Pursue recall insurance - The Packer

Pursue recall insurance

06/01/2012 09:07:00 AM
The Packer Editorial Board

You get the call every produce company dreads.

It’s the Food and Drug Administration, and it found E. coli on your product. The good news is that no illnesses have been reported.

But you’ve prepared for this.

Your company has a crisis plan in place and traceability, so you start recalling product and informing customers. It’s going to be bad for business, sure, but it’s the right thing to do.

You start dealing with media, trying to protect your brand and company’s reputation and not lose customer and consumer trust.

Then you get another call from FDA.

Oops, our bad, FDA says. It was a false positive. Your product is fine to ship.

What now?

You have to call back customers, but those recalled packages are likely lost. Depending on how efficient your recall was, you’ve lost a lot of money, maybe in the millions.

This scenario wasn’t hypothetical for Taylor Farms in late May. It was real.

And while the company did nothing wrong — in fact, it appears it did everything right — it’s taken a hit to its finances and reputation.

Such circumstances could put a smaller, less-established company out of business.

There seems to be no recourse, no recall insurance. There seems to be nothing in the farm bill or the 2012 version currently in the Senate.

But this is the kind of episode with a respected company that could get it in farm bill negotiations.

Produce companies now have a real-world example to point to when they lobby on this.

Did The Packer get it right? Leave a comment and tell us your opinion.

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California  |  June, 04, 2012 at 01:04 PM

We recently tried to buy recall insurance for our small operation. $100k in coverage had a premium of $15K annually. We requested $2 million in coverage and could not find a carrier. For the small producer, which there are many, potential litigation will be devastating.

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