There hasn’t been much in the way of developments since my last report on the now slowly unfolding pet food recall story. Pets continue to die, either because of the residual effects of having eaten the tainted food or because they continue to be fed it. I continue to see anti-Chinese editorials and op-eds which I think is misconceived. I’d rather see pro-due diligence op-eds (“Be responsible!”, “Do due diligence!&148;) than anti-Chinese ones (“ban Chinese goods!”). No ban can be successful without country-of-origin labelling laws and serious enforcement.
Menu Foods, the Canadian company the recall of whose products began this entire affair, is on shaky ground, having had a major order cancelled:
Still reeling after a tainted pet food scandal, Menu Foods Income Fund announced it has lost a major contract, causing investors to drive its stock down 25 per cent yesterday.
Menu Foods revealed that a “significant customer” that represented 11 per cent of last year’s sales decided to end its contract to purchase cuts-and-gravy products with the company.
In a statement released after Monday’s close, Menu Foods said the customer – identified by Cormark Securities as Procter & Gamble Co. – will continue to purchase solid canned food from the company.
The Mississauga-based company ended its tumultuous day with a loss of $1.04, closing at $3.05.
The stock is now trading at half the price it was when news of tainted pet food hit front pages across North America in March after the company said melamine-laced wheat gluten from China made its way into its product line.
The direct costs of the recall are estimated at more than $40 million. This doesn’t include either lost sales or litigation costs. There’s one notable quote from the cited article:
Robert Silgardo, an analyst with Dundee Securities Corp., dropped the company from his coverage yesterday, in light of news that the contract ended.
“It’s unfortunate, but the company has been touted as the fall guy in all of this, even though it’s been proven that the source of contamination was not at one of their facilities,” said Mr. Silgardo, who previously rated the stock as “market underperform.”
Not exactly. The cause of the deaths of cats and dogs remains, officially, unknown. All that has been determined as best as I can tell is that a Chinese exporter sold melamine-adulterated “wheat gluten” to a domestic importer which in turn sold the product to Menu Foods which used the product in making pet food. Has anybody demonstrated that melamine was the cause of the deaths? And who is responsible for what is something that has yet to be adjudicated.
Meanwhile, the official Chinese word is that everything there is under control:
BEIJING, June 13 — About 152,000 unlicensed food businesses were shut down last year under a regime of tightened inspections which helped improve food safety, a senior official said yesterday.
Official figures show that the industry and commerce administrations at various levels last year made 10.4 million inspections and uncovered problems in 360,000 food businesses – comprising food processors, distributors, sellers and eateries.
In addition to those which were banned from operation, 4,629 businesses licenses were withdrawn, and the rest ordered to correct their practises, said Li Dongsheng, vice-minister of the State Administration for Industry and Commerce (SAIC).
He did not detail the problems which surfaced during inspections.
Official figures also show that industry and commerce authorities ordered the withdrawal of about 16,000 tons of unsafe food products from the market last year. There were 63,065 consumer complaints against food, down 2.8 percent over the previous year.
That would be reassuring if we knew how many of the 152,000 unlicensed businesses started right back up again under another name, how many problems there actually were in food businesses, or how many unsafe Chinese food products there were overall. As it is there’s no way to tell whether a drop in complaints is because things are getting better, because consumers have realized that complaining doesn’t do any good, that they’re underreporting the number of complaints, or any number of other explanations.
