Washington Post - Owners, Manufacturers, Suppliers All Feel Fallout

The Washington Post reports

Crisis Over Pet Food Extracting Cost

Owners, Manufacturers, Suppliers All Feel Fallout

By Rick Weiss and Nancy Trejos

Washington Post Staff Writers
Wednesday, May 2, 2007; Page D01

In Nevada, the chief executive of an import company examines the lawsuit that just hit him, wondering how much it will cost to ensure that his next purchases of pet food ingredients are free of industrial poisons.

In Kansas, wheat growers wonder how China usurped the once-bustling market in gluten, a protein-rich byproduct of those amber waves of grain that once symbolized America's bounty

And at a park in Washington, the owner of a soft-coated terrier says that after learning the food he had been giving his beloved Checkers for the past six years was on the recall list, he will never again buy pet food brands with foreign ingredients.

"They've lost a lot of credibility," said Fred Mitzner, who after the recall started buying California Natural dog food. "It was very upsetting."

While the Food and Drug Administration pursues what is sure to be a long investigation into how pet food became contaminated with an ingredient for making plastics, and while Congress begins the months-long process of haggling over food-safety amendments, pet food companies, their suppliers and their customers do not have the luxury of waiting.

They have to cope with the crisis immediately, and for most, that is already proving expensive.

Stephen S. Miller, chief executive of ChemNutra of Las Vegas, was sued last week by a pet food company to which it had sold tainted Chinese wheat gluten. He now faces legal fees and the costs of extra on-site inspections he plans to impose on his Chinese suppliers.

Producers of brand-name pet foods, several of which were revealed by the recall to use the same ingredients that economy chow makers use, stand to lose once-loyal customers, many of whom are saying they would not return to their former brands.

And some pet owners like Mitzner, fed up with worrying about poisoning their animals, can expect to pay up to three times as much for organic or other specialty chows.

If there is one player that may benefit from the still-spreading disaster -- federal officials said yesterday that millions of chickens that ate the contaminated food were sold for human consumption -- it is the U.S. wheat gluten industry, which has been struggling for years to compete against cheaper Chinese imports.

"We've seen a renewal of interest in U.S.-manufactured wheat," said Steve Pickman, a vice president at MGP Ingredients of Atchison, Kan., one of four surviving wheat gluten companies in the United States.

People seem to be learning a lesson, Pickman said: "When you buy strictly on price, you don't necessarily get a bargain."

At the heart of all these dynamics, legal and marketing experts say, is that great lubricator of commerce, trust. It is a commodity American buyers have extended to China in return for significant cost savings but, in retrospect, with little testing and documentation to back it up.

...

No such mix-ups or contamination events have plagued U.S. producers of wheat gluten, Pickman said. But domestic producers have been unable to match the rock-bottom prices that the Chinese offer. The going price of about 60 cents a pound, he said, is 20 to 30 percent lower than the cost of production in the United States, where 540 million pounds of the stuff are bought every year -- 70 percent of it from foreign sources.

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"If you want to import from China you need to go to the factory," said Paul Splitek, vice president of mass retail for Boston Warehouse Trading, which imports candy, chocolates and ceramics for companies such as Crate & Barrel and Pottery Barn. "If you don't, you are dumb and acting irresponsibly," said Splitek, who estimates that 60 percent of food factories in China have reliable safety, labeling and documentation practices.

But NutraChem's Miller did visit his suppliers regularly, Stern said. Short of full-time surveillance, he and others said, it is impossible to guarantee that a supplier is not pulling an occasional fast one.

The melamine scandal has angered some in China as well as in the United States.

Richard Zhang, an import-export sales manager for Qingyuan Foodstuff, which sells corn gluten and other feeds in Shandong Province, said his company does not use additives such as melamine in its products, but that some smaller competitors started doing so a few years ago. Because of their conduct, he said, the Chinese government is demanding that all vegetable protein exporters send their products to Beijing for central testing first.

That means the misbehavior of a few firms has delayed shipments for everyone by up to two weeks.

"We really hate them," Zhang said of the companies that were cheating. "They have destroyed the credibility of the whole industry."

Oh, you don't hate them nearly as much as we do.

Premium pet food brands also stand to take a hit from the loss of trust.

A poll of 1,000 American adults, conducted by GfK Custom Research North America after the food recall began, found that 66 percent of pet owners sometimes buy premium brands and 40 percent do so regularly. Of the 1 in 6 whose brands were recalled, the survey found, nearly half said they did not plan to return to their old brand, even after the crisis has passed.

I'm sure that number has gone up, given how badly all of the companies have handled the recall.

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Some local pet owners are poised to bypass the commercial market altogether.

At the Kalorama Recreation Center and Park in Northwest Washington, Karin Wiedemann said she no longer trusts the Purina dried dog food she bought for years for her 5 1/2 -year-old Rotweiler-German shepherd mix, Bella. But she does not want to switch to the expensive organic brands because she doesn't think they're any better.

"It's made me so wary and skeptical of all dog food," Wiedemann said of the recalls. "It's all mass produced. It makes me think, 'Where are all the ingredients coming from for the organic food?'"

So instead, she is considering making Bella's food from scratch, a huge commitment for someone who rarely cooks for herself. ...

Carl Tobias, an expert in product liability at the University of Richmond School of Law in Virginia, said that given how slow Congress and regulators can be to act, consumers and companies have little choice but to become more demanding about the sources and integrity of the products they buy.

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Correspondent Ariana Eunjung Cha in Shanghai contributed to this report.