Global Trends in Food Safety

November 2009Steve DelGiornoSenior Director, Daymon Worldwide

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China Market Landscape Government:

Law, regulation and act issued by central government Weak governanceWeak governance

Local implementation and interpretation may vary from Central policy Open to bribery & fixing

Manufacturer: International company/ export manufacturers with good QA expertise But majority -> huge; immature supplier base

Local Immature process caused bad practice; Less QA/ QC investmentLocal Immature process caused bad practice; Less QA/ QC investment Products apply to multiple standard, like GB/ QB, FZ, NY etc… / DB/ Q standards

Retailers: Very frequent random tests and challenges by local authorities on product label and safety Conservative/ limited investment in QA functionConservative/ limited investment in QA function Only basic knowledge and implementation on PB QA/ any QA management; QA not viewed as critical

function; most retailers do not have complete QA department. Third party

May provide lower service standard due to market competitive costMay provide lower service standard due to market competitive cost Auditors integrity issue when doing site auditing Professional skill varied

High Consumer Expectations - public complaints on product safety issue, particular on food

That’s Why Quality Assurance Is Critical In China

3

QA Initiatives-U.S.

Daymon Sharing of plant audit reports Promote adoption of a single

audit standard by working closely with FMI and SQF

CIES Technical Committee member

Development of Quality Assurance Share groups

Approval of singular testing protocols on diapers and feminine protection items

Finding traceability solutions-TraceTracker

Industry Development of singular

recall system Adoption of the CIES

recognized standards (BRC, SQF, IFS, Global GAP)

Managing compliance and certification documents (Organic, Kosher, third party plant audit reports, etc.) via the internet

Sustainability and Social Accountability initiatives

Retail More reliance on sensory

testing and development of Product Innovation Centers

Software systems such as Hamilton Grant to develop and store product specifications

Increased focus on store sanitation and use of third party providers to perform store audits

Review of auditing protocols on internationally sourced products

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The Audit Situation Today

Retailer A Audit fatigue

Retailer B Confusion

Retailer C Inefficiency

Auditing Firm A High Cost

Auditing Firm B Focus on

Audits-Not

Retailer D remediation

EffectAuditor

Sept.12

Sept.16

Sept. 25

Oct. 7

Oct. 2

Sept. 4

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The Case For A Single Auditing Standard

Cost Effective—large suppliers have hired full time “hosts” for auditors, reduces repetitive audits

Current system is filled with redundancy and is sometimes contradictory

Uniform standard assures that all suppliers and retailers are operating from the same playbook and audits are better calibrated

Time efficient—speed to market is increased, plant visits can focus on improving quality/product development

Proven---European model for 10 years (starting with BRC)

Food Safety should not be a competitive issue-there is no reason not to share plant audit reports

Certified Once, Accepted Everywhere

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Daymon’s Road to A Single Auditing Standard

We are a member of GFSI’s Technical Committee that approves standards-next meeting May 18 in Chicago

Daymon has hosted SQF (Safe Quality Food) Training Sessions for suppliers and retailers in 2006 & 2008

Participated in a Discussion Panel supporting a single audit standard at the 2007 QAA (Quality Assurance Association) meeting

Working with SQF to meet with non food suppliers to develop a non food audit protocol

Worked with retail share group members to gain their acceptance of SQF plant audit reports

Certified Once, Accepted Everywhere

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Current Food Safety Concerns-U.S.

Supplier Food Safety Audits Melamine Traceability Bisphenol A Obesity

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Peanut Corporation of America (PCA)

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PCA Update

To date, more than 2,100 products in 17 categories have been recalled by more than 200 companies. Many items sold under Daymon’s retail customers label have been affected-categories include ice cream, crackers and bakery products 0ver 600 illnesses and 9 deaths attributed to contaminated peanut

products On January 27, FDA completed their investigation of the Georgia

facility and issued violations On February 9, FDA raided the PCA Georgia Facility On February 10, PCA shut down its Plainview, Texas plant On February 13, PCA filed for bankruptcy

Jeff Almer speakingat a Congressionalhearing

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Findings

Stewart Parnell-Owner

Company e-mails showed that PCA owner Stewart Parnell ordered shipments tainted with bacteria because he was worried about lost sales.

Deibel Laboratories Inc. tested PCA’s products and notified the Georgia plant that salmonella was found in some of its peanut stock. Peanut Corp. sold the products anyway.

Parnell told the manager of the Blakely, Ga. to "turn them loose" after being told that some products had tested positive for salmonella.

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Melamine

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Melamine

U.S. Pet food recall in March, 2007—melamine found in wheat gluten Infant formula recall in September, 2008—Over 300,000 illnesses and 6 deaths

attributed to contaminated formula. There are claims that Sanlu knew of the problem in June, 2008

Trace amounts of melamine found in U.S. infant formula in November, 2008 U.S. FDA sets 1 ppm limit for melamine

FDA sets melamine standard for baby formula FDA finds traces of melamine in US infant formula

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A woman, whose child died from drinking tainted milk, holds a sign reading "Give me back my child" outside Shijiazhuang People's Court January 22, 2009.

A newborn baby holds onto his mother's finger at a hospital in Beijing

Sanlu Executives on Trial

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U.S. Reaction

Retailers sent letters to all private label suppliers:

Wanted to know if any products contain melamine

Wanted to know what testing procedures have been implemented Increased scrutiny on quality assurance protocols for all imported food

products FDA issues a country-wide Import Alert on milk and milk

ingredients/products from China in December, 2008---Products may enter the country if they are shown not to contain dairy OR not to contain melamine, based on tests using methods able to detect melamine at levels as low as 250 ppb

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Traceability

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2006---204 people ill with E. coli O157:H7, 3 deaths in 26 states due to contaminated

spinach

2008---1442 people in 43 states confirmed

ill with Salmonellosistraced to contaminated

jalapeño peppers and serrano peppers(as of August 26, 2008)

Traceability-Recent Causes For Concern

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Food Companies need to do more than train their employees-they need to develop a food safety culture

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Why Did It Take So Long To Trace?

No product code

No "sell by" date

No markings in most cases

The traceback can be further complicated by a lack of records or incomplete records, or in some cases, huge volumes of records that need to be reviewed for key information

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Rethinking Traceability

Current practices document on a “one-up one-down” method (where did it come from, where did it go)

Limits each member of the supply chain to a review their own records relative to traceability.

Process can take hours or days (or weeks) to perform a full trace on product through the supply chain

Can result in:

• lost $ due to production

• lost $ due to product on hold

• loss of consumer confidence

• Incorrect decision making in a crisis management situation

We need a holistic approach to traceability

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Ingredients TransportManufacturing

Transport Transport

TransportRetail Distribution

Stores BondedWarehouse

One Up One Down

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IngredientsTransport

Transport Manufacturing Transport

Transport

BondedWarehouse

Retail Distribution

Stores

A holistic approach allows instant access to

traceability at all points in supply chain

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Founded in 2000

Headquartered in Norway, regional offices worldwide

Allows for real time product traceability throughout the supply chain in real time

Information accessed from your desktop

Traceability is only as effective as the weakest link in the supply chain

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Bisphenol A

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BPA-Bisphenol A

Used in plastic production Used to make hard plastics such as baby bottles, toddler

sippy cups, water bottles, and the linings of many food and beverage cans

BPA can leach from the plastic Found to cause cancer, obesity, diabetes and other health

problems in laboratory animals

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Reaction

October, 2008--Connecticut, New Jersey and Delaware sent letters to companies that make baby bottles and baby formula containers, asking they no longer use the BPA in their manufacturing

October, 2008-a panel of scientists state that FDA's conclusion that BPA is safe is flawed

December, 2008-FDA announces that it will revise it’s BPA review and consider independent studies

February 2009-law makers in Washington state and on Long Island propose a ban on plastic containing BPA

March 2009-Sunoco, a producer of BPA, announces it will not sell BPA to manufacturers who will use it in products designed for use by children under 3

September 2009-California law makers fail to pass a bill that would have outlawed use of BPA in the state in drink and food containers aimed at children

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Obesity

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Obesity Trends* Among U.S. Adults

1985

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14%Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

1988

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14%Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

1991

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

1994

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

1997

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19% ≥20%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

2000

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19% ≥20%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

2003

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

2005

(*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

Source: CDC Behavioral Risk Factor Surveillance System

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Obesity Trends* Among U.S. Adults

2007

(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)

No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

Source: CDC Behavioral Risk Factor Surveillance System

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Overweight U.S. Children and Adolescents (Aged 2-19 years)

Source: National Health and Nutrition Examination Surveys

4.0%

5.0%5.0%

7.2%

13.9%

6.5%

11.3%

18.8%

6.1%

5.0%

10.5%

17.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

1974 1980 1994 2004Survey Period

Per

cen

t

Non Hispanic White Non Hispanic Black Mexican American