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Food Safety News

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Cost of traceability negated by legal, marketing benefits

Editor’s note: This is the third piece in a four-part series. The final installment is scheduled to publish Oct. 3.

One step forward and one step back might be sufficient in the context of a boot scootin’ line dance, but in the context of foodborne illness outbreaks and increasingly long, complex supply chains, consumers and the federal government are demanding more in the way of food traceability.

However, the Food Safety Modernization Act (FSMA) of 2011, some of which becomes effective this month, doesn’t impose a specific traceability procedure or system. It merely requires that food companies be able to track their products, leaving the method up to industry. It also requires that traceability records of ingredients be maintained for up to two years to assist with recalls when necessary.

traceability graphic for a hamburgerConsider what that means for the average hamburger. It’s not as simple as wheat flour from Kansas for a golden bun and a patty of grass-fed Nebraska beef. According to food safety technology company Roka Bioscience, the ground beef in a single package can contain meat from more than 50 cows from several countries.

Even with such a range of variables, the IoT — Internet of Things — with its plethora of interconnected devices and databases, suggests to some that traceability is easily achieved.

Scanners, smart phones, bar codes, QR codes and Radio Frequency Identification Devices (RFIDs) have been in relatively wide use for several years. Global positioning software can track shipments on roads, rails, rivers and oceans. Temperature sensors can document, down to fractions of a minute, whether a perishable load has been kept cold enough while in transit.

Yet foodborne illness outbreaks are on the rise and consumers’ confidence in food is, at best, flat. At the same time, the American public is increasingly demanding year-round access to fresh produce, specialty meats and imported delicacies. To meet those demands the food industry must continue to source commodities and ingredients far and wide.

“Greater complexity leads to more interfaces, which increases the chance for error,” according to a report earlier this year from the insurer Swiss Re.

With such diversity in the food supply and distribution chain inevitably more complex to protect, there are automatically more costs for food production and sales companies, from one-off mom-and-pops to retail grocery behemoths and restaurant chains with thousands of locations.

PARtec sidebar 09-11-16The trick for them is to develop a food safety plan that meets the law, effectively mitigates pathogens and other risks, and documents every link in the supply chain while keeping prices low enough for consumers.

As complicated as the first part of that equation is, the second part is easy: You can’t charge more than the market will allow. That amount is ever shifting in the context of the American economy, according to statistics from the U.S. Department of Agriculture.

Americans have been on a declining path for more than 50 years in terms of the per-capita amount of disposable income being spent on food.

USDA’s Economic Research Service tracks such data, and from 1960 through 2013, the percentage of per-capita disposable income spent on food by people in the U.S. dropped from about 17 percent to less than 10 percent.

Food companies that have been ignoring the consumer trends and hoping for reveals of federal laws are likely facing quite the financial pinch now. But a number of individuals and corporations have opted to keep up.

Many in the fresh produce industry banded together several years ago to launch the Produce Traceability Initiative. The self-imposed industry deadlines of the initiative became selling points for some companies courting large retailers that were simultaneously stepping up food safety efforts, partly as liability mitigation and partly as marketing efforts.

There were more than 600 food recalls in the U.S. in 2015 and the impact to industry was costly.

A survey of 36 major international food companies by the Grocery Manufacturers Association, 55 percent of respondents said they had experienced a product recall in the five years prior. They reported the cost of many of these recalls reaching well into the tens of millions, some even costing more than $100 million.

Among the companies attempting to stay in front of the curve, activities have been wide-ranging, according to a report prepared by Cornerstone Capital Group for the Investor Responsibility Research Center Institute. Highlights include:

  • Starbucks has implemented a product traceability program that enables the company to trace 100 percent of the raw materials in a particular product within four hours.
  • Darden Restaurants has implemented full product traceability for shelf life management and food safety crisis management with leading supply chain standards organization GS1.
  • Hormel Foods and Maple Leaf Farms have implemented pork product traceability back to the individual hog.
  • Wal-Mart mandated certification by GFSI and Safe Quality Food (SQF) for all suppliers and uses meat traceability systems.
  • Costco manages suppliers and factory audits through its Traqtion system. Through its membership database, Costco can contact every customer who has purchased a recalled product.
  • Sysco, the country’s largest food service supplier, implemented an audit system for its ready-to-eat produce customers. It also has a GS1 Standards Initiative that enables the tracing back to all raw materials.

Tracking the performance of such programs can be seen as just one more cost of operations that food businesses must calculate when developing and updating their food safety plans. It can also provide data for marketing opportunities that could negate part of those costs.

One common denominator in reports and surveys of consumers done in recent years by industry groups such as the Produce Marketing Association, the American Institute of Baking (AIB), The Packer newspaper, Supermarket News and other entities is the desire of consumers to know how their food got to the grocery store.

Moms and dads, millennials and baby boomers, the poor and the affluent, minority groups, virtually all consumers want to know more about their food. That provides a huge opportunity for savvy businesses to get more bang for their traceability bucks.

A study by the advertising agency Sullivan, Higdon & Sink showed only about a third of consumers trust food companies to provide them with the right information. That leaves a big window of opportunity wide open for forthcoming food companies.

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