FOOD SAFETY HITS THE BUSINESS NEWS

I was pleasantly surprised yesterday when reading the stock market news on the CNBC website – as I always do, usually at least twice a day. For once they actually covered the latest food recalls among all the talk of earnings, forecasts, bank frauds and so on. This was unusual. Analysts almost always ignore such events. Why not, if it doesn’t affect stock prices?

And, oddly enough, even the announcement of huge recalls never DO seem to impact the recalling company’s stock price. In all the years that I have been following both food recalls and the stock market, I have always found this hard to understand.

After all, recalls can be very expensive. Not only do the companies involved have to spend a lot of money on tracing where their food went, and getting it back, but it even costs them to safely dispose of it. Over the longer term, they often suffer in terms of a damaged brand and may lose customers. Food producer frequently have to spend a great deal of money overhauling or replacing their equipment and facilities and even close them down for a period of time. Many small and medium size companies or food growers or distributors never recover and go under.

I have often felt sorry for many good safety-conscious family enterprises and caught in this type of very unpleasant situation, especially if their products were contaminated through no fault of their own. This can happen when their ingredients suppliers were to blame, and they simply had no way of knowing. Even now, I remember the owner of one such small company weeping over the phone to me as the FDA inspectors were crawling over his business, and I also remember several small women-owned food production companies, where I knew how hard the owners had worked and how conscientious they were about food safety, but I doubted they would survive.

So back to CNBC. What suddenly prompted their attention to the hummus, walnut and sprouts recalls? It probably had something to do with the fact that we suddenly had three recalls in close proximity, although that is not at all unusual. But their attention was also caught by another event that happened recently. A few weeks ago WalMart Stores settled lawsuits with the families of 23 people who had died from having eaten the Listeria-contaminated cantaloupes sold by the retailer in 2011. Of course, the terms of the settlement were not disclosed, but I would guess it was in the hundreds of millions of dollars.

To your good health

TSF

RECALLED NJ GROUND BEEF - REDUX

Even CNBC is announcing the latest ground beef recall - all of 200,000 pounds of ready-to-cook hamburgers. (By the way, I blogged this recall yesterday already). Of course - food recalls affect the health of companies as well as health of the public,so reporting recalls is quite natural for a leading business website.

But this is not really a case of exceptionally huge amounts of meat being recalled. Not in the day of mass-produced food. Nor is it that unusual a food recall. Hamburger meat and ready-to-cook frozen hamburgers are recalled all the time by different companies in the business.

But there are two interesting facts that CNBC and most other news reports are not telling you about this recall - yet. One is that this is a case of American business at its worst - that is, unethical, with no concern for public health (see yesterday's blog). The other interesting fact - and I am still checking it to make sure I have it straight - is that the OneGreat Burger Company is physically linked to the former Topps Meat Co. LLC. Topps was a nice family-owned company, which prided itself on its safety procedures. This obviously did not prevent E.coli 0157 from being found in its frozen hamburgers, resulting in their having to recall 21.7 million pounds of frozen hamburgers. (Now there's a big recall - in fact, the second largest beef recall in U.S. history). Topps was, up to that point, the largest manufacturer of frozen hamburgers in the U.S. It had been in business for 67 years, and this was its first recall.

That huge recall tipped Topps into bankrupcy back in 2008 (It already closed its plant in 2007). During the bankrupcy proceedings, an affiliate of Hawthorne-based Premio Foods, a sausage maker, then acquired the remainder of the Topps lease at its New Jersey plant, together with its flash-freezing equipment for $250,000. It set up the not-so-great One Great Burger, of Elizabeth, N.J.(The Topps name was bought by another company). Now IT is being faced with a huge recall, and not just because its burgers were smelly and spoiled - and could be contaminated. Because it broke the food safety rules.

What would be really ironic is if Premio Foods was then forced to sell off the meat plant, and the Topps former ownership bought it back at a bargain-basement price. Redux, with reversal of roles.

TSF