Another catalyst in the consolidation and full-service trend involves foodservice and food safety requirements.
Once upon a time, merchants could source locally from just about anywhere without worrying too much about traceability or even breaks in the cold chain, as long as the produce looked and tasted good.
Feeling the impact
In recent years, tightened regulation has forced wholesalers to upgrade facilities and implement food safety protocols, including inspections as well as pricey software and tracking equipment.
While the soft threat of FSMA has been looming for several years with no real bite, the deadline is forcing merchants to take compliance seriously.
Some are already up to date on requirements, while others might have to scramble a little to hit the mark. More relevant, the expense of requirements has also play-ed a role in displacing some smaller wholesalers—as well as growers—and contributed to the consolidation trend.
“The larger chains won’t take product from smaller, local growers that don’t meet their food safety standards,” notes D’Arrigo. “A lot of businesses are closing their doors and smaller growers are going out of business because getting certification is expensive and time consuming. And now that it will be 100 percent required, if you don’t have certification you won’t have a buyer for your product.”
“What’s happening is the smaller companies are leaving and the larger com-panies are getting bigger,” weighs in Koster. “I think food safety is one of the things forcing some of the smaller companies out.
“It’s very expensive to be cold chain compliant—you have to purchase new, state-of-the-art technology and quite a few other things,” Koster observes. “It’s becom-ing more and more expensive to run a wholesale business.”
Murky language and grey areas
Although the deadline for some of the rules is pending, Fierman notes, “It might take a little longer before it gets enforced. And hopefully, when it comes to wholesale markets, they’ll back off on some of the requirements.
There’s no cross-contamination here and not a lot of handling of prepared product. Some of the FSMA regulations don’t necessarily apply to wholesale terminals.”
Michael Muzyk, president at Baldor, which operates from Hunts Point and Boston’s Chelsea market, says some of the language in FSMA misses the varied roles at different levels in the supply chain.
“Being part of United Fresh Produce Association, we helped craft parts of FSMA that we are satisfied with, but there are still a couple of things we don’t understand,” Muzyk says. “They define a farm as a family or person that grows and packs on their land, and if you’re not that, then you’re considered a processor.