So everyone is going bananas today about the FDA shutdown of the Sundland peanut butter processing plant. This is the first time the FDA has used its new plenary powers granted to it by the Food Safety Modernization Act to shut down food production of a US facility. Big food law news, indeed, for anyone concerned about food safety and federal food policy.

But the HuffPo piece glosses right over my favorite part the story. Here’s the quote that should send every food processor running to the file cabinet where they keep their insurance liability agreement:

The Food and Drug Administration suspended Sunland Inc.’s registration as a food facility on Monday, two months after issuing a recall on 240 products containing Sunland’s organic peanut butter, which has sickened at least 41 people with salmonella.

Sundland didn’t just make spreadable peanut butter for the jar. Food processors and manufacturers apparently bought bulk peanut butter from Sundland to add to their own products – cracker sandwiches, cookies, peanut butter filled pretzels, and so forth. For these independent companies, Sundland was a supplier of a key input for their products that ultimately tainted what were otherwise pristine products.

Food processors have to always think defensively when purchasing their inputs, especially when those inputs are not heat sterilized like peanut butter. I am almost certain that a great many of the products in that “240” number were not covered by product recall insurance, every one of which went right into the landfill.  I am also sure several of food processors had no indemnification agreement with Sundland to get remunerated for losses incurred due to its peanut butter. Those two risk management gaps are sufficient to put any small to medium sized food processor into the red if they are not managed properly.