Pork Producers Feel Effects of Swine Flu
Pork producers are feeling the effects of the swine flu as the number of reported cases of the virus increases. Stock prices for Virginia-based Smithfield Foods, the world’s largest pork processor, and Arkansas-based Tyson Foods, fell 12 percent and 9 percent today, respectively. The Wall Street Journal reports that the prices of hogs, corn, and soybeans also dropped today. About 16 percent of U.S. pork exports have been shipped to Mexico over the past year – a country where so far 149 people have died from the swine flu.
The Centers for Disease Control and Prevention and other health officials have emphasized that swine flu viruses are not transmitted by food and people cannot contract the virus by eating pork or pork products. That fact alone does not seem to be enough to quell consumers’ fears. MarketWatch earlier today quoted a pork industry analyst as saying the industry wants to avoid a slip of exports and prices akin to the 2003 avian flu outbreak in Asia. Analyst Heather Jones said she believes the pork industry “needs to undertake an aggressive and widespread informational marketing campaign.”
Meanwhile, the Associated Press is reporting that Seattle-based Starbucks Corp. announced today that it is closing 10 of its Mexico City cafes in response to the swine flu outbreak and pursuant to instructions from the Mexican government.
Lessons from Toxic Rice and Chinese Dairies - Threats From Bioterrorism and Supplier Fraud
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Manufacturer fraud and bioterrorism should be on the radar screen for any food producer. Apart from the meltdown in the U.S. financial markets and presidential politics, the big news this week is toxic rice from Southeast Asia and melamine-tainted dairy products from China. Both crises were caused by intentional contamination of food products by raw-materials suppliers with the apparent motivation to defraud food manufacturers and sellers.
Both (especially melamine-tainted dairy products) are causing a worldwide health scare and crisis in consumer confidence. Consumers outside of China may not be at serious risk, because the melamine-tainted dairy products are not sold as pure dairy products. Outside of China, Chinese dairy products are used only in small quantities as ingredients in products such as candy and coffee. U.S. and European Union consumers are at risk only when consuming unusually large quantities of these “nondairy” products.
Yet the consumer crisis inside and outside of China could have ameliorated dramatically but for failures in crisis management. Even the presumably government-controlled Chinese press understands this: “Crisis management is closely related to the brand and credibility of an enterprise, but many Chinese enterprises have not developed the capability to react properly when a crisis emerges . . . .”
Consistent with Western principles of crisis management, Chinese experts, according to the Chinese press, opine that “one principle of crisis management is to take a responsible attitude immediately and in a sincere manner, which is of great help for enterprises to rebuild their credibility.”
The press in China points to a company named Sanlu and concludes that “Sanlu, the center of the scandal, provided a bad example of crisis management. When it was first exposed, Sanlu refused to take the blame and passed the buck to innocent dairy farmers, which ignited great anger nationwide. . . . Sanlu didn’t openly admit its products were toxic until Sept. 11. It eventually recalled baby formula manufactured on and before Aug. 6. The scandal led to the fall of chairwoman Tian and the disappearance of all dairy products bearing the brand of Sanlu.”
