´AS A BUYER, I PUT FOOD SAFETY BEFORE PRICE´

August 03, 2008

Royal Ahold´s European sourcing manager Rody Frequin on maximum residue levels for pesticides:

´As a buyer, I put food safety before price´

The Maximum Residue Levels (MRLs) for pesticides laid down in the harmonised European Union legislation that enters into force this September are not the only requirements to be taken into account if you´re supplying food products or ingredients to Europe. Some supermarkets in Europe will enforce private MRLs that are stricter than the law requires. “If a supermarket is caught just once selling food containing higher pesticide residue levels than legally permitted, the brand damage can be irreparable. For that reason, we will always try to stay well within the legal boundaries”, explains Rody Frequin, European sourcing manager for Royal Ahold.

MRLs are the talk of the town in the European food industry. With the announcement by the European Commission (EC) that EC Regulation No.396/2005 will enter into force as of September 2, 2008, and non-governmental organisations raising the banner for healthier fruit and vegetables, supermarkets are scrambling to put on their very best behaviour. In itself, the new EC Regulation, published in March and covering some 900 chemicals, is good news for food exporters from developing countries (DCs) as it will effectively lower the trade barrier posed by the countless and widely differing national MRLs currently in place all over Europe. With a single standard throughout Europe, exporters will no longer have to spend extra time and money figuring out and complying with the rules for each separate country. Also, the pesticide issue offers new openings for organic suppliers. However, the supermarkets´ safety measures may jumble up the non-organic market, making compliance more complicated than ever.

Several examples
“From what is happening at the moment it seems the supermarkets and other stakeholders are far from finished with MRLs and suppliers will have to renew their research and compliance efforts to meet changing supermarket demands”, says Ana María Peña of CBI-partner and Dutch sustainable development bureau CREM BV.  She cites several examples that confirm the view that supermarkets are raising the bar far beyond what is legally required. A number of German retailers, including Tengelman and Rewe, have said they will only accept fruit and vegetables that contain 70% or less of the legal MRLs. They are likely to establish the same requirements throughout their Eastern Europe branches.

Avoid all risk
Similar movements are going on in the Dutch retail sector, where German-owned supermarket chains Aldi and Lidl as well as Dutch-owned Super de Boer reportedly decided earlier this year to introduce their own stricter MRLs. Ahold, which has supermarket chains and outlets not only in the Netherlands (with market leader Albert Heijn) but also across Europe, the Baltic states and the United States, has not established its own MRLs, but will definitely avoid all risk with pesticide residues, says Rody Frequin. “September 2 is an important date. We won´t be going as far as some of the German retailers, but our policy is to stay well within the boundaries of legislation and we will do everything we can to make sure we do. As a private label company, we have to. We can´t afford the slightest breach of conduct; our performance has to be better than that of the A brands.”

Naming and shaming
The eagerness of supermarkets to outdo legislation is being fuelled by anti-pesticide campaigns of non-governmental organisations. These NGOs are seizing the introduction of new legislation as another opportunity to clean up the globe – or at least the fruit and vegetables departments of supermarkets. The 70% limit adopted by Tengelman and Rewe in Germany, for instance, came in response to a Greenpeace campaign called ´The 70 % Initiative´. In Austria, environmental NGO Global 2000 is urging supermarkets to adopt residue levels 50% lower than the EU´s for certain pesticides.
In the UK, the annual publication of monitoring results, including the names of retailers monitored, has led to the ´naming and shaming´ of supermarkets selling products with residues above the permitted MRLs. In response to this negative publicity, UK retailers are putting in place particularly strict requirements on their suppliers to be able to demonstrate compliance with MRLs. England´s Coop supermarkets recently voluntarily published their residue test results, becoming the first supermarket in the UK to do so.

Stricter monitoring
Campaigners are not only pushing for stricter MRLs, but also for stricter monitoring and MRLs for more chemicals. In January 2008, Greenpeace Germany presented a study in which it concluded that over 50% of the pesticides known today cannot be detected by the authorities’ monitoring facilities for fruit, vegetables and cereals. More recently, Greenpeace published a black list of 327 pesticides harmful to human health and the environment – out of a total of 1,134 pesticides analysed. The list includes 168 substances permitted in the EU. Greenpeace wants the supermarkets to ban these substances.
The Edeka Group, one of Germany’s largest retail organisations, has said it will produce a new list this year of pesticides it intends to ban. Meanwhile Edeka is enhancing its quality control systems for fruit and vegetables. In October 2007 the group adopted an early warning system linked to an extensive residue database and aiming at more frequent analysis of critical products. Austria´s Billa supermarket chain is carrying out more residue analyses than the whole national Austrian monitoring programme.

Excessive levels
These measures are not surprising considering how often pesticides still turn up. Only in 2006, the EU published a Pesticides Report in which 40% of 60,000 food samples contained pesticide residues with 3% above the permitted levels. The most common products containing excessive residue levels were sweet peppers, tomatoes, leaf salad, strawberries, grapes, berries, peaches and nectarines. A survey in Belgium in the same year showed that as much as 25% of the fruit and vegetables for sale in supermarkets was out of line with regulations. In the Netherlands, an NGO compared the MRL performances of supermarkets. Ahold-owned Albert Heijn emerged with flying colours, along with Plus supermarket, but several other chains – Dirk van den Broek, Spar, CO-OP and C1000 – were urged by the NGO to clean up their act.
The market in such situations is quick to point out that even above-MRL figures very rarely present a real threat to consumer health as MRL values are far below actual toxicity levels. However, it is obvious that any pesticide scare can cause serious damage to a supermarket or even the entire sector. 

Shakeout
So where does all this leave suppliers from DCs? The simplest answer is: beware of pesticides and make sure you´re keyed in to retailer requirements. Comments Ahold´s Rody Frequin, “If MRLs get much stricter, there could be something of a shakeout among suppliers as some will be unable to keep up.” Even low prices lose attractiveness when food safety comes into play, she points out. “As a buyer, if I have to choose between a cheap product with dubious residue levels and a more expensive product well within the MRLs, I´ll opt for safety. The risk of damage is too high.”
That does not mean Ahold or other major players will ruthlessly drop suppliers struggling to stay clean. Says Frequin, “No one wants to lose a good supplier. I think the sector as a whole recognises the pesticide issue as a responsibility of the entire chain, not just the suppliers. There is a general willingness, rooted in a mixture of commercial interests and corporate social responsibility, to help suppliers pull through. At Ahold, for instance, we may offer suppliers who are behind on the latest requirements the option of delayed deliveries to give them extra time without placing our label at risk.”

Next Generation Sourcing
The main message to suppliers, it seems, is that they should be at least as proactive as buyers are. Says Frequin, “Food safety and sustainability are not side issues. The big multinationals are investing serious money in these areas and looking ahead into the future. We are having meetings on a European association level to discuss scenario´s and anticipate developments. At Ahold we regularly send out quality guidelines to our suppliers, informing them not only of what we require now, but also of where we believe the market is heading. Also, we´re broadening our horizons as buyers; we´re willing to go further beyond the EU borders to find quality partnerships.” Ahold´s so-called Next Generation Sourcing (NGS) concept typifies these developments, says Frequin. “Next Generation Sourcing means our purchasing managers and analysts analyse the entire global value chain more thoroughly than we´ve ever done before, with the purpose of strengthening our buying position and streamlining the chain as a whole. It goes without saying that we´re constantly on the lookout for partners who understand the market and are willing to go along with developments.”

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www.ahold.com.