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Peanut case food for thought

Regulatory system needs more power, better connection

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The peanut butter and peanut paste recall that has been unfolding in Canada and the U.S. is already the largest food recall in history.

To date, nine people have died and hundreds of people in the U.S. have fallen ill from salmonella poisoning from food products processed and distributed by Peanut Corporation of America (PCA). Although no cases of poisoning have been reported in Canada, hundreds of peanut products made in Canada and the U.S. are being recalled.

The U.S. Food and Drug Administration (FDA) discovered a PCA plant not only lacked sanitary and hygienic conditions, PCA also knowingly shipped contaminated products even after it knew lab reports had indicated the presence of salmonella. As a result, peanut products sold by PCA since January 2007 are potentially contaminated and could be recalled soon.

This raises a serious question: why did it take so long to discover the tainted peanut products? This is especially relevant because food is almost always meant to be sold and consumed in less time than that. At the heart of this current issue are product safety regulations, quality issues in global supply chains, and a lack of public information.

In my research with colleagues, we have found that clear and unambiguous evidence influences the speed with which product harm is identified and remedial action taken. Lack of evidence can delay recalls even from reputable firms, which otherwise recall defective products swiftly.

In the current case, it was weeks before the Center for Disease Control and Prevention (CDC) could pinpoint that peanut butter from the PCA plant in Georgia was the source of the salmonella outbreak. Understandably, tracing illnesses to food consumed is not an easy task.

My investigation into product recalls shows that some companies identify problems swiftly, and subsequently recall those products much faster than others. We found that companies with closer contact with consumers, such as retailers, recall products faster than those farthest away from the consumers, such as manufacturers and suppliers.

Based on the research evidence so far and the specifics of the peanut recall, three key lessons are possible.

First, as simple as this might sound, companies must strengthen their quality systems to ensure product safety. Companies such as the Canadian one that rejected the peanut shipment from PCA in April 2008 should be the standard, not the exception.

Even though the salmonella outbreak is a failure on the part of PCA, it is not PCA's fault alone. It was also a failure of the more than 400 companies that used the products but likely never tested them or saw firsthand the conditions at the PCA factory.

Second, the regulatory system could strengthen its processes by being better connected. As pieces of information have arisen during the recall, it appears a number of regulators were involved, but none was aware of each other's reports. All that the Canadian Food Inspection Agency (CFIA) knows is that a peanut shipment was rejected. It does not know who received the shipment or why it was rejected.

Nor could the CFIA confirm if it alerted the FDA or if the latter acted on its own. Likewise, the FDA could not confirm if the shipment was intercepted at the borders or later in Georgia. It appears that the regulators from Georgia inspected the PCA Blakely plant in June 2008, but the FDA could not confirm what was covered during that inspection.

The shipment rejected by the Canadian company was destroyed in November 2008, but it appears the plant was not comprehensively inspected either before or after. When, in December 2008, CDC investigations identified salmonella contamination, the FDA inspections revealed PCA had had many violations.

Third, regulators need more power and companies need to be more accountable to them. As it stands now, a company that learns its product is not fit for consumption is not required to inform regulators. Instead, companies only need notify officials if their product has caused injury or accident. In cases involving food-borne illness, it is difficult for companies and regulators to quickly know what caused the illness. Therefore, it is important that companies be mandated to share their test reports with the regulators.

Finding the violations noted above was not easy for the FDA, who had to resort to the Bio-terrorism Act to access plant records of Peanut Corporation of America.

I suspect as global supply chains get 'longer' and companies become further distanced from the consumer, it will become even more difficult for companies to react when they learn food or toys are unsafe. However, the key to product safety regime lies within the companies, regulators, their interaction and the power those regulators have.

Dr. Hari Bapuji is an assistant professor in the Department of Business Administration in the Asper School of Business at the University of Manitoba. His teaching and research include strategic management and international business. The research mentioned in this article draws upon Dr. Bapuji's work with professors Niraj Dawar and Manpreet Hora and Andre Laplume and Kent Walker.

The Learning Curve is an occasional column written by local academics who are experts in their fields. It is open to any educator from Winnipeg's post-secondary institutions. Send 600-word submissions and a mini bio to thelearningcurve@freepress.mb.ca.

Republished from the Winnipeg Free Press print edition March 30, 2009 B2

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