Tariffs, Testing, & Trust: How Economic Pressures Are Changing Food Safety

Inflation and economic policies, like tariffs, can force manufacturers to adjust their sourcing strategies that may lead to increased food safety risks. 

Dr. Ben Miller, Executive Vice President of Regulatory and Scientific Affairs at The Acheson Group, discusses how food companies can re-evaluate their food safety programs - from supplier quality to workforce management - amidst rising costs and regulatory shifts.

In this episode we review:

• Where economic disruptions can weaken food safety
• What control points should be reviewed and updated
• How to strengthen supplier evaluation, testing, and verification programs
• The role of customers in setting food safety expectations

Related Resource:

A Guide to Supplier Quality Management: Benefits, Processes, and Measurement

FSMA Friday is a collaboration with SafetyChain and The Acheson Group.

Want to join the conversation? Register for the next live FSMA Friday webinar for your chance to ask the food safety experts at TAG your questions directly.

Register here: https://safetychain.com/solutions/fsma-friday

Transcript

00:12  Jim Albright:    Welcome, everyone, to the show. It is a splendid day for Fizzle Friday, don't you think? My name is Jim Albright, and today we are going to check in on how your food and beverage peers are paddling through the choppy economic waters we've all been sloshing around in, and how the recent regulatory shifts are putting supplier programs and risk mitigation strategies under the microscope. Now, if you're new to the show, Fizzle Friday's mission is to bring food safety enthusiasts together to share and discuss updates, insights, and guidance around the Food Safety Modernization Act. And we've been doing this for well over a decade now, in collaboration with the Atchison Group, who is a global leader in food safety and compliance consulting services. And SafetyChain, the developers of the number one platform to digitize processes such as food safety, quality, supplier compliance, and others, in order to get real-time visibility and more control over plant performance. So we're here to help. All right, without further ado, it is my great pleasure to introduce the one and only Dr. Ben Miller. So Ben is serving currently as the Executive Vice President of Regulatory and Scientific Affairs at the Atchison Group, and he brings over 25... Ben Miller, Executive Vice President of Regulatory and Strategic Affairs at the Atchison Group, and he brought over 25 years experience within food safety regulatory space. So for example, he started as an epidemiologist and then later helped reform food safety legislation for the Minnesota Department of Agriculture. So Ben's experience is vast, and we love having you back, Ben, so thanks again for joining Fizzle Friday.

01:47  Ben Miller:        Ben Miller, Executive Vice President of Regulatory and Scientific Affairs at the Atchison Group, Hey, Jim. Always a pleasure. Great to be here.

01:50  Jim Albright:    Excellent. All right, well, I know you're going to walk us through some of the newer Fizzle updates here, which we see scrolling on the screen. So, we're going to go ahead and take a look at some of these. So let's dive in.

02:29  Ben Miller:        So let's dive in.

02:58  Ben Miller:        So that really actually gives a lot of time for the supply chain to identify best practices and sort of knit itself together in a way that will ultimately lead to probably better compliance overall. And actually, we'll talk about some of the benefits or the potential benefits of traceability overall, especially when we look at just supply chains and some of the impacts that these tariffs may have. So nothing has changed in the way that the rule is currently written. So, you know, I think there's still some desire to see some modifications from some corners of industry, especially those at the far end of the supply chain from distribution to restaurant to retail. But we're also seeing, you know, retailer requirements or a number of large retailers that have actually extended traceability requirements for their suppliers into their retail locations, not just for FTL foods. So like food traceable list foods, those things like fresh produce. And seafood, not butters, but for all types of food. So this is going to be a space that we continue to keep an eye on. But, you know, we're encouraging people to just continue with their compliance plans and develop out their traceability programs as of today. The other thing that probably is a big one was the FSIS withdrew the proposed salmonella framework for raw poultry products. So this was a rule. That looked at establishing a limit of 10 colony forming units in certain types of poultry for salmonella serotypes of public health concern. So there were six serotypes targeted. I don't have them all memorized, but actually back when I started my career in public health and food safety around some of these products, we would see a lot of outbreaks. Associated with these sort of partially cooked poultry products and industry had really worked in concert or because of some of those outbreaks to address some of the labeling concerns around there. Because 20 years ago, these products were they looked like they were ready to eat, but in fact, they were ready to cook. And so that was causing some consumer confusion. And so we can talk about food dyes here as well, because there was a meeting this week as well with the HHS secretary. Food dyes are something that's been, I think, top of mind for him and the administration. And so the proposal is under the current administration to really reduce the use of synthetic food dyes in consumer facing food. So specifically blue number one and two, citrus red number two, green number two, orange B, red number 40, and then yellow number five and six. And so FDA is going to actually start the withdrawal authorization for red number two and orange B, which are aren't currently widely used in the industry. The approach with this one's maybe a little bit different than what we've seen in the past in the sense that the administration would like to use sort of non-binding agreements with food manufacturers to get the other dyes removed from the marketplace and in the formulations of their product. And the goal is to get that.

06:32  Ben Miller:        And so there's going to be some complexity within the supply chain again and looking at how do we get there? Is there enough that's available? Are these non-binding agreements enough to move the majority of industry there? So, again, it's something I suspect we'll continue to have conversations around. So here to talk about just what are some of the food safety impacts or potential food safety impacts? So one of the big impacts of the current tariff policies, obviously, this has been in the news quite a bit for a whole variety of reasons. But, you know, as of April 5th of this year, so earlier this month, we know that we have 10% tariffs on imports from essentially most countries around the world coming into the U.S. And, you know, the tariff policy has been a bit shifting. I know there's a lot of uncertainty around it. But this. Sort of where it sits as of today, and it's important to recognize that many of these proposed tariffs, the reciprocal tariffs have been paused at this point for 90 days as of a couple of weeks ago. But the possibility exists that they could come back. We do have some standing tariffs right now. So when we look at China specifically, it's about one hundred and forty five percent on most imports, and that really depends on the product category. But it's kind of a. Good rule of thumb overall in terms of where we sit there. And then for Canada and Mexico, it's twenty five percent on some items with the exemption of goods that fall under the USMCA agreement. But, you know, in most instances, food imports aren't going to be exempt. We've seen some sector specific exemptions carved out even in the case of China and things like phones and computers. But again, this is all sort of a moving target. Right now, which I think introduces uncertainty and talk about sort of what the potential food safety impacts of that may be. So Yale did some analysis just in terms of if these their budget lab to see if these tariffs were actually implemented sort of as written, so not not paused, but as written and for fresh produce, the expected price increase of about four percent across the board for produce. But, you know, I think. I think it's important to just sort of highlight some of the food categories that we think will be most significantly affected. So things that we import a lot of obviously things like spices, cocoa, coffee, we know that the vast majority of that, as well as seafood, is imported into the US as well as things like food packaging. So when we look at the potential impact on aluminum and that gets back to those twenty five percent tariffs from China or excuse me, from Mexico and Canada. We know all of that's going to have an upward price pressure just in terms of both the raw materials and obviously the cost to manufacture, but also potentially for the consumer as well. So where do some of our most vulnerable supply chain sit? It's obviously those products that we don't have a domestic alternative for here in the US. And, you know, when we do look at certainly specialty foods with ingredients from countries like China with high tariff levels, that's going to be a source of.

09:58  Ben Miller:        Extreme price pressure, you know, when you're talking about one hundred and twenty five percent to bring that product into the country, that's a significant cost. And then seasonal produce that we may typically import from Mexico or Canada, you know, our other potential areas where we'll see some vulnerability in the supply chain just driven by price and other markets as well, because we'll have to remember that, you know, there's there's that ten percent tariff. They're really. Generally exists across the board. Those food products generally aren't exempt. And this kind of measures up or comes at the same time when we're seeing, I think, some reduced capacity. From federal oversight. So when we look at the proportion of foods that FDA, for example, inspects, historically, that's been around one or two percent of imported foods annually. And these tariffs come at the same time. Welcome to my lecture.

17:00  Ben Miller:        It's unclear if a product is produced in country A that moves to country B that might have a lower tariff rate, then there may be an incentive to do that. And the food handling practices and processes in transport may also introduce risk as well. So what are some of the things that we can do, you know, just in this time of uncertainty? Really, you know, that supply chain risk assessment, as I mentioned before, is important. So look at your current ingredient sources for that tariff vulnerability. So, obviously, are they coming from countries with higher tariffs? Is this a higher risk product or ingredient or product in general, just based on your normal food safety evaluation?

17:43  Ben Miller:        Understand the food safety programs of your suppliers. That sounds relatively straightforward, but, you know, I think it's really important, especially when considering what do they have good written food safety programs in place? What is the condition of their processing environment? And, you know, are they forestalling or kind of waiting or pausing on some of the investments that they should be making in terms of their food safety program, just given the state of economic uncertainty right now? Then also, where it's possible or feasible, you can consider domestic alternatives as well. But again, some of those same pressures are going to exist here in the U.S. in terms of expanded supply or demand. So if we see increased demand for domestic sources,

18:33  Ben Miller:        I would say in some sense, that's going to be a real problem. But just to give you a little bit of background here. So we are having a good relationship here in the U.S. in terms of our growing supply chain. I think that's important, because you know, we have a quite broad supply chain, and So I think we've got some of those industries that we need really to be looking at are But, you know, I think that the industry is going to be able to really build on the production of these products, the production of omega-3 and other foods, the production of these products, and that's something that we really need to be building on, you know, we need to be thinking about how we're going to go from here, and how we're going Think about how are we going to test that product and what are you going to require from them, especially for high risk ingredients. So doing that hazard analysis, understanding what are the microbiological or chemical risks that could be associated with that ingredient and making sure that you're getting a high level of trustworthy testing. And that can be done through certificates of analysis by the supplier. And, you know, I think in some instances, it's definitely a good practice to do some testing yourself when you receive that product. Obviously, have that conversation with your supplier, let them know that's going to happen. But it's an important component to kind of that trust but verify piece, especially as we see so much movement and different pressures within the supply chain right now. And obviously consider, you know, third party certification. That's something that's, I think, well embedded within the food supply. So, you know, in the safety world, especially in terms of supplier audits and verification, but make sure that those audits are really telling you what they should be telling you, especially when you're identifying a new supplier within that space. And then to bring it back to traceability, I think there's some benefit in thinking about how do we communicate to the consumer around transparency. So if we are seeing sourcing changes, having robust traceability systems in place to say, yeah, we're working with a certain consumer. We're confident that product A came from where we said it came from, and having that backed up in the supply chain, there's going to be value in that. And so I think it's good that we saw that extension around FISMA 204 and that we are seeing that drive some interest in improving traceability overall through the supply chain. I think this is just another reason that sort of makes the case for why improved, having the ability to really track and trace product to the supply chain, not just from a public health standpoint, but from an economic integrity or an adulteration standpoint is also valuable. You know, and there's always, it's always a good time to just recommit to, you know, letting your consumers know that you have high food safety standards and that these are things that you're considering on their behalf as you source and manufacture and distribute the products that you do on a daily basis. So.

21:22  Jim Albright:    Um, when it comes to, uh, pivoting quickly and why would you pivot quickly? Well, generally it's rising costs, um, it's reliability and then it's quality where I think it, you know, obviously should focus on quality, um, prior to anything. Why? Because down the road, your customers are going to notice and that's going to have a ripple effect and you're just going to be back at square one looking for another supplier. So how do you advise, um, companies that are really struggling to quickly find backups for suppliers, uh, to generate, uh, the similar quality that their, their consumers are used to having?

22:04  Ben Miller:        Yeah, that's a great question. You know, and I think that's going to be difficult too, especially if, if we do see these shifts in the supply chain. So let's say if you're a domestic supplier of a particular ingredient or product, you know, there's only a handful of those domestic suppliers in place, obviously you're going to see an increase. There's going to be an increase in interest in terms of, you know, you as one of the key suppliers in that space. You know, I think it's having that conversation to be being clear in your specifications and it's, you know, ensuring that you have a good representative sample of product that you're receiving, you know, and looking at that, especially over, you know, let's say you establish that relationship to really make sure that you're meeting that over the first, um, you know, number of shipments so that you're doing some adjustments. You know, you're doing some additional testing around quality attributes so that you're confident that you're getting essentially what you're paying for in that space. But it's a great question, but not an easy answer.

23:03  Jim Albright:    No, and, as we're talking about, obviously the, the economic situation going on, there's, there's costs rising everywhere. So this doesn't just impact the ingredients that you use, this impacts other factors such as labor or, you know, getting, um, utilities. Uh, to anything that basically produces the product is rising in cost. So how are manufacturers trying to navigate those waters in terms of driving the best cost to get the same type of quality in the same level of output?

23:39  Ben Miller:        Yeah, I think it's, it's kind of the ill doing more with less, right. You know, I think, and we're seeing that as well, you know, there was a, another article yesterday. I think, uh, large CPUs. I think the last one was from a RPG company had had their earnings call and just talked about, you know, consumers stepping back in the marketplace, partially out of kind of interest around their own purchasing choices for health reasons, but also just given this kind of drive in terms of economic uncertainty. And I think, you know, both in quality and food safety, it comes back to. Just making sure that the systems that you have in place are running the way that they should. Yeah. You know, I think, actually, Jim, before the call, you and I were just chatting about some things, you know, the importance of, you know, GMPs in general. So, a colleague that said, you know, we shouldn't, with GMPs, you know, let's not worry about the three-pointers if we can't make the layup. So, you know, it's ensuring that those basic food safety systems that we all know are really important in terms of the way that the product is made, manufactured, distributed, are in place. So, it is really a tricky time. I think, you know, we're in a space where we may see some increasing costs, diminishing resources, and at the same time, you know, need to continue to make sure that the food safety management systems that we've developed are well-functioning. I will add, too, that I think, you know, we've seen an increase just in terms of how do we think about or how do we measure or define our food safety culture. And I think that actually plays. An important role right now, you know, especially when you see some of these systems that may come under pressure, right? So, do we have, you know, the right culture in place to make sure that we can react to these kind of changes in a way that, you know, really does help us manage risk in an ongoing way? Because as we've seen, you know, at the end of the day, it takes many years to build up trust and that trust can be eroded pretty quickly, you know, given an incident or an event.

25:52  Jim Albright:    Absolutely. Yeah, I'm just thinking about that customer communication piece there. So, if you have a more mature food safety culture, you have more confidence in communicating with your customer base. And a lot of times, you know, people don't want to kind of open up the hood and show people what's really going on. But in this case, really, that's how you stand out. You have to show proof that you are providing the best, highest quality products. That is safer for not just the consumer, but the consumer's family, et cetera. That's part of the food safety culture that you're extending to your consumer. So, let's go back to this conversation you and I actually were having before when you said there's 1% to 2% of audits actually happening at the FDA level. And obviously, resources are scarce now. And what does that actually mean for? We'll just say regulatory compliance. If the pressure is off, not off, but if it's lessened because you're not maybe getting audited as frequently or it's not getting scrutinized as deeply, how is it that companies are really going to be held accountable?

27:11  Ben Miller:        Yeah, and I think there's a couple of thoughts there. You know, from my previous regulatory days, you know, I spent a lot of my time dealing with, you know, probably the 1%, right? So, the really... The people that did not want to comply no matter what. You know, and so I think in a lot of instances, that's where regulatory agencies do spend the majority of their, especially enforcement time. So, you know, I think we're still going to have an FDA. We're still going to have state inspection programs. So, you know, the really bad actors, I think, are still going to continue to stand out. Right. But I do think, you know, some of that next tier down in terms of... manufacturers, especially if, you know, foreign manufacturers where a lot of these inspections probably will potentially, we will see a reduction in the frequency of, you know, inspections around imported food, you know, I think it just speaks to the importance of making sure that the audit program that you as an importer have in place are really sound, you know, and that can involve physically going on site as best you can to those locations as well. So, there may, again, be... So, some increased cost pressures in order to look at and develop those relationships, but I think anybody that's worked in the food industry knows that you really don't have a good sense of what's happening someplace until you really walk around the four walls where that thing's happening. So, you want to get as close to the work as you can and see what those food safety programs and systems really look like from a supplier standpoint. And then again, be clear in terms of your specifications. Be they quality. Or be they food safety. Have some confidence that you're getting what you're paying for. Sure.

28:58  Jim Albright:    You know, given the current state of, again, the economy, the supply chain disruption issues, et cetera, how would you say companies are kind of balancing the need to, you know, get their FISMA 204 compliance structure built out or up to date versus dealing with the immediate pressures of, you know, rising costs?

29:25  Ben Miller:        think the pause gives companies the opportunity to, one, you know, look at what medium to longer term investments may have to make in my data systems or even my operational systems if those things have to change to some extent. I think the other thing that it does is it creates more space for just conversations up and down the supply chain to have that conversation with your supplier and your customer. And I think that's one of the things that I think is really important. I think the other thing that I think is really important is to say, can we really align around how we want to share these data in a consistent way? You know, I think the regulation itself doesn't have any sort of requirement in terms of data standards. But when we talk about exchanging data electronically and sort of that importance of electronic interoperability, how do we get to a space where the supply chain is doing that in a more consistent manner? So, you know, if I'm calling. You know, a tomato, a tomato, and you're calling it the same thing versus something different, that we're able to exchange that information in a more structured and coherent manner up and down the supply chain. So I think that's really the key piece that this extension gives us is the opportunity to go back and collectively figure out how to do this more efficiently.

30:43  Jim Albright:    Yeah, that makes sense. I would say, obviously, there's there's a lot more to evolve on that topic, just because, again, just we have a third. 30 day extension, but people are still trying to figure this out. Even if we didn't have an extension, there's a lot of folks that just wouldn't be ready. So this is evolving. We're going to obviously want to talk about this on FISMA Friday as we kind of keep seeing what happens in the supply chains around the world. I appreciate, Ben, you coming back to talk to us about the current state, at least of some of the food safety issues and as it relates to the current economy. And I think it's really important to talk about that. And I think it's really important to talk about the current state of the food industry. I'm going to leave everybody here. We've got a wonderful resource that you can tap into both at the Atchison Group and Safety Chain. If you head on over to their websites, you can check it out. There are definitely vast quantities of good information that is written by the food safety experts over at TAG. And, of course, if you would like to take us on the road, you can check out TAG Talks. They regularly update that podcast with videos. Very, very good information that is quick, digestible, and really fun. And, of course, here at Safety Chain, we have a bunch of resources such as e-books, videos, and, of course, the podcast that you can check out at any time at your leisure. We are always taking questions. We always want your feedback. And, of course, you can send those off to us here at safetychain.com. And, of course, we thank everybody and Dr. Ben for coming back and talking to us about food safety. And this wacky. This world that we live in and what might happen and how to prepare for it. So, we appreciate it. Thank you, everybody. Have a wonderful weekend ahead. We look forward to seeing you next time.

32:30  Ben Miller:        Thanks, Jim.

32:31  Jim Albright:    Thanks, all.