With the E. coli crisis unfolding in Alberta right now, it is hard not to think what went wrong. Ethics as well as slow adaptation to current needs can be found as the root causes of the E. coli crisis. XL Food Inc. found itself in the middle of this E. coli outbreak. On their website, XL Food Inc. does not mention governance and vaguely mentions safety. XL Foods Inc. does not have independent directors. The website and lack of governance are internal weaknesses that XL Food Inc. should improve for a stronger future outlook. Cargill Ltd., the other major beef processor in Canada, has an independent board with an ethics open line as well as has a commitment to food safety with responsibilities in risk management and supply chain.  The independent board for food safety that Cargill Ltd has is their point of difference because consumers would much rather be more aware about how their food is handled as well as how safely it is handled. However, having independent directors or a board of directors is not mandatory.

Governance of food safety is important for agri-business because once food safety is breeched; it is hard to regain the same level of consumer trust. To reduce food safety risk internal controls need to be strengthened. An example would be segregating duties and keeping records.  Risk management and internal controls may not produce profit but they are worth the cost in the long run. Regaining consumer trust as well as regaining reputation is difficult and also there is an ethical issue involved. The ethical issue is whether the health and safety of consumers is more important than the extra cost of extra safety measures.

source:

http://www.canadianbusiness.com/blog/corporate_control/101353–e-coli-contaminated-beef-and-shoddy-governance