Supply Chain Matters has featured three previous postings providing update and commentary regarding the ongoing salmonella infection outbreak involving Peanut Corporation of America (PCA).  In my previous posting on January 22, I commented on the subsequent spread of product recalls among the various food supply chains, and that the implications will continue to effect not just PCA, but many of the impacted companies and their supply chains as well.

This morning I performed an updated search of the latest information and noted the following important factoids:

– The product recall list now includes 1844 food, snack and pet related products.  Here is the link to the updated U.S. FDA product recall listing.

– The number of sickened persons continues to rise, and is now in excess of 600.  Eight deaths have been linked to this outbreak.

– On January 28, PCA expanded its voluntary recall of all peanut related products processed at its Blakely Georgia facility to production generated since January 1, 2007.  That’s over TWO years of volume production.  PCA also acknowledged in this expanded recall that tests indicating positive salmonella contamination may not have been disclosed to either state or federal regulatory authorities.

– On January 30, the FDA confirmed that a criminal investigation of PCA, in conjunction with the U.S. Department of Justice, is now underway, obviously not a comforting sign.

 – This expanded window of production subject to recall implies that even more products and product recalls may be forthcoming.

 

We can begin to now speculate on the dollar and brand-equity impacts as a result of this latest risk incident.  A blog posting featured on the Scientists & Engineers for Action (SEA) web site implies that it is typical that the food industry would only wake-up to a food safety problem when it hurts the bottom-line.  Perhaps that’s true, especially now with so many companies reacting to the severe downturn in the economy.

The SEA posting also points out that the US FDA last inspected the PCA Blakely plant in 2001, at a time when only roasted and blanched peanuts were being produced.  The agency only became aware of the production of peanut butter products when it was notified by the state of Georgia in 2006.  The U.S Department of Agriculture (USDA) separately sent inspectors to visit ten times between 2001 and 2007 because that agency was buying peanut butter for the free school lunch program, but, it is told, the inspectors were not looking for sanitary conditions, but auditing processes.  I guess our kids in schools do not warrant any more than a cursory inspection for safety- how outrageous is that!

An LA Times article reported on the overall impact to the Blakely, Georgia surrounding community, and the initial impressions of the impact on Georgia’s peanut industry. “We’ve got an industry that has a good track record, and now we have a small processor that did something wrong and caused chaos for everyone,” said Don Koehler, executive director of the Georgia Peanut Commission. “Because of this, farmers are having a difficult time obtaining peanut contracts for 2009, consumers are confused, and the ripple effect is being felt throughout the peanut industry. This is unconscionable.”

A story broadcast on CNN indicates that the supermarket and grocery brands such as Jiff Peanut Butter and Peter Pan, whose products were not, nor claimed to be sourced from PCA, have seen their sales plunge up to 20 percent as consumers are apparently avoiding all peanut products until clarity of safety is assured. A U.S. Senator expresses his outrage, as do consumers. An associate professor of food safety at Kansas State University, home of the International Food Safety Network, implied that food companies are not emphatically stating what they plan to do to keep food safe.

So let’s boil all of this down to the essentials.  Supply chain risk management teams need to deal with this continuing crisis to both react, as well as mitigate, the risk to the product and the brand.  Lack of budgets or the notion that this will somehow work out is in my view, is shortsighted thinking.  As consumers, parents, and responsible people, we need to demand more accountability and transparency from both regulators and industry participants.

The fact that just one supplier and one plant has such as far reaching and costly impact on the peanut industry and many linking supply chains is the lesson that should not be replicated.

Self-regulation has to be truthful, or everybody suffers. When is enough- enough!

Feel free to share your comments.

Bob Ferrari