Feb 2012 Financial News

GraceKennedy safe, but sees issue for some firms with US food safety law

Feb 07, 2012

JAMAICAN conglomerate GraceKennedy, while confident that its plants will meet the standards that will allow its goods to enter the United States under that country's new Food Safety Modernisation Act (FSMA), says the issue of traceability will be an initial handicap for some suppliers.

"In a lot of cases it's the facility (that could cause issues) but the biggest headache is traceability; you have to be able to say where your raw materials are coming from and in some cases we have been able to work out some really interesting solutions to that issue and what we need to do now is get the agreement of FSMA (Food Safety Modernisation Act) to go with the precautions that have been put in place," Mike Ranglin, chief executive officer of GK Foods, told editors and reporters during the weekly Observer Monday Exchange yesterday.

GraceKennedy is celebrating its 90th anniversary this month.

The Act, signed into law by US President Barack Obama in January last year, is an amendment to the Federal Food, Drug and Cosmetic Act which requires that by this year all processed foods entering the US must be tested by an accredited laboratory.

The requirement emerged from increased international trade in food and the risk of food-borne diseases.

The Act will be implemented in phases up until December 2012.

"I don't think some of the manufacturers will be able to make the grade, at least not in this first round, and there are going to be difficulties, but I think ourselves and any other big plant owners/manufacturers are actually helping. There is actually a support group for the smaller manufacturers," Ranglin said.

"I will give you an example — pepper sauce. Because a lot of our raw materials that are generated within Jamaica are from small farmers, what you will find is that they would like us to get all our peppers from a few sources and be able to say it's coming from there or there. In our case, we have hundreds of suppliers of peppers, so one of the things we have been looking at as a possible solution is if they will accept a region (group of suppliers in blocs) and that's part of the discussion that's going on because if this doesn't happen a lot of our raw material sources are not going to be able to comply," he explained further.

The GK Foods CEO, however, said the corporation has been working assiduously with the US Food and Drug Administration (FDA) to cushion the effects.

"We are an integral part of that programme. Since last March/April we have been in dialogue with the FDA. In fact, right after this meeting I have a meeting with one of their representatives here because we are seen as one of the lead companies; let's say we are mentoring the manufacturing industry, so we are helping other plants to get ready, our own suppliers as well as others that are outside the net," Ranglin told the meeting.

"In terms of disruptions, we do expect that some people will be negatively affected," he added. "Within GraceKennedy we don't expect any issues in terms of products that we send to the United States at this point in time, so we are working with the programme."

Yesterday, GraceKennedy Group CEO Don Wehby said while the company was optimistic about its ability to make the grade it fully intended to help bring others up to speed.

"In terms of GraceKennedy we have our five factories, in terms of being compliant with our five factories we don't foresee any problems at all. However, we also support a lot of smaller manufacturers throughout Jamaica, for example we don't can our own ackees; we need to and we will be supporting smaller manufacturers to ensure that they are qualified for the new FDA regulations, and that's important for us and it's important for Jamaica," Wehby said.

He agreed with Rangling that the issue of traceability is going to be a challenge. However, he said once the US can agree to qualify the farmers as a region and not a specific area, "I think we should be OK. But it's something we are going to be very focused on".

Wehby also pointed out that the Ministry of Industry and Commerce has had several meetings to try and ensure that firms are ready.

GraceKennedy purchases approximately 45,000 pounds of produce per week from farmers.

In September last year, then Industry and Commerce Minister Dr Christopher Tufton said 80 per cent of local food exporters were not certified to standards that would allow their goods to enter the US under the Food Safety Modernisation Act. He said that development poses the risk of serious revenue fallout in the lucrative export market. Local food exports to the US were valued at US$118 million in 2010. In the meantime, the FDA is to conduct some 50 audits among Jamaican businesses that export to the US this year.

Under the new Act, among other procedures, companies are required to share their food safety plans with the FDA upon request; write and implement food safety protocols to mitigate potential hazards; and implement acceptable traceability and recall mechanisms.

Meanwhile, the FDA now has the power to order a mandatory recall if it determines that there is a reasonable probability that a product poses a health hazard (it could only recommend voluntary recalls before). It can also block food from facilities or countries that refuse inspections.

Jamaica has, however, put in place a number of measures to prevent the potential fallout. Among them agro-processors who export food to the US are to benefit from a special loan facility — $100 million initially — made available by the Ex-Im Bank, with interest rates ranging from 6.5 to seven per cent. The loan is aimed at assisting assessment of the requirements in getting certified, and purchasing equipment and tools necessary in the process towards certification.

Additionally, the Bureau of Standards Jamaica and the Ministry of Industry are cost-sharing up to 25 per cent of the expense of assessing and providing the necessary technical assistance to entities, including inspection and training. There will also be a mentorship programme, in which certified companies locally will provide uncertified companies with the process of certification.

It is estimated that some 200 exporters could be affected by the FSMA, including 160 registered exporters of food products and more than 40 traders. While manufacturers have varying levels of ISO certification, there are just 10 Hazard Analysis Critical Control Point certified firms in Jamaica.


Source:
BY ALICIA DUNKLEY Observer senior reporter
dunkleya@jamaicaobserver.com
Jamaica Observer
Tuesday February 7, 2011

http://www.jamaicaobserver.com/news/GK-safe--but-sees-issue-for-some-firms-with-US-food-safety-law_10722063#ixzz1lj2dUmpo