This article has been taken from our IEG Policy dated 26/05/20.

The COVID-19 pandemic and related stay-at-home orders has led American consumers to turn to prepared foods, and it was precisely those foods that topped the list of recalls for FDA-regulated products for Q1 of 2020, according to new data from Stericycle Expert Solutions, an Indianapolis-based company which tracks quarterly recall data.

And while undeclared allergens remained the top reason for FDA recalls for the eleventh consecutive quarter, nearly 38% of all FDA foods recalled due to an undeclared allergen were prepared foods, Chris Harvey, Stericicyle's director of recall solutions, said a webinar on Wednesday (May 20).

"Prepared foods could be fruit bars, trail mix, graham crackers and potato chips … a lot of the COVID-19 comfort foods a lot of us are eating right now," Harvey said.

Prepared foods were also the top food category to be affected by bacterial contamination - the second most common reason for FDA's 141 food recalls in Q1.

Bacterial contamination, Harvey said, was the top reason for FDA recalls by units for the second consecutive quarter, accounting for just over 58% of the 8.8 million units that were involved in FDA food recalls in that period.

Listeria was the most prevalent cause of bacterial contamination in FDA-regulated products, impacting 24 of the 36 Q1 recalls related to contamination. And prepared foods were again the top food category impacted, both in terms of recall events at nearly 30%, but also units at 33%, Harvey said.

"In fact, nearly 28% of bacterial contamination recalls were prepared foods," said Harvey, who spoke at a webinar where Stericycle experts presented the latest trends in food recalls and warned companies to prepare for new and sometimes unforeseen challenges the COVID-19 crisis is presenting for recalls.

Speaking to IEG Policy Friday (May 22), Harvey offered further insight into FDA's prepared foods recalls, noting that the food category encompasses a wide range of products and therefore often tops the list for FDA recalls.

For now, it remains uncertain if prepared foods would spike again in Q2, which is expected to provide a clearer picture of COVID-19's full impact on food recalls, Harvey noted.

"I don't believe we can attribute COVID-19 to the increase at this point, and we don't anticipate a huge spike [in Q2] but we will keep a close eye through the second quarter and the rest of the year," Harvey said. "With non-mission critical regulatory inspections on hold and supplier audits reduced, you could expect issues to fall through the cracks. This is why it is so important for manufacturers to work very closely with suppliers on their food safety protocols."

USDA food recalls drop 99.4% in Q1

COVID-19 has likely affected Q1 recalls, though the full impact of the crisis will probably be more visible in Q2 recall data, Stericycle experts said.

Pointing to data that Stericycle shared with IEG Policy earlier this month, Stericycle experts noted a Q1 drop in food recalls for both FDA and USDA- regulated foods, noting that the 10% reduction in FDA recalls in Q1 was much more in line with past data, than what turned out to be a 99.4% decrease in Q1 USDA food recalls.

For FDA-regulated foods, 133 unique companies announced recalls in the first quarter of 2020, of which only seven announced more than one recall, Harvey added.

Recalls for USDA-regulated foods on the other hand, plummeted to six recalls in the first quarter impacting just over 22,000 pounds of meat and poultry products.

"We think it's too soon to say if COVID had an impact since our data only represents Q1, although all of those six recalls occurred prior to February 8, which would indicate a slowdown, potentially due to COVID," said Amanda Combs, a Stericycle recall consultant. "And I think April had only two recalls."

Of the six USDA recalls in Q1, four were due to undeclared allergens and more than half of the pounds recalled were due to lack of inspection, Combs added. That was largely due to one 12,000 pounds recall that lacked a foreign import inspection.

"Half of the USDA recalls impacted beef products due to wheat allergens or foreign material while seafood products accounted for more than half of all pounds recalled," Combs said.

COVID-19 creates a ripe environment for food issues to 'fall through the cracks'

Companies in the food industry have their work cut out for them during the pandemic and for probably many months ahead, experts suggested at the webinar, as they listed a whole array of challenges that are affecting businesses during the crisis - from remote workforces to supply chain disruptions, shuttered manufacturing plants, and changes in consumer buying habits.

"It is an environment we could have never planned for and no one knows the full impact this will have on near-term revenue, long-term investment, or consumer spending," said Combs. "And what's even more unpredictable is all the other ways in which reputations may be affected by this."

While these challenges are common for all branches of industry, the food industry is facing additional pressure, as consumers are hearing more about the impact of COVID-19 on the food industry than nearly any other sector, she said. As consumers watch news about meat plants being forced to close down, hearing about potential food shortages and seeing images of farmers being forced to plow down fields or dump milk, "questions are arising about whether companies are doing enough and whether regulators can be trusted," Combs noted.

"These are all topics that create and foster fear," Combs noted.

And even though there is no evidence that food is a source of coronavirus contamination, food products are being impacted indirectly by the lack or reduced frequency of inspections, she added.

"We would have to assume that things are falling through the cracks and that issues that would normally be identified are being missed," she said. "Now, if that's enough to cause a serious issue is really unknown."

Food companies should focus on the basics, speed up recall execution

Harvey stressed the same point Wednesday, stressing that a "poorly managed recall can be truly devastating in this environment, not only for your company but really the entire sector."

Yet, there are things that food companies can do to ensure the safety of products, protect consumers and their own reputations, experts stressed during the webinar.

"The key is to focus intensely on the basics," Harvey stressed. "It's too easy to assume food safety protocols, quality controls are being followed as strictly and as uniformly as they always are."

Companies, therefore, should use this time wisely to re-check the supply chain, review food safety processes and update recall plans, he advised.

Compared to other product recalls, the execution of food recalls has always been faster moving, but under the current environment, it has to speed up even more to match the unprecedented rate at which food products are flying off the shelves, Harvey stressed.

"[N]ow food products are moving in and out of stores faster than ever, so it is even more important for companies to very quickly identify issues, investigate them and quickly notify the marketplace to reduce consumer exposure," he said. "Traditionally, we have a short amount of time with perishable foods, so we recommend communicating very closely with retailers and following up very rapidly on any food safety type issue in order to reduce adverse events."

Stericycle experts also asked Bernie Steves, managing director for commercial risk at the Chicago, Ill.-based Aon Risk Services Crisis Management Practice, to weigh in on the issue and offer additional advice for companies operating the food space during the pandemic.

In response, Steves stressed that companies need to look critically at their operations and consider whether they are prepared to manage potential food safety risks in an environment in which inspections are placed on hold, travel restrictions prevent conducting regular audits of suppliers and the burden of responsibility is placed on supply chain partners.

"Not to mention that if one link in the chain goes down, you need to be ready to quickly, efficiently and safely institute new quality control measures or turn to a new supplier," Steves told Stericycle. "Could you do that? More importantly, can you trust the decision if it needs to be made remotely?"

Food companies should also remember that the pandemic has removed some of the safety nets for recalls that businesses may usually rely on, and plan accordingly, Stericycle experts added.

In addition, the crisis has impacted recall and product handling logistics as many retailers have downsized or shuttered their typical consumer care centers. Companies should also consider that it is more difficult to execute recalls in the pandemic, which makes it even more important to review recall plans and rely on focused and targeted communication with retailers.

"It's going to be important to be flexible and fluid during this time," Combs added.

Additionally, food producers should also have in mind that in the pandemic many retailers have been reluctant to accept returned products and that consumers also are less likely to take the additional risk of going to the store to return products.

"We highly recommend to take a look at your recall plan to see what contingencies need to be put in place during this time," Harvey said. "Normal logistics have definitely changed."

View more articles

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.