What Cost Safety?

For the past couple weeks, we have explored information about the food safety program in the United States and some of the myriad of food-safety laws and regulations administered by a virtual labyrinth of governmental agencies. We have also taken a look at what can go wrong when the safety of the food supply is compromised through a variety of methods. This week I will be examining what companies can do to ensure the safety of the food we eat. HACCP (Hazard Analysis & Critical Control Points) is part of the food-safety program administered by the FDA designed to ensure that food producers develop effective internal programs to both protect from and discover food-borne diseases before the food makes its way to our tables. While HACCP is mandatory for some industries, companies have a great deal of leeway in how they implement the program.

As I mentioned, HACCP is only part of a food-safety program which responsible companies should enact. To give you an idea of how challenging it can be for a company to develop and implement a comprehensive and effective food-safety program, here are the five fundamental and five ancillary programs recommended in an article in Food Safety Magazine:

 

1.         Current Good Manufacturing Practices (cGMPs)

2.         Sanitation

3.         Regulatory Compliance

4.         Quality Control

5.         HACCP

6.         Allergen Control

7.         Testing & Verification

8.         Auditing

9.         Employee Training & Education

10.       Biosecurity

As you can see, implementing an effective food-safety program is no small task. And of course there is a price tag attached to all these “best practices.” How much? The Produce Marketing Association estimates that a large company would pay approximately .6% (yes, less than 1%!) of its annual sales in order to implement a food-safety program. The same article which computes an estimate of the cost also recommends that companies consider the cost of such a program as an investment in the business, which makes perfect sense. By enacting a good food-safety program a company is investing to protect sales and to secure future customers. As the article points out, the costs of a recall or food-borne disease outbreak to a company can be catastrophic.

A study by the Produce Safety Project puts the total cost of food-borne disease in the U.S. at $152 billion annually. The study looked at the cost of emergency and ongoing health care, pain and suffering, and death attributable to food-borne illnesses, even those from an unverified source. The cost to companies involved in a food-borne disease outbreak is not included in the $152 billion figure! There is no way to know how much financial damage a food-borne disease will cause a company until after it happens, but some recent examples are informative. During the first quarter of 2009, Kellogg’s spent $27 million on recalls; a 2006 recall cost Hershey’s $14.5 million; and in 2009, voluntary food recalls cost General Mills $24 million. One way that companies can mitigate losses from an outbreak of food-borne disease linked to their products is through insurance. But how can a company protect from the bad press and loss of customer loyalty? This is one instance where an ounce of prevention is definitely worth a pound of cure!