A study found a link between food safety law violations and a company's weak financial position.
This study investigated the relationship between the financial condition of Finnish companies and the inspection grade received by their food production facilities.
According to a study published in the journal Food Control, financial metrics can help identify companies with financial challenges, potentially allowing for targeted testing of those companies.
The hypothesis was that a weak financial position increases the risk of recurrent non-compliance and reduces the ability to comply with the law. A weak financial position covers delays or difficulties in payments or business losses.
This study does not prove a causal relationship between deteriorating financial conditions and non-compliance. However, such circumstances can affect the possibility of fixing the problem.
limited resources
The researchers used food control inspection reports for Finnish meat, fish and dairy sites from 2016 to 2020, as well as the public financial statements of these companies. The data included 612 facilities.
In the Finnish system, a central agency, the Finnish Food Authority (Ruokavirasto), directs regulatory measures in cooperation with local authorities. Facility inspections are carried out at the local level by municipal food control staff. Results range from an excellent A to a poor D.
Past findings have shown noncompliance requiring control actions in fish, meat, and dairy facilities. Additionally, there may be cases where the fix for the problem is partially insufficient.
The researchers said a risk-based approach is needed because resources are limited and only 73.2 to 82.7 percent of meat, fish and dairy production facilities in Finland are inspected each year.
Of the 612 businesses included in this study, 150 had an overall inspection grade of C or D for at least two of the five years studied. Of the sites with repeated violations, 78 were in the meat department, 62 in the fish department, and 10 in the dairy department.
Of the eight financial indicators examined, seven had a significant correlation with the percentage of overall inspection grades C and D for at least one year.
Data shows that almost a quarter of Finland's meat, fish and dairy factories repeatedly violate food safety regulations. Repeat violations were more common in the meat and fish sector.
The role of finance in risk decisions
The analysis found that a food manufacturing facility's low profitability means there is a high risk of recurrence of non-compliance. A food producer's low liquidity also indicates a high risk of non-compliance in the same year. The study found that persistently low profitability undermines a company's solvency and liquidity, reducing its ability to invest in food safety.
If your financial situation is weak, it may be tempting to ignore legal requirements to save money. Researchers say this could happen if the company doesn't take food safety seriously and struggles to maintain adequate fluidity.
Combining financial indicators targeting food control inspections with approaches already in place, such as risk assessment of establishments based on production type and volume, could improve targeted and earlier intervention. .
“These financial indicators can be used to map food operations that are at high risk of repeat food safety violations, and inspections may be targeted at those operations. “This may lead to increased sexual activity,” the scientists said.
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