Over the last couple of years, we’ve seen the FDA present at nearly every food safety conference held in the fresh food sector. At each of these conferences, they evangelize the critical importance of compliance with the new FDA Food Traceability Rule, FSMA 204 to minimizing the impact of foodborne illnesses to public health and the food industry.
The FDA is right about this. However, the impact of FSMA 204 will depend on the level of compliance and cooperation across the supply chain.
Over the last few months, New Era Partners has written articles outlining how to Budget for FSMA 204 and how compliance with FSMA 204 can improve ROI. In this article, we take a different perspective, outlining some of the major costs to individual companies and to the industry that can result from an outbreak and recall, and how FSMA 204 can significantly minimize the impact in the future.
Let’s start with the costs and look at some of the more impactful outbreaks we’ve had in recent years.
In 2021, the Economic Research Service of USDA posted that the economic impact of pathogenic food safety outbreaks in 2018 was $17.6 billion which is $2 billion higher than 2013. This calculation is based on medical expenses, decreases in wages, and sadly the deaths of many Americans.
Chipotle Stock Prices Drop
In 2020, Chipotle agreed to pay $25 million in fines for its part in multiple outbreaks that sickened more than 1,100 customers from 2015–2018. Chipotle’s fine is minute compared to their stock market loss that dropped from $750 a share to $250 a share in just over two months.
$55 Billion in Annual Losses to the Foodservice Industry
Johns Hopkins Bloomberg School of Public Health did a study and concluded that foodborne illness costs the American foodservice industry $55.5 billion annually. Each food safety outbreak costs individual restaurants anywhere from around $4,000 to $2.6 million, depending on the size of operation and how widespread the outbreak was.
Billions Lost, Lives Lost, and Jail Time
The 2008-2009 Salmonella outbreak tied to the Peanut Corporation of America:
- Cost nine people their lives, and another 714 people (about half of whom were kids) got sick
- Sent three executives to jail
- Cost peanut suppliers $1 billion in lost production and sales
- Cost Kellogg’s, just one of the many customers the Peanut Corp of America sold to, an estimated $70 million.
33 Lives Lost
Jensen Farms Listeria outbreak, found in cantaloupe, sickened 147 people and ultimately led to 33 deaths. The brothers, Eric and Ryan Jenson, went bankrupt and were sentenced to five years probation, six months of home detention, and both had to pay a $150,000 fine.
The Spinach and Romaine Industries Lose Millions
A 2010 study showed the spinach industry alone lost more than $200 million just in retail sales from the 2006 E. coli outbreak, and the E. coli outbreak tied to romaine lettuce in 2018 cost the industry an estimated $350 million.
Read more about these costly outbreaks in an article I wrote last year for Food Safety Tech on The Costs of Food Safety: Correction vs. Prevention.
How Will FSMA 204 Minimize These Costs?
Once we reach the FSMA 204 compliance date of January 20, 2026, the FDA recall response should become significantly more efficient and accurate.
Increased efficiency and access to accurate and complete data will minimize the impact of an outbreak of foodborne illness by reducing the likelihood of widespread illness or death, helping pinpoint the source of the outbreak thus reducing the need for a widespread recall, and significantly reducing the costs associated with an outbreak or recall.
In fact, the overarching goal of FSMA 204 is to significantly increase the rate at which the FDA can provide conclusive results on outbreak investigations and pinpoint the exact products that are causing the pathogenic illness. Right now, an outbreak investigation takes on average over a month, sometimes many months, and unfortunately many are never solved.
New Era Partner’s Andy Kennedy likes to use an example of a real-life outbreak investigation the FDA worked on while he was at the agency. Investigators worked to identify the source of an outbreak with available traceability lot codes versus without. They found it took up to 84 days without a traceability lot code, or an average of 35, down to just an average of 6 days with a traceability lot code available. This 83% reduction in product tracing time equates to an estimated staggering $897 billion annual benefit.
Moving Forward with Traceability and Technology
Frank Yiannas, a member of the iFoodDS board and the former FDA Deputy Commissioner for Food Policy and Response, noted that FSMA 204 is a game changer for prevention., further stating that “we’re increasingly identifying the pathogens and cases linked to foodborne illnesses, kind of like finding needles in the haystack. But even with this advanced technology, we can’t always find the haystack (the food and source) itself. That’s where traceability comes in.”
A great example of traceability and technology working together is FDA’s use of whole genome sequencing (WGS) identify the unique genetic markers that prove all the victims of an outbreak are definitely related. What the FDA has a hard time identifying now are the products the victims consumed that link to those unique pathogen’s genetic strain. If the FDA can’t identify the poisonous products, they can’t pull them off the retailers’ shelves and restaurants tables, every day exposing many more potential victims.
The Traceability Lot Code (TLC) is at the heart of the traceability solution envisioned by FDA in FSMA 204. Being able to use technology to trace that TLC across the supply chain to quickly understand the journey of a questionable product is key to identifying where the issue happened and where the product ended up so it can be pulled from shelves.
While the use of a specific technology is not a requirement of FSMA 204 compliance, finding a traceability solution that meets your needs will certainly contribute to process efficiencies such as helping to speed up response rates and ensuring data accuracy and security. It will be essential for enterprise organizations and will make it easier to capture, maintain, share, and report on critical data elements across your supply chain network.
There’s no question that FSMA 204 will ultimately have a huge impact on minimizing the risks inherent in our complex, global food supply chain.
The FDA believes that once FSMA 204 is fully adopted they can consistently minimize the investigative process to a week. If the FDA’s assumption is proved accurate the results will have a staggering positive impact on the economy, individual food companies, and more importantly keep millions from becoming sick and save countless lives.
Will the benefits outweigh the costs? Yes.