1. The New World of Food Safety in the United States: Are you ready? 1

3. Consequences

4. Food Safety Legislation

5. Impact on Chinese Exporters

6. Leavitt Partners Solutions 2

8. Changing science

9. Consumer expectations

12. 16 percent of fish and shellfish;

13. 12 percent of spices;

14. 9 percent of fruit;

15. 8 percent of nuts;

16. 5 percent of vegetables;

19. Greater capacity to link food with illness.

20. Ability to measure lower levels of chemicals.

21. Greater fidelity of epidemiology.

22. Improvements in genetic testing.6 10 Foods Linked to New Outbreaks of Foodborne Illness in the United States Since 2006 Bagged spinach Carrot juice Peanut butter Canned chili sauce Broccoli powder on snack food Pot pies Dog Food Hot peppers White pepper Raw cookie dough

24. Zero tolerance for unsafe food.

25. Consumers place responsibility for safe food on the producer.

26. Increased desire for local and unprocessed food.

27. European-style “Chemophobia.”

29. Faster;

30. 24-hour news cycle;

31. Focused on health and food;

32. Looks to blame;

33. Variation in bias and selective reporting.

34. Social media gives individual citizens a mechanism to broadly report food-related illness and destroy a brand.

37. Consequences

38. FoodSafety Legislation

39. Impact on Chinese Exporters

40. Leavitt Partners Solutions 10

42. Additional regulatory oversight:

43. Recalls;

44. Warning letters;

45. Import Alerts.

46. Food Safety Modernization Act11

48. Overnight harm to a brand and industry: The Case of Spinach Percent change in expenditures on bagged spinach following 2006 outbreak announcement % change in expenditure Source: http://www.ers.usda.gov/amberwaves/march10/features/OutbreakSpinach.htm

50. August 2009: U.S. FDA announced significant changes to enforcement posture.

51. These changes will result in faster, more frequent enforcement actions.“Companies must have a realistic expectation that if they are crossing the line, they will be caught, and that if they fail to act, we will” - U.S. FDA Commissioner Margaret Hamburg (8/6/09)

52. More Recalls of Food in the United States 15 Source: US FDA

53. Increased number of Warning Letters Source: US FDA

56. Consequences

57. Food Safety Legislation

58. Impact on Chinese Exporters

59. Leavitt Partners Solutions 18

61. Most sweeping overhaul of the food safety system since 1938.

62. Several provisions are already in effect:

63. Increased frequency of mandatory inspections by U.S. FDA;

64. Expanded access by U.S. regulators to companies’ records;

65. Authority for U.S. FDA to issue import certifications;

66. Authority for U.S. FDA to issue mandatory recalls of food products;

67. Fees on producers and importers;

68. Prohibition on “port-shopping”; and

71. Firms must submit Prior Notice before shipping

73. Changes to Prior Notice

74. Changes to access to firms’ records by U.S. FDA

76. Hazard Analysis

77. Preventive Controls

78. Strategies to mitigate intentional adulteration

79. New standards for produce (fresh fruits and vegetables)

80. Sanitary transportation

82. Importer verification

84. Laboratory accreditation 21 Significant Changes

86. Manufacturers and processors

87. Importers

88. Laboratories

89. Third-party certification bodies

90. Foreign Governments 22

94. 25

96. Sanitation procedures;

97. Training in hygiene for supervisors, managers, and employees;

98. Environmental monitoring;

99. Recall plans; and

100. Supplier-verification activities.

101. Hazard Analysis and Critical Control Points (HACCP)

102. Focus on biological, chemical, physical, and radiological hazards;

103. Hazards can occur naturally, be unintentionally introduced, or be intentionally introduced;

104. Producers must identify preventive controls for critical control points (i.e., HACCP or “HACCP-like”)26 New Requirements: Preventive Controls

106. Monitor : Monitor the effectiveness of controls, and establish corrective action plans.

107. Verify: Validate and document the preventive controls have the desired effect in reducing risk.

108. Document: Create (and share with U.S. FDA upon request) a written FOOD-SAFETY PLAN that documents and describes the facility’s preventive-controls procedures 27 New Requirements: Preventive Controls

111. 30 Impact of the Food Safety Modernization Act

113. U.S. FDA may require imported food to be certified by an accredited third-party auditor (which could be a foreign government), to ensure compliance with U.S. laws.

114. Certificates can apply to a specific shipment of food, or to a facility.

116. Importer Verification

117. Importer-verification program requires U.S. FDA to develop a program to assure products entering the United States are not adulterated or misbranded, and have been produced in accordance with U.S. laws and regulations:U.S. FDA must publish regulations in one year; and The new regulations will become effective in two years. 31 Increased Accountability for Importers

118. Voluntary qualified importer program: U.S. FDA is supposed to establish the program by mid-2012; Will provide path for expedited entry for qualified facilities; Third-party audit to determine compliance (by foreign governments or private third-parties) Importer pays fee to cover administrative costs; Importers will have to verify their suppliers are producing products in compliance with U.S. laws and regulations; and If an importer is involved in a recall or outbreak in the United States, it will lose the ability to participate in the qualified program. Compliance + Participating Importer + Qualified Foreign Facility = Expedited Entry 32 Opportunities for Expedited Entry

120. Third-parties can be a foreign government or a private entity.

121. U.S. FDA will use third-party audit certifications to ensure products offered for import are in compliance with U.S. laws and regulations, and to determine if a facility is eligible to offer food for import under the voluntary qualified importer program.

122. U.S. FDA will be looking for outside parties to assist in providing coverage of the food supply, particularly beyond U.S. borders. 33 Third-Party Certification “The voluntary third-party certification guidance that we issued in January 2009 gives us a solid foundation for moving forward, and should give you a sense of how we have approached recognition, or indirect accreditation, to date.” - Mike Taylor, FDA Deputy Commissioner for Foods, 2/17/11

124. The program will have model standards, which will include:

125. Sampling and analytical procedures;

126. Internal quality systems; and

127. Training for individuals who conduct sampling and analysis.

128. Both domestic and foreign laboratories are eligible to participate, and both must meet the model standards.

129. U.S. FDA must establish the program by January 2013.

130. By July 2013, laboratories will have to receive accreditation by U.S. FDA to conduct regulatory testing for food imported into or sold in the United States.34 Accreditation of Laboratories

132. Consequences

133. Food-Safety Legislation

134. Impact on Chinese Exporters

135. Leavitt Partners Solutions 35

137. Fresh fruits and vegetables;

138. Nuts;

139. Spices; and

140. Low-acid canned foods.36 Some Chinese products will receive additional attention from U.S. FDA

142. Your firm will face additional scrutiny (regulatory, industry, third-parties) to ensure you are meeting the new requirements.

143. Failure to meet the new requirements will inhibit your access to the U.S. market, and erode consumer confidence in your brand.

144. You must act proactively to gain access to the upcoming expedited-entry programs and maintain your competitive place in the U.S. market. 37

146. Verification;

147. Expedited Entry.

148. Regulator Navigation and Information: Companies must analyze forthcoming rules and regulations to demonstrate what the impact of the new U.S. law will be on their business.

149. Assessment: Firms should conduct a gap analysis of their current procedures with preventive-control requirements, and immediately address any gaps identified.

150. Food-Safety Plans: Companies need to draft and maintain a food-safety plan.

151. Import requirements: Firms need a strategy for meeting the new U.S. requirements and navigating the application process.

152. Resolution of Problems and Management of Crises: Companies should have a plan in place to deal with any unexpected problems with their shipments.

154. Importer verification;

155. Import certificates;

156. Voluntary qualified importer program.

157. Regulatory navigation and information: Firms should analyze the requirements of and application for the U.S. FDA certification program.

158. Assessment: Third-party certifiers should assess their current programs and standards against U.S. FDA program requirements and standards.

160. Validate preventive controls;

161. Import certification, verification, and testing of voluntary qualified importers.

162. Regulatory navigation and information: Labs need to analyze the requirements of and application for the U.S. FDA accreditation program.

163. Assessment: Labs should assess their current program and standards against U.S. FDA program and standards.

165. The impact of much of the legislation depends on how U.S. FDA drafts regulations;

166. Implementation also depends on U.S. FDA’s financial resources.

167. Provide input to the U.S. FDA rule-making process:

168. Every regulation will have a public-comment period.

169. Understand what you need to do to comply with the new requirements.

170. Stay in front of changes:

171. Understand and respond to the changingdynamics in the United States

173. A New Era of Food Safety

174. Consequences

175. Food-Safety Legislation

176. Impact on Chinese Exporters

177. Leavitt Partners Solutions 42

178. 43 Leavitt Partner Food Safety Service Offerings

179. Leavitt Partners Global Food-Safety Solutions Our global food-safety solutions combine extensiveexperience in navigating the U.S. regulatory system with an in-depth knowledge of food-safety science, systems and vulnerabilities to help clients maintain and expand their presence in the global food market. 44

181. Secretary of U.S. Health and Human Services (HHS);

182. Chief of Staff to the Secretary of HHS;

183. Associate Commissioner for Foods at U.S. FDA;

184. Director of Global Health Affairs at HHS.

185. In their previous roles, our team was responsible for

186. Leading the development and implementation of the U.S. Import-Safety Action Plan and Food-Protection Plan

189. Interpretation of what these changes mean to firms that export food to the United States.

190. We can provide information in person, by webinar, by telephone, or through written documents.

191. Information will be available at a high level to anyone who is interested:

192. www.leavittpartners.com

193. Subscribe to our newsletter

194. More detailed information related to specific firms is available by request.47

196. Validation and verification of equipment;

197. Examination of environmental risks;

198. Review of supply-chain management.

199. Example:

200. Identified gaps and suggest detailed solutions; and

201. Identified best-practices, and suggest specific actions48

203. We can provide guidance on conducting risk assessments, and validating and documenting hazards and preventive controls

204. Example:

205. Evaluated the hazards and critical control points of a nut industry;

206. Developed suggested risk-mitigation strategy, and identified industry best-practices. 49

208. We can develop protocols and provide tools to assist firms in meeting the requirements for importer verification.

209. We can provide infrastructure to firms to capture and submit the necessary information to use the upcoming opportunities for expedited export to the United States.

210. We can assist third-parties in evaluating and developing an audit program that aligns with U.S. FDA requirements. 50

212. We can address issues that threaten a firm’s ability to export food to the United States:

213. Import bulletins;

214. Import Alerts;

215. Recalls; and

216. Illness linked to a product.

217. Expertise:

218. The Leavitt Partners team members all have experience in dealing with domestic and international food-safety crises.

219. The team has continuing interactions with current U.S. regulators and policy-makers.51

220. Thank You Contact us: Web: www.leavittpartners.com Email: info@leavittpartners.com 52