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    Supermarket FRESH FOOD Business: After the Madness

    Grocers and the meat industry are taking substantive steps to maintain consumer trust in a post-BSE world.

    Most Americans continue to be virtually unfazed in the months since the first incidence of mad cow disease made headlines late last year in the United States. But after being exposed to a new round of unrelated reports concerning bird flu in Asia and here, the "trust but verify" world in which we now live promises to usher in not only new rules for conducting business, but also new opportunities for the allied industries' key trading partners.

    As expected, throughout late January and the month of February, among the majority of U.S. grocers, there was a pronounced uptick in beef features that rightfully took advantage of lower beef prices and suppliers' need to keep product moving through the domestic pipeline. Chuck and round cuts were the preferred choice for many retailers, since, according to several industry sources, they offer the most advantageous opportunities for aggressive features.

    And while the mad cow case has given some retail meat buyers enhanced negotiating leverage with beef packers in the short term, it will be incumbent on retail grocers to remain mindful -- in much the same way most did in the immediate weeks following the nation's first mad cow-related beef recall -- that information about a product is often more valuable than the product itself.

    Proactive stance best

    Within two weeks of the initial discovery of bovine spongiform encephalopathy (BSE) on American soil, Kroger stepped up as the first major U.S. retailer to call on its beef suppliers to immediately implement new USDA regulations specifically aimed at strengthening protection against the disease.

    "Kroger shares the concerns of millions of our customers that our beef supply is as safe as is possible," wrote Kroger president Don McGeorge in a letter to the company's beef suppliers. "In December the USDA announced new guidelines concerning the handling of cattle for human consumption. We expect all Kroger suppliers to immediately implement the USDA guidelines and not wait for the regulatory process to take effect."

    Among the key points of its beef guidelines, all suppliers must be able to certify to Kroger that no "downers" or those cattle exhibiting BSE-like symptoms were processed for human consumption, that all cattle tested for BSE are held until test results are received, and that spinal cords, brains, and other "specified risk material" are not used for human food.

    Kroger further announced it will not do business with suppliers that are unable or unwilling to comply with these requirements, and urged the USDA to create a mandatory animal identification system that tracks all cattle from birth to slaughter while developing more effective testing techniques and technology to detect BSE.

    At presstime, however, Jill Crowson of Bellevue, Wash. filed a class action against a local Kroger Co. subsidiary, Quality Food Centers (QFC), for failing to use its customer loyalty card database to warn her and her family about the risk of mad cow disease, despite USDA reports of an extremely low likelihood of infection. According to Crowson, QFC initially told her it didn't have any of the questionable beef, then removed the meat, which she had served to her husband, on Dec. 24 and posted signs announcing the recall three days later.

    Some industry experts believe many of the nation's major chains ran the risk of erring on the side of caution by failing to use their customer loyalty cards to identify and warn people who had purchased suspect meat, because they were afraid of jeopardizing shoppers' privacy.

    But it seems the proactive stance taken by Rochester, N.Y.-based Wegmans -- which has long bucked traditional thinking by using its "Shoppers Club" card to alert customers about recalls -- is a more prudent strategy in this case. Noting the chain has had "nothing but positive comments," Wegmans, as previously reported, routinely sends out postcards to notify customers about recalls that could involve severe allergic reactions.

    Regardless of high consumer confidence levels, however, America's beef eaters have become decidedly interested in the origins and processing of the meat on both their household and away-from-home menus. As such, the nation's food retailers -- including many small independent groups with renowned meat departments -- have been required to improve their internal educational and training efforts to assuage the fears of today's Web-savvy consumers.

    In seeking ways to encourage consumers to keep their faith in domestic beef, the North Central Cattlemen's Association, an affiliate of the South Dakota Cattlemen's Association, sought to take the message directly to the masses in January by handing out $5 coupons called "Beef Bucks" to about 300 people at Kessler's Grocery in Aberdeen, S.D. Distributed on a first-come, first-served basis, consumers were invited to use the $5 certificates to buy beef at grocery stores and restaurants anywhere in the United States.

    Ensuring traceability

    For its part, Publix is assuring consumers that it hasn't been affected by the mad cow discovery. The chain says it contacted its suppliers immediately and determined that it had no meat products affected by BSE. "Publix meat products are safe and none were included in the recent recall," a statement on the company's Web site says, further noting that the chain "remains very vigilant in its procurement and handling of all meat products" as it continues to monitor the situation.

    In view of rising concerns about animal disease containment among the consuming public, government, and the beef industry -- even before news of the single U.S. case of BSE broke -- efforts to provide the industry with a means to ensure 48-hour animal tracebacks in the event of an animal disease occurrence are gaining momentum.

    To that end a new coalition of leading beef industry data service providers has been formed in an attempt to meet the need for a cost-effective national traceback mechanism that will also ensure producer data confidentiality.

    Established as the Beef Information Exchange (BIE), the purpose of the effort, according to spokeswoman Leann Saunders, "is to create data-sharing standards for the beef industry and provide a secure technical platform to facilitate information exchange throughout the beef supply chain." The BIE and its founding member companies -- AgInfoLink, APEIS, eMerge Interactive, IMI Global, and Micro Beef Technologies -- have been working "aggressively to assist the industry by providing a realistic, industry-driven solution to the traceback issue, based on practical animal tracking, technology development, and implementation experience," Saunders says

    Because of their combined 35-year experience record and their investments in individual animal-tracking technology and methods, the technology companies understand the challenges associated with the application of production environment technology and are offering a low-cost, industry-driven, and industry-originated solution, Saunders notes.

    According to Gary C. Smith of the Center for Red Meat Safety at Colorado State University, who attended the formal launch of the BIE at the recent National Cattlemen's Beef Association convention in Phoenix, the U.S. beef industry has been moving forward, "in fits and starts, toward individual animal identification, source verification, process verification, and traceability for more than a decade. Impetus has been generated from the need to trace backward and trace forward to improve satisfaction of end users of cattle and beef, and to reward those who work hardest to assure that the end users receive what they want."

    Animal identification

    Efforts were already under way late last year to develop a U.S. Animal Identification Plan (USAIP) and to phase in that plan beginning later this year, Smith says. "The need for premise and individual-animal identification was fast-forwarded with the Dec. 23, 2003 incident of BSE and with USDA Secretary Ann Veneman's announcement that the agency 'would expedite the development of the technology architecture to implement [USAIP] as a top priority,'" he adds.

    In addition, Smith says, the International BSE Advisory Board, in its report of findings regarding the U.S. mad cow disease case, encouraged "the implementation of a national identification system that's appropriate to North American farming."

    Though many cattle producers seem finally ready to implement animal identification, Smith says many remain reluctant for any number of reasons, including fear of the unknown when it comes to purchasing the wrong kinds of tags or using a means of identification that serves the purpose but may not be the method of choice in a mandatory government program.

    "And though most have heard, and even used, the term 'traceability,' many don't really understand how that will be accomplished," particularly when it comes to how the identification device they might use will eventually convert animal identities to numbers and data in electronic systems, or how such numbers will become a part of a national traceability dataset, Smith adds.

    Commenting on the BIE specifically, Smith says the five member companies, all of which will act as data service providers while continuing to compete with each other for business, "have rightfully decided to work together to be certain that the information collected from farms and ranches is compatible with that of all the other companies and with that of a nationally mandated program." That's great news for producers that wish to be proactive, he says, "since it will allow them to forge ahead by selecting the company or system with which they feel most comfortable."

    The BIE's Saunders says the collaboration offers "true benefit down the road" for retailers in important ways. "When considering at any application with regard to 'authenticity management' regarding both branded and private label meats, these companies' systems and experience from a production verification perspective will impact grocers' ability to verify the authenticity of their labels. Regardless of whether it's a brand-labeling initiative or a more regulatory impact, like COOL, these systems will help provide the infrastructure to allow them to get the information they need."

    In terms of issues associated with the government's animal disease containment efforts -- specifically animal ID and traceback -- there are obvious benefits to the agricultural community and the national economy, Saunders says. But from a retailers' perspective, she notes, "a governmental or privately administered system that's focused only on those aspects doesn't look at the value-added opportunities for improving profitability, efficiencies, and product performance."

    The nation's fifth-largest beef producer -- Green Bay, Wis.-based Smithfield Beef Group, Inc. (SBG) -- comprising Smithfield Foods, Packerland Holdings, and Moyer Packing, and doing business as four divisions: Packerland Packing Co. in Green Bay; Packerland Packing Co. in Plainwell, Mich; Moyer Packing Co. in Souderton, Pa.; and Sun Land Beef Co. in Tolleson, Ariz.-- is adopting policies that will encompass what Rod Bowling, s.v.p. for food safety, quality, and innovation, says are unprecedented corporate safety assurances.

    Pointing to SBG's strong commitments to safety, humane animal handling, and environmental stewardship, Bowling says the company's commitment begins with a roster of highly dedicated, extensively trained employees "who work extremely hard to produce the highest-quality products at the fairest price possible. The rest of the industry has just started to institute production and business methods that have been common practice in our plants for some time."

    Noting that it employs some of the "toughest standards in the industry when it comes to accepting and processing cattle and producing meat to ensure the production of the highest-quality, safest meat possible," Bowling says SBG's standards included a "downer" cattle ban long before the government ordered it. "This has been the group's policy for several years, and our buyers have been instructed not to purchase such cattle. If one arrives at any of the plants, it's euthanized outside the facility and taken to a rendering plant. It never even enters the facility."

    The use of advanced meat recovery machines was also eliminated at all plants about a year ago. The decision to hand-trim each carcass, Bowling says, was made because the company's executives frowned on both the quality and impersonal nature of the machine-produced meat. "We also stopped using wizard knives in processing carcasses approximately two months ago," he says, noting that the hand-held automatic cutting devices produced what the group thought was an inferior cut of meat.

    SBG also has a strict policy of spinal cord auditing, Bowling says, adding that if the spinal cord can't be removed from a carcass in a way that meets its guidelines, the animal is removed from the processing line and appropriate measures are taken.

    Noting that SBG is the first beef processor to have its ground product receive the USDA's verified-process approval, Bowling says, "Our ground beef contains only 100 percent fresh, hand-trimmed beef produced in our own plants." As the nation's largest supplier of Fed-Holstein beef, the company is growing on a national level, with current expansion projects in the works at both its Green Bay and Souderton locations, says Bowling, adding that SBG also runs a case-ready production plant in Philadelphia.

    As well as focusing on quality processing, "we're actively developing a system with the USDA that promotes quality and safety through an emphasis on standardized production practices. Creating traceability and a life-cycle history of animals is yet another example of our emphasis on measures that offer the highest-quality product on the market," Bowling says.

    In the words of one retailer, "We would all be wise to expect the unexpected in the days and months ahead." But, by the same token, BIE's Saunders says: "If there's been one positive that's come out of what happened on Dec. 23, it's been the industry's heightened understanding that we need to work together to protect our nation's food system. Oftentimes we've been against each other on lot of key issues, and I think we need to continue working toward becoming more unified."

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