More on Compensation for Tomato Growers
I wrote recently about legislation introduced in Congress to compensate tomato growers for their losses during the recent and protracted Salmonella Saintpaul investigation. While the legislation has not yet advanced, Cindy Skrzycki from Bloomberg.com is also covering this issue and wrote a great article "Tomato Growers Seek Payback on Samonella Scare."
According to the Bloomberg article, even Bill Marler, the leading plaintiffs' attorney in the area has sympathy for the growers and believes that compensation may be warranted (though he believes its premature).
The Bloomberg article explains well how tomato growers (many of whom are small businesses) have no where else to turn:
"The U.S. Department of Agriculture runs crop-insurance programs that cover disasters from floods and hurricanes, not crops ensnared in recalls. Some companies have recall insurance, but they're not likely to collect unless there is a recall -- not a warning or an advisory."
Government Assistance for Rotten Tomatoes?
I recently received a call from a reporter about legislation introduced by Representative Tim Mahoney (D-Fl), that would provide “emergency assistance to growers and first handlers of tomatoes.” The text of the bill, HR 6581, as referred to the House Agriculture Committee reads as follows:
SECTION 1. EMERGENCY ASSISTANCE FOR GROWERS AND FIRST HANDLERS OF TOMATOES.
(a) Emergency Assistance - There is hereby appropriated to the Secretary of Agriculture $100,000,000, to be available until expended, to make payments to growers and first handlers, as defined by the Secretary, of fresh tomatoes that experienced crop or market losses, or both, as a result of the Food and Drug Administration Public Health Advisory issued on June 7, 2008.
(b) Payment Amount - The amount of the payment made to a grower or first handler under this section shall not exceed 75 percent of the greater of--
(1) the value of the unmarketed tomatoes; and
(2) the actual loss incurred by the grower or handler.
The reporter asked whether those intended to receive financial assistance under the bill would be compensated some other way, such as insurance payments. She also questioned the fairness of this legislation.
The answer to the first question—will producers receive insurance payments—is most likely no. Some producers and sellers maintain recall insurance (or perhaps some form of business interruption insurance). As discussed previously in this blog, recall insurance may not cover events that are not “recalls.” In this case, FDA never requested a recall. Even for forms of recall insurance that may offer coverage for events other than a recall, insurers may argue against coverage because it turns out that there is no evidence that tomatoes were the culprit of the Salmonella Saintpaul outbreak. The bottom line is that few, if any, producers or sellers may receive insurance payments for their business losses (estimated to be in the hundreds of millions of dollars).
Although many “fault” FDA, tomatoes have been linked to previous outbreaks. FDA’s warning about tomatoes was the food equivalent of rounding-up the usual suspects.
Yet, government relief may still be justified and, therefore "fair." Events leading to the losses suffered by producers and sellers (many of whom are small businesses) were fortuitous and beyond their control. While relief may not be justified because of some "fault" by the federal government, government relief may be justified as “disaster relief.” If relief is justified for agriculture wiped out by floods or other acts of God, why is not fair for those same farmers and producers to be compensated for this kind of disaster?
Good Time To Review Crisis Management Plans
Personal injury and economic damage claims await for the FDA and CDC to determine causation. Produce industry, particularly in Mexico, stands to suffer long lasting injury.
Whether or not your business stands to be impacted (or has been impacted) by the current outbreak, now is a great time to review and rehearse your crisis management plan. I recommend that your team include the following (whether in-house personnel or outside consultants):
- Scientific - Epidemiology, Microbiology, Infectious Disease - Quantifies risks, assists public health officials and supports litigation;
- Accounting - Estimates costs of response options and manages system for customer reimbursement;
- Public Relations - Coordinates all internal and external communications and develops a plan to limit impact to the brand;
- Quality Assurance - Assists in conducting traceback;
- Sales and Marketing - Notifies suppliers and buyers, monitors recall effectiveness and coordinates product returns;
- Legal - Assists with fact investigations, assists coordination with regulatory officials, addresses liability issues, deals with issues of insurance coverage and prepares for litigation;
- COORDINATOR/TEAM LEADER - selecting a member of the team that can bridge a diversity of disciplines and demonstrate leadership is critical.
Yes, We Have No Tomatoes
By Guest Blogger Richard Goldfarb
Sunday, at a local restaurant, I saw a sign saying that there would be no fresh sliced tomatoes on my burger. Although it is quite clear that there are safe tomatoes available, the FDA has encouraged restaurants simply to cease selling them. This makes a lot of sense: rumors fly so rapidly and irresponsibly. Though, individual restaurants may take different steps; those that pride themselves on knowing the source of their heirloom tomatoes should be advertising that fact.
The problem is salmonella, in particular a strain called “saintpaul.” The FDA identified salmonella in tomatoes as a significant risk a year ago. Thus, they had the infrastructure in place to monitor and deal with the significant number of reported outbreaks this year. So far, no one knows the source of the problem, and all the FDA can do at this point is to list those tomatoes that have not been associated with the outbreaks:
• Cherry tomatoes
• Grape tomatoes
• Tomatoes sold with the stems on
• Homegrown tomatoes
In addition, the FDA lists those tomato-growing areas that have been ruled out in the outbreaks. This doesn’t mean that tomatoes grown in those areas will always be safe, but that they have not been linked to this outbreak. The FDA also reiterates its advice on the safe handling of fresh tomatoes and other fresh fruits, both in restaurants and at home. The CDC website provided a nice summary:
• Refrigerate within 2 hours or discard cut, peeled, or cooked tomatoes.
• Avoid purchasing bruised or damaged tomatoes and discard any that appear spoiled.
• Thoroughly wash all tomatoes under running water.
• Keep tomatoes that will be consumed raw separate from raw meats, raw seafood, and raw produce items.
• Wash cutting boards, dishes, utensils, and counter tops with hot water and soap when switching between types of food products.
The problem isn’t limited to the United States; New Zealand tomatoes have been implicated as well, and banned in Hong Kong. It was nice to know that the tomatoes we had with dinner last night were doubly safe: they were hothouse tomatoes sold with the stems on, and they were from British Columbia, one of the locales ruled out by the FDA.
