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Compliance fail

Senior Execs in for a Rude Awakening Regarding Supply Chain Compliance

By Maria Fontanazza
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Compliance fail

In previous years, supplier compliance was oftentimes built on trust. With FSMA tightening the reigns on compliance via auditing and documentation requirements and unannounced inspections, a higher level of accountability is being placed on companies, from the employees on the manufacturing floor all the way up to the C-suite. However, when senior executives start digging into the level of compliance maintained by their suppliers, they might not like what they find. In fact, they might be downright shocked, according to Randy Fields, chairman and CEO of Park City Group. “Instead of maintaining control over these issues of compliance, by delegating it and not properly supervising it, they’ve [senior management] lost visibility,” Fields says. “They have to be more involved than in the past, because they’re on the hook for it. But, they’re going to discover that their supply chain is nowhere near as compliant as they imagined.” In a Q&A with Food Safety Tech, Fields discusses how FSMA is changing the game for executives in the food business.

Food Safety Tech: In the context of supply chain accountability, increased interaction is now essential between food safety managers and executives. What level of awareness is required in the C-suite?

Randy Fields
Randy Fields, chairman and CEO of Park City Group, says the C-suite is not ready for what it is going to discover in terms of lack of compliance in the supply chain.

Randy Fields: Given the change in the law (FSMA), the regulatory world, and increasingly, the world of tort, the unfortunate reality is that the C-suite in nowhere near as aware of the issues of accountability in the supply chain as they need to be. It breaks down into two pieces: First, they have entrusted supply chain compliance to other people in the business; it’s been dropped down too far within the organization without the proper oversight.

Second, they don’t have a good way of measuring compliance—it’s been based on trust. Compliance has become more complex and as a function of the complexity, [senior management] doesn’t have a good set of tools by which they can stay on top of compliance and measure it.

With the change in the law, accountability has legally moved up to the C-suite, because FSMA, for all intents and purposes, brings Sarbanes–Oxley to the FDA. Between FSMA and tort, the way that it’s been is about to change very dramatically, but the surprises are all downside surprises. The consequence of trust without verification is now likely to lead both to litigation and possible criminal conviction. This is a different world.

The basic level of compliance in the global supply chain is far worse than anyone ever imagined. It will be not unlike turning over stones in your backyard in terms of what’s going to crawl out.

“Personal liability is probably the ultimate determinate of whether or not the C-suite starts to pay attention.” –FieldsFST: Is there a larger responsibility on the part of food safety managers to translate the compliance message to the C-suite?

Fields: I think it’s now both the appropriate responsibility and potentially the legal responsibility of food safety managers to insist that their C-suite become aware and provide them both the oversight and the tools by which compliance can be continually and professionally supervised and managed. I think failure to do that represents negligence.

Tort claims are getting more frequent and larger for foodborne illness problems. And now with both civil and criminal penalties potentially being applied by the FDA, it’s a game changer. It cannot be business as usual. This changes the world for food safety managers, and it changes the world for their bosses. We live in a world now where, whether we like it or not, the concept of accountability is about to be more legally enforceable.

The Peanut Corporation of America sentences are exemplary. But strict liability means that there can be a criminal prosecution without intent or even conceptually gross negligence. It is only a matter of fact that you supervised the function that was involved.

There’s a set of issues here that food safety managers should be bringing to the attention of senior executives. It’s beholden on them to say to these guys, ‘you have to pay more attention to this because you’re legally, civilly and criminally on the hook.’

FST: Do these factors have an impact on the type of professionals that are needed within food businesses?

Fields: Yes. I suspect that what will happen over the long term is that food safety will not be as much [about] science as it is compliance. In many companies, the food safety people tend to be the scientists who may not be as interested in the whole compliance problem. Increasingly, it’s the whole problem of compliance, not just the problem of food science.

We typically see within a company that someone manages the insurance part of the supply chain; someone else manages the food safety part of the supply chain, and someone else manages some other part of it: All of that fits under the rubric of compliance. We’re seeing more and more companies beginning to address this holistically.

House Votes to Repeal COOL for Beef, Pork and Chicken

By Maria Fontanazza
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The debate over country-of-origin labeling isn’t over yet.

In a 300-131 ruling, the House voted to pass the highly contentious COOL Amendments Act of 2015 (H.R. 2393) last week. This means that country-of-origin labeling will no longer be required for beef, pork and chicken. Consumer advocacy groups such as the Consumers Union (a division of Consumer Reports) are clearly unhappy about the passage of the bill, while industry associations such as GMA immediately applauded the decision.

“Without these changes to U.S. COOL rules, U.S. food and agricultural sectors could face financial losses in the billions when Mexico and Canada impose WTO authorized retaliatory tariffs as early as this summer,” said Denzel McGuire, executive vice president for government affairs at GMA, in a statement. “The financial impact of these tariffs will be felt even before they are implemented because the targets of these retaliatory tariffs will begin to experience a substantial drop in export sales almost immediately due to supply chain disruptions. A wide array of product categories will be impacted by these tariffs.”

On the opposing side, the Consumers Union states that the U.S. can avoid trade sanctions. According to the advocacy group, 90% of Americans surveyed want country-of-origin labeling on the meat they purchase. “No penalties have yet been accepted by the WTO, and the U.S. may still avoid trade sanctions by negotiating a settlement with Canada and Mexico,” said Jean Halloran, director of Consumers Union’s Food Policy Initiatives, in a letter sent to the House of Representatives, urging them to vote against a repeal. “Even if retaliation occurs, it is not likely to begin for many months, during which time the United States could develop and implement a solution preserving consumers’ access to country-of-origin information.  Contrary to statements made by the proponents of H.R. 2393, a settlement with our trade partners would be the true “targeted response” to the WTO ruling.”

Now it’s up to the Senate.

Does Your Company Really Understand GMO Labeling?

By Maria Fontanazza
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Consumers want to know what’s in their food, from artificial sweeteners and high-fructose corn syrup to dyes and pesticides. The latest hot-button issue surrounds foods made from genetically modified organisms (GMO) and the demand for companies to indicate on labeling whether a product contains GMOs.

In a recent Q&A with Food Safety Tech, James Cook, Food Scientific and Regulatory Affairs Manager at SGS, briefly discusses the challenges and misconceptions surrounding GMOs and labeling.

Food Safety Tech: What are the biggest challenges food companies face in communicating that their products are GMO-free?

James Cook: The biggest challenge for a company is to determine what words or phrases can be used concerning the regulations and/or laws of country that the product will be received into. Companies want to use GMO free, a terminology recognized by consumers, which is actually prohibited in certain locations such as the European Union (EU), and discouraged by the FDA.

FST: How has public (consumer) awareness of this issue complicated matters?

Cook: There is a diverse difference in dealing with the consumers in the EU that have a clear knowledge and unfortunately outrage to GMOs, and the consumers from the United States, where some have no idea what GMOs are.

FST: Are there misconceptions among consumers that present additional challenges to food companies?

Cook: The biggest misconceptions are: Everything created by humankind is evil, food crops have never changed, and the government and the industry are lying. Another misconception is that in the future, we will have enough food to feed the world population, without making significant changes in the way we produce food.   

FST: What are the most critical developments regarding state and federal labeling laws that we need to know about?

Cook: At this time, the Vermont law is the only breakthrough for the requirement [of] GMO labeling in the United States. If some non-government organization obtains passage of their bill through U.S Congress then this law will not come into effect. If this law becomes effective, we will have many states issuing and passing a similar law, as their consumers will want to know why this is required in Vermont but not in their states.

On April 16 Cook will be offering more insight on the topic during a GMO Labeling webinar. Register for the webinar now.

FST: Where do you see the GMO issue headed over the next year or so?

Cook: We will have some sort of GMO labeling law in the United States. Whether this law only affects one state or all of the U.S. is still unknown. Even if this is not solved, more locations in the United States will continue to ban the growing of GMO crops. Eventually these bans will make it into the courts, because you are dictating to a farmer what crops they can grow and sell.  

FST: What key questions will you address during the GMO Labeling webinar?

Cook: What does my company need to do in order to verify to a Non-GMO program?
Does one have to review the entire supply chain in order to prove the product is GMO free?
Why isn’t GMO product just labeled as such in the USA?
Why the vast difference of GMO policies between EU and USA?

 

Related Content: Expanding GMO Labeling Requirements in the U.S.