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SUBCOMMITTEE ON 

REGULATIONS AND HEALTHCARE 

HEARING ON IMPACT OF 

FOOD RECALLS ON SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

MARCH 11, 2009 

Small Business Committee Document Number 111-008 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

DENNIS MOORE, Kansas 

HEATH SHULER, North Carolina 

KATHY DAHLKEMPER, Pennsylvania 

KURT SCHRADER, Oregon 

ANN KIRKPATRICK, Arizona 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

DAN LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

PARKER GRIFFITH, Alabama 

DEBORAH HALVORSON, Illinois 

SAM GRAVES, Missouri, Ranking Member 

ROSCOE G. BARTLETT, Maryland 

W. TODD AKIN, Missouri 

STEVE KING, Iowa 

LYNN A. WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BLAINE LUETKEMEYER, Missouri 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

Subcommittee on Regulations and Healthcare 

KATHY DAHLKEMPER, Pennsylvania, Chairwoman 

DAN LIPINSKI, Illinois 

PARKER GRIFFITH, Alabama 

MELISSA BEAN, Illinois 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

LYNN WESTMORELAND, Georgia, Ranking 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Dahlkemper, Hon. Kathy ........................................................................................ 1 

Westmoreland, Hon. Lynn ...................................................................................... 2 

WITNESSES 

Petersen, Dr. Ken, Assistant Administrator, Office of Field Operations, Food 

Safety and Inspection Service, Department of Agriculture .............................. 4 

Solomon, Dr. Steven, Assistant Commissioner for Compliance Policy, Office 

of Regulatory Affairs, Food and Drug Administration ...................................... 6 

Austin, Ms. Diane, Vice President, Perry’s Ice Cream, Co., Inc., On behalf 

of The International Dairy Foods Association ................................................... 20 

Ambrosio, Mr. Mike, Vice President, Quality Assurance, Wakefern Food Corporation, On behalf of The Food Marketing Institute ....................................... 22 

Conrad, Mr. Ken, President, Libby Hill Seafood Restaurants, Inc., Greensboro, NC On behalf of The National Restaurant Association ........................... 24 

Koehler,Mr. Don, Executive Director, Georgia Peanut Commission, Tifton, 

GA .......................................................................................................................... 26

Vanco, Ms. Sheryl, Dairy Farmer, Bear Lake, PA, On Behalf Of The National 

Farmers Union ..................................................................................................... 28 

APPENDIX 

Prepared Statements: 

Dahlkemper, Hon. Kathy ........................................................................................ 38 

Petersen, Dr. Ken, Assistant Administrator, Office of Field Operations, Food 

Safety and Inspection Service, Department of Agriculture .............................. 40 

Solomon, Dr. Steven, Assistant Commissioner for Compliance Policy, Office 

of Regulatory Affairs, Food and Drug Administration ...................................... 50 

Austin, Ms. Diane, Vice President, Perry’s Ice Cream, Co., Inc., On behalf 

of The International Dairy Foods Association ................................................... 63 

Ambrosio, Mr. Mike, Vice President, Quality Assurance, Wakefern Food Corporation, On behalf of The Food Marketing Institute ....................................... 71 

Conrad, Mr. Ken, President, Libby Hill Seafood Restaurants, Inc., Greensboro, NC On behalf of The National Restaurant Association ........................... 78 

Koehler,Mr. Don, Executive Director, Georgia Peanut Commission, Tifton, 

GA .......................................................................................................................... 83

Vanco, Ms. Sheryl, Dairy Farmer, Bear Lake, PA, On Behalf Of The National 

Farmers Union ..................................................................................................... 87 

Statements for the Record: 

Bright, Hon. Bobby .................................................................................................. 95 

Murray, Mr. Taz, CEO, Dynamic Confections ....................................................... 96 

(V) 

(1) 

SUBCOMMITTEE ON REGULATIONS AND 

HEALTHCARE HEARING ON 

IMPACT OF FOOD RECALLS ON SMALL 

BUSINESSES 

Wednesday, March 11, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360 Rayburn House Office Building, Hon. Kathy Dahlkemper 

[chairwoman of the Subcommittee] presiding. 

Present: Representatives Dahlkemper, Westmoreland, King, Buchanan, and Thompson. 

Also Present: Representative Graves. 

Chairwoman DAHLKEMPER. This hearing of the impact of food recalls on small businesses is now called to order. From the dinner 

table to the grocery store, most Americans take the safety of their 

food for granted. But what happens when that food is jeopardized? 

Recent outbreaks of Salmonella and E. Coli have shown that, as 

much as we would like to believe otherwise, we cannot always assume the food our families are eating is safe. This past January, 

a Salmonella outbreak in peanut butter tainted a wide range of 

products, from crackers to candy bars. The epidemic killed 9 people, sickened hundreds, and kicked off one of the largest food recalls in U.S. history. 

The men and women on the front lines getting products off the 

shelves and educating consumers about which foods are safe to eat 

were small business owners. They did this not because they had to- 

-after all, they weren’t the ones who created the problem--but because they felt the responsibility towards their customers. But for 

all the good that these entrepreneurs did for customers, there is a 

very real economic side to this stepping in to do the right thing. 

Now that the Peanut Corporation of America has declared bankruptcy, small businesses are the ones left holding the bag. In today’s hearing, we will examine the effects of a food safety crisis on 

entrepreneurs. More importantly, we will look for solutions moving 

forward. 

For small firms, managing a food safety crisis is an enormous financial burden. They not only have the responsibility of tracking 

down and destroying tainted products, but they often have to dispatch costly damage control campaigns; whereas, large firms can 

often afford to retain public relations firms. Most entrepreneurs 

2 

cannot. This can be especially damaging considering the stigma attached to tainted products. 

Even foods not directly affected have been stigmatized. In the 

case of the Salmonella outbreak, jarred peanut butter sales plummeted 22 percent. Peanut butter cookies also stayed on the shelves, 

with purchases own 14.6 percent. These drop-offs have been devastating for the broad range of small businesses that sell peanut 

butter products, from 7-11 franchises to boutique bakeries. 

Food safety crises are particularly hard on small businesses. Because many of these firms operate on tight profit margins, generally between 2 and 5 percent, large recalls can mean bankruptcy. 

This is especially true for small firms that cannot afford recall insurance. 

Even companies that do have these policies are struggling to recoup their costs. Many insurance providers are now refusing to fill 

peanut butter-related claims, arguing that they are the PCA’s responsibility. 

Perhaps the most frustrating aspect of the Salmonella epidemic 

is the fact that it could have been avoided. To begin, the regulatory 

process is fragmented with different foodstuffs falling under different agency jurisdictions. These divisions prevent authority from 

properly responding to outbreaks. On top of that, agencies like the 

FDA are often understaffed and overwhelmed. 

In response to the spotty inspection system, many large businesses have taken food safety into their own hands. In fact, some 

large firms have gone so far as to hire their own private inspectors. 

Yet, this is not likely the best response to this issue. 

From the fields to the processing plant to the grocery store to the 

dinner table, small businesses are an integral part of our food supply chain. But recent recalls have made us question the safety of 

our food. And they have not only jeopardized the health of our families. They have put an important part of the small business community at risk. 

I would like to thank all of today’s witnesses in advance for their 

testimony and, with that, yield to the Ranking Member for his 

opening statement. 

Mr. WESTMORELAND. Thank you, Madam Chairwoman, for holding this hearing today and for your comments. I would also like to 

thank all of the witnesses for their participation today in coming 

up to D.C. to inform us of some of the situations and some of the 

solutions that our government is looking at. 

I would also like to thank you for having such a great topic as 

our first hearing. And so I know that we will have many more that 

are going to give us an opportunity to work together on some of the 

problems that small business faces today in our country. 

We are here today to discuss the impact food recalls have on 

small businesses, but I want to start off by saying how sorry I am 

to those who are harmed by the recent string of food contamination. It is a frightening situation. And I can’t imagine what it 

would have been like if it had happened to me or someone, one of 

my loved ones. 

Unfortunately, the origin of the contaminated peanuts happened 

in my home State. Madam Chairwoman, I am here to tell you 

today that I am very disappointed that one bad actor could have 

3 

caused such a devastating effect on so many others, but I am also 

here to tell you that we have some of the greatest, best, most dedicated farmers in the United States, if not the world. And so it was 

certainly not the intention of any crop that they had grown to get 

into the situation that we are in today. 

The Peanut Corporation of America’s lack of integrity has punished small businesses in Georgia and nationwide. Georgia’s peanut industry has taken a huge blow. And farmers and small businesses have felt the serious economic impact of this recall. 

Let me remind you farmers do business with other small businesses. And because of this, I believe we have yet to see the worst 

of the food recall. 

In these tough economic times, our small businesses cannot afford the domino effect that occurred because of bad players or because of burdensome regulation. I hope we can all learn from this 

situation and maybe reach some solutions to the problems we face. 

The safety of our nation’s food supply is a pressing issue, but it 

is important to address how government agencies work to assist 

those indirectly affected by food recalls. Government’s bureaucratic 

web, combined with the lack of resources, can often contribute to 

the regulatory burdens working against small businesses. And, as 

I have experienced in my 5 years in Congress, sometimes this is 

a knee-jerk reaction group up here, rather than proactive. 

I do not agree that placing more regulatory Band-Aids on a 

wound is the right answer. Rather, having a reactive government 

that should rely on science-based information and utilize the resources that we have for prevention. 

If Congress decides to authorize more power and money to our 

agencies, I hope to see the measures that streamline policies and 

encourage agencies to work closely with the state and local entities 

when recalls occur. 

The FDA and the USDA have an obligation to the public to address a food recall situation, reveal the source, and inform the public as quickly and as accurately as possible. I am looking forward 

to examining the ways that USDA and the FDA can assist small 

businesses who are adversely affected by these food recalls. 

Our country has been a worldwide leader in food safety measures 

imposed by a strict regulatory structure leading to the safest food 

supply in the world. However, accidents do occur. And our job on 

this Committee is to examine how these situations affect our nation’s small businesses and the public. 

I hope this hearing provides insight on the serious impact food 

recalls have on some of these small businesses and especially the 

farmers that grow the product. 

This Congress faces a great challenge as it tries to help small 

businesses survive in this recession. The timing of this recall could 

have not been worse, but I am hopeful that the work of this Subcommittee will do its part in answering this challenge. I welcome 

this distinguished panel and thank you all for your willingness to 

testify. 

With that, Madam Chair, I yield back. 

Chairwoman DAHLKEMPER. Thank you, Mr. Westmoreland. 

We will now move to the testimony from our first panel of witnesses. Witnesses will have 5 minutes to deliver their prepared 

4 

statements. The timer begins when the green light is illuminated. 

When one minute of time remains, the light will turn yellow. And 

the red light will come on when your time is up. 

Our first witness is Dr. Ken Petersen. Dr. Petersen is the Assistant Administrator of the Office of Field Operations for the Food 

Safety and Inspection Service of the Department of Agriculture. 

FSIS is the public health agency within USDA responsible for ensuring that the nation’s commercial supply of meet, poultry, and 

egg products are safe. 

Thank you, Dr. Petersen. 

STATEMENT OF KEN PETERSEN 

Mr. PETERSEN. Good morning, Madam Chairwoman and members of the Committee. I want to thank you for inviting me to appear before you today to address the Food Safety and Inspection 

Service’s recall procedures and outreach to small businesses. 

I am Dr. Kenneth Petersen, Assistant Administrator for the Office of Field Operations with the Food Safety and Inspection Service, U.S. Department of Agriculture. 

FSIS is the public health regulatory agency within the USDA. 

We are responsible for ensuring that the nation’s commercial supply of meat, poultry, and processed egg products is safe, secure, 

wholesome, accurately labeled and packaged, whether the products 

are domestic or imported. 

Industry is responsible for the production of safe food while FSIS 

continuously inspects each livestock and poultry carcass at slaughter and visits processing establishments at least once per shift per 

day. 

Regarding recalls, the purpose of a recall is to remove meat and 

poultry from commerce as quickly as possible when FSIS has reason to believe it is adulterated or misbranded. Recalls are voluntary actions taken by industry at the request of the Agency. This 

is a rapid and efficient way to determine where affected product 

has been distributed because companies are familiar with who 

their customers are and can notify them much more quickly than 

the Federal government could. Should a firm deny FSIS’ request 

for voluntary recall, the Agency has the authority to detain and, if 

necessary, seize product in commerce. 

FSIS may become aware of adulterated or misbranded product in 

commerce in several ways. We may be alerted to a potential recall 

situation by the company that manufactures or distributes the 

product, by test results from our own sampling programs, observations or information gathered by our inspectors, consumer complaints, or epidemiological or laboratory data submitted by State or 

local departments, other USDA or Federal agencies. 

FSIS is able to convene a recall committee in a matter of hours 

24/7. After recall occurs, FSIS conducts effectiveness checks to ensure that the consignees have received notice of the recall and are 

making appropriate efforts to retrieve and destroy the product or 

return it to the recalling firm. 

This past August 18th, 2008, in order to improve the effectiveness of a recall, FSIS began making available to the public a list 

of retail customers that are likely to have received products subject 

to a recall. We believe this information helps consumers lower their 

5 

risk of foodborne illness by providing more information that may 

assist them in identifying recalled products. 

FSIS’ food safety system is preventative. It is our goal to eliminate the need for recalls altogether. One way we do this is through 

education and outreach. By educating producers and manufacturers of FSIS-regulated products, we continually seek to protect public health and, accordingly, the need for recalls at all. 

Some of the most important groups that FSIS works with are the 

small and very small plants. The businesses that fall into this category have a particular need for current and frequent food safety 

information because they often lack the resources to monitor food 

safety developments from the Agency, academia, or trade associations. To address the challenges that these companies face and to 

further the Agency goals of minimizing the need for recalls, FSIS 

has initiated several efforts to work with small and very small 

plants. 

We have an action plan to deliver outreach assistance to promote 

food safety and food defense systems for small and very small 

plants. Last year, as part of that plan, FSIS established a new program office, the Office of Outreach, Employee Education and Training, to provide comprehensive one-stop assistance to owners and 

operators of small and very small plants. 

This office provides consolidated access, resources, and technical 

support for small and very small plants. Over the past two years, 

FSIS has held a series of regulatory education sessions around the 

country to deliver various topics of interest to small business. We 

intend to continue this successful effort. 

In January 2009, FSIS began holding a series of ‘‘how to’’ workshops to provide practical tools and methods for the proper application of and compliance with various regulatory requirements. These 

workshops are designed so that the small and very small plant operators can walk away from the workshop with a plan that they 

can immediately implement, such as a recall plan. 

FSIS has a variety of resources available through the FSIS Web 

site, including podcasts and access to educational Web seminars. It 

also includes access to FSIS compliance guidance that helps small 

and very small plants apply public health regulations in their 

working environment. 

In conclusion, FSIS’ system for achieving food safety is strong. 

We continually seek to protect public health. And we take this responsibility very seriously. We focus on preventing recalls at the 

plant level through inspection and outreach to producers and manufacturers of FSIS-regulated product. FSIS will work to ensure 

that small and very small businesses continue to meet their food 

safety requirements. 

Thank you for this opportunity to appear before you today. I am 

happy to take any questions at the appropriate time.[The prepared 

statement of Ken Petersen is included in the appendix at page 40.] 

Chairwoman DAHLKEMPER. Thank you, Dr. Petersen. 

We would like now to hear from Dr. Steven Solomon from the 

FDA. Dr. Steven Solomon is the Deputy Associate Commissioner 

for Compliance Policy at the Food and Drug Administration. 

The FDA regulates almost 124,000 business establishments that annually produce, warehouse, import, and transport $1 trillion 

6 

worth of consumer goods. Among other things, the FDA is responsible for protecting the public health by assuring the safety of our 

nation’s food supply. 

Thank you, Dr. Solomon. 

STATEMENT OF STEVEN SOLOMON 

Mr. SOLOMON. Good morning, Madam Chairman and members of 

the Subcommittee. I am Dr. Steven Solomon, Assistant Commissioner for Compliance Policy in the Office of Regulatory Affairs at 

the U.S. Food and Drug Administration, which is part of the Department of Health and Human Services. 

We appreciate the opportunity to provide you with information 

about how we manage the recall of FDA-regulated products that 

can harm consumers, including the ongoing recalls related to peanut products made by the Peanut Corporation of America, or PCA. 

As you know, these products have been the source of a foodborne 

illness outbreak caused by Salmonella Typhimurium, which as of 

March 8th has infected 683 people in 46 states and may have contributed to 9 deaths. 

One of the key messages that FDA has been emphasizing over 

the last few years is that all food companies, both large and small, 

should establish strong food safety programs. It is critically important for these companies to understand the supply chain for the ingredients they use in their products and to have accurate information about the safety and quality of their ingredients. In a complex, 

global market, this may require close interaction with many critical 

components throughout the food supply chain, including growers, 

manufacturers, distributors, retailers, food service providers, and 

importers. 

When a marketed product presents a public health hazard, 

promptly recalling that product is the most effective means of protecting the public. For food products, with the exception of infant 

formula, FDA does not have the authority to order the recall of a 

food or dietary supplement. In most cases, companies recall their 

products voluntarily. FDA believes that the prompt removal of 

volatile products from the marketplace is in the industry’s and the 

public’s best interest. 

As illustrated by the recent events, a recall initiated by one company can sometimes have repercussions for a very large number of 

businesses that receive those products or ingredients. 

In most cases, the recalling firm and FDA work collaboratively 

to develop a recall strategy. Early communication helps to ensure 

that violative products are removed from the market quickly, which 

can help to minimize the adverse impact on affected businesses. It 

also allows FDA to determine the steps needed to address specific 

circumstances, which may include making certain that all products 

that need to be recalled are, in fact, recalled; locating the product 

subject to the recall; identifying the cause of the problem; and 

checking similar firms or products to determine if the problem is 

more widespread. Rest assured that FDA is sensitive to the impact 

on small businesses caught in a recall scenario. 

FDA is committed to working recalling firms to effectively and 

promptly remove volatile products from the marketplace. And we 

have a variety of mechanisms in place to achieve this goal. For exVerDate Aug 31 2005 15:57 Mar 27, 2009 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\47797.TXT DARIEN
7 

ample, FDA has field recall coordinators located throughout the 

country who act as the point of contact for recalling firms and 

works closely with them throughout the process. 

Recall coordinators help firms develop an effective recall strategy, review a firm’s letter to customers affected by the recall, and 

coordinate the destruction, reconditioning, and disposition of recalled product. 

FDA has also developed model press releases that firms can use 

to inform the public about a recall. These model press releases help 

ensure that critical information about the recalled product is accurately and appropriately conveyed to the public. 

For recalls of widely distributed products, FDA recently developed a searchable database for its Web site to help the public and 

recalling firms identify recalled products. The database can be updated daily with important information, including brand name, recalling firm, UPC code, size, and product description. 

In the recent peanut outbreak, there have been over 3 million 

hits to date on the site. In this outbreak, we learned of at least one 

small business that used the searchable database to identify a recalled peanut ingredient product that the business had used in its 

finished product. The firm initiated a recall of its own products, 

even before receiving notification from its supplier. 

As discussed in more detail in my written testimony, the agency’s 

investigation of the Salmonella Typhimurium outbreak associated 

with PCA’s peanut products resulted in a series of recalls that 

began on January 20th with products made in the Blakely, Georgia 

facility. Since then the scope has expanded as we identify companies that use PCA’s products as ingredients in their own products. 

On February 12th, the State of Texas issued an emergency order 

directing PCA to cease the manufacture and distribution of all food 

products at the Plainview, Texas facility and issued a mandatory 

recall order for all products manufactured at that plant. 

On February 20th, PCA issued a statement that it had filed for 

chapter 7 bankruptcy and would no longer able to communicate 

with their customers about recalled product. As a result, FDA is coordinating with Texas officials to notify customers that received 

product from the Texas facility and follow up with these companies 

as needed. 

Many companies that received recalled product from PCA have, 

in turn, conducted voluntary recalls themselves. These companies 

use recalled PCA products as ingredients in their own products, exponentially increasing the scope of the recall. 

FDA continues to work to identify products that may be affected 

and to track the ingredient supply chain of these products. The 

facts of this outbreak as well as our experience with other outbreaks highlights the need to enhance FDA’s statutory authority to 

protect consumers from foodborne outbreaks. 

We are currently reviewing with the Department of Health and 

Human Services the agency’s prior legislative requests to strengthen our ability to protect Americans from foodborne illness. 

Food safety is a priority for the new administration. One of the 

areas under discussion is mandatory recall authority, which would 

be a useful tool in some circumstances to effectuate removal of implicated product from Commerce. We are also discussing the need 

8 

for new or enhanced authority for FDA to require preventative controls, exercise enhanced access to food records during routine inspections, and require food facilities to renew their registrations 

more frequently and modify the registration categories. 

Thank you for the opportunity to discuss FDA’s recall process. 

And I would be happy to answer any questions you may have.[The 

prepared statement of Steven Solomon is included in the appendix 

at page 50.] 

Chairwoman DAHLKEMPER. Thank you, Dr. Solomon. 

I would like to stay on the subject that you just finished discussing, the actual recent contaminated peanut product recall. 

Let’s go back to the beginning because I think we all know that if 

we can stop a contaminated product from even leaving or even 

being produced, we’re going to save a lot of money and we’re going 

to save a lot of small businesses a lot of financial burden, a lot of 

headaches. 

So as we look at this entire scenario of what happened at the 

Peanut Corporation of America, what regulatory failures led to this 

incident? Can you give me some specifics about exactly what could 

have been done to prevent the scenario from happening? 

Mr. SOLOMON. Thank you for the question. So this facility at 

PCA we have now uncovered through the subsequent inspections 

that they knew about some problems associated with Salmonella in 

this facility. 

FDA does not have routine access to those type records. In fact, 

we had to issue some authorities we have under the Bioterrorism 

Act that Congress passed previously a request to actually get all 

of the records from the firm. In order for us to get those type 

records, we need to be in a situation where there is a significant 

consequence or adverse health effects, so a very severe outbreak 

situation in order for FDA to have access to those type records. So 

that is one of the requests when I just mentioned some of the authorities we are looking at is routine access to such records is one 

of the aspects that we think would be important. 

The other issues relate to our request. FDA issued a food protection plan last year and is looking for greater preventative controls. 

We all recognize that recalls are a reactive piece. And we all want 

to get into the preventive controls aspect. 

So right now there are GMPs that apply, but trying to analyze 

what the hazards are in different type facilities and then how you 

control those hazards is not one of the controls that are currently 

done in this type facility. We do do those types of controls in the 

area of seafood and juice controls. So one of the other areas is 

greater preventive controls we are looking for. 

Chairwoman DAHLKEMPER. So no physical? A lot of the inspection is visual when you go into these plants at this point? 

Mr. SOLOMON. It is records. It is a visual examination. And it is 

a sampling. 

Chairwoman DAHLKEMPER. Okay. So you do do sampling? 

Mr. SOLOMON. We do do sampling. What we have learned from 

these is that traditionally a product like a peanut butter manufacturer is a plant that has a very dry environment. And dry environments don’t allow, really, for the growth of bacteria, like Salmonella, traditionally. 

9 

We have learned through the previous ConAgra and this recent 

one that the introduction of moisture into a dry plant allows for the 

opportunity of these bacteria to grow. So that has changed our 

inspectional approach. 

And what we would like firms to be doing is doing a lot of environmental testing because testing finished product does not give 

you the entire answer because the bacteria only periodically develops into finished products. So extensive controlling of your environment, making sure that it stays in a dry environment in the case 

of a plant like this, are critical to try and control those hazards. 

That is part of the kind of preventive controls we are looking for. 

Chairwoman DAHLKEMPER. Because I am just trying to understand. You know, I have a background. I was a dietician for over 

25 years. So I have been in lots of facilities where food has been 

produced or food has been served. And knowing that visually you 

have to do physical testing to be able to really see if there is some- 

-you can look at a doorknob and it looks fine, but we all know what 

could be on a doorknob. 

So that is what I guess I am getting at. You know, what kind 

of physical testing is being--there is really no mandatory physical 

testing at this point or-- 

Mr. SOLOMON. There are no controls required on the farms to do 

that type testing. That would be part of a more elaborate preventive control program. 

FDA’s inspectional approaches do include environmental testing. 

So when you go into such facility--and we did it during the recent 

inspection of PCA--taking several hundred environmental samples 

to try and understand what type of bacteria pathogens may be in 

such a facility, in addition to looking at testing some of the finished 

products, but to-- 

Chairwoman DAHLKEMPER. And that was after the fact? 

Mr. SOLOMON. That was after the fact. 

Chairwoman DAHLKEMPER. Okay. So prior to that, I am just trying to get down to the basics on any food production company. It 

is all really up to them in terms of what they do in terms of physical testing. And FDA comes in and does mostly visual testing, 

looks at records? 

Mr. SOLOMON. We have changed our procedures into doing more 

and more environmental testing when we learn the unique conditions, such as a plant. So we are now going through all other 

plants similar to PCA and having an inspectional approach to do 

fairly extensive environmental testing, finished product testing, in 

addition to records and the observations. 

Chairwoman DAHLKEMPER. Okay. Thank you. 

Dr. Petersen, last year we had the contaminated beef recall, 

which also had a crippling effect, I think, on many small firms. In 

this particular case, it was the humane society, not FSIS, that 

alerted the public to the violations, which led to the recall. 

How did FSIS miss these violations? And what specific steps 

have you taken to ensure that this does not happen again? 

Mr. PETERSEN. Okay. Thank you. 

Well, the situation that you mentioned is at the Hallmark facility 

in Chino, California, where we saw a video of just outrageous treatment of cattle at a slaughter plant. It was quite troubling, certainly 

10 

for me, that that occurred at a federally inspected slaughter plant, 

certainly was troubling to Congress, and obviously the public. 

And you asked the right question, how did this happen? I 

thought you were there every single day. We have done some investigation. The Office of Inspector General actually did a follow-up investigation. And they had a couple of observations. 

One was that there were deliberate actions by that firm to bypass inspection. And that is still the subject of some investigation. 

They also found that there was some noncompliance by my inspectors with them executing their required inspection procedures. 

We thought at the time and we had no reason to believe at the 

time that that was anything other than an isolated event. And the 

OIG report from this past November did say and basically quoting, 

that the events at the Hallmark facility were not evidence of a systematic failure of the inspection procedures. It was a constellation 

of very, very bad events that occurred in that particular facility. 

We have implemented several things, actually, quite a few 

things, some of which from OIG and some of which we initiated in 

advance of their report. 

We looked at, how did my supervisory structure allow some of 

my inspection behaviors to occur? They should have been tracking 

these employees on a more close basis, particularly my veterinarian 

in that particular plant. That veterinarian supervisor should have 

had a better understanding of what they were doing. 

So we introduced a new layer of--not a new layer but a new level 

of structure, organization, to how they assess the performance of 

those veterinarians and inspectors on an ongoing basis, structure 

where it is documented and other people in the supervisory chain, 

including myself, can follow up and see what is happening. That 

is all populated in a management control system. 

Then we looked at training, training of the workforce. Had we 

really trained the workforce to identify some of the low-level behaviors at the Chino plant, I think if they had identified some of those 

behaviors by the plant early on, then they would not have gotten 

to this egregious activity, you know. 

And if we introduce the regulatory sanctions earlier, then obviously the point of that is to deter behavior. And so we have reinforced our training, pushed that out, as well as reinforced the accountability for enforcing inhumane activity at slaughter plants. 

And last year we did quite rigorously enforce inhumane handling 

at a variety of slaughter plants across the country. 

That plant I think is not typical of the industry. And we recognize that. But it is typical of a very, very significant problem. 

The recall was massive, as you suggested. It is the largest recall 

we have ever had. It was really not a safety-related recall. It was 

that, as I mentioned, proper inspections were not done because the 

plant had found a way to bypass those inspections. So the food was 

recalled because of a regulatory violation. The product has to be inspected. And in that case, on certain days, it was not. 

That recall went all the way down the food chain, including to 

a variety of school lunch programs. And many small businesses 

were affected. It is surprising how product coming out of one plant 

can touch many, many businesses. But it was important, we felt. 

11 

And obviously we looked at the scope of the recall and looked at, 

were there ways to mitigate it. We, at the end of the day, did feel 

that the scope of that recall, as massive as it was, was the right 

thing to do for the public, in spite of the consequences. 

And so we did get a lot of that product back, but it did have a 

significant impact on a variety of retailers, small firms, school 

lunch programs. And my goal is, with these new measures we put 

in place, that we will not see anything nearly as sweeping as that 

in the future. 

Chairwoman DAHLKEMPER. Any idea what the cost of that recall 

was? 

Mr. PETERSEN. Well, the cause-- 

Chairwoman DAHLKEMPER. No. Cost. 

Mr. PETERSEN. Oh, the cost. No. But it is 143 million pounds. 

That dwarfs any other recall we have ever done. Well over 10,000 

businesses and stores were affected. I don’t have a cost on it, no. 

Chairwoman DAHLKEMPER. I don’t think any of us ever will, but 

I think the issue we are trying to look at here today is how can 

we prevent these massive recalls from happening. I think we are 

always going to have some incidence of a recall, but how can we 

prevent these massive recalls. 

So what you have in place right now you think will help to prevent this kind of a massive recall? 

Mr. PETERSEN. Well, we are not going to stand still. We think 

what we put in place mitigates and goes a little bit beyond what 

occurred. And obviously we are transposing that to all of the other 

facilities that we regulate and then following up in a more timely 

manner with folks to make sure that they are doing what you and 

others expect them to be doing. 

Chairwoman DAHLKEMPER. Okay. Thank you. 

I wanted to ask you both a little bit about private inspections 

versus government inspections because there has been kind of a 

movement towards industry hiring their own inspectors. And, as 

we look at that, maybe if you could address that and what you see 

as the role of a private inspector versus a government inspector. 

Mr. SOLOMON. During my testimony, I talked about trying to understand the supply chain. That is really critical. And as the 

globalization of our food is changed, it is important for firms to be 

able to try and understand that supply chain. I think a response 

is many of them do hire various private auditors to go help them 

inspect that. 

I don’t see that as a substitute for government oversight and regulation. I think that needs to happen, too. But I think some companies put in additional requirements. And some of these auditors are 

looking at those. 

FDA is conducting a pilot right now of looking at third party inspections and the value of that. We are actually looking at it more 

for imported products. But it needs to be very closely structured. 

There need to be very clear standards established for any third 

parties that we need to be controls for conflict of interest. There 

needs to be auditing of it. 

So we are very carefully running a pilot right now to evaluate 

the value of third parties, particularly in the import environment. 

Chairwoman DAHLKEMPER. Dr. Petersen? 

12 

Mr. PETERSEN. For the laws that USDA implements, here basically the Federal Meat Inspection Act, Poultry Products Inspection 

Act, and the Egg Products Inspection Act, inspection shall be done 

by government employees. And so our role, in fact, our legal obligation, which is a little different than FDA’s, is to find the product 

acceptable before it leaves the plant. And so that is a big resource 

issue. 

Now, private businesses have a variety of third party auditors, 

as Dr. Solomon mentioned, that can assess quality factors, food 

safety factors. And sometimes, of course, a lot of the times, they assess customer specifications. 

If those third party audits involve food safety decisions, then we 

can have access to those records. And we do that. We do assess 

some of their findings and, if necessary, marry them up with our 

findings. 

But for us the Federal role to find a product safe in the meat, 

poultry, and egg product sector, that is our primary role. And I 

don’t see a role without some legislative change, which we are not 

pursuing for other inspection people. 

Now, certainly we partner with our State partners, local partners, who are authorized to do some of these inspections, but a private entity we don’t see that on the board. 

Chairwoman DAHLKEMPER. Thank you. 

Dr. Solomon and Dr. Petersen, the Regulatory Flexibility Act requires Federal agencies to consider the impact of regulations on 

small firms. In crafting effective policies, it is critical that we do 

not forget the needs of entrepreneurs. 

How do your agencies collaborate with small businesses? And can 

you give me an example of a specific rule that was influenced by 

the input of entrepreneurs? 

Mr. SOLOMON. As you note, on every regulation, there needs to 

be a regulatory assessment that takes place, economic analysis of 

what that is. I can’t give you off--many of these regulations have 

had various input from--when we go through the notice and comment rulemaking process, we accept a lot of input from small businesses as well as large businesses. And that influences how those 

final rules come out. 

And there are a number of rules--we can come back to you with 

specifics--where there have been various exceptions, either an implementation of the regulations or some exceptions for small businesses on some of those regulations. 

Mr. PETERSEN. Of course, our key interest is food safety, and so 

if there are food safety lapses in a very small plant, those lapses 

can obviously make a consumer as sick as any lapse in a large 

plant. So our starting point is food safety, making sure that they 

meet the regulatory obligations. 

But we recognize the impact of regulations can certainly disproportionately impact small and very small firms. And, as I indicated in my testimony, we have a rather aggressive outreach to 

really communicate with our small and very small plants that we 

regulate, find ways to get them the information that they need but 

get it in a way that is useful to them. But at the end of the day, 

they do have to meet their food safety obligations. 

13 

We have and, as Dr. Solomon mentioned, any regulation that is 

proposed and finalized under the Administrative Procedures Act 

would require us to consider the economic impacts of that rule. 

The best example I think I could give was about 10 years ago we 

implemented one of our most significant regulatory changes, what 

is called HACCP, Hazard Analysis Critical Control Points, a preventive approach to food safety. That had a 3-year implementation 

plan, where the largest plants started first; then small plants, 

which we consider 10 to 500 employees; and the very small plants, 

which are less than 10 employees, plant employees, implemented 

last. And so there was a kind of sequential way so they could get 

the information, make any adjustments they needed, but then at 

the end of the day, they did have to implement their responsibilities. 

Chairwoman DAHLKEMPER. Thank you. 

I will now yield to Mr. Westmoreland, but before that, I would 

like to recognize that we have been joined by Representative Buchanan and Representative Thompson. Thank you. 

Mr. WESTMORELAND. Thank you, Madam Chair. 

I would like to ask Dr. Petersen, have you ever had an inspector 

in the PCA plant in Blakely? 

Mr. PETERSEN. The Department has, but it is important, I think, 

to kind of distinguish inspectors, which, of course, is what we think 

of in the Food Safety and Inspection Service, with contracting procurement verification. So I wouldn’t say there was so much an inspector from the Department, but there was somebody in the plant 

yearly. 

The last time was in September of 2007, really verifying their 

contractual specifications, a more systems assessment, rather than 

being on the floor and looking for whatever was going on in that 

plant. 

Mr. WESTMORELAND. Was everything in order while your inspector or compliance officer or whatever you want to call them at the 

plant, was everything in order then? 

Mr. PETERSEN. In the September ’07 visit, yes. There were no aberrant findings that we are aware of. Earlier in the 2001, I think, 

2002, there were some minor findings. And they were shared with 

the appropriate regulatory bodies. 

But in the recent past, there was nothing. This is folks involved 

with what is called our Farm Services Agency, who is the procurement body, did not find anything as of September 2007, which is 

the last time they were in there. 

Mr. WESTMORELAND. So they don’t really get there once a year 

if that was the last time they were there, of course. So it’s not a 

yearly visit. How often is it? 

Mr. PETERSEN. Well, their obligations for their frequencies I am 

not personally aware of. We can certainly get you that. I do know 

that going back to 2001, they were in the plant about 10 times and 

a handful of times, certainly less than half of those times, did they 

find minor sanctions, such as some insects that had to be controlled 

and that kind of thing. 

Mr. WESTMORELAND. We are trying to get a little comfort here 

from the Food Safety and Inspection Service about the reliability. 

14 

I mean, listening to your testimony, we are supposed to think that 

you are providing us some type of protection. 

If you are telling me that they were there in ’07, nothing was 

wrong, and now we have had this major recall and you weren’t 

there in over a year, how comfortable are we to fill this number of 

employees that you have and evidently this small plant program 

that you were touting, I guess? I mean, is this something that we 

are working on? 

I mean, this plant and the plants of PCA, all 3 plants, provide 

less than 2 and a half percent of the peanut butter or products that 

are used in this country. So to me, it is a relatively small thing. 

So how much protection are we getting there? 

Mr. PETERSEN. I will say for the commodities that we are directly 

responsible for regulating through our statutory authorities, meat, 

poultry, and egg products, you should have and you should expect 

a very high level of comfort with the mission that we are executing 

with the resources that we have in those facilities. 

We do not have jurisdiction. We have no legislative authority-- 

that is an FDA responsibility, and I know they embrace it--for 

other commodities, such as in this case peanuts. 

Now, we are looking at--I mentioned the procurement people. 

Some government person is going in there. Should they have other 

training or whatnot to-- 

Mr. WESTMORELAND. Who would that have been from the government that should have been in that plant? 

Mr. PETERSEN. Well, for us, for USDA, as I indicated, it would 

be our contracting official who was looking at the contract obligations. And through the investigation, of course, they found some of 

the attestations by that firm were not what they were claimed to 

be. 

Mr. WESTMORELAND. When was the last time a USDA inspector 

was in there or somebody stationed there? 

Mr. PETERSEN. Nobody was stationed there. Again, the last time 

a contracting person would have been there--but they are obligated 

to make sure they are following their contract. The last time a 

USDA person was in there looking at their contract was in September of 2007. 

Mr. WESTMORELAND. So do they look at what is going on there 

through mail that they receive in their office, wherever that might 

be? 

Mr. PETERSEN. The details of how they verify the contract I don’t 

know, but we will certainly get you-- 

Mr. WESTMORELAND. I will certainly look into it because it 

sounds like somebody may have missed something. The other thing 

I wanted to ask you about, the recall and how it goes about, well, 

I will ask Dr. Solomon this because you were talking about the recall and I guess you have a Web page and you put something out 

on the recall. 

Rite Aid just had a recall, I think, last week of some of these peanut products. Rite Aid is a pharmacy that I do business with in 

Hogansville, Georgia. Why would they have waited so long to do a 

recall? 

And I think that either you or Dr. Petersen mentioned that you 

know who has bought these products and who is using it and who 

15 

is using it in their food processing, I guess. Why would it take so 

long to do the recall? Because as these recalls are stretched out, it 

makes it more severe to small business, I mean, if it was a onetime operation. 

Second point is from the FDA, I think you all had issued a statement that it was very unlikely or not likely at all that this was in 

I guess Jif or Peter Pan or the jarred peanut butter. Now, is that 

true or not true? 

And you can answer in any other you want. 

Mr. SOLOMON. Thank you for the questions. I will take the second one first. The name brand peanut butters, there has been no 

contamination. They didn’t purchase any of the products from PCA. 

And so we have made that statement, put that out on the Web. 

Mr. WESTMORELAND. Okay. Let me point this out. Madam Chair, 

I think this is important from a small business standpoint especially. You spend as much time and effort putting that out as you 

do the other stuff because I think that is important because some 

people just see that there is peanut butter contaminated and they 

quit buying peanut butter. I think if you would spend as much time 

and effort saying, ‘‘Look, these products did not buy any of the 

stuff. These are okay,’’ you know, especially with some of your 

major brands, that would be something that you might want to 

look at. 

But go ahead. I am sorry to interrupt you. 

Mr. SOLOMON. Well, we did do many, many media calls and post 

on our Web information. And we do agree our responsibility is to 

make sure that contaminated product is taken off, but we also 

know that peanut butter and other products we regulate are nutritious and valuable commodities. So we also do try and assure people in the safety of products where we know they are safe. 

Related to--your first question again--I’m sorry--related to? 

Mr. WESTMORELAND. Well, I guess when did you have an inspector out there? I mean, does the FDA have any type of inspection 

into some of this food safety that goes on in the plants? 

Mr. SOLOMON. We do. FDA had an inspector in this plant back 

in 2001. And then we have had contract arrangements with the 

State of Georgia that does work on our behalf. And they had inspectors in that plant in 2006 and 2007 doing the work for FDA. 

And then the State of Georgia also conducts inspections in this 

plant. And I believe they have had an inspector in this plant 

around 7 times in the last 2 years or so. 

Mr. WESTMORELAND. So who you are contracting with is not necessarily an independent or a private contractor but could be a state 

or a local agency? 

Mr. SOLOMON. That is correct. We have contracts with 43 states. 

We provide training to those states. And they follow the same protocols and procedures that FDA uses. And the State of Georgia did 

conduct inspections for us in this PCA facility. 

Mr. WESTMORELAND. And one last question, Madam Chair, to Dr. 

Solomon. These testing facilities because, if I understand it correctly, some of this paste was sent to different testing facilities and 

that some of it had come back with a Salmonella as positive. But 

the test kept going forward until somebody said, ‘‘No. There’s no 

Salmonella.’’ 

16 

Now, what type of oversight do you all have over these testing 

facilities? And what type of responsibility do you have or safeguard 

to make sure that those tests are correct? And what type of authority do you have to punish some of these people that may give some 

false tests or evidently in this case a bad test? 

Mr. SOLOMON. FDA doesn’t have authority over private laboratories. These laboratories had a contractual relationship with PCA. 

They sent them samples. We have no information that any of the 

tests done by the private laboratories had any problems with it. We 

have reviewed those tests and their testing assessment, testing 

protocols seem to be valid that we are using. 

That information goes back to PCA. And, as I mentioned before, 

the issue there becomes we are requesting additional access to 

records so that when we did an inspection, we could actually have 

access to those records of test results they got back from these laboratories. 

Mr. WESTMORELAND. Thank you. 

Madam Chair, that is all I have. 

Chairwoman DAHLKEMPER. The Chair now recognizes Mr. Buchanan for 5 minutes of questioning. 

Mr. BUCHANAN. Thank you, Madam Chair. 

I wanted to switch from peanut butter to tomatoes. I represent 

a part of Florida, Manatee County, which has 40 percent of the tomatoes grown in that county. Dr. Solomon, let me ask you. Last 

year the FDA devastated our growers in my district by issuing an 

alert only to find out later that the problem was associated with 

peppers, not tomatoes. 

What guidelines are in place to alert the public regarding legitimate safety concerns without needlessly hurting growers? 

Mr. SOLOMON. Thank you for that question. The outbreak that 

you are talking about, we need to understand how the current safety system works. When people get sick, they generally go to a doctor. That information then, they may get cultured that they have 

a Salmonella. In this case I think it was Salmonella St. Paul was 

the outbreak. 

Mr. BUCHANAN. Yes. 

Mr. SOLOMON. That information goes to a state public health laboratory. That information then goes to the CDC and is put into a 

database called PulseNet. Then CDC when they see a cluster of 

these, that there seems to be something unique going on in the nation, works with the state and local public health agencies to try 

and get a food history, to try and determine what product may 

have caused this outbreak. 

The assessment from CDC and the states from the initial part 

of this outbreak is that the implicated products were tomatoes. And 

so they alerted FDA to that concern that appears to be a rise in 

the Salmonella St. Paul, several different states, an outbreak. 

These are all matching. And the people all report a common source 

as tomatoes as one of the source. 

Now, when you think about it, obviously going through that process of several weeks of testing, going to the doctor, having those 

tests analyzed, getting into a system, and then going back and having CDC or the state try and determine the product is a difficult 

recollection issue for folks. So they try and add additional case conVerDate Aug 31 2005 15:57 Mar 27, 2009 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\47797.TXT DARIEN
17 

trol studies to try and match up and get statistical evidence about 

what product was implicated. 

The initial case control studies also showed that tomatoes appeared to be the most likely vehicle. At that point in time, the decision was made to issue alerts from areas that we knew that tomatoes were being harvested at that period in time. 

Mr. BUCHANAN. Just in our case, it cost our growers millions of 

dollars and a lot of jobs in our local economy, which leads me to 

the next question, Dr. Petersen. Under what circumstance is it appropriate for the Federal government to reimburse growers for 

losses associated with false alerts? 

Mr. PETERSEN. At least on the meat, poultry, and egg side, if we 

execute a recall, meaning the plant agrees to do a voluntary recall 

in lieu of me containing and seizing their product, on the meat and 

poultry side, there is no provision for reimbursing them for executing that recall. 

Our focus is on at that point there is problematic product in the 

marketplace. It could be product that can make people sick. And 

we need to get it back. 

This did come up in the Hallmark situation. And we looked at 

any provisions or other reimbursement provisions. And for the 

packers, for the processors, there are no provisions. 

For farmers, at least on the livestock side, there could be provisions. And we looked at this several years ago in what was then 

the melamine issue. 

Mr. BUCHANAN. I am looking for tomato growers. 

Mr. PETERSEN. Yes. As far as reimbursing tomato growers, I 

would have to ask Dr. Solomon. That is under his purview. 

Mr. BUCHANAN. Okay. 

Mr. SOLOMON. FDA does not have any authorities in relation to 

reimbursement for products. 

Mr. BUCHANAN. But it does appear if it’s something that egregious there should be some consideration because in our case, I 

know personally. I have been through these packing facilities and 

talked to these farmers. And they’re talking millions of dollars because of these early alerts basically lost most of their crop an opportunity for that reason, which, you know, many of them live from 

week to week or month to month. So it was a huge economic impact in our area. 

And I think there should be some consideration. I don’t know if 

this crosses a line. I think it does but in a case where the federal 

government makes a mistake or potentially a mistake. 

Mr. SOLOMON. We have understood that. And Congress has held 

previous hearings on that subject before. 

Mr. BUCHANAN. Thank you, gentlemen. 

Chairwoman DAHLKEMPER. The Chair now recognizes Mr. 

Thompson for 5 minutes. 

Mr. THOMPSON. Thank you, Madam Chairwoman. 

This maybe was answered at some point, but in terms of the 

trend line, just from food recall incidents, are we on a level play, 

decreased, increased level of incidence? 

Mr. SOLOMON. For FDA, it has been probably relatively level for 

what we call a class I recall. We have been running around 350 

18 

class I recalls for the past several years. Obviously this recall when 

we look at ’09 statistics will have a tremendous increase. 

Mr. PETERSEN. On the meat and poultry side, they have really 

leveled off the last couple of years. Our high-water mark, which is 

really a low-water mark, was back in 2002. We were at about 120 

recalls. There were some major E. coli-related recalls, Listeria-related recalls that year. 

Through working with plants, having them understand what 

happens when we take a test, that they have the opportunity to 

hold the product when we do that so there is not a recall, the numbers now have been flat for the last couple of years, in the mid 50s, 

55 or so, every year. 

Mr. THOMPSON. Okay. Dr. Petersen, you mentioned with the 

meat and meat-processing facilities, the FSIS, have they taken 

steps to update the requirements for the meat-processing facilities, 

specific hazards analysis, critical control point plans? 

Mr. PETERSEN. They raise, well, several things. As I mentioned 

in the opening, the plans are required for meeting their regulatory 

obligations. But for the small and very small plants, we think we 

are a good vehicle for them to provide them some information, provide them avenues for information. And so we have a lot of outreach activity where we go to them, provide them materials that 

we think can help them update their plans. 

Sometimes when there are true changes in the system, such as 

a spike in E. coli that has happened in the last, really, beginning 

of 2007, the plants are obligated to reassess what they are doing. 

Do they still have the right controls? Are they working? And are 

they tracking them correctly? 

And they do that, but we work with particularly the small and 

very small plants because of their resource limitations, give them 

the information to be successful, but at the end of the day, it is 

their obligation to be successful. 

Mr. THOMPSON. Thank you. 

Madam Chair, I yield back my time. 

Chairwoman DAHLKEMPER. I just have one other question for you 

before we finish up this panel. And that is regarding looking at all 

of our federal agencies which administer at least 30 different laws 

related to food safety, 15 agencies. 

Often people refer to this as a very fragmented, inconsistent, ineffective, and inefficient way to look at food safety. And I truly believe that this is one role of government: to ensure the safety of the 

citizens. 

So would it ultimately be more effective--and you can both answer this--to create a single food safety agency? 

Mr. SOLOMON. Obviously the new administration has not had an 

opportunity to weigh into that discussion. I will say we work very 

closely with the other agencies. Dr. Petersen and I have worked together for many, many years. We have MOUs with each other. We 

have notified each other, for example, in this particular incident, 

about recalls, about peanut products that may have affected USDAregulated products. 

We exchange information. When we go into a facility that may 

have a USDA-regulated product that we have sampled, we notify 

19 

them. Similarly, they do the same. We conduct some joint operations. We work closely on food defense issues. 

So I know the administration has got this under consideration. 

Mr. PETERSEN. I will echo the information sharing, the collaboration. Now much of that is on a personal level. I know Steve and 

I have talked over holidays and when there is something that 

needs to be resolved. And so those discussions do occur. 

There is a variety of, as you are no doubt aware, some legislative 

proposals. We are certainly interested in those. Our new Secretary 

Vilsack has expressed an interest in looking at that very issue. And 

so we are going to certainly give him the information he needs. 

But as far as a recommendation, a position, frankly, for us, it 

would be a little preliminary. But I understand the concern, where 

the way it is implemented, does it make sense to have all of these 

different players, particularly to the extent that there are any overlapping authorities in today’s climate? That may not make the 

most sense. 

Chairwoman DAHLKEMPER. You two have known each other for 

a long time. You talk back and forth. But what about when one of 

you leaves? 

Mr. PETERSEN. Yes. 

Chairwoman DAHLKEMPER. You know, just a thought there. 

Mr. WESTMORELAND. I have just got one last question for both 

of you. I am assuming both agencies have looked this meat recall, 

the tomato recall, the peanut recall. Have you all changed any of 

your policies? And has anybody with either one of your agencies 

been disciplined or reprimanded over not following some existing 

policies that you had that could have led to some of this being a 

little loose, so to speak? 

Mr. SOLOMON. We look at every foodborne outbreak. And we try 

and learn lessons from it. And we do learn lessons. And we consistently improve the process. So I think we have learned lessons from 

the tomato outbreaks, spinach outbreaks, peanut butter outbreaks. 

And we incorporate those new pieces. 

So when I was speaking earlier about basically the new science, 

about understanding how Salmonella can live in a facility in a dry 

plant. It is some of that new science that needs to be integrated. 

And we do integrate that into new inspectional approaches, so the 

environmental pieces. 

There has been no disciplinary action related to any of the FDA 

outbreaks. 

Mr. PETERSEN. Well, I mean, you haven’t said it here, but every 

recall for us is a failure. We have put product in the marketplace 

that we have said was okay, and we have to bring it back. And 

many recalls look alike, but there are many things we do learn 

from every single one. 

And we do our best to communicate those flaws, whether it be 

a plant flaw or some other activity, so other people know so they 

don’t repeat the same mistake. And that is for recalls. That is for 

outbreaks. 

So we try to communicate ‘‘Here is what didn’t work,’’ ‘‘Here is 

how they got into trouble.’’ Obviously we have to kind of protect 

their proprietary interests, but there are some lessons learned that 

we do get out. 

20 

Some of the outbreaks that we have had as far as interagency 

from our perspective, we have learned from those certain regulatory approaches, legal authorities that we can work together on. 

So we have taken those lessons. 

As far as employee actions, I guess I can tell you in certain outbreaks, the appropriate personnel actions have been taken. 

Mr. WESTMORELAND. Thank you. 

Chairwoman DAHLKEMPER. I want to thank both Dr. Solomon 

and Dr. Petersen for being with us here today. You are now excused, and I would like to call up the second panel. Thank you very 

much for joining us, gentlemen. 

Good morning. I want to thank the second panel here for joining 

us today. Witnesses again will have 5 minutes to deliver their prepared statements. The timer begins when the green light is illuminated. When one minute of time remains, the light will turn yellow. And the red light will come on when the time is up. 

Our first witness today is Ms. Diane Austin. Ms. Austin is Vice 

President of Perry’s Ice Cream in Akron, New York. Perry’s Ice 

Cream is a family-owned business that was founded in 1918. 

Ms. Austin is testifying on behalf of the International Dairy 

Foods Association. The association’s members represent more than 

85 percent of the milk cultured products, cheese, and frozen desserts produced and marketed in the United States. 

Thank you, Ms. Austin. 

STATEMENT OF DIANE AUSTIN 

Ms. AUSTIN. My name is Diane Austin. I am the Vice President 

of Perry’s Ice Cream Company in Akron, New York. I would like 

to thank you for the opportunity to discuss the impact of food recalls on small food manufacturers. 

Chairwoman DAHLKEMPER. Thank you. 

Ms. AUSTIN. I have 3 points to make today. First, remember, 

American dairy products are among the safest in the world. Second, product recalls of ingredients have had devastating impacts on 

small food manufacturers. And, third, Congress should consider financial assistance for small businesses that have been impacted by 

these recalls. 

Perry’s Ice Cream is a small family-run business that has been 

making great tasting ice cream for 4 generations. We manufacture 

550 different ice cream products at our facility in Akron. And we 

employ nearly 300 team members. We make ice cream for grocery 

stores, convenience stores, mom and pop ice cream stands, schools, 

nursing homes, and many food service venues. 

We recently received the 2008 INNOVATE award in the agribusiness category by the Buffalo Niagara Partnership for growth, 

innovation, and investment in our regional economy. Our 90-year 

commitment to product quality and consumer safety is a key reason for our success. 

I am here today with the International Dairy Foods Association, 

which represents our nation’s dairy manufacturing companies and 

their suppliers. More than half of IDFA member companies are 

small businesses. 

To begin, I would like to remind the Committee that the American dairy products are among the safest in the world. Dairy manuVerDate Aug 31 2005 15:57 Mar 27, 2009 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\47797.TXT DARIEN
21 

facturing plants must meet stringent federal, state, and local regulations, including those developed by the U.S. Food and Drug Administration as well as state regulatory agencies. 

As is typical in our industry, Perry’s has a plant-wide HACCP, 

or Hazard Analysis and Critical Control Point, plan, which includes 

good manufacturing practices, preventative maintenance programs, 

and other food safety and quality programs. Our good manufacturing practices are based on FDA’s requirements for food processing plants. In 2008, Perry’s delivered over 1,700 hours of training to our team members in the area of food safety and quality 

alone. 

Previous to the peanut recall, Perry’s had only 2 limited product 

recalls in the past 10 years. Simply put, it is never in our best interest to cut corners or risk delivering unsafe products to our customers. 

Until January, Perry’s had used PCA ingredients in some of our 

product lines. Because these ingredients are added after pasteurization, we require documentation that they meet our safety standard. And, in spite of our best efforts, we were significantly impacted by the events at PCA. 

Perry’s issued 3 separate recall notices, impacting 44 different 

products. We traced distribution to 6,534 individual locations. We 

have conducted audits at more than 900 locations to ensure that 

the product had, in fact, been removed for sale. To the best of our 

knowledge, no consumer illnesses were related to any of our ice 

cream. 

We destroyed more than 170 tons of product, spent more than 

2,100 employee hours, placed recall notices on our Web site, and 

responded to nearly 1,000 consumer and customer contacts. These 

efforts continue as we communicate with our customers and consumers and begin the resupply process. 

In addition to these mounting expenses, we are financially responsible to make sure that our customers are whole. Perry’s is 

now crediting our customers for recalled product that they purchased, paying our suppliers for ingredients that were used in the 

recalled products, incurring costs for dumping product, legal fees, 

and other recall-related expenses, all this while we begin to try to 

reestablish a pipeline of product that has been dry for nearly 8 

weeks. 

At the same time, we are trying to build inventories for the peak 

summer demand season, which is absolutely a make or break season for our industry. 

While we do not yet have a complete accounting of the losses, 

they are likely to be in the hundreds of thousands of dollars, if not 

more. And we are just one of nearly 300 companies that purchased 

product from PCA. 

In spite of the significant investments that we have made over 

the years, to meet or exceed industry best practices in the areas 

of quality and food safety, we have incurred a considerable financial loss through no fault of our own. 

There was little hope that we will recover any of these costs from 

PCA. And with over 3,000 products now on the FDA recall list, 

there can be no doubt that other small businesses encounter the 

same problem. 

22 

Small businesses are dependent on cash flow for operations. And 

those affected by the PCA recall must make difficult and immediate choices about which bills will be paid, whether people can be 

hired, and which products can now be produced. We fear that before this is all over, many small business manufacturers or small 

food manufacturers will go under. 

This Committee and Congress should consider providing financial assistance, preferably in the form of grants or loan guarantees, 

to help small businesses that have suffered significant financial 

losses as a result of a recall prompted through no fault of their 

own. As a small business, we would ask Congress to carefully balance business responsibility and government regulation to ensure 

a safe food supply but to be careful before assuming that more regulation is always the answer. 

On behalf of Perry’s Ice Cream and the 530 members of the 

IDFA, I would like to thank you for the opportunity for us to voice 

our views this morning. Thank you.[The prepared statement of 

Diane Austin is included in the appendix at page 63.] 

Chairwoman DAHLKEMPER. Thank you. 

Our next witness is Mr. Mike Ambrosio. Mr. Ambrosio is Vice 

President of Quality Assurance at the Wakefern Food Corporation 

in Elizabeth, New Jersey. The Wakefern Corporation is a retailerowned cooperative comprised of entrepreneurs that own and operate supermarkets. 

Mr. Ambrosio is testifying on behalf of the Food Marketing Institute, which develops and promotes policies supporting food retailers 

and wholesalers. 

Welcome. 

Mr. AMBROSIO. Thank you. 

STATEMENT OF MIKE AMBROSIO 

Mr. AMBROSIO. Thank you. Chairwoman Dahlkemper, Ranking 

Member Westmoreland, and members of the Regulation and Health 

Subcommittee, I am Mike Ambrosio, Vice President of Quality Assurance for Wakefern Food Corporation. And I have been in charge 

of food safety programs at Wakefern for 29 years. 

I am honored to appear before you today to testify on behalf of 

my company and our members but also FMI, Food Marketing Institute, our trade association, representing over 1,500 retail members. 

Founded in 1946, Wakefern Food Corporation has grown from a 

small, struggling cooperative into a strong regional player. 

Headquartered in Keasbey, New Jersey, Wakefern is comprised of 

45 members, who independently own and operate supermarkets 

under the ShopRite banner in New Jersey, New York, Connecticut, 

Pennsylvania, Delaware. 

While we are the largest retailer-owned cooperative in the nation, the majority of our members own 1 or 2 stores and understand the challenges that businesses face. Only owners that understand these needs of their customers and community are able to 

survive and prosper. 

As a result of our members’ dedication to their customers and 

communities, ShopRite has been named the New Jersey Corporate 

Philanthropist of the Year by the Community Foundation of New 

Jersey. And America’s Second Harvest Food Bank Network has 

23 

also recognized ShopRite as a Grocery Distributor of the Year for 

its ShopRite Partners in Caring Program, a year-round initiative 

dedicated to fighting hunger. 

As part of our dedication to the consumer, our most important 

goal is to ensure that the food resale is safe. our store has many 

prevention programs in place to protect our customers, such as consumer education campaigns, employee food safety training, extensive sanitation programs, and food safety management systems. 

But all of these prevention programs at retail level cannot ensure 

that we deliver safe food to our customers if the food coming into 

our stores isn’t already produced and processed to the highest 

standards. 

When we do receive notification that a product is adulterated, we 

take a variety of vital steps to ensure that the effective product has 

been removed from our shelves as quickly as possible and also to 

notify our customers in certain instances. However, this process is 

often challenging, time-consuming, and expensive due to the loss of 

man-hours and the loss of sales created not only by not having the 

product taken off the shelves but also due to a recall impact on consumer confidence. 

I would like to provide the Committee a snapshot of what steps 

we take when we are notified that a product has been recalled. The 

notification process, when we receive notification a product has 

been recalled through a variety of different means, we use third 

party services that we subscribe to, direct contact by the vendor 

through monitoring government Web sites, such as the FDA and 

USDA, or through a variety of media outlets. 

With any notification method, it is vital that we receive the necessary information, such as product name, correct UPC codes, product size, and sell-by dates to ensure we know exactly what product 

is being recalled. 

The average size grocery store has over 45,000 items on their 

shelves every day. In the case of the high-profile Peanut Corporation of America recalls, the FDA as of March 9th had over 3,200 

listed products on their Web site. 

The actions we take once we receive the necessary information 

in the Quality Assurance Department, we notify Consumer Affairs. 

While comparing the affected UPC codes to our current inventory, 

all identified products are embargoed and segregated to a designated holding area. In addition, recalled UPC codes are locked 

out of our point-of-sale system. So product cannot be scanned for 

sale at our registers or sold through the front end. 

Our bulletin is sent to our store owners and applicable in-store 

divisions and management staff. The information is posted on our 

internal Web site, also an external Web site if you log onto the 

shoprite.com. 

Class I recalls triggers automatically phone calls to notify our 

store owners, management staff directly to reinforce the bulletin. 

We also have a third party private visit to the stores to ensure that 

the class I product has been removed from the shelves. 

At the same time we are removing products at store level, our 

Consumer Affairs Department is creating signage for display at 

point of sale and sending releases directly to the media. That’s a 

24 

vital piece of this because consumer education when it comes to recalled product is key. 

Depending on the type of recall, they also search for data from 

our loyalty card program. That allows us to notify our customers 

directly through phone calls and about product they had purchased. 

It is important that grocers are able to employ a variety of different 

methods to notify consumers. 

I am proud of the actions we take as a company to remove adulterated product. As a matter of fact, last fiscal year we had 214 recalls, 27 class I, 43 pharmacy recalls. That accounts for 238 UPC 

codes that were blocked out at the front end as well as the time 

dedicated to that. Over 2,140 hours are dedicated to that, 305 

working days if you want to break that down. And these don’t even 

include the numbers with PCA. 

Our trade association, FMI, is working with Wakefern and other 

members of all sizes dedicated to continually improving food safety. 

And we also support the FDA and the USDA with regard to mandatory recall authority that they have. 

We also believe that suppliers should be--[The prepared statement of Mike Ambrosio is included in the appendix at page 71.] 

Chairwoman DAHLKEMPER. Thank you, Mr. Ambrosio. 

Mr. AMBROSIO. Okay. 

Chairwoman DAHLKEMPER. We will cover more this in the questions. Thank you. 

Mr. Conrad is next. Mr. Conrad, Ken Conrad, is President of 

Libby Hill Seafood Restaurants in Greensboro, North Carolina. 

Libby Hill Seafood was founded in 1943 by Mr. Conrad’s father. It 

operates restaurants in North Carolina and Virginia. 

He is testifying on behalf of the National Restaurant Association, 

which represents more than 380,000 restaurant establishments. 

Welcome, Mr. Conrad. 

STATEMENT OF KEN CONRAD 

Mr. CONRAD. Chairwoman Dahlkemper, Ranking Member Westmoreland, and members of the Subcommittee on Regulations and 

Healthcare, on behalf of the National Restaurant Association, 

thank you for the opportunity to testify before you today regarding 

the impact of food product recalls on restaurants. 

My name is Ken Conrad. I am the Chairman of the Board of 

Libby Hill Restaurants. For the past 5 years, I have had the privilege of serving as the North Carolina delegate to the National Restaurant Association. I also serve as Chair of the North Carolina 

Restaurant and Lodging Association. And by operating a chain of 

seafood restaurants, it has kept me very active in the seafood industry. I currently serve as Vice Chair of the National Fisheries Institute. 

My family continues to own and operate Libby Hill Restaurants, 

and I am proud to say that my son today is the third generation 

to run the business. Three weeks from today, we will begin our 

57th year of serving seafood in a family-friendly atmosphere. We 

currently operate 12 units scattered across western North Carolina 

and southwest Virginia. 

The restaurant industry is comprised of 945,000 food service locations, 13 million employees nationwide. We serve 130 million 

25 

guests every day, and every $1 million of revenue in our industry 

creates 33 new jobs for the economy. Seven out of 10 restaurants 

are single-unit operators, with 91 percent of eating-and-drinking 

places having 50 or fewer employees. We are truly an industry of 

small businesses. 

Food safety is of the utmost importance for restaurants. Restaurants have taken the lead in ensuring food safety within our 4 

walls with the National Restaurant Association and its members 

making a multi billion-dollar investment to continuously improve 

food safety programs and develop state-of-the-art food safety education. 

We are proud of ServSafe, the food safety education program that 

sets the standard for the industry. Foodborne illness outbreaks and 

the recalls that follow have greatly impacted our industry. Lapses 

in management in the food supply chain can create negative consequences to consumer confidence, as recent outbreaks and recalls 

have shown. 

Most recalls are due to mislabeling mistakes, but very large outbreaks and recalls due to adulteration or contamination indicate 

more could be done in both the supply chain and with improvements in the federal and state regulatory approach. 

Since 2006, the United States has dealt with the impact of 

foodborne illness outbreaks and recalls resulting in the contamination of tomatoes, serrano peppers, chicken and turkey pot pies, 

ground beef, chili sauce, lettuce, spinach, and peanut butter. 

Currently, the industry continues to cope with peanut butter recalls resulting from a Salmonellosis outbreak involving thousands. 

It is likely this outbreak will become one of the most infamous outbreaks of foodborne disease. 

When a foodborne illness outbreak occurs, the first priority is to 

identify the affected product and immediately remove it from the 

food supply. Restaurants often use an abundance of caution when 

learning of an outbreak and may just simply choose to remove that 

item from the menu until the dust clears and it has gone away. 

Trace-back investigations to determine the source of outbreaks 

can require extensive resources and may result in irreparable damage to a food service establishment. Therefore, it is critical that 

each piece of the investigation be thorough, complete, and accurate. 

We must remember that trace-back investigation recalls are reactive measures. We should not neglect the importance of preventing 

contamination to ensure safety to reduce or mitigate the need to recall product. 

Adequate funding to food safety agencies at both the state and 

federal levels to ensure appropriate staffing and expertise is mandatory, improved collaboration and communication between government and industry during the investigation of a complex outbreak, 

communication and education strategies to effectively inform consumers in the event of an outbreak or recall. We need stronger 

standards and practices for fresh produce and additional tools such 

as recall authority, traceability, and improved epidemiological investigation. 

In conclusion, the safety of the food supply must and will continue to be the top priority for the restaurant industry. We stand 

by and are ready to work with Congress, the administration, and 

26 

our food chain partners to improve food safety and the needed reforms. Thank you for the opportunity to testify. And I will be 

happy to answer questions at the appropriate time.[The prepared 

statement of Ken Conrad is included in the appendix at page 78.] 

Chairwoman DAHLKEMPER. Thank you. 

Mr. Westmoreland will introduce our next witness. 

Mr. WESTMORELAND. Thank you, Madam Chairwoman. 

It is my pleasure to introduce a friend of mine and fellow Georgian, Mr. Don Koehler. Mr. Koehler is the Executive Director of the 

Georgia Peanut Commission. 

Mr. Koehler and his family reside in Tifton, Georgia, where he 

has lived for 25 years. He is a native of Alberta, Alabama and received a B. S. in agricultural science from Auburn University in 

1979. 

In 1986, he became the Executive Director of the Georgia Peanut 

Commission. In that position, he has served in numerous positions 

of leadership within the peanut industry. He oversees the Commission’s programs in the areas of research, education, and promotion, 

including advocacy for the farmers in Atlanta, Washington, and on 

international issues. 

He currently serves on the Agricultural Technical Advisory Committee on trade for cotton, tobacco, peanuts, and planting seeds. He 

also serves on the management team of the Southern Peanut 

Farmers Federation, which represents peanut farmers in Alabama, 

Florida, Georgia, and Mississippi. 

I want to thank Don for being here today to share his perspective 

on behalf of the Georgia Peanut Commission. And I know we all 

look forward to hearing your testimony, Don. Thank you. 

Mr. KOEHLER. Thank you, Congressman. 

STATEMENT OF DON KOEHLER 

Mr. KOEHLER. Good morning, Chairwoman Dahlkemper, Ranking 

Member Westmoreland, and members of the Committee. I am Don 

Koehler, the Executive Director of the Georgia Peanut Commission. 

On February 1st of this year, I celebrated 22 and a half years in 

that position. 

The current outbreak and recall attributed to the Peanut Corporation of America is the most devastating issue to ever face our 

industry in my time there. We currently have 4,535 peanut farmers 

in Georgia. That number has the potential to decline in 2009. 

An inscription over the entrance to Washington’s Union Station 

reads, ‘‘the farm, best home of family, source of our national 

wealth, the natural providence.’’ That is true even today. Farmers 

provide more to the economic health of our economy than at any 

time in history. 

On January 10th, the U.S. Food and drug Administration issued 

a voluntary recall notice on peanut butter processed at a plant 

owned by the Peanut Corporation of America. The initial recall was 

expanded to roasted peanuts and later to include all product ever 

produced at a PCA plant in Texas. 

PCA was a supplier of peanut butter to the food service industry 

and a supplier of ingredients to food manufacturers. They had a 

broad reach for a small processor. 

27 

The recall has been ongoing for 2 months and has rippled 

throughout the peanut industry. We are dealing with a situation of 

historic proportions. The full impact will not fully be known for 

some time. Rebuilding cannot fully begin until the outbreak is over 

and the recall complete. 

The 2008 peanut crop was a record crop, and we were faced with 

managing a surplus. USDA has been slow to react to the current 

market conditions in setting the weekly posted price, which has 

complicated this issue. Peanut sales are nonexistent for farmers 

who have uncontracted peanuts. Yet, USDA has not sufficiently reduced the posted price. 

After the recall, sales of peanut products tumbled. General agreement is that peanut butter consumption is off as much as 20 percent. Peanut butter processing accounts for about 70 percent of the 

Southeastern peanut market. 

Due to uncertainty, no contracts are being offered to farmers. 

This is critical because farmers need a contract to get financing 

and to make planting decisions. In 2 Georgia towns, groups of 

farmers built modern shelling facilities to add value to their peanuts. Each has fewer than 50 employees, and they will be impacted. 

Peanut buying points are paid on the volume that they handle. 

And then there is the impact on our farmers. The market has collapsed. So the best case scenario seems to be $355 per ton, which 

is the loan rate. 

Using projections for only variable costs, excluding land rent, 

farmers would need irrigated yields of 4,700 pounds per acre and 

non-irrigated yields of 3,500 pounds to achieve a zero cash flow. 

Typically, the yield in the Southeast would be less than 3,800 

pounds irrigated and about 2,800 pounds for non-irrigated. There 

is little to no likelihood of farmers’ cash flowing this year. 

The National Center for Peanut Competitiveness took a 5-year 

Olympic average of U.S. peanut production and used USDA’s posted price for peanuts and came up with an average price of $408- 

plus a ton. The difference of that price and the loan rate include 

factors showing a loss that ranges from about $114 to $121 million. 

If you take into account a loss of production, these numbers 

grow. Growers anticipate a reduction of acres of at least a third. 

The NCPC indicates that that reduction could be 40 to 60 percent 

based on their representative farm. This is a loss of $225 to $450 

million just at the farm gate. If you use a conservative multiplier 

of 2, which is very conservative, we are looking at potential for a 

billion-dollar impact in the peanut industry in this country. 

What can be done to help us? The formula that USDA uses to 

set the national posted price is a farce. Congress should ask USDA 

to review this formula and report back in a firm time and come up 

with something that is realistic. 

Peanut butter has been a staple for U.S. and international feeding programs. It is good, and it is good for you. And we need USDA 

to look at this and to really come to the table now. We need them 

to buy peanuts and peanut butter now more than ever. 

Peanut butter is 25 percent protein and about $2 a pound. So the 

only thing that even beats that is whole chickens and chicken legs 

with the or bone in. 

28 

Farmers have felt the impact of this recall, but the thing that I 

will tell you is that the growers in Southeastern United States, 

peanut farmers, are here to work with Congress to find ways to 

make sure that this can never happen again.[The prepared statement of Don Koehler is included in the appendix at page 83.] 

Chairwoman DAHLKEMPER. Thank you, Mr. Koehler. 

Our next witness is Ms. Sheryl Vanco, who is from my district. 

She is a dairy farmer from Bear Lake, Pennsylvania. In addition 

to being a Pennsylvania Farm Union member, Ms. Vanco is also active with the Farmers Union Milk Producers Association and 

serves on the Pennsylvania Animal Health Commission. 

She is here to testify on behalf of the National Farmers Union. 

The National Farmers Union represents 250,000 farm and ranch 

families. 

Welcome, Ms. Vanco. 

STATEMENT OF SHERYL VANCO 

Ms. VANCO. Thank you, Madam Chairman Dahlkemper, Ranking 

Member Westmoreland, and members of the Subcommittee. We 

thank you for the opportunity to testify today. 

My name is Sheryl Vanco. My husband and I have and operate 

a 95-cow dairy in northwestern Pennsylvania. We hire 2 full-time 

workers. One of them is an Amish man. My husband and I both 

work full-time on the farm. It is a lifestyle that we chose and that 

we love. 

As a member of the Animal Health Commission, I help to oversee 

all of the animal health rules and regulations in the State of Pennsylvania. And we have 3 animal health diagnostic labs that we 

oversee. 

We are proud of our industry and the dairy industry. We produce 

a quality product, and we produce quality meat products. We work 

hard every day to ensure that they are wholesome when they meet 

the market. 

Our farm facilities are inspected by state and federal inspections. 

And annually our milk is tested for Brucellosis. There is mandatory 

monthly testing for bacteria. Weekly our milk is tested for somatic 

cell counts, which indicate the health of the cow’s udder. 

Every drop of milk that we ship to market is tested for antibiotic 

residues. It is very costly if a farmer has a load of antibiotic milk. 

He loses not only the value of the milk of his on the truck, but he 

is responsible for paying the value of all of the other milk. Typically there is $10,000 worth of milk on the truck. 

We routinely vaccinate our cows to prevent diseases and take 

very good care of them if they need prompt health with any of the 

medical emergencies that they encounter. Veterinarians are in very 

short supply for large animals in this country now. So most of the 

farmers and herdsmen do a lot of the veterinary work themselves. 

We have nutritionists who advise us on the diet for the cows to 

keep them healthy. 

Cows have a very high value. And they are the heart of the dairy 

business. We work very hard to take very good care of our cows. 

We appreciate them both for their value and the emotional attachment that we have with them when we work with them every day. 

29 

When the cow’s productive life is over, it joins the beef cattle in 

the market. The animal is visually inspected before and after 

slaughter. Unhealthy cattle, whether they are downers or not, do 

not enter the food chain. Our domestic meat and milk products are 

highly regulated for quality and safety on the farm level. 

Dairy is one of the most highly inspected and regulated industries in the food industry. When there is a problem that leads to 

a dairy or beef recall, the contamination is usually found to have 

been after it has left the farm. 

Not only does the product recall of hamburger affect the financial 

loss of the processing facility, but it leads back to a reduced consumption by consumer, which leads to lower prices for the farmers. 

This works the same way in milk products. As soon as people back 

off from purchasing them, it ultimately leads back to us receiving 

less money for our milk or our meat that we are selling. 

My own milk coop processes their milk in a cheese plant in Ohio. 

We sell it to the Ohio plant. If there were to be a product recall 

for dairy in the country, we are faced with financial loss because 

of the loss of consumption. But if we had a recall of the product 

from the plant that we ship our milk to, it would be much more 

devastating to us. 

If it was a large enough recall to require the shutdown of the 

plant or to lead to bankruptcy of the plant, then we would be looking for another market out of the milk marketing generally. And 

we at this time have way too much milk on that market. So we 

would have very, very little financial ability to sell that milk. It 

would lead to devastation to the farms that have this supply on the 

milk. 

We are very highly regulated on the farms, but we think that imports pose a greater threat to the health value in the United States 

than the farm-produced milk in this country. Only a minimal 

amount of that milk is inspected. And we think that it should all 

meet the same health requirements that we meet. 

The recent melamine scare should wake everyone up to the fact 

that we need to regulate these imports. That melamine came in in 

powder into this country, could have very easily been in food bags 

that produced the cheese that we ate. We are very, very lucky that 

it was just showing up in a couple of candy products. It could have 

been far more reaching in this country, and we could have been 

facing the health problems that the Chinese have faced. 

It comes into this country under the guise of MPCs, which is 

multiple protein components. It was missed in the last trade 

rounds. So it is not regulated. It does not really have a standard 

of identify to inspect it. And it is both economically devastating to 

this country and poses a health risk to the products that we have 

worked very hard to produce for you. 

The impact food recalls would have, especially negative impact, 

on family farmers’ and ranchers’ recent contamination events have 

demonstrated in animal and non-animal foods, the current U.S. 

laws and their enforcement are not sufficient. We need more inspectors for the imports. And we need to highly regulate and keep 

on top of these. 

30 

We think we have in the dairy industry enough regulations in 

process, but we need more enforcement.[The prepared statement of 

Sheryl Vanco is included in the appendix at page 85.] 

Chairwoman DAHLKEMPER. Thank you. 

I just want to let you know that we may be called out for a vote. 

So we will try to get through some questions here quickly. 

I would just like to ask the panel. And any of you or all of you 

could address this. Obviously each one of your industries is affected 

by recalls in different ways, but each one of your industries, which 

is consisting of small businesses, entrepreneurs, is affected, sometimes in a devastating way, with these recalls. 

So as we look forward, we certainly don’t want to impose undue 

regulations on struggling small businesses, whether that be the 

farmers, whether that be restaurants, whether that be the producers. 

We have got 15 agencies already working on this issue. How can 

we who are looking at policy work in collaboration with small businesses in whichever industry we are talking about here in terms 

of the food supply to help you produce what you want to produce? 

And that is safe food for the people of this nation. I mean, that is 

kind of the crux of it here. How can we work better collaboratively 

with you through the agencies that we currently have? 

I asked the question of the previous panel. Do we need to look 

at one agency. Do you have some thoughts on that from your perspective on the ground? 

Ms. AUSTIN. I will start that. I am sure some of my other panel 

members probably have some thoughts on that as well. 

One of the things that we would like to see is a generally accepted overview of the Global Food Safety Initiative, GFSI. There are 

a lot of activities underway regarding third party certification for 

imports. And some of those same practices could be applied domestically so that as an auditing body or anyone who is looking at a 

facility has got commonly accepted practices that are applied routinely. 

So that, for instance, in our facility, New York State Ag Markets 

is in. We are an organic-certified facility. We have an auditor for 

that. The military comes in and audits. We have New York State 

Ag Markets come in routinely for other things as well. 

We have customers who require third party audits. Everyone has 

a certain kind of oversight that they would like to see. If there was 

one standard generally recognized, we could streamline a lot of 

those activities and the burdens that that places on a small business so that there could be consistent application of practices. It 

will make it easier for us to train our people and increase the opportunity for small businesses to improve their food safety without 

taking on additional responsibilities. 

Chairwoman DAHLKEMPER. Mr. Ambrosio? 

Mr. AMBROSIO. There is a difference between what Diane is 

speaking about and inspections. Inspections is a snapshot at the 

time when you go into a facility. And you spoke about that earlier 

with the government panel. 

I think what is important to capitalize and what you are saying 

is GFSI, the Global Food Safety Initiative, it’s recognizing food 

management systems. It is a cultural change, I think. And that is 

31 

what we need to look at in this country. We need to have a cultural 

change on how we go about doing business. We have gotten away 

from actually having management and everybody else buy into the 

fact that you have to produce food in a safe manner before it leaves 

the facility. 

And if we are going to go about just having inspections, inspections, inspections, I could tell you that I have been doing this a 

long time. You can’t inspect quality or food safety into any system. 

You have to have a culture. And when you embrace an SQF model 

or an IFSS or a VRC that are all members of GFSI, you have a 

foundation of a management system that is going to be working in 

a good way. And I think they alluded on it a little bit about third 

party inspections. I think that is important. 

It is a good adjunct to what the government is doing right now. 

It can’t replace government oversight. I think it is a good adjunct 

to what they have. 

Chairwoman DAHLKEMPER. Does anyone else want to comment 

on this? 

Mr. KOEHLER. Again I want to go back to the whole issue of culture within a business. And what we were dealing with in the peanut recall is very evident now when you look at 2 factories with 

the conditions that they had, it is very evident that it was a culture 

within that business. 

Certainly the thing that needs to be there is a major amount of 

accountability for these people in the food business, for the food 

production business. They have got to be accountable for what they 

do. And though it has put this business out of business, there 

needs to be a lot of accountability that even losing the business 

might not be all that you have. 

Our organization wants to be sure we work with Congress on everything that is going on. And so we have not talked about issues 

on mandatory recall, any of those kinds of things right now, though 

they are there, because we want to look at everything there and 

find the best result that comes out of the United States Congress 

for the food-processing industry. 

We are not terribly negative toward mandatory recalls, but they 

come with a great deal of responsibility. I want to use a personal 

example to tell you how that is. 

I have a farmer friend who grows peanuts, but the other thing 

he grows is tomatoes. In the just advisory that happened last year, 

he had beautiful table-stock tomatoes. I ended up going to his farm, 

and we bought 5-gallon buckets full of these tomatoes that we 

picked ourselves for $5 for a 5-gallon bucket and canned those tomatoes. These were table-stock tomatoes. 

And then they find out that it was a problem not on tomatoes 

but on peppers. So anything we do has to make a good system better. And it has to be based, too, on the science that we can say, 

‘‘Hey, there is a reason that we did it.’’ 

Mr. CONRAD. There is currently a bill in Congress that I had 

worked with Senator Burr in North Carolina about and Senator 

Durbin and Gregg have cosponsored in regard to food safety. It 

does have some things that restaurants are certainly looking at. 

And certainly it seems to be a path that we may want to go down. 

32 

Two things have happened in the last several years that we 

would like strengthened: the requirements on produce safety and 

mandatory recall. We think that both of these probably need to 

happen. 

Chairwoman DAHLKEMPER. Ms. Vanco, do you have any comment 

on this? 

Ms. VANCO. The only comment that I have is when they did the 

Homeland Security, they moved some of the testing to Homeland 

Security from USDA. I think it would be a good idea to put it back 

with USDA, consolidate that back into one entity again. 

Chairwoman DAHLKEMPER. Okay. I’m going to yield to Mr. Westmoreland at this point so he can get his question before we might 

be called away. 

Mr. WESTMORELAND. Thank you, Madam Chairman. 

Ms. Austin, you were talking about the products that you had 

made that you had to take off the shelves. Just curious, is there 

any type of testing that you do after these ingredients are added 

and then all put together? Do you do any type of testing on that? 

I mean, I am just curious. 

Ms. AUSTIN. We would require in this particular case a COA, or 

certificate of analysis, for the incoming ingredients before we would 

bring them into the facility. So that if there were a potential that 

there was something harmful included, we would not bring them 

into the facility, number one. 

The testing after the fact is unlikely to find things. You really 

want to test it proactively. So we did have certificate of analysis 

on the incoming PCA ingredients that indicated that they tested 

negative for Salmonella. Otherwise we never would have used 

them. 

Mr. WESTMORELAND. In this testing, I am assuming you all have 

turned over that information to whoever is investigating this, that 

certificate? 

Ms. AUSTIN. No, we have not. I don’t think they have gotten into 

our facility to look at that. I think they looked at the documentation in Blakely. But we did. 

Mr. WESTMORELAND. But you got a certificate. 

Ms. AUSTIN. Yes. 

Mr. WESTMORELAND. Right? 

Ms. AUSTIN. Yes. 

Mr. WESTMORELAND. That’s interesting that they haven’t contacted some of those, looking for some of those certificates. 

Ms. AUSTIN. I think it was alluded to as well. Testing, particularly in this case, if you have an intermittent problem, you are not 

going to necessarily find everything by testing. 

Mr. WESTMORELAND. Right. 

Ms. AUSTIN. It goes back to practices. 

Mr. WESTMORELAND. Yes. 

Ms. AUSTIN. It goes back to culture. And that’s what we rely on. 

There has to be some degree of trust throughout the supply chain. 

And there is a certain amount of trust that you put in your vendors 

and suppliers. And those are the same kinds of trust that they 

need to have of us. 

Mr. WESTMORELAND. How long had you been doing business with 

PCA? 

33 

Ms. AUSTIN. Probably no more than two years. 

Mr. WESTMORELAND. Mr. Koehler, let me ask you. The peanut industry is very supportive of food safety, right? 

Mr. KOEHLER. Absolutely. You know, what we had was a bad 

actor that took a very short-term view. But, you know, we have got 

a product that we can go out, and we can tell folks that it is good 

and good for you. 

And it is a long-term proposition for us. And the only way that 

we can have long-term health as an industry is to be sure that 

what we put out there, the mother that feeds that to a child or in 

my case the grandfather that feeds it to his grandsons knows that 

that product is safe and that it is good and that it is the best that 

it can be. 

Mr. WESTMORELAND. And is it not true that whether you are a 

peanut farmer or a tomato farmer, that your job is to grow the crop 

and to make sure that you know it is the best product that it can 

be and then you take it to the processing plant and, from there, 

it is up to them and that you certainly have the interest of the consumer at heart and want to make sure that that is the best product 

that can come out of what you produce? Is that true? 

Mr. KOEHLER. Even though the farmer sells to a buying point 

that sells to a peanut sheller that then sells to a company like PCA 

or a major processor, you know, we are four spaces removed. But 

if the consumer won’t each that product, then it impacts us, too. 

And it doesn’t matter whether it is peanut farmers or whatever. 

Food safety is all of our issue in the agricultural system in this 

country. 

Mr. WESTMORELAND. And you mentioned that this could be up to 

a billion dollars on the peanut industry. Is that just dealing with 

the growers or is that the total industry? 

Mr. KOEHLER. What the multiplier number looks at is the total 

economic impact but on growers, almost $500 million right there. 

Mr. WESTMORELAND. Ms. Vanco, I want to thank you for what 

you do. I have had an opportunity to both work on a dairy farm 

and to go out and visit them. You earn your money. And I want 

to thank you for doing that because that is a very worthwhile way 

of life, and I want to thank you and your family for doing that. 

So, with that, I will yield back. 

Chairwoman DAHLKEMPER. I would like to recognize Mr. King for 

5 minutes. 

Mr. KING. Thank you, Madam Chair. I want to thank all of the 

witnesses for your testimony. Now I understand something about 

what is good about Mr. Westmoreland since he worked on a dairy 

farm. 

A lot of your testimony had remarks in there about--I would synthesize it down to this, the best place in the world to raise a family 

is right there on the land. I just came from the Ag Committee, by 

the way, why I was late. But your testimony does empt me as I 

can reference that in our corn region. 

I want to assure you, Mr. Koehler, if your peanut producers decide they want to raise corn down there--and I know they have got 

to make up their mind pretty quick--that I am not looking at this 

in any parochial way. You’ve got to get all you can out of the land. 

34 

And one of the things we have tried to do is more dollars per acre. 

That solves, really, our agricultural problems throughout time. 

I am curious about this. Before I ask my question, I want to comment also. Mr. Ambrosio’s comment I think was the most significant in that you can’t inspect safety into a system. You have to 

have a culture and reiterated by Mr. Koehler, if I remember correctly, and agreed I think by the rest of you. 

I think that is a very significant point. I think that food inspection needs to be the inspection of the culture. And if the culture 

doesn’t reflect the kind of food safety that is necessary, then that 

should bring more scrutiny in the food safety until such time as the 

culture is created or the place is shut down. 

And I reflect back on having gone to a pharmaceutical manufacturing company and visited that. And they had great vats of white 

powder and people walking around in white frock coats. And they 

had a laboratory to evaluate quality control. And I asked, ‘‘Where 

is my FDA inspector?’’ 

‘‘Well, there is none here.’’ 

‘‘When was the last time he was here?’’ 

‘‘Well, I think he was here late last year, maybe 6 or 7 months 

ago.’’ 

‘‘You mean you don’t have anybody on site like a USDA meat inspector watching all of the pharmaceuticals?’’ 

The answer is no. Their quality control is in the quality of the 

pharmaceuticals that they produce in bulk that are packaged up in 

little capsules and sold to people and in the liability that trails that 

clear back to them. They create that culture because there are incentives in place for a good, solid, clean food culture. And I don’t 

think that is what we have to do. 

I wanted to pose this question this way. How many people have 

died in America because of lack of food safety in the last 10 years, 

the last 50 years, any increment anybody would like to take a stab 

at? 

Myself I have a hard time coming up with numbers that I think 

would impact in comparison to many of the other hazards we face 

in life. Does anybody want to take a stab at that? 

[No response.] 

Mr. KING. I understand. Then I take you back to Alar, which 

seemed to be the precursor for the modern reaction to the lack of 

food safety. And it destroyed the apple market. Of course, it didn’t 

affect my region again either, but it set the parameter that a scare 

of food safety chases the market away. It took a lot of apple producers out of business. 

We had the BSE issue, which was mentioned. That hurt the beef 

industry dramatically. Now here we are with the impact on the 

peanut industry. Sitting there having to make a decision, if you 

don’t get some answers, Mr. Koehler, can you tell us what you 

might do? 

Mr. KOEHLER. Well, I represent farmers because that is my job, 

but I can tell you what farmers are telling me. They are struggling 

now to know what to do because our primary rotation is peanut 

and cotton with some corn. And we can’t grow corn like you guys 

can there in the Midwest. We have to work pretty hard at it. 

35 

And it’s pretty costly for us to do that. We have to irritate. The 

choices just aren’t there. With 42-cent cotton, there is no cash flow 

there; with peanuts now below our cost production, nothing there 

to cash flow. 

And I am not sure I know what farmers are going to do because 

sometimes they make a decision based on a motion, rather than on 

what their pocketbook is. 

The National Center for Peanut Competitiveness has run every 

representative farm they have in this country. And they have found 

that farmers would lose more money if they would go fishing all 

year and not farm. 

Mr. KING. I am looking at the projected gross receipts that you 

need to make your land cash flow. And I come up with $621 an 

acre for dry land, $834 an acre for irrigated land. What has happened to your land values, your asset values, that uphold your continuing operation? 

Mr. KOEHLER. Farming-wise land values have kind of held where 

they are because of one thing. But it has changed a whole lot in 

the last few years. Our land values aren’t continuing to escalate because we don’t have the migration from Florida coming back up to 

buy 100 acres and a horse--it used to be 40 acres and a mule, but 

it’s 100 acres and a horse right now--because of the situation in the 

economy. 

So certainly land values aren’t going back up. And the question 

is, at what point do they start falling, then, in value? 

Mr. KING. I just thank all of the witnesses. And we will keep 

sending you corn because we don’t know how to make grits. 

[Laughter.] 

Chairwoman DAHLKEMPER. I just have one last question, I think, 

for all of you. As we look forward, obviously we want to prevent 

recalls is really the issue here. You have talked a lot, Mr. Koehler, 

about the cost of what this particular recall has cost your industry. 

I don’t know if any of you could address this. This is just kind 

of looking in the past. In terms of your industries and the recalls, 

whether we’re talking about beef, whether we’re talking about tomatoes, spinach, peanuts currently, the cost, do you have any idea 

what the cost is to your individuals within your industries? You 

know, what kind of costs have they been dealing with? 

Mr. AMBROSIO. I know in the supermarket industry, it is in the 

millions of dollars every time we go through this because it is not 

only do you lose product, there is product liability. Plus, there is 

loss of product. Once you pay for that product, you throw it out. 

And a lot of those companies, they go out of business and then 

stand in line with everybody else trying to recoup your money. 

Chairwoman DAHLKEMPER. Do any of them or whatever percentage have recall insurance? 

Mr. AMBROSIO. I think not too many. Recall insurance is a tricky 

one. It covers, it could cover, a variety of different things on the 

liability side, but we are looking also from the product loss side because if you are purchasing a million dollars worth of inventory 

and that million dollars worth of inventory has to be thrown out, 

then that is a tough pill to swallow. 

Chairwoman DAHLKEMPER. Anyone else address that within your 

industry? 

36 

Mr. CONRAD. Recalls at the retail level are catastrophic if there 

is an event, an event such as the Jack in the Box chain or Taco 

Bell in the salad or in Cheyenne, Wyoming Taco John’s. You know, 

those events were catastrophic for those companies because people 

got sick. 

Chairwoman DAHLKEMPER. And how about your individual restaurants? Because you represent a lot of the small entrepreneurs, 

rather than the chains, correct? 

Mr. CONRAD. That’s correct. The small entrepreneur just pitches 

it more often than not. He takes his case of spinach. He takes spinach off the menu. And he doesn’t put spinach back on the menu 

until such time as it goes away. 

Chairwoman DAHLKEMPER. Ms. Austin? 

Ms. AUSTIN. Well, I spoke to the potential losses for our individual company. And if you multiply those by even IDFA, the 530- 

member, it is in the millions. There is the out-of-pocket cost. There 

is also the disruption and the distraction from day-to-day, business 

growth opportunities, and reintroducing product in the market. 

And, again, until people are comfortable buying those products, 

your sales suffer. 

So it definitely has a huge ripple effect. Until we get through it, 

we are not sure how long that will last? But if in the case of dairy, 

because it is a very seasonal business, if companies right now are 

in a position where they can’t buy ingredients to make ice cream 

for the season and they don’t have ice cream to sell, they may suffer when they get to July and August and they don’t have product 

to sell and their bankruptcy or going out of business would really 

not look like it is related to the recall, but it has an awful lot to 

do with how they position themselves and set themselves up for 

success. 

Chairwoman DAHLKEMPER. Have any within your industry gotten to that point? 

Ms. AUSTIN. Well, we haven’t approached the season yet, but I 

can tell you from our perspective cash flow is huge. And the immediate impacts for us because we have product that we are not getting paid for, in the case of ice cream, we figure the PCA inclusions 

represent only about one-tenth of the product cost. So the product 

cost to us multiples substantially. 

We have to pay our cream and dairy suppliers. We have to pay 

for sugar. We have to pay for packaging. And then we throw all 

of that out. And to resupply, we have got to buy it all again. 

And so it is really a double hit. We don’t have cash coming in, 

and we have a lot of cash going out. And we are at a critical season 

where we need to be building our inventory because we don’t have 

the infrastructure to manufacture the peak demand. 

So if we are not able to make enough in July and August, then 

our sales will suffer as a result of that. 

Chairwoman DAHLKEMPER. Last, Ms. Vanco? 

Ms. VANCO. At the farm level, it is very, very difficult to measure 

the impact of a recall because those are products that have been 

produced after they have left our farms. We just sell the bare product to you. And so the trace-back is very hard to measure. 

I do know that the BSE cost the whole country in the millions 

of dollars when that cattle lost their market. On our particular 

37 

farm, it would have been in the thousands. But it is very, very difficult to measure because everything that we sell fluctuates daily 

on the prices that we get. It is really hard to measure what the 

total effect is from a specific thing that is making those prices go 

up and down. 

It does cost us thousands of dollars, I know, on a beef recall, but 

I can’t tell you how many. 

Chairwoman DAHLKEMPER. Well, I want to thank everyone on 

the panel today. This was very timely and informative testimony 

that you gave. And I appreciate you all taking the time to be down 

here with us to discuss this topic. 

And, with unanimous consent, the members will have 5 days to 

submit statements and suppurating materials for the record. If I 

have unanimous consent, without objection, this hearing is now adjourned. 

[Whereupon, at 12:00 p.m., the Subcommittee was adjourned.] 

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