The best insurance against food safety problems is … insurance

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

In response to these risks, Durkin said some are looking at policies that would allow growers be protected from risks that cannot be controlled by the producer, including food recalls by competitors.

Federal crop insurance provides against low crop yields or declines in price or both. Durkin said some lawmakers are interested in greater options for producers.

Durkin said there is language floating around Capitol Hill that would direct the Risk Management Agency to conduct a feasibility study related to food safety events. Lawmakers seek to determine whether or not producers who are not at fault can insure themselves against losses from food safety events, he said.

The challenge to expanding crop insurance options for specialty crops is the trend to reduce federal budget expenditures. Another probability is that any insurance product would not likely include processors. Other difficulties include the uncertainties of measuring the risks of specialty crops. Yet another problem is defining the “trigger” where an insurance product would begin to apply, Durkin said.

“If you are a tomato producer and some (other) tomato producer has a recall and the bottom drops out of the tomato market, if people just stop buying tomatoes — can that be a definable event for insurance purchases for insurance purposes, a loss that could trigger coverage?” he said.

Though likely beset with limitations, USDA getting food safety insurance on the books has the potential to be one of the most effective drivers of Good Agricultural Practice compliance among growers of any size. I can’t imagine the USDA offering the one without demanding the other.


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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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