The recent incident of large numbers of eggs contaminated by pesticide use is but the most recent of a series of food scandals in recent years that have shaken consumer confidence. The government has instituted a number of regulatory reforms in an effort to deal with the issue, but it remains uncertain whether the current system is sufficient to stem the problem.

In the latest in a series of food-safety incidents that have unnerved Taiwanese consumers in recent years, Council of Agriculture (COA) inspectors in late August discovered contamination in the country’s egg supply. A pesticide containing fipronil, commonly used for the control of fleas, lice, and mites on animals, including pets, was found to have been used at a number of egg farms in central Taiwan, despite its having been banned for use on any animals intended for the human-food supply chain. Fipronil is considered “moderately hazardous” by the World Health Organization, which notes its potential to impact the central nervous systems of all species.

Taiwan amended its regulations regarding pesticides last year and now follows the European Union standard for a Maximum Residue Limit (MRL) of five parts per billion (ppb) of fipronil in eggs, while Japan and South Korea allow 20ppb and the United States 30ppb. Nevertheless, the contamination in Taiwan exceeded all available standards, reaching as high as 153ppb at one farm, according to COA Deputy Minister Chen Chi-chung.

Subsequent inspections by the cabinet-level COA of some 2,000 egg farms throughout Taiwan revealed another 44 farms using fipronil. Tens of thousands of tainted eggs were recalled off store shelves in Taipei after being discovered by the city’s Department of Health, and the COA blocked 1.5 million eggs from reaching the market.

The incident sent downstream food suppliers – food factories, bakeries, and restaurants – scrambling to ensure that their own products were free of contamination. Gaps in communication and coordination between the government and industry resulted in uncertainty over which egg suppliers tested positive for fipronil and which were free of contamination. To protect consumers, many food makers pulled all their products off the shelves while awaiting test results. Those tests took as long as two weeks to be confirmed, resulting in significant losses.

“Overall, the government could improve its communication and coordination with business,” says Echo Chen, commercial director for General Mills Taiwan.

Meanwhile, food makers needed to find new sources for eggs confirmed to be free of contamination. “I use eggs every day and in very big quantities, but when the scandal broke I only had two days to find another supplier,” says Dan Co, factory manager for international bakery Aunt Stella’s Handmade Cookies and Cakes. “It was really a big challenge.” More significantly, Co observes, “I need to face similar situations all the time.”

Food scandals in Taiwan are seemingly a regular occurrence. This year alone – besides the problem with eggs – harmful bacteria were discovered in 60% of cold drinks tested in Taipei City, banned chemicals turned up in tons of bean sprouts in New Taipei City, and the country was shocked to learn of a number of cases in which expired meat and seafood, some of it years old, had been relabeled with current dates and sold at retail outlets.

When it took office last year, the Democratic Progressive Party (DPP) government of Tsai Ing-wen pledged to do a better job of safeguarding the nation’s food supply than had the previous administration. Following the discovery of the tainted eggs, the President Tsai quickly pledged to raise the budget for food safety by 50%, from NT$920 million (US$29 million) to NT$1.37 billion, according to media reports.

The opposition Kuomingtang (KMT) wasted no time in criticizing the government, saying it had risked the health of the people by focusing only on controversial pension reform and infrastructure development projects. “How can a government say that it prioritizes food safety when it cannot even handle eggs?” asked KMT Legislator Alicia Wang.

Industry insiders note that violations of food safety laws are generally inspired by greed, and that no food safety system is perfect. “Food safety is not a perfect science. It’s an always evolving process of self-development and there’s always room for improvement,” observes Louie Silveira, regional general manager for Costco Wholesale Taiwan. “Food scandals are big, but they happen everywhere. It’s not just a Taiwan problem.”

The egg contamination scandal actually broke first in Germany and the Netherlands in early August before sparking investigations around the world that led to the discovery of fipronil in the egg supply in at least 17 countries.

Substantial reforms

In 2013, the discovery of a rogue factory in Pingtung County that produced food oils derived from such exotic sources as roadkill and kitchen drains set off a chain of inquiries into the food oil market that uncovered numerous instances of contaminated and fraudulent oils. In the wake of the scandal, the government enacted significant reforms to its food-monitoring system, including amendment of the Act Governing Food Safety and Sanitation to impose higher fines and harsher prison sentences for violators. The Taiwan Food and Drug Administration (TFDA) hired more than 70 new inspectors.

However, responsibility for food safety is shared across an array of ministries and agencies, including the TFDA, COA, Environmental Protection Administration (EPA), Ministry of Health and Welfare, Ministry of Education (related to school lunches), as well as local bureaus of health and environmental protection. Inadequate coordination among the various government bodies was found to be a major reason why the pirate food-oil producer in Pingtung was able to evade detection for years. The factory had in fact been inspected by the local bureau of environmental protection which, seeing no environmental issues, took no action, despite the fact that the plant was not licensed to produce food oils and contained large quantities of industrial chemicals.

To better coordinate the efforts of various agencies, the Office of Food Safety (OFS) was created under the Executive Yuan, with its head reporting directly to the deputy premier.

But food-safety scandals continued to plague Taiwan even after these reforms, prompting President Tsai to proclaim a “Five-point Food Safety” policy in which the government promises to 1) “strengthen source control management,” 2) “re-establish the food production-management system,” 3) “strengthen government market-inspection capabilities,” 4) “increase liability for producers and vendors,” and 5) “encourage and create oversight platforms.”

The cloud-located database called the “food cloud” created under the Ma administration has been expanded to include more comprehensive data. For example, since the government needs to be able to locate food sources in order to manage them properly, the TFDA has collaborated closely with the Ministry of Finance (MOF) as well as local bureaus of health to vastly expand the national registry of food businesses located on the food cloud. From the 170,000 businesses listed in 2015, the number is now 440,000 – nearly all such operations, says the TFDA.

These food businesses range from farms to manufacturers to restaurants and night-market stalls. (Street vendors, however, are not registered because they do not pay taxes and are essentially illegal.)

“Each year we set the goal for every local health department to register the food businesses in its district, and we give them a lot of support to reach the goal,” explains Hsu Chao-kai, deputy director of the TFDA’s Food Safety Division. “Now we know the food businesses in Taiwan and what they are doing – whether they are importers, sellers, restaurants, or whatever.”

The registration of these businesses allows the TFDA to better manage them – ensuring, for example, that food-related production lines are safely isolated from industrial production lines, and that larger firms have onsite government-certified Quality Assurance officers to monitor and test the product to guarantee that the product is safe and that the label reflects the actual contents.

Besides the business registrations, the various databases in the food cloud include a tremendous amount of detailed, searchable information that can be cross-referenced. Food-grade oils and feed-grade oils can be traced throughout the system by means of their customs codes, allowing the government to track whether food producers are importing feed-grade oils.

In addition, a “chemical cloud” maintained by the EPA has a database of over 600,000 materials that might be used in the chemical industry as well as in food processing. By cross-referencing the data on the chemical cloud with information on databases maintained by other agencies, “we can see if some food companies are using chemicals or other materials that are not supposed to be used in food, and then check them to see what is going on and potentially stop them,” says the TFDA’s Hsu.

“The government is becoming stricter,” says Frank Chung, vice general manager of Kimlan Foods Co., one of Taiwan’s largest soy sauce makers. “They want us to list a lot of ingredients and where they come from. They want to have credentials for everything.”

No system is ideal, however, and food makers complain that the data entry now required by the government is time- and labor-consuming and question its utility or effectiveness. The pesticide with fipronil, for example, seems to have evaded the system.

The role of inspectors

The inspection regimen has been expanded and improved, according to the TFDA, which recently added another 80 trained inspectors, bringing the total to 170, for inspection of 18,000 food companies.

Deputy Director Hsu notes that TFDA inspectors work closely with local departments of health on projects in high-risk sectors such as food oil and fish and meat product factories, as well as larger enterprises (those with at least NT$30 billion in paid-in capital) where violations are likely to have greater impact.

The inspections are aimed at rooting out violations and promoting good practices such as Hazard Analysis and Critical Control Points (HACCP), the basic production standards used around the world. The U.S. FDA defines HACCP as a “management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product.”

The quality of the inspectors has been called into question, however, as they are government employees hired through a civil service exam and generally lack industry experience. The absence of practical food-industry experience hampers their ability to ferret out malfeasance effectively, says Aunt Stella’s Dan Co. “If you hire people who are experienced in the food industry, in five or ten years all of the problems that are being seen could be solved. Experienced people can see the problems right away.”

The Ma administration raised penalties for food-safety violations, and the Tsai administration has one-upped them with even stricter penalties. Serious food-safety violations can now result in fines of NT$2 million to $6 million, or even higher based on prosecutors’ determination of the extent of illegal profit-making. This year Yuyang Co. manipulated the expiry date labels on its aquatic products and was fined NT$15.48 million, while Lichin Co. was found to have also sold expired food with false labels and was fined NT$12 million. It is under on-going criminal investigation.

“If they were violating regulations governing human safety, food safety, or food adultery and the use of illegal additives, then they can face criminal charges,” says the TFDA head, noting that such charges are brought by prosecutors.

In one of the highest profile cases, Wei Ying-chung, former chairman of  the Ting Hsin Oil and Fat Industrial Co.  and one of Taiwan’s wealthiest people, began a two-year prison term in July for ordering employees to adulterate food oil products and providing false information to consumers. The company is part of Ting Hsin International Group, one of Taiwan’s largest companies, with interests as varied as instant noodles in China and a stake in the Taipei 101 building. The company was implicated indirectly in the initial waste oil scandal of 2013, and quickly found itself the target of numerous investigations, one of which accused the firm of using feed-grade lard in its food products. Prosecutors at the time suggested that Wei might face 30 years in prison.

Wei was given a final conviction last April by the Intellectual Property Court, which handles cases of food fraud at the appellate level.

The government has also established a food-safety hotline for whistleblowers to report cases of food-safety violations or fraud. The TFDA has fielded some 83,000 calls to the 1919 hotline, which have resulted in exposing significant violations of food-safety laws. Most of the cases of expired meat and fish that had been relabeled were exposed by whistleblowers. Under the new policy, whistleblowers are rewarded for their vigilance.

Industry insiders praise the government’s efforts to work with industry to ensure a safer food supply. Nevertheless, some observers point to inefficiencies in the system that both create gaps in the monitoring of the food supply and hamper businesses’ efforts to operate in the Taiwan market. They caution that if compliance is too onerous, many people will seek ways to skirt the regulations.

The complexity of deftly deploying a system involving at least six different cabinet-level ministries and agencies as well as local bureaus of health and sanitation continues to be a challenge. The overlapping jurisdictions sometimes result in contradictory policies, confusing enterprises and adding to operating costs. “It can be hard to get a straight answer,” says Frank Chung of Kimlan. “If there could be more standardization or just one agency to oversee the entire system, that would help a lot.”

The Office of Food Safety has not lived up to expectations, report numerous industry executives, who see little leadership or coordination emerging from the office.

Aunt Stella’s Dan Co views the egg contamination issue as a case in point for this lack of coordination. “Basically this problem has been passed around and no one wants to take responsibility,” he observes.

In an effort to enable the various agencies to work together effectively, high-level representatives from each of the central government’s offices involved in food safety meet once every two months in the Executive Yuan. Gaining cooperation from local governments is also important, as that is the level at which policies are implemented. Every three months the TFDA meets with local departments to set up projects and goals, offering substantial bonuses to the local bureaus that prove to be the most effective.

Political factors

The politicization of food-safety issues is also a concern for many in the industry. Josephine Chen, director of corporate affairs for Mars Taiwan, notes that when the public demands action following the eruption of a food scandal, understandably “public health officials have to show that they are doing something about it.” Unfortunately, however, the action is not always “done in a rational manner or based on science,” she observes, echoing the opinion of numerous other food industry professionals.

To demonstrate their commitment to food safety, government officials and legislators tend to respond by revising laws and regulations to make them ever stricter and more thorough. Consequently, industry says it is overburdened by constantly shifting regulations. “The biggest challenge we face is that they change the rules very quickly and require implementation in a short period of time” without a grace period to prepare and adjust, says Michelle Chiang, scientific and regulatory affairs manager for Wrigley, a subsidiary of Mars.

Standards for products sold in Taiwan often differ from global or regional norms, resulting in difficulties for importers to bring product into Taiwan. “There are a lot of regulations that are unique to Taiwan, which makes it a challenge when the rest of the world is doing it one way and Taiwan is doing it another way,” says Costco’s Silveira.

For example, Taiwan’s labeling requirements have changed several times in the past few years, often on very short notice, creating difficulties for multinational companies offering products in several markets with the same labels. In some cases, companies have decided to simply pull the product from the market rather than go through the time and expense of developing a new label.

Many companies cite products that are available in most other markets but that cannot be imported into Taiwan because of Taiwan-unique standards. For instance, Mars refers to its peanut butter M&Ms that cannot be imported because the government bans the use of antioxidants in chocolate, even though antioxidants are present in the peanut butter, which use is permitted.

Further, the government has recently begun making increasing demands for quality and safety testing of imported product in domestic laboratories, although testing has already been done in the home market. This requirement raises the cost of doing business and reportedly also often delays the time to market because of backlogs at some of the designated laboratories. For perishable items, the delays may mean a seriously shortened shelf life.

Nevertheless, industry is optimistic that government officials are serious about both food safety and enabling an efficient market. “I’ve seen progress in the government’s willingness to work with industry,” says Costco’s Silveira. “I know that we can pick up the phone and find somebody to speak with about our issues. It’s complicated to get an answer, but we get there. And there’s a willingness to get there.”