Food product recalls are monstrously expensive. Most obviously, food businesses have a sunk cost in the value of the ingredients in the jar or package being recalled, which commonly end up in a landfill. Additional costs are incurred during the performance of a recall. Stocks need to be taken off of shelves, boxed again, and shipped back to the manufacturer. Unsellable products need to be stored, catalogued to determine the effectiveness of the recall, then carted off for disposal. For all but the largest businesses, recall expenses are an existential threat.
How Can a Business Mitigate Recall Risk?
Several of the services listed on our Services Pages can be used to mitigate recall risk. These services have a cumulative effect and achieve maximum effect when combined.
- A compliance audit of all packaged food product labeling can reduce the risk of recalls caused by misbranding or undeclared allergens.
- Assess the “worst case scenario” by analyzing how a food product is used by its purchasers. Recall magnitude can vary depending on how the product is used in commerce. Defective products used as ingredients in other manufactured foods can contaminate the final product, causing a cascade of recalls that increase in size. Calculating the worst case scenario guides the resources allocated to prevention and mitigation.
- Food safety plans should be regularly reviewed and rigorously adhered to. There is no such thing as a superfluous investment in food safety. We work closely with an excellent food safety specialist who can build and monitor superb food safety plans.
- Input suppliers should warranty that they have accurately declared the allergens in the ingredients that the manufacturer is depending on.
- Co-packers should be contractually obligated to indemnify and hold-harmless you and your product for any recall precipitated by their negligence. These terms can be addressed in co-packer agreements.
- The cost of purchasing recall insurance should be delegated to co-packers, if possible. If a food business is unable to negotiate this term, it is almost always advisable for the food business to purchase recall insurance for itself.
- Run a recall drill with staff at least once a year. If a product is causing harm to the public, the quicker it can be pulled off of the shelves, the fewer liabilities you will have.
It is impossible to fully insulate a food business from the consequences of a recall. We can only create resiliency through comprehensive risk management that permeates the business’s culture, its commercial agreements, and its food safety practices.
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