Food contamination continues to plague popular US food chains
This year alone, food contamination has plagued several popular food chains, creating a large challenge for both consumers to monitor what they ingest and for companies to regulate what they sell.
CRF Frozen Foods announced a large recall on its frozen food after the Food and Drug Administration and Center for Disease Control and Prevention confirmed that its products tested positive for listeria.
By the first week of May, the recall was expanded to include 358 of its products sold under 45 separate brand names, all of which are listed on the FDA’s website. The products included in the recall were sold to large grocers including Costco, Trader Joe’s and Safeway.
On May 3, Trader Joe’s announced that it removed potentially contaminated products from its shelves and would provide a full refund to anyone who had purchased these items.
As a precautionary measure, CRF Frozen Foods suspended operations in its Pasco, Washington plant where the outbreak originated. Investigation persists to pinpoint the exact cause of the contamination.
Unfortunately Trader Joe’s had two further recalls on May 5, when the company became aware that pre-packaged broccoli-slaw and kale salads were potentially contaminated with the same listeria bacterium. As a result, the organic retail chain voluntarily pulled 33,610 pounds of fresh products from its shelves. Five days after that recall, Trader Joe’s announced yet another recall for its frozen Vegetable and Chicken Fried Rice bags that were similarly hazardous.
With two recalls in one week and a third in the succeeding one, Trader Joe’s will have a large expense in lost inventory, as it cannot resell this merchandise. The cost of recalls as a result of defected merchandise purchased from suppliers has burdened companies’ operations and reputation.
If recalls persist, the expense of discarded inventory can have huge financial consequences. Additionally, companies can lose customer loyalty and bear the costs of finding another supplier.
Since Trader Joe’s is a privately owned food chain, it will not be adversely affected by stock market view. However, it must find a way to recover these costs with help from its own private investors, financial advisors and accountants.
The Dole Food Company, known as the largest global producer of fresh fruit and vegetable products, has also recently gone under investigation by the Department of Justice because of listeria concerns. The corporation has been accused of knowing about contaminated products and not taking the proper steps necessary to rectify the situation. The outbreak has resulted in 33 people being hospitalized after eating Dole’s pre-packaged salads. Four of these individuals passed away.
These recent listeria investigations are an added cost to government agencies such as the FDA and CDC to detect and resolve the bacterium’s spread through frequently purchased food items. The total expenses of both agencies are publicized on their sites with government funding documented well into the millions.
Robert Scharff, a professor at Ohio State University, determined that about 48 million Americans become ill as a result of their food annually. The total direct cost involved in the remediation of these outbreaks is roughly $55.5 billion. This cost does not include prevention measures taken by the agencies or the companies.
So far, the FDA does not require testing by manufacturers, but emphasizes the importance of preventing food pathogens from entering consumer households. Even though consumers are now becoming more driven to purchase more fruits and vegetables, it is produce that appears to be the most contaminated.
It is the decision of retail chains to choose their suppliers very carefully, as the products they put on their shelves are just as much a reflection on those companies from whom they buy them.
With roughly 20 percent of the U.S. groceries being imported, it is nearly impossible to pass regulations to control everything that lands on our grocers’ shelves. However, the business costs associated with the damage control of contaminated products can often prove heavier than the prevention costs.
A survey conducted by the Grocery Manufacturers Association uncovered that lost sales as a result of food pathogens equated to between $30 million and $90 million in 2011. The grocer’s total costs went above $100 million for 5 percent of the 36 international participating companies.
The problem surrounding food contamination is a triangle between consumers, suppliers and regulators. It poses a financial burden on families who cannot eat the merchandise they purchased, as well as the suppliers and regulators who work with the product administration.
Lastly, it has a moral implication on what suppliers value more: the health of their consumers or the company’s economic gain.