Peanut recall having big impact on small firms

WASHINGTON (Reuters) - The U.S. peanut industry could lose $1 billion and small businesses millions of dollars more because of an outbreak of salmonella that has forced the biggest food recall in U.S. history, members of the food industry said on Wednesday.

The salmonella outbreak, which began in September, has affected hundreds of companies and led to the recall of more than 3,200 products from crackers to ice cream. The government says 683 people in 46 states became ill after eating contaminated peanut products.

Losses will mount until it ends, said Don Koehler, executive director of the Georgia Peanut Commission. “We could see total economic losses of a billion dollars,” he told a House of Representatives small business committee.

“We are dealing with a situation of historic proportions,” Koehler said. “Rebuilding in the peanut industry cannot fully begin until the outbreak is over and the recall is complete.”

Diane Austin, vice president of Perry’s Ice Cream, said her family-run business had to recall more than 170 tons of product and so far has spent 2,100 hours on the recall.

“(Losses) will surely be in the hundreds of thousands of dollars, if not more,” said Austin, whose firm ships ice cream across much of the Eastern United States.

Illness outbreaks caused by contaminated lettuce, peppers and spinach have eroded public confidence in food safety and renewed calls for change at FDA.

Several congressional committees are examining ways to do this. President Barack Obama has promised a thorough review of the agency.

CONSUMER CONFIDENCE

Caroline Smith DeWall, a director of food safety at the nonprofit Center for Science in the Public Interest, said at another food safety hearing on Wednesday that reform hinges on prevention and not response.

“These events are causing steep declines in consumer confidence both in the overall safety of the food supply and it FDA’s ability to protect the public,” said Smith DeWall.

The FDA has pressed Congress for more funding and authority to conduct mandatory recalls, get better access to testing records and force more proactive measures by firms.

“It is clear that we cannot rely on FDA alone to prevent foodborne illness outbreaks,” said Rep. Henry Waxman, chairman of the House Energy and Commerce Committee. “Manufacturers must implement preventive systems to stop outbreaks before they occur, and we need to hold them accountable when they fail.”

There is also concern about FDA’s oversight of state inspection programs.

Republican Representatives Joe Barton and Greg Walden said in a letter to Acting FDA Commissioner Dr. Frank Torti on Wednesday the agency was not adequately monitoring these agreements. About 59 percent of FDA inspections of food firms were conducted by states in fiscal year 2008, they said.

FDA’s Steven Solomon, a deputy associate commissioner for compliance policy, said most food recalls tied to the peanuts have been completed, but the agency remains concerned about tainted products still in people’s homes.

“We can’t declare that the ... outbreak is over,” he told reporters. “Our recall activity is still ongoing.” (Reporting by Christopher Doering, editing by Maggie Fox)