Who pays the cost of food safety?

The Oireachtas Joint Committee on Agriculture, Fisheries and Food has published the results of its investigation into the pork dioxin crisis in Ireland last December. This crisis was caused by contaminated oil being used in a food waste recycling plant in Co. Wexford resulting in elevated levels of dioxin above the EU legal maximum in some pork products. Pigs on those farms which had been fed contaminated feed were slaughtered and all Irish pork products produced since 1 September were recalled from the home and export markets. The Joint Committee report describes how the contamination occurred and identifies a number of weaknesses in the food safety control system. However, the broader question of who should pay for food safety is left unexamined.

The report highlights two weaknesses of the food hygiene control system. The first weakness is that the remit of the Food Safety Authority of Ireland (FSAI), the agency established to enforce food law, does not cover the whole food chain. It is only given responsibility for food safety from the farm gate onwards, while animal feed and animal health controls on the farm remain the responsibility of the Department of Agriculture and Food. The Department argued that the plant, which converted food waste into animal feed, was low-risk and it was inspected annually to determine that it was in compliance with the hygiene regulations. However, HACCP programmes have not included oil contamination as a potential hazard, and there are no EU regulations requiring the sampling of oil used in feed processing.

The FSAI operates food safety monitoring through service agreements with various state agencies which actually undertake the controls. Although the former FSAI Chief Executive, Professor Pat Wall, testified that this system of service agreements worked well, the Committee disagreed. It recommends that a single agency for both food and animal feed with direct control over all staff should be considered. Extending the Authority’s remit to cover animal feed is sensible (many major recent food and animal disease scares such as BSE and the 2001 foot and mouth outbreak have been linked to animal feed), but the logic of centralisation is not so convincing. It seems that the basic HACCP protocols were defective rather than their enforcement by the Department.

A second weakness concerned the food traceability system. This was introduced as a legal requirement in the EU food system in the 1990s in the context of dealing with animal health, disease control and disease eradication. The legal requirement on the food business operator is to be able to trace one step forward and one step back. The system worked exactly as it should have at farm level. When the contaminated pork was identified at factory level, this could be traced back to the farmer suppliers, who in turn could identify the source of their feed, and in turn, the other customers of this feed plant in both the Republic and Northern Ireland could be traced.

The difficulty concerned the traceability system beyond slaughter. Although less than 10% of pork products were potentially affected by the contamination (sourced from the nine farms which had purchased contaminated feed from the single mill), 100% of product had to be recalled. In Denmark, a sophisticated traceability system would allow Danish rashers purchased by a customer to be traced back to a particular process in a particular plant at a particular time on a particular day. No such system operates in Ireland. Although the Department of Agriculture and Food has set up a review group to consider what improvements can be made, it highlights the extra costs this would imply for processors and the tight profit margins in which they operate.

However, it is not acceptable that an industry can externalise the costs of the risk of a food safety breakdown in this way. In the recent Irish supplementary budget in April 2009, the Minister confirmed that he was setting aside €200 million to compensate processors for the cost of the product recall (of which €20.7 million is being provided by the EU). The farmgate value of the output of the pig sector was €293 million in 2007. The value of exports (which account for 67% of total output) was €367 million in that year, so we might estimate that the value of processed pigmeat on the home market was around €183 million. The value of the €50 million exports of live pigs mainly to Northern Ireland should be added to this, giving a total industry value of output of around €600 million (other figures put this value higher at €1.1 billion, but this seems to include the value of all food products with pork ingredients such as pizza toppings). Seen against this figure, the €200 million which the product recall may cost the Irish (and EU) taxpayers is a significant subsidy to the industry to protect its reputation in overseas markets.

The pigmeat sector is an important element of the farm economy, but it has no incentive to attempt to lower the cost of food safety breaches if it knows that the taxpayer is there to pick up the tab. It is worth remembering how, in the immediate aftermath of the recall last December, the processing industry refused to restart processing Irish pigs which were certified as uncontaminated until it received government guarantees that the taxpayer would meet the cost of the recall.

4 thoughts on “Who pays the cost of food safety?”

  1. “In Denmark, a sophisticated traceability system would allow Danish rashers purchased by a customer to be traced back to a particular process in a particular plant at a particular time on a particular day. No such system operates in Ireland. Although the Department of Agriculture and Food has set up a review group to consider what improvements can be made, it highlights the extra costs this would imply for processors and the tight profit margins in which they operate.”

    Do Danish processors have higher margins? If so, is it because they can command higher prices due to the traceability system? Based on what have written, I presume that this traceability system is of a higher standard than is required by EU

    Is this a case of a do-minimum approach by the Irish food sector? Comply with EU (lowest common denominator?) standards and then rely on government to pick up the tab when things go wrong?

    Does highlighting the costs imply that the improvements will not be brought in? Or that they will only be brought in if the processors do not have to carry these costs directly?

  2. Who pays? The taxpayers, obviously (cf. also child abuse, NAMA, army deafness etc.). The very last group that would ever be asked to pay is the agri-business.

    The Committee went along with the story that the problem was discovered by an Irish lab during routine tests in late November. Why then was all pork destroyed from 1 September? Because the Dutch had discovered the problem earlier! So why did the Committee not invite someone from the Dutch labs?

  3. Failure to build up the food industry is down to the members of the industry. Asking the government to lead is a waste of time, particularly in Ireland.

    There are going to be more scandals. The food issue is an opportunity to vastly improve wealth but it requires hard work and a long term view. It will only be accepted after another decade of these problems. Expect Ireland’s competitors to check on quality to ensure that this happens. They can scent blood in the water ….. No one is going to help unless it is in their interest to do so. Basic.
    If I wanted to cry conspiracy, I would ask to see what scope exists for sabotage in an industry of fundamental importance to the country.

  4. Who pays if food safety is not guaranteed? The consumer, with their health. The analogy between a risk assessment based regulatory system for global and national finance-related sytems and the the risk assessment based regulatory system for food within the context of the WTO is glaring. As the implications of this philosophy of regulation’s failure in the financial system are gradually taken on board, how long will it be before someone calls time too on the laissez-faire led madness of desk based risk assessments and non-inspections of food?

Comments are closed.