(Source)

In addition, such outbreaks can severely damage the reputations of the growers, processors, restaurants and supermarkets involved as well as their bottom lines as they face lost sales and costs for recalls that often run into the millions of dollars. Technology such as block chain is now offering a better way to prevent and respond more effectively—and far more quickly—to food contamination. From farmers to food processors and supermarkets, technology is finding its way into the supply chain today and promises to rapidly transform food safety.

(Source 2)

Combatting an outbreak effectively depends upon quickly identifying the source of the contamination. That process can be painstaking and involves examining the pattern of the outbreak, common points in the distribution chain, and environmental assessments in food production facilities, farms and restaurants (source). In the meantime, consumers continue to become infected and reputations suffer as the recall makes headlines nationwide. An E. coli outbreak in 2018 sickened 210 people across 36 states. Researcher traced the outbreak back to lettuce grown in the Yuma area of Arizona, but not before five people died of the illness and produce was pulled from stores and restaurants across the country (source). After a 2015 E. coli outbreak that infected 55 people across 11 states, sales at restaurant chain Chipotle fell significantly (source).

The costs of a recall add up quickly. A survey of international companies by the Grocery Manufacturers Association found that 77% experienced recalls that had a financial impact of up to $30 million—and 23% reported higher figures— with the biggest expenses tied to business interruption and product disposal (source). The costs to food industries for massive recalls have reached from $100 million for an egg recall to $1 billion in the case of contaminated peanut butter.

(Source 6)

Technology can reduce the time it takes to source an outbreak from days to seconds. About three years ago, a Walmart food safety executive challenged his team to locate the source of sliced mangoes bought in one of the company’s stores. It took just short of seven days, Fortune reported. When Walmart tested a blockchain solution with IBM, the same information, including harvest date, the orchard and the processing data, was available in seconds (source).

The IBM Food Trust network has partnered with more than 80 brands to use blockchain to track food from the farm to store shelves. Leading grocer Albertsons, with 2,300 stores across the country, plans to pilot the system for tracing bulk romaine lettuce initially and then consider expanding to other food categories throughout its distribution network (source). IBM says the system has the potential to transform nationwide food recalls into precise eliminations of recalled products. More than 5 million food products using the system are already on retail shelves, IBM says.

In other blockchain efforts, tuna packer Bumble Bee Foods is using SAP blockchain technology to trace yellowfin tuna from Indonesian waters to the consumer. Consumers will be able to learn the origin and history of the tuna—including where the fish was caught, freshness and safety—by scanning a QR code on the packaging with their smart phones (source). The National Pork Board plans to pilot blockchain with Ripe Technology to improve quality, traceability, and waste (source).

Technology is also being used to find contaminated food before it reaches the consumer. Food technology startup Inspecto has introduced a portable scanner that can be used on-site to test food for chemical contamination (source). Another startup, SafeTraces, has received a patent for DNA-based barcoding using strands drawn from seaweed that allows food companies and processors to apply edible and flavorless DNA barcodes directly to food to carry complete source data (source). Robots are already being used to prepare packaged meals, for cutting and sorting chicken and beef, in conjunction with artificial intelligence to detect bacterial and other contaminants (source).

BOTTOM LINE

Food recalls can prove highly expensive to a company, while causing lasting reputational damage. Technology such as blockchain is transforming how food safety is managed from farm to table and promises to help companies and regulators identify the source of contamination much more quickly. Those efforts should not only reduce the costs of recalls but also help limit the scope of outbreaks.

One of the biggest threats to companies in the food space remains the costs of recall and/or contamination events. Yet, many are still not transferring this risk with insurance. Product recall and contamination insurance helps to defray costs for recalls and legal defense, and coverage can include loss of gross profits, replacement costs, and third party recall liability damages. Working with a CRC Group producer that specializes in this type of coverage can ensure you are aware of all of your options and help find the best solution to meet your clients’ individual needs.

Contact your CRC Group producer for more information.

Contributor:

Chris Martin is the Office President of CRC’s Minneapolis, MN office and is a member of the Casualty Practice Advisory Committee.