Traceability

In Protecting Your

Brand Name

American Butter Institute

Chicago, IL

April 27, 2009

By

Gale Prince

Gale@galeprince.com

Food Safety is Essential to Our

Business!!!

Under Magnifying Glass

In the end it was …

Or was it both?

Recent Food Safety Problems• 2006 Produce Safety was the top news story

– Spinach

• 2007 Product safety was the top news stories

– Peanut Butter

– Pet Food

– Canned Chili

– Ground Beef

• 2008

– Ground Beef

– Tomatoes and Peppers

• 2009

– Peanut Butter

– Pistachios

– ????????

Product Recalls Are Becoming More

Massive

• 25 million pounds • 22 million pounds • 1.8 million pounds• 143 million pounds• Over a year’s production of peanut butter• All production codes of chili sauces• Multiple brands by multiple mft’s of pet

food• Over 600 different food products recalled in

Europe– all related to one adulterated minor ingredient

• 30 Millions of toys recalled

Product Recalls Are Costly

• Preliminary recall costs reported by firms of recent recalls:– $56,000,000– $35,000,000– $60,000,000– $30,000,000– $37,000,000– $103,000,000– Some firms ceased business

• These costs do not include litigation costs• Nor does it include the cost in lost sales• Nor does it include the swings in stock market

Salmonella 2009

Source: Mn Dept Health AP Photo 012909

Congressional Hearings

Why the increase in food safety

Issues?

Why the Change?

• Concentration of food production

• Increased batch size

• Product changes

• Changes in food distribution

• Consumer has changed

• Science has changed

• Epidemiology has changed

Food Net Sentinel Sites

Represents about 15% of US population

CDC Food Net Trends

1996 -2008

Source: MMWR April 10, 2009

Center of Disease ControlPulse Net

Pulse Net Database

0

10000

20000

30000

40000

50000

60000

70000

1996 1998 2000 2002 2004 2006

PFGE patterns submitted to PulseNet Databases 1996- 2007

In 2007 ~ 30,000 patterns in E. coli O157 database

Source: CDC 2008

Electronic Communications

CDC Outbreak Response and Surveillance Team (ORST)

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Slide Compliments of Dr. Art Liang Center of Disease Control and Prevention

Peanut Butter 2009

Source: CDC 030609

Peanut Butter 2009

Source: CDC 030609

PCA Peanut Product Related RecallsJan 10 – Mar 10, 2009

0

10

20

30

40

10-

Jan

17-

Jan

24-

Jan

31-

Jan

7-

Feb

14-

Feb

21-

Feb

28-

Feb

7-

Mar

Recalls

Source: CDC & FDA

MN HD

State of TX Orders Recall

~ 500 Recalls Involving > 3,868 Products as of 3/28

Other Food Companies Recalls

PCA Recall

PCA Expands Recall

What does this tell us?

• The foodborne disease detectives have become

very good!

• The science and electronic capabilities of

epidemiology will continue to grow rapidly.

• Electronic communications links all of this

together with instant messaging.

• Provides a mechanism to identify a product that

is the vehicle for the pathogen.

Pet Food Recall

• Triggered questions on source of ingredients

in pet food, but…

Today Consumers More Vocal

More rapid communications when products

are not satisfactory.

Consumer Satisfaction

• Blogs

• Consumer Generated

Media (CGM)

Do Consumers care about

traceability?

Consumer Reaction to Recalls

• Harris Interactive Research-April 2007

– 79% aware of food recalls for past three years

– 29% felt recalls were “serious concern”

– 55% would switch brands temporarily

– 15% said they would never purchase the recalled

product

– 21% avoid purchasing any brand made by the

manufacturer of the recalled product

Consumer Research

Consumer Research

Source: FMI Trends 2008

Consumer Research

Source: FMI Trends 2008

Consumer Research

Source: FMI Trends 2008

Global Food Traceability

USA: high fructose corn syrup, sugar,

wheat flour (produce & milled), whole

grain oats, sunflower oil,

strawberry puree, cellulose, red dye #40

China: vitamin & mineral

supplements,

B1, B2, iron, folic acid),

honey

Scotland: sodium alginate

Italy: malic acid

Denmark: lecithin (soy)

Philippines: carrageenan

India: guar gum

Europe: citric acid

Source: Business Week July 30, 2007

Country of Origin Labeling Requirements

Farm Bills of 2002 and 2008

USDA Regulations

Final Rule

January 15, 2009

Effective

March 16, 2009

Public Health Security and Bioterrorism

Preparedness and Response Act of 2002

Signed into Law

June 12, 2002

FDA Established and Maintenance of Records for

Food

Regulations

Final Rule

Published December 9, 2004

Effective December 9, 2005

FDA Establishment and

Maintenance of Records 2005

• Proposal required lot codes of everything

coming into a retail store

• Final rule allowed for the use of:

– Commercial Paper

– Purchase orders

– Invoices

– Bill of Lading

Congressional Hearings

March 26, 2009

Hearings on

Traceability

Traceability Report

• Were able to trace 5

of 40 items

• Lack of lot code info

• Lack of records

• 25 % of facilities not

aware of record

keeping

requirements

Current Proposed Legislation

Traceability

• FDA Food Safety Modernization Act

SB-519 by Durbin of IL

• FDA Globalization Act of 2009

HR-759 by Dingell of MI

• Safe FEAST Act of 2009

HR-1332 by Costa of CA

• Establish a traceability system for food

SB 425 by Brown of OH

Current Problems

• Paper work challenge

• Manpower extensive and do

not provide rapid response

• Currently a universal systems does not exist to provide transfer of lot code information to achieve efficient and rapid transfer that would aid in epidemiology investigation

• SYSTEM NOT ADEQUATE TO PROTECT YOUR BRAND

Traceability

• Needs to be more rapid

• Needs to be standardized so electronic

exchange of data can be synchronized with

global harmonization of information

• Needs a platform for exchange of information

as product moves through the distribution

channels

Electronic TracingElectronic Tracing

UPC Bar Code

Identify company and product

First item to be scanned

on June 26, 1974

An idea that was born in 1932 by a grocer Wallace Flint

GS 1 USGS 1 US

•• Uniform Code Council (UCC)Uniform Code Council (UCC)

–– Managed UPC numbers in USAManaged UPC numbers in USA

•• Changed name to GS 1 USChanged name to GS 1 US

–– 20052005

•• Consumer package bar codeConsumer package bar code

GTINGTIN

Global Trading Item NumberGlobal Trading Item Number

Includes bar codes and RFIDIncludes bar codes and RFID

Bar CodeBar Code

•• Consumer UPCConsumer UPC–– Limitation to product ID Limitation to product ID

•• Case UPCCase UPC–– May be same as Consumer UPC or May be same as Consumer UPC or

–– May be different UPCMay be different UPC

–– May have extended bar code with lot code infoMay have extended bar code with lot code info

•• Pallet GTINPallet GTIN–– Contains Consumer UPC # in GTINContains Consumer UPC # in GTIN

–– May contain lot codeMay contain lot code

–– Pallet serial number Pallet serial number

Uniform Traceability System

• Food industry has begun to investigate and

implement electronic systems

• Breath - from farm to retail shelf

• For lot codes need to expand bar codes

• Result in change of food distribution

modifications

• Recent outbreaks are the driving focus

Traceability Benefits

• Multifaceted

• Help target resources during an investigation

• Minimize use of “Do Not Eat Warnings”

• Prevent erosion of public confidence

• Protect innocent food companies

• Protect your brand and your company

Traceability Benefits

• Universal Electronic System

– Less labor extensive

– More accurate

– Management tool

• Quality Assurance

• Financial Controls

• Production Controls

• Inventory Control Management

• Supplier Management Tool

– Fulfill consumer expectations

Food Safety is Essential to Our

Business!!!

Preventing Food Safety Problems

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2.

3.

April 27, 2009April 27, 2009April 27, 2009April 27, 2009

Today you have an opportunity To prevent a food safety problem

By taking action in your operation

What are you going to do upon

Return to your job?

Responsibilities

Our Responsibilities

• Moral

–To do what is right for our customers

• Legal

–To meet regulatory requirements

• Both as a Corporation and Personally

Complacencyis a self-satisfaction especially when

accompanied by unawareness of

actual dangers or deficiencies.

- Merriam-Webster Dictionary

Complacency

• “We have been in business for 67 years and

we have never had a problem.”

• “We have always done it like that and it has

never been a problem.”

• “The inspector didn’t say anything about that

being a problem”

• “Peanut butter has always been a safe food”

Complacency

• What about your operation?

• Have you as a manager become complacent?

• Are you taking things for granted?

• Are you accepting less than what you should?

Complacency

WE Cannot Accept A Complacent

Attitude With

FOOD SAFETY

Food Safety is a Journey

Not a Destination!

You must continue to strive for

improvements each and every day

in protecting the consumer.

Thank you for your attention

Gale@galeprince.com

513-236-6264

Consumer Reaction to Recalls

• Impact of major food safety issues on consumer purchasing decisions

– Consumer reported they would not purchase the

recall product in the future…

• 2005 - 6%

• 2006 - 38%

• 2008 - 15%

FMI Trends 2008