Randy Fields, Repositrak
FST Soapbox

Despite FSMA Exemptions, Compliance Will Not Be Optional For Small Suppliers

By Randy Fields
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Randy Fields, Repositrak

Moving to automated, interoperable systems will help suppliers meet retailer and consumer demands for supply chain transparency.

The product recall at Blue Bell Creameries earlier this year is yet another example of food safety issues negatively impacting food marketers, growers, processers and manufacturers. We all remember the Peanut Corporation of America’s salmonella outbreak in 2008 and the Jensen Farms listeria outbreak in 2011. Salmonella-tainted eggs in 2010, E. coli in strawberries in 2011, and listeria in caramel apples last Halloween combined with dozens of others during the last six years, have sickened thousands and killed dozens of people.

The brand reputation impact from the incidents at Peanut Corporation of America and Jensen Farms was terminal—both companies went bankrupt. The effect on Blue Bell, while likely not fatal, is expected by industry experts to be substantial and include loss of revenue and market share. The company has already announced plans to lay off more than 1,000 workers as a result of the recall.

In addition, growers saw cantaloupe consumption take a nosedive after the Jensen Farms listeria outbreak, which was one of the worst foodborne illness outbreaks in U.S. history in terms of number of deaths. They are only now seeing sales levels return to those before the incident. And because the farm itself went out of business, personal injury lawyers went after the companies that sold the disease-ridden cantaloupes—the retailers. By virtue of last year’s out-of-court settlement by Walmart on the Jensen Farms lawsuit, both suppliers and retailers are now responsible for everything they sell.

Enter the Food Safety Modernization Act, signed in 2011 and about to begin finalization in August. FSMA mandates that retailers and suppliers have documentation that verifies their supply chain’s regulatory compliance is readily accessible for government inspection. Add these records to the business relationship records that retailers and suppliers should already be maintaining (including indemnifications and certificates of insurance that help manage brand risk), and you’d think our risk of foodborne illness is about be eradicated.

Although FSMA represents the most sweeping change to our food safety laws in the last 70 years, it may not have the greatest impact where the supply chain is most vulnerable. Today the largest suppliers that sell the majority of our food have very sophisticated systems to ensure safe food production and transportation. This group will have the easiest path to compliance with FSMA, and they most likely already hold themselves to a higher standard. It’s actually the smaller suppliers, which likely do not have the available resources or sophistication to comply with FSMA requirements, that will be exempt from certain documentation under FSMA based on their size. This group of suppliers is growing rapidly to meet consumer desire for fresh food that is locally grown and produced. Unfortunately for them, it’s only a matter of time before wholesalers and retailers decide that the risk is too great to continue to do business with these small suppliers.

The good news is that technology exists that can help small suppliers reduce risk in their extended supply chains. Affordable, interoperable systems have been developed to address the market need for receiving, storing, sharing and managing regulatory, audit and insurance documentation. Suppliers of any size can also track products as they move through the supply chain and trace them back in the event of a recall. This move to automation will help all suppliers not only meet the demands of FSMA, but also establish a base for retailer and consumer demands for transparency in the supply chain going forward.

Having a comprehensive food safety system is quickly becoming a competitive advantage. Retailers and consumers are looking for those suppliers that have an unblemished safety record and are transparent about their safety processes, so the time is now for small suppliers to hold themselves to a higher standard than FSMA requires for future business opportunities. The stakes are just too high for retailers and wholesalers to not verify that everything they sell to consumers is produced and transported safely.

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Randy Fields, Repositrak

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