Editor’s note: In a November interview with QA Magazine, Johnson laid it on the line about various areas of today's food supply chain.
Read more about the impact of the economy on the food safety industry in the December article "Belt Tightening."
The current economic condition makes it a difficult time for food companies concerned about safety but controlled by the dollar. Tom Johnson, owner and CEO of Johnson Commercial Agents and Johnson Diversified Products, has worked with industry associations, government agencies and major producers in various legal, technical, advisory and consultative capacities. Being an inside outsider, Johnson has not only developed big-picture insights and industry-spanning knowledge, he can afford to lay it on the line, as he says, with no fear of retribution.
INCIDENT IMPACT. Take for example the Taco Bell rat video that wound up on YouTube earlier this year. What happens when something like that occurs is that the parent company takes a huge hit on top-line sales, which impacts the entire chain. So then the franchisees respond by seeking ways to cut costs, with non-revenue positions generally taking the first and worst hit.
And the New York regulatory response was extremely harsh — they closed restaurants, they attacked the industry. From a food safety perspective I think the greatest injustice, the net result of this was that a lot of quality assurance managers lost their jobs. We talk as if food safety is really advanced and it is advanced. Our understanding of it is advanced, but our funding is not. Basically we have immense dysfunction. We have unfunded mandates coming from government and coming from the public; and frankly I think the public is speaking with a forked tongue. I hear the media and I hear the public saying they want food safety, but then when they go to buy something they buy the cheapest thing that’s there.
FOOD SAFETY VS. FOOD QUALITY. I believe strongly that quality assurance needs to be separated from food safety. They’re two totally separate and distinct functions and issues. The market should make decisions about food quality and what is acceptable for a given audience, whereas there should be no market decision about food safety. That should be non-negotiable. It should be a fundamental of all food products regardless of the quality of the product that is being merchandised or marketed. If it is intended for human consumption, then the baseline should be that it’s safe to eat and that it’s free of adulteration.
Time and time again, what I see in departments because they’re going through cost-saving measures is they have food safety lumped into quality. When they do that, they end up developing standards, where the standards send a mixed message.
I’ll give you an example — the California leafy green marketing. Ostensibly you think it’s about safety, but when you read its criteria, much of its criteria is about quality. There is no problem about poor quality lettuce — it’s just that you can’t command the same dollar in the market place. And that doesn’t have any place in the same discussion as whether or not it’s safe. Whether or not it’s free of pathogens.
I see the same thing in the meat industry. The quality of the meat or the grading of the meat or the quality of the feed — these are all market decisions. Once you’ve decided that it’s free of adulteration, your HACCP plan is in place and the prerequisite programs are in place, you’ve got high level of confidence in safety. Then all those other decision about quality — those are all things that consumers should be able to decide for themselves whether they are buying in bargain bin or secondary food market.
FOOD SAFETY INCENTIVE. A symposium earlier this year included a panel of four CEOs from major food brands talking about the importance of food safety. I raised my hand and said — which one of you has changed your compensation programs for those delegates within your company that are responsible for food safety; to provide them a carrot, to provide them some incentive for improving HACCP, for reducing the likelihood of cross contamination and the communication of disease. No hands went up. So I asked, then who among you has bonuses for your managers based on cost savings, and three of the four said that’s how their managers make bonuses.
All the incentives we have for managers are near-term incentives, and they’re all about cost cutting. None of them are about brand protection; none of them are about improved operations from a food safety perspective. So how can we possibly expect people to do innovative things?
To innovate is to take risk. How would you take risk, allocating resources, whether it be human resources or money, when there’s no financial incentive of you to do it — and, in fact, you may be blowing your chance at a bonus is by cutting cost?
FROM THE CEO VIEWPOINT. The most important roll of a CEO is to be sure their organization survives until tomorrow. So one of the questions I asked them is: do you really think you’re going to survive a food safety issue where there’s a food-borne disease outbreak? One guy spoke up and said, “What makes people think we’re going to survive at all? We’re under such financial duress.” And a light bulb when on in my head — that that’s exactly what is going on out there in the marketplace.
Companies are running so close to empty, they’re running so close to bankruptcy that they’re making tough decisions and they’re playing Russian roulette with public health. And there’s not going to be any stopping this. They have a right to survive, and they have a right to chose how they’re going to allocate their resources. Now if they go too far in trying to survive, and they compromise public health and safety, then Bill Marler is going to take their company away from them one day.
But, you know, when they reach that day and the company’s gone because of food-borne disease outbreak, they’re going to look back and say, What choice did we have? If we hadn’t cut those costs, we would have died in bankruptcy court — what’s the difference if you die in bankruptcy court for poor financial performance or you die … because you gave up your assets in food-borne disease litigation? In American business — does it matter?
You’re talking about business ethics. What’s the price of business ethics? What’s the dollar sign you’re going to affix on that? I don’t mean to get too altruistic, but you have to.
A CULTURE OF INSTANT GRATIFICATION. That’s one of the greatest sins of our economy today, is that there is no long-range focus. All that matters is instant gratification with profit. Nobody seems to care. And what we’re really not doing — is we’ve forgotten how to compete globally.
We’re so concerned about our silos of information and our silos of events that I think we’re really flubbing it when it comes to positioning ourselves to be successful global companies and remain the strongest economy. So a lot of what is going on in food safety is symptomatic of American business — and all for short-term objectives.
At the end of the day people will do what you reward them for. So if you reward people for having safe operations, then you can expect that you will have safer operations. But if you reward them for being sneaky and clandestine about how they get their bonuses, then you will have the most sneaky, most surreptitious people you can imagine.
And largely because there’s no money in the private sector. Food safety may have been sold to CEO originally when the economy was good. Now food safety is on the chopping block along with all the other activities that a company’s involved with as they revise their budget.
CUTTING INTO THE MUSCLE. If you look out over the course of the past 6 to 10 years — every quarter managers have talked about cost cutting as a goal. When you string together five or six years of quarter after quarter of cost cutting, we’re to the point now where all the fat is long gone. What’s left now is deadwood that you’re not going to get rid of — it’s part of the structure — and muscle. And so now all the cuts are muscle that is being lost — critical activities that you can no longer afford to do; you’re just trying to get to the next month, you’re trying to leverage your debt. You’re trying to avoid bankruptcy. So as you cut all those additional costs, it’s inevitable that you’re going to be incurring additional risk for cross contamination or adulteration.
So I’m very sympathetic to the quality assurance managers who are also trying to wear two hats and be food safety. I know they’ve done their level best to convince senior managers that they need to put more money into food safety. But I also feel the pain of the chief executive in not knowing what else to do. How can they possibly justify spending more money when they have less, or they’re already in the red and they’re faced with additional debt?
In my opinion, there are CEOs that are being fired today because of food safety decisions that they made, or maybe they made an investment that maybe the owners or the shareholders felt was not the right time to make the investment. So they bring in a new team, and the new team they bring in is told, “Hey you’re a turn around team — to put our company back in the black again. And your compensation program is about getting us in the black, it isn’t about food safety.”
A GLOBAL ISSUE? Look at all the economic fraud in China. The reason they’re committing that economic fraud is they negotiated deals for themselves that did not allow them to have the dollars or the resources they feel they should have after the fact. It’s all about money and the pursuit of money.
What’s different today is they’re getting caught.
You see the desperation just by how prolific it is and how much graft and corruption there is. They’re not the only place. There’s economic fraud perpetrated everywhere.
We’re the leaders. We can say it’s the world economy, but we’re the largest economy in the world. We really set the pace. We lead. So we lead with a really bad example and the globe follows our lead.
TECHNOLOGICAL ADVANCES. The good news for food safety is that technology has advanced, but the problem is it takes a lot of research and effort to separate the wheat from the chaff — to understand which technology can be successfully integrated and what’s the value of their integration into a food operation.
The reverse side is that because there are so many different unique technologies, it’s really difficult for people in food safety to know about all of them. And there really is not a single good forum to discuss them, discuss their merits or look at case studies to discuss their merits. Manufacturer case studies may be accurate, but they can’t help but be jaded, because someone is trying to sell a product.
Most companies — if you intend to embrace a new technology, you tend to not tell people about it. You test it first, prove it to yourself, and even though you’ll tell people, you don’t want to use food safety as a marketing advantage.
But you will — in the near term, and you’ll do it with your largest accounts. You’ll bring them in and show them how you’ve changed your processes, and you’ll explain to them why your new processes are less likely to lead to a contamination … how your new process enables extended shelf life… how your new package is environmentally friendly … or uses less water for washing fresh produce. All of those things become bellwethers in articulating an improved food safety position in the eyes of their customers, which are mostly the largest of the large customers.
CUSTOMER COMMITMENT. Finally it’s about the customer and what they hold important. More and more are saying they want to have traceback, but then when the food company says, “Okay, I can give you traceback, but it’s going to cost an extra fraction of penny per package,” they’ll get pushback. So people want it all, but they want somebody else to pay for it.
I think (prioritizing food safety) starts with the consumer. It starts with the realization, somehow or other, that food safety costs something. If you want safe food, you have to be willing to pay for it. Otherwise, we’re going to have a breakdown in our system. Were going to have black markets for food — we already have black markets for food.
There are certain food products that are ‘not coming from approved sources,’ and the more trouble that we have in dealing with food safety in the legitimate market, the greater the black market for unprotected food is going to become. And I think were pretty close to getting off to the races with that right now.
I think it’s just a natural evolution that the customer has to pay the price for food safety. The government is going to get more active, we’re gong to have new regulations coming out for traceback. They’re gong to get more involved with eggs and salmonella, and just a range of different things like that with new regulations, and they’re probably going to hire more inspectors.
THE OUTLOOK. Money is extremely tight, and it’s getting tighter as the economy puts the pinch on all businesses. We know so much about food safety, we’re so good at traceback, and we’re so good at fingerprinting with DNA that were going to have a trebling of food-borne disease outbreaks. All kinds of people are going to be held accountable; companies are going to go out of business; and our food costs are going to go up.
I think with the new administration coming in and how vocal the public has been about their concerns about food safety, and how much the media has seized upon it, I do think that the government is going to play a larger role in food safety in the future than they have in the past.
MOST IMPORTANT. The most important thing is we have to separate food quality from food safety, and we have to openly talk about it. Consumers can make quality decisions in the grocery store — “This head of lettuce looks better than that one.” “I prefer the meat from (store x) rather than (store y).”
But the consumer has to also be vocal with whomever they’re doing business with, about the prerequisite, the non-negotiable aspect of food safety. And how you go about doing that — (the food plant has to) have HACCP and SOPs. More and more, we’re hearing that most of the food-borne disease outbreaks have been contaminants at the processing level. (None of the jalapenos implicated in the recent salsa contamination came through a major food processing plant.) It got commingled with other product and distributed across the country, and now many of best producers in the tomato industry have been decimated because of the bad media they got when FDA was pointing the finger at them
CONCLUSION. I am a food safety professional and I see the work that we do and my brethren do every day, and it’s a thankless job. You know that your system is working when you don’t have a food-borne disease outbreak; when operations are normal — and that, too, is counterintuitive. In sales and marketing, you win when you get a big order … The world of food safety is just the opposite. You’re doing a good job when it is status quo; when you’re not in the media, you’re not in the paper. That’s a really tough thing to finance. There is no silver bullet here, but there are all kinds of new interventions.