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Homework answers / question archive / Global food safetyUnsafe food, such as fruits and vegetables contaminated with feces, clearly creates a huge public health risk, with the potential transfer of harmful bacteria, viruses, parasites, or chemicals to consumers
Global food safetyUnsafe food, such as fruits and vegetables contaminated with feces, clearly creates a huge public health risk, with the potential transfer of harmful bacteria, viruses, parasites, or chemicals to consumers.
In 2010, 582 million cases of 22 different foodborne diseases resulted in 351,000 deaths worldwide, with salmonella, E.coli, and norovirus resulting in the greatest number of fatalities, according to a September 2015 case Quelch co-wrote with HBS research associate Margaret L. Rodriguez, Me?rieux NutriSciences: Marketing Food Safety Testing.
Food safety problems can be quite costly. An E. coli outbreak in Germany in 2011 caused $1.3 billion in losses to the global agricultural industry.
Yet, a worldwide standard for food safety is lacking.
"Different countries and regions have different food safety standards," Quelch says. "We're accustomed to taking food safety for granted. When you peel back the onion, you find a tremendous amount of nuance affecting the reliability and specifics of food safety testing around the world."
China, for example, has seen its share of well-publicized cases of food contamination. In 2008, melamine was found in milk products that killed six infants and made 300,000 sick. Keeping a good handle on food safety there may be challenging because China has a highly fragmented agriculture system.
For instance, one Chinese milk brand may be taking its supply from hundreds of individual farmers—a potentially risky situation because, if one of the farmers introduces a contaminated product, it can affect the entire supply for that brand.
China implemented stricter food safety laws in April 2015, but the country may not have enough qualified enforcement staff. And inspectors don't always enforce regulations as
thoroughly as they should, critics complain.
"In fairness, it takes a long time to build up a culture of integrity for any inspection service," Quelch says.
Plus in China, some suspect that foreign brands are at times unfairly targeted, accused of food safety violations that may be fabricated or exaggerated by those hoping to impede the market progress of successful foreign firms.
In the United States, government officials have attempted to shift food-safety efforts to prevention with the passage of the Food Safety Modernization Act in 2011. One result: Produce is now subject to preventative controls, including more raw material and
environmental testing, and, in some cases, less finished-product testing.
Outsourcing food safety testing
A growing number of food manufacturers, grocery stores, and restaurants are choosing
to outsource some or all of their food testing—and in many cases, they are saving time and money in the process.
The market for food safety testing by third-party labs in the US in 2015 was about $1.5 billion, compared to the estimated $8.5 billion value of food safety tests conducted by companies in-house. Me?rieux NutriSciences is one of the largest providers of food safety testing for food companies, with a network of 80 laboratories located in 20 countries and annual revenues of more than $450 million. The majority of its recent revenue growth in the US has come from companies that previously did their own testing but that have decided to outsource.
In-house testing has its drawbacks. Regulations are increasing and evolving, requiring
more expertise than many food companies can muster. The sensitive nature of testing and upgrades in the tests required also mean companies need to make an investment in sophisticated equipment, which involves high fixed costs.
Plus, food companies recognize that using one of the three or four leading global food safety firms gives their testing a certain level of external validity that they may not enjoy by doing their own testing, although big companies such as Nestle remain strongly committed to in-house monitoring.
In the case study, Gallus (name disguised)—a large American poultry manufacturer that sold processed chicken parts to both retailers and fast food restaurants—was debating whether to outsource food safety tests to Me?rieux NutriSciences at a cost of $1 million for 12 months of testing.
As it turned out, the economics were a wash: Gallus would save money compared to the cost of operating its own in-house lab, while Mérieux NutriSciences would still make a profit. Gallus officials, who knew that using a third-party testing vendor would likely provide a certain level of comfort to the large retailers it supplied, ended up accepting the outsourcing deal.
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