Horsing Around with the Global Food Chain

By Nayan Chanda
‹‹Previous Page |1 | 2 |

Globalization of prepared food, increasingly popular for working-class families looking for fast, easy and affordable meals, has for its part stepped up the pressure on primary suppliers. Companies like Findus and Spanghero, trying to supply supermarkets with ever-cheaper packaged food, have attempted to secure profit margins by squeezing farmers and suppliers down the line. Unlike high-end organic food, sources of which can be traced to the growers, frozen foods intended for poorer consumers have been produced with limited supervision and control. Industry resists quality control as that costs money. The inevitable result has been cutting corners and perhaps even outright fraud.

Consumers, schoolchildren and hospital patients are not the only victims of the supply-chain failure; 320 workers of Spanghero have been laid off as the government suspended its license, pending investigation of the company's role in the mislabeling. The suspension order is a "death sentence" for residents of Castelnaudary, where one is either employed by Spanghero or probably not employed at all. The small town is situated in France's third poorest region, where the unemployment rate stands at 13.5 percent. Whether the executives are found guilty or not, the future of that company, or for that matter, distributors like Findus, looks grim. In this hyper-connected age, the bad reputation of a supplier spreads at the speed of light and it could take the company involved years to recover. In 1990 there was a scandal involving benzene found in a few bottles of French-produced Perrier. Despite the decision to withdraw its entire worldwide stock of 160 million bottles, the company's image was gravely damaged. It took Perrier 15 years to recover its transatlantic market share.

Receive email alerts

The horsemeat scandal has exposed, once again, the risks of long and complex supply chains involving dozens or more suppliers, where the search for a better price results in careless quality control. The French newspaper Le Monde calls the horsemeat scandal the "Pasta subprime," a comparison that recalls the disastrous bundled debt containing toxic US subprime assets that brought global financial market to the verge of collapse. Comparing fraudulent use of mislabeled food that affects a sliver of the market to the subprime fraud may be excessive, but it raises legitimate issues of supervising a closely integrated market for the well-being of all consumers.

As bankers and rating agencies allowed subprime mortgages of questionable value to be bundled for their private gains, some actors in the frozen food supply chain have done the same. To ensure their own profit, one of the links in the long supply chain was contaminated, leading to the collapse of the entire chain. Similar failures have occurred repeatedly, as in the case of China's melamine-tainted formula for babies in 2008, causing death and injury.

Given the complexity of production systems with components crisscrossing international borders and increasing pressure for cost-cutting, the need for supervision is greater than ever. Unless local authorities take on a greater responsibility to ensure safety and hygiene of ingredients and components produced for global consumption, the economy and workers will suffer as much as consumers beyond local borders. Packaged foods in the supermarket shelf may be global, but the responsibility for consumer safety everywhere is ultimately local.

‹‹Previous Page |1 | 2 |

Nayan Chanda is editor of YaleGlobal Online and co-editor of A World Connected: Globalization in the 21st Century. © 2013 Yale Center for the Study of Globalization

(AP Photo)

Sponsored Links
Nayan Chanda
Author Archive