Questions from Irish pigmeat contamination crisis

Europe’s lastest food safety incident stems from the confirmation of elevated levels of dioxins in Irish pigmeat last Saturday. As a result, all Irish pork and bacon products from pigs slaughtered in Ireland since 1st September 2008 have been recalled. Consumers have been advised, as a precautionary measure, not to consume Irish pork and bacon products at this time and to dispose of any purchased since the 1st of September 2008. The discovery of this contamination – which has been sourced back to a small feed mill recycling bakery and confectionery waste for animal feed – is a calamity for the Irish pig sector and could yet have major adverse consequences for the Irish food processing sector as a whole. There is a good account of the background to the incident on Wikipedia. I have given my own initial reaction to the events in an Irish Independent article today. Here I want to explore three questions which the crisis has thrown up.

It is important to stress that the public health advice is that no one is likely to become ill, let alone die, from the contaminated pigmeat. The product recall has been take as a precautionary measure, mindful of the mishandling of the similar Belgian dioxin case in 1999 which led to the fall of the government there, and to reassure consumers that public health is being given priority in the handling of the incident. Nonetheless, at least three questions now press for answers:

• why, despite the revamped food and feed controls introduced as part of the EU’s hygiene package in 2005, was the problem not detected earlier?
• what will be the overall cost of the contamination to the agricultural sector and the national economy?
• who will bear this cost – the industry or the taxpayer?

The overhaul of EU “farm to fork” food safety legislation begun in 2002 introduced traceability as the basic concept. The new EU food hygiene rules place primary responsibility for food safety on food establishments, while requiring the public authorities to have a risk-based control system in place to verify compliance with food law and food hygiene regulations. Animal feed mills were brought within this system of legislation with effect from 1 January 2006.

There is now evidence that feed compounders on the continent of Europe noticed elevated dioxin levels in pig fat as far back as September, although it was not possible immediately to identify the source. The alarm was raised early last week by a routine food safety control of pigmeat in Ireland by Department of Agriculture and Food inspectors. How was it that the mill’s own HACCP procedures did not pick up the problem before it emerged in animal products? Given that many of the major recent food scares have been associated with animal feed, is there sufficient control and regulation even in the revised legislation?

The second question concerns the cost. The pig industry in Ireland produces around 3 million pigs a year from 400 farms, and has a farm level value of around €250 million, but a processed value of more than double that. Estimates in the Irish newspapers today suggested the total cost of the contamination could be anything between €125 million to €1 billion, but any estimates must be very imprecise at this stage. The costs involved include, in increasing order of uncertainty:

• the slaughter of around 100,000 pigs on the 9 pig farms which purchased the contaminated feed;
• the cost of the product recall, the loss of product and the cost of disposal;
• the potential loss of consumer markets both at home (which accounts for around 55% of Irish pigmeat output) and in export markets (around half in the UK, the rest spread over 25 or so countries). While some of the drop in domestic consumption will lead to a switch to the purchase of other types of Irish farm produce (such as beef, poultrymeat or lamb), the loss of export markets is an unmitigated cost.
• whether markets for other Irish food products will be closed or affected because of a perceived loss of reputation for Irish food.

The third issue relates to who is going to bear this cost. Given EU food law that food sold for consumption must be fit for purpose, consumers have been given refunds by the supermarkets for returned pigmeat. Presumably, the retailers, in turn, are entitled to seek refunds from the processors. But the processing sector is not in a position to bear the cost.

The Irish government, now that the source of the contamination has been identified, is hoping to get new stocks of Irish pork on the supermarket shelves in the next few days. But the processors have refused to resume slaughtering the 90% of pigs from farms which were not involved in purchasing the contaminated feed until they get a promise of compensation from the government. Already, tonight, 850 workers have been laid off and trade union sources are predicting that up to 6,000 jobs could be lost.

The call for compensation throws into relief the hidden costs of the convenience-driven, industrialised food processing and distribution system which has come to dominate our food supply. In many ways, this system is an incredible accomplishment. It has driven food costs down to their lowest ever in real terms while increasing variety and availability. But the silent weakness of the system, with its growing concentration of supply chains, is its increasing vulnerability to risk, and the increasingly catastrophic nature of that risk. if something goes wrong. In this instance, we have a single relatively small feed mill which has been able to close down an entire sector of the agri-food industry.

As a general principle, it is unacceptable that the taxpayer should be asked to foot the bill if a problem occurs. The food industry has successfully externalised the cost of this risk to other agents. If the cost of this risk was properly factored into the operations of food companies, the vaunted efficiency costs and economies of scale might appear less convincing, and the playing field relative to smaller, more local and more decentralised food systems would be levelled.

How to require the food system to recognise and internalise this catastrophic risk is a question for another day. In the meantime, the Irish government is faced with the collapse of a significant agri-food sector at a time when the public deficit is ballooning and the macro-economy is collapsing. The Belgian government compensated farmers up to 80 per cent of their losses following the 1999 dioxin scare there. We can expect to see some kind of compensation package on the table for Irish producers and processors in the next few days.