(Editor’s note: This is Part 1 of a four-part series. Subsequent parts will post on the next three Mondays.)
Foodborne illnesses and food recalls seem to dominate the news these days. All across the globe, we hear about people being sickened by contaminated milk, flour, fresh produce, raw seafood, frozen entrées, and myriad other products.
Some food-related recalls involve only one product lot and no reported illnesses. Others involve thousands of pounds of food sold nationwide, with hundreds sickened, dozens hospitalized, and occasionally, some fatalities.
According to the U.S. Centers for Disease Control and Prevention (CDC), about 48 million people become ill each year from a foodborne pathogen acquired in this country. Of those, about 128,000 are hospitalized and 3,000 die.
CDC has linked about 9.4 million episodes of foodborne illnesses each year to 31 identifiable pathogens, although more than 95 percent of these related illnesses, hospitalizations and deaths are caused by only 15 of them.
Because many foodborne illnesses are not reported, and sometimes even when they are, the cause for 80 percent of the ones acquired in the U.S. is never identified.
Besides the individual, personal costs, the economic costs from medical expenses and lost productivity are staggering. The U.S. Department of Agriculture’s Economic Research Service estimated the financial burden of the 15 leading foodborne illnesses acquired in the U.S. at about $15.5 billion in 2013 dollars.
Last year, a study from Ohio State University put a much higher price tag — and a wide-ranging estimate — on the total cost of foodborne illness in the U.S.: $55.5 to $93.2 billion per year.
Then there are the quantifiable costs to the recalling businesses. A 2011 Grocery Manufacturers Association survey of 34 international firms found that more than half of them had been affected by a food recall in the previous five years. Of those, 18 percent reported lost sales of $30 million to $99 million, and 5 percent lost $100 million or more.
A global supply chain
The reasons driving this situation are as complex as today’s food supply chain, which stretches across continents. As our food supply becomes more globalized, so do the chances for problems, and the increasing complexity created by globalization makes it even tougher to find and eliminate those problems.
As the world’s population becomes more centralized in cities and increasingly less dispersed on farms, reliance on others for our food supply will become the norm, states a 2015 report by Zurich-based Swiss Re entitled, “Food Safety in a Globalised World.”
“Assuring this supply today is not possible without globalisation. It is a process involving countless partners and interfaces, requiring logistics that are complicated and are growing more so by the day,” the group’s report states. “But where there is complication there may be error. And error may lead to harm.”
As writer Beth Kowitt put it in a May 6, 2016, Fortune Magazine article, our pantry is global and so are the chances for contamination. Americans want certain food products available year-round and we want them cheap.
We bring in strawberries from Mexico in the winter, for example, and some exporting countries have different food safety standards and inspection regimes, Kowitt notes.
“The global supply chain has not only given us a cornucopia of food choices; it has also cut costs. The downside is that it has made preventing food-borne contamination nearly impossible. By the time milk tainted with melamine produced in China was detected, it had already been exported to 47 countries by way of milk-containing products,” she writes.
The question of consumer trust
For industry, the cost of recalls inevitably impacts the bottom line. However, the impact to customer trust in a given brand name is harder to quantify.
No food manufacturer wants a consumer to hesitate about buying their product, to stand there in the grocery store, checking the label, and wondering whether the item has been safely produced and whether eating it might harm them or their family members.
Naturally consumers want to know which products are safe and where to find information they can trust. However, according to a March 2016 analysis from Sullivan, Higdon & Sink, an ad agency based in Kansas City, MO, only about one-third of American consumers trust food companies to give them accurate product information.
The good news is that the level of trust has gone up in recent years, SHS notes, mainly due to better and more concerted efforts at consumer education to fill the gap. After all, consumers vote with their wallets (and, increasingly, share their sentiments on social media sites), so any erosion of trust will be felt quickly and painfully and can take a long time to shore back up.
Key to understanding this is the elusive concept of having a “social license to operate.” As explained in a Sept. 6, 2016, Food Safety magazine piece, this means “… the ability for any organization to operate with the confidence of stakeholders and that its activities are deemed morally and socially legitimate. Companies are judged based on a set of values collectively shared across the continuum of food system stakeholders.”
When contamination is discovered, people get sick, or recalls are announced, there is a perceived breach of this social license. The fragile trust between producers and consumers is consequently damaged and only restored (if at all) by being laboriously earned back bit by bit over time.
Or, as the magazine article put it, “The very essence of social license is transparency, inclusiveness and informed consent. Whether we agree with the concept of food social license or not, or even think that it has always been there, we now have an opportunity for stakeholders to make the food industry more democratic, more accessible and relevant to the broader public.”
Diversity, globalization, supply chain complexity and fragile consumer trust have collided to present a perfect storm of challenges for today’s food industry. How companies adjust their operations to handle technology, traceability, and new federal regulations, among other management decisions, will determine how well they weather those challenges.
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