PESTICIDES SEMINAR GAFTA HOUSE FRIDAY, 7 NOVEMBER 2008 WEBB JAMES SRL Mr Stefano Trumpy

1. PESTICIDES SEMINAR GAFTA HOUSE FRIDAY, 7 NOVEMBER 2008 WEBB JAMES SRL Mr Stefano Trumpy

3. EU --> THE GREATEST PROTECTION OF END CONSUMERS PHILOSOPHY TO BE APPLIED Food chain operators must (necessarily) consider the regulations on food as opportunities of market growth, consolidation and protection by extra-European processors and traders, who are remarkably competitive as far as cost reduction is concerned, but who are not able to offer the (high) food safety guarantees required by the EU. Moreover, a safe activity of the operators from the world of spices should be taken into account; this safety is acquired through the sale of products that are actually consistent with existing regulations. As a matter of fact, food risks are so expensive that they jeopardize the whole business of a company. OPERATORS --> HIGH FOOD SAFETY = MARKET PROTECTION Food chain operators must take any action, effort and investment so that goods reaching the �points of entry� are consistent with food regulations, in order to avoid any problem with health authorities (from the rejection and reshipment of goods to their seizure and destruction) and the ensuing financial losses, and also great losses at times.

4. OPERATORS --> GUARANTEED PRODUCTS AT �POINTS OF ENTRY� WITH FEWER PROBLEMS WITH HEALTH AUTORITIES AND LOWER EXPENSES Food chain operators must be certain that buying a better product and thus paying a higher price will, in any case, be more cost-effective than having to cope with the destruction of the lot or its sale (selling-off) in other non-EU Countries (bearing in mind that regulations prohibit it � therefore, it is advisable to contemplate DDP quarantine). OPERATORS --> HIGHER COSTS TO BUY GUARANTEED GOODS MEAN HIGHER SAVINGS (= FEWER PROBLEMS)

5. SUPPLIER APPROVAL CATEGORY� OF SUPPLIERS: * Implement a direct auditing plan in the Countries of Origin, aimed at understanding whether, besides single preparation, company organization and work method, there are other conditions really allowing control or non-control of pesticides. The Supplier must be aware of the problem (pesticides) and be able to check that the product is coming from specific cultivations or at least is not �accidentally� bought on the local market, but rather knowing the field of origin and the specific cautions used by the �farmers� (e.g. use of active substances with high maximum residue levels, compliance with doses and withholding periods, environments that are neither polluted nor subject to the �drift� of active substances from other neighbouring crops or irrigation water, pesticide-less cultivation techniques, use of �cultivar� that are more resistant to infestations, etc.). In addition, the Supplier must necessarily guarantee that the supplied product is compliant when entering the EU and its quality is guaranteed at destination.

6. * Give up self-audit systems through documents to be e-mailed to Suppliers and filled in by them. They are absolutely unreliable! * Only approve �processors� or, better, direct producers and processors; a several- year experience showed that it is expedient and advisable to turn to direct producers and processors, rather than to original traders (exporters), who entrust third parties with cultivations and thus have less control on the quality of the product.* Clearly inform the Suppliers that supplied products should be compliant with EU regulations on pesticides. (Almost) certainly the products sold so far, with the exception of wild collections, even though they led to no claims for pesticides, are very probably illegal. We must realize that up to now the �compliance� of a product and thus of a supplier was facilitated by the fact that no analysis to determine pesticide residues was carried out either by official control authorities or by food operators.* Advise one�s own approved suppliers NOT TO USE pesticides in growing and, should it not be possible, suggest a list of �allowed� pesticides that have �high� maximum residue limits according to law. In practice, all non-allowed products need to be excluded, especially those whose residue limits are very low (0.01mg/kg).

7. BUYING POLICY * TENDERS� � It will not be possible to �put out to tender� (i.e. to send a request to several companies and bargain the lowest price) any longer. You will realize that it will be very difficult to find Suppliers able to guarantee products complying with the regulations and, in some Countries of Origin, they will not be more than one or two. * PURCHASES� � Only buy from approved Suppliers, who proved to be aware of the problem, to be able to carry out analyses through EU laboratories, to give real guarantees, to be ready to be sent back a non-compliant lot, etc. * PRICE� � The price of guaranteed products will certainly be higher. The reason is due to the fact that, even though they are the same type of product, a compliant lot and a non-compliant lot actually belong to two completely different markets and should, in actual fact, be considered as different products in all respects. To this aim, it is important to observe that some Countries generally send offers or price lists of products guaranteed as pesticide-free and of the same products that are not guaranteed as pesticide-free. To this it must be added that the Suppliers able to give reliable guarantees are the more organized and therefore more expensive.

8. GUARANTEE ON PURCHASE/PAYMENT CONTRACT AND GUARANTEES� * A real guarantee is obtained only through �payment after arrival and approval� for non-European Suppliers, or, at least, partial payment. During the years, we succeeded in obtaining good results only with the Suppliers, who accepted to ship goods with the �payment after arrival and approval, documents in trust� clause, thus they were thus really obliged to supply a compliant product, under penalty of the obligation to reship the goods and pay all the expenses. This resulted in their being really interested in having a control over pollutants and, in most cases, we noticed that they used to send samples to European laboratories before shipment.

9.  * In the European Union, this problem does not exist, since the product must comply with regulations in force. The responsibility to ascertain food compliance falls on the importer, also when the importer has no analyses or applies commercial agreements that are �commonly� believed to limit the liability (such as IGPA SPOT CONTRACT). No commercial agreement can limit law provisions in force, unless the product is contractually intended for non-human food use. This also applies to any clause, such as �quality approved at departure� or �quality approved on the basis of the certification submitted by the Supplier�. * In case of non-compliance ascertained through the analysis of the goods at destination, the European or non-European Supplier is bound to take back the lot and pay transport charges. As contract term, it may be useful to state the laboratory, where the analysis will be carried out, to protect both parties.

10.  QUALITY CONTROL * In actual fact, the trend of European laws on food makes it impossible to work on the basis of documents only! The equivalence between �analytical certificate� and �consistent goods� cannot be virtually applied any longer. As a matter of fact, * Certificates of origin are invalid, they only serve as an indication, or they may be valid in special cases, out of standard practice (e.g. Sudan and import certificates). * The certificates, which are issued by EU laboratories, are reliable if they are accredited by a suitable Control Authority. The analytical methods used must comply with the instructions given by EU existing regulations on the matter (which is often very complex!). We will see below what it means to have an accredited method.

11. QUALITY CONTROL * In actual fact, the trend of European laws on food makes it impossible to work on the basis of documents only! The equivalence between �analytical certificate� and �consistent goods� cannot be virtually applied any longer. As a matter of fact, * Certificates of origin are invalid, they only serve as an indication, or they may be valid in special cases, out of standard practice (e.g. Sudan and import certificates). * The certificates, which are issued by EU laboratories, are reliable if they are accredited by a suitable Control Authority. The analytical methods used must comply with the instructions given by EU existing regulations on the matter (which is often very complex!). We will see below what it means to have an accredited method.

12. * Considering the fact that a laboratory analyses one sample of 100 � 500 grams, taking a �pinch� of only a few grams from this sample (as in the case of pesticides) for a batch of goods of 10 � 20 mt, it is clear that the sample must be taken with the utmost possible care. There are specific regulations, which food chain operators must necessarily refer to for sample taking according to the type of pollutant searched for (e.g. mycotoxins, heavy metals, pesticides, etc.). In some cases (e.g. aflatoxins), it may be advisable to carry out a more careful and precise (and much more expensive!) sampling than the one provided for by EU regulations, so as to decrease the risk of untrue results. * Taking into account the criticality at the time of sampling, we should only rely on the quality control carried out by the company, without using warehouse staff. We suggest you not to have third parties - such as, a forwarder, warehousing company, or certified sampler - take the sample.

13. * The better is the sampling method used, the higher is the guarantee following the analysis and the higher is the certainty that what we pay for and distribute is a consistent product. * An analysis of the hazards and ensuing risks needs to be performed on the different food matrices that are the subject of corporate business, so as to focus the attention on real problems and avoid losing time and resources on non-important aspects (e.g. presence of pesticides in wild products). For the drawing up of such as document, TIME and EXPERIENCE also gained through direct contacts with the Suppliers (audit and quality inspections) are required.

14. LABORATORIES OF ANALYSIS * Use of EU laboratories accredited by Official Control Authorities only. * What needs being accredited is not the laboratory, but rather THE SINGLE ANALYTICAL METHOD USED! * Since the analysis is an instrumental activity and thus it never is thoroughly precise, it is necessary to know the uncertainty factor of the method in relation to the analytical result found (that may occasionally reach plus or minus 20 � 30%!). We remind that, in some cases (e.g. mycotoxins), the result of an analysis should be considered consistent taking into account the �recovery� due to the uncertainty factor of the method. * It is necessary to have a sufficient knowledge and experience to properly read analytical certificates. In some cases, it may be advisable to ask the laboratory for a suitable declaration of conformity that also takes into account the uncertainty factor; unfortunately, not all analytical laboratories are willing to issue this certificate (and a small part of them at least may also not be able to...). This experience should also concern a proper interpretation of the law (e.g. for product classification, the use of dehydration factors, etc.).

15. * To support the activity of assessment or non-assessment of a lot regarding pesticides, the Web site prepared by the Official Authority http://ec.europa.eu/sanco_pesticides/public/index.cfm, as well as the official document containing the dehydration factors for spices and aromatic herbs drawn up by ESA may be useful. * It is necessary to identify among accredited laboratories the laboratories that have a greater analytical experience in the field of pesticides and especially spices, a food matrix that is not common and particularly difficult due to the high presence of essential oils and pigments interfering in different ways, which results in a modification of analytical results when the analytical method has not been defined or applied with the necessary expertise. * It is necessary to assess the performance of the analysis laboratories used. If a ring test cannot be carried out, it is necessary to request a copy of the ring tests performed by the laboratory (and required by the accreditation protocol).

16. PROCEDURES FOR GOODS RECEIPT AND CLEARANCE * Should the goods turn out to be not consistent at the time of importation or, even worse, later at the time of nationalization, EU regulations envisage the rejection and reshipment to the original supplier or the destruction of the lot. A notification to Official Health Control Authorities is also required. * It is allowed to directly carry out food controls at �points of entry� in Europe on goods that are still in the foreign country, and thus before nationalization, using bonded warehouses. For the above-mentioned reasons, it will be necessary to use responsible and qualified staff for sampling so as to have reliable results. To do this, for practical sampling purposes, it will be necessary to store the goods in the bonded warehouse, and then carry out the sampling after the container has been unloaded. The samples taken �from the first row of sacks appearing when the container is opened� are a non-sense.

17. A PENALTY KICK IS AWARDED WHEN THE REFEREE WHISTLES * In conclusion, it must be said that all the aforementioned statements are true only if the Health Authorities of the European Union or of a single UE Member State carry out serious and strong controls, so as to discourage �the market of non-consistent products�. Otherwise, non-guaranteed products will appear both on the market and on our tables, as it still happens today � the subject of an �unfair competition�, against which little can be done, since it is impossible to compete with the extremely lower prices of these products. * It follows that �non-consistent products� will be considered as such only when final Authorities or end buyers (e.g. supermarkets) will oblige food chain operators to properly act, under penalty of exclusion of the Supplier and/or measures for the repression of the fraud in progress.