Canada’s food safety crisis
by Margret Kopala

Published in the Ottawa Citizen, September 20, 2008

I begin by summarising some commentary on the global credit crisis written earlier this week by Times of London columnist Anatole Kaletsky.

Important distinctions exist between the real economy and financial markets, he says; by attempting to anticipate the real economy, financial markets are inherently prone to self-reinforcing cycles of euphoria and panic. A gap between the two economies is therefore normal, though during this credit crisis, thanks to the U.S. subprime mortgage imbroglio, there’s disproportionate growth in the financial.

Here, repackaging of debt between financial institutions has mushroomed around the world even though the debt between the original U.S. borrower and mortgage company, however irresponsible or opportunitistically based, remains the same. The financial sector has been paying for its folly with losses in jobs and profits but the real economy only weakened slightly. Prospects for the real economy changed, however, when failing financial behemoths like Lehman Brothers and American International Group threatened exposed financial structures everywhere. Investment in the financial economy, never mind lending to the real economy, could now stall with dire consequences, he concludes.

At time of writing this column, Kaletsky hasn’t commented on Thursday’s bailout package that includes $10 billion from the Bank of Canada. But for the rest of us, it’s apparent regulators will soon have their day in the American financial sector even though amazingly, no one, not even Kaletsky, is considering the perils of corporate concentration and integration that can hold a global economy hostage.

In the meantime, over here in Canada’s real economy of roofs-over-heads and food-on-the table, corporate concentration is surely a factor in our listeriosis-induced food safety crisis where real people are also dying. Seventeen of 43 confirmed cases in various regions of Canada have died becaused of listeriosis bacteria traced to a single Maple Leaf Foods processing facility in Toronto. This is more than double the deaths resulting from E.coli contamination to the Walkerton water supply. Concerns about cutbacks and other changes to food inspection protocols are amply justified and add to a growing list of food safety issues.

Consider for instance how a consortium of 115,000 cattle ranchers which has been awarded $6 million from a livestock feed manufacturer for negligence in using ruminant byproducts is now sueing the federal government for billion dollar losses following the closure of the U.S. border to Canadian cattle in 2003. Alleging negligence of duty as a regulator of the cattle industry after the first outbreak of Bovine Spongiform Encephalopathy (BSE, or mad cow disease), the class action suit contends Agriculture Canada lost track of animals imported from Britain where BSE first appeared and was slow to ban cattle remains that could harbour the disease from livestock feed.

Antemortem tests for detecting BSE and vCJD (its human variant) are now in the pipeline but consider this too: there is no cure for either, no one knows what caused BSE in the first place and, like listeriosis which incubates for months before presenting symptoms, BSE/vCJD take several years to incubate. One credible estimate suggests thousands of humans are incubating vCJD in England with all that implies.

And doesn’t it seem passing strange that millions of cattle owned by 115,000 cattlemen could be at risk by virtue of one feed supplier? Or that one meat processor in Toronto should have product available across so many regions in Canada? How did they acquire this reach?

Like Fannie-Mac and AIG, Canada’s food industry has become increasingly concentrated. From the days of Burns, Swift and Canada Packers, highly capitalised meat processing operations have required high volume and slender margins for profitability. Competition from smaller players thus becomes virtually impossible – a bitter lesson recently learned by Alberta based Rancher’s Beef. Moreover, politicians adore corporations, usually multinationals, who meet this test because they create jobs but what happens when their vaunted economies of scale produce a scale of disease heretofore unimaginable?

A class action suit against Maple Leaf is pending but is this how a civilized market place works? Let animals and people die, then litigate and compensate and hope it doesn’t happen again?

An inquiry into the listeriosis outbreak is clearly necessary but this issue should also be re-visited by the Competition Policy Review Panel. Though Canada’s financial economy is exposed to subprime excesses, good regulations have protected Canada’s real economy of roofs-over-heads; it is now time to reconsider Canada’s regulatory framework where food-on-the-table is concerned.

MARGRET KOPALA’s column on western perspectives appears every other week.

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