More on FSMA and Food Safety Risk Avoidance
Thank you to Parker Smith & Feek for inviting me to speak to about FSMA and how it’s changing the status quo. My slide-deck can be viewed here.
Following my talk, Marty Bask from Parker Smith & Feek led a very interesting discussion about the pros and cons of product recall and contamination coverage. A link to our recent discussion on this blog on what to ask when purchasing this kind of coverage is here.
Bagged Salads: Consumers Union Weighs In, Perishable Pundit Replies
The motto of Consumers Union, the publisher of Consumer Reports, is "working for a fair, just and safe marketplace for all." The motto of Jim Prevor's Perishable Pundit is "where the subject may be perishable but the insight isn't." When Consumer Reports publishes a report, it nearly always becomes widespread news. When Jim Prevor publishes a report, it will be carefully read and commented upon within the confines of the produce industry, but it is not often that it reaches national attention. Let us now match the insight of Jim Prevor against the values of Consumers Union. The subject: bagged salad.
Bagged salad is one of the most successful take-home convenience foods ever. The produce industry loves it, because it greatly expands the market for fresh produce. The packaging industry loves it, because it only works with special packaging that extends the product's shelf life. The grocery industry loves it, because it is high-margin, high-volume product that goes in the produce aisle. And consumers love fresh salad they don't need to prepare. Win-win-win-win.
Until Consumers Union comes along.
Consumers Union has published a report that is entitled, "Bagged Salad: Better Standards and Enforcement Needed." A shorter article is in the March issue of Consumer Reports, entitled, "Bagged Salad: How Clean?" Both are based on a study, funded in part by Pew Health Group, that examined samples of bagged salad purchased, as Consumers Union ordinarily does, in grocery stores near its Yonkers, New York headquarters. It found levels of bacteria they called "indicator organisms" that exceeded standards set by a number of other countries, since there is no federal standard in the United States. No E Coli O157:H7, listeria or salmonella was found.
From the study, Consumers Union concluded that the United States needed to adopt food safety legislation pending in Congress (about which we reported here), needs to declare known pathogens in leafy greens "adulterants" (even though the study didn't find any), and set satefy standards for indicator organisms. In addition, Consumer Reports recommended that consumers should:
- Buy packages as far from their use-by date as possible
- Even if the salad is pre-washed, wash it again
- Prevent cross-contamination with other foods (although the link the article does not, as it appears to promise, go straight to a how-to list for that)
Since this is of great concern to the produce industry, Jim Prevor sent the report to Dr. Trevor Suslow of the University of California at Davis., a plant pathologist. Apparently a number of other readers of the report did so as well, because Dr. Suslow's response printed in the Perishable Pundit is broader than Jim's questions. Dr. Suslow makes some very cogent points about the Consumers Union report.
- "We eat lots and lots of microbes all the time." And generally don't die from them. Leafy greens are colonized by microbiota, not contaminated by them.
- The specific number of microbes on a leaf do not relate well to risk of illness.
- Higher numbers closer to the use-by date are expected, particularly if the product was subject to significant changes in termperature. More specifically,
Because all the samples were taken from retail stores, the numbers of bacteria (not that fact that they were present) may tell us more about the temperature history of the product than provide clear evidence of poor sanitation.
- Additional washing of pre-washed greens can lead to cross-contamination and is not recommended. He cited a 2007 study to that effect which concluded,
additional washing of ready-to-eat green salads is not likely to enhance safety. The risk of cross contamination from food handlers and food contact surfaces used during washing may outweigh any safety benefit that further washing may confer
His ultimate recommendation was that a consumer should check both the way the bagged salads are placed in the store (vertical in a row, not placed on top of one another in a stack) and get a feel for the temperature at which they are stored (both the air and the bag should feel "very cool").
As I read the report and the rejoinder from Dr. Suslow, it would seem the Perishable Pundit has the better of it. What Consumers Union proposed would seem to lead to a lot of regulation and attendant expense, leading to a false sense of security in consumers. What Dr. Suslow proposed would seem to enable consumers to make senisible choices for themselves.
FDA and CDC Warn of Salmonella in Raw Sprouts
The U.S. Food and Drug Administration and the Centers for Disease Control and Prevention are recommending against eating raw alfalfa sprouts because of potential salmonella contamination.
According to the FDA, the salmonella contamination appears to be in seeds for alfalfa sprouts. As of yesterday, 31 cases of illness with Salmonella Saintpaul have been reported to the CDC. The reported cases are in Michigan, Minnesota, Pennsylvania, South Dakota, Utah, and West Virginia. The FDA cautions that the number of infected people may rise because some illnesses have not yet been confirmed with laboratory testing.
The FDA believes this outbreak may be linked to an outbreak from earlier this year. Its initial investigation traces the contaminated raw alfalfa sprouts to multiple sprout growers in multiple states. Additional details are available here.
PCA Recall - Insurance Lessons for Food Sellers
Bill Marler posted on his blog recently a complaint for declaratory relief filed by an insurer for Peanut Corporation of America (“PCA”). Mr. Marler comments, “Frankly, I read this suit several times and still do not see what the fight is about.” For those who represent commercial insureds in pursuing coverage from their insurers, the suit is no surprise. The suit is likely a function of the fairly limited insurance limits available to PCA, PCA’s tender of both bodily injury and recall expense related claims, possible exclusion for organic pathogens and/or allegations of intentional acts by PCA.
The complaint filed by PCA’s carrier, Hartford Casualty Insurance Company, alleges that PCA had at the time of the outbreak a $1 million primary liability insurance policy and $10 million umbrella insurance policy. Given the high number of probable personal injury claims (some of which will involve wrongful death) and the broad scope of products affected by the recall, claims will far exceed limits available to PCA under the Hartford policies. This outbreak demonstrates why any food manufacturer or seller should carefully consider whether its insurance limits are sufficient. A $10 million policy might have seemed to PCA like a great deal of coverage prior to the outbreak; today, the prevailing perception is that it is totally inadequate.
The complaint also alleges that the Hartford policies included “terms, conditions, exclusions, and limitations including but not limited to those pertaining to . . . coverage for claims arising out of the presence, suspected presence, or exposure to, among other things, bacteria.” The policies are not attached to the complaint. However, the allegation suggests that the Hartford policy might have included an organic pathogens exclusion. If the policy includes such an exclusion, PCA may be without coverage for any claims related to the Salmonella outbreak. The organic pathogens exclusion may exclude any claim for bacterial contamination of food products. As we’ve discussed previously on this blog, every food manufacturer should review its coverage to ensure that its policy does not include an organic pathogens exclusion.
Finally, the quick filing of a declaratory relief complaint by Hartford illustrates why a food seller needs to engage an experienced insurance coverage counsel immediately. Coverage counsel can assist in developing a strategy to pursue and preserve available insurance. Also, in situations such as PCA’s, all communications with insurers should be managed by coverage counsel. From the outset, communications with insurers are critical because they are likely to become relevant to the inevitable coverage disputes with the carriers.
More on Melamine . . .
I was interviewed recently by Food Innovation Weekly on “Melamine, Recalls and Crisis Management.” This question-and-answer article discusses how the waves of melamine issues circling the globe affect the way a company should think about crisis management. I suspect that we’re not done hearing about melamine contamination and that the scope of fraud has yet to be fully uncovered. Some of the more interesting issues are safe dosage levels, product testing and what companies should or should not disclose to consumers.
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.”
