In a recent piece by Derek Singleton, who is the ERP Market Analyst at an online site called Software Advice, the writer makes his case that the cost of implementing a food traceability system …is going to force companies to invest a lot of money in infrastructure to meet FDA tracking and tracing standards. He’s not against track and trace. In fact, he’s all for it. But he is advocating for a federal subsidy or incentive program to kick-start traceability initiatives. Let’s see if you agree that the infrastructure costs are off the charts and the food and beverage industry can’t do this without a handout of tax dollars.
First, let’s examine some of the genuinely astronomical numbers in the article, which is entitled, “Bringing Home the Bacon (Safely) Under the Food Safety Modernization Act.” For example, Mr. Singleton notes the following statistics: Food-related illnesses cost the US $152 billion each year… the toll of a recall, which can cost farmers and producers anywhere from a few thousand all the way up to $1 billion… In the case of the spinach recall of 2006, it was estimated that an efficient food traceability system could have saved up to $94 million.
Now keeping in mind the new Act exempts small and local farmers and apparently all food companies with annual revenues of less than $500,000, what number would you name as the outer limit of bearable infrastructure costs to insure against sweeping and devastatingly expensive recalls? Mr. Singleton estimates the required infrastructure will cost $200,000 and, as such, can be financially challenging. He also offers a cost breakdown published from a report by the Institute of Food Technologists in support of the numbers. That group estimates the total cost for fixed and variable expenses at $342,000. I say if he and/or the Technologists are right, it’s the deal of the century. But in fact, based on how the estimate is calculated, the number could often be significantly lower. Why? Because there seem to be some pricey items mentioned that may already be a part of the infrastructure. And, because the economic risk of not having traceability is enormous, wouldn’t you agree?
You can see Mr. Singleton’s full analysis at this link.