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With healthy skepticism, California citrus packers move ahead with PTI

by Tim Linden | October 28, 2011

The California citrus industry has been one of the more vocal skeptics of the Produce Traceability Initiative, yet that sector is moving ahead with the concept on a much faster pace than other industries.

Joel Nelsen

A seminar at the recent Produce Marketing Association Fresh Summit convention revealed that even some of the more progressive firms in the business are only in a trial phase in their PTI programs, and many are not even close to reaching the milestone dates established by the PTI committee.

By the end of this year, each shipper is expected to have both human-readable information (milestone 4) and an encoded GTIN barcode (milestone 5) on each case. In addition, each subsequent handler of the case along the supply chain must have the systems and capability to read and store the GTIN and lot number as it is received at their respective facilities (milestone 6).

“By the end of the year, I expect 75 percent of our production will be able to satisfy requests from their retail customers to be PTI compliant,” said Joel Nelsen, president of California Citrus Mutual, the industry’s Exeter, CA-based trade association. “As an industry, we made a conscious decision to follow the recommendations of the PTI Leadership Council this past summer, and most of the packingsheds have been working toward that goal ever since.”

Since the milestones recommended action by the end of this year and the California citrus industry’s season generally runs from October through July, Mr. Nelsen said that most firms wanted to get their plan of action in place before the season started. He said that many firms currently are in PTI trials and have already, or soon will be, purchasing the necessary technology to complete the task.

“We have done a careful analysis of what it will cost the California citrus industry to comply, and we estimate it at $17 million,” Mr. Nelsen said. “We have broken out all the costs including software, hardware and the labor that will be necessary to implement this.”

He explained that all packingsheds will have to include some type of a failsafe system to make sure the traceability code is working the way it should. In addition, he said that there will be some reduced efficiency in the production line since this extra step is added to the packing process.

Mr. Nelsen said that compliance with PTI is not as easy as some have indicated, and there are many complexities that need to be examined.

For example, he said that it is mind-boggling that the California citrus industry alone has applied for and received 40,000 GTINs to account for all the different packers and packs that are involved in the production of one category from one growing region. Any one retailer dealing with several different citrus suppliers will easily receive more than 100 GTINs for that one category.

In comparing notes with several other commodity representatives, including tree fruit, grapes, strawberries and potatoes, and estimating the cost in those industries, Mr. Nelsen believes using a figure of $500 million for industrywide PTI compliance is a conservative number.

He also said that the advantages of PTI compliance as an inventory-management tool for citrus packers is not great since virtually every packer already had some type of in-house traceability systems that already gave them that information.

Many on the supply side view PTI compliance as being “information rich, but knowledge poor,” said Mr. Nelsen. In other words, it is going to produce a lot more data but not necessarily data that can be used in any way that would result in a significant return on investment.

Mr. Nelsen has vocally expressed these concerns to the PTI Leadership Council over the last couple of years as his industry seemingly was poised to balk at compliance.

In addition, the citrus industry remains skeptical that the retail end will do its part and complete the traceability circle.

“I would suspect that if PTI does fail, it will be because the customer base can’t harmonize their needs,” he said. “At this point they have yet to reach an agreement.”

Mr. Nelsen said that it is critical that the customer base come together and accept uniform application of this technology, adding that packers cannot be in the position of having to add different information within that GTIN barcode for each customer.

So why is the citrus industry now leading the way?

“PTI is a good idea,” Mr. Nelsen said. “There are some commodities that aren’t as sophisticated [as citrus] and cannot trace back to the block where they were grown. As an industry, we do have an obligation to address the food-safety concerns of consumers.”

In addition, Mr. Nelsen said that this is a member-driven initiative, and CCM members have been told by their customers that they should be PTI compliant. As such, CCM made it a priority item, researched the concept and has worked with its members on implementation.

But he added that this level of protection that the citrus industry is adding to its packs must be appreciated at the retail level.

Mr. Nelsen repeated to The Produce News what he told the PTI Leadership Council during its last meeting in October at the PMA convention: “We are going to be watching and taking notes. We want to make sure that the customers are recognizing our efforts.”

He indicated that for PTI to be successful on a total industrywide level, retailers must use their buying power to recognize compliance and should not buy product from those who are not taking that extra effort that PTI compliance requires.