Ingredients for Better Imports
Print Issue: November 2011
From about the 1940s to today, a food revolution has occurred. Seventy years ago, most of the food Americans ate came from within 100 miles of their homes. Now, according to the Food and Drug Administration (FDA), 10 to 15 percent of the food Americans eat is imported, arriving from more than 300,000 foreign facilities in 150 different countries. Roughly 66 percent of all fruits and vegetables and 80 percent of seafood consumed by Americans are imported, much of it from China, where recent incidents have raised questions about health and safety controls.
An estimated 48 million Americans get sick from food-borne illnesses each year, the FDA’s Deputy Commissioner for Foods, Michael Taylor, told The George Washington University School of Public Health in May. About 128,000 are hospitalized, and about 3,000 die, said Taylor. As more food travels longer distances it is being handled in facilities in countries that do not have the same food safety infrastructure or standards as the United States, multiplying the risks.
Incidents over the past few years show that the global food supply chain can be contaminated with a range of unhealthy threats—from pathogens to adulterants—that can sicken or kill. One of the worst examples of adulterated food occurred in 2008, when dairy powder exported from China was found to contain melamine, an industrial chemical used to manufacture plastic. Melamine artificially boosts protein levels of diluted milk, allowing unethical producers to stretch their product and make more money. Eventually, melamine was found in the food supply chains of some of the world’s biggest food companies—Mars Incorporated, Unilever, H.J. Heinz Company, Cadbury, and YUM! Brands, Inc.—triggering massive recalls of potentially affected products.
Incidents like these led Congress in December 2010 to pass a new food safety law, giving enhanced regulatory authority to the FDA, one of the primary agencies with responsibility for protecting America’s food supply. (The other major agencies include the U.S. Department of Agriculture, which has responsibility for meat, poultry, and egg products; the National Marine Fisheries Service; and the Environmental Protection Agency.)
Signed into law by President Barack Obama in January, the Food Safety Modernization Act (FSMA) is the first comprehensive overhaul of the country’s food safety system in more than 70 years. While most media coverage concentrated on the FDA’s power to recall contaminated foods, nowhere is the legislation more ambitious than in provisions regarding the safety of imported food. Indeed, the FDA describes FSMA as “a paradigm shift in the area of imports.”
In the years ahead, the FDA’s goal is to become a risk-based global organization with the mission of preventing contaminated food stuffs from ever reaching the United States, rather than reactively intercepting them at U.S. ports of entry. To achieve its safety objectives, FSMA places most of the regulatory burden on U.S. food importers—from the large corporate food companies down to the mom-and-pop shops—because the exporters are beyond the reach of U.S. law.
The FDA reports that, over the past seven years, food import shipments, which are known as “lines,” have grown by an average of 10 percent per year, from 5.6 million in 2002 to 10.7 million in 2009. The inspection force, however, has not kept pace with this growth. “The growing challenges of globalization have far outstripped the FDA’s resources for inspection and quality monitoring,” the agency said in a recent strategic planning document.
Fewer than 2,000 FDA inspectors are employed to examine imports for signs of unsafe food stuffs passing through America’s 300-plus ports of entry. As a result, according to the FDA, just 2.1 percent of U.S. food imports in fiscal year 2010 were physically inspected. That meant that the FDA only got a “snapshot” of the quality of food coming across the border, says Dr. David Acheson, former associate commissioner for foods at the FDA and now managing director of food and import safety at the consulting firm Leavitt Partners.
FSMA’s intent is to change the model so that these inspectors become the last line of defense. “The border must be viewed as a final checkpoint for preventative controls, rather than the primary line of defense against unsafe imports,” the FDA’s five-year plan states.
Like the U.S. military did long ago, the FDA is going beyond U.S. territorial boundaries in search of security. “Over the next decade, FDA will transform itself from a domestic agency operating in a globalized world to a truly global agency fully prepared for a regulatory environment in which product safety and quality know no borders,” the FDA planning document states.
A big part of this effort will be ramping up inspections of high-risk foreign food facilities, establishing more FDA offices overseas, and requiring high-risk facilities to certify that their food is safe to import.
Inspections. FSMA mandates that the FDA increase the number of its foreign food facility inspections from 357 in fiscal year (FY) 2010 to 600 in 2011, doubling that total each year until 2016. By then, Congress expects the FDA to inspect 19,200 foreign facilities—an increase of almost 3,200 percent over 2011.
Because this is still only a fraction of the number of actual facilities, the FDA must prioritize by targeting high-risk facilities. The determination of whether a foreign facility is high risk will depend on the types of foods produced or handled there, how prone those foods are to contamination and pathogens, and whether the facility is located in an area known for poor safety standards, among other factors. “So if I’m looking at bringing in black pepper that’s going to be irradiated versus bringing in farmed shrimp that has a history of antibiotic residues, I’ll inspect the shrimp farm,” says Shaun Kennedy, the director of the National Center for Food Protection and Defense, a Homeland Security Center of Excellence.
These facilities are, by definition, located in other countries, where U.S. laws do not apply. But the FDA is not without leverage. To help drive up inspection compliance among high-risk facilities and their home governments, FSMA gives the FDA a big stick. If the facility or home government refuses to give FDA inspectors access within 24 hours of a request, the agency can impose a ban on imports from that facility. This translates into a “motivation in developing countries to develop an infrastructure that will ensure safe products because it’s better for business,” Kennedy says.
The FDA already started foreign inspections and is currently on pace to meet this year’s inspection goal of 600 foreign food facilities, says Ann Marie Montemurro, director of the FDA’s Division of Foreign Field Investigations. The inspections concentrate on facilities in high-volume, high-risk regions. For instance, the FDA has inspected 54 Chinese food firms and 48 Indian food firms this year. While this may seem like a small number, just two years ago, the agency only inspected four Chinese firms and nine Indian firms.
But the open secret here is that there’s no way the FDA will meet Congress’s future inspection goals unless Congress gets serious about authorizing and appropriating sufficient funding. Captain Domenic Veneziano, director of import operations at the FDA, admitted as much, telling Security Management that the agency would fail to meet Congress’s 2013 inspection goal and beyond without a substantial increase in staffing and other resources. In this budgetary environment, that’s simply not going to happen, and the FDA knows it.
Foreign offices. In an effort to help ensure that foreign facility inspections will be as effective as possible and to put the FDA in a better position to build relationships with foreign regulators, FSMA directs the agency to open more foreign offices.
Even before FSMA’s passage, the FDA had begun to expand its global reach, opening 13 foreign offices since late 2008. It focused much of its attention on China and India, whose food exports are expected to increase annually by 9 percent within the next decade, according to the FDA’s special report, Pathway to Global Product Safety and Quality.
These foreign offices provide a home base for FDA inspectors, who in the past were primarily stationed in the United States—a practice that the Government Accountability Office (GAO) noted can create logistical roadblocks to timely inspections. “For example, some [FDA] officials indicated that for domestic-based investigators, visa and other delays can result in an inspection being conducted several months after an establishment is notified of FDA’s intent to conduct an inspection,” wrote the GAO in a September 2010 report.
FSMA explicitly calls for foreign office personnel to conduct inspections as well as support the inspections and regulatory efforts of their host government, creating a train-the-trainer-type multiplier effect.
Certification requirements. FSMA also empowers the FDA to require facilities, particularly those that handle high-risk food or have performed poorly in the past, to receive third-party certification before exporting food to America. The certification can be carried out by either the foreign government of the country in which the facility resides or a third-party auditor but these entities, whether governments or private auditors, must first be accredited by FDA-designated bodies. Shipments from these companies must arrive at U.S. entry points with proof of the exporters certification; without that certification, the shipment will be flagged at the border and denied entry.
The FDA has until January 2013 to establish the system that will recognize accreditation bodies, which in turn will accredit foreign governments and other third-party auditors to certify that foreign facilities meet U.S. food safety standards.
Importers. FSMA’s “most groundbreaking shift” is not the expansion of foreign FDA offices or the accreditation regime, according to the FDA. It is holding U.S. importers accountable for the food they vouch for at the border.
Adopting an approach similar to that used for other imports under the Customs-Trade Partnership Against Terrorism Act, FSMA requires the FDA to create the Foreign Supplier Verification Program (FSVP) and the Voluntary Qualified Importer Program (VQIP), a voluntary, fee-based program to give trusted food importers preferential treatment at U.S. borders after their suppliers are certified as FSMA compliant.
By January 2012, the FDA must publish regulations that determine how U.S. importers will “verify that food imported into the United States is as safe as food produced and sold within the United States.” Importers will then have until January 2013 to verify that suppliers do their due diligence and perform hazard analyses; put in place preventive controls to mitigate any potential hazards identified at their facility; continually reevaluate those controls; and keep a written food-safety plan, specifying what potential hazards exist and how they have been mitigated.
Importers will have to keep all related FSVP records for at least two years and present them promptly to FDA officials upon request. This will give FDA inspectors the ability to verify that importers are in compliance with FSVP, explains Veneziano.
The big question for importers will be how FDA defines verification. Richard Ryan, assistant deputy director of Archer Daniels Midland (ADM) corporate security, believes it could go two ways. “First, suppliers could promise to meet U.S. food safety standards, which would satisfy the ‘verification’ requirement and be cheap,” he explains. “Two, the verification process could require on-site validation and performance audits, which would be very difficult and expensive.”
According to various food-safety stakeholders, the biggest food importers like Kraft Foods, Inc., McCormick & Company, and ADM already verify that their suppliers institute safety processes to prevent pathogens and adulterants from getting into the supply chain. “Many companies already do some sort of supplier verification,” says Bill Ramsey, director of corporate security at McCormick and chair of the Grocery Manufacturers Association’s Food Defense Work Group. “In their supplier verification programs, most of them have some level of on-site inspection, some of that might be done in-house and some of it might be done by consultant groups.”
The problem, according to Ramsey’s colleague Bryan Fort, CPP, corporate security manager at McCormick, mainly resides with small and mid-sized importers, who may not be as cautious as large multinational corporations when sourcing because of resource constraints. And it’s these types of businesses that the FSVP primarily targets, says Kennedy. “What much of FSMA does is raise the floor,” he says. “It’s getting everyone onto what is generally recognized as an appropriate level of performance.”
One reason large food importers supported FSMA was because it raised the standards for smaller importers who may not source their products and ingredients as meticulously as the big boys do, say industry insiders. “The major food companies were all about trying to drive this forward in a way that wouldn’t impact them negatively,” says Acheson. “It was built not to make the best even better. It was to take people who were substandard, causing problems, and get them up to the standards of the best.” (Of course, some of the large companies have also been caught up in food safety supply chain problems, such as the melamine incident.)
Before FSMA was introduced in Congress, Pam Bailey, the president and CEO of the powerful Grocery Manufacturers Association, called on lawmakers to give the FDA the powers it eventually received.
Creating such a floor was in the self-interest of big food companies: when a food scare occurs, the guilty aren’t the only ones who suffer. During the salmonella-contaminated peanut butter scare of early 2009, for example, peanut butter sales slid 25 percent, reported The New York Times. It didn’t matter that the contamination was traced to just one plant in Georgia, owned by the Peanut Corporation of America, and didn’t affect other companies’ products. In response to steep sales declines, J. M. Smucker Company and ConAgra Foods, the makers of Jif and Peter Pan, took out ads in newspapers across the country to reassure customers of their peanut butter’s safety.
By June 2012, the FDA must establish the VQIP for importers who voluntarily allow third-party auditors to certify that their suppliers’ facilities meet U.S. standards. Qualifying companies get to speed their imports through a “green lane” at ports of entry.
Admission to the program is based on at least seven factors, including the known safety risks of the food to be imported, the adequacy of the exporting country’s regulatory system, and the importers’ compliance with FSVP. Importers that get accepted into the program will have a way to mark their products with a VQIP certificate so that they receive expedited review and entry into the country. It’s all part of rewarding those companies who go above and beyond the call of duty, says Veneziano.
The challenge for the FDA when designing the program, however, will be getting the incentives just right, says Cary Coglianese, director of the Penn Program on Regulation at the University of Pennsylvania. “A problem with any voluntary program,” he explains, “is that there exists a tradeoff between maximizing membership and demanding members do all that much.”
It’s a problem the FDA is hard at work trying to solve. “One of the things we’re working toward is ‘What are benefits to the industry? ‘What are the ramifications if anything goes wrong?’ ‘How is it going to benefit the agency?’” says Veneziano. “Obviously there has to be a two-way street on a program that’s going to benefit both us and them.”
And considering the agency’s threadbare coffers, the FDA has an incentive to ensure VQIP’s attractiveness to importers. “[The FDA] wants to push people into that…potentially to generate revenues,” Acheson says. The revenues raised can then be allocated to identify those nonmembers who import high-risk food or do business with high-risk foreign suppliers.
FDA’s new import safety strategy is what some academics call metaregulation. This regulatory strategy means governments promote and supervise self-regulation, but pepper it with enough coercion to invite cooperation. This is precisely what FSMA does for U.S. importers, says Coglianese.
FSMA basically directs the FDA “to facilitate and oversee, through various regulatory and nonregulatory efforts, the ‘regulatory’ work of others, be they importers, third-party auditors, [or] foreign regulators,” Coglianese tells Security Management. Kennedy agrees, stating that it’s more efficient for importers to push safety standards down through their own supply chains than for the government to do it. McCormick’s Ramsey calls this the “20 Elephants Theory: When you take the 20 biggest companies in the country, and they decide they want something, then everyone that supplies them has to fall in line with that.”
FSMA takes this principle and universalizes it: all importers now have the responsibility of driving U.S. food safety standards throughout their supply chains.
Another upside of the FDA’s metaregulatory approach, says Coglianese, is that border inspections become more than just the last line of defense against unsafe imports. They become a way to evaluate the entire regulatory scheme. “That kind of system assessment, with efforts to make continuous improvement, is a characteristic of most metaregulatory schemes,” he says.
The FDA will begin issuing proposals for comment next year, and all stakeholders will have a chance to try to shape the final rule. Whether the results will suit industry or achieve the ultimate goal of improved safety for food imports remains to be seen. Most stakeholders Security Management spoke with say they are optimistic—not the expected attitude when it comes to a forthcoming government regulatory scheme.