BusinessWeek, 5/21/07

MAY 21, 2007
NEWS & INSIGHTS

How Safe Is The Food Supply?

The hamstrung FDA may be unable to prevent a contamination crisis

Tainted ingredients in pet food may have shocked most Americans, but not William Hubbard. As a longtime top policy official at the Food & Drug Administration, Hubbard a decade ago spotted two worrisome trends. Food imports were rising dramatically at the same time the FDA's ability to police the food supply was in decline. Agency officials tried to stem the tide, but their plans didn't get funded or passed by Congress. "We've been warning about food safety since the '90s," says Hubbard, who left the agency in 2005. "Now the people at the FDA are frustrated. They have good solutions, but they can't do anything."

Nor is Peter Kovacs surprised by the latest spate of food frights. Kovacs has spent four decades in the ingredient industry as an executive and consultant. Top-tier companies like Kraft Foods Inc. (KFT ) and Nestlé (NSRGY ) have learned how to guarantee the safety of their products for human consumption, he says. They trace ingredients back to their source and regularly test them to ensure quality. The very survival of their brands depends on it. But not all companies are as diligent, especially when the risks seem lower, as with animal food. In fact, contaminated pet food is just one tiny part of a huge problem. "The U.S. is sitting on a powder keg," he says.

That powder keg hasn't exploded--yet. But every month there are a surprising number of near misses. Europe just had a scare from harmful bacteria in vitamin A from China that nearly got into infant formula. And in the past few weeks alone, the FDA has issued warnings or recalls for brands of milk, olives, bottled water, bread, prepared fruit trays, melons, oysters, and peanut butter. The pathogens or contaminants implicated in such scares form an unholy litany: salmonella, listeria, norovirus, nitric acid, arsenic, even wire fragments. Toxins such as lead routinely show up in vitamins and dietary supplements.

SHOCK TO THE SYSTEM
These known cases make up a tiny fraction of the overall problem--an estimated 76 million illnesses and 5,000 deaths in the U.S. from food poisoning each year. Meanwhile, imports of food, some from countries without strict controls, soared to more than 9 million shipments last yeara doubling since 2002. The cash-strapped FDA is able to inspect less than 1% of imports. It's a recipe for disaster. "Our food-safety system in this country is broken," warned former FDA Commissioner Dr. David A. Kessler at a recent congressional hearing.

Few incidents ever have a body count high enough to shock the country into making fundamental changes. Overall, "we do have a very safe food supply," says Sanford A. Miller, former director of the FDA's Center for Food Safety & Applied Nutrition. But the alarms over pet food and vitamin A have lit a fire under lawmakers and executives. On May 2 the Senate rushed to pass a bill by a vote of 94-0 giving the FDA more responsibilities, such as creating databases of adulterated food. Meanwhile, food producers have been holding emergency meetings with suppliers, looking for problems in their factories or supply chains. Companies are "feverishly examining their own purchasing policies and trying to ensure they are followed," says Kovacs.

The first big lesson from the current scares is that food producers have to do more themselves. "It is absolutely appropriate to put the responsibility on the companies," says Alexander Filz, spokesman for Swiss-based DSM Nutritional Products, the world's largest ingredient maker. Too often, though, consumers get hurt before companies take action. Natural Selection Foods in San Juan Bautista, Calif., learned this the hard way last year when its spinach was linked to 204 illnesses and three deaths from contamination with a deadly strain of E. coli. The company now spends millions of extra dollars a year testing everything from seeds and irrigation water to processed salad greens for pathogens. Few of its competitors do the same. But "knowing what we know now, it's the right way to go," says Natural Selection Foods President Charles Sweat.

ConAgra Foods Inc. (CAG ) also has taken extra precautions. In February, the company was forced to recall Peter Pan peanut butter because of salmonella contamination. The cause: a leaky roof in a Sylvester (Ga.) plant that allowed peanuts to get wet and bacteria to grow. The company spent more than $15 million to fix the problems and upgrade the plant, and hired a top food-safety expert. "Some companies are highly committed to food safety. Others are just looking for ways to cut costs," says Michael Doyle, director of the Center for Food Safety at the University of Georgia, who has worked with both ConAgra and Natural Selection Foods. "I've been incredibly impressed with the commitments [they] have made."

Spotting problems in fields or factories may be the easy part. The pet food scare has revealed the difficulty of ensuring that ingredients companies buy are safe. The tainted products have been traced to Chinese companies that added the chemicals melamine and cyanuric acid to wheat products to boost the apparent protein contentand the price. "Any company can be the victim of adulteration-for-profit if they don't have the proper procedures in place," explains Kovacs. "My guess is, this sort of thing has been going on for some time."

Companies are now scrambling to shore up their defenses. One key is a system to trace shipments of ingredients back to their original sources, rather than just buying from middlemen and taking their word for it. "This has forced our companies to go back and double-check their suppliers," says Sean McBride, spokesman for the Grocery Manufacturers Assn. Another safeguard seems like a no-brainer: regular testing.But this is often skipped because of the cost. Europe was spared a disaster this year when a German company testing vitamins from China spotted harmful bacteria in time to stop the supplements from being added to baby food.

Industry can only tackle part of the problem, though. Regulators have to do the rest--and there's widespread consensus that the FDA is not up to the job. "We're not even close to having a system in place that gives assurance that the food is safe," says Georgia's Doyle.