Thursday, August 14, 2008

Olympics food safety dirty secrets

We were wowed by the Olympic ceremonies. This amazing display demonstrated how China can concentrate resources on a problem it wants to solve regardless of the cost.

Food safety was one of the big concerns in preparations for the games. Organizers worried that sick athletes or failed doping tests due to hormone-laced meat would give China bad publicity. So since 2005 there has been a massive effort to develop an elaborate system of production bases for vegetables, milk, poultry, etc., including secret pig farms where the hogs eat like kings, have to swear off drugs and get to roam around in exercise yards in accord with European animal welfare requirements.

Last year I visited the control room in northwest Beijing to see the city's food safety monitoring system. Like the opening ceremonies it was an awe-inspiring martialing of technology and "Big Brother"-type control. The wall was covered by a bank of video and computer screens. There is a massive database that allegedly contains every menu item for every restaurant and hotel in the city. Each ingredient can be tracked back through the supply chain to its supplier and farm. Little labels costing $100 each are affixed to each shipment, sending signals back to headquarters via radio frequency. The room displays real-time video from cameras showing the production floor of a poultry plant and loading docks. GPS systems tracked the route and progress of trucks bringing produce into the city as well as temperature of the goods.

As far as I know, no athletes have become ill, but the food safety problem popped up in an unexpected place--the suicide of one of China's top food safety officials. A fascinating article in the Brisbane Times reveals the dirty secrets behind Beijing's food safety system.

Mr. Wu Jianping, head of food supervision with China's AQSIQ, apparently jumped off a building (official story: he accidentally fell) after corruption investigators paid him a visit. It seems that he had a fat bank account and real estate holdings that were far beyond what he could afford on his salary.

It seems that the much-ballyhooed food tracking system that AQSIQ requires companies to use is run by a company actually part-owned by AQSIQ itself. Both producers and consumers have to pay a fee to use the tracking system. Essentially AQSIQ has awarded a monopoly to itself. What makes it worse is that the service duplicates services available already from other companies and some companies are complaining loudly about having to use it.

There are plenty of other opportunities for bribes and corruption in China's food safety system. Beijing hotels and restaurants were presented with a list of approved food suppliers that they must use. How does a company become an approved supplier? Apparently not by producing good products. One chef complained that the bacon from the approved supplier was too fatty; milk was tasteless and chili peppers from the approved supplier cost 12 times the usual price. A little cash for the AQSIQ official surely helps the application along.

China's approach to food safety features lots of lists of approved exporters, licenses, as well as "black lists" of punished suppliers. In a recent survey of corruption, one of the most common motivations was to avoid punishment like being placed on a "black list." The Brisbane Times also reported that it is customary to hire "public relations firms" to get on the list of "famous brand" companies that are so good they are exempt from food safety inspections.

There is a lot of clamoring for a better food traceability system in the U.S. following the recent salmonella scare. Those who want a rigid system of required suppliers and heavy-handed regulation should take a careful look at what's being implemented in China. Its order and technology appeals to the engineers but its rigidity eliminates the magic of competition that provides us with products so dependably and cheaply, and the system provides new opportunities for corruption.

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