Earlier this month the U.S. Food and Drug Administration (FDA) sought the help and assistance of Chinese food regulators as the U.S. prepares to implement the 2011 Food Safety Modernization Act. The law is aimed at stemming the continued rise in food contamination incidents across the U.S., and among increased inspection and enforcement initiatives, also includes the realization that food safety measures must be incorporated across the entire food supply chain. While the effort is laudable, the reality and scope of control efforts required from both nations remains a rather open question.

An article published in the Wall Street Journal (paid subscription required or free metered view) highlights the growing presence of China’s producers within U.S. food products, with China now representing a significant presence as an exporter of food products. China’s food and agricultural exports more than doubled in 2010, with major exports including processed vegetables and fruit juices.  We were surprised to read that 72 percent of U.S. apple juice imports originate from China.

According to the WSJ, the FDA currently shares inspection information with regulators in Europe and Australia and now hopes to include China. The agency’s current outreach is an effort to secure accreditation of private-sector inspectors and to create a documentation system for China’s suppliers.

Supply Chain Matters has featured multiple commentaries regarding the alarming increases in both food safety and pharmaceutical product contamination and we openly supported the passage of the Food Safety Modernization Act. But the reality remains that China has its own internal challenges regarding the safety of food products and food ingredients.

To gain a current perspective, we came acrossa recent Voice of America News article which indicates that newspapers across China continue to be filled with disturbing stories of egregious food safety violations. A Chinese university student in Shanghai, who was so fed up with the stream of contamination scandals, started a website that collects and summarizes reports of food safety issues.  Thus far, the web site has documented more than 2000 incidents from media sources, and while violations decreased from 2008 to 2010, the trend is rising again in 2011. A callout panel notes some rather disturbing examples, including pork tainted with bacteria that causes the meat to emit blue light, and vinegar tainted with anti-freeze. China’s population continues to be concerned, and China’s political leaders are stepping-up efforts for increased inspection and enforcement of food safety laws.  The question, however, remains the scope and scale of the effort.

While the efforts of both the FDA and China’s regulators to increase cooperation in inspecting food products are encouraging, it does not take away from the reality that food producers across all tiers , especially those involving export and import, have to insure that proper inspectional and process control safeguards are in-place. Government resources are limited, and the scope of the effort requires both governmental and private industry initiatives. The law itself requires that the riskiest U.S. facilities would have to be inspected every three years. One wonders aloud how the on-site inspectional requirement would be interpreted among China’s regulators.  The law also calls for U.S. food producers to have detailed food safety plans encompassing all stages of food chain production.  This provision alone should be the area of emphasis and concern for U.S. food producers, and not the reliance that government regulators will catch major problems.

Bob Ferrari

U.S. President Barack Obama has signed into law the Food Safety Modernization Act of 2010, the largest overhaul of U.S. food safety laws since the 1930’s. While the measure has gained widespread support among industry participants, certain emboldened House Republicans are threatening not to fund the regulatory enforcement measures related to this law. Supply Chain Matters finds this position to be unconscionable, and lacking any sense of good judgment, other than favoritism to certain political interests.

The new law as outlined would:

-Increase inspections of U.S. and foreign food facilities; the riskiest U.S. facilities would be inspected every three years.

-Allow the FDA to order the recall of tainted food. Previously, the agency could only negotiate with businesses for voluntary recalls.

-Impose new safety regulations on producers of the highest-risk fruits and vegetables.

-Require processors to prepare detailed food safety plans and inform the FDA what steps they are taking to keep their food safe at different stages of production. The government would use the information to trace recalled foods.

The law exempts meat, poultry and processed eggs, since they are regulated by the Agriculture Department. That alone was a major concession considering the 2010 major recall of salmonella infected egg, poultry and meat products that impacted so many.

Also exempt are some small businesses, which had complained that the new requirements could force some of them into bankruptcy.

Representative Jack Kingston, Republican of Georgia, favored to become the incoming chairmen of the agriculture appropriations sub-committee is quoted as indicating that he does not feel that the $1.4 billion price tag, spread over five years, to enforce this new law is necessary.  Mr. Kingston argues that although one in six Americans (which equates to in excess of 50 million people) are estimated to be sickened by tainted food every year, if the number is divided by the entire food supply chain, than 99.9% of food is safe.

Any reader scanning the numerous Supply Chain Matters commentaries related to food contamination that we have posted in the past twelve months would perhaps get a better sense of the true overall cost of this problem.

Let’s suppose that if one were to calculate just the physician and healthcare system costs related to over 50 million people potentially receiving treatment who were sickened by food contamination incidents in 2010, that alone should provide a strong argument that funding enforcement is a no-brainer decision.  Add in the additional costs of litigation and attorneys’ fees by alleged victims to sue consumer goods companies or other supply chain participants, and there is even more evidence of savings. Food related companies have also rightfully concluded that it makes good business sense to have a safer food supply chain because the alternative costs of a recall to the business, and to the brand, can be significant.  Consider that Peanut Corporation of America, which resided in Georgia, is no longer a viable business, or that Jack DeCoster’s national network of egg farms has gained the watchful eye of many consumers.

Representative Kingston, your logic is somewhat suspect.  Rather than arguing that Americans cannot afford the high costs of enforcement, the argument is really that Americans cannot afford to have their food delivery supply chains to be unsafe and without proper safeguards.  I should know, since I was one of those who was sickened by contaminated pistachios, and it will be a very long time before I consume any more.

Bob Ferrari

It has been over a year since the late 2008 major product recall incident involving peanut butter and peanut products being produced by the now defunct Peanut Corporation of America.  That incident had multiple cascading effects among quite a number of food-related supply chains.

An article appearing in the Atlanta Journal Constitution indicates that little has changed since this incident.  The article notes that prior to the incident, the state of Georgia had not mandated that food producers test their products.  The State has since passed legislation that calls for regular food testing, and requires Georgia food producers to test their products on a regular basis.  However, Georgia legislators, just before passage, amended the bill in two significant areas.  First, companies could bypass self-testing by submitting a “food safety” plan to the state.  What that plan involves appears to be rather unclear, according to the AJC article. The bill also exempts plants whose end product remains a raw agricultural product.  This includes peanuts, and growers in Georgia represent about 46 percent of the U.S. supply.

On the U.S. federal level, the Food Safety Modernization ACT of 2009 remains stalled in the Senate, after the House of Representatives passed its version of the bill.  This bill had widespread industry endorsement, and a coalition of 18 industry and other groups has written a letter this month to Senate leaders imploring passage of the bill.

To date, no criminal charges have been filed regarding events from the previous incident, and the article notes that the Georgia Bureau of Investigation has decided to defer to federal authorities for prosecution.

The media makes note that the current mood among consumers and voters across the U.S. is one of building cynicism in the ability of government to solve problems on a timely basis, and on industry to be able to produce safe products.  I suspect these same concerns are evident in other countries as well.  With noted brand names such As Toyota and others constantly in the news, it is no wonder. 

We should all expect and demand that our food supply has adequate safeguards.  This type of news doesn’t help in building confidence. Industry needs to take a leadership position in insuring product and food supply chain integrity, since reports such as these only add more fire to consumer concerns.

Bob Ferrari

Today’s Wall Street Journal (subscription required) included an article, Nestle Unit Restarts Cookie-Dough Facility, which provides some mixed messages.  Supply Chain Matters has provided previous commentary regarding the events and supply chain implications associated with the recent recall of Nestle Toll House Cookie Dough and other products because of suspected E.Coli contamination.

 The latest chapter outlined in the Journal article indicates that the U.S. Food and Drug Administration (FDA) is wrapping-up its investigation of the incident, and further indicating that the E.Coli sample found in a packaged product sample within the Nestle Danville Virginia production plant “didn’t match the DNA fingerprint of the strain that has caused at least 72 illnesses in 30 states.”  David Acheson, an FDA associate commissioner, indicates in the article that the FDA is not likely to figure out how the dough became contaminated, and has authorized continued production of product at the Danville plant. A Nestle spokesperson is also quoted as indicating that more than 1000 tests were performed on environmental and other samples within the production facility and its equipment with no E.Coli found.  Dr. Acheson is later quoted as indicating that FDA investigators suspect that wheat flour as a “plausible” source of the contamination, since it is the only dough ingredient that could be contaminated by animals such as deer. These same investigators however have not been able to verify E.Coli at the flour mill that Nestle utilized.

Let’s recap the Nestle situation and what have we learned from yet another incident of contamination within food supply chains.  Three weeks after the initial announcement of the voluntary recall by Nestle on June 19, regulators and Nestle have determined that the actual source of the contamination cannot be verified. While flour is suspected as a source, a decision was rightfully made to move on with production.  Wisely, Nestle has decided that it will label all new production with the term “New Batch” and include the usual warning for consumers to not consume cookie raw and uncooked dough. But as I pointed out in my original posting, the current reach of social media and the Internet has already associated the words of E.Coli and Nestle Toll House together in numerous content entries.

Similar to what occurred in the salmonella contamination found in peanut butter and paste, and traced to Peanut Corporation of America, a raw ingredient to multiple other food products permeated itself throughout these supply chains, leading to eventual product recalls in the hundreds.  In this latest incident, if wheat flour is indeed suspected, how many other product supply chains are now vulnerable? 

This week, the White House food panel established in March declared that the federal government is shifting its focus of food regulation to preventing outbreaks before they occur.  The latest demonstration with the Nestle Tool House cookie dough incident doesn’t seem to reflect that the FDA has gotten the message as yet.  If flour contamination is suspected, what other measures are be taken by the government.  As for the industry itself, what added measures are individual foods companies initiating to be more diligent in inspecting raw ingredients, particularly wheat flour.

Regarding Nestle, they will have to do better than just re-packaging of the product.  There needs to be a very comprehensive and visible inspection process surrounding all future production, packaging and distribution. This is a challenge to not toss over the wall to marketing.  The brand has suffered a setback, and in my view, marketing alone will not mitigate this problem.

As consumers, how confident are you in the overall quality of food products?

As supply chain professionals within the food industry, do you feel that management is actively supporting increased inspection and quality initiatives?  Does management also actively support supply chain risk mitigation team efforts?

What have we learned from this latest incident- that much more work remains on all fronts. In the meantime, please urge your families and friends not to consume any uncooked, raw dough products.

Bob Ferrari

I came across a posting on BusinessAssurance.com alerting its readers to a recent report that is titled: Keeping America’s Food Safe: A Blueprint for Fixing the Food Safety System at the U.S. Department of Health and Human Services. This report was authored by Trust for America’s Health; a non-profit organization dedicated to making disease prevention a national priority, and was supported by a grant from The Robert Wood Johnson Foundation. For convenience, I will also provide the report download link.

The report should provide rather interesting reading for those of you who are involved in food or drug-related supply chains for the sobering messages related to the current state of regulatory controls and oversight that currently exists. One particular statistic cited on the BusinessAssurance.com post caught my eye: Only one percent of imported foods are currently inspected, even though approximately 60 percent of fresh fruits and vegetables and 75 percent of seafood Americans consume is imported.

Highlights of the concerns raised by the noted TAH report that I found significant were:

• The U.S. food safety system has not been fundamentally modernized since its inception over 100 years ago.

• A 2007 GAO report noted that: “the federal oversight of food safety is fragmented, with 15 agencies collectively administering at least 30 laws related to food safety.’

• There is no single official at FDA whose full-time job is food safety, and who has authority over all elements of FDA’s food safety program.  (My bolding) FDA managers usually focus on drugs and medical devices, but get dragged into food safety during a crisis. This made me think that the FDA must really be in crisis mode right now.

• Too few inspection points and resources, and a current focus primarily on products in a finished state, vs. upstream processes related to the supply chain.

So far in 2009 we have had two major salmonella contamination incidents involving food, the latest being an evolving incident of pistachios (noted in yesterday’s post). In 2008, the salmonella incident of what was originally believed to be tomatoes, took weeks to trace to jalapeno and Serrano peppers originating in Mexico.  The FDA and supporting federal agencies performed yeoman work in tracing and uncovering sources of these contaminations, in spite of the above described deficiencies noted in TAH report.  But I for one wonder how much other oversight work was compromised or set aside because of crisis.

Supply Chain Matters has previously commended both the food and drug industries for taking self-initiatives to more adequately control quality and safety across their respective supply chains.  In my view, this TAH report is another sobering reminder that incidents will continue unless and until further joint industry and government mitigation initiatives are implemented. Technology should also play a major role, and surely could be applied to increase supply chain visibility and oversight.

How many more incidents of food safety can we tolerate in 2009, and is the clock ticking for a major drug incident?

Bob Ferrari