There is an excellent article (Broken links in food-safety chain hide peanut plants’ risk) penned by Julie Schmit of USA Today that should be mandatory reading if you or your company is involved with food-related supply chains.

This article outlines the events leading up to the actual discovery of the salmonella contamination that originated from the Peanut Corporation of America’s Blakely, Georgia plant, the post-discovery events leading to a criminal investigation, and the obvious lessons for the food industry.  From reading the story, I came to the conclusion that quality and inspection reforms are way overdue, and the events seem to have the same litany of the failed oversight process that brought about the recent world financial crisis.

Among the takeaways within the article were:

• A quote from William Hubbard, a former FDA associate commissioner indicating that the outbreak “is a poster child for everything that went wrong” with the U.S.’s food-safety system. “The whole idea (of third party audits) isn’t working.  Inspectors are either telling the client what they want to hear, or doing a perfunctory audit or they’re poorly trained“.
• The fact that the U.S. FDA can only inspect food facilities, on average, every five to ten years unless they are deemed high risk, which peanut processors were not.  The FDA last inspection of the PCA Blakely plant was in 2001, while Georgia inspectors visited the plant in the last three years and cited only minor problems.

If the litany of events doesn’t catch your attention, than the quote from a former employee should.  The plant roof leaked so badly, “It rained in the plan.””

As a consumer, I’m going to hold food companies more accountable for the overall quality and safety of their products.  As an experienced supply chain observer, I believe that time is long overdue for a new model of supplier and production audits.

 Bob Ferrari

I thought I was getting over my shock and outrage regarding the recent salmonella contamination of peanut butter and peanut products stemming from The Peanut Corporation of America (PPA). But, an article last week in the New York Times, Food Problems Elude Private Inspectors, raised my awareness even more about flaws in food industry supply chains. This article exposes the fact that the contaminated PPA facility in Blakely Georgia had been inspected by a privately hired inspector in March of 2008, and according to this inspector, “the overall food safety level of this facility was considered to be: Superior..”.  .

This inspector, who was employed by the American Institute of Baking, had performed his inspection on behalf of Kellogg and other food companies, but his inspection services were reportedly paid for by PPA. The specified inspector had less than a day to inspect the entire plant, and as noted in this article, was not aware that salmonella bacteria could survive in plant such as PPA.  Another audit by a Michigan based firm found two dozen minor problems but scored the PPA plant 91 out of 100. 

The article further explains that while audits are not required by the U.S. government, food companies are increasingly requiring their suppliers to undergo such voluntary audits.  The rigor of these audits can contrast from cheap, to an FDA class audit. Also noted was these private auditors inspect only manufacturing plants, not the suppliers that feed ingredients to these facilities.

Last week, I applauded the food industry for publicly calling for increased funding of the U.S. FDA for broader inspection and transparency control.  It seems that these same food companies need to extend these controls to their private inspection processes as well.

Yes, every food related company should indeed insure that it was a comprehensive food safety plan in place. But in light of this latest revelation, that plan needs to include comprehensive audits from either private or government agencies.

 Bob Ferrari

Supply Chain Matters has featured three previous postings providing update and commentary regarding the ongoing salmonella infection outbreak involving Peanut Corporation of America (PCA).  In my previous posting on January 22, I commented on the subsequent spread of product recalls among the various food supply chains, and that the implications will continue to effect not just PCA, but many of the impacted companies and their supply chains as well.

This morning I performed an updated search of the latest information and noted the following important factoids:

- The product recall list now includes 1844 food, snack and pet related products.  Here is the link to the updated U.S. FDA product recall listing.

- The number of sickened persons continues to rise, and is now in excess of 600.  Eight deaths have been linked to this outbreak.

- On January 28, PCA expanded its voluntary recall of all peanut related products processed at its Blakely Georgia facility to production generated since January 1, 2007.  That’s over TWO years of volume production.  PCA also acknowledged in this expanded recall that tests indicating positive salmonella contamination may not have been disclosed to either state or federal regulatory authorities.

- On January 30, the FDA confirmed that a criminal investigation of PCA, in conjunction with the U.S. Department of Justice, is now underway, obviously not a comforting sign.

 - This expanded window of production subject to recall implies that even more products and product recalls may be forthcoming.

We can begin to now speculate on the dollar and brand-equity impacts as a result of this latest risk incident.  A blog posting featured on the Scientists & Engineers for Action (SEA) web site implies that it is typical that the food industry would only wake-up to a food safety problem when it hurts the bottom-line.  Perhaps that’s true, especially now with so many companies reacting to the severe downturn in the economy.

The SEA posting also points out that the US FDA last inspected the PCA Blakely plant in 2001, at a time when only roasted and blanched peanuts were being produced.  The agency only became aware of the production of peanut butter products when it was notified by the state of Georgia in 2006.  The U.S Department of Agriculture (USDA) separately sent inspectors to visit ten times between 2001 and 2007 because that agency was buying peanut butter for the free school lunch program, but, it is told, the inspectors were not looking for sanitary conditions, but auditing processes.  I guess our kids in schools do not warrant any more than a cursory inspection for safety- how outrageous is that!

An LA Times article reported on the overall impact to the Blakely, Georgia surrounding community, and the initial impressions of the impact on Georgia’s peanut industry. “We’ve got an industry that has a good track record, and now we have a small processor that did something wrong and caused chaos for everyone,” said Don Koehler, executive director of the Georgia Peanut Commission. “Because of this, farmers are having a difficult time obtaining peanut contracts for 2009, consumers are confused, and the ripple effect is being felt throughout the peanut industry. This is unconscionable.”

A story broadcast on CNN indicates that the supermarket and grocery brands such as Jiff Peanut Butter and Peter Pan, whose products were not, nor claimed to be sourced from PCA, have seen their sales plunge up to 20 percent as consumers are apparently avoiding all peanut products until clarity of safety is assured. A U.S. Senator expresses his outrage, as do consumers. An associate professor of food safety at Kansas State University, home of the International Food Safety Network, implied that food companies are not emphatically stating what they plan to do to keep food safe.

So let’s boil all of this down to the essentials.  Supply chain risk management teams need to deal with this continuing crisis to both react, as well as mitigate, the risk to the product and the brand.  Lack of budgets or the notion that this will somehow work out is in my view, is shortsighted thinking.  As consumers, parents, and responsible people, we need to demand more accountability and transparency from both regulators and industry participants.

The fact that just one supplier and one plant has such as far reaching and costly impact on the peanut industry and many linking supply chains is the lesson that should not be replicated.

Self-regulation has to be truthful, or everybody suffers. When is enough- enough!

Feel free to share your comments.

Bob Ferrari

I first alerted Supply Chain Matters readers to a new outbreak of human infections involving salmonella in a posting on January 8^th.  At the time, federal investigators had not been able to determine the specific source of the infections and I urged risk management professionals and product managers to be very diligent to the ongoing CDC investigation.

In an update posting of January 15^th, I alerted to the fact that the U.S. CDC and FDA agencies  had begun to link the infection to peanut butter, specifically production originating from a specific Peanut Corporation of America (PCA) manufacturing plant in Blakely, Georgia.  We sounded the alert that since the contamination was suspected to have involved institutional and bulk-packaged peanut butter products, that the concern for potential contamination would echo through various food production supply chains and indirectly impact consumers and brands. I also applauded The Kellogg Company for being the first to take proactive action to place a precautionary hold on the sale of a variety of its peanut butter cracker products.

In this post, I observe that the implications of this contamination have indeed been working their way through food production supply chains.  As of this morning, over 125 products have had to be recalled, and my unofficial count would indicate that at least 27 brands, both public and private, have also been impacted.  The products that have been recalled include peanut butter, crackers, cookies, candy, fruit and vegetable, snack food, and other products.  It also now includes certain pet-food products.  If you would like to search the complete list of products, here is the link to the listing on the FDA website.  The latest CDC update also indicates that the count of infected persons is now 486 within 43 states.  This qualifies for the term of nationwide outbreak.  Infections may have contributed to six deaths, according to the CDC. 

While the frequency of illness may be waning, the implications of this incident will continue to impact each of the companies involved. Almost all national and local media outlets are reporting the story of contaminated peanut butter. Both the CDC and the FDA now urge manufacturers to inform consumers about whether their products contain peanut butter or peanut paste acquired from PCA.  These agencies also urge institutions, food service establishments, as well as retailers to not serve or sell specific recalled products.  While these same agencies continue to clarify that the contamination does not involve retail-based peanut butter, consumers who have been constantly hearing of unsafe products are sure to be very wary of consuming any form of peanut butter products. 

Similar to the last year’s salmonella incident involving tomatoes and peppers, the dollar-impact to brands and brand equity are yet to be quantified. For the time being, supply chain risk management teams involving any of these recalled products will need to move from reactive to proactive means to deal with this incident.  Visibility to inventory throughout the supply chain, as well as alternative sources of supply will prove invaluable. While Kellogg was proactive in its response, these other impacted manufacturers are most likely in react mode, attempting to not only insure recalled products are accounted for, but also mitigated for any long-term impact.

Yet another reminder that a supply chain risk event that may initially seem small in scope, can echo itself through many impacted supply chains.

 Bob Ferrari

Just about a week ago, I alerted Supply Chain Matters readers to the ongoing investigation by the U.S. Center for Disease Control of a human outbreak of infection due to Salmonella serotype Typhimurium. At the time, 388 persons were identified as sickened, with ongoing investigations from multiple agencies to determine the cause. As of today, the number of reported sick has risen to 430, and five deaths have been reported across three states (Idaho, Minnesota, and Virginia).

It has not taken long to now identify the potential cause of this outbreak linked to peanut butter.  Virginia based Peanut Corporation of America (PCA), which distributes its peanut butter in bulk to institutions, private label food companies, and other food producers, issued a nationwide recall on January 13^th for 21 lots of peanut butter made since July 1 at its plant located in Blakely Georgia.  PCA utilizes the brand Parnell’s Pride in its institutional products, and is also sold by the King Nut Company under the name of King Nut, An open container of King Nut peanut butter in a Minnesota long-term care facility was found to contain the strain of salmonella.

While FDA and media reports continue to stress that none of the recalled peanut butter is sold to end consumers in retail stores, the implications of the potential contamination will echo through various food production supply chains, and indirectly impact consumers.  The first indicator is that The Kellogg Company announced a precautionary hold of the sale of a variety of its Austin and Keebler branded peanut butter cracker  sandwiches.  Consumers and retail stores are being asked to hold onto the Kellogg products, but not eat them, until the investigation is complete.

We need to applaud PCA and King Nut for their prompt and proactive actions in voluntarily recalling their institutional products.  I especially applaud Kellogg for taking bold action to not only protect consumers, but proactively respond to a supply chain risk situation.  Crisis what-if, and business continuity planning are important tenets of an effective supply chain risk management plan.  This ongoing situation is yet another opportunity to observe these plans in action.  Other consumer product companies utilizing peanut butter or paste should focus upstream and proactively act.  Consumers and customers should be your first priority.

Bob Ferrari