Regulating peanut butter (and lots more): good for business

The financial industry (what's left of it) now knows what the food industry is learning (or never learned; take your pick). Effective regulation is good for business. Or rather, poor regulation is (very) bad for business. Latest exhibit: the gigantic recall of peanut products (international in scope: here's a long list of newly recalled Canadian products) after a relatively modest player (less than 1% of peanut products in US) ran a sloppy operation (for years), wasn't caught and now is dragging down everyone:

The economic wallop from a salmonella outbreak in peanut products continues to spread with more than 800 recalls and more expected this week.

The recall, one of the largest ever, started with bulk peanut butter, spread to crackers and cookies and has engulfed products as diverse as kettle corn, pad Thai and trail mix.

Whole Foods (WFMI), for one, has removed more than 80 products from its stores, its website says. Anecdotal evidence indicates that sales of all peanut-related products, even unaffected peanut butters, are slipping, says Robert Brackett, senior vice president of the Grocery Manufacturers Association, a food industry trade group.

"All it takes is a little company, and it has a huge ripple effect," he says. (USAToday)

The $1 billion peanut industry worries that rather than check continually growing recall lists, consumers will just decide not to buy peanut products. Given the size and complexity of the recall, this would indeed be a reasonable strategy. It's not over yet, either. The Peanut Corporation of America is now recalling products with added peanuts, peanut meal and the peanut butter and paste made as long as two years ago following evidence that there has been salmonella in their ingredients for some time (and they knew it). There is talk of criminal charges.

A reputation for safety is good for business. The industry as a whole can only be assured of this if it is effectively regulated across the board. The corollary is that a reputation for problems is bad business. This little peanut company is now causing losses to retail giants with a customer base that values safety like Whole Foods and industry giants like Skippy (whose products are not contaminated but who will suffer from reduced demand).

The food industry, like many regulated industries, reflexively opposes regulation. Now they are going to suffer for it. Not as much as the 500 plus reported salmonella cases, half of which are children, not to mention the 8 deaths associated with this salmonella outbreak.

More like this

I could be wrong, but I thought I had seen that some inspections had found evidence of contamination at the PCA facility prior to this outbreak. If that is so, then the blame can be spread further than the food processor and food industry in general.

Mark: Yes, I think we covered it in one of the several earlier posts. The FDA dumped inspection off to the State, who was short staffed but did find numerous violations when they got there. It doesn't appear that anything was done about it, though. But pulling the plug on inspections has been a goal of the anti-regulatory crowd all along and it isn't just the agencies slacking off.

That is certainly not the only benefit of regulation for business. Regulation also ensures that businesses are on an equal footing in competition. You can be assured that your competitor isn't able to engage in "illegal" activity that allows him to sell at a lower price, for example.

The problem comes with industry's perception of regulation. They equate inspection with citation, even though, if they are doing the right thing, the inspection would be nothing more than a slight inconvenience in the middle of the day.

Regulation today is a ruse whereby Industry can regulate themselves under the guise of government regulators, and protect the big boys in each industry from competition. Undue regulation and selective enforcement cripples the smaller competitors and promotes monopolies and cartels, as we see in finance (FIRE), pharmaceuticals, energy and agiculture and food industries today. It is in effect, a mechanism to protect the big boys from price competition which threaten their profits. If they can control price, then regulator costs for the big companies can be passed on.

Most regulations are written by industry insiders, and are meant to be so complex smaller companies have trouble complying with them due to high costs to employ those who can understand and to implement them, many of them not even addressing the key safety issues. Our Congressmen don't even read most of them, and most have no idea what is inside them except for those which they have a vested interest in due to pressure from the lobbyists and companies who have contributed the most to their campaigns.

In this case, sure, some companies here will fail, and the big boys, those deemed too big to fail or who are the most influential, get bigger as a result. While stuff gets recalled from time to time, most of what is recalled either got consumed before the recall, or never gets returned.

In a true competitive market with a free press and a judicial system that has not been corrupted by business, government regulation need is minimal. Sadly, this does not exist except in the fairy tales believed by so many today.

I mean, the finance industry is the most regulated industry we have, the Fed is nothing more than a private banking monopoly disguised as being under the Federal Governments control, and despite trillions in cost to the taxpayer, there is not a single call for an investigation. In fact, the solutions proposed are to give the Fed more regulatory control and the banks that own the Fed more bail out money.

It's truly an Orwellian world.

Government fraud?Roasted peanuts are roasted. Processed foods are processed. Even if Salmonella was dripping off the truck, contaminated peanut butter is an oxymoron, emphasis on moron! Just the heat of putting this product through a screw auger is usually enough to heat it to over 140F, sterilized. The private test labs, like the tomato scare (now placed at risk by the government), showed only one slightly overboard test. This means that like the tomato scare I would start looking at the peppers in the salad, i.e. we are almost certainly being manipulated, but to what end and by whom? You want to crucify a few Georgia peanut farmers, fine. Did you know rodents eat as much as half the peanuts coming out of a peanut field and contaminate it with rodent dung...&.. for hundreds of years!! Human food comes from the soil, it is dirty, full of bacteria, fungus, worms, virus, crap, and protozoa. The bigger question is why an unattenuated, super nasty aerobic disease bacteria, that normally requires water, suddenly pops up, alive, outside CIA headquarters in an anaerobic media. Real diseases rely on sickness, not death, to spread. Only when titer needs to be very high to spread, such as in venereal disease, does the bug becomes deadly.
Otherwise the genome throws unused stuff overboard, attenuates. Where is the attenuation here?

"Dr.": Unfortunately for your argument and the rest of us, Salmonella has been isolated multiple times from the product you say cannot be contaminated. Disease spread depends on the host not dying? Like Ebola, rabies, smallpox? Not that it is relevant in this case, because the disease is spread not person to person but via food. You might have heard of something called botulism. If not, there's always "The Google."

Regarding the "required" attentuation of "real" diseases:…

Did you happen to catch any of the hearing today of the Senate Committee on Agriculture, Nutrition, and Forestry concerning the contaminated peanut butter? The hypocrisy of Sen. Saxby Chambliss, ranking Republican on the Committee, going on about the collapse of our public institutions and public health infrastructure, from someone rated at zero percent by the American Public Health Association (see:… ) was not surprising, but it was breathtaking nonetheless.


You might wish to avoid using the "Dr." when commenting on things not directly relating to your doctorate.


I'm not fully sure I understand your point. You are saying that the regulatory structure needs to be overhauled, not that regulation is an inherent drag on business, right? (At least that's what I assume you mean where you talk about the "free market" being a fairy tale.)

Dr. Ed. Read the MMWR on the outbreak and the FDA inspection reports. Boxes of crackers containing peanut butter are not vaccum-sealed, nor are 5-lb tubs of peanut butter. Salmonella can survive in a high-lipid, low-moisture environment like peanut butter for over 50 minutes (MMWR). Salmonella is not a select agent as you suspect, it is ubiquitous in nature, and find a natural reservoir in many animals and insects (Poultry, dude, come on.) Roasted peanuts should be sterile, but that's not a guarantee considering the plant didn't even know at what temp the peanuts were roasting at or for how long. And finally, the roasted peanuts were stored without barrier next to unroasted peanuts, and were also stored under a leaky skylight.