including Apple, Papaya, walnut, and pear were also damaged. “The orchids in these areas wore a worried look with uprooted trees and broken branches,” said Samad-ul-lah of Zinpanchal.He said various chemicals and pesticides, sprayed during last 10 days on fruits for protection against various diseases and better quality of fruit have also gone waste. “Besides damage to orchids, the fruit growers have suffered on economic front as well and would now require to do re-spraying to protect the crop from diseases,” Samad said.According to the reports from Doda, untimely snowfall and in various areas hail storm have caused massive destruction of just bloomed fruits by way of either uprooting the whole trees or bruising the delicate sprouts and flowers which were on their brim for the last two weeks. The reports said that the fruit trees especially Plums, Cheeries, Almond and peaches are the worst hit as they had started flowering right from the initiation of the current month adding that the kind of blooming was being considered as the sign of a good cash crop in these varieties of fruits.“Since I am unemployed and my sole source of subsistence rests on the horticulture practices as I have a good chunk of land converted recently in to a garden with a view that it would generate a good deal of income, but as ill luck would have it, this year the brimfully bloomed fruits of almonds and peaches have got destroyed with the untimely snow fall,” said Muhammad Ajaz Rangraz-resident of Mohalla Sarafa Bhadarwah.

Wednesday, March 14, 2007

Dear Nut Talk readers:

David Rosenthal at Sunrise Commodities recently sent this letter to one of his clients. I thought his insight into the cashew market was interesting and worth sharing.

I just wanted to clarify my views on the market as my thought process did not convey into words very well this afternoon. My point was that this market has been so quiet for so long that the amount that the market has gone down does not relate to the level of inactivity. In previous years this level of inactivity would translate into a consistent downward trend greater than 10 cents per pound over a 1 year period, hence my comment on the double dip. Over the last year price declines have stimulated some activity that has either stabilized prices or caused them to go back up. This has kept market fluctuations within about 10 cents per pound. Price declines have not exceeded two consecutive drops before market activity caused prices to move back up.

For example 320’s traded at the following price levels over the past for months on an FOB India basis at:
Dec 8 $2.08
Jan 8 $2.13
Feb 9 $2.10
March 8 $2.03

About 1 year ago the market in April 2006 from a medium packer was about 2.10

Not a significant difference given how slow things have been. Yes, one could say that we downward trend over the past few days, but overall the slope is very shallow. Not to mention the fact that the upper level shippers have little to no offers into the market … In fact, on Tuesday I received a quote on 320’s from VLC at $2.20 FOB India based on a specific inquiry from a client looking for an offer from a top tier packer. I doubt their price ideas have changed significantly.

Keep in mind that the local Indian processors are trying to sell domestically where the prices are about 7 to 8 cents higher. Certain grades like pieces are not even really making it to the American market. In Vietnam sellers are reluctant to offer anything at the moment and top packers are reasonably sold until the 3rd quarter. At this point they prefer to wait to see how the market develops. Over the past 18 months Vietnamese shippers have lost a great deal of money selling the market short. In order to avoid a “repeat performance” speculative selling at lower than market prices is at a minimum with any reputable shipper.

With this type of market I subscribe to Cashew Buying 101. Buy a portion of your forward requirements and ride the market either up or down. Cost averaging would be in my opinion the best way to approach this uncertain market. You will always be in a good position!

GUINEA-BISSAU: Cashew policy could bring back hunger, FAO warns

With cashew buyers not buying Guinea Bissau’s 2006 crop, tens of thousands of tons sit piled up in warehouses and much of the harvest is now rotting, Buba, capital of Quinara Region in southern Guinea BissauBISSAU, 13 March 2007 (IRIN) - As more than 100,000 tonnes of cashews begin to ripen on trees around Guinea-Bissau, agricultural economists have warned the government against making the same policy decisions as in 2006 that left many farmers unable to sell their produce, triggering hunger. “The government should allow market forces to function and stop setting the price at which farmers should sell their cashews,” said Marco Giovannoni, the Food and Agriculture Organisation’s (FAO) West African regional advisor on food security. He took part in a mission to Guinea-Bissau at the end of February along with an agricultural expert from the Committee for Drought Control in the Sahel (CILSS) to evaluate the country’s food situation. Analysts say the government sought to please farmers before elections in 2006 by raising the price per kilogramme of unprocessed cashews from the standard 250 CFA (about 50 US cents) to 350 CFA. But international traders, mostly Indians who form a cartel, refused to pay the higher price. Unable to sell their cashews, farmers could not buy rice, the country’s staple food. Eventually the price of cashews crashed with traders currently buying cashews for around 50 CFA (10 cents) a kilogramme. Analysts say this will likely become a problem around mid-year. For now people can live off the rice they are growing, but from July to October people will depend on imported rice while waiting to harvest the next season’s rice crop. The same Asian traders who export cashews import Asian rice. They sell it for the equivalent of 50 cents a kilogramme, the same price for which they used to buy cashews. But now farmers have to give 5kg of cashews for 1kg of rice. Agriculture Minister Sola N’Quilim Na Bitchita told IRIN on Monday that the government would set a price for cashews. “It is the government’s job to inform farmers about the value of their produce on the international market,” he said. For Giovannoni, the government would be making a mistake, particularly if it bows to local pressure to raise the price back up to 250 CFA. “How can the price suddenly jump from 50 CFA to 250 CFA?” he said. “This would be a huge disincentive to the Indian traders who are not in a hurry to return to Guinea-Bissau anyway.”The traders have not returned since leaving last year. “The government had created so many obstacles for us,” Norbet Djidonou, a local representative for the Singapore-based conglomerate Olam, the largest cashew trading company operating in Guinea-Bissau, told IRIN on Monday. “I don’t know if we will return or buy elsewhere.” Olam shut down in the middle of last year’s season when the government decided that it had to pay an extra US$2.4 million in taxes and confiscated 6,000kg of the cashews it had already bought.Olam and other international traders are also hobbled by a recent law that prohibits them from buying directly from the farmers. Many of the local businessmen they must go through are at the same time senior government officials - a practice that presents a serious conflict of interest, experts say. The FAO/CILSS mission report called on the government to make several policy changes such as reducing the taxes and various tariffs it imposes on cashew exporters and keeping the high cost of operating out of the Bissau port in line with the costs of other ports in the region.With cashews accounting for 85 percent of Guinea-Bissau’s total exports and Vietnam rapidly boosting its cashew production, Giovannoni said the government needs to do all it can to avoid its only export crop from collapsing. Also see GUINEA-BISSAU: Hunger in a land of plentyom/dh/cs
Themes: (IRIN) Food Security, (IRIN) Health & Nutrition
Report can be found online at:

Sunday, March 11, 2007

No Pistachio Commission

CDFA referendum failed to receive enough votesCecilia ParsonsCapital Press Staff WriterWhen California's pistachio growers meet March 14-16 for their annual conference, for the first time in 26 years they will not have the California Pistachio Commission to conduct marketing and research programs. A referendum conducted in February by the California Department of Food and Agriculture failed to receive enough votes to continue the commission for another two years. The 444 ballots in favor only represented 41 percent of the industry volume, according to Steve Lyle of CDFA. The commission needed 51 percent support to continue operations. Paramount Farms filed a lawsuit in 2006, challenging the commission's mandatory assessments on all growers to pay for generic pistachio advertising and research programs. Paramount Farms is the state's major grower of pistachio nuts, with about 25-30 percent of the total crop grown on about 15,000 acres in the southern San Joaquin Valley.Paramount challenged the effectiveness of the commission and in a statement said it was critical for the industry to move beyond the commodity mindset and stimulate consumer demand for pistachios.The commission, which is funded with grower assessments, had an annual operating budget of $7.5 million to $8 million according to commission president Karen Reinecke. Growers are assessed 3.25 cents per pound of production. Since 1981 growers have voted every five years to continue operations of the commission with the last referendum showing 96 percent in favor. This referendum offered only a two-year extension, one of several structural changes aimed at securing growers' approval.Commission board member Chuck Nichols of Hanford said he thinks it is fortunate the annual meeting is coming so soon after the voting."I think there will be a lot of discussion there as to what we can do, what we can agree on and what it makes sense to do together. The slate is clean, we can look at options and I hope Paramount will be receptive," Nichols said.The commission added some structural changes in operations in late 2006 in hopes of smoothing things out with Paramount. The commission board approved a modification that would require a two-thirds vote by directors to approve advertising and promotion programs. The board also approved a seat for Paramount on the government affairs committee and expanded its duties to include international trade issues. In addition, the committee would have authority to consult when there were differences in analysis between the commission and individual growers.Reinecke said this week the litigation was consuming so much of the commission's resources they were losing sight of the purpose of the commission. "This is a very difficult situation for a lot of growers," said Reinecke, who has served as commission's president for the past 17 years. Nichols, who has been vice chairman of the commission's board for the past two years, said he voted to fold the commission."In the last year and a half since the lawsuit, nothing has been done to promote pistachios," he said. "We didn't see any settlement and it was costing millions." Nichols added that the divisiveness was hurting the industry and dissolving the commission would be one way of moving forward."The commission did a phenomenal job for the industry, but times change," he said.The past three years have been extremely profitable for pistachio growers, Nichols noted. This year's crop is expected to set volume records. There are presently 112,000 bearing acres of pistachios in California and other 40,000 acres coming into production. Nichols said new plantings are expected to continue as more growers take out annual crops and plant pistachios. Commission chairman Kevin Herman of Madera said there have been discussions among growers about forming some type of voluntary organization for growers."I'm hopeful that the conference next week will be a good venue for creation of some type of those groups, but am not totally optimistic. Something voluntary won't be the same," Herman said. He also said it was unfortunate that growers are losing their generic promotion tool just as pistachio inventories are beginning to grow.Reinecke said over the next five months the commission will wind down operations."The theme for this year's meeting is 'The Road Ahead' and that is appropriate since the industry will have to focus on what is ahead of them," she said.Cecilia Parsons is based in Ducor. Her e-mail address is

Friday, March 09, 2007

Senegal: Cashew processing takes off in West Africa
Afokantan Benin Cashews, West Africa’s newest cashew-processing facility and one of several recent developments in the continent’s blossoming industry, was officially opened in January. The plant, a joint venture between Kenza SA of Benin and the Netherlands’ Global Trading, will employ 300 and produce an annual 1,500 tonnes of semi-finished cashews – hugely increasing Benin’s previous processed output of only 50 tonnes a year.
“This is the pride of our country,” said Benin’s minister of industry, Issifou Soumanou about the plant, which has an on-site canteen, clinic and child-care facility. “I call upon everyone present here to help this factory succeed.”
Afokantan will ship its kernels to Europe, South Africa and the U.S., helping to change the continental trend of shipping raw cashews to India and Vietnam for processing. Africa grows one-third of the world’s cashews, but processes only 10-15 percent of them, missing out on the jobs and added value that processing would create.
Promoting the continent’s cashews is the purpose of the African Cashew Alliance (ACA), of which Afokantan is a member. Created in 2006, the ACA is attracting attention throughout the global cashew industry – and within Africa, generating discussion and activity about the future of the continent’s cashew business. It does so by facilitating new business, sharing information about successful trade strategies and promoting sales, quantities and improved standards of African cashews.
In January a government-selected delegation from Benin visited Mozambique, to learn from the latter's more established industry. One of Mozambique’s leading processors, Felipe Miranda, also attended Afokantan’s opening. Also in January, Cilia de Cock of the West Africa Trade Hub/Accra, the secretariat for the Alliance, attended the annual conference of the Peanut and Tree Nut Processors Association in Arizona, U.S., a mostly American group of “roasters and salters.” It was the first time Africa had been represented at the industry event, and many participants were keen to learn about its growing processing capability.
Much of that energy can be found in Nigeria, where de Cock visited eight processing facilities in December 2006. In January, the governor of Kwara state in Western Nigeria inaugurated a new cashew factory to be run by international commodities giant Olam. Its annual production of 5,000 tonnes boosts the country’s annual output to 16,000 tonnes for export, making Nigeria one of the leading cashew-processing countries in West Africa.
The first Nigerian ACA country-level meeting is set for July 12. ACA country-level meetings were planned for February in Senegal and Guinea-Bissau, organized with partner organizations donors USAID, and SNV of the Netherlands. The meetings help identify a country’s stakeholders to discuss issues faced by the industry, such as the need to improve quality standards or find more training opportunities. Meanwhile, Ghana is planning a Cashew Week for the end of April in cooperation with the private sector and USAID.

Wednesday, March 07, 2007

Vietnam: 2007: A bumper year for cashew farmers
The amount of cashews produced in Viet Nam this year will grow by 12.5 per cent, according to the Viet Nam Cashew Association.
The organisation estimates producers will harvest 350,000 tonnes of cashew nuts in 2007, with 50,000 tonnes imported from Cambodia, to meet processor’s needs.
Pham Van Cong, deputy head of the association, said companies will not face a shortage of cashews because producers in Binh Phuoc, Dong Nai, Binh Duong and Binh Thuan provinces are yielding more of the crop than ever.
Lower export prices and larger processing costs could affect the industry negatively, said Cong.
Viet Nam’s cashews meet the World Trade Organisation’s safety regulations, but cost more than cashews from other countries, said Nguyen Thai Hoc, deputy head of the association.
Ho Van Huu, chairman of Cashew Association of Binh Phuoc Province said the price is higher because the quality of the nuts is better than in previous years. The cost of one kilogram of raw cashews is now VND10,000.
Market experts predict that Viet Nam will export 140,000 tonnes of cashews in 2007, an year-on-year increase of 10 per cent.

Tuesday, March 06, 2007

Australia: Shell-shocked macadamia growers pick up pieces

THE Northern Rivers macadamia industry has been left in a state of shock following revelations its second-largest processor is going out of business.
And the issue is proving so controversial none of the suppliers affected has been willing to speak publicly about it.
^^^ John Wilkie, chief executive of Agrimac in his Alstonville office, says his company has spare capacity.
Wollongbar-based Macadamia Industries Australia announced on Friday it was closing, leaving more than 120 farms without a processor and 20 people out of a job.
One farmer who has supplied MIA for 20 years said he was very upset.
"I can’t talk about it," he said, asking not to be named.
"I’m just trying to work out what I’m going to do."
However, it looks unlikely there will be too many nuts wasted.
John Wilkie, chief executive of Alstonville processor Agrimac, said his company had spare capacity to take on more nut in shell, and other processors probably did as well.
"The market will be there for growers’ nut in shell," he said.
"The truth of the matter is the global kernel price is so low at the moment MIA’s demise won’t really have that much impact."
However, he added MIA’s suppliers would have to settle for a lower price than they would otherwise have got.
Things would improve over the next couple of years, Mr Wilkie said, but in the meantime farmers were going to have to tough it out.
"They will need to have a reasonable financial buffer," he said. "If they don’t and they’re up to their eyeballs in debt.... The market is very, very bad at the moment."
He said it was not the first time the industry had gone through hard times. "This time the adjustment in price was so sudden, and so severe," he said.

Thursday, March 01, 2007

From: Richard S. Silverman
Joseph A. Levitt
Ryan D. Shadrick Wilson
Date: February 23, 2007
Re: Safe Food Act of 2007
Last week, legislation was introduced in both houses of Congress that would create a
Single Food Agency and dramatically expand the scope of existing food safety laws. Senator
Richard Durbin (D-IL) and Congresswoman Rosa DeLauro (D-CT) introduced companion bills
entitled the “Safe Food Act of 2007.” 1/ If enacted, this legislation would create the Food Safety
Administration and consolidate within this agency all responsibilities regarding food safety,
labeling, inspection, and enforcement currently divided among several federal agencies,
primarily responsibilities of the Food and Drug Administration (FDA) and the Food Safety and
Inspection Service (FSIS). Additionally, the bill would impose more stringent requirements
related to the registration of food establishments, process controls, performance standards,
inspections, imports, mandatory recalls, and recordkeeping, as well as provide for increased
penalties and citizen lawsuits.
Throughout the past decade, both Sen. Durbin and Rep. DeLauro have sought to
consolidate food regulatory efforts in this country, introducing similar legislation at least five
times in the past ten years. Each previous effort garnered little momentum. This year, however,
with the Democratic control of the Congress, and Sen. Durbin as Senate Majority Whip, and Rep.
DeLauro as Chair of the House Agriculture Appropriations Subcommittee, the bill is likely to
garner increased attention and visibility, as evidenced by a Congressional oversight hearing on
this very subject chaired recently by Rep. DeLauro (see summary of hearing below). This
legislative effort will be considered within the broader context of a series of highly publicized
recent outbreaks, including the E. coli outbreaks related to spinach and lettuce and the finding of
Salmonella in peanut butter. Finally, a recent report from the U.S. Government Accountability
1/ S. 654 and H.R. 1148.
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Office (GAO) designated, for the first time, federal oversight of food safety as a “high-risk” area,
citing “the need to integrate the fragmented federal food safety system.” 2/
The proposed Safe Food Act of 2007 is nearly identical to the proposed Safe Food Act of
2005. Because of the heightened attention likely to be given to this most recent incarnation, we
believe that it is important for the food industry to be aware of some of the Act’s key provisions.
This memorandum is intended to briefly summarize these provisions. This memorandum will
also summarize key points from the recent Congressional hearing on this subject.
The Single Food Agency
The Act would establish within the Executive Branch an agency called the Food Safety
Administration (FSA). The head of this branch would be the Administrator of Food Safety and
would be charged with administering and enforcing all food safety laws, overseeing the
implementation of all federal food safety inspections and enforcement efforts, and coordinating
the federal response to food-borne illness outbreaks. All provisions of existing laws under which
the Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA),
Environmental Protection Agency (EPA), and the Department of Commerce (DOC) currently
regulate food would be transferred to and administered by the FSA. The primary agencies that
would be affected would be: FDA’s Center for Food Safety and Applied Nutrition and Center
for Veterinary Medicine; USDA’s Food Safety and Inspection Service, Agricultural Marketing
Service, and Animal and Plant Health Inspection Service; DOC’s National Marine Fisheries
Service; and, certain divisions with the EPA that control and regulate pesticide residues.
Registration and Category Designations for All Food Establishments
The Act would mandate that any domestic food establishment, or foreign food
establishment engaged in processing food in the United States, register with the Administrator. 3/
Upon receipt and review of registrations, the Administrator would then provide a registration
number for each establishment and designate each establishment as a Category 1, 2, 3, 4, or 5
establishment. Pursuant to the Act, the categories are defined as follows:
• A “Category 1 food establishment” slaughters animals for food.
2/ GAO, “Federal Oversight of Food Safety: High Risk Designation Can Bring Needed
Attention to Fragmented System,” Testimony before the Subcommittee on Agriculture, Rural
Development, FDA, and Related Agencies, Committee on Appropriations, House of
Representatives, Feb. 8, 2007, GAO-07-449T. GAO has been a long-time advocate of a Single
Food Agency, dating back more than a decade.
3/ Pursuant to the Act, the term “food establishment” means “a slaughterhouse, factory
warehouse, or facility” that “processes food or a facility that holds, stores, or transports food of
food ingredients.” The term does not include entities such as farms, restaurants, or other retail
food establishments.
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• A “Category 2 food establishment” processes raw meat, poultry, or seafood products
regardless of whether the establishment also has a kill step, or animal feed and other
products deemed by the Administrator to be at high risk for contamination and the
process for which does not include a step validated to destroy contaminants.
• A “Category 3 food establishment” processes meat, poultry, seafood products, and
other products that the Administrator determines to be at high risk of contamination
and whose processes include a step validated to destroy contaminants.
• “A Category 4 food establishment” processes all other categories of food products not
covered in the above categories.
• “A Category 5 food establishment” stores, holds, or transports food products prior to
delivery for retail sale (e.g., warehouses).
As explained below, these designations would determine the type and frequency of
inspection faced by the establishment.
Suspension of Registration
The Act would permit the Administrator to suspend the registration of an establishment
for “violation of a food safety law.” No distinction is made among the types of violations that
might trigger suspension, but there is a requirement for notice and an opportunity for a hearing
within three days of the suspension. It would be considered a “prohibited act” for an
establishment to operate without a valid registration.
Preventative Process Controls
Pursuant to the Act, within a year of enactment, the Administrator would be tasked with
promulgating far-reaching regulations aimed at “ensuring that food establishments carry out their
responsibilities” related to food safety. These regulations would accomplish the following:
require all food establishments to adopt preventative process controls, set standards for sanitation,
mandate sampling and testing, and require recordkeeping and records access to monitor
Performance Standards for Contaminants
The Act also would task the Administrator with establishing and enforcing performance
standards with respect to food-borne contaminants. The Act defines “contaminant” broadly to
include “bacterium, chemical, natural or manufactured toxin, virus, parasite, prion, physical
hazard, or other human pathogen that when found on or in food can cause human illness injury or
death.” The Act also would expand the definition of the term “adulterated” to cover food
“bearing or containing a contaminant that causes illness or death among sensitive populations.”
Within six months of enactment, the Administrator would be required to identify the
contaminants and foods that contribute significantly to food-borne illness. Then, it would
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establish appropriate performance standards to protect against these contaminants. These
standards would set the level of contaminant that can safely be present in food and include zero
tolerances for fecal matter and any other contaminants already subject to zero tolerances. For the
five contaminants that contribute to the greatest number of illnesses and deaths associated with
meat, poultry, and seafood, these performance standards would be expected within three years of
enactment and would be revised at least every three years thereafter. When there is an absence
of data to support a performance standard, regulations would define performance in terms of
“best reasonably achievable performance.” All current performance standards, tolerances, action
levels, and similar standards would remain in effect pending action by the Administrator.
To monitor compliance with performance standards, the Act would mandate a sampling
program with requirements “at least as stringent” as the Hazard Analysis and Critical Control
Point (HACCP) system requirements that already apply to meat and poultry establishments.
Regulations promulgated within a year of enactment would outline the program. If, following a
finding that an establishment fails to meet a performance standard, the establishment fails to take
corrective action, the Act gives the FSA authority to increase inspection frequency, withdraw the
mark of inspection, or detain, seize, or condemn food. As noted below, the Act also gives the
FSA the authority to order a recall.
Inspection Frequency
The Act would increase the frequency of inspections for many food establishments. The
following frequencies are established for each of the five categories defined above:
• Category 1—continuous inspection
• Category 2—random inspections at least daily
• Category 3—random inspections at least monthly and ongoing verification that
processes are controlled
• Category 4—random inspections at least quarterly
• Category 5—random inspections at least annually
Based on calculated risk assessments and “to foster risk-based allocation of resources,” the Act
would allow the Administrator to determine increasing or decreasing frequencies for
subcategories of food establishments or individual establishments. The Act also outlines how the
Administrator should handle the transition to the new inspection system. Before the completion
of the transition process, the Administrator would be required to develop an official mark to be
affixed to products produced in Category 1, 2, and 3 establishments. Pursuant to certain
requirements, Category 4 and 5 establishments would be permitted to voluntarily use the official
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Recordkeeping and Records Access
The Act would expand both the recordkeeping obligations of establishments and the
federal government’s authority to inspect records. The Administrator would have broad
authority to require that a range of records related to food safety be maintained, including records
describing results of tests and sampling. In addition to those records currently required to be
provided to federal inspectors upon request, the Act would grant broad access to all records
deemed necessary to determine whether food is in compliance with all food safety laws and to
track the food in commerce, excluding any “sensitive information,” such as trade secrets.
Lack of Preemption and Federal/State Cooperation
The Act would require that the Administrator coordinate food safety efforts with the
states and maintain current agreements with the states until they are reviewed. Notably, the Act
has an explicit provision that says: “Nothing in this Act shall be construed to preempt the
enforcement of State food safety laws and standards that are at least as stringent as those under
this Act.” This provision could have a significant impact, opening the door for states to enact
more stringent food safety requirements.
The Act would require that the Administrator routinely inspect “food and food animals”
before entry to the United States. Such inspections would ensure compliance with all food safety
and labeling requirements. The Act would give the Administrator authority to deny entry, detain,
seize, or condemn product.
Within two years of its enactment, the Act would also require that the Administrator
establish a system for certifying foreign governments or foreign establishments seeking to import
food to the United States. At least every five years after a certification, the FSA would conduct
an audit of the importer to ensure continued compliance. And, the Administrator would have
authority to withdraw certification if imported food is linked to an outbreak of a human illness, if
certification requirements are not met, or if there is a refusal to allow U.S. officials to conduct
necessary audits.
Pursuant to the Act, the Administrator must promulgate regulations establishing “a
national system for tracing food and food producing animals from point of origin to retail sale.”
The Act provides little guidance as to how such a system should be developed or implemented,
but it is explicit that a tracing system should not interfere with the implementation of country of
origin labeling requirements included in the 2002 Farm Bill.
Public Health Assessment
The Act would require that the Administrator conduct a detailed public health assessment.
To do this, the Administrator would build upon the resources at the Centers for Disease Control
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and Prevention and conduct a large sampling program. Following this surveillance and sampling,
the Administrator would be tasked with ranking food categories based on hazards, identifying
appropriate approaches to minimize the hazards, and assessing the public health environment for
emerging diseases.
Enforcement Authority
If enacted, the Act would expand the authority of the federal government to take several
enforcement actions. Most significantly, the Act would grant the FSA mandatory recall
authority, and its inspectors would be permitted to order the administrative detention of food if a
food safety or misbranding concern arises during an inspection.
The Act provides for both civil penalties and criminal sanctions for violations, and it
provides explicit “whistleblower” protection for government or company employees that provide
information concerning violations.
Citizen Civil Actions
Pursuant to the Act, any person may commence a civil action against any person or
establishment that violates a regulation or “other action of the Administrator to ensure the safety
of food.” The Act would mandate that such actions be brought in federal court, and it permits
courts to consider, in addition to actual damages, the award to plaintiffs of court costs and
reasonable attorneys’ fees.
Introduction of the Safe Food Act of 2007 was preceded by a February 8 Congressional
hearing (“Food Safety: Shedding Light on a Broken System”) on the federal framework for
regulating food safety. Chaired by Rep. DeLauro of the House Agriculture Appropriations
Subcommittee, the hearing featured testimony addressing agency resources, jurisdiction,
coordination, and oversight. Several speakers expressed concern that the current system is
ineffective because it is “fragmented” and features a “patchwork” of programs administered
across several regulatory agencies. The following testimony, in particular, may be of interest:
• The U.S. Comptroller General, David M. Walker, reviewed the General
Accountability Office’s (GAO) recent decision to designate federal oversight of food
safety as a “high risk” area. In its 2007 list of high risk programs, GAO called for a
“fundamental reexamination” of the federal food safety system, including
comprehensive reform legislation and an analysis of alternative food safety systems.
• Michael Taylor, a Professor at the University of Maryland School of Medicine, and
former senior official at both FDA and FSIS, supported GAO’s call for
transformation of the food safety system. Expressing concern that “no one is in
charge” of food safety, Mr. Taylor recommended that Congress modernize the
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relevant laws and provide clear lines of authority, designating one agency and one
official as ultimately responsible for food safety. Mr. Taylor also urged Congress to
provide adequate funding for any statutory changes.
• Carole Tucker Foreman of the Consumer Federation of America criticized USDA’s
claims of continuing improvement in fighting Listeria, citing the fact that the federal
goal of reducing Listeria-related illnesses to 2.5 cases per million by 2005 had not
been met (the illness rate in 2005 was 3 cases per million, down from a baseline of 5
cases per million).
• Mark Dopp of the American Meat Institute commended USDA’s food safety program
and described a downward trend in the incidence of foodborne illnesses. In particular,
Mr. Dopp pointed out that the incidence of E. coli O157:H7 in ground beef products
is down 80% over the past five years.
• Thomas E. Stenzel of the United Fresh Produce Association expressed his view that
FDA currently has adequate statutory authority to set fresh produce standards that
protect public health. He recommended that FDA use that authority to adopt new
food safety requirements for fresh produce. Although Mr. Stenzel believed that FDA
has adequate authority to ensure produce safety, he also stated that he did not
conceptually oppose a single food safety agency.
If enacted, the Safe Food Act of 2007 would result in substantial changes to the food
safety system and would impose significant new requirements on the food industry. It would be
an enormous challenge for the government to implement, given the many new regulations,
development of risk-based categories and inspection frequencies, and establishment of a
certification program for imported food. The bill’s implementation would also require
government resource levels far above current budgets.
The recent Congressional hearing reflects the environment in which this bill will be
considered. Even though this hearing was conducted by the Appropriations Subcommittee, it is
noteworthy that most of the testimony addressed organizational, statutory, and program
effectiveness issues. Additional Congressional interest in food safety should be expected to
continue throughout this legislative session.
* * *
We will monitor the progress of the legislation and keep you apprised of significant
developments. If you should have any questions, please do not hesitate to contact us.
Producers’ vote fails to continue California pistachio commission
The California Department of Food & Agriculture (CDFA) has announced the results of the Continuation Referendum for the California Pistachio Commission (CPC) and confirmed that California pistachio producers did not achieve the required threshold vote to continue the CPC.
“The CPC has served the industry extremely well for the past 26 years and I know that many of my fellow growers share my profound disappointment that we could not resolve our differences that have ultimately resulted in this vote that terminates the CPC,” stated CPC Chairman Kevin Herman, “I have always been a strong believer in the democratic system and therefore we must accept the fact that the voice of the growers has been heard.”
A constitutional challenge was filed against the CPC in October 2005 and since that time the CPC has been embroiled in litigation while attempting to negotiate a settlement resolution with the plaintiffs in the case. CDFA oversees the CPC and had conducted a public hearing in December 2006 to allow the industry to express their opinions as to potential structural and governance changes for the CPC that was enacted by the State Legislature in 1981.
Referendum ballots were mailed to all assessed growers on January 25, 2007 and included options to restructure the CPC for the purpose of resolving the current litigation. The referendum results revealed that 61 percent of the producers voted in the referendum and of those voting, 66 percent of the producers, representing 41 percent of the voted volume, voted to continue the CPC. However, this vote fell short of the requirement that for the CPC to continue, at least 65 percent of the producers, representing a majority of the voted volume, or the reverse, of those voting, must vote in favor.The CPC Board of Directors will meet Monday, March 5 to discuss the next steps in preparation for winding down the operations of the CPC.
“This has been a very difficult time for the industry and it is my sincere hope that the growers can move beyond their disappointment and start working together for the good of the industry,” stated Karen Reinecke, CPC President.
California produced its first commercial crop in 1976. The state is the largest producer of pistachios in the U.S. and the second largest in the world. A total of 734 growers farm 112,000 bearing acres with 40,000 nonbearing acres. The 2006 harvest produced 237 million pounds; the record to date was 347 million pounds produced in 2004.
California Pistachio Commission 1318 East Shaw Avenue, Suite 420Fresno, California 93710-7912T: (559) 221-8294 F: (559) 221-8044E-mail: Web site: