Simply COOL

AMY SUNG

Country-of-origin labeling regulations for produce have been in effect for a little over a year and a half now, and the U.S. Department of Agriculture has completed approximately 8,300 store audits to gauge compliance with the new laws. And while these reviewers are regularly discovering compliance issues, they're nothing that can't be overcome with some awareness and discipline, industry experts agreed.

The USDA Agricultural Marketing Service has been busy, to say the least. In January, the Produce Marketing Association and the USDA jointly hosted a webinar highlighting common non-compliance issues that had been discovered. At that time, 3,871 reviews had been conducted. Vegetables held a higher percentage of non-compliance violations than fruits, and local produce was frequently not in compliance with COOL regulations. Also at that time, 76% of the stores that were not compliant with COOL simply did not have any information about the country of origin at all. The USDA has not yet compiled new statistics accounting for the additional 4,429 stores that have been audited this year, but the same trends in non-compliance exist, industry experts said.

“For all commodities, the No. 1 non-compliance is no country-of-origin label on a covered commodity, so that's consistent across everything,” said Craig Morris, deputy administrator of USDA AMS' Livestock and Seed program. “It's something that needed a label and just didn't have a label on it. So, without question, no matter what the commodity, that is the No. 1 non-compliance we find.”

Fieldwork done by the USDA's Office of the Inspector General has also found an absence of labeling to be the primary non-compliance issue, Morris said. Other issues at retail include non-specific labeling — which was also a common problem with local produce — and conflicting or inaccurate origin declarations. Inaccurate origin declarations, and abbreviations and variant spellings that fail to unmistakably indicate country of origin are also common non-compliance problems.

But, most of these issues can be resolved by educating retailers on the specifics of the regulations, and encouraging more diligence with local produce.

“From a shopper's point of view, they may know that the local produce on display came from the farmer a few miles down the road or the next county over; however, the store reviewer may not have that knowledge and he or she is looking to see if the produce has origin information at point of sale,” explained Kathy Means, vice president of government relations for PMA.

“While most store reviewers are assigned from state departments of agriculture, many have other job responsibilities, so they may not have that close connection with local growers.”

Mike O'Brien, vice president of produce for Schnuck Markets, St. Louis, said that it is very clear how the regulations read and the problems with local produce being in non-compliance are mostly because retailers are unaware of or don't understand the regulations.

“You have to either have ‘Product of USA’ or the country. Or it is allowable to have the state,” O'Brien told SN.

“If it's from Missouri, then you can tout that and just put ‘Product of Missouri.’ But just calling it ‘locally grown’ won't work, it's not part of the regulation.”

Means echoed the fact that using the word “local” is insufficient and that the labeling needs to be more specific.

“The easy answer for COOL and locally grown produce programs is for retailers to encourage their local farmers whom they source product from to include origin information on their bills of lading or invoices,” Means suggested.

“This will make the records verification process run more smoothly should documentation be requested for any produce provided by local farmers. Keep in mind the items selected for review at store level are chosen by the reviewer, so depending on the size of a retailer's locally grown program, it very well could be that those items end up on a recordkeeping review.”

O'Brien of Schnucks agreed, adding that the best practices program the retailer has put together through PMA and Western Growers Association has worked very well so far to ensure consistency and ease of implementation.

“If we all talk and share and have a best practice, then we can make this as easy as we can,” he said. “Everybody will do it the same way so that all retailers aren't putting different requests on their suppliers.” O'Brien added that sending in a bill of lading with the country of origin is an efficient way to get records to auditors, if asked to.

“It actually has helped and made it a lot easier for me to have 100% audits. We're all trying to help each other.”

COOL CONFLICTS

Retailers also must ensure that their store-level execution of country-of-origin signage is accurate, especially when they might be receiving local fruits and vegetables from multiple sources — and possibly nearby states, depending on how the retailer defines local, Means told SN.

“Lee Mannering of our staff heard this from the state-level cooperators at the USDA training session in Atlanta in February: In general, the biggest problem is conflicting COO information between the sign and the sticker,” Means said.

“Granted, it is unlikely any ‘local’ product will carry a PLU sticker, but it still underscores the reality of being attentive to COOL when product turns over on the merchandising racks.”

Produce does present some unique challenges. In many other commodities, conflicting COOL information is responsible for less than 15% of the violations. This problem is more prevalent in produce departments mainly because of the way that product is sold, Morris explained.

“It's sold in a bulk bin, and produce tends to shift origin more commonly than any other commodity,” Morris said.

“So you have a bin, for example, that might say a Chilean asparagus, then you actually look on a rubberband and it says ‘Product of Mexico.’ What happened was [the retailer] opened up a new box and that product was actually uniquely labeled, but they just never changed the dry erase board on that. Or if the product wasn't uniquely labeled, when we went back to the back, the boxes had an inventory that was actually different than what was out front.”

O'Brien of Schnucks said that because of challenges like these, he believes that the key to staying on top of COOL compliance is discipline and making it an everyday practice.

“We're working as hard as we can with the industry to make sure that everything that comes in that possibly can has a PLU on it, but not everything does so you have to make sure you sign it,” he said, adding that if it can get the supplier to label the produce at the source, it's much easier.

But, O'Brien noted that his staff is still working to address some challenges.

“We've done a great job of signing it on the regular shelf, but let's say we put an auxiliary display, make sure you sign that too. So, really, it's just a discipline thing and it's just an everyday thing.”

PMA encourages its members to use existing industry labeling vehicles such as price-look-up stickers, bands, twist ties, clamshells, bags or other labels on individual packages to convey country of origin wherever such vehicles are being used.

“We also encourage providing country of origin on master shipping cartons, as well as increased supplier-retailer partnerships to establish more opportunities to individually label produce with country of origin,” Means said.

CORPORATE OVERSIGHT

In addition to the completion of 8,300 audits as of this month, the USDA AMS will be pushing out another 3,000 reviews by federal employees across the country to compare state-to-state variability. The agency will also analyze whether chains operate differently than single-store retailers. If that is the case, the USDA can then think about allocating resources differently to try to do more outreach and education for small independents, Morris said.

“We don't have that information yet; that's just a hypothesis that may prove to be true,” he said.

“Certainly one of our experiences is that when we have dealt with individual outlets of major chains, the major chains' corporate [office] has not only been made aware of it, but often involved in better understanding what the actual violation was at that particular outlet. So, that's encouraging for us, that there is a corporation taking those things seriously and trying to make amends.”

Schnucks approaches COOL from a corporate level and has a protocol set up for the company.

“We had a great protocol already written for it, and as long as our produce managers followed that, we've done very well on audits,” O'Brien said.

O'Brien has been following the COOL program since it was in the Farm Bill back in 2002, and was sure to have his departments in compliance when the regulations went into effect in 2008, but said that the reality of actually being audited was an eye-opener.

“What we do is whenever we have an audit, we look at the audits and review them, then share that with the entire chain as far as what we missed so that we can improve on the next audit. So we've learned and we've gotten better over time. We've had 100% audits — it's not an impossibility at all. And they're very aggressive with their audits. Sometimes we have two a day, or a couple a week.”

The USDA has also invested in a computer system that will enable state reviewers to enter the information in online, Morris said, which will provide the agency with the ability to process the data in real time.

“It's a very manual process for us right now in that we're actually getting in literally emails that we have to take a lot of labor to process,” Morris told SN. “And that's why things like the data that we're talking of today is [sourced from] 3,800 reviews and not 8,300 reviews.”

Once the system is up and running, questions like, “Do retail chains operate differently than mom-and-pops when it comes to COOL?” are going to be very easy to analyze, Morris said.

The system will also have dashboards, which will give real-time information as far as variances by state. The USDA will then be able to take that data and find out things such as whether it should be doing a better job of training state reviewers, or if the audits are consistent on a nationwide basis.

Morris added that the agency is very open to feedback from retailers on tools it can develop to assist in COOL compliance.

“We also depend on venues such as SN to communicate as best as we can. The known universe of those covered is a known universe, so chances are, at the very high volume of reviews that we're doing per a year, every outlet will get an audit within a pretty short period of time,” Morris said.

“We're going to see them one way or another, so it would clearly be in the consumers' best interest and frankly, we'd want it to be this way as well, but as soon as they can be aware of the program requirements, the better for all involved and that shouldn't necessarily happen when a reviewer shows up at the doorstep.”