Food safety is always a challenge. Insuring food safety from suppliers in distant countries like China is even more of a challenge. “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” (New York Times, March 4, 2017) report new applications of Bitcoin’s Blockchain to food security:

Frank Yiannas has spent years looking in vain for a better way to track lettuce, steaks and snack cakes from farm and factory to the shelves of Walmart, where he is the vice president for food safety. When the company dealt with salmonella outbreaks, it often took weeks to trace where the bad ingredients came from.

Then, last year, IBM executives flew to Walmart’s headquarters in Arkansas to propose a solution: the blockchain.

Blockchain, the encryption protocol backing Bitcoin security is deployed for supply chain security. Modern manufacturing as well as food production is often spread across a wide network of suppliers around the world. All major companies from Ford and Toyota to Nike and Walmart hire third-party certification services both to monitor quality standards and working conditions with suppliers.

Nike never wants their shoes made by untraceable factories using low-quality materials, nor face news stories of Nike subcontractor factories with unsafe working conditions. Similarly Walmart and other companies selling food want to certify standards and safety from the original farms, through processing and distribution.

Blockchain provides an accounting system that makes it hard for later links in the supply chain to falsify earlier links (to hide low-cost unapproved suppliers, for example).

Nearly half a trillion dollars world of goods were shipped (or flown) from China to the US in 2016, and a significant part of the cost is documenting these goods. Maersk is a major shipping firm facing this challenge:

For Maersk, the problem was not tracking the familiar rectangular shipping containers that sail the world aboard its cargo ships — instead, it was the mountains of paperwork that go with each container. Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.

…The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world.

What’s more, the system is rife with fraud. The valuable bill of lading is often tampered with or copied to let criminals siphon off goods or circulate counterfeit products, leading to billions of dollars in maritime fraud each year.

Shipping fraud leads to food safety risks for companies like Walmart (and, of course, for customers).

FDA and USDA food safety agencies, apart from turf fights with each other, are challenged by incentive, information, and budget issues.

FDA/USDA Catfish fights offer a turf-war example. “Senate votes to end USDA catfish inspections, which just got underway,” (Food Safety News, May 26, 2016)

The U.S. Senate has voted to shut down the nation’s only catfish inspection program, a move that would put more Americans at risk of exposure to carcinogens and antibiotics from Asian white fish, such as Vietnamese pangasius.

…If it passes the House, it would still have to be signed by President Obama before the U.S. Department of Agriculture (USDA) catfish inspection program would be shut down. If that happens, catfish would likely revert back to the U.S. Food and Drug Administration (FDA), where only 1 to 2 percent of seafood imports are inspected because of budget constraints.

Sounds scary, but Food Safety News has its own perspective and bias, according to a NPR story discounting a Food Safety News scare story on supermarket honey, “Relax, Folks. It Really Is Honey After All,”

Maybe we’re too inclined to believe the worst about supermarket food.

How else to explain the reaction to a recent report about honey on the web site Food Safety News? Food Safety News is published by a lawyer who represents plaintiffs in lawsuits against food manufacturers and processors.

The post, by journalist Andrew Schneider, claimed that most honey on supermarket shelves isn’t really honey. As evidence, the site cited tests showing that there is no pollen in most of that honey. (Raw honey contains lots of pollen, which bees collect along with the nectar that they turn into honey.)

The Food Safety News story in NPR post focused on allegedly unsafe honey from China:

The article implied that this was part of a deliberate attempt to prevent anyone from detecting illicit honey from China. (The United States blocks imports of Chinese honey because U.S. officials decided that it was being sold at artificially low prices, undercutting American honey producers.) Schneider also reminded his readers that Chinese honey has had a history of safety problems, including contamination with banned antibiotics and lead.

This 2011 NRP story is valuable for its in-depth research on the honey industry, and gives a glimpse of the way many food safety scares (and lawsuits) develop.

One avenue to incentivize companies to keep food safe is to avoid expensive litigation and awards to customers hurt by unsafe food. Bad publicity provides a powerful incentive as well, as Chipote management and stockholders learned recently.

Most of economics is about incentives, and it is an open debate whether food safety regulations, potential litigation, or fear of bad publicity plays the larger role in maintaining and improving food safety. Critics of the FDA and USDA regulatory approach focus in agency incentives.

Government agencies suffer from incentive and information problems that slow innovation and hamper alternative food safety systems. Students have an opportunity to research the dozens of food safety certification systems that have developed to protect consumers.

A major concern with both domestic and imported food is possible overuse or misuse of pesticides and herbicides. Interesting to see how significantly U.S. pesticide and herbicide use has fallen, even as agricultural production has increased:

May 2014, the National Agricultural Statistics Service at the U.S. Department of Agriculture (USDA) issued its comprehensive report Pesticide Use in U.S. Agriculture. The agency found that herbicide usage peaked at 478 million pounds in 1981—a decade and half prior to the introduction of the first biotech crop varieties—and fell to 394 million pounds in 2008. So instead of the massive increase in herbicide spraying claimed by Benbrook, the USDA actually reports a modest decline. Insecticide applications peaked in 1972 at 158 million pounds, dropping to 29 million pounds in 2008. [Source: Chipotle Treats Customers Like Idiots, Aug./Sept. 2015 Reason]

For more on certification and regulation, here is a 2011 post on Certified Humane discussing the debate over expanded federal regulation and inspection of food, and critical of the claim that private sector food producers and importers can “self police.”

The Chairman of the Appropriations House Subcommittee, Jack Kingston (R-GA) said, “The food supply in America is very safe because the private sector self-polices, because they have the highest motivation.  They don’t want to be sued, they don’t want to go broke. They want their customers to be healthy and happy.”

The Centers for Disease Control (CDC) estimates that 28,000 Americans are hospitalized every year and 3,000 die every year from tainted food.

Even the Grocery Manufacturers of America are in support of doubling the FDA’s food safety budget, in light of the recent food scandals.Rep. Kingston also claims the high level of food safety is due to the private sector without the “nanny” state.  “That’s the private sector working,” he’s quoted as saying.

In reality, do you want to risk your life and the lives of your families on Rep. Kingston’s fantasy?  We saw the result of   de-regulation and lack of oversight in the financial sector, as we watched homes being foreclosed and savings and pension plans evaporating

If you want the FDA and the Food Safety Inspection Service at USDA fully funded, please write your Senators and let them know they need to put the funding back to provide us with safe food oversight. …

According to the article, increased federal funding for FDA and USDA inspectors could save lives, and those who say the private sector can “self-police” to keep food safe are living in a fantasy world.

However, today’s food industry relies on independent food safety certification organizations. These are generally NGOs (non-government organizations) that are in compliance with regulatory agencies like the FDA and USDA.

Here is page for Global Food Safety Initiative (GFSI) Certification with this introduction:

Due to complex challenges in today’s food supply chain, many of the world’s largest food retailers are mandating supplier certification to Global Food Safety Initiative (GFSI) schemes, which include SQF, BRC, IFS, FSSC, GLOBALG.A.P. and BAP and CanadaGAP.

NSF companies are the leading global certifier to GFSI benchmarked standards, with exceptional technical expertise, consistently calibrated auditors and capacity for a timely path to certification.

GFSI was established to ensure confidence in the delivery of safer food to consumers, while continuing to improve food safety throughout the supply chain.  These global standards address food, packaging, packaging materials, storage and distribution for primary producers, manufacturers and distributors.

So Third-Party Certification is key. Big grocery chains like Kroger and Safeway would like to believe the farms and food-processors who deliver food to their shelves each day have clean and modern facilities with strict procedures to keep equipment clean and free of microbes. However, the food industry runs on “trust, but verify.” They can’t afford to just believe what suppliers claim nor can most afford to hire their own inspectors to investigate each supplier.

Companies can’t just rely on government agencies like the FDA or USDA since they can be sued when customers are hurt even when they comply with federal regulations. FDA and USDA tend not to be up to speed with the latest technologies and data analytics.

So, instead, private sector firms rely on certification. Here is the NSF page: What Is Third-Party Certification?

Third-party certification means that an independent organization has reviewed the manufacturingScreen Shot 2017-03-24 at 9.14.48 AM process of a product and has independently determined that the final product complies with specific standards for safety, quality or performance. This review typically includes comprehensive formulation/material reviews, testing and facility inspections. Most certified products bear the certifier’s mark on their packaging to help consumers and other buyers make educated purchasing decisions.

NSF Certification
Recognized by regulatory agencies at the local, state, federal and international level, NSF certification demonstrates that a product complies with all standard requirements. NSF conducts periodic facility audits and product testing to verify that the product continues to comply with the standard. See the complete NSF product listings.

NSF’s programs include testing and certifying drinking water treatment products and water filters, commercial food service equipment and a wide array of consumer products such as bottled water, nutritional supplements, private label goods, personal care items and home appliances (washers, dryers and dishwashers).

Why Do Companies Seek NSF Certification?
Independent, third-party testing and certification through NSF helps organizations:
• Demonstrate compliance with national or international standards and regulations• Demonstrate independent validation and verification of their commitment to safety and quality  • Increase credibility and acceptance with retailers, consumers and regulators  • Benefit from enhanced product quality and safety

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