Pressure along supply chain means companies desperate for best deal

Pressure along supply chain means companies desperate for best deal

For all the puns flying around Twitter ("Nag bol" was one highlight), the horse meat scandal has in truth shaken Europe's food industry to its very core.

The origins of the story were serious enough: burgers on sale in the UK and Ireland containing up to 27% horse meat. But, in the last four days, the impact of the contamination has grown - and the consequences for the industry could be significant.

After a weekend of more headlines, here, at the time of writing are the most notable developments:

The Findus recall that started in the UK last week has grown to take in Sweden and France, where, on Sunday, retailers including Carrefour and Casino pulled Findus products and those made by its supplier, French firm Comigel.

The French government has claimed the source of this contamination (the one with Findus at its centre, not the burger products in January, the source of which is still not certain) is an abattoir in Romania, via traders in Cyprus and the Netherlands and firms in France.

UK food secretary Owen Paterson yesterday admitted the horse meat could contain a substance "injurious to human health". Paterson told LBC Radio the contamination was "at the moment a labelling issue". We will no doubt find out for certain when the results of industry-wide tests in the UK are published on Friday.

Paterson has also publicly stated he believes the contamination is "a criminal action". He told the BBC: "This is a straight case of fraud."

To a degree, therefore, one can sympathise with the suppliers and retailers affected. There has to be an element of trust in business and one can understand why the likes of Tesco, Aldi and Findus feel let down by the incidents of the past month.

That empathy does, however, only go so far. There is the feeling that these incidents are of the industry's own making. In an sector in which profit margins are wafer thin, with retail pressure bearing down on manufacturers and manufacturers bearing down on their suppliers, it really is not a surprise that the best deal will be sought after and snaffled up.

In the case of Findus, it claims it did not know its meals were being made with horse meat, as does its European supplier Comigel. But the old adage of "if something appears too good to be true, it probably is" has rarely felt so apt.

Some say Findus now faces a mountain to climb in regaining consumer trust. It does. However, trust in the entire food sector has been shaken by this incident. The rest of the UK food industry, for example, will be nervously testing its products this week to see if the contamination has captured them, too. And consumers from Strasbourg to Stockholm - and those watching the news across Europe this weekend - will have become all too aware in recent days of how interlinked the supply chain is across the Continent. What looked like a UK issue has very quickly become one that has taken in the entire continent.

The suppliers and retailers affected have promised tougher testing in the future. Last month, Tesco, in the wake of the burger contamination, promised new DNA tests would "set a new standard" in the industry. The UK food industry has agreed in principle with the country's Food Standards Agency to test more regularly and publish the results.

But is this kind of voluntary action enough? Should regulation be introduced to try to ensure this kind of contamination does not happen again? The industry would balk at that but, unless it can demonstrate it is serious about tackling these issues, it may find the state opts for legislation.