Monday, August 25, 2008

Is our food supply chain safe?

The current listeriosis outbreak has really gotten out of hand, so much so that Maple Leaf ™ Foods in addition to recalling at least 220 different products has temporarily suspended its usual advertising campaigns and in its place is running a 60-second public service announcement apologizing for the tragedy and assuring its customers that it intends to make sure it never happens again. That didn't help its stock price which was down over 9% by midday today.

How telling is this scandal? When I went to a Timmie's in downtown Hamilton today, they had signs posted there and at other locations around town assuring patrons that its sandwich meats and cheeses are not included in the recall. But it does make me wonder about other places that may use bulk ingredients in their restaurant servings.

I credit the company for acting relatively promptly, acknowledging the issue, and taking full responsibility for its actions. The kind of candor shown by the company's president, Michael McCain, is extremely rare in the corporate world. The fact remains that it did happen and at least four people are dead and two dozen seriously ill.

The other problem is that since Maple Leaf has such high standards, and this still happened, the pressure will be on to eliminate the minimum government standards as the Cons want to do (and as I wrote about the other day). But let's suppose for a minute the damage is irreparable. If a company with such a high regard goes, what would the next highest standard be? Would it be close to what existed, the minimum government standards, or less?

It's kind of like automobiles and trucks. A vehicle cannot be legally sold unless it can take a head-on or side impact of at least 60 km/h, or 35 mph in such a way that the passengers survive the crash even if injured. The insurance industry says that's not good enough -- that a concussion is not acceptable. They do their own testing at 70 km/h or 40 mph and offset crashes which they say reflect the real world then give grades on whether the passengers (i.e. dummies) are injured at all. The companies that have "fail" or "poor" grades always reply that they meet the minimum standards "set by the government."

But which vehicle would you buy? The bare minimum, or the insurance standard? Moreover, ask yourself, would the insurance industry even bother with the exercise if there were no minimum standards, which is what I think auto companies probably would prefer?

I believe that if there were no minimum standards for food safety, Maple Leaf might not be taking the extraordinary steps it is because they'd have no reason to set the bar even higher.

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