RAISING THE STANDARD USDA ORGANIC

TOM ZIND

The new definition of what constitutes organic produce poses opportunities -- and challenges -- for supermarket produce merchandisers, who will have to ensure that their handling and merchandising procedures protect the new standard's integrity.

"Produce departments are going to need to understand issues such as handling requirements, what's meant by an audit trail that verifies organic produce is certified, and proper labeling and segregation of organic product," said Katherine DiMatteo, executive director of the Organic Trade Association, a Greenfield, Mass., group representing a range of organic food interests. "The requirements placed on them won't be particularly onerous, but they'll need to develop a system of policies and procedures for ensuring that the produce they label as organic is indeed organic."

Most retailers won't be subject to certification like growers, but they still could be subject to fines if they misrepresent non-organic product as organic, DiMatteo said. That could happen if improper handling taints produce purchased as "certified organic," or if it's improperly represented as organic on the display shelf when it's not.

"USDA inspectors, as part of their routine supermarket inspections, could look for things that might be in violation of the regulations, but enforcement will likely be based more on consumer complaints that lead to investigations," DiMatteo said.

To help acquaint retailers with their responsibilities under the new rule, DiMatteo's organization will hold Good Organic Retailing Practices training programs March 10-11 in Anaheim, Calif.; May 19-20 in Austin, Texas; and Oct. 13-14 in Washington.

Even retailers experienced with selling organic produce should review their receiving, storage, preparation and display programs, operators acknowledged.

A preliminary list of best practices might include ensuring that iced non-organic products, such as broccoli, aren't stored above organic items; that bulk organic displays are adequately separated from non-organic; and that organic product is shielded from contamination by store fumigation or other pest management procedures.

In short, retailers will have to ensure that their final link in the organic-integrity chain is as strong as it is for those who grow, pack and ship the produce.

Tom Pozorski, produce category manager for Copps Food Centers, Stevens Point, Wis., echoed the sentiment of other retailers in saying the new standard leaves a lot of unanswered questions about handling procedures. A particularly vexing one, which perplexed many departments even before the new rules, is whether organic offerings should now be separated from conventional produce.

"The big challenge for all of us is looking at segregated vs. integrated rack sets," he said. "Having bulk organic produce next to conventional now may be a bigger concern. In several of our stores we've moved from a segregated approach to an integrated one. But now that we have these new rules and regulations, it's something that may be interpreted as a red flag."

Co-mingling will be partially addressed through official "USDA Certified Organic" stickers bearing PLU numbers preceded by the numeral "9," which identifies an organic product. But retailers may still have to separate selections using either packaged product as buffers or physical dividers -- techniques some maintain lead to product neglect and the feared "organic ghetto."

Some produce executives told SN that lingering concerns over co-mingling could lead to more packaged organic produce. While it would help protect organic integrity and ensure a proper register ring, the practice would impact bulk, which many see as a superior merchandising style.

Other concerns the new standard may raise at store level include whether display cases would have to be cleaned before organic product is rotated into a space occupied by non-organic; ensuring that organic product does not come into contact with non-organic shipping containers; that product signage on constantly revolving display sets be accurate; and even that organic shipping cartons are not placed on pallets that bore non-organic.

Product misting patterns also may have to be monitored to prevent cross contamination, and some thought may have to be given to designating separate back-room coolers for organic, said Larry Mauren, produce director for Kowalski's Markets, a St. Paul, Minn., independent chain.

"We think we're in line already with a lot of the handling standards that may be necessary, but somewhere down the road there might be some more policing that comes into play," Mauren said.

Depending on the extent to which handling procedures come under scrutiny, Pozorski said there's a possibility that the new standards could present some large unforeseen costs for retailers.

"It may come to retailers needing to set up separate warehouses for organic produce," Pozorski said. "I don't see that as a likelihood, but it's possible."

Recordkeeping presents another potentially costly and time-consuming byproduct of the new rule. OTA's DiMatteo said retailers may have to retain documentation of their purchases and sales. That may come into play especially if product is further processed at the store after it's purchased.

"For organic distributors there's clear language on how long these kinds of records are kept but at this point we don't know what will be required of retailers," she said. "Retailers may have to keep a record detailing that they, for example, bought a case of organic melons that were cut into 20 pre-packed units and sold as organic.

The specter of this and other onerous scenarios raises the question of whether some retailers might choose to abandon organic produce altogether. That's not likely, say organic believers, who point out that architects of the new rule were careful not to require retailers to be certified for that very reason. The consensus appears to be that most retailers who've been handling organic recognize its potential and won't mind dealing with a little more red tape by instituting some basic handling guidelines.

"I think most retailers have systems already in place that they can translate to helping address some of these areas once they understand what they need to be aware of," DiMatteo said. "Supermarkets are already regulated in so many ways that most are already familiar with the kinds of procedures and systems that may ultimately be required."

The ultimate payoff for retailers who make the effort to help ensure the integrity of the new organic standards could be large. The emergence of a national standard that replaces a patchwork of state rules could bolster consumer confidence in the product and lead to higher sales.

"Having the USDA behind this is going to help, and I see the new rule helping to increase sales substantially," said J.B. Pratt, owner of Pratt's Foods, a Shawnee, Okla.-based retailer with a large organic foods selection. "It invites more people into producing and handling organic by finally stipulating what organic really is. That will open the door for more mainstream retailers to take it on."

A lack of consistency in supply and quality, an issue that's soured many retailers on organic, could well improve with the new national definition. Dick Rissman, produce director for Dahl's Food Stores, a 12-store chain based in Des Moines, Iowa, said stores that have been reluctant to carry organic because of a need to allocate tight space only to volume movers might be more inclined to handle organic if they see a chance to build sales.

"It might become more economically feasible to carry organic and it could get to the point where some stores may choose to handle only organic versions of a product if the price is consistently better," Rissman said.

Pratt said organic produce is increasingly being purchased by consumers who see it as being of superior quality. The new standard, he said, can only help elevate that perception.

"This will be a big boost for our quality image," he said. "Our sales have been leveling off lately, although they've been solid, and the category will get another boost when consumers see this certified seal on produce. I wouldn't want to run a grocery store today without organic, and I expect that in a couple of years, partly because of the new rule, our organic sales could reach 50%."