1. SQF Institute SQF Technical Advisory Council Meeting – April 2010

2. Discussion Topics  SQFI Program Updates  SQF Product Updates  Quickfire  Other

3. SQFI Program Updates  Program Growth  Update on training, on-line training  Marketing update  Market expansion – Asia / Pacific  Certification Body performance  RABQSA update  Review of scoring / rating solutions  Input from group

4. Structure of SQF Program FMI CEO Sam DiCarlo CFO FMI John Schulz SQFI - BD Jill Hollingsworth VP of Food Safety Gary Smith SQFI - TD

5. SQF Registrations – January 09  Total of 1963 registrations  Aus / NZ – 1385  N.A. – 322  A / P – 215  S.A. - 15

6. SQF Registrations – January 2010  Total of 4257 registrations  Aus / NZ – 1902  N.A. – 1968  A / P – 286  Latin Am. – 52  Europe – 14  Other - 35 Now 4890 sites

7. North American CBs within SQF – Number of Registered Sites  SGS – 1535 (1)Others  Silliker – 748 (2)- DNV - 48  NSF – 583 (3)- Steritech - 37  NCSI – 354 (5)- SCS - 23  GFTC – 147 (6)- Eurofins - 3  TUV – 129 (7)- Cert-ID - 0  SAI Global – 100 (8)- Intertek (new)  AIB – 86 (9)- Perry Johnson (new)  Eagle – 78 (10) (rank within total SQF CBs – 19 total)

8. US Certifications by FSC by % – April 2010 N = 1159

9. Growth in SQF Program  Overall there has been 117% growth in the program over the last 12 months  The number of registered auditors has increased from 128 to over 300  There are now SQF certificates in over 30 countries around the world

10. SQF Budget Performance in 2009  2009 Budget approved was that SQF was expected to lose 400,000 USD  Final 2009 budget numbers show SQF actually finished in positive numbers, with some revenue from 2009 actually being attributed to 2010 due to some CBs invoices still outstanding  2010 approved budget has a 60 % increase in revenue First quarter 2010 update

11. Revenue Model Discussion  SQF current revenue stream 52% from registrations (average $300 per year) 18% from conference and training (auditor, update) 11% from on-line training revenue 9.5% from license fees 4.0 % from conference sponsorships 3.6% from PAF downloads  Revenue stream from beyond 2010 - ???

12. Update on SQF Training  Since January 2009, there have been 3,200 Implementing SQF 2000 exams 316 SQF auditor exams 242 Implementing SQF 2000 on-line course

13. Training Update  SQF 1000 Materials  Training Update  Upcoming Projects

14. SQF 1000 Materials  Training Materials  Exam  Guidance Document

15. SQF 1000-- Training Materials  Implementation Training Materials for SQF 1000 have been developed PowerPoint Workbook Exam  Includes food safety and food quality examples for primary producers  Need pictures to enhance content  Future: Spanish translation

16. SQF 1000-- Exam DDeveloped for 1000 Implementation Course DDesigned for Consultants, Suppliers, Practitioners MMultiple choice – no true/false or negative questions. Example: When developing the food safety plan the producer must ensure A. That at least one critical control point has been identified B. All employees have attended a HACCP certification class C. The customer's quality requirements have been considered when determining critical control points. D. The SQF Practitioner has validated that each critical limit is effective in controlling the identified hazard

17. SQF 1000– Guidance Document  Developing General Guidance Document  Ready for review by May 5th  Need Technical Experts for Animal Handling (sections 5.6, 6.15, and 6.16)

18. Training Update  SQF 1000 Materials  Training Update  Upcoming Projects

19. SQF Training  Training Survey Overview  Feedback from Participants and Training Centers  Training Materials

20. Survey Results-- Overview Course attended:

21. Survey Results-- Overview Overall did you find the course….

22. Survey Results-- Overview The content was…

23. Survey Results-- Overview The method and style of presentation was…

24. Survey Results Overview The rate of instruction was…

25. The course prepared me to implement SQF systems Survey Results-- Overview

26. The course exam….

27. Survey Results– Participant Comments Comments can be classified into 4 Categories  Time  Materials  Instruction  Exam

28. Survey Results-- Comments  Time Participants would like more time and extend the Implementing course at least ½ day The time for the course content should re-structured with emphasis on the Implementation modules. Specifically more time is needed on: SQF Code; Food Quality Plans; Validation and Verification Activities

29. Survey Results-- Comments  Materials Fix typos and grammatical errors Remove irrelevant information Include “real world” examples, pictures and documents Translate in French

30. Survey Results-- Comments  Instruction Online course is a very useful tool Overall instructors are doing a great job More interaction/ exercises are needed

31. Survey Results-- Comments  Exam Exam items are tricky A practice exam would be helpful Exam items didn’t correspond with the training material

32. SQF Training  Training Survey Feedback  Updated Training Materials to address comments  Translations

33. Updated Training Materials Time  Observation: There is not enough time to cover all the information presented. The training time should be extended.  Resolution: Reorganize the agenda to emphasize the modules in the Implementing Section. Trim/restructure the “Cost of Quality” and “Implementing SQF System.”

34. Updated Training Materials Example Agenda: 1) Introduction and Overview of the Course- 1 hour 2) The SQF Codes, Food Sector Categories, SQF Vocabulary, Use of the Logo, SQF Practitioner, SQF Consultant – 90 minutes 3) Implementing SQF 2000 Systems – 4 hours Workbook Review – 45 minutes 4) SQF Code- Fundamental Requirements – 90 minutes 5) SQF Code- Pre-requisite Programs – 1 hour 6) Auditing & Certification of SQF Systems: A Supplier Overview – 1 hour 7) The SQF Food Safety Plan – 90 minutes Exercise: Developing a Food Safety Plan 8) The SQF Food Quality Plan – 1 hour Exercise: Developing a Food Quality Plan

35. Updated Training Materials Materials  Observation: There are some clerical errors in the documents. When practical examples are used in the training course the participant can better understand how to apply the concepts  Resolution: Fix all typos and grammar errors. Simplify some of the “bulky” slides. Include “real world” examples in the notes section as they apply to the code. Create an appendix that includes sample documents (Policy Manual, Pre-requisite programs).

36. Updated Training Materials Instruction  Observation: Some of the information presented was not current. While the majority of instructors were rated high there were some instructors that were not rated favorably.  Resolution: Audit training courses and develop a train the trainer course to keep trainers updated on the code revisions. Include a module on Quickfire

37. Updated Training Materials Quickfire Module Designed as quick introduction and to be used as a long term reference Topics: - What is Quickfire and how do I use it - How to register your site on Quickfire - ICIX - The buyer module -How to add a buyer -How to access buyer information - User guides/videos

38. Updated Training Materials Exam  Observation: The exam questions are tricky and don’t pertain to the course material.  Resolution: Develop a new bank of test questions that are relevant to the course and the participant. Include a practice exam and/or questions dispersed within the training materials.

39. Training Update  SQF 1000 Materials  Training Update  Upcoming Projects

40. Upcoming Training Projects  Translations Revised SQF training materials to be translated in Chinese, Japanese, and Spanish (French?)  Auditor Training Revisit training materials Develop new bank of audit questions (include a practical exam as part of training class?)

41. SQF Marketing Update  Working with marketing firm Merrill and Associates on marketing projects Short term – March/April newsletter Market research – surveys from  Suppliers  CBs  Retailers Marketing materials Review of SQF website

42. Activities in Growth of Asia / Pacific Market  Conference in China, November 2009  Auditor course in China, April, 2010  Other activities / potential Brazil Mexico Central America Europe

43. Certification Body Performance  Monitoring capabilities limited from Quickfire Currently able to do report review and monitoring of audit group management Feedback provided to CBs  Have requested more reports from Quickfire for future monitoring  Have been in close contact with both accreditation bodies with reports from recent assessments and concerns  One Certification Body has been delisted due to monitoring activities

44. CB Compliance Data  Reality – very limited reporting capability out of Quickfire presently  Management of Audit Groups – audit groups closed within 45 days after due date  North American CBs – (SQF average 93.7) CB A – 100%- CB H – 75% CB B – 99%- CB J – 70% CB C – 97%- CB K – 56% CB D – 95%- CB L – 50% CB E – 93% CB F – 85% CB G – 78%

45. RABQSA Performance  Since Sept 1, all applications have been handled electronically by RABQSA  Applications received – 263 applications total 196 auditor applications 58 consultants 9 trainers  Turn around time of applications now at 7 business days  Concerns – 9 trainers applications only –14 total trainers registered

46. Rating Issue  Issue: Due to the scoring system of SQF audits, ratings for all audits are skewed very high  Potential solution: Rework rating formula for determination of rating Increase weighting of non-conformances  Fix will be incorporated with new PAFs for SQF 2000 in May, 2010

47. Example of Rating Issues  Example: site with 2 majors, 15 minors, and 10 OIP – surveillance audit needed Currently rates – 96.0% E rating Reworking formula – 84.1% C rating Weighting of N/C – 77.6 % C rating  Weighting of N/C proposal OIP: -1 point Minor: -10 points Major: - 50 points Critical: -100 points  Weighing of N/C chosen by AP group, show both scores for a year  Implement by June 1 st, 2010

48. Discussion Topics  SQFI Program Updates  SQF Product Updates  Quickfire  Other

49. Multi-site Certification  Some confusion on multi-site certification, clarification from TAC needed Audit protocols  Every 6 months central site audited, sample of sub-sites  Full document audit done at one sub-site  Full audits done by central site of each sub-site annually  Only certificate received by central site Questions  Should sub-sites each receive a certificate from CB  How should a document review audit of sub-sites be conducted

50. SQF 1000 Update  5 th Edition Final version was released Sept 1 st, 2009  Minor revisions in Jan, 2010  Updates Transition over March 1, 2010 Minor revisions to ensure GFSI recognition Level 2 and 3 PAFs available

51. Update on Competing Produce Standards  Freshcare Given growth of Fresh Care in Australia, we are meeting with them to discuss collaboration options Given status of 1000 and declining market share, what should we attempt to accomplish  United / LGMA / FL Tomato No push for GFSI certification within produce industry in North America Less robust standards being developed and accepted by US buyers

52. United Produce Standards  Developing a produce standard with customer buy-in and participation that can be used by anyone.  The goal isn’t to create a new standard but use the content from existing standards to create a “harmonization” approach.  Currently have 39 out of 60 standards developed. Target date for completion is October 2010  Next big discussion is on how the developed standard will be implemented and sustained.

53. Future of SQF 1000  SQF 1000 market share eroding quickly  Freshcare in Australia becoming dominant produce standard  In North America – produce industry has not embraced 1000, GFSI recognized many primary produce standards  Actions / Strategies to move forward

54. SQF 22000  SQF 22000 has been submitted to GFSI for benchmarking Using session 5 and 6 from SQF 2000 standard, with ISO 22000 as the foundation for food safety management  Accreditation will have to include 17021 as an scheme, CB criteria document must be updated  Reason – North American, Asia/Pacific option for 22000, easy access to SQF CBs  Status – initial benchmarking, additional work needed to complete benchmarking, no activity until July, 2010

55. SQF Ethical Sourcing Module  Module built combining the SQF modules (RSP, REP), retailer standards and the Global Social Compliance Program (GSCP)  To be combined with SQF certification audit  Expected to be 1 additional audit day  Auditors will be required to be SQF registered and undergo an additional training session on ethical sourcing module and on-line exam Webinar April 28 th Classroom May 7 th - Chicago

56.  Responsible Social Practices  Responsible Environmental Practices  Ethical Sourcing  Food Defense Solution for Sustainability – SQF Modules

57. Guidance Documents for SQF  General Processing Requirements  Produce Packing House (FSC 4)  Shell Egg (FSC 12)  Transport and Distribution (FSC 25 & 26)  Packaging (FSC 27)  To begin in Q1 of 2010 Dairy (FSC 10) Brokers (FSC 35)

58. Guidance Document Approvals Needed  Packaging  Produce Packinghouse  Ethical Sourcing

59. Other Potential New Products  Ethical sourcing training and on-line training  Animal welfare – module around humane handling of animals, chicken, beef, pork, lamb  Aquaculture module  SQF branded products

60. Quickfire Support Solution  SQF Quickfire Support Personnel Australia – part time, 20 hrs per week US – part time, 20 hrs per week (ON HOLD)  Dedicated to providing Quickfire support to Industry Suppliers CBs  Will be interacting with Muddy Boots directly when there are issues they cannot address  Implementation April 1 st, 2010 in Australia  Webinars, user guides, Muddy Boots training

61. Quickfire Discussion  Current status – SQF has expressed major concerns to Muddy Boots over usability of system, report capabilities, interface requests, responsiveness and engagement of SQF team in communication and strategy  Concerns – Have we asked them to do too much? Reality – system not built to run a certification program, very limited customization to SQF needs  Future – reviewing options on reporting capabilities with other service providers, contracted objective review with usability of system for customer interface

62. SQF Conference, August 2010  In conjunction with AFS HACCP conference in Melbourne  Review of agenda and speakers  Awards and sponsor updates

63. GFSI Update  Many standards globally seeking GFSI recognition Primus, Global GAP, FSSC 22000, Syngery 22000, Red Meat Standard recognized Concern expressed to GFSI on number of recognized standards growing GFSI not concerned with number of standards, want as many as possible, more concerned on costs of GFSI certification audits and expansion into emerging markets  6 th Edition of the GFSI Guidance Document set for July, 2010 release  SQF working with GFSI Accreditation committee on Witness Audit Recognition Program with CB association (Food Safety Forum)

64. Other Discussions  Sprouts / Mushrooms to be SQF 2000  ICIX integration  Use of the SQF buyer module