The best insurance against food safety problems is … insurance

05/21/2013 04:58:00 PM
Tom Karst

 

Most recently, the United Fresh Produce Association is offering a “Recall Ready” program that members can purchase from a cost of $5,000 to $15,000 per year.

This topic of food safety insurance will be interesting to follow. Just how broad could “food safety insurance” be? Should the insurance product be designed to cover costs to a grower/shipper if he must perform a recall, or offered only to those not implicated but were “collateral damage” victims?

What kind of growers/farmers would be eligible? Would “means-testing” be used so only smaller or mid-size growers could benefit? If a grower wants food safety insurance, what kind of preconditions (i.e., food safety audits, GAP compliance) must he subscribe to in order to be covered?

Check out this coverage from the United Fresh show of last year that defined the issue

 

From that story:

Fresh produce marketers looking for insurance against market losses caused by food recalls and food safety scares caused by other companies don’t have a solution.

But David Durkin, principal with Olsson Frank Weeda Terman Matz PC, Washington, D.C., said that the farm bill might address the issue.

Durkin was part of a May 1 panel discussion at a United Fresh 2012 grower-shipper workshop.

Durkin said food recalls can effect a large swath of producers because of public uncertainty over the scope of the recalls. Consumers may just decide not to buy a certain food item from any source, even if they hear a problem is limited to a region or company.

The permanence of information and stories on the Internet also broadens the effect of food recalls, he said.



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Rick VanVranken    
Rutgers Co-op Extension, NJ  |  May, 22, 2013 at 09:34 AM

Every producer knows the need for product liability insurance, but insurance does not prevent food contamination any more than applying all the GAPs, audits and tracability in the world will insure a product is always 100% free of contamination. What producers need are fair prices from all levels of buyers (and regulators) who are demanding added costly practices of their suppliers which only protect the bottom line and liability of those buyers and/or give them some marketing advantage to crow about their produce being better than the next guys. If insurance is mandated/demanded and GAPs are a requirement to obtain the insurance, who's paying for it? Farmers/growers are price takers, not price makers, so unlike a hard goods manufacturer, there's no passing on the cost to the customer, and margins get ever thinner.

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