- Editorial Commentary -

October 19, 2009 (”The Komisar Scoop” via FinancialWire) (By Lucy Komisar) — On the heels of Friday’s health care ETF’s rally, including the Health Care Select Sector SPDRS ETF (NYSE: XLV) closing at its highest level in over a month, while the Vanguard Health Care ETF (NYSE: VHT) gained more than 1%, Lucy Komisar offers some food for thought:

When he was interviewed for the investigative story I did in March (http://thekomisarscoop.com/2009/03/cafeteria-kickbacks) on Sodexo’s (OTC: SDXOF) (Paris Stock Exchange: EXHO) practice of demanding rebates (ie kickbacks) from suppliers, Sodexo deputy counsel Tom Morse argued that working only with “compliant” vendors was necessary to assure health and safety. (”Compliant” means they pay rebates.”)

He said that “the first thing we vet our vendors for is safety” against food-borne illnesses …”

Safety?

In August 2009, at a Boy Scout camp in Goshen, Va, 27 people were made ill and more than 80 showed symptoms of E. coli, the deadly bacteria, which had infected ground beef which Sodexo bought from Sysco (NYSE: SYY), a distributor, which got it from Cargill (Colombo Stock Exchange: CARG), the giant food conglomerate.

An investigative article by Michael Moss in the NY Times this month reported that Cargill’s hamburgers are made “from a mix of slaughterhouse trimmings and a mash-like product derived from scraps” that are ground together.

Moss wrote that hamburgers of various grades of meat from different parts of cows and even from different slaughterhouses “are particularly vulnerable to E. coli contamination.”

But, “Using a combination of sources - a practice followed by most large producers of fresh and packaged hamburger - allowed Cargill to spend about 25 percent less than it would have for cuts of whole meat.”

“Those low-grade ingredients are cut from areas of the cow that are more likely to have had contact with feces, which carries E. coli, industry research shows.”

Moss said, “With seven million pounds produced each week, the company’s product is widely used in hamburger meat sold by grocers and fast-food restaurants and served in the federal school lunch program.”

Such burgers “cost Cargill about $1 a pound, company records show, or about 30 cents less than industry experts say it would cost for ground beef made from whole cuts of meat.”

“But when it came to E. coli O157:H7, Cargill did not screen the ingredients and only tested once the grinding was done.”

Sodexo could use safer hamburger. Moss noted that “The retail giant Costco is one of the few big producers that tests trimmings for E. coli before grinding.”

Why doesn’t Sodexo demand that its suppliers do the same? Would it cut into its profits?

Source: Courtesy of “The Komisar Scoop” (http://www.thekomisarscoop.com)

Original Article: http://thekomisarscoop.com/2009/10/sodexos-safe-supplier-sickens-27-boy-scouts-at-camp

FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation for its news, opinions or distributions. Further disclosure is at the FinancialWire(tm) web site (http://www.financialwire.net/disclosures.php). Contact FinancialWire(tm) directly via inquiries@financialwire.net.

Free annual reports for companies mentioned in the news are available through the Free Annual Reports Service (http://investrend.ar.wilink.com/?level=279).

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.