OF PESTICIDES AND GERMAN DISCOUNTERS

Just when we thought that everybody was focused on pathogens on produce, it turns out that pesticides are creeping back into the public eye. There is the specific issue of Maximum Residue Limits (MRL), which Greenpeace has made top-of-mind for every operator in Europe.

Greenpeace regularly takes samples off the shelves and tests them for residue pesticide levels. It has communicated the results aggressively and directly to the consumers, putting the German retailers on the bench of the accused. This in turn has had a major effect: German retailers - in particular German discounters Aldi and Lidl - have taken drastic actions to avoid future criticism. What until recently was perceived the “dumping ground” of Europe now has arguably the strictest food safety standards worldwide!

Produce is as safe as it has ever been, but Greenpeace’s actions have highlighted that the EU regulations are far from harmonized. That means residue limits vary from one member state to another, and as long as the European Union has not harmonized the MRL, each member state must enforce its own laws. So if you want to market produce inside the European Union, you have to have it tested for every single market. That is tantamount to taking your driving exam 27 times...

German discounters are now arbitrarily enforcing their own MRLs, which are set at anywhere between 33% and 50% of the recommended MRL. Producers must have each lot tested for 500 active ingredients at a cost of €200 per test and only then does a discounter decide if it buys or not. (Remember the days we just fought over price?)

This has changed the buying dynamics tremendously, and the effects will be strategically interesting at the very least. Does an operator now pursue a fully integrated supply chain on one hand and is a discounter willing to hand over its strength of flexible spot buying on the other? The answer will likely be that the solutions will be different for each operator and retailer. What will happen is that no longer just UK buyers, but now all EU buyers, will enforce much stricter codes in the global quest for fresh produce.

For all of you readers who wonder whether 1/3 of the MRL is at all possible, the answer is a simple: YES. Growers from around the world have proven this for months. The problem only arises when, prior or during harvest, products need to be sprayed due to rain, and then one can forget about meeting the target.

As a result, a discounter today in Germany will then switch into a different origin, a different variety or de-list the product altogether. The rules of the game have once again changed: This is EU-27 in 2007. Welcome!