April 23, 2024

F.D.A. Says Importers Must Audit Food Safety

Major food importers and consumer advocates generally praised the new rules, but the advocates also said they worried the rules might give the companies too much discretion about whether to conduct on-site inspections of the places where the food is grown and processed. They said such inspections must be mandated.

The law itself was grappling, in part, with problems that have grown out of an increasingly globalized food supply. About 15 percent of food that Americans eat comes from abroad, more than double the amount just 10 years ago, including nearly two-thirds of fresh fruits and vegetables. And the safety of the food supply — foreign and domestic — is a critical public health issue. One in every six Americans becomes ill from eating contaminated food each year, Dr. Margaret A. Hamburg, F.D.A. commissioner, estimated. About 130,000 are hospitalized and 3,000 die.

The F.D.A. has tried to keep tabs on imports, but, in reality, manages to inspect only 1 to 2 percent of all imports at American ports and borders.

The new rules would subject imported foods to the same safety standards as food produced domestically and require companies importing the food to make sure it meets those standards. American companies would have to prove that their foreign suppliers had controls in place with audits of the foreign facilities, food tests, and reviews of records, among other methods. The companies would also have to keep records on foreign suppliers. They would be allowed to hire outside auditors to make on-site inspections — if such inspections were ultimately required. The auditors would be vetted in a process approved by the F.D.A.

Consumer advocates said that the test would be whether importers were required to conduct such on-site audits, or whether that was left to the companies’ discretion, as one option proposed in the draft rules would allow. If that option becomes final it would effectively allow the industry to police itself, advocates said.

“Without more clarity, this could end up as a paper exercise,” said Erik Olson, head of food programs at the Pew Charitable Trusts. He added, however, that the rules were “an important improvement over the weak current import system.”

Michael R. Taylor, deputy commissioner for foods and veterinary medicine at the F.D.A., said the different options simply reflected an effort to be flexible regarding a very complex food supply. “We envision circumstances in which it would be required to have an on-site audit,” he said. “We are trying to — with these two different options — flesh out different ways of getting there.”

These are the last major rules needed to put into effect the Food Safety Modernization Act, a law passed by Congress in 2010 that was the first significant update of the agency’s food safety authority in 70 years. The Obama administration has been criticized for taking more than two years to propose the rules; some complained that the White House delayed acting to avoid Republican attacks, at the cost of public safety.

Some of the biggest importers, like Walmart and Cargill, praised the proposed rules and said they already do much of what they would be required to do to avoid food outbreaks that could damage their global brands.

“What we’re really looking for is a level playing field here,” said Michael Robach, vice president for food safety at Cargill. He said the company was still studying the rules to determine if it needed to make any changes.

Consumer groups said that outbreaks had persisted under the current system, and noted that a significant share of imports were brought to the United States by smaller companies.

The new rules on imports would cost $400 million to $500 million, Mr. Taylor said. The money reflects new costs, because, in the past, no one was legally accountable for ensuring safe food production before the food arrived in the United States.

Article source: http://www.nytimes.com/2013/07/27/health/fda-proposes-rules-to-ensure-safety-of-imported-food.html?partner=rss&emc=rss

LOOKING AHEAD: Looking Ahead to Economic Reports This Week

Opinion »

Op-Ed: Ending the Alimony Guessing Game

Family court judges need a formula, not just their own discretion, to avoid unfair settlements.

Article source: http://feeds.nytimes.com/click.phdo?i=cc6ac6a06d5bc3514325921c4da094a6

You’re the Boss: The Sweet Spot of Business Growth

Thinking Entrepreneur

The growth of business revenue can be steady or sporadic, and it can also reverse itself and go down. Even more complicated is profit, which does not always stay on speaking terms with revenue. Even when sales can go up, profit can go south. The reverse can also happen, which may seem counterintuitive. Let me explain.

Let’s start with bad growth, where sales go up and profits go down. This is easier to accomplish than you might think. Suppose you give your sales manager a new bonus plan — he gets 1 percent of sales, and he has full control of your pricing and discounting. He lands some big deals by discounting heavily. Sales go up a million dollars, but your expenses go up, too, and your profit shrinks. And the sales manager gets a $20,000 bonus!

In this scenario, the customers win, the sales manager wins, you lose. This happens all of the time. The answer is to keep an eye on pricing, and if you give a bonus (especially if there is some discretion on discounting) make sure it is based on profits, not sales. All of that might seem obvious, but the next example — where revenue falls but profit rises — is more subtle.

Suppose you are growing quickly, and you are starting to outgrow your infrastructure. That means you might need more space, more trucks, more computers, more equipment, or maybe a big time chief financial officer. This all costs money, and in many cases you can’t just buy as much as you need for the moment. You can’t buy half of a forklift or half of a new computer system. You have to plan ahead and buy more than you need with the idea of growing into it.

For instance, suppose you are growing at 15 percent a year, and you have a 10,000-square-foot building that’s getting tight. If you move into a 15,000-square-foot building, you will probably outgrow it in three years (assuming you continue to grow at the same rate). Understanding that moving expenses are substantial, you instead move into a 20,000 square-foot building under the theory that it should suffice for five years or more (assuming your growth will slow down eventually).

But here’s what happens: the year after you move in, you only do 15 percent more business but have 100 percent more rent plus some serious moving expenses. Surprise! You make less profit the year after the expansion, not more. Maybe the second year you get back to where you were, and in the third you make more profit. In the fourth and fifth years you make much more profit. Times are good, but now it’s time to move again. The cycle starts all over. Those years when you are nearing full capacity are what I call the sweet spot of making money. Those are the years before you decide to increase your fixed costs again.

If you want to stay in that sweet spot and perhaps make it even sweeter, there are other options. Rather than expanding your infrastructure, for example, you could eliminate poor-performing product lines to free up space and resources. Or you could just raise prices, which will slow down growth — if not eliminate it — but give you a better bottom line. That can be a better solution than spending the money to expand, especially if you would have to borrow the money.

There are many factors that might make you think twice before you start investing money to take the business to “the next level.” It could be the number of employees you are comfortable managing, the amount of inventory you want to carry, the amount of real estate you want to be responsible for, how much debt you want to take on, or how much you want to increase the size of your “nut.” With the recent volatility in business, there are plenty of business owners who wish they had kept their businesses smaller and more manageable.

There is another factor. As business owners get older, their needs and perspectives change. There is a price to pay for growing your business bigger and bigger. Some people get to a point where they conclude that they need more money less than they need more stress.

On the other hand, there are many people who need to keep growing because it is what they do. They wouldn’t have it any other way. You read about them in the newspaper everyday. Some of them are fabulously wealthy, some are going broke, some are very happy, and some are miserable. Some are suing or being sued by family members.

The sweet spot of making money could be where you have the biggest return on investment, or it could be where you are making enough money to live well (whatever that means to you), or it could be where you have no loans, no bad partners, no bad landlords and — as a result — very little stress.

Now, that’s sweet.

Jay Goltz owns five small businesses in Chicago.

Article source: http://feeds.nytimes.com/click.phdo?i=f754ca08ddcc56e253b2e6ff7bb71e77