How to avoid costly food recalls in your business

5-minute read

As I write this blog post, some of you may be emptying your freezers of the latest food recalled nationally by the Canadian Food Inspection Agency (CFIA)—frozen field berries. Your morning smoothie could have been contaminated with a dash of salmonella, depending on which brand you bought.

Last month, your supposedly healthy extra lean ground beef could have come with a hidden addition of E.coli. The month before that, your baby’s organic food pouches may have contained “spoilage microorganisms” due to “packaging defects.”

So far in 2018, the CFIA has issued 198 product recalls. In 2017, it was 154 recalls for everything from flour to beef products due to improper labelling, undeclared allergens, and bacterial contamination.

A health and business concern

As consumers of food, you are right to be concerned about the frequency, and variety, of food recalls due to contamination. As food business entrepreneurs, your concerns are likely even more heightened.

In addition to the human cost, a food safety crisis can frequently pose:

significant business disruption
damage to reputation and brand name
loss of earnings both in the short and long term

For most Canadian food and beverage entrepreneurs, the costs of even a single recall can have significant and lasting impacts—even if their business did nothing wrong. For example, in 2006, the spinach industry in the U.S. reported a 20% reduction in sales and a $350 million loss following a major recall. The whole industry was damaged by the actions of a limited number of producers. Small and big companies alike saw consumers fleeing from purchasing spinach irrespective of which companies were involved in the recall.

Understanding the full cost of a food recall

The cost of a large-scale product recall can sometimes dwarf the immediate costs associated with pulling the product off the shelf and reimbursing customers. Other associated costs can include:

Labour and warehouse storage costs incurred to destroy contaminated products.
The costs to decontaminate the production facility and equipment under strict regulations imposed by government agencies.
The cost of specialized personnel brought in to carry out the decontamination and testing to demonstrate its effectiveness.
The cost of determining the root cause of the contamination, which can take weeks or months.
The cost of fixing failure points in the manufacturer’s food production system, which contributed to the contamination in the first place.
Reputational costs to the company and industry, which can affect sales over the long term.

Common causes of food recalls

Businesses often imagine food contamination to be a single-source problem. However, recent recalls have shown a variety of food production and monitoring deficiencies operating in concert:

Lack of a risk-based approach to food safety and product quality.
Failing to implement Good Manufacturing Practices (GMP).
Poorly maintained processing facilities and equipment.
Failing to track products through their supply chain to detect food fraud and contamination.
Failing to properly implement Hazard and Critical Control Points (HACCP)programs.

Strategies to minimize recalls

Since the majority of food safety recalls happen due to operational errors (that are often within a business’s control), management commitment and investment in a food safety system should be a priority.

Developing and implementing a HACCP-based program should be the minimum proactive step for any business concerned about managing the risk of product contamination and recall. Adhering to one of the highest internationally recognized food safety standards such as SQF, BRC, and ISO 2200—benchmarked by the Global Food Safety Initiative (GFSI)—is also invaluable in minimizing food recalls. These standards have rigorous, audited requirements designed to address the host of contamination causes at the heart of most food recalls.

Six questions to ask yourself to improve food safety

Businesses successfully committed to food safety systems have shared best practices, which begin by asking yourself the following questions:

Is food safety a company-wide daily operational focus in our business?
Does our approach to food safety go beyond minimal compliance with regulatory requirements?
Does everyone (not just our employees) in our food supply chain, from raw ingredient suppliers to distribution partners, have to adhere to the same standards of food safety?
Is every element in our production system evaluated and monitored actively with an eye to risk-management from employee health and hygiene, to facility and equipment sanitation, to pest control?
Are food safety protocols clear, relevant, thoroughly communicated and understood with all activities being documented and audited routinely?
Have we implemented a whole chain traceability system for our product?

Food recalls and food safety systems

With the recent changes launched by the CFIA under the Safe Food for Canadians Regulations, investing in the above measures to control and minimize product contamination is no longer an optional item on the menu for many food businesses, but rather a requirement to continue operating.

CFIA is taking a more rigorous risk management approach with an increased focus on traceability to improve the overall safety of Canada’s food supply chain. The onus now is on all actors in Canada’s food supply chain to take a proactive, prevention-based approach to ensure they produce safe products consumers can trust—starting with the frozen berries in their morning smoothies.