Saturday, January 31

Breaking Pride: Peanut Corporation Of America


The day before federal health officials began a criminal investigation into the actions of the Peanut Corporation of America (PCA), Beth Falwell, daughter of PCA founder Hugh Parnell, in an ill-advised exclusive interview spoke to a local station, asking for understanding and the benefit of the doubt.

Federal investigators says PCA shipped out peanut products that had tested positive for salmonella at least 12 times during the past two years. The FDA says PCA shipped each out after retesting with a different laboratory. The interview reveals two messages from Falwell. One is a distraught family member, obviously concerned for the family company that is not likely to survive the crisis. The other is more defiant, claiming that the FDA investigation is exaggerated.

“Right now it’s not a law, maybe it should be. But he didn’t break any laws,“ Falwell said.

On Thursday, we revealed how the PCA had emphasized safety, quality, and freshness of product. However, even Falwell could not deny any allegation of cockroaches in the plant, a leaky roof, or the presence of mold. "I'm not saying there weren't," she said.

Based on the interview alone, it's extremely clear that the Peanut Corporation of America doesn't have a crisis communication team in place. While we pointed to a breakdown of the first step — situation analysis — in the crisis communication process, it seems the communication matches the operations, with extreme negligence. Not once, that we are aware of, had the company expressed any empathy or remorse for those afflicted until the criminal investigation was launched (see the newest statement).

In addition, we recently stumbled onto evidence that this is not the first time the plant has had to recall product due to improper and unsafe operations at its plant in Gorman, Texas, which is now closed. Although the report dates back to the 1990s, the Peanut Corporation of America recalled thousands of pounds of product because they exceeded the FDA's established tolerance level for aflatoxin. Aflatoxins, a fungus, are toxic and among the most carcinogenic substances known.

While manufacturers and processors have recalls from time to time for any number of reasons, the report stands out because mold was one of the many problems that the FDA noted during this inspection and, for years, the company has claimed "providing a quality product at a fair cost has been the credence our business has grown up with for the past 28 years." Incidentally, the family did not own the company between 1995 and 2000 (they sold the company, and bought it back).

11 comments:

Rich on 1/31/09, 12:50 PM said...

More words:

As suspected, there have been others incidents associated with the PCA. In 2008, text from another Food and Drug Administration record citing the September 2008 incident in which chopped peanuts from Peanut Corp. of America of Lynchburg, Va., were caught at the U.S. border. Read yet another story.

It seems apparent that the PCA has experienced ongoing quality control issues spanning several years. How many has yet to be determined.

Rich on 1/31/09, 1:04 PM said...

The text of our report finding from the 1990s.

Product: Peanut butter products and large peanut granules:
(a) Creamy Stabilized Peanut Butter;
(b) Crunchy Natural Peanut Butter;
(c) Crunchy Stabilized Peanut Butter;
(d) Creamy Old Fashioned Peanut Butter;
(e) Crunchy Old Fashion Peanut Butter;
(f) Creamy Natural Peanut Butter;
(g) Dark Roast Creamy Stabilized Peanut Butter;
(h) Old Fashion Peanut Butter;
(i) Dark Roasted Peanut Granules. Recall #F-017/025-1.
Code: Peanut butter products are not coded. All lots shipped
between April and mid-July 1990. Peanut granules -
lot #T-188 0122 D.
Manufacturer: Peanut Corporation of America (PCA), Gorman, Texas.
Recalled by: Peanut Corporation of America, Lynchburg, Virginia,
by telephone and letter September 14, 1990. Firm-
initiated recall ongoing.
Distribution: Nationwide.
Quantity: 1,303 boxes - 50 pound Creamy Stabilized Peanut Butter;
56 boxes - 50 pound Crunchy Natural Peanut Butter;
5,648 pails - 35 pound Creamy Stabilized Peanut Butter;
402 pails -35 pound Crunchy Stabilized Peanut Butter;
14 pails - 35 pound Creamy Old Fashioned Peanut Butter;
14 pails - 35 pound Crunchy Old Fashioned Peanut Butter;
15 pails - 35 pound Creamy Natural Peanut Butter;
75 pails - 35 pound Crunchy Natural Peanut Butter;
40 pails - 35 pound Dark Roast Creamy Stabilized Peanut
Butter;
260 tubs - 12/3 Pound Creamy Stabilized Peanut Butter;
76 tubs - 12/3 Pound Crunchy Stabilized Peanut Butter;
112 tubs - 6/5 pound Creamy Stabilized Peanut Butter;
2 tubs - 6/5 pound Crunchy Stabilized Peanut Butter;
10 tubs - 6/5 pound Creamy Natural Peanut Butter;
1 tub - 6/5 pound Old Fashioned Peanut Butter;
11 drums - 475 pound Crunchy Old Fashioned Peanut Butter;
8 drums - 475 pound Creamy Natural Peanut Butter;
3 drums - 475 pound Crunchy Natural Peanut Butter;
166 boxes 30 pound Dark Roasted Peanut Granules
were distributed.
Reason: Products exceed FDA established tolerance level for
aflatoxin.

Chief Rabbit on 1/31/09, 7:18 PM said...

I agree with you, Rich, that PCA doesn't have a crisis comm team in place, otherwise, they may have a better response to reports that the company knowingly shipped tainted products over a period of time.

Without an effective comm strategy, PCA has been tried and convicted by media reports and blog posts. The situation is spinning out of control, painting the PCA leadership's lack of responsibility beyond run-of-the-mill greed and into criminal negligence and apathy.

PCA likely will not survive this fiasco. If allegations prove correct, then the loss of this company will be beneficial to all.

Rich on 2/1/09, 8:05 AM said...

Bonnie,

As soon as one of the first lawsuits included the distributer, there was no doubt that the PCA was dead.

Even if they escaped criminal charges and survived to try, it would be difficult to imagine any other company accepting the risk of a repeat recall. The damage they have already done is immeasurable.

They've damaged an entire industry, even companies that never purchased from them.

Even their last statement demonstrates ignorance. They say they are expressing empathy. You don't say you "express empathy." You express sympathy and demonstrate empathy. Sad.

Best,
Rich

Jeremiah on 2/2/09, 9:48 AM said...

It just keeps getting worse for these people. This is a perfect example of how poor planning can lead to total disaster.

Anonymous said...

The sister of the company's owner did more harm than good in agreeing to an on-camera interview.

Rich on 2/2/09, 4:35 PM said...

Anon,

Absolutely it was a bad idea. I would not be surprised if that video ends up as evidence against the PCA.

Jeremiah,

Yep. Never underestimate the damage that can be done internally. Often, it's the people inside the company that are its own worst enemies.

Best,
Rich

JQuinn on 2/3/09, 5:29 PM said...

I have a question though, what laws did PCA actually break and what proof would be needed to convict?

Sure, they might of had tests that came back positive but secondary tests came back negative. What is the law there?

I have read comments from lab officials saying that once a test comes back positive, good business practices suggests throwing the entire lot out but I haven't read anywhere that this is an actual law.

I have heard allegations that the PCA was lab shopping but I haven't read that this is actually illegal and even if it were or is, I would imagine it would be extremely difficult to prove seeing as secondary tests seem to be legal.

What is PCA's crime? If it is only that they knowingly shipped out tainted product, how can this be proved seeing as all 12 shipments had at least one clean bill of health from a lab?

Rich on 2/3/09, 8:31 PM said...

Hey JQuinn,

Any criminal charges will have to be up to the FDA, Justice Department, Georgia Bureau of Investigation, among others. They will also have to decide whether which laws were broken, which laws apply to which jurisdiction, etc.

There are ample laws across all jurisdictions. The FDA, Department of Agriculture, Georgia Department of Agriculture, and Georgia Food Act. As it turns out, its Texas plant was also operating without a license.

So to answer your question more specifically, it seems to me that there will be charges. What those charges are or whether they lead to a conviction is anyone's guess. It could along the lines of criminal negligence or tied to the deaths they are responsible for, but I am not an attorney nor am I familiar will all those laws. In addition, it seems there will be several civil cases.

For my part, I tend to focus mostly on the communication.

It seems unlikely, given PCA communication challenges, that the company could manage to reenter the market after costing what will be millions or billions of dollars in losses and a breach of public trust. It might have worked out differently, but the communication mistakes drove it deeply in another direction.

Best,
Rich

Mountain Sage on 2/11/09, 4:59 PM said...

Do you have a link for the 1990 report?

Rich on 2/11/09, 5:05 PM said...

Mountain Sage,

Yes, I do. I did not include it because it is the full report and includes many more companies unrelated to this case. I also printed a copy.

If you need it, please contact me direct. copywriteinkin (at) yahoo.com

Best,
Rich

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