China Risk Rising: The Sino-Organic Roots of the Peanut Crisis and Beyond

So are you the type that shops at Trader Joe's and Whole Foods who thinks that you're safe from the peanut crisis because you don't buy chemically and biologically altered proletarian legumes? If this describes you, guess again. According to an AMR Research post over on ZD Net "Chinese organic peanuts may have been the source of another Salmonella outbreak at PCA back in 2006. Now that China is part of the story we have a full blown worst practice example of stupidity in the global supply chain." Stupidity or not, we can all agree that supply risk from tainted products is rising. And AMR's latest research confirms this. According to the same post, a recent AMR survey of over 130 companies found that organizations cited the following areas as their number one China supply chain risk concern: "Product quality/safety/fear of contamination -- 45%, Rising material costs -- 10%, Rising environmental compliance costs -- 10%, Rising labor costs -- 9%, Political unrest -- 9%, Other -- 14%." Where does this leave us going forward when it comes to Chinese supply risk? Kevin O'Marah argues in the rest of the post that "a year ago when oil starting going up, we saw wave 1 of the hidden costs of globalization as transportation suddenly began eating up profits. In wave 2, which is now becoming clear, the hidden cost of poor product quality is beginning to bite. I predict wave 3 will be fuller realization of the cost of stolen or damaged intellectual property; we'll see that next year as pirated content, counterfeit brands, and hijacked patents slashes earnings." And to think: this all started with tainted Chinese organic peanuts sourced by a US company trying to save a buck knowing full well that it was processing a tainted product. Clearly, no legume is innocent ...

- Jason Busch

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