The feed sector has gone through some serious scares lately; from dioxin to melamine and from salmonella to aflatoxins. These scares not only cost money, they also damage the image of the sector. What can be done to prevent it? Feed Tech has put this question to Wilco de Haan, Director Liability at Marsh, eminent insurance broker and risk management consultant. By Emmy Koeleman
A similar crisis
happened in Belgium in 1999, in which the industry lost millions of Euro, either
through quarantine of 200 Belgian farms, or through the loss of their export
markets after some countries imposed bans. It turned out that two filters at
Tessenderlo Chemicals were defective, resulting in untreated hydrochloric acid
being delivered to its subsidiary, PB Gelatins. PB Gelatins in turn, supplied
animal feed producers with dioxin contaminated ingredients. These two examples
of feed scares have different backgrounds and consequences. They do however have
one important thing in common, it all started with only one contaminated
Empty shelves in a US supermarket. The recalled pet food by
Menu Foods has cost the company millions of dollars.
“However, not all risks have the same impact,” says de
Haan. Feed companies seem to require some extra attention in this. This is
because the animal feed is part of the food chain, which is is a long and
complicated one, marked with many different suppliers and buyers from around the
world. This may sometimes lead to miscommunication with different approaches and
thoughts about quality and safety issues. Secondly, because the end product is
food for humans there is inevitably more scrutiny as it is such a sensitive
area. Animal feed that is used for the production of animal products therefore
need to be of top quality and absolutely safe. In addition, legislation
concerning the production of feed is getting stricter (for example lower maximum
levels for PCBs and mycotoxins). Also supermarkets, due to their oligopolistic
market position, are major stakeholders in this market and sometimes demand
certain quality and certifications for animal feed.
product contamination insurance is already quite common in the human food
sector. “However, feed companies sometimes don’t need or want such an
insurance,” says de Haan. Many potential risks in the feed industry are already
minimised by simple quality and hygiene procedures (on farm hygiene measures and
joint programmes such as GMP+, HACCP and ISO). If a feed company agreed that
ingredients need to be GMP+ certified, and it turns out not to be the case, the
company can claim the potential damage from the supplier. These measures are all
implemented to prevent risks and claims from other companies in the feed chain.
This is the reason why an increased number of feed companies have adopted GMP+
for example and more local initiatives pop up regarding food and feed
What are the current quality measures at company level?
– Which specific
risks is the primary producer exposed to?
– Where are the measurement points
within the feed/ food chain?
– What are the tracking and tracing methods and
quality programmes that are currently in use?
– How much risk are you able
and willing to take?
– What are the quality requirements that you have to
deal with (feed safety, food safety?)
– What are the certifications, norms
– How are these managed and controlled?
– What is the legal
context in which the liability needs to be covered?
– What are the current
financial solutions? Any more requirements? Etc.”
norms in the
sector (GMP+, ISO, HACPP, BRC). “After that, we hold interviews with the
key-stakeholders of the company (double check for possible gaps),” explains de
Haan. A third step in the risk inventory includes the risk matrix. The different
risks will be labelled and then plotted as to whether they are perceived as a
high or low impact (see figure 1). This makes it easier to define the
priorities and an action list. The last step is risk grading, a review for
existing processes (e.g. purchasing, quality assurance, etc.). “Having insight
into the risks and insurance covers in place, does not automatically mean that
you can lay back and relax,” de Haan continues. It remains difficult to predict
whether all potential risks are covered and if they will prove sufficient if an
incident were to occur.
contamination insurance more
important for feed companies, according to de Haan. The increased number of
claims is the result of better analytical methods (for example dioxins, PCB),
more stringent legislation (lower maximum tolerated levels in feed), increased
awareness among consumers and increased scrutiny from supermarkets. In addition,
the speed that information proliferates across the globe due to modern
communication technology ensures that any negative publicity, whether true or
not, will expound the problem. Increased knowledge on the effect of certain
toxins for human and animal health also guarantees that any problems become
front page news.
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