Food safety: the new normal in a globalised world

Two new studies highlight why food producers must adapt to the new reality of food production: Food safety in a globalised world from Swiss Re; and Food safety: International regulatory dynamics and the impact on insurance from the Centre for Global Dialogue.

Contaminated meat, mislabeled packaging, tainted baby formula – food recalls have become a regular feature in today’s headlines. The reason is clear: we all eat and we want to be sure that what we and our loved ones consume is safe and wholesome. However, is it still?

Food recalls happen when public health is at stake. This seems to be more and more the case since the trend in food recalls is up. The numbers for the most serious recall class nearly doubled from 447 in 2002 to 659 in 2014. What's behind this rise?

Two new publications,Food safety in a globalised world from Swiss Re (see right); and Food safety: International regulatory dynamics and the impact on insurance (see right) discuss these issues.

Global regulations for a globalized world

While regulatory changes are behind some of the increase, that doesn't explain it all. The other aspect driving the increase is globalization. Today food ships from one part of the globe to another. This has generated ever more complicated supply chains, which are prone to error. Germs, chemicals and allergens make it to the shops of the world, putting consumer health at risk. According to WHO, there were 582 million cases of food-borne diseases in 2010 alone.

But Swiss Re reseachers say in Food safety in a globalised world that this complexity can be managed. Safe and healthy food is possible by using measures that are already in place. The publication presents data and an overview of food safety best practices, both prerequisites for insurance.

Food recall laws grow more teeth

The US Centers for Disease Control estimated that the bill for public health reached a staggering USD 15.6 billion annually in a 2011 study.

And that’s not the only cost. In Germany in 2011, an E.coli outbreak affecting 3,950 people of which 53 died triggered emergency payments of USD 1.3 billion by the EU to cover losses for farmers and the food industry.

Regulators have also strengthened laws governing the food industry. As the new publication Food safety: international regulatory dynamics and the impact on insurance by the Swiss Re Centre for Global Dialogue summarizes, food recall laws are strengthening and becoming more streamlined across the globe. This is to protect consumers and contain health care costs associated with contaminated food.

Companies' futures at stake

As the payment in Germany shows, the fallout of a recall for food producers can be big. Not only the cost associated with collecting and disposing of food come into play. The reputational damage can trigger a decline of sales many companies will not be able to stomach.

Recalls involve crisis management and communication to assure that the brand is protected. In an industry  characterized by small to medium enterprises, many lack the internal resources to put all of this into place.

Global know-how for global trade

Here insurance can play a role. Based on the lessons learned of food recall and liability claims a wide range of knowledge is available for the food industry. So besides having the assurance that recall cost and liability claims are covered, clients can count on additional services like crisis communication support to keep the business going.

Globalisation in food trade is set to continue. The complexity in today's supply chain will increase even more. Food producers must adapt to this new reality. To keep our food safe in the 21^st century.

Published 13 July 2015

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