When food safety is uncertain

In our third and final report about the CIES conference held in Shanghai, we focus on the issue of food safety. The title of the presentation by James Morehouse, senior partner of A. T. Kearney and in charge of their research conducted in China is “China prospering – What do you get out of it?” As 95 per cent of Chinese are concerned about food safety, an increasing number of people trust modern store types and are willing to pay higher prices. Safety is not uninterrupted however, as the refrigeration chain is still in its infancy. There is no legislation in effect to guarantee food safety and official supervision is lax. In the US, eight times as much refrigerated warehouse space is available per one member of the middle class, as in China. In the US, there are nine refrigerated trucks per ten thousand Americans, while this ratio is only two per ten thousand Chinese. The majority of enterprises which transport the produce of 250 million farmers to stores have a single truck, which is not refrigerated in general. Safety hazards make private labels and retail chains vulnerable. One third of Chinese consumers said that they stop buying products which become compromised in terms of safety, while another third stop buying the specific brand involved. One fifth .of Chinese consumers will report a food safety problem to the authorities, while eight per cent will not do anything about it. According to A.T. Kearney’s research, people in China frequently suffer from food poisoning, with the exception of the customers of large supermarkets. Safety standards based on an understanding between the food industry and the government should be introduced. Legislation should be mandatory for all market players, while investment in infrastructure should be made lucrative for private investors. According to Mr. Morehouse’s estimate, increased food safety could yield an extra USD 33 billion in revenues through premium prices, whereas a reduction in the quantity of food unfit for consumption would bring another USD 65 billion. A nation-wide supply chain would reduce the cost of distribution by USD 60 billion annually. Jeffrey M. Ettinger, CEO and president of Hormel Foods, said that it would be unfair to blame China alone for problems with food safety, as similar scandals occur in the US as well. Professor Hu Xiao Song from the agricultural faculty of a major university argued that food safety problems in China are exaggerated by the international press. However, he admitted that Chinese people in general are less conscious about food safety than Westerners.