Supplemental_Local_Resource_Procurement_Initiative_Report_updates_11May12.pdf

ADVANCED C4 SOLUTIONS, INC.

4017 WEST DR. MARTIN LUTHER KING JR. BLVD.

TAMPA, FL 33614

(813) 282-3031

28 FEBRUARY 2012

Supplemental Local Resource Procurement Initiative

Iraq

(SLRPI-I)

Supplemental Local Resource Procurement Initiative – Iraq (SLRPI –I) i

Table of Contents Page

Table of Contents ......................................................................................................................... i

List of Tables and Figures .......................................................................................................... vii

Supplemental Local Resource Procurement Initiative – Iraq (SLRPI-I)

Executive Summary

Background

Discussion

Food Safety

Vendor Reliability

Security

Recommendation

Crawl

Walk

Run

Conclusion

Assessment Factors

1.0 Food Safety

1.1 Global Food Safety Standards

1.2 Local Food Safety Standards

1.3 Food Safety Risk Continuum

1.4 Food Safety Conclusion

2.0 Vendor Reliability

2.1 Existing Import Routes

2.2 Logistics Management

2.3 Robust Suppliers

3.0 Security

3.1 Logistics Security

3.2 Product Tampering

3.3 Vendor Vetting

3.4 Vendor Security

ii

4.0 Other Factors

5.0 Way Ahead

Conclusion

Appendix A: GFSI Global Markets Capacity Building Programme Assessor Guideline ............... A-1

Appendix B: GFSI Global Markets Capacity Building Programme Checklists ............................. B-1

Business Details ................................................................................................................................ B-1

Checklist ........................................................................................................................................... B-2

Disclaimer....................................................................................................................................... B-15

Logo Usage Guidelines .................................................................................................................... B-15

Appendix C: USDA Foreign Agricultural Service Global Agricultural Info. Network (GAIN) Report

............................................................................................................................................... C-1

Appendix D: Report of Dr. Yaarub Al-Ubudi ............................................................................. D-1

General ........................................................................................................................................... D-1

Border Crossings .............................................................................................................................. D-1

The Land Crossing Points ............................................................................................................. D-2

Rules, Regulations and Conditions for Iraq Food Supplies ................................................................ D-2

Needed Documentation to Export Food to Iraq ............................................................................... D-3

Documentation needed for food produce in Iraq ............................................................................. D-3

Food Stuffs ...................................................................................................................................... D-3

Dry Goods .................................................................................................................................... D-3

Fruits and Vegetables .................................................................................................................. D-3

Dairy Products ............................................................................................................................. D-4

Meat ............................................................................................................................................ D-4

Canned Food ............................................................................................................................... D-4

Water and Soft Drinks .................................................................................................................. D-4

Appendix E: Al-Jazeera Group Co. Food Supply, Dewaniya .......................................................E-1

Contact Information ......................................................................................................................... E-1

Area of Operation in Iraq .................................................................................................................. E-1

Food Specialties and Other Services.................................................................................................. E-1

Warehousing and Transportation ..................................................................................................... E-2 iii

Past Work with the US ...................................................................................................................... E-3

Reputation in the Market Place ........................................................................................................ E-3

Financial Abilities .............................................................................................................................. E-3

Access to the Internet ....................................................................................................................... E-4

Access to the Green Zone ................................................................................................................. E-4

Access to the International Market ................................................................................................... E-4

Final Notes ....................................................................................................................................... E-4

Appendix F: Al-Muften Group .................................................................................................. F-1

Contact Information ......................................................................................................................... F-1

Company Organization ..................................................................................................................... F-1

Area of Operation in Iraq .................................................................................................................. F-3

Food Specialties and Other Services.................................................................................................. F-3

Warehousing and Transportation ..................................................................................................... F-3

Past work with the USA .................................................................................................................... F-4

Reputations in the Market Place ....................................................................................................... F-4

Financial Abilities .............................................................................................................................. F-4

Access to the Internet ....................................................................................................................... F-4

Access to the Green Zone ................................................................................................................. F-4

Access to the International Market ................................................................................................... F-4

Final Notes ....................................................................................................................................... F-4

Appendix G: Al-Maha .............................................................................................................. G-1

Contact Information ........................................................................................................................ G-1

Area of Operation in Iraq ................................................................................................................. G-1

Food Specialties ............................................................................................................................... G-1

Warehousing and Transportation .................................................................................................... G-1

Past work with the USA ................................................................................................................... G-1

Reputations in the Market Place ...................................................................................................... G-2

Financial Abilities ............................................................................................................................. G-2

Access to the Internet ...................................................................................................................... G-2

Access to the Green Zone ................................................................................................................ G-2

Access to the International Market .................................................................................................. G-2 iv

Final Notes ...................................................................................................................................... G-2

Appendix H: Al-Jazeera............................................................................................................ H-1

Contact Information ........................................................................................................................ H-1

Area of Operation in Iraq ................................................................................................................. H-1

Food Specialties and Other Services................................................................................................. H-1

Warehousing and Transportation .................................................................................................... H-2

Past work in the USA ....................................................................................................................... H-2

Reputations in the Market ............................................................................................................... H-2

Financial Abilities ............................................................................................................................. H-2

Access to the Internet ...................................................................................................................... H-2

Access to the Green Zone ................................................................................................................ H-2

Access to the International Market .................................................................................................. H-2

Final Notes ...................................................................................................................................... H-2

Appendix I: Al-Thamir............................................................................................................... I-1

Contact Information .......................................................................................................................... I-1

Area of Operation in Iraq ................................................................................................................... I-1

Food Specialties ................................................................................................................................. I-1

Warehousing and Transportation ...................................................................................................... I-1

Past work with the USA ..................................................................................................................... I-1

Reputations in the Market Place ........................................................................................................ I-2

Financial Capabilities ......................................................................................................................... I-2

Access to the Internet ........................................................................................................................ I-2

Access to the Green Zone .................................................................................................................. I-2

Access to the International Market .................................................................................................... I-2

Final Notes ........................................................................................................................................ I-2

Appendix J: Oasis International Waters .................................................................................... J-1

Appendix K: Al-Rajahi Limited ................................................................................................. K-1

Appendix L: Al-Sabah Group ..................................................................................................... L-1

Contact Information ......................................................................................................................... L-1

Area of Operation in Iraq .................................................................................................................. L-1 v

Food Specialties and Other Services.................................................................................................. L-1

Warehousing and Transportation ..................................................................................................... L-1

Past work with the USA .................................................................................................................... L-2

Reputations in the Market Place ....................................................................................................... L-2

Financial Abilities .............................................................................................................................. L-2

Access to the Internet ....................................................................................................................... L-2

Access to the Green Zone ................................................................................................................. L-2

Access to the International Market ................................................................................................... L-2

Final Notes ....................................................................................................................................... L-2

Appendix M: Al-Rajeh Food Company .................................................................................... M-1

Contact Information ........................................................................................................................M-1

Area of Operation in Iraq .................................................................................................................M-1

Food Specialties and Other Services.................................................................................................M-1

Warehousing and Transportation ....................................................................................................M-1

Past work with the USA ...................................................................................................................M-1

Reputations in the Market Place ......................................................................................................M-1

Financial Abilities .............................................................................................................................M-1

Access to the Internet ......................................................................................................................M-1

Access to the Green Zone ................................................................................................................M-1

Access to the International Market ..................................................................................................M-2

Final Notes ......................................................................................................................................M-2

Appendix N: Al-Foorsoan Co LTD ............................................................................................. N-1

Contact Information ........................................................................................................................ N-1

Area of Operation in Iraq ................................................................................................................. N-1

Food Specialties and Other Services................................................................................................. N-1

Warehousing and Transportation .................................................................................................... N-1

Past work with the USA ................................................................................................................... N-1

Business Details ............................................................................................................................... N-1

Financial Abilities ............................................................................................................................. N-2

Access to the Internet ...................................................................................................................... N-2

Access to the Green Zone ................................................................................................................ N-2 vi

Access to the International Market .................................................................................................. N-2

Final Notes ...................................................................................................................................... N-2 vii

List of Tables and Figures Page

Figure 1.1.1 - Safety Standard Benchmarked Coverage Areas

Figure 1.1.2 - GFSI Global Markets Protocol

Table 1.3.1 - Food Safety Risk Continuum

Figure 2.1.1 - Import Routes

Figure 2.3.1 - Desirable Iraqi Vendor Characteristics

Figure 2.3.3 - Local Vendors

Figure 5.0.1 - SLRPI-I Tactical Timeline

Figure 5.0.2 - SLRPI Strategic Campaign file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288522 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288523 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288524 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288525 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288526 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288527 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288528 file:///C:/Supplemental%20Local%20Resource%20Procurement%20Initiative%20Report%202012-02-28%20mcc.docx%23_Toc318288529

Supplemental Local Resource Procurement Initiative – Iraq (SLRPI-I)

Executive Summary:

There appears to be a viable local market for food and beverages for U.S. personnel operating in the Republic of Iraq. The local supply chain, properly mitigated, is safe, reliable, and secure.

Using the local market requires diligent planning and management.

Background:

The Department of State (DoS) requested AC4S and their subcontractor SOSi determine the viability of the local market for supplying food and beverages for U.S. personnel operating in the Republic of Iraq. All food and beverages required by U.S. government facilities are currently procured through the Defense Logistics Agency (DLA) Troop Support Subsistence Prime Vendor Program and shipped into Iraq via a dedicated logistics channel. The costs to operate, manage, and secure this dedicated logistics channel are high and its single point of entry characteristic represents significant risk.

Our assessment has determined that there are viable sources of food and beverages that could be sourced locally from Iraqi Distributors. While there appear to be viable supplies of locally produced food, the Iraqi food safety surveillance mechanisms, in our opinion, are not yet to a point of sufficient maturity to offset the potential risks of utilizing these locally produced items in a mass dining facility. As such, we recommend that imported food items represent the greatest risk/reward tradeoff. Some locally produced beverages (water/soda) do appear to have sufficient safety and surveillance standards in place to allow procurement and use.

Discussion In conducting its assessment, AC4S considered food safety, vendor reliability, and security.

Food Safety – Refers to food and beverages free from pathogens in the manufacturing, packaging, and distribution processes. The current DLA subsistence supply chain uses U.S. Army veterinary standards, which equate to USDA standards. The application of these standards will be difficult to attain and maintain in Iraq. As such, we focused on international standards such as the Global Food Safety Initiative (GFSI). Export standards of supplier countries are more stringent and better enforced than Iraq’s internal standards. Reliance on global standards will be more sustainable long term. We recommend the initial use of imported food items and selected locally produced beverages.

Current Subsistence Supply Chain

Dedicated Logistics Channel

Single Point of Entry into Iraq

High Transportation Costs

High Security Costs

Safety of locally procured Food/Beverages

Viable supplies of safe imported food and beverages from Iraqi distributors

Locally produced food safety surveillance mechanisms generally insufficient

Selected locally produced beverages

(water/soda) have sufficient safety surveillance mechanisms

Risk Mitigation Considerations

Vetting of Iraqi Vendors by RSO

Tamper-resistant packaging

Existing security practices (checkpoints, inspections, dogs, etc.)

Vendor Reliability - Reliability focuses on local vendor competency and capacity. Reliability applies to diverse shipping routes from the source countries through varied Iraqi ports of entry to minimize single points of failure in supply lines. It also refers to robust vendors with the characteristics listed in the table to the right.

Additionally, multiple supply sources should be developed for products being imported to minimize potential supply disruption and maximize competition.

Security - Security refers to the intentional introduction of pathogens into the food supply or CBRNE (Chemical, Biological, Radiological, Nuclear, Explosive) into US facilities. The current DLA model provides among the lowest security risk, but is extremely costly (raw cost, footprint, management, etc.). Additionally, securing the entire supply chain for local sourcing is also not sustainable or realistic. What constitutes acceptable risk will need to be an ongoing consideration by DoS.

Recommendation:

It is our recommendation to apply a crawl/walk/run methodology to the local sourcing of food and beverages.

Crawl – Begin local sourcing by the DLA Subsistence Prime Vendor (ANHAM) and/or with direct DoS contracts to local vendors.

Higher risk items such as fresh fruit, vegetables, and meat would continue to be procured through DLA until local vendors are certified. As local channels develop, continual analysis and

“Other than direct action, food and fuel security are the biggest factors that would cause mission failure.” -

Ambassador Jeffrey

Initial Local Sourcing

Procure lower risk items

― Similar to those in DLA catalog

― Produced and packaged by companies certified to an international standard

― Tamper-resistant packaging

― Example products include: bottled water, canned sodas, packaged beverages, canned/bottled goods such as canned vegetables or cooking oil, dry goods that are cooked (i.e. heated to a temperature that would destroy food-borne pathogens) such as rice or have low susceptibility to food-borne pathogens such as sugar.

Desirable Iraqi Vendor Characteristics

Food Quality

Verifiable local licensing

Strong Financial Status

Appropriate Facilities

Transportation Assets

Logistics Capability

Supply Chain Responsiveness risk-assessment would be applied to additional products for inclusion on the list of locally available items.

Walk – Develop a repeatable model. Managing multiple vendors requires a different model than is currently in use. A single contract to a single vendor requires the least management oversight and effort. Multiple contracts with multiple vendors will require a greater amount of management. At a minimum, a Program Management Office (PMO) function would likely need to be established. This could be accomplished by realigning existing DoS resources, hiring service-provider support contractors, hiring Local Nationals (LNs) or Locally Employed Staff (LES), and/or using local brokers. Even using LNs there remains a leadership/management function tasked and required to increase procurement from local sources. Without that, the current DLA model will likely remain the standard.

Run - Develop a campaign plan and a notional timeline for complete in-country competitive sourcing and phase-out of DLA support. Complete classes of food and beverages could be sourced locally. Based on the reliability of the local supply route at this stage, on-site storage requirements could be reduced to lower levels or fewer days of supply. Dining Facility (DFAC) operations themselves could be combined (procurement, preparation, serving) and outsourced to local suppliers and providers. Ultimately, DFAC operations could be scaled back and local suppliers could provide stock to commissaries allowing DoS Permanent-Change-of-Station (PCS) staff to provide some or all of their meal needs and cook in their quarters.

Conclusion:

Local sourcing of food and beverage items in Iraq is possible and viable. Cost savings and political good will are likely outcomes. How effective it will be will directly correlate to the effort applied and the organizational willingness – to include Senior Management - to exercise local sources.

Benefits of Using Local Nationals or Brokers

Increases interaction with local vendors

Greater freedom of movement than US personnel

Lower profile than US personnel

Lower cost than US personnel

Supports the objective of using local sources

Assessment Factors

1.0 Food Safety:

In determining viable local sources for food and beverage procurement, the issue of food safety is paramount. Confidence in the safety of the food and beverages consumed is created by the surveillance and enforcement of food safety standards. The current sourcing path relies on US Army Veterinary Standards, which in effect equate to USDA standards. DLA currently sends inspectors throughout the supply chain and controls the supply chain to maintain a safety standard required to maintain the viability of a fighting force. In this scenario, there is little room for risk as readiness of that fighting force is directly impacted by any lapses in food safety, which would have grave effects on the military mission. As such, the military maintains a robust logistics and surveillance infrastructure in order to meet this very high standard. The cost of maintaining this infrastructure is significant but is offset by the substantial risk to military objectives caused by lapses in safety and security.

By contrast, a long-term DoS Mission has very different goals and objectives. While a safe food supply is of paramount concern, a ‘zero tolerance’ policy is not typically applied. Additionally, there are other considerations such as the political good will gained by the infusion of capital by procuring resources from the local economy. In the words of the US Agricultural Counselor in Iraq, “the enforcement of any standard is already well beyond what DoS could expect in any developing country.” Considering the security situation in Iraq, however, this mission is unlike most other countries’ Missions in that a robust security force does need to be maintained, but perhaps not to the standard of a standing military. Additionally, due to the security situation, U.S. Mission in Iraq staff are unable to live on the economy as they do in other missions and, as such, are fed in mass in dining facilities (DFACs). These two factors alone do require the adherence to a food safety standard that would be beyond a normal Mission/Embassy. Reliance on a DoD standard and logistics infrastructure, in addition to being extremely costly, could be viewed as contrary to mission goals. Reliance on other well-established international food safety standards may prove acceptable to DoS goals – even in this unique scenario.

1.1 Global Food Safety Standards:

International Standards and enforcement mechanisms exist that are recognized by both governments and the food industry. An example of an internationally recognized and accepted set of food safety standards is the Global Food Safety Initiative (GFSI). The GFSI was established to ensure confidence in the delivery of safer food to consumers, while continuing to improve food safety supply chain management. GFSI provides a benchmark to ensure consistency between countries and the products that have been certified. These global food safety standards address food, packaging, consumer goods, storage, and distribution for primary producers, manufacturers, and distribution.

GFSI-benchmarked food safety standards

Safety Standard Benchmarked Coverage Areas

SQF: MFR, wholesalers & Distributors

BRC: Supply Chain

IFS: MFR of loose food – contamination during packaging

FSSC: MFR and Suppliers

Global GAP: Crops, livestock, Aquaculture

Figure 1.1.1 – Safety Standard Benchmarked

Coverage Areas include: Safe Quality Food (SQF), British Retail Consortium (BRC), International Food Safety (IFS), Food Safety System Certification 22000 (FSSC), and Global GAP (Good Agricultural Practices). (http://www.nsf.org/business/global_food_safety_standards/index.asp)

GFSI was launched in May 2000 by CIES, the Consumer Goods Forum, and an independent, global food business network in more than 150 countries, comprised of international retailers.

GFSI is a retailer-driven certification program that has been strengthened by the participation of the foodservice sector. Currently, many major global retailers (Carrefour, Tesco, Metro, Migros, Ahold, Wal-Mart, and Delhaize), along with the National Restaurant Association, have agreed on common acceptance of the global food safety certifications. (* The GFSI, an independent non-profit foundation managed by The Consumer Goods Forum, was founded in 2000.) Carrefour, the 2nd largest retailer globally, is opening five stores in the Erbil area, so the distribution channels of GFSI certified goods are becoming if not already available. More information on GFSI can be found at http://www.mygfsi.com/

What GFSI shows us through its adoption by the major global retailers is that there are international food safety standards that are suitable for the western public and thus the U.S.

Mission in Iraq. Locally procured products could abide by one or more of these standards since the biggest food safety risk for other than fresh meats and produce occurs during production and packaging. Confidence in production and packaging would allow the U.S. Mission in Iraq to focus solely on the ‘last leg’ of the supply chain. In this last leg, focus can be applied to proper handling in distribution. As local standards become acceptable and reliable or the suppliers become internationally certified, confidence in this last leg increases. In that vein, GFSI has a Global Markets Capacity Building Program whose efforts are focused on developing food safety competencies and building supplier capacity (See figure 1.1.2 below). It is targeted at small, less-developed businesses, training how to develop food management safety processes. In this construct, there are requirements to step a business through basic and intermediate processes with the ultimate goal at the advanced level of being certified in one of the GFSI standards.

Certification and surveillance is by third-party audit bodies that are commercially available to any business choosing to participate. Appendix A contains assessor guidelines and Appendix B contains checklists that would be used by both businesses seeking certification and third-party audit firms. Participating in this program could be a contractual requirement of local suppliers.

Minimum ordering quantities would likely have to be significant for the GFSI certification process to be cost-beneficial to suppliers.

http://www.nsf.org/business/sqf/index.asp?program=SQF http://www.nsf.org/business/global_food_safety_standards/brc.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/ifs.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/ifs.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/fssc.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/globalgap.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/globalgap.asp?program=GFSI http://www.nsf.org/business/global_food_safety_standards/index.asp http://www.mygfsi.com/

Expecting GFSI certification (i.e. advanced processes) of local Iraqi vendors upon inception is not realistic as the path to certification is typically a three year process from the time they start the program. Encouraging vendors to start the program not only enhances the confidence in the safety of locally procured items, but increases the viability of this sector of the Iraqi business base as part of a nation-building effort. For example, a vendor who enters this program in order to supply DoS could then be qualified to supply a major retailer (i.e. Carrefour in Erbil) who has operations in Iraq. This could garner support from the local business community for the US presence in Iraq.

1.2 Local Food Safety Standards:

Iraq does have food safety standards that are relatively robust and in line with international standards. The concern raised by our assessment and validated by the Agricultural Counselor in Baghdad is the veracity of surveillance and enforcement of those standards for locally produced food supplies. In the opinion of Dr. Yaarub Al-Ubudi (Appendix C), the former Iraq Minister of Agriculture, the Iraqi surveillance entities coupled with their outsourced consultants do provide a safe food supply to the Iraqi people. The concern shared by the Agriculture Counselor is that the system is not yet free from corruption and is therefore suspect. Per our consultant Dr.

Yaarub Al-Ubudi, and according to USDA Foreign Agriculture Service (FAS) Baghdad sources, the government of Iraq has contracted with Société Générale de Surveillance (SGS), to inspect, test, certify, and verify that products meet quality and food safety standards at the country of origin.

The contract with SGS was expected to be effective by May 2011 according to the USDA Foreign Agricultural Service Global Agricultural Information Network (GAIN) 3/24/2011 report.

Figure 1.1.2 – GFSI Global Markets Protocol

SGS (www.sgs.com) is, by their claim, the world’s leading inspection, verification, testing and certification company. They are recognized as the global benchmark for quality and integrity.

With more than 70,000 employees, they operate a network of more than 1,350 offices and laboratories around the world. As the SGS outsourced surveillance matures so will the confidence in locally procured food. There is little disagreement that the food safety standards are much more stringent and more stringently applied to imported goods. The combination of outsourced surveillance at points of entry, the stringent Iraqi import standards and the export standards of the countries being imported from (which abide by recognized and accepted international food safety standards) contribute to relatively high confidence, in our assessment, in the safety of imported food products. Consequently, the primary area of potential concern is in the storage and distribution of those imported items after entry into the country. For example, do frozen items remain frozen throughout the entire supply chain before arrival at the final consumer destination?

What follows is a discussion of the Iraq food safety standards. Contributing to this discussion are the following documents, which can be found in appendices to this report:

USDA Foreign Agricultural Service Global Agricultural Information Network (GAIN) report (Appendix D)

Consultant Report – Dr. Yaarub Al-Ubudi, former Iraq Minister of Agriculture (Appendix C)

Iraq food Standards are based on Codex Alimentarius, as well as regulations and standards of neighboring countries such as Egypt, Jordan, and Gulf Cooperation Council States. The Codex Alimentarius ("Book of Food") is a collection of internationally recognized standards, codes of practice, guidelines and other recommendations relating to foods, food production, and food safety. The Codex Alimentarius is recognized by the World Trade Organization (WTO) as an international reference point for the resolution of disputes concerning food safety and consumer protection.

The Iraqi Central Organization for Standardization and Quality Control (COSQC) is an independent government agency that was established by law no. 54 in 1979 and acts as a consultant on quality control and standardization issues for government ministries and state owned enterprises. It maintains relationships with international standard setting organizations.

The organization is presided over by a president and a deputy minister. It consists of three directorates headed by a general director who reports to the president. The Republic of Khurgistan (KRG) has reached an agreement with their counterparts in Baghdad, on adopting the same standardization and quality control standards issued by COSQC.

The COSQC has established industry-standard Labeling and Shelf-life criteria.

The Iraqi COSQC labeling requirements for locally produced and imported food products are as follows:

The name of the food

List of ingredients

Net contents and drained weight (metric system) http://www.sgs.com/

Name and address of the manufacturer/packer/distributor/importer/exporter/vendor

Country of origin

Lot identification

Date of production and storage instruction

Instruction for use

Quantitative ingredients declaration

Shelf life can only be shown by clear and unambiguous production and expiration dates. The use of any of the following statements for expressing expiration date is permissible.

Expiration Date

Use by (date)

Fit for (from the day of production)

Use Before

Sell by date (for food products having an expiration period exceeding 3 months)

Additionally, they have implemented Product inspection for imported products and require specific certification and documentation. The current system for testing imported products at border crossing points involves three agencies: COSQC tests all foodstuffs by collecting samples at the border to be tested in their Baghdad lab, the process takes a minimum of five days; the Ministry of Agriculture (MOA) tests shipments such as grain, feed, vegetables, live animals and agricultural inputs, preliminary analysis of the shipment is handled at the border and more thorough testing is done at their testing labs in Baghdad; and, the Ministry of Health (MOH) conduct its own testing by taking a sample of the foodstuffs and analyzing it at the Central Health Lab in Baghdad. A representative sample would have an average weight of two kilograms.

The general requirements for imported food products are as follows:

Brand/trademark should be used on product packaging

Traceability of products

It is permissible to use data or graphics on the general labeling if it does not contravene the general requirement of standard IQS 230/1989

When using quality grading, it should be comprehensible and should not be misleading to consumers

The following documents are required for imports:

Commercial Invoice

Certificate of Origin

Halal certificate for meat and meat products

Health certificate from country of origin

Bill of lading or airway bill

Weight list (for grain)

Phytosanitary certificate for plant and plant products

1.3 Food Safety Risk Continuum:

While robust food safety standards and reliable surveillance mitigate the risk of food-borne illnesses, the complete elimination of risk is not possible. There are events, even in the U.S., of food supply contamination regardless of the preventative measures applied. Therefore, in situations such as the US Mission in Iraq where food safety is of paramount concern due to its impact on the mission, continual risk assessment must be undertaken. Certain food categories are inherently riskier than others. Table 1.3.1 provides a sample food safety risk continuum.

As can be seen, fresh agricultural products represent the greatest food safety risk despite stringent standards and controls. Risk to food safety can be inserted at any point in the supply chain. The greatest risk to food safety occurs in the production, manufacturing, and packaging of products. It is for this reason that significant effort be applied to the selection of products with the highest degree of confidence in their safe production and packaging. Doing so mitigates the largest portion of the risk. For example, if Green Giant Canned Green Beans have been successfully procured through the DLA channel with limited or no problems, procuring that same product through another channel is less risky than the selection of a suitable substitute. Even if there is high confidence in the safe production and packaging, however, there is risk of pathogens developing in the storage and distribution end of the supply chain.

For this reason, the next step in risk mitigation would be the selection of products from the ‘less risky’ end of the spectrum when utilizing alternative sourcing channels. For example, Table 1.3.1 - Food Safety Risk Continuum choose identical (brand and manufacturer) dry goods from the DLA catalog for local sourcing.

As confidence in the local supply route increases, foods with marginally greater risk can be selected for local sourcing on an incremental basis. Reliance on the DLA channel for the riskiest of foods – i.e. fresh fruit and vegetables – should be continued until such time as that channel is no longer available or sufficient confidence exists in the food safety processes of local vendors.

An example of this could be fruits imported from Jordan with an approved phytosanitary certificate via a local import-distributor certified to the Food Safety System Certification (FSSC) 22000 standard.

1.4 Food Safety Conclusion:

Given the preceding discussion, the combination of generally acceptable international standards, the export standards of countries that would be importing into Iraq and the import standards, requirements and surveillance mechanisms established by Iraq, there appears to sufficient complementary mitigation to allow the availability of safe food products from import distributors in Iraq. The concern would then shift to the food handling and safety practices of those distributors. The selection of lower-risk foods such as canned goods would further mitigate safety concerns. The selection of a vendor whose food handling processes have been audited by a third party certification authority further reduces risk and increases confidence in a safe product. This final step will likely take time to implement, but simply participating in a process such as the GFSI Global Markets Program could be a viable first step.

2.0 Vendor Reliability:

2.1 Existing Import Routes:

The trade system in Iraq is one of the oldest systems in the country. Many of the routes have been in existence for literally hundreds of years. Even with three major wars in the last 30 years, the food supply chain has never been measurably interrupted. There are at least 14 established trade border crossings (land and sea) and 5-6 airports. Appendix C (Dr.

Yararub assessment) contains additional information about each of these border crossings. The current DLA sourcing model is only utilizing one of these points of entry, which provides no redundancy. A reliable food supply should provide for redundancy in the supply chain. Local vendors make use of a variety of the country entry points and have alternative routes designated in the event of challenges at any given entry point. Entry points are typically product-specific based on a given vendor’s supplier

Figure 2.1.1 - Import Routes relationships. They typically have alternative supplier relationships to offset any supplier or border challenges.

2.2 Logistics Management:

Under the current DLA model, food shipments destined for the U.S. Mission in Iraq facilities are in specific containers. This requires the US to monitor the logistics chain for these shipments and secure those convoys. Shipments by Iraqi import-distributors are not destined for any specific customer, but the country’s customer-base as a whole. As such, there is no need to monitor the supply chain since it is the vendor’s responsibility to get the goods into the country.

An additional benefit to using local vendors is that all orders could be “FOB Destination.” This means that the seller has total responsibility for goods until they are delivered. In other words, the suppliers have the responsibility to get the products to the DFAC unlike the current model where the U.S. government takes responsibility for the products when they leave the ANHAM facility in Kuwait. Therefore, in a local vendor model, the U.S. would only pay for products that were actually received at the DFAC vs. products that were shipped.

In addition to the outsourcing of supply-chain transportation and management, the U.S. would bear no responsibility to provide security for shipments. It is our understanding that the U.S.

Mission in Iraq is spending approximately $30M per year to secure convoys. This does not include the additional transportation costs that DoS is paying for the dedicated shipments nor does it include the cost of expeditors at IZ checkpoints, which costs approximately $1M per year. We were informed that ANHAM was to take over the securing of convoys in July 2012. As of the writing of this report, there are no projections on what future security costs will be, but it is clear that there will be additional costs of possibly similar magnitude as being paid today.

2.3 Robust Suppliers:

In order to gain reliability in the use of local suppliers, companies need to be evaluated to determine their capability to consistently support the level of supplies required. Figure 2.3.1 highlights reliable vendor characteristics that we assessed companies against and should be considered for any companies chosen as local suppliers. To begin with, there are Iraqi suppliers who are the ‘authorized vendor’ in Iraq for many of the products currently being utilized by the DFACs. For example, Al Fahad is the authorized distributor in Iraq for KDD (Kuwait Danish Dairy) whose dairy and juice products are available in the DFACs today. A significant benefit of using a local authorized distributor is that shipments, in the case of Al Fahad, will enter Iraq in Iraqi registered trucks with Iraqi drivers. This addresses one of the primary challenges being experienced by the DLA path at border crossings. Designation as an authorized vendor typically involves some level of vetting by the producer of the firm’s ability to reliably represent that producer in a given market. That vetting would include the same items that are in figure 2.3.1 such as the financial

Desirable Iraqi Vendor Characteristics

Food Quality

Verifiable local licensing

Strong Financial Status

Appropriate Facilities

Transportation Assets

Logistics Capability

Supply Chain Responsiveness

Figure 2.3.1 – Desirable Iraqi Vendor

Characteristics capability to have a line of credit or support the purchase of substantial inventory, sufficient and appropriate (i.e. refrigerated) storage facilities, and the ability to maintain the quality of the product.

Many of the local suppliers we visited had logistics as a core capability of their business and do not outsource for that function. Many began as logistics companies and evolved into suppliers.

Al Muften Group, for example, owns a land/sea logistics company and Air logistics company. They have a fleet of trucks in Iraq, a sea logistics company out of Dubai and significant international supplier relationships. They have offered a demonstrated capability to procure and deliver whatever specification desired from whatever source globally. This is a desirable characteristic of a robust and reliable supplier.

Another key attribute of a reliable supplier is storage capability. Suppliers do exist in Iraq with warehousing capability to store significant inventory and maintain product separation. We also found vendors with robust and reliable cold and frozen storage capacity to include back-up generators, which should be a requirement for any vendor providing cold/frozen products due to the unreliability of the power supply throughout Iraq.

The next factor to consider is the responsiveness of the vendors supply chain and the quality of goods provided.

The responsiveness of the supply chain will directly tie to the scale and recurrence of orders. Small, sporadic orders may result in less than desirable outcomes. Sizeable and regular orders will cause vendors to maintain sufficient inventory to meet demand. Expected quality can be specified in the order.