BETTER NEWS

LYNNE MILLER

It's been a tough six months for spinach growers and handlers.

While there are signs the industry is recovering from last fall's E. coli outbreak, sales of spinach and, to a lesser extent, packaged salads have remained depressed. Sales of packaged spinach had dropped nearly 27% during the four weeks ending Feb. 24, compared with the same period in 2006, according to the Perishables Group, Chicago. Packaged salad sales were down nearly 5%. (The data reflect sales at U.S. chains with more than $2 million in annual sales, excluding Wal-Mart Stores, club stores, small independents, Whole Foods Market and Wild Oats Markets.)

Industry observers believe the decline can be attributed to many factors, not just an unwillingness on the part of consumers to buy spinach.

“Changes in assortment or promotion could be reflected here,” said Steve Lutz, executive vice president at the Perishables Group, who noted that cuts in production output also could be keeping sales down.

When the Food and Drug Administration announced it was safe to consume spinach, many retailers and restaurants didn't get the message. They steered clear of the leafy green. Weeks, in some cases months, passed before they started buying it again. Consumers who wanted fresh spinach couldn't find it. In some cases, retailers who wanted to bring spinach back were unable to source it.

At the same time, there were — and still are — leery shoppers who choose not to buy the vegetable.

“Once you lose the trust of the consumer, it's hard to get it back,” said Jack Armstrong, produce buyer for Chandler, Ariz.-based Bashas'. “They're not that comfortable with it.”

Compared with early September, before the outbreak, spinach sales are down 15% to 20%, Armstrong said, noting that some packaged products containing spinach have been discontinued by vendors. The slump seems most pronounced in the packaged spinach and salad categories. Bunched spinach sales are back to normal, he said, noting that people who buy spinach in bunches usually cook it. Many of the victims of the E. coli outbreak got sick after eating uncooked spinach.

“Spinach used to be the No. 1 or 2 bagged item,” he said. “It's still up there. It's no longer No. 1 or 2.”

The slump “hasn't hurt produce overall, just salads and bagged spinach,” Armstrong said. Shoppers “have switched and they're eating some other fruit or vegetable. They've taken their dollar to a different commodity in the produce department,” he continued. “Maybe they're buying something they feel more confident in, just regular romaine or red leafy” lettuce.

The Western Growers Association estimates that the industry losses exceed $100 million, and the figure doesn't reflect the full impact of the E. coli outbreak on Northern California's agriculture.

“Folks in the state of California who had nothing to do with the outbreak, who grow spinach at other times of the year, were also affected,” said Paul Simonds, communications manager for the WGA, Irvine, Calif. “FDA lifting the ban on spinach didn't resonate with consumers, or retailers or restaurants. In January, there was still talk about retailers and restaurants not selling spinach. We heard many stories of people asking their local grocers for spinach.”

In some markets, retail sales have rebounded. Officials at Lakeland, Fla.-based Publix Super Markets and Mollie Stone's Markets, based in Mill Valley, Calif., said business is back to normal.

Associates at Publix responded quickly when the FDA issued its initial warning about the contaminated vegetable. The retailer, which operates nearly 900 markets in five states in the Southeast, put up signs in the stores, posted information on the company's website and kept the consumer relations department up to date on the recall, said Maria Brous, spokeswoman for Publix.

“We had knowledgeable staff able to answer questions,” she said. “Our customers trust us to respond to these issues. There hasn't been a lingering effect for us with respect to that particular recall.”

Likewise, shoppers at Mollie Stone's stores in Northern California don't seem concerned about E. coli, not if spinach and salad sales are any indication. In fact, David Bennett, co-owner of the chain of eight stores, has heard more comments about the recent frost than the spinach crisis. He credits fresh produce distributor Natural Selection Foods, parent company of Earthbound Farm, for handling the crisis responsibly and minimizing the impact. Natural Selection's bagged products, sold under a variety of brands, were linked to the outbreak that caused three deaths and about 200 illnesses around the country.

“They were up-front,” Bennett said. “I don't think during the whole process Earthbound Farm did anything to make Mollie Stone's consumers not trust the brand. We don't see any long-term ramifications.”

Natural Selection overhauled its food safety program in the weeks following the E. coli episode. The San Juan Bautista, Calif.-based company consulted leading experts in food safety. Among the changes put into place, officials ramped up testing of raw and finished product. Under the stepped-up program, handlers pull 60 samples from every four-pallet lot. On finished goods, they're taking 60 samples off every processing line every two hours. The sampling procedure is in accordance with specifications from the International Commission on Microbial Specifications for Food.

The company does enough sampling to justify having a lab on the premises to expedite testing, said Samantha Cabaluna, spokeswoman for Natural Selection.

“Obviously, there are increased costs,” she said, adding that officials have not determined exactly how expensive the program is to operate. “We have not raised our prices as a result of it.”

Organic produce sales are back to normal, although spinach sales remain down for Earthbound Farm, a pioneer in the packaged organic salads industry and one of the best-known brands in the fresh produce department.

For its part, the company has worked hard to get the food safety message out to consumers as well as retail customers. Communication will continue to be critical to recovery, Cabaluna said.

“As a consumer, I need to know what's going on,” she said. “Consumers care about their food and want to know what's being done. Communication needs to happen.”

There are signs suggesting recovery is under way. During the first quarter of 2007, close to 28 million pounds of bunched spinach had been shipped to market from domestic producers, a 6% increase over the same period last year, according to the U.S. Department of Agriculture's Agricultural Marketing Service. February shipments added up to more than 11 million pounds, a 12% jump compared with the 9.88 million pounds shipped in February 2006.

“I think it's encouraging,” said Ray Clark, executive director of the Leafy Greens Council, a trade group representing growers, shippers, terminal market operators, brokers and suppliers. “We've got continued interest in spinach. People buy and serve spinach because it has a lot of nutritional value and it's good.”

Safe Deposit

As a new growing season begins, fruit and vegetable growers and processors are expressing a renewed commitment to the safety and traceability of the U.S. produce supply. During the past month, several California growers have either pledged money to help fund food safety research or have announced developments at their own companies that will further the industry's cause. Below are a few of the most recent developments:

New Rules

Industry leaders agree: California's marketing agreement, designed to raise the bar on the safety of spinach and other leafy greens, is only the beginning.

More than 70 handlers, or buyers, representing more than 99% of the leafy greens grown in the state, have signed the agreement, which took effect April 1. By signing on, handlers agree to buy greens that are grown in accordance with the agreement's standards. Growers who want to sell their greens are required to follow the “good agricultural practices” outlined in the agreement. The GAPs cover water and soil amendment testing and call for establishing buffer zones around growing fields.

“The handlers have embraced this and are participating almost fully,” said Steve Lyle, spokesman for the California Department of Food and Agriculture, Sacramento.

The CDFA, with the U.S. Department of Agriculture, will inspect processing plants and farms to ensure the standards are being followed. How frequently inspections will be conducted remains to be seen. A state advisory board will determine the frequency, Lyle said, noting that the CDFA has 20 inspectors, while USDA has 10 inspectors available to conduct audits.

“The marketing agreement is just the first step to attacking food safety,” said Paul Simonds, communications manager for Western Growers Association, Irvine, Calif.

WGA worked collaboratively with the Produce Marketing Association, the California Farm Bureau Federation, the Grower-Shipper Association of Central California, the United Fresh Produce Association and other groups to develop the GAPs, which set specific recommendations and metrics for optimal growing protocols. WGA consulted outside scientists and met with growers, processors, academics and regulators, among others, to gather input.

Simonds acknowledged that the process was challenging.

“I can't sit here and tell you all the growers are thrilled with this,” he said. “I can't say growers are upset about this, either. The metrics are not so onerous that they can't be applied. We want to be able to promote the safest, freshest produce in the world, and this vehicle allows us to do that.”

The agreement is a step in the right direction, said an official with Natural Selection Foods, parent company of Earthbound Farm.

“It's a great first step and good to get something off the ground quickly,” said spokeswoman Samantha Cabaluna.

The agreement is seen as more industry-friendly than legislation proposed by State Sen. Dean Florez, D-Shafter. Growers were not pleased with his proposal, which would add more state oversight of the lettuce and spinach industries through a state-run crop inspection program. However, Florez last month made changes to his three-bill package to get it through the California Senate Agricultural Committee. The changes appeared to soften the impact on growers, as Florez said he would give the CDFA a bigger role in regulating the legislation.

“We're not sitting here in a combative state trying to fight Florez's legislation,” Simonds said. “We've just adopted a different approach. The marketing agreement approach is just quicker.”

While the legislation and marketing agreement are laudable, neither would begin to solve the industry's food safety challenges, Cabaluna said.

“Without commenting specifically on the content of Sen. Florez's legislation, when it comes to legislation, we lean toward believing a nationwide standard is important,” she said. “The reality is, food moves across state lines. That's one of the toughest things about the marketing agreement. It only applies to growers in California.”
— L.M.