Japanese loss, US gain

Japan's tragedy could benefit US processors

The recent tragedy in Japan will affect the global food supply-especially seafood-but it could provide an opportunity for American food suppliers and retailers to increase their market share, according to Phil Lempert, food industry expert and editor of SupermarketGuru.com and The Lempert Report.

While some produce farms and dairies near the damaged nuclear reactor site in Japan have been adversely affected by radiation fallout, other unaffected areas in the region have been branded as potentially contaminated as well, primarily due to a lack of understanding by consumers and media rumors.

For example, Far East processors and fisheries that are unaffected by the Japanese power plant radiation leakage are now having to explain to shareholders and customers that their food is safe. For example, China Marine Food Group, manufacturer of seafood-based snack foods, responded to shareholder concerns over possible radiation contamination of its seafood supplies.

“Our supplies of raw fish and seafood come from the Taiwan Strait, which is located between Taiwan and Fujian Province, China and thus pose no threat of contamination,” says Pengfei Liu, China Marine CEO and chairman. “In addition, this area maintains a separate ocean current from those of the East Japan Sea. According to the nuclear radiation-monitoring station in Shanghai, large-scale and long-distance radiation spread is unlikely as the primary containment vessel and fuel rods in the nuclear plant in Japan were not damaged,” Liu adds.

“This [nuclear tragedy] might be the event that triggers the reverse of our dependence on Asia for cheap foods,” says Lempert. “Americans might complain about the increase in food prices, but will pay for the safety of their food supply.”

Over the years, Lempert says, food from China has been a concern to retailers and consumers alike (see “The next melamine scandal?” below), and we can expect food from Japan may also join the list. However, there’s no doubt the seafood supply will be directly affected.

“The length and degree of seafood supply disruptions from Japan and China to the US will clearly take time to determine; however, Asian seafood exports won’t likely be available in the US for a significant period,” says Lempert.

Seafood retail prices will increase until Asian supplies come on stream again, and then a price war could develop, says Lempert. Time will tell which US fisheries could step up production without over-fishing and damaging their resources. Despite the issues concerning the Gulf of Mexico oil drilling disaster and questions about the feed used on fish farms, Lempert expects US seafood processors to gain ground on their Far East competitors-at least in the near future.

Expect to see more “produced or made in America” signage as supermarkets start to promote foods from the US-like Gulf shrimp instead of shrimp from China-especially as the prices of the Asian imports rise, says Lempert.

According to Canada’s Agri-Food Trade Service, China alone, the world’s top producer and consumer of fish and seafood products, exported more than $11.5 billion in fish and seafood products in 2009-20 percent of it to the US. By contrast, the US exported to China less than $500 million worth of fish and seafood products in 2009.

For more information, see “The Consumer Impact of the Earthquake in Japan,” The Supermarket Guru and “Seafood Aftershock to Impact US,” The Supermarket Guru.

Surging wholesale food prices widen and create a negative retail price margin. Source: The Food Institute analysis of Bureau of Labor Statistics data.

Producer prices spike

February 2011 marked the largest one-month increase in 37 years for wholesale food prices, climbing by 3.9 percent, according to The Food Institute. This number was only exceeded in November 1974 when spiraling oil prices resulted in sharp food price increases totaling 4.2 percent.

“Food retailers in the US have been very adept at holding price increases at a minimum for the past 18 months, but the February surge will make the task more difficult in future months,” says Brian Todd, president and CEO of the Food Institute.

This latest increase in the Producer Price Index for finished consumer foods is driven by a 49 percent jump in fresh vegetable prices due to freezes and other crop issues in many farming areas. Price increases of 4 percent or more during the month for beef and pork also added to the surge in the overall index, says Todd.

Of the 17 categories The Food Institute tracks on a regular basis, 13 posted increases during February, led by fresh vegetables and followed by a nearly 10 percent jump in shortening and cooking oil, a 7.6 percent spike in egg prices, a 4.1 percent gain in dairy prices and a 3.2 percent jump in coffee prices.

For more information, visit The Food Institute website.

PepsiCo’s “green” bottle is now made from bio-based raw materials and, in the future, may be made from agricultural byproducts. Source: PR Newswire.

PepsiCo develops 100 percent plant-based bottle

PepsiCo has developed the world’s first PET plastic bottle made entirely from plant-based, fully renewable resources, enabling the company to manufacture a beverage container with a significantly reduced carbon footprint.

Pepsi’s “green” bottle is 100 percent recyclable and is made from bio-based raw materials, including switch grass, pine bark and corn husks. In the future, the company expects to broaden the renewable sources used to create the green bottle to include orange peels, potato peels, oat hulls and other agricultural byproducts from its food business.

“This breakthrough innovation is a transformational development for PepsiCo and the beverage industry, and a direct result of our commitment to research and development,” says PepsiCo chairman and CEO Indra Nooyi. “PepsiCo is in a unique position, as one of the world’s largest food and beverage businesses, to ultimately source agricultural byproducts from our foods business to manufacture a more environmentally preferable bottle for our beverages business.”

Automation News

PMMI strengthens relationship with OMAC

PMMI will provide staff support to further the mission of OMAC, the Organization for Machine Automation and Control. PMMI’s supplier membership provides processing and packaging solutions that use OMAC Packaging Workshop Guidelines to create compatible equipment for modern production operations.

PMMI’s support will enable OMAC’s volunteer leadership to expand its membership domestically and internationally, plus engage customer and supplier teams in further developing OMAC standards, including PackML (packaging machinery language). The goal is to extend further production standards for packaging equipment.

According to Rob Aleska, OMAC board member and Procter & Gamble controls manager, “On behalf of the OMAC Board of Directors, I wish to express our appreciation for PMMI’s longstanding support, which has been essential to OMAC Packaging Workgroup’s concept of ‘win-win-win,’ meaning initiatives that benefit packaging machinery users, OEMs and automation technology providers, all of whom are PMMI constituents.”

Although they can often work together to cool a specific application, the modular cells in plastic cooling towers can be split so they handle more than one function. For example, a six-pack can be configured so four cells handle process cooling while two units handle HVAC support. They can also be shut off when not needed. Source: Delta Cooling Towers.

Keep the process cool

Sometimes it’s not practical to recycle all the heat a process generates, or when a plant’s environment is too warm. In these situations, external cooling towers, which take advantage of the evaporative cooling effect of water, can drop process or environmental temperatures to desired levels. Cooling towers are often located somewhere outside the plant-sometimes on the roof. Able to operate open-loop or closed-loop, these systems have usually been constructed of galvanized steel, often a weak link where maintenance is concerned.

“Where the traditional, galvanized metal-clad cooling towers have done a good job at cooling process water, they have also been highly prone to corrosion and, therefore, frequent cleaning, recoating and replacement,” says John Flaherty, president of Delta Cooling Towers. In addition, the use of water treatment chemicals to maintain water chemistry can also cause faster deteriorating of the metal shell, says Flaherty.

Using plastic (high-density polyethylene or HDPE) as an alternative to galvanized steel might cost a little more than galvanized steel, but since HDPE isn’t affected by chemicals that cause oxidation, its lifetime will be much longer, and maintenance is less, says Flaherty. Plastic will survive more aggressive chemicals when they’re used to clean the towers. In addition, plastic can easily be molded so sharp corners usually associated with metal towers are gone. Flaherty says plastic towers outlive their galvanized counterparts such that his company places a 15-year warranty on them.

Like their metal counterparts, fans in these systems are usually run by variable-speed motors whose variable-frequency drives are operated through a control system to provide the right speed to match cooling requirements with wet-bulb temperatures of the outside environment. This allows, for example, returning 100°F process water cooled to 70° as it reenters the process. According to Flaherty, it wouldn’t be unreasonable to expect that a three-cell cooling stack using six 5hp premium-efficiency motors running 8,760 hours annually would require about half the power that competitive metal towers using four 15hp standard motors would need for the same cooling ability.

ASHRAE (American Society of Heating, Refrigeration and Air-Conditioning Engineers) 90.1 standards established minimum efficiency standards for cooling towers with either axial or centrifugal fans: greater than 38.2 gpm/hp for axial fan cooling towers and 20.0 gpm/hp for centrifugal models at 95°F entering water, 85°F leaving water at 75°F wet-bulb temperature. If cooling towers meet these specifications, buildings using them can qualify for LEED credits.

For normal building cooling, open-loop systems are used where the cooling water is exposed to the outdoor air. For process cooling in food plants, closed-loop architecture can be used, says Flaherty. This isolates the process cooling water from the cooling tower water. “For a closed-loop system, we incorporate the cooling tower with a shell-and-tube or plate-and-frame heat exchanger. Thus, the cold side of the heat exchange is open to the tower, and the hot side of the heat exchanger is closed back to the process,” he adds.

While heat exchangers can be prone to clogging, the nature of the plastic cooling towers allows cleaner water to be run through the exchangers, decreasing clogging. Counter-flow cooling architecture provides less of an environmental impact than cross-flow systems, which means the water stays inside the cooling tower, even during high winds, and the water is not exposed to sunlight, which could encourage biological growth.

When a plastic water cooling tower finally meets the end of its life cycle, it can simply be disposed as any recyclable plastic, a benefit to the environment, says Flaherty.

For more information, contact Delta Cooling Towers,
41 Pine St., Rockaway, NJ 07866
,  sales@deltacooling.com, 800-289-3358.

Food Safety News

The next melamine scandal?

Remember the Chinese melamine scandal? Well, another scandal has been brewing and this time it’s in Chinese pork. According to a report from the China Daily, 19 pigs among 689 waiting to be slaughtered and processed at a facility in China’s Henan province tested positive for clenbuterol. The substance can speed up the growth of muscles and burn fat, resulting in leaner pork, but is hazardous to humans.

Clenbuterol is banned as an additive in pig feed in China because humans can “suffer from nausea, headaches, limb tremors and even cancer after eating food containing the additive,” says the report. The additive was found in the urine of the 19 pigs tested by the local Jiyuan city government. The local authorities are investigating more than 1,300 hog farms and 130 feed suppliers, according to a statement from the Jiyuan government.

According to the report, none of the tainted meat has entered the Chinese market, but some consumers are not buying pork products because their confidence has been shaken. Any meat products suspected of being contaminated with the additive have been removed from retail shelves. All feedstuff and meat confirmed to contain the additive have been destroyed. In China, clenbuterol is known as “lean meat power.”

In Nanjing City, capital of Jiangsu province, the local government suspended the operation of a slaughter house after pigs there were believed to have been brought in from Henan tested positive for clenbuterol, says the China Daily report.

Gary Nowacki, TraceGains CEO.

Are you ready for Title III, FSMA 301?

Section 301 of the new Food Safety Modernization Act (FSMA) affects food and beverage processors in the US that either import and resell products from foreign countries (including Canada and Mexico) or import ingredients used in a product manufactured in the US. Section 301 includes verification activities such as on-site inspections and monitoring lot-by-lot shipment records for compliance, risk-based foreign supplier verification activities to verify that imported food is safe and record-keeping (records must be maintained for two years or more and be readily available to FDA upon request).

It is the record-keeping part that can be a fly in the ointment for several food processors that still may keep records with Excel spreadsheets, clipboards, bills-of-lading, paper-based supplier COAs (certificates of analysis), lab reports, etc., says Gary Nowacki, TraceGains CEO. TraceGains software takes aim at this hodge-podge and focuses on creating all-electronic records of documents, making them searchable and able to be recalled at a moment’s notice. The software is available as SaaS, otherwise known as software as a service. It resides in “the cloud” and, therefore, eliminates the need for installations on-site.

FE asked Nowacki some key questions in an exclusive interview.

FE: In many cases small- and medium-sized food processors need to move away from paper-based record-keeping, but can’t afford capital expenditures for software applications to move them to the next stage. What solutions are available?

Nowacki: We built the whole system to be affordable-software that you don’t purchase. Therefore, you don’t incur expensive, up-front licensing fees. It’s purely subscription; it’s Web-based, and the monthly fee is a fraction of the cost of a full-time employee.

Subscribers pay as they go and can cancel at any time since there are no long-term commitments. There are no related costs such as involvement from the IT department, there is no specialized programming, and it doesn’t need to be integrated or interfaced to a processor’s ERP or SCM systems.

FE: What about the processor’s suppliers that need to connect with the software? Do they have to pay for its use?

Nowacki: No, there is no fee for a processor’s suppliers. That’s a cost we purposely eliminated to get rid of any barriers to suppliers participating.

FE: With all the confusion over the myriad collection of food safety standards, how do you correlate one with another?

Nowacki: First of all, we work with GFSI (BRC, SQF, GAP, etc.) and all the other standards as well. It’s obviously up to each community and each supply chain to pick the standards they want to deploy at each step along the way. We automate many of the key elements related to these standards and compliances.

Here’s a key benefit of automating. Today, most food companies are keeping track of their suppliers to all of these audit standards on a big, manual spreadsheet.

On the left-hand side of the spreadsheet, they have row-after-row of all their suppliers, and it could be hundreds or even thousands of suppliers. Across the top, they have column-after-column with the suppliers’ status against all of the different audits and compliances-e.g., a column for BRC, SQF, ISO, HACCP. Are they current with their HACCP? Are they certified for Kosher? Are they allergen-free? Does the supplier have current policies and certifications in place meeting all the processor’s minimum requirements for insurance, mutual non-disclosure agreements, performance guarantees, etc.?

Our system automates the whole process of tracking suppliers and flags instantly any suppliers that are out of compliance at any point in time. The current way most processors handle this is to open the spreadsheet and scan, for example, who’s getting close to a new HACCP plan. This process is a nightmare. No technology is going to wave a wand and harmonize audit standards, but we can automate the technology to keep all suppliers in compliance to the required standards.

FE: If a US processor already has an on-site lab and is using a LIMS (laboratory information management system), can you help with the integration of LIMS data, ERP data and COAs from suppliers?

Nowacki: We have standardized connections into LIMS. But more important, we treat QA lab results as critical data in the profiling of a supplier’s risk. We take the supplier’s COA results, append the lab test results and compare the two, and then profile the supplier’s risk based on the consistency of what the supplier listed on the COA vs. the processor’s lab results.

Not all of these issues relate to safety. There are a lot of quality issues where, for example, the supplier may be just out of compliance with the processor’s specifications, which can produce headaches in the manufacturing process or in the quality of the finished goods.

FE: This is a hypothetical question. If the FDA had a reporting system, could your software system tie into it?

Nowacki: Yes, we can, but your question is the right question at the wrong time. Currently there is no guidance on this. I would ask this question two years from now when the FDA has issued specific guidance on this subject.

Of course, there is already guidance for the keeping and availability of records. You already discussed that in your introduction: Records must be kept for at least two years and be readily accessible. The software can easily support these requirements.

FE: Can all the data you acquire in your system connect with ERP systems, and can you standardize the reporting of data?

Nowacki: We take all the COAs in whatever their format (electronic, paper, PDF, spreadsheets, fax, etc.) and convert this data into actionable intelligence. COAs contain different data according to the ingredient; e.g., flour will obviously have different parameters than apple juice. This actionable data can then be exported to other systems, such as ERP, as needed or desired.

FE: With the speed of the Internet, shouldn’t it be possible to approve or disapprove a shipment based on the COA that arrives at the processor before the ingredient is shipped from the supplier’s site?

Nowacki: Yes, we’re already seeing this trend with our customers because they realize they don’t have to wait for a shipment to arrive and then review the COA (and perhaps test the shipment), only to find it doesn’t meet specs and has to be sent back. I find that processors would like to see the COA before the product is shipped, have the system automatically notify them of any problem, and if there is a problem, pick up the phone and talk to the supplier. The processor doesn’t want to have to reject a product at the receiving dock if it’s out of spec. And suppliers don’t want to deal with penalties, added shipping and reverse logistics costs.

In the old world, COAs arrived with the product and were thrown into the file cabinet. Most processors would randomly spot check only a very small percentage of COAs. When they’re digitized, however, 100 percent of them are automatically checked for conformance and compliance, in many cases even before the product is shipped.

For more information, contact Gary Nowacki or visit TraceGains website.

Federal government needs to reduce fragmentation in food safety oversight

For more than a decade, the Government Accounting Office (GAO) has reported on the fragmentation of federal food safety oversight and how it results in inconsistent supervision, ineffective coordination and inefficient use of resources. In 2007, GAO added this issue to its high-risk list.

In March 2009, President Obama established the Food Safety Working Group (FSWG) to coordinate federal efforts and establish food safety goals to make food safer. Section 21 of Public Law 111-139 mandated that GAO identify programs, agencies, offices and initiatives with duplicated goals and activities. The review examines:

  1. Steps, if any, that the FSWG has taken to increase collaboration among federal food safety agencies.
  2. Options GAO and others have identified to reduce fragmentation, overlap and potential duplication in food safety oversight.

Creation of the FSWG elevated food safety to a national priority, demonstrated strong commitment and top leadership support and was designed to foster interagency collaboration on this cross-cutting issue. Although much has been accomplished, there is much more to do, and GAO has issued a recommendation.

To improve collaboration among federal agencies on food safety oversight and provide an integrated perspective on this crosscutting issue, the Director of the Office of Management and Budget, in consultation with the federal agencies that have food safety responsibilities, should develop a government-wide performance plan for food safety. The performance plan should include results-oriented goals and performance measures for food safety oversight throughout the federal government, as well as a discussion about strategies and resources. It should be updated on an annual basis.

A complete version of the report, Federal Food Safety Oversight: Food Safety Working Group Is a Positive First Step but Government-wide Planning is Needed to Address Fragmentation, can be downloaded from the GAO website. An executive summary is also available. The full report has an appendix showing all 15 federal government agencies that have responsibility for food safety.