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Food Fraud: More Than Just Economic Injury
“Do you really know what kind of fish you’re eating?” And why that’s such an important question?
As recently reported in Food Safety News, food fraud (by way of species substitution) presents more than a risk of ripping off consumers. Pregnant women may be unwittingly exposed to toxins, gastric distress, and allergens from consuming seafood that is not what it purports to be. Honest employees of fishing companies, distributors, and retailers that sell genuine products can lose sales and their jobs.
U.S. Senator Barbara Boxer (D-CA) recently asked the FDA to increase its efforts to reduce seafood mislabeling. For bad actors, increased “traceability and enforcement . . . from bait to plate” presents risks of criminal prosecution and civil damages from class action litigation. However, for seafood companies that adopt best practices, it also provides promotional and marketing opportunities.
Country of Origin Labeling (COOL) Fraud: A Worldwide Problem
Today’s edition of Dairyreporter.com reports that numerous Chinese infant formula manufacturers are allegedly falsely claiming that their products were manufactured in New Zealand. At least one company, Abid, allegedly falsely claimed a product endorsement from Prime Minister John Key.
Why is this Happening?
Chinese consumers are willing to pay a premium price for NZ baby formula due to its perceived safety and quality advantages over Chinese-made products. Chinese consumer confidence in the safety of domestically-produced food has declined over the last year, and dairy products are the number one imported food in the country. In just June and July 2012, Chinese firms recalled infant formula and milk products contaminated with mercury, aflatoxin, and lye. These recent problems demonstrate that the country still needs to improve its food safety and quality after the 2008 melamine-contaminated infant formula disaster that implicated 22 companies.
Why should my Company Care about COOL Fraud?
Companies should consider proactively addressing country-of-origin labeling (COOL) fraud to reduce the risk of brand dilution, lost sales, and injuries to their customers. New Zealand has a top-three country brand name. Some of its manufacturers are specifically marketing their products as being “safe” or “tamper proof,” based on the country’s strong food safety and environmental standards. Higher Western food safety standards present an opportunity to boost sales to Chinese consumers. COOL fraud also may present risks of civil and criminal liability as well as conviction in the court of public opinion.
Food Poisoning: A Recurring Problem that Requires Investing in Prevention
Recent news stories illustrate that bacterial food poisoning is a recurring, high cost, sickening (and in some cases, deadly) problem that requires investing in prevention.
Today’s Washington Post includes an online article about how salmonella infections have increased “by 10 percent in recent years.” (The longitudinal data regarding the total number of U.S. cases from 1996 to 2009 can be found here.)
Additionally, according to the Centers for Disease Control and Prevention, the 2009 salmonella incidence rate was 15.19 cases per 100,000 population, which is more than twice the National Health Objective of 6.8 cases per 100,000.
Elizabeth Hagen, the Undersecretary for Food Safety at the U.S. Department of Agriculture, noted that the incidence of E. coli O157:H7 infections has decreased, demonstrating that more stringent regulation and efforts by meat processing companies in particular have lowered contamination at the slaughterhouse level. However, as the recent outbreak in Germany of the world’s deadliest E. coli tragically illustrates, “new and ‘highly infectious and toxic‘” E. coli strains are emerging from a source(s) that is still unknown.
Compounding the human tragedy, some businesses that sell fresh produce have seen their sales fall 35 percent since the outbreak began. EU farmers’ losses are estimated at $611 million per week. Former FDA Commissioner David Acheson has opined that an outbreak like the current one could happen in the U.S.
Michael R. Taylor, the FDA’s Deputy Commissioner for Foods, provided sound advice for the food industry: “investing in prevention is, ultimately, the only way to provide the protection that consumers expect.”
Fish HACCP: FDA Publishes Updated Fish and Fishery Hazards and Controls Guidance Document
On April 28, 2011, the FDA gave notice that it had updated and implemented guidance standards for fish that “support[] and complement[] FDA’s regulations for the safe and sanitary processing and importing of fish and fishery products using hazard analysis and critical control point (HACCP) methods.” According to the Federal Register, the FDA implemented the new standards immediately, without public comment, to promote consumer safety and “provide important recommendations for conducting a hazard analysis and implementing a HACCP plan.”
A .pdf copy of the guide can be downloaded here.
The 476-page document provides an organized and comprehensive overview of how to identify potential hazards, determine whether they are significant, identify critical control points to reduce the hazard, and develop a control strategy (which includes setting critical limits, establishing monitoring procedures, establishing corrective action protocols, record-keeping, and verification procedures).
Customers Will Pay More for Safer Food
The March 2011 Deloitte Consumer Food Safety Survey confirms that customers are aware of food safety issues, and they are willing to pay more for safer food products. Food processors, distributors, and retailers may all benefit from this trend by developing and implementing food safety risk management plans.
Customers are Aware of Food Safety Issues
According to the Deloitte survey, 73 percent of consumers are “more concerned than they were five years ago about the food [they] eat,” an increase of eight percentage points over 2010 figures. The top five food safety concerns include ingredient safety, toxins and chemicals in packaging materials, and contracting a food-borne illness. About 91 percent of consumers think the number of food recalls has stayed the same or increased since the prior year.
Consumers Concerned about Safety of Fresh and Imported Foods
Consumers generally reported the greatest safety concerns about fresh foods, such as meat, fish and seafood, and fruits and vegetables. Fresh food producers, distributors, and retailers may benefit from developing, implementing, and regularly updating their cold chain risk management and HACCP plans to maintain and improve food safety to minimize the risk of food-borne illness and food recalls (as well as the risks of litigation and lost brand value).
Consumers Hold Manufacturers and Retailers Accountable for Food Recalls
More than three-fourths of those surveyed told Deloitte that they hold manufacturers responsible for communicating food recall information. A majority expect that retailers will also notify them about food recalls. Critically, almost 20 percent of consumers reported they would buy “somewhat more expensive” products that included traceability information, compared to lower-priced products without it. These data highlight the need for food growers and manufacturers, distributors, and retailers to adopt and implement food recall risk management plans before a problem arises to meet your customers’ rising food safety demands. (You will be able to read more about food recall risk management plans in my upcoming July 2011 publication).
“Gluten Free” Update: Baker Behind Bars
Paul Seelig, the owner of Great Specialty Products, has been sentenced to 9-11 years in prison for falsely representing to his customers that his bread was gluten free. According to testimony from one of his former employees, Mr. Seelig also told customers that his products were “homemade,” even though he apparently just repackaged baked goods he bought at various stores.
The takeaway message (other than the obvious: follow the law) is that customers rely on a company’s representations, so it is important for those representations to be correct, documented, and verifiable. Even if Seelig had truthfully represented that he tested his products weekly, he failed to produce any records confirming this at trial. ”Get it in writing” is as true now as it ever was; do you think your customers expect (and pay for) any less?
Most Ironic Food Recall of 2011: Toxic Waste Candy Recalled (Again) for Being Too Toxic
On March 26, the makers of Toxic Waste candy recalled their “Toxic Waste® Short Circuits™ Bubble Gum” for excessive lead content. This is the second Toxic Waste candy product recalled in 2011 for excessive lead levels.
The gum was distributed between January 4, 2011 and March 18, 2011. This raises the question of the extent to which the recalled product may already have been consumed. Time is of the essence for food recalls, and managing a food recall is easier for both the manfacturer and consumer when a product is recalled sooner than later.
As with the January 2011 recall of the company”s “nuclear sludge” candy, the recalled candy at issue here was imported. Although non-chocolate candy accounted for only 7.3 percent of FDA food import violations from 1998 to 2004, it is difficult to find specific data regarding the scope of these violations. However, the FDA provides information about how it monitors and regulates food importation. Additionally, while candy manufacturers are not at this time required to develop and implement HACCP plans, companies may want to consider doing so sooner than later to manage their risk of food recalls.
Food Processing Companies, Restaurants, and Foodservice Providers: Do You Have a Current Food Defense Plan?
Is your company implementing plans to protect its products from intentional harm? Reducing this risk helps protect your customers, your employees, and your business.
What is a Food Defense Plan?
A Food Defense Plan is a written plan to identify, address, and minimize the risk of intentional harm to food, such as deliberately adding pesticide to ground beef sold for human consumption.
Why is a Food Defense Plan Necessary?
The U.S. Department of Homeland Security has determined that the food and agriculture industry is one of the nation’s most critical elements of infrastructure. This trillion-plus dollar industry may be vulnerable to attack.
How Can My Business Develop a Food Defense Plan?
Preparing a Food Defense Plan requires identifying potential vulnerabilities, preparing a written plan to minimize them, and verifying the effectiveness of the food defense measures. The FDA and USDA have free food defense plan development and training resources available.
California Restaurants and Retail Foodservice Companies: Do You Post Proposition 65 Warnings?
Your restaurant serves wholesome food and artisinal cocktails; the menu touts all of the fresh ingredients, including the farms where you obtain your fresh produce and meats. Did you also disclose a Proposition 65 warning about potential food safety hazards?
California’s Proposition 65 requires businesses to notify consumers that hazardous chemicals may be present in products purchased on the premises. A consumer may sue your restaurant and allege that it does not comply with this requirement. Even if such a lawsuit is frivolous, litigation can be quite expensive.
Fortunately, a business can take cost-effective steps to protect itself from the risks of this litigation by posting prescribed warnings, such as:
“WARNING: Chemicals known to the State of California to cause cancer, or birth defects or other reproductive harm may be present in foods or beverages sold or served here.”
I know, a warning label may not be the most enticing way to upsell your customers. However, think about this simple fact: the U.S. government has required warning labels on alcoholic beverages since 1989, but there is little (if any) evidence that they have affected sales. (There is also a specific Proposition 65 warning for alcoholic beverages.)
However, there are emerging Proposition 65 litigation risks, such as neurotoxic acrylamide in fried foods and carcinogenic heterocyclic amines (HCAs) in grilled foods. The San Francisco Department of Public Health publishes this handy (and free) FAQ about Proposition 65 for restaurants and other food establishments.
For more information, feel free to read the article I co-authored regarding Proposition 65 Risk Management.
