ASSOCHAM FMCG Summit: How changing standards will impact on FMCG Companies?


Theme Paper for ASSOCHAM FMCG Summit [1]

Changing Food Safety Standards and Environment Standards and their impact on FMCG Companies

By:
Vijay Sardana






With every change in food laws, corporate managers feel very irritated because these changes are forced on them. It forces them to re-think and re-work and once again disturbs the well-established supply chain. The argument is why we need it, when everything was fine? How many times in a life of company changes labels for its products? How many times companies modify its label to launch a scheme? How many times food laws are changed in a life of company?
It is human nature; we don’t want change when we are comfortable. Whether it is pollution, global warming, traffic diversion, change in accounting laws, change in phone number, home address, so same is with changes in food laws. Unfortunately, neither consumers’ expectations nor needs are static. At the same time, food safety is changing with new scientific findings; it is also no more static.
That is why we need competent and qualified supply chain managers to manage and minimize risks including food safety risks. Good Supply chain managers can quickly fix the issues and move ahead.
Why New Food Safety Laws are emerging?
Initially we had food laws i.e. PFA Act, based on knowledge of 1954. There was no WTO. There was no internet. There was no Google. Global integration was negligible. Citizens were also not alert. Media was in very infant stage. Legal system was also taking shape. India was just 7 years old as independent country from British occupancy.
When the Food Safety and Standards Act of India came in 2006, Indian successfully entered 21st century by becoming information technology hub for the world. There was no reason to expect that only industry voice will be heard and other stakeholders will have no role.  If anyone thinks that only one group can move the things for the rest, it is nothing but day dreaming. Policy makers, Courts and NGOs are also equipped with same set of knowledge and information base which is used by various stakeholders. Now we are in the world which somehow ensures level playing field. Concept of lobbing is fading ways, concept of education and awareness is creeping in.
Citizens are demanding their rights
The availability of safe food improves the health of people and is a basic human right. Safe food contributes to health and productivity and provides an effective platform for development and poverty alleviation. People are becoming increasingly concerned about the health risks posed by microbial pathogens and potentially hazardous chemicals in food.
According to WHO and FAO studies, up to one-third of the populations of industrialized and developed countries are affected by food borne illness each year, and the problem is likely to be even more widespread in developing countries. The poor are the most susceptible to ill health. Food and waterborne diarrheal diseases, for example, are leading causes of illness and death in less developed countries, killing an estimated 2.2 million people annually, most of whom are children.
Social and economic structures are changing:
Due to globalization of trade, emerging trends in global food production, processing, distribution and preparation present new challenges to food safety. Food grown in one country can now be transported and consumed halfway across the world. People demand a wider variety of foods than in the past; they want foods that are not in season and often eat away from home. Institutionalizing children in schools and childcare facilities and a growing number of elderly persons in hospitals and nursing homes means that food for many is prepared by a few and can therefore be the source of major foodborne disease outbreaks. Greater life expectancy and increasing numbers of immune-compromised people mean a larger vulnerable population for whom unsafe food is often an even more serious threat.
WTO and WHO and its Member States have responded to these new challenges by recognizing that protecting food safety is an essential public health function. Food safety must be addressed along the entire food chain by measures based on sound scientific information at both national and international levels.
Global laws on Food safety and Environment matters will be identical:
Corporate are no more private properties. They are performing public duties but charging for it as profits from the willing citizens. Their action impact safety and health of the society. They have to accountable. Corporate managers will be forced to implement these changes in public interest. With passage of time, on the matters of food safety and environment, world will be almost flat. It means there will be minor difference between laws of different countries on these issues. With the passage of time, food and environment laws will make various stakeholders more and more accountable for their actions and they will be forced to bear consequences by other stakeholders.
Why is food safety an essential public health issue?
Serious outbreaks of food borne disease have been documented on every continent in the past decade, illustrating both the public health and social significance of these diseases. Consumers everywhere view food borne disease outbreaks with ever-increasing concern. Outbreaks are likely, however, to be only the most visible aspect of a much broader, more persistent problem. Food borne diseases most seriously affect children, pregnant women, the elderly and people already affected by other diseases. Food borne diseases not only significantly affect people’s health and wellbeing, but they also have economic consequences for individuals, families, communities, businesses and countries. The experience of Dropsy cases due to Edible oil contamination and recent controversy of pesticide residues in carbonated soft drinks and its impact on sale of products are clear example of consumer concern about food safety. These diseases impose a substantial burden on health-care systems and markedly reduce economic productivity. Poor people tend to live from day to day, and loss of income due to food borne illness perpetuates the cycle of poverty.
On the other side, these reasons provide enough grounds to impose non-tariff barriers for food trade to protect domestic markets as well. To challenge these new non-tariff barriers will also need equal amount of scientific studies and justification to prove otherwise.
New Challenges to Public health and Food Safety
The globalization of the food trade offers many benefits to consumers, as it results in a wider variety of high-quality foods that are accessible, affordable and safe, meeting consumer demand. A diversity of foods in a balanced diet improves nutritional status and health. The global food trade provides opportunities for food-exporting countries to earn foreign exchange, which is indispensable for the economic development of many countries and for improving the standard of living of many people.
However, these changes also present new challenges to safe food production and distribution and have been shown to have widespread repercussions on health. Food safety programmes are increasingly focusing on a farm-to-table approach as an effective means of reducing foodborne hazards. This holistic approach to the control of food-related risks involves consideration of every step in the chain, from raw material to food consumption. Hazards can enter the food chain on the farm and can continue to be introduced or exacerbated at any point in the chain until the food reaches the consumer.
The integration and consolidation of agricultural and food industries and the globalization of the food trade are changing the patterns of food production and distribution. These conditions are creating an environment in which both known and new food borne diseases can become prevalent. Food and feed are distributed over far greater distances than before, creating the conditions necessary for widespread outbreaks of food borne illness.
In a recent crisis, more than 1500 farms in Europe received dioxin-contaminated feed from a single source over a two-week period. Food produced from animals given this contaminated fodder found its way onto every continent within weeks. The effects of exposure to dioxin from this source on public health may become known only after years of investigation. The international spread of meat and bone meal prepared from cattle affected by bovine spongiform encephalitis (BSE) needs no further description. The full economic consequences of such incidents and the anxiety raised among consumers are still being assessed.
Other factors account for the emergence of food safety as a public health issue. Increasing urbanization leads to greater requirements for transport, storage and preparation of food. Increasing wealth, an urban lifestyle and sometimes a lack of facilities mean that people eat much of their food away from home. In developing countries, food is often prepared by street vendors. In developed countries, up to 50% of the food budget may be spent on food prepared outside the home. All these changes lead to situations in which a single source of contamination can have widespread, even global consequences. Developing countries in particular are experiencing rapid changes in their health and social environments, and the strains on their limited resources are compounded by expanding urbanization, increasing dependence on stored foods and insufficient access to safe water and facilities for safe food preparation.
Although significant progress has been made in many countries in making food safer, thousands of millions of people become ill each year from eating contaminated food. The emergence of increased antimicrobial resistance in bacteria causing disease is aggravating this picture. The public is increasingly aware of the risks posed by pathogenic microorganisms and chemical substances in the food supply. The introduction of new technologies, including genetic engineering and irradiation, in this climate of concern about food safety is posing a special challenge. Some new technologies will increase agricultural production and make food safer, but their usefulness and safety must be demonstrated if they are to be accepted by consumers. Furthermore, the evaluation must be participatory, transparent and conducted using internationally agreed methods.
Until recently, most systems for regulating food safety were based on legal definitions of unsafe food, enforcement programmes for the removal of unsafe food from the market and sanctions for the responsible parties after the event. These traditional systems cannot respond to existing and emerging challenges to food safety because they do not provide or stimulate a preventive approach. During the past decade, there was a transition to risk analysis based on better scientific knowledge of food borne illness and its causes. This provides a preventive basis for regulatory measures for food safety at both national and international levels. The risk-based approach must be backed by information on the most appropriate and effective means to control foodborne hazards.
Food Hazards don’t respect borders and brands:
Food borne disease is major cause of concern worldwide and it takes a major toll on health worldwide. Millions of people fall ill and many of them die as a result of eating unsafe food. Due the growing incidences of food borne illnesses, the Fifty-third World Health Assembly in May 2000, adopted a resolution calling upon the World Health Organization (WHO) and its Member States to recognize food safety as an essential public health function. The resolution also called on WHO to develop a Global Strategy for reducing the burden of food borne disease.
Major issues in food safety
Foodborne illness can be caused by microbiological, chemical or physical hazards. An increasing body of scientific data is highlighting the nature and extent of these risks, although several areas of information gathering, such as the surveillance of foodborne illness, need to be strengthened. There is also mounting concern about new technologies like the introduction of genetically modified organisms into the food supply.
Food Safety and Food Marketing:
Very often it is observed that many decision makers and managers, due to their own background and limited experience in food management system are not willing to appreciate the food safety concern. Very often senior management is only concerned about the turnover and profitability. It very clear that food safety is neither easy nor cheap. It needs skills and knowledge of the subject. Major corporate world over face food recalls. Clearly indicates things are not in control even at big corporate and big brand owners. Assuming that everything is fine in my company can be a disaster. Senior managers must audit food safety regularly and companies must be audited to find out what percentage of turnover is spent upon food safety related issues. Companies spend money to audit their financial health but rarely do they take similar interest in food safety matters.
Cost estimates for foodborne illnesses in India:
According to WHO, approximately 1.8 million children in developing countries (excluding China) died from diarrhoeal disease in 1998, caused by microbiological agents, mostly originating from food and water? One person in three in industrialized countries may be affected by foodborne illness each year. In the USA, some 76 million cases of foodborne illness, resulting in 3,25,000 hospitalizations and 5,000 deaths, are estimated to occur each year. There are only limited data on the economic consequences of food contamination and foodborne disease. In studies in the USA in 1995, it was estimated that the annual cost of the 3.3–12 million cases of foodborne illness caused by seven pathogens was US $6.5–35 billion. The medical costs and the value of the lives lost during just five foodborne outbreaks in England and Wales in 1996 were estimated at UK£ 300–700 million. The cost of the estimated 11 500 daily cases of food poisoning in Australia was calculated at AU$ 2.6 billion annually.
What is the cost of unsafe food to India?
Why Parliament and courts have not ordered these cost estimation till date to calculate the damage to the national health and finances?
Why CAG is not calculating this national loss?
Food Safety Assurance: Challenge for India’s Food Industry
The differentiation between “Product of Export Quality” and “Products for Domestic Market” in the name of food quality and safety itself exposes the concern and commitment about food safety in India by all-important stakeholders like producers, manufactures and government policies. This differentiation in food safety standards itself is a shameful admission that Indian manufactures cannot offer safe food to common man in India what they are offering to consumers outside India and this admission itself is a major hurdle for growth in food exports.
Traditional food safety measures, employed by producers, processors and distributors have not been efficient in preventing foodborne disease over the last decades. This is clearly evident from the rejection of export consignments of food products in world market and also increasing imported food bill shows consumers desire for better quality.
Where there is a trust, there is a turnover:
India’s goal of improving exports of food products can only be met with success by reducing the public health burden of foodborne disease. This can best be achieved through systematic application of risk analysis and capacity building.
Structures and systems must therefore be developed, in close coordination with international agencies at national, regional and international levels to survey foodborne disease, conduct risk assessments and implement risk management strategies.
Capacity building and coordination of scientific effort are essential roles of international agencies and are important elements of Food Safety Strategy, but these must be combined with strong commitment and resources by Government of India and State governments in order to ensure food safety through targeted, risk-based prevention initiatives.
Effective participation of all stakeholders, especially producers, processors, food distributors and research organizations is needed in setting standards as well as guides for food safety initiatives that are acceptable to buyers both in domestic as well as international markets.
While the existing activities in food safety have focused primarily on hazards in food, the proposed strategy should address the broader concept of risk along the entire food production chain. It will take into consideration the need for sustainable agricultural production systems in all regions and will redirect some of the existing approaches to ensure that they meet the emerging challenges of global food safety.
The biggest hurdle and challenge to achieve food safety in India is not the money or technology. It is outdated mindset and ignorance about the ground reality among exporters and decisions makers at all levels both in private as well government organizations. Unfortunately money cannot bring the change it is the knowledge about changing markets that will play major role, role of money is limited to money will facilitate change.
In globalized economy, consumers have the options but what about producers, processors and distributors. If consumers want safe or better food they may go for imported foods.
Please note consumers have choice to change the suppliers and veto to say NO to your product and brand. Without assured food safety, what will happen to your brand and company in basic question?
Role of FSSAI:
To develop a system is simple and less time consuming. We are not asking relaxation in food safety but speedier decision making so that time and money can be saved. Safe Innovation should be supported.
Parliament should provide enough resources to food safety and quarantine functions to protect national health. Accountability of field staff in case of food safety outbreak in their jurisdiction and functional area should also be looked at.
The way forward:
According to the author, in food business or any FMCG company, “Where there is a trust, there is turnover.” Food Business is a recession proof industry. People are willing to pay premium provided they are sure of quality and safety. The best way to improve profitability is to improve food safety perception about your products among masses.
Disclaimer: Views expressed in this article are personal.

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[1]Presented at ASSOCHAM FMCG Summit, New Delhi

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