Will New FDA Penalties Break Your Bank?

Pricey monetary penalties are just one of many concerns over the Congressional passage of the latest food safety regulations.


Set against the backdrop of recent food-contamination incidences including the Peanut Corp. of America (PCA) tragedy that claimed nine lives and sickened hundreds more people, Congress recently passed HR 2749—the Food Safety Enhancement Act of 2009 (FSEA).

The PCA debacle, the largest recall of food products ever in the history of the country, stemmed from salmonella poisoning of peanut butter the company manufactured. “Consumer confidence had been shaken and Congress felt it had to act,” explains Michael Sansolo, a Washington-based industry consultant and former senior vice president of the Food Marketing Institute (FMI).

But do some provisions reflect a knee-jerk reaction? Many in the food logistics industry feel that Congress should put the brakes on the movement of this resolution, which is on a fast track to passage. Once the Senate version (S-510) passes, the House and Senate bills will move to a conference committee, where the final bill will be written.

“We are concerned over attempts to rush legislation through Congress without the proper vetting and consideration relating to the impact such onerous regulation would have upon our small business community, especially during this economic slump,” cautions Anne Holloway, vice president of government affairs for American Wholesale Marketers Association (AWMA) in Fairfax, VA.

Concerns over the resolution include additional fees, operational costs and harsh monetary penalties; increased recordkeeping; and a one-size-fits-all approach to liability that could disproportionately impact some companies along the supply chain, especially companies whose responsibility is limited to storing and moving the finished goods. Some provisions would not even contribute to the overall goal of food safety, note contenders of specifics within the bill’s language.

So how exactly will food distributors be impacted? To find out, we asked AWMA, FMI, the Grocery Manufacturers Association (GMA), the International Foodservice Distributors Association (IFDA) and the International Warehouse Logistics Association (IWLA).

Understanding The Food Supply Chain

Many concerns exist in the industry because of Congress’ apparent limited understanding of the food supply chain and the differing roles and associated liabilities of companies along that long and complex chain.

“They view the supply chain as if there are only two players—the shipper and the receiver,” states Joel Anderson, president and CEO of Chicago-based International Warehouse Logistics Association. “They don’t understand there are many others involved in the movement of food products, including truckers, warehouses, brokers and retailers.”

This limited understanding resulted in the bill’s unfair stance regarding the extent to which a particular company is liable. Contenders maintain liability should reflect a company’s ownership and knowledge of product makeup.

AWMA, IFDA and IWLA, disproportionately and negatively affected by the bill, are working assiduously to have the language changed to reflect their respective limited liabilities. While AWMA and IFDA are food distributors and IWLA is a 3PL, the bill would subject each of them to penalties for not complying with activities that are not within the scope of their respective responsibilities. Both GMA and FMI support the bill.

Warehouse logistics providers: IWLA represents 3PLs and warehouse logistics providers of finished food products (as well as other goods). “We are like a trucker that doesn’t move,” explains Anderson. “Goods come into our warehouses but we never hold title to them and we never open them or inspect them. Our job is to keep them in safe condition and ship them out again when requested. This bill presupposes that we have chain of ownership as well as knowledge of product characteristics that we simply do not have.”

He emphasizes that his members merely store the products, a key differentiator from a company that actually manufacturers the products.

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