Technology / Food Safety

Examining the Global Supply Chain

As the global flow of raw materials and packaged goods increases, the benefits and needs of visibility to the food supply chain are crystallizing.

By Kevin T. Higgins, Managing Editor

The reception in some quarters was less than enthusiastic when a report comparing food traceability regulations in 20 nations was released.

Written by the Global Food Traceability Center (GFTC), the report weighed factors such as mandatory traceability regulations in each country, whether or not an electronic traceability database exists and the documentation requirements for imported products. All 13 European countries studied were judged to have superior visibility into their supply chains, while China’s was called poor. The six deemed average included the U.S., one of only two beef exporters without a national cattle identification system and a country where regulations remain incomplete for implementing the Food Safety Modernization Act.

“Deeply flawed” was among the barbs leveled at the report, and parochial muttering about regulatory over-reach was not uncommon. But the point of the report, explains Brian Sterling, GFTC’s managing director, was to highlight some of the barriers to harmonized requirements and regulations that will have to be overcome if improved visibility to the global food supply chain – and the consumer trust that would engender – is to be achieved.

Traceability should not be thought of as only a regulatory device.

– Brian Sterling, Global Food Traceability Center

Foodborne illness and disease-control in livestock are often-cited justifications for robust traceability systems, but mislabeling, misrepresentation and outright fraud also are concerns. Public confidence in the integrity of processed foods suffers as much or more damage from a horsemeat-sold-as-beef scandal as it does from an E. coli O157:H7 outbreak. With global trade in raw materials, ingredients and finished goods accelerating, maintaining trust is critical to the food industry’s long-term health.

Lost trust can wreak havoc on a product category, as illustrated by poisonous infant formula sold in China. Seven years after melamine in milk powder resulted in the deaths of six babies and illnesses in hundreds of thousands more, parents still shun domestic infant formula. Arrests for smuggling formula from Hong Kong to the mainland are double those for contraband drugs. Perhaps more troubling for Chinese formula makers, the scandal triggered a surge in breast-feeding.

Trust also is an issue between trading partners and with retailers and foodservice customers. Meeting the requirements of regulators in multiple nations adds further impetus for a more visible system than currently exists.

Tedious but necessary

Identity preservation, maintenance of chain of custody and knowing your supplier are solid safeguards, but they become more elusive as the supply network expands. Lab tests, certifications and audits are the primary tools for verifying that protocols have been met. In some countries, the assurance foundation still is being built, and there is increasing recognition of the impact organized crime has on the supply chain. As the velocity of trade increases, blindspots in supply chain visibility are exposed.

Traceability TouchscreenThe business of verifying claims is drudgery, and it must be done over a period of time to have value, observes David Baker, a microbiologist who serves as director-consulting and technical services at NSF International, Ann Arbor, Mich. His firm is developing an outsourced supply chain management program to monitor supplier performance “so their COA’s (certificates of analysis) actually mean something.”

It’s comforting to have a trusted supplier, but unless someone examines the “micro numbers” of the supplier’s sampling plan, how the criteria were set and other minutia, COA’s are more cosmetic than substantive, he suggests.

Private-sector policing is industry’s preferred avenue to supply chain visibility, and NSF has expanded its auditing services to include standards endorsed by the Global Food Safety Initiative (GFSI), the retailer consortium that has been embraced by international food companies such as Cargill. NSF also is beefing up its consulting and technical support, acquiring firms such as Erdmann Analytics, a German laboratory specializing in analytical testing, to extend its global support capabilities.

A similar path is being followed by AsiaInspection, a Hong Kong-based inspection and auditing firm that has aligned with Silliker Labs, and domestic operators like IMI Global, a Castle Rock, Colo., firm whose parent company has the aptly descriptive name, Where Food Comes From Inc.

Founded 20 years ago as a cattle identification and tracing service, IMI partners with Colorado State University to test of food products and raw materials for a wide array of residues. Last year, the company acquired a dairy cow audit service that supports USDA’s animal disease traceability program.

The traceability program only applies to livestock moving interstate, and less than 5 percent of the domestic herd is covered. “It makes me sick, but that’s the truth,” says IMI President Leann Saunders. “There has to be a driver for a more comprehensive system, but we haven’t sent the right signal to make it happen.”

The driver necessarily must be beef producers and processors, maintains GFTC’s Sterling. “If government forces me to do something, I minimize my investment” and don’t attain business benefits such as reduced waste, higher quality and reduced capital costs, he points out. If industry takes the lead, improved visibility will be about more than simply satisfying a regulatory requirement.

Citing the example of international banking, which is able to maintain data confidentiality while dispensing cash to travelers anywhere in the world, Sterling says electronic record exchange absolutely is doable in food. U.S. cattlemen may find themselves at a competitive disadvantage to Brazilian, Canadian and Australian beef exporters if they don’t develop some type of national identification system, he argues. India is the only other major beef exporter without a system.

Fish out of water

GFTC officials spent much of 2014 demonstrating the business benefits of interlinked track and trace systems in trials involving seafood. The global nature of seafood commerce results in an extremely complex supply chain, and GFTC reasoned success with that sector would inspire producers of beef, poultry and other products.

Traceability, sustainability and business profitability are intertwined, and the seafood trials demonstrated how already-available data can drive improvements in all three areas. Fishing fleets target specific species, and considerable time and energy is spent separating aquatic life that doesn’t meet the spec sheet from the rest of the catch. Implementing practices that slowed the process and reduced time at sea were resisted by the fishermen, Sterling says, but when they did so, waste reductions of 20-25 percent and greater profitability were realized. “Traceability should not be thought of as only a regulatory device,” he summarizes. “It can deliver lowered cost, increased revenue, higher margins and reduced risk.”

Seafood labeling is fraught with fraud. DNA analysis by FDA last year found that 15 percent of 700 fish samples collected from wholesalers and importers were mislabeled, typically with low-value species posing as high-priced fish. Similar analysis by the environmental group Oceana concluded one-third of shrimp sold in U.S. grocery stores and restaurants are misrepresented as to location of capture or as wild caught when in fact they are farm raised.

Dismissing mislabeling with a cavalier “buyer beware” won’t cut it with increasingly skeptical consumers. Regulators may lack the manpower to police the marketplace, but retailers and foodservice operators have the resources and clout to hold suppliers accountable, and they are losing patience. Chipotle Mexican Grill recently pulled pork from the menu at hundreds of its restaurants when a supplier failed an animal-welfare audit.

“Behind the scenes, suppliers are put on notice or suspended all the time,” notes Paul Noel, senior vice president-procurement solutions at Redwood City, Calif.-based Ivalua Inc. What distinguished the recent response was that the restaurant chain, presumably responding to customer demands, scrapped a standard practice of simply posting notices that the meat being served did not meet the chain’s standards in favor of a harder line.

“Supply chain management is becoming a full-time endeavor,” reflects NSF’s Baker, and growing concern over misrepresentation and outright fraud is adding another layer of complexity. A variety of authentication technology is being applied to seafood, with DNA testing and placement of micro-markers at the time of capture among them. Bar codes with sourcing data are in the experimental stage, and on-board certification of Chilean sea bass is among the other assurance tactics.

Brand owners are the toughest cops on the visibility beat, and technology is providing them with an arsenal of enforcement guns. A former McDonald’s employee, Baker recalls the Geiger counters the firm placed in select locations in the wake of the Chernobyl nuclear accident of 1986 to screen for radioactive ingredients and products.

Today’s monitoring is much more sophisticated, however. Isotope-ratio mass spectrometry (IRMS) is an example. By mapping the number and configuration of several stable isotopes, IRMS not only can reveal if a sample was adulterated, it can pinpoint its geographic origin, according to Craig Barrie, IRMS product manager for Elementar Americas Inc., Mt. Laurel, N.J. IRMS is used primarily in geologic science and sports doping investigations, though applications are growing in food.

Maple syrup was perhaps the first U.S. food application. Some suppliers were suspected of blending it with corn syrup and other less expensive sweeteners. IRMS analysis easily detected the adulteration. Honey was another IRMS application. When Chilean wine was being misrepresented as French, the French government used the technology to expose the imposters.

The lab equipment costs about $200,000, but that hasn’t deterred Pepsi from using IRMS as a quality assurance tool for incoming ingredients, according to Mark Larson, also of Elementar Americas, one of two major suppliers of the equipment. The other is Thermo Scientific, which equips Coca-Cola.

From squeals to eels

Visibility can make people squirm when it sheds light where they prefer darkness. A case in point is the harvesting of the nether regions of a pig’s digestive tract for further processing. It was the subject of a segment of the radio program “This American Life” that aired Jan. 11, 2013 on WBEZ-FM in Chicago.

The report focused on the collection of 10-12 inch segments of pig bung immediately upstream of the rectum at a since-closed Oklahoma slaughter facility. Plant manager Ron Meek confirmed a report that the material, once cleaned and collected, “just looked like a bunch of big noodles in a box” and was sold to a customer who further processed it for sale as artificial calamari.

Absent a standard of identity, it’s difficult to label artificial calamari a product misrepresentation, any more than the drinker of imitation champagne can cry foul because his sparkling wine isn’t from northeastern France.

The growing role of the world’s second largest economy in the global food chain is the elephant in the visibility discussion. “Chinese officials still too often choose secrecy over openness and accountability,” U.S. Sen. Sherrod Brown complained at a 2013 Congressional hearing on food and drug safety and the tripling of Chinese food exports to the U.S. from 2001 to 2012. The People’s Republic supplies 30 percent of U.S. garlic, half of the apple juice and 80 percent of tilapia, Brown noted.

Sen. Brown convened his panel weeks after revelations of rat meat being sold as lamb in China and 20,000 dead and diseased pigs floating down the Huangpu River toward Shanghai. Last July, an OSI Group plant supplying hamburger patties to McDonald’s outlets in Asia was shut down when health inspectors found workers were blending out-of-code meat with fresh product and scraping meat off the floor and feeding it to a patty former. “This is happening in a country where a lot of people starve,” suggests Jennifer McEntire, a food scientist who in March will assume the post of vice president-scientific operations at the Grocery Manufacturers Assn. “When food security is an issue, salvaging meat is culturally acceptable.”

Mathieu Labasse, vice president of AsiaInspection, scoffs at the starvation contention, noting “the issue is more quality than quantity.” Nonetheless, bringing China’s food processing practices into step with Western standards has a ways to go. Unannounced audits are best for verifying conformance, but China isn’t ready for them.

“If you just knock on the factory door, they won’t let you in,” explains Labasse. Correcting deficiencies, not detecting transgressions, is the objective at this point. “It should be an instructive effort,” he adds. “When you consistently enforce rules, you educate your suppliers.”
Food on the floor: a teachable moment.

China’s growing middle class is demanding safe food, and the government is making a concerted effort to enforce the Food Safety Law that became effective in 2009. The U.S. had been building on the Pure Food and Drug Act for a century at that point, Labasse points out, while China has fewer than 30 years of food export experience under its belt. Only 1,700 of China’s 500,000 food plants are BRC certified. “Global harmonization is the macro trend, but it won’t be completely effective for another 5-10 years, at least,” he believes.

Whoa, Nellie!

Lest Westerners feel too smug, recently exposed chinks in their own chain should humble them. Despite unique identification requirements for livestock, cattle rustling occurs on a relatively large scale in Northern Ireland. Over a recent four-year period, 12,500 head – the equivalent of 2.2 million in a country the size of the U.S. – were stolen and introduced to the supply chain, suggesting extensive use of forged IDs and the complicity of packing house operators.

At least it’s beef.

Cattle rustling was one of the abuses highlighted in the Elliott Review, a government-commissioned probe of the UK’s food supply network that was ordered in the wake of the country’s horsemeat scandal in 2013. The meat was blended with beef and sold through major UK retailers such as Tesco and Aldi. Subsequent DNA testing of thousands of samples of fresh beef, frozen entrees and further-processed products from throughout the European Union returned almost 5 percent positive results, underscoring the complexity and interdependency of the supply chain.

“The basic issue with horsemeat is that it results in a loss of consumer confidence,” according to Don Hsieh, director-commercial & industrial marketing for Tyco Integrated Security (www.TycoIS.com), Boca Raton, Fla. He cites a Mintel study conducted six months after the scandal broke that found half the British public no longer trusted the industry to deliver safe food, even though the horsemeat itself was not found to be contaminated.

The Elliott Review’s focus is on the intelligence gathering, government-industry information sharing, lab services, audits and other measures needed to advance a zero-tolerance approach to all types of food fraud, from deliberate mislabeling to egregious events. The extent of the fraud problem is unknown, allows John Spink, an assistant professor at Michigan State University and an Elliott collaborator, but without question, organized criminals are involved. “The penalties are low, the profits are huge,” says Spink, who also serves as director of MSU’s Food Fraud Initiative. “It would be illogical for organized criminals not to be involved.”

Spink also consults with the board of GFSI, which sets the requirements for food-safety certification programs such as SQF and BRC. In July, the board endorsed a recommendation to require fraud vulnerability assessments and documented fraud vulnerability control plans as part of food-safety audits. Auditors are unlikely to begin evaluating prevention programs for at least two years, he says, but manufacturers should begin incorporating fraud protection immediately in their risk management strategies. “The fraud opportunity is a reflection of all your activities,” Spink advises. “The bad guys are very good at finding gaps.”

To jump-start the discussion, the Food Fraud Initiative is hosting a series of food fraud “MOOCs,” short for massive, open, online courses. The next free, web-based MOOC will be May 19.

“More testing is not a holistic approach, but that’s all QA personnel have” in their visibility tool kits, Spink says, echoing a common refrain. Resources are limited and must be expended judiciously. “All suppliers shouldn’t be treated equally,” seconds McEntire. “It’s about understanding the risk.”

A workable model for industry self-policing and government regulation is a major sticking point in attaining a highly visible global food chain. Another is interfacing myriad data sources so that accurate and reliable information can be accessed when needed – the intergalactic database” is not an option, GFTC’s Sterling laughs. But locally produced food preferences, the organic food movement and other trends are indicative of lost public confidence in the existing system. Improved visibility is critical for the long-term health of processed foods.