Since the US Food and Drug Administration (FDA) resumed domestic surveillance inspections in February there has been a lot of speculation within the food and beverage industry, their Insurers, and various other stakeholders whether the return of inspectors will increase the number of recalls. At first glance, the recall numbers indicate that there is a good probability of this, however, a deeper dive into the numbers provides a slightly different story.
To understand the recall data, it is necessary to first understand the terminology and how the recalls are accounted for in FDA’s system. Data published is based on the US government’s fiscal year, which is October 1 through September 30. Every individual product that is recalled is counted as one recall, and recalls that stem from the same incident, such as a Salmonella contamination, are linked by an event number. If we look at the recall numbers below,we can project recalls for fiscal year 2022 to have a total of 1,767 recalls if the current trend of 147 recalls per month continues. This is an increase of 72% of total products recalled year over year.
Now if we turn our attention to recall events, there have been 39 events per month this fiscal year compared to 35.5 events per month last fiscal year. The total number of projected recalls this year would be 470 events, roughly a 10% increase from last year. While we are seeing more recalls and events, the bigger takeaway is that we are seeing more recalls per event this year.
There have been 3.75 recalled products per event this fiscal year compared to last year’s 2.4 products per event. It’s important to note this because as more products are recalled during an event, the more likely the cost of the recall is to go up, customer irritation increases, overall disruption of operation increases, and liability costs increase for firms that supply raw materials.
While a robust food safety management system is a top priority to prevent recalls, recalls happen and must be managed properly to reduce the impact on public health, and to an organization’s brand, finance, and operations. In order to mitigate the number of recalls per event, it’s important to have good traceability systems, not just of a finished product but of the raw material used for production. If one lot from a supplier is used in multiple product lines, contamination from that supplier would result in a large recall event. Understanding the risk profile (e.g., known hazards, potential to contains allergens, supplier and ingredient recall history) of the raw material being used, how many finished products would be impacted by an event, the downstream supply chain to the customer, and customer reaction to a recall are crucial to an organization’s efforts to reduce the impact of a recall.
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