The Reality of Recall Planning

Sometimes, the best introduction is to get straight to the point. Now more than ever, consumers are interested in the safety of their food supply, and they’re showing a growing concern when it comes to the ingredients farmers and ranchers feed their livestock.  In recent years, several high-profile recalls have shined a spotlight on the feed industry and for good reason. Across the globe, feed and food recalls have a devastating impact:

  • 1 in 10 people fall ill every year from food contamination
  • 420,000 people die as a result (125,000 of them young children)
  • Unsafe food containing harmful bacteria, viruses, parasites or chemical substances causes more than 200 diseases, ranging from diarrhea to cancers
  • Diarrheal diseases are the most common illnesses resulting from the consumption of contaminated food
  • Foodborne diseases impede socioeconomic development by straining health care systems and harming national economies, tourism and trade

The reality is we cannot eliminate the existence of recalls; however, we can significantly improve the process, detect recalls faster, determine exact recall locations and significantly diminish these consequences.

The financial toll of recall planning

Not only do food recalls become a dire health issue, they’re largely a significant economic issue as well. The average cost of a recall to a food company is $10 million in direct costs, in addition to brand damage and lost sales according to a joint industry study by the Food Marketing Institute and the Grocery Manufacturers’ Association. Many of these recalls impact the entire country, causing millions of dollars in losses, including product destruction, sanitary improvements and health care costs.

Below are the three largest recalls that caused the highest financial loss in U.S. history:

#3: Cargill Ground Turkey

After the death of one person and at least 75 others becoming ill after eating ground turkey contaminated with salmonella, Cargill recalled 35 million pounds of turkey in July 2011. Cargill temporarily shut down the plant for a week where the contamination originated; however, less than a month later, the same salmonella contamination was found there again. The CDC estimated that lost production at the plant, which processes about seven million pounds of turkey products weekly, cost Cargill about $2.4 million per week. The company laid off 130 of the plant’s 1,200 workers in October of that same year.

#2: Sara Lee Deli Products and Hot Dogs

In one of the biggest deli products recalls in history, Sara Lee removed 35 million pounds of product – equivalent to almost 16,000 tons of food – from the shelves in 1998 after a listeria outbreak. More than 100 people were sickened and 21 died as a result of the contamination, and Sara Lee paid more than $100 million as a result of the recall.

#1: Confirmed mad cow disease results in Chinese banning U.S. beef

Beef shipments from the United States were virtually halted after it found its first case of mad cow disease in December 2003 in Washington state. The discovery of bovine spongiform encephalopathy (BSE), led many countries to restrict imports of U.S. beef, resulting in significant losses in exports and industry revenues. BSE is passed between cows through the practice of recycling bovine carcasses for meat and bone meal protein, which is fed back to other cattle. This epidemic trickled down, significantly impacting U.S. ranchers and processors who lost almost $11 billion in revenue between 2004 and 2007.

The challenges behind the recalls

Currently, food safety is challenged by multiple recall reporting agencies and reporting procedures that are not only voluntary, but also time- and resource-consuming. In addition, the data manufacturers report to recall agencies often lacks the pivotal information necessary to identify the ingredient and lot-specific sources of feed contamination. Therefore, these recalls take a long time to be issued and can be extremely broad in scope.

Ann Grackin, supply chain advisor to business executives and president at ChainLink Research writes:

“Multiple suppliers and ingredients go into the manufactured product. Truckloads, containers, pallets and cases are shipped globally, but even the lowest level – the case – can be further subdivided into items for distribution. Now the challenge comes: Who were the ultimate retailers and then the ultimate consumers? Many systems contain some information about the supply chain and its path to the end consumer, but rarely is all the critical information contained in one system.”

Time is of the essence when it comes to recalls, but unfortunately, the process does not reflect this urgency. In fact, in another nut butter recall in 2014, even with confirmed traces of salmonella, the responsible firm did not issue a recall until 165 days – almost six months – after the FDA identified the potentially adulterated product, and at least 14 people were sickened.

Another challenge for the recall industry is traceability. Traceability is essential to the protection of the industry’s collective reputation and market share by isolating products from the source of the problem. Currently, there’s not enough data traceability (including ingredient lots and supplier sources) in the reporting of food- and feed-related problems to determine the root cause. There are transparency concerns from producers when asked to provide proprietary information about their products. In order to determine the root cause for food-related problems, it’s essential to understand traceability from farm to fork.

 A solution to the problem

As I mentioned before, food recalls are a reality of the supply chain and manufacturing industry, and they’re almost impossible to avoid altogether. Accepting this reality is only half of the equation; understanding that the process can be significantly improved is the other.

At Sprout Solutions, we’ve created a SaaS platform that automates recall problem reporting and provides system inquires against known contaminated products at the ingredient lot level, allowing manufacturers and governmental agencies recall activity from farm to fork. Our software solution is able to collect information about feed source ingredients from existing software products; integrate known information about issued recalls from state departments of health, the FDA and USDA into the database; use lot tracing capabilities to determine lot-specific commonalities among source ingredient(s); and provide this information to federal agencies in a Web-accessible manner. Federal agencies will now be able to make reasonable decisions about recalls faster than ever before.

Social benefits of this software include:

  • Consumer trust in the food supply
  • A reduction in foodborne illnesses in livestock and humans
  • Reduction in food- and feed-related incidents
  • Increase in reporting feed-related recalls
  • Improved confidence to submit food-related incidents by firms
  • More data reported to improve feasibility of predictive analytics
  • Significant decrease in number of deaths due to foodborne illnesses

Economic benefits include:

  • Reduced health care costs
  • Improved “time to issue” will reduce recall costs
  • Protection for companies from catastrophic damage or bankruptcy
  • Focused recalls rather than broad strokes

By leveraging the capability of this software, feed manufacturing systems can more readily identify adulterated ingredients and prevent further feed production inclusive of that ingredient lot, providing improved food security in feed manufacturing. By improving the process, we can ensure safer feed production and a quicker response to removing recall items.

 

Gretchen Henry is the co-founder and CEO at Sprout Solutions, a full-service software platform that provides mills and merchandisers in the agricultural industry with accurate, Web-based tools and systems to ensure the food they produce is not only safe, but traceable. Connect with Sprout Solutions on our Facebook and Twitter pages.

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