Got Milk? Got eggs? Lost face.

The melamine scandal in Chinese agribusiness refuses to die down. Not only has the echo of contaminated milk continued to reverberate around the world through chocolate, Koala March cookies, and infant formula - but now eggs are showing up with high levels of melamine contamination. Melamine was banned in China for animal feed only in 2007 - but is clearly still being used illegally. The experts warn us not to panic ... a child would have to eat two dozen eggs to get melamine poisoning ... but this misses the point. It's a case of lost trust and lost face. What other contaminants are being used in food manufacture, that are going undetected?

Just as the banking industry relies on trust (and we discovered what happens when that evaporates) so does agribusiness. We assume that the government is providing oversight to make sure that our foreign and domestic food suppliers are playing by the rules - and those rules are keeping us safe from harmful chemicals. Even if melamine was the ONLY chemical that Chinese farmer adulterated their product with, it destroys the delicate web of trust that holds up our belief in the whole system.

We believe that empowered consumers can provide an additional check and balance. Ignorance is bliss only as long as we're all healthy.

Michael Pollan (the next administration's food safety tsar?) outlined the future perfectly in a recent New York Times Magazine editorial:

The government should also throw its support behind putting a second bar code on all food products that, when scanned either in the store or at home (or with a cellphone), brings up on a screen the whole story and pictures of how that product was produced: in the case of crops, images of the farm and lists of agrochemicals used in its production; in the case of meat and dairy, descriptions of the animals’ diet and drug regimen, as well as live video feeds of the CAFO where they live and, yes, the slaughterhouse where they die. The very length and complexity of the modern food chain breeds a culture of ignorance and indifference among eaters. Shortening the food chain is one way to create more conscious consumers, but deploying technology to pierce the veil is another.

Sound familiar? Watch this space...

Trust Them. Customers Can Handle It.

There's been a couple of reports (here and here) published recently exploring the role transparency plays when consumers choose a product. The received wisdom is that a consumer spends 2.6seconds deciding whether to buy a typical consumer packaged good - so a brand's reputation needs to shortcut the decision making process.

Transparency is generally thought to engender greater trust and confidence in the brand, and brand reputation is the most powerful influencer of buying decisions.

Recent food safety scares (salmonella, Ecoli) and scandals (melamine) have only increased consumers' desire to know that their products are safe, and where they come from. In addition to the inexorable rise of locavores, sustainable and organic buyers, and COOL sleuths. What's interesting about the prevailing wisdom among many food execs, apparently, is that they are reluctant to share information with consumers, in case they don't understand it.

Many of the executives surveyed [in the Colman Brohan Davis report] still questioned the near-term value of deploying information to fully empower consumer decision-making.

What can we be sure of? The consumer of the future will have access to unimaginable amounts of information at their fingertips (10 years ago - could we imagine Google?) through devices we can only dream of (an iPhone which reads barcodes and has great battery life). It follows that brands will want to be the authoritative sources of information about their products ... or someone else will be.

Don't Hold Your Breath

Gov. Swarzenegger has signed into a law a requirement that pharmaceuticals sold in California are serialized and tracked. This should finally help tackle the problem of counterfeit, re-dated, diverted or otherwise dubious drugs.

But before you breathe a sigh of relief and rush out to buy pharmaceuticals in total confidence, take a deep breath:

the deadline for compliance is in seven years.

More Hot Chips

We've discussed in this blog several times about the threat posed by counterfeit semiconductors. Today's Business Week ran a long article about the incredible way fake chips get into US defense equipment. The Pentagon's policy of buying hard-to-find spares from the cheapest sources and from small businesses creates a gigantic crack for fakes to leak through.

Many of these parts are old, and are impossible for buyers to authenticate. Fakers sand off the original markings, and replace with bogus text.

The semiconductor industry is currently working on a method to uniquely identify semiconductors with an encrypted identifier (called SEMI T20) - which will allow buyers to verify authenticity. This won't help authenticate 20 year old devices - but it could prevent the problem 20 years from now.