Why the CEO and Board Need to Pay Attention to FSMA

My testimony, which only lasted for about 15 minutes with questions, was part of a hearing entitled, “A Diminished Capacity: Can the FDA Assure the Safety and Security of the Nation’s Food Supply?” My pitch was pretty straightforward — modernize our food safety system and deny me the opportunity to sue food companies on behalf of my clients. The politicians and the audience seemed to relish the idea of “putting me out of business.”

After me came a table full of CEOs whose companies had caused some of the larger foodborne illness outbreaks in the preceding years. Producers of lettuce, pot pies, beans and chili sauce were forced to stand and swear under oath to tell the truth. Their army of lawyers was right behind them to help them avoid making any statements that might haunt them later.

As I watched these CEOs squirm under questioning, it was clear that all of them wished they were anywhere in the world other than where they were now sitting. As many of them stumbled though the grilling by both Democrats and Republicans on the committee, something was becoming painfully clear to all: It was past time to set aside the hollow arguments against regulation and seek a responsible solution to reduce the 48 million cases of foodborne illness in the U.S. each year (with an estimated cost to consumers of more than $15 billion).

It was also clear to all in attendance that the cost to business from outbreaks and recalls was negatively impacting profits. Just months before, all spinach grown in the U.S. was recalled after 205 people were sickened and five died from spinach that came from one California farm. Spinach sales tanked and have never quite returned. Then there was the peanut recall, prompted by more than 700 illnesses and nine deaths. That one ended up causing more than 4,000 products to be recalled and peanut sales to plummet, at an estimated cost of nearly $500 million.

It was amazing to see CEOs, who may have previously thought that “government was the problem,” admit that it was past time to enact comprehensive food safety legislation to allow for thoughtful hazard analysis of the food supply – both domestic and imported. Being hauled in front of a congressional committee, realizing the burden on the consumers, or feeling the hit to their company’s bottom line may have awakened them to a newfound desire for a partnership between business, government and consumers.

With this partnership – especially between some consumer groups and the food industry – the outlines of FSMA began to emerge. The primary guiding principle was to apply the rigors of Hazard Analysis and Critical Control Points to the 80 percent of the food supply regulated by the U.S. Food and Drug Administration (FDA). The other principle – more of a reality – was that FDA would probably never have sufficient resources to hire enough inspectors to oversee all these changes, and therefore the burden would fall on the CEOs and their board bosses to ultimately make sure that the food they produce was safe.

FDA was tasked with creating new regulations – in consultation with both industry and consumers – to set standards for testing, water quality, and other good manufacturing practices. These new regulations have been slow to roll out since the passage of FSMA in 2010, but they are coming and will ultimately set the ground rules for what FDA will expect from food production, both here and abroad.

FDA also was given – although not necessarily wanted – mandatory recall authority. Although still not frequently used, it is an “arrow in the quiver,” along with mandatory registration, mandatory reporting and increased product testing, all of which adds a bit of muscle to an agency without the necessary resources for enough inspections.

A CEO and his or her board can see the new FSMA rules and regulations as a burden, but I expect most to see them as opportunities to avoid the problems and costs of the past. Playing by the rules, although far from perfect, provides the opportunity to avoid problems and prevent outbreaks and recalls and the attendant costs.

I would be remiss if I didn’t mention one final reason why the CEO and board need to pay attention to FSMA. That would be these two words: “criminal sanctions.” What is clear, and will become even clearer on Sept. 21 when former Peanut Corporation of America CEO Stewart Parnell of Salmonella outbreak fame could be sentenced to spend the rest of his life in prison, is that FDA is likely using the criminal sections of the Federal Food Drug and Cosmetic Act to focus attention on those who produce our food. There have been more criminal prosecutions in the past five years of food company managers than in the prior two decades combined. Hefty fines and jail time do have a way of focusing one’s attention.

In my view, a CEO and board embracing FSMA makes sense. Playing by the rules and not poisoning customers is good for business. It is a good thing not to alienate your customer base with foodborne illness symptoms, such as diarrhea and vomiting, or perhaps worse. It is a good thing to avoid the recall costs and other attendant losses, including your personal freedom.