Foodborne Illness Costs $152B/year. Who Will Pay for Prevention?


A recent study estimates the cost from sicknesses due to contaminated food in the U.S. to be $152B/year. Meanwhile, food safety legislation is making its way through congress, containing new guidelines and standards for hygiene, inspection, and sanitation. Even if that passes, it is not likely to contain a strong prescriptive mandate for any specific traceability technology. But there are other drivers to adoption of traceability besides regulatory mandates, such as brand assurance, risk management, and supply chain efficiency.


Will New Revelations About the High Burden to Society Translate Into Stricter Regulations or Enforcement?

A 28 page report released last month by the Produce Safety Project estimated the cost of foodborne illnesses in the U.S. at $152B annually (when including quality of life impacts) or $103B when focused solely on productivity losses. Either estimate is significant, and much higher than previous estimates by the FDA and the USDA ($7B-$35B). The older studies substantially underestimated the true cost largely because they only counted officially reported illness of known cause (more than 9 of 10 cases go unreported, or cause is unknown). Whether this newer, much higher estimate will result in tougher regulation and requirements for traceability remains to be seen. There is inevitably pushback from an industry with such a variety of players, many with razor thin margins and little appetite for new systems and requirements, in spite of increasing focus on corporate responsibility.

New Legislation in the Works

Last year, President Obama called for new food-safety regulations. In July, 2009, the House passed H.R. 2749 which:

  • requires annual registration of all facilities that grow or process food (with specific exemptions)
  • mandates HACCP (Hazard Analysis Critical Control Point) implementation across those facilities
  • requires the creation of science-based performance standards for contaminant control during growing, harvesting, processing, packing, sorting, transporting, and storing of food and agricultural products
  • establishes a tracing system to “quickly identify each person who grows, produces, manufactures, processes, packs, transports, holds, or sells such food
  • expands the Reportable Food Registry to require farms, restaurants, retail food establishments, and importers to register
  • contains a variety of other new requirements and gives powers to the agencies for prevention, intervention, and response to contaminated foods.

The traceability requirements in H.R. 2749 are not overly specific, allowing discretion in implementation. Meanwhile, S. 510, the FDA Food Safety Modernization Act, is awaiting a vote in the senate. It has some similarities to the house bill, but addresses only traceability of agricultural commodities. It does, however, give the FDA clear authority to order a food recall. Another Senate bill, S. 425: Food Safety and Tracking Improvement Act, requires the Secretary of Health and Human Services to “establish a traceability system for all stages of manufacturing, processing, packaging, and distribution of food through which the Secretary can retrieve the history, use, and location of each article of food shipped in interstate commerce.”S.425 is still in committee, as of this writing. We are watching to see if it will pass.

At the FDA/FSIS (Food Safety and Inspection Service) food traceability meeting in December, Jerry Mande, acting USDA undersecretary for the Office of Food Safety, said improving food tracing has become a priority for the Obama administration. Their Food Safety Working Group wants a system that reduces the time from outbreak detection to resolution. Industry advocates like GMA (Grocery Manufacturers Association) stress the need for flexibility, since one size can’t possibly fit all in the food industry, as illustrated clearly in this research poster on traceability in the seven types of food supply chains.

Implications for Traceability Technology Adoption / Small Players Are Key

With all of this legislative activity, one might be tempted to think that a regulatory mandate for traceability technology is imminent. We don’t believe so. Even if the Senate passes S.425 and reconciles with the house bill (passing anything is a major feat these days), it is unlikely to be a strong or prescriptive mandate for adoption of a traceability technology. Instead, we are more likely to see legislation push industry towards pilots and trials to encourage the development of affordable approaches to learn what works for the differing requirements of the different food supply chains and players in those chains. Of course, for many players there are other reasons to implement traceability besides complying with regulation, especially for companies that want to project a special brand, experience, and ethic to their customers.

However, smaller companies are already complaining about the cost of the PMA’s (Produce Marketing Association) voluntary Product Traceability Initiative. The small players (whether producers, processors, or preparers) throughout the food supply chain have not only smaller budgets, but typically have no dedicated technical resources and often have small margins. However, it is critical that they be included in any traceability schemes, since they constitute a major portion of the world wide food supply chain and small players have been the source of a number of sizeable outbreaks. Therein lies the challenge: how to create a system that is effective yet inexpensive enough for the small farmer or producer or restaurant owner. The traceability solution providers that can innovate to meet that challenge have a good shot at achieving the broadest reach and most widely adopted solutions. And we can all benefit from that.

To view other articles from this issue of the brief, click here.

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