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Salmonella/Tomato Crisis
Creates Collateral Damage

Who Will Pay For The Losses?

Jim Prevor’s Perishable Pundit, June 12, 2008

What is the one question that dare not speak its name during this stage of the Salmonella Saintpaul/Tomato crisis?

Who is going to pay for all this? One industry veteran put it this way:

It will be interesting to see who suffers the financial losses on this one. In the Spinach/Spring Mix mess, buyers went back to suppliers for the cost of recalls, delivered product cost, etc.

The shippers didn’t like it, but they swallowed it. I don’t think the tomato growers are going to give credit for the losses- at least I would be very surprised if they do. So we might see retailers and distributors swallowing this one.

Since it is all voluntary — not a mandatory recall; in fact, not a recall at all — many legal agreements don’t apply, so things will wind up being the subject of business negotiations.

A few big processors were in a better position to eat the loss than a lot of tomato growers, shippers and repackers.

Still, how it plays out will be interesting to watch.

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