Consumer Confidence and Benefits of Third Party Audits

Ruth Woiwode Author

09/02/2020 Added

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Dr. Ruth Woiwode discusses the benefits of 3rd party auditing in livestock production.
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[00:00:00.690]Welcome, my name's Ruth Woiwode.
[00:00:04.790]I'm an assistant professor
[00:00:07.250]in the animal science department at UNL.
[00:00:09.740]My focus is behavior and wellbeing.
[00:00:13.400]I'll be talking to you today about consumer confidence
[00:00:16.610]and the benefits of third-party audits.
[00:00:19.530]And I'm really excited to be joining long time friends
[00:00:23.510]and colleagues in both the industry and academia.
[00:00:27.030]And I think that we have a really exciting lineup
[00:00:32.460]of speakers and topics.
[00:00:33.930]So, I hope you'll find it really useful and engaging
[00:00:45.510]Before I get into my topic.
[00:00:47.140]I just want to take a few moments
[00:00:48.990]and tell you a little bit about my background
[00:00:52.770]and experience as it pertains
[00:00:54.410]to the topic we're discussing today.
[00:00:59.590]I completed my graduate work at Colorado State University
[00:01:04.200]under the advisorship of Dr. Temple Grandin,
[00:01:07.880]where I led research focused on industry compliance
[00:01:11.090]with the beef quality assurance feed yard assessment
[00:01:13.530]for cattle handling.
[00:01:15.470]Effects of routine handling
[00:01:17.270]on performance of fed cattle
[00:01:19.080]and the effects of zilpaterol hydrochloride
[00:01:22.140]on behavior and mobility of feedlot steers.
[00:01:26.040]Following that, I also worked
[00:01:30.760]as a postdoctoral researcher
[00:01:32.890]at New Mexico State University's
[00:01:34.990]Clayton Livestock Research Center,
[00:01:38.060]where I studied the interaction between behavior,
[00:01:42.420]welfare and nutrition of feedlot cattle,
[00:01:47.190]particularly in receiving.
[00:01:53.270]From there, I was hired by Food Safety Net Services
[00:01:57.960]to expand their audit portfolio
[00:02:03.200]by adding on farm audit services.
[00:02:07.660]As the manager of livestock audit services,
[00:02:11.740]my role included training auditors,
[00:02:16.320]business development obviously,
[00:02:18.720]providing routine humane handling training
[00:02:21.820]for employees of federally inspected slaughter plants,
[00:02:26.350]as well as mandatory training following
[00:02:30.530]regulator enforcement action by USDA.
[00:02:33.950]So, if a plant had been shut down
[00:02:37.170]for a humane handling violation,
[00:02:40.150]as part of the process to reinstatement,
[00:02:44.330]USDA mandated a third party training
[00:02:49.710]which I provided in many cases.
[00:02:52.910]My industry service includes serving
[00:02:55.830]on PAACO Feedlot Curriculum Committee.
[00:02:58.730]Serving on the North American Meat Institute,
[00:03:00.767]Animal Welfare Committee
[00:03:02.220]and the Animal AG Alliance's Issues Management Committee,
[00:03:06.560]as well as serving as editor for the Sheep Care Guide
[00:03:10.080]published by the American Sheep Industry Association,
[00:03:13.160]to name a few.
[00:03:19.110]This is a brief roadmap
[00:03:21.380]of where we'll go in the discussion today,
[00:03:25.060]starting with a background
[00:03:26.300]in history of animal welfare auditing
[00:03:29.250]where it had its origins
[00:03:31.610]and how it's advanced and progressed,
[00:03:36.890]how auditors are certified,
[00:03:41.740]what audits are certified,
[00:03:45.260]auditor qualifications,
[00:03:47.970]benefits of the third-party audits,
[00:03:53.950]auditing in 2020 and beyond.
[00:03:56.990]And we'll wrap up with an opportunity for questions.
[00:04:06.420]When we talk about the origin of animal welfare auditing,
[00:04:10.700]the conversation can occur
[00:04:12.910]even without the recognition that this process
[00:04:19.090]had its roots in the meat industry.
[00:04:21.580]The meat industry led on farm
[00:04:25.070]and animal welfare auditing dating back to 1991
[00:04:33.197]where the American Meat Institute encouraged its members
[00:04:40.130]to participate in voluntary audits of animal welfare.
[00:04:47.820]In 1999 was when Dr. Temple Grandin wrote
[00:04:52.060]the first guidelines for auditing animal welfare
[00:04:54.970]and slaughter plants.
[00:04:55.890]That was and became the basis for the AMI guidelines.
[00:05:01.370]and later the meat plant of audit.
[00:05:07.845]In 1996, the USDA requested a survey
[00:05:11.260]of federally inspected meat plants
[00:05:14.130]in order to make recommendations for alternative systems
[00:05:17.470]and approaches that ensure humane handling.
[00:05:21.630]Dr. Temple Grandin conducted that survey using
[00:05:25.660]the guidelines that she'd written in 1991
[00:05:29.820]with some additional measures included.
[00:05:34.660]And of 48 plants that were surveyed
[00:05:38.810]that provided a baseline of a scoring
[00:05:45.000]objectively animal-based measures.
[00:05:50.970]And in 1997, Temple publishes those baseline results
[00:05:57.930]with the addition of animal scoring
[00:06:01.810]being included in the Meat Institute guidelines.
[00:06:07.790]Additional publications from those findings
[00:06:11.050]of the USDA survey were published leading
[00:06:14.900]to an increased focus and emphasis
[00:06:18.380]on third-party auditing of animal welfare
[00:06:21.760]in the slaughter plant.
[00:06:24.680]In 1999, McDonald's initiated the restaurant audits
[00:06:33.320]and were soon joined by Wendy's and Burger King
[00:06:41.150]in what became the inaugural audit of the restaurant.
[00:06:56.433]If you're familiar with third party audits
[00:06:59.460]and animal welfare audits,
[00:07:01.720]then you've most likely heard the term PAACO.
[00:07:06.030]PAACO stands for
[00:07:08.040]Professional Animal Auditor Certification Organization.
[00:07:12.320]And PAACO is considered to be the gold standard
[00:07:16.560]for auditor certification and certification of audits.
[00:07:24.470]The animal welfare auditor certifications
[00:07:28.870]that PAACO currently offers
[00:07:32.870]are the meat plant animal welfare audit certifications,
[00:07:37.850]poultry welfare, swine welfare,
[00:07:41.300]dairy welfare and feedlot welfare.
[00:07:46.220]The meat plant animal welfare auditor certification
[00:07:49.750]was the first animal welfare auditor certification
[00:07:55.230]to be offered through PAACO corresponding
[00:07:58.460]with the Meat Institute's guidelines
[00:08:01.470]for animal care and handling
[00:08:03.560]and the audit of the spotter plants concurrently.
[00:08:08.230]That that was the first audit
[00:08:11.400]that was also certified by PAACO.
[00:08:15.820]Though PAACO is certainly recognized
[00:08:19.260]as the gold standard for auditor certification.
[00:08:23.200]What's important to note is that not all companies
[00:08:28.930]or customers or audit schemes
[00:08:34.250]may require auditors to be PAACO certified.
[00:08:39.810]Again, while it's recognized as the gold standard,
[00:08:43.930]there are many auditors
[00:08:46.110]that are not necessarily PAACO certified.
[00:08:48.980]It's certainly grown in awareness
[00:08:54.130]and certainly adoption.
[00:08:58.470]And in many cases it is a requirement
[00:09:02.060]of a customer or a scheme.
[00:09:05.610]USDA is even requiring PAACO certification
[00:09:09.730]of consultants who are providing training
[00:09:14.400]or doing assessments in federally inspected meat plants
[00:09:19.310]or slaughter plants.
[00:09:30.100]When we talk about the audits
[00:09:32.160]that are certified by PAACO
[00:09:34.510]as I mentioned on the previous slide,
[00:09:37.440]the North American Meat Institute animal handling guidelines
[00:09:41.850]was the very first audit that was recognized
[00:09:46.340]and certified by PAACO.
[00:09:50.260]And not necessarily in order of appearance,
[00:09:52.800]but I've also included a list of the most widely recognized
[00:09:58.910]other audits that are certified by PAACO,
[00:10:01.890]including the Common Swine Industry Audit
[00:10:05.060]that was developed by the Pork Board.
[00:10:08.600]The Validus Animal Welfare Review
[00:10:11.180]and Validus has a dairy welfare audit
[00:10:14.190]as well as a swine welfare audit.
[00:10:17.700]The Dean Foods DairyWell Audit,
[00:10:22.340]National Chicken Council guidelines
[00:10:25.110]for broilers and breeders,
[00:10:28.880]FACTA, which is a farm animal care and training,
[00:10:33.960]the humane certified audit for broilers,
[00:10:38.520]Perdue USDA process verified program for broilers
[00:10:45.170]and the Canadian Feedlot Animal Care Program,
[00:10:50.140]as well as the Wildlife and Rodent Control audit,
[00:10:53.790]which is referred to often as a pest audit.
[00:10:59.180]And finally Fur Commission USA audit of mink.
[00:11:05.980]To reiterate, this list focuses on audits
[00:11:12.900]that are certified by PAACO.
[00:11:16.210]There are countless additional industry standards
[00:11:20.810]and audit that are not necessarily PAACO certified
[00:11:25.100]and many companies, some of which you see listed
[00:11:30.550]have developed individualized standards
[00:11:34.670]for a particular customer or customer group
[00:11:39.290]and many animal welfare audits occur
[00:11:47.790]to customer specifications.
[00:11:50.280]And what the third-party process does
[00:11:55.330]is substantiate the claims that are made
[00:12:00.790]even in those individualized programs
[00:12:03.260]through third-party review.
[00:12:11.460]You heard me use the term gold standard as it pertains
[00:12:16.360]to PAACO certification of auditors and audits.
[00:12:23.270]PAACO has set some parameters for other qualification,
[00:12:31.970]as well as a process even to apply
[00:12:35.590]to attend auditor training courses.
[00:12:39.480]That process includes vetting
[00:12:42.530]to ensure that a qualified individuals
[00:12:47.210]are attending auditor training courses,
[00:12:50.300]as well as preventing attendance from activists
[00:12:59.660]or those who might have less
[00:13:05.300]than genuine intentions for the industry.
[00:13:12.350]But those attending auditor training courses
[00:13:15.520]have to be able to demonstrate a certain number
[00:13:19.710]or combination of number of years
[00:13:22.120]of industry experience and education.
[00:13:27.300]After having completed the auditor training course,
[00:13:32.510]the potential auditor must achieve a minimum passing score
[00:13:38.000]on a written exam following the course
[00:13:41.550]and then in a specified time period they
[00:13:45.710]also complete a minimum of two shadow audits
[00:13:49.980]with a qualified or certified PAACO auditor.
[00:13:53.960]Now, many other industries mirror this approach,
[00:13:57.610]the Farm Animal Care Program being one of them
[00:14:01.830]where there is a set requirement for industry
[00:14:07.930]and production experience at the second party level
[00:14:11.900]with an even greater requirement
[00:14:15.040]at the third-party level.
[00:14:19.440]So, in addition to the PAACO requirements
[00:14:22.160]for auditor qualification,
[00:14:24.620]many other firms
[00:14:26.720]or customers may impose additional requirements
[00:14:31.870]or qualifications above and beyond those.
[00:14:35.310]Food Safety Net Services for example,
[00:14:38.420]viewed the PAACO requirements as entry level requirements
[00:14:47.260]and all animal welfare auditors employed
[00:14:49.730]by Food Safety Net Services are PACCO certified.
[00:14:55.650]Food Safety Net Services operates under an ISO certified
[00:15:00.660]and third-party audited quality management system
[00:15:04.680]that includes a huge dedication to calibration
[00:15:14.540]so that there's a consistent standard of performance
[00:15:19.000]that is met by each and every auditor.
[00:15:23.340]And that's accomplished through extensive
[00:15:25.880]internal shadows to ensure calibration
[00:15:30.370]so that that quality and consistency standard is met.
[00:15:38.274]For example, with the Farm Animal Care Program,
[00:15:40.550]which was one of the main programs
[00:15:44.030]that I managed over the last four years.
[00:15:52.650]The average number of internal audits
[00:15:55.300]that we conducted before internally qualifying
[00:15:59.770]an auditor to perform solo audits was 12 shadow audits.
[00:16:07.030]So, that gives you a frame of reference
[00:16:09.900]when it comes to the background and qualifications
[00:16:14.070]and the process for an auditor
[00:16:16.610]to become certified and further qualified.
[00:16:27.910]When discussing the benefits of third-party audit
[00:16:31.460]it's also important to make a distinction
[00:16:34.270]between internal audits or review
[00:16:38.840]and external independent or third-party audit
[00:16:43.450]or review of a program.
[00:16:46.090]The independent and external review by a third-party
[00:16:53.080]is of huge benefit when compared with internal review
[00:16:58.570]because of the known potential for bias.
[00:17:05.180]So, as we talk about each of the individual benefits
[00:17:10.720]of third-party audit as I've illustrated here,
[00:17:16.330]each one of these benefits both individually
[00:17:20.550]and then collectively help drive
[00:17:23.690]consumer confidence overall in the process.
[00:17:29.620]The data that is captured through third-party audit
[00:17:35.240]is invaluable in being able to track progress
[00:17:42.070]to certain targets over time
[00:17:45.750]and as facilities demonstrate improvement
[00:17:50.810]and progress over time,
[00:17:54.230]that illustrates to consumers both that certain targets
[00:17:58.850]are being monitored and monitored consistently
[00:18:02.070]and that site management is committed
[00:18:06.870]to improving animal welfare,
[00:18:11.150]that's demonstrated through progress over time
[00:18:17.330]By participating in certain animal care programs
[00:18:20.550]or in some cases simply being audited
[00:18:25.340]by an independent third-party results in eligibility,
[00:18:30.380]in some cases for premium pricing of product.
[00:18:38.000]Consumers in certain cases indicate a willingness
[00:18:42.390]to pay for the assurance associated
[00:18:48.010]with some of the animal care practices
[00:18:51.180]associated with some animal care programs.
[00:18:58.290]Certain animal care programs include
[00:19:01.470]a structure and mechanism
[00:19:03.010]for managing crisis and crisis response.
[00:19:08.920]In this instance, when I refer to crisis,
[00:19:12.110]always speaking most specifically
[00:19:15.690]about animal activist activity.
[00:19:22.050]The Farm Animal Care Program is one of the programs
[00:19:26.910]that has the most structured mechanism
[00:19:34.060]for both reporting allegations
[00:19:39.410]or concerns around animal abuse or neglect,
[00:19:44.150]as well as investigating those claims,
[00:19:48.970]probation of sites
[00:19:50.240]and then a pathway to return
[00:19:52.330]to good standing using third-party monitoring
[00:19:57.310]as a key component of the process.
[00:19:59.550]And we'll talk about that a little bit more later,
[00:20:06.990]but each of these elements also individually reduce risk.
[00:20:15.620]And when we talk about reducing risk
[00:20:17.480]when it pertains to animal welfare
[00:20:21.070]and the third party-audit process,
[00:20:25.190]the review by an independent outside party
[00:20:29.380]helps identify gaps in both management practices
[00:20:33.760]and in some cases,
[00:20:35.490]training or even breakdown in animal care.
[00:20:45.300]And identifying those gaps early on
[00:20:50.960]helps reduce the risk of future non-conformity's
[00:20:57.560]with a program and circle back to tracking progress,
[00:21:04.100]improving welfare over time.
[00:21:15.830]So, when we talk about the independent review
[00:21:19.700]of a facilities animal welfare program.
[00:21:25.910]When internal review is conducted by an establishment,
[00:21:34.770]the internal review inherently holds
[00:21:38.510]a greater risk of missing details,
[00:21:40.870]simply because of the familiarity
[00:21:44.160]that the internal personnel have with a site.
[00:21:52.700]An outside party provides both a fresh perspective
[00:21:59.270]because there's essentially a learning curve
[00:22:02.980]during that visit where the auditor's required
[00:22:06.820]to learn as much as possible about the operation
[00:22:10.910]to familiarize themselves with it
[00:22:12.770]so that they understand that operation.
[00:22:19.910]The unbiased opinion is invaluable
[00:22:24.520]because of freedom from bias.
[00:22:32.040]Ideally, the auditor has no investment
[00:22:37.870]in any particular outcome.
[00:22:42.540]Additionally, the third-party auditor
[00:22:45.210]is calibrated to the standard more highly
[00:22:50.510]in many cases than internal personnel may be.
[00:22:55.530]For example, a PAACO certified auditor
[00:23:00.210]is also required to earn a certain number
[00:23:04.260]of continuing education credits
[00:23:10.380]prior to the renewal of their certification
[00:23:14.210]that requires them to stay current
[00:23:16.210]in the industry standard.
[00:23:22.970]But in addition to that,
[00:23:24.370]many firms require annual training
[00:23:30.520]and then calibration that occurs annually
[00:23:34.500]or even more frequently.
[00:23:37.030]And in the example of Food Safety Net Services,
[00:23:42.470]there are two main calibration events
[00:23:46.410]that occur annually with monthly auditor staff meetings,
[00:23:54.750]where calibration is the focus.
[00:23:59.720]As well, One of the things
[00:24:02.220]that is perhaps a little unique
[00:24:08.836]about Food Safety Net's approach to calibration
[00:24:13.180]is the use of technical review,
[00:24:18.330]both at the peer level and at the management level,
[00:24:22.880]as well as a tertiary level of review
[00:24:28.180]that would be a QA review.
[00:24:30.600]But when auditors provide peer review,
[00:24:36.060]that's just one more way that they can calibrate
[00:24:38.930]and make sure that the team
[00:24:40.540]is consistently evaluating the standard the same way.
[00:24:44.970]And also writing it clearly,
[00:24:48.800]writing up findings in a clear and concise manner.
[00:24:53.680]That occurs essentially on a daily basis.
[00:25:00.310]An auditor should be free from conflict of interest.
[00:25:04.490]Most auditors are required to disclose
[00:25:08.390]any potential conflict of interest.
[00:25:11.250]And in the case where they're employed
[00:25:14.150]by Food Safety Net Services
[00:25:15.820]and had potentially worked for a site previously
[00:25:22.580]that was scheduled for an audit,
[00:25:24.210]that site would then be assigned to someone else
[00:25:29.230]that does not have a conflict of interest,
[00:25:34.130]either potential or perceived.
[00:25:37.070]An auditor should not receive any benefit
[00:25:41.470]based on the outcome of the audit.
[00:25:43.880]That's how the third-party unbiased perspective
[00:25:50.550]is obtained or achieved.
[00:25:55.260]It's virtually impossible to discuss the benefits
[00:25:58.610]and value of third-party auditing
[00:26:01.620]without talking about audit data
[00:26:06.680]and how we track progress over time.
[00:26:11.570]For purposes of illustration,
[00:26:13.580]I like to refer to the Meat Institute guidelines
[00:26:17.610]and the meat plant audit,
[00:26:21.000]simply because we have the most data
[00:26:27.390]from an industry perspective to date
[00:26:31.500]surrounding that particular instrument.
[00:26:36.690]The animal based measures that I have listed here
[00:26:40.160]were included in the 1999 audits.
[00:26:48.210]They were not part of the original guidelines
[00:26:52.040]written in 1991,
[00:26:55.300]but were developed out of the USDA audits
[00:27:02.580]that occurred in 1996 and moving forward.
[00:27:08.210]So, just so that we're familiar
[00:27:10.810]with these categories for the purposes of illustration,
[00:27:15.690]the target for effective stunning
[00:27:20.480]essentially means that the method of stunning
[00:27:25.570]must be applied correctly
[00:27:29.690]and must be effective the first attempt.
[00:27:34.420]And that target is 95%.
[00:27:39.159]So, for a facility to receive an excellent score
[00:27:46.160]they must achieve a 95%
[00:27:47.840]or higher rating in this category.
[00:27:54.280]Bleed rail insensibility
[00:27:57.190]has a zero tolerance threshold,
[00:27:59.630]meaning that first of all,
[00:28:06.098]we would result in regulatory action
[00:28:10.720]if an animal were to be observed on the rail
[00:28:15.940]demonstrating signs of sensibility
[00:28:18.550]or even return to sensibility,
[00:28:20.870]therefore the audit instrument does reflect that
[00:28:25.610]and also has zero tolerance for that category.
[00:28:31.577]The category of slips and falls.
[00:28:35.350]The target is 2%.
[00:28:40.750]So, 2% of all of the sample
[00:28:45.680]is the maximum number of animals that can fall.
[00:28:53.440]Each of those criteria
[00:28:55.890]are standalone categories for audit failure.
[00:29:01.590]So, a facility could have a perfect score for studying,
[00:29:09.230]a perfect score for bleed rail in sensibility
[00:29:12.380]and could exceed the target for falls
[00:29:16.280]and fail the audit.
[00:29:20.490]The target for vocalization
[00:29:24.570]is not a standalone pass-fail category per se.
[00:29:33.760]An electric prod use is an interesting target
[00:29:38.330]because it's so high compared to some of the others.
[00:29:44.860]Electric prod use or use of prod is acceptable
[00:29:50.010]and up to 25% of the population scored
[00:29:54.020]during an audit.
[00:29:55.790]That target reflects the audit having
[00:30:00.230]to be applied in both fed beef,
[00:30:03.460]as well as cold beef.
[00:30:11.780]The category of a act of abuse and neglect
[00:30:15.270]is obviously a standalone pass-fail category
[00:30:19.090]and it's not scored in the same way.
[00:30:22.910]There's not a target, a numeric target,
[00:30:27.210]but if an act of abuse or neglect
[00:30:29.800]is observed at any point on the facility
[00:30:32.960]during the audit that result in failure.
[00:30:36.457]And those acts of abuse and neglect are quantified,
[00:30:42.150]they include hitting, kicking,
[00:30:44.490]the application of the electric prod
[00:30:48.420]to sensitive areas,
[00:30:49.610]such as the ears or nose or eyes or genitalia.
[00:30:57.490]And access to water is also monitored.
[00:31:01.200]Per federal guidelines water must be available
[00:31:05.140]to animals in holding pens prior to slaughter.
[00:31:15.140]So, first let me just orient you to this graph.
[00:31:18.760]On the left access what's represented
[00:31:23.100]is the percentage of slaughter plants
[00:31:28.050]that met the target.
[00:31:30.430]So, what I just described,
[00:31:31.840]what some of the targets are.
[00:31:33.610]I don't have all of the criteria depicted here,
[00:31:36.170]but I wanted to illustrate the immense progress
[00:31:43.360]that was made between the first and second audit
[00:31:51.126]for you to see that visually.
[00:31:58.160]The blue line represents effective stunning.
[00:32:05.520]Only 30% of plants audited in 1996
[00:32:13.290]were able to make that 95% target.
[00:32:17.600]So, 95% of all animals stunned during the audit.
[00:32:28.820]Have to be stunned on the first attempt.
[00:32:35.370]By 1999, 90% of plants audited were able
[00:32:44.290]to make that 95% target.
[00:32:51.360]And that number has continued to increase since
[00:32:54.910]so much so that by the 20th anniversary revision
[00:33:01.190]of the meat plant guidelines,
[00:33:03.680]the Meat Institute guidelines,
[00:33:05.830]that target finally increased from 95 to 96%.
[00:33:18.970]The orange line represents insensibility on the bleed rail.
[00:33:24.470]And in 1996, only 90% of plants audited were able
[00:33:32.640]to do past that target.
[00:33:36.240]And remember, that's a zero tolerance category,
[00:33:42.020]meaning that a single animal out of 100 animals sample
[00:33:52.420]that shows signs of return to sensibility
[00:33:55.290]on the rail will result in an audit failure.
[00:34:01.570]By 1999, 97% of plant audited were able
[00:34:13.560]to meet that target.
[00:34:17.840]In all of the plants that I personally have audited
[00:34:22.600]and trained in over the last number of years,
[00:34:26.950]I have not had a failed audit due to this category.
[00:34:36.070]That gives you a little bit of perspective
[00:34:38.340]on the improvement that we've seen
[00:34:40.990]in this particular category.
[00:34:45.020]The yellow line represents vocalization.
[00:34:48.740]And in 1996, only 43% of plants audited met
[00:34:56.725]that excellent target for vocalization
[00:34:59.760]or 95% of the animals did not vocalize.
[00:35:07.468]By 1999, that number had improved immensely.
[00:35:15.760]And 95% of the plant audited were able
[00:35:20.450]to meet that target.
[00:35:25.120]This is just one simple representation
[00:35:29.040]of how progress to a particular standard
[00:35:33.330]can be tracked and measured over time.
[00:35:36.940]And it's important to do this
[00:35:39.330]with our audit data and findings
[00:35:41.610]because we manage what we measure.
[00:35:49.220]I can't tell you how many times
[00:35:53.960]that in having conversations with a facility,
[00:35:57.420]their self-assessment tends
[00:36:00.380]to typically overestimate their performance.
[00:36:09.910]And by that, I mean that they would estimate,
[00:36:13.760]90% of the time we meet this target.
[00:36:17.960]And in reality, they're much further
[00:36:21.460]away from the target than they estimate.
[00:36:25.820]And that typically is because
[00:36:28.300]they're not measuring that category consistently.
[00:36:36.650]So, how this progress has occurred
[00:36:40.430]then goes back to...
[00:36:44.930]The burden does fall on site personnel
[00:36:50.270]for ongoing monitoring.
[00:36:53.800]And doing internal assessments are key
[00:36:57.570]to be able to achieve this type of progress.
[00:37:01.080]But again, it's understanding the targets,
[00:37:03.820]how they're scored and consistently measuring them,
[00:37:09.180]identifying issues that might contribute
[00:37:13.750]to poor scores, poor outcomes
[00:37:18.230]and implementing strategies,
[00:37:21.350]both handling strategies,
[00:37:24.230]management strategies onsite
[00:37:27.630]that can influence some of these outcomes.
[00:37:30.070]And that's the beauty of many of the audits
[00:37:35.620]that are implemented in the industry
[00:37:37.860]is that they're outcome-based.
[00:37:41.040]Meaning they look at an outcome
[00:37:43.970]and targets are set based on outcomes.
[00:37:48.530]They're not prescriptive in management practices
[00:37:53.270]or how those targets are achieved,
[00:37:57.330]allowing individual management practices
[00:38:05.520]and adjustment on a case by case basis
[00:38:09.090]to be able to realistically
[00:38:12.290]and practically meet those targets.
[00:38:20.700]I mentioned a little while ago
[00:38:22.340]that one of the benefits of third-party audits
[00:38:27.150]is crisis management.
[00:38:28.570]And I wanna talk about that just a little.
[00:38:31.250]This isn't necessarily the case in every standard
[00:38:35.200]or audit or animal care management program,
[00:38:39.670]but I like to talk about the Farm Animal Care Program
[00:38:43.760]when we talk about this
[00:38:44.970]because of some of the really visible scrutiny
[00:38:50.140]that the program and the dairy industry for example
[00:38:53.480]has received in the form of activist activity.
[00:38:58.400]On the Farm Animal Care Program
[00:38:59.990]actually includes a reporting process
[00:39:03.100]and an anonymous reporting mechanism
[00:39:08.600]whereby allegations of animal abuse or neglect
[00:39:15.970]can be reported to National Milk Producers Federation.
[00:39:20.930]The program includes a structure for all of this
[00:39:26.780]and describes how allegations
[00:39:28.850]will be investigated by an independent third-party.
[00:39:35.420]The willfulness treatment protocol
[00:39:38.780]also includes criteria and definition
[00:39:45.480]for a site being placed on probation
[00:39:48.590]when abuse or neglect or unacceptable conditions
[00:39:52.810]are substantiated through the third-party process.
[00:39:58.330]That particular process also has a pathway
[00:40:04.990]for sites to return to good standing
[00:40:08.460]if required progress is made.
[00:40:11.540]So, based on the findings from the third-party
[00:40:17.730]and the action prescribed,
[00:40:23.750]if a site is meeting those targets,
[00:40:27.770]they begin to progress to a return to good standing.
[00:40:32.070]And this is all clearly spelled out in the program.
[00:40:37.470]However, third-party monitoring is the key.
[00:40:40.690]And what's really important is having conversations
[00:40:47.100]about these type of activities
[00:40:56.780]because in my experience in having these conversations,
[00:41:02.220]both with producers, consumers and the general public
[00:41:10.270]that are not necessarily consumers
[00:41:14.440]as each of those individuals understands the process better.
[00:41:24.050]There is increasing buy-in on the part of the producer,
[00:41:29.490]increased confidence on part of the consumer
[00:41:32.970]and certainly increased awareness
[00:41:35.910]on the part of the general public
[00:41:37.580]that may not be consumers.
[00:41:40.110]And it's these types of conversations
[00:41:44.610]that are crucial to ensuring
[00:41:49.640]the future of animal agriculture
[00:41:52.900]in a sustainable society, I'm convinced.
[00:41:56.060]And I've seen that as a big part of my role
[00:41:59.900]to this point in time.
[00:42:06.350]As we talk about the activist activity
[00:42:10.140]as we've seen it evolve over the last number of years,
[00:42:14.780]it's become increasingly strategic and focused
[00:42:18.820]with an emphasis on supply chain connection,
[00:42:23.720]as well as highlighting weak areas of programs.
[00:42:28.540]A misconception is that some of the activist activity
[00:42:33.670]highlights simply bad producers
[00:42:38.340]or the lower percentile, if you will of production.
[00:42:45.260]And as is the case with the Fair Oaks cases,
[00:42:54.700]that's not necessarily the case.
[00:42:58.290]That particular supply chain was identified and targeted
[00:43:04.620]and based on brand awareness
[00:43:18.920]and place in the market, if you will.
[00:43:22.010]For example, in a market where milk consumption
[00:43:32.010]on the average was on the decline,
[00:43:35.970]Fairlife product through innovation and marketing
[00:43:41.450]was on the incline on target to be a $1 billion brand
[00:43:47.830]at the time of the activity.
[00:44:06.160]In the supply chain captive with the Fairlife products
[00:44:13.750]really represents the upper percentile
[00:44:20.340]of structured program for employee care
[00:44:26.650]and management and training,
[00:44:29.520]as well as animal care and management.
[00:44:33.840]What's important to point out is that
[00:44:36.360]even in that upper percentile,
[00:44:41.210]gaps in the program were identified
[00:44:44.830]and those were leveraged in that activist activity.
[00:44:51.360]For example, young stock in the dairy farm program
[00:45:02.350]was not monitored or evaluated
[00:45:08.670]to the same level of scrutiny
[00:45:13.020]that mature lactating animals were.
[00:45:20.730]And it wasn't difficult for the activist group
[00:45:25.510]to identify that as a gap and highlight it,
[00:45:31.370]they followed animals through transportation.
[00:45:35.540]They watched some of the handling practices
[00:45:39.580]and did capture whether it was staged or encouraged
[00:45:51.270]or some other type of condition,
[00:45:54.300]they captured behavior and handling that was unacceptable.
[00:46:02.810]And for a program to have credibility,
[00:46:09.990]how these events are handled is critical.
[00:46:11.258]At a time like this is not a time
[00:46:22.777]where being relaxed is advised.
[00:46:37.220]So, participating in third-party audits
[00:46:39.360]may reduce risk partly by the early identification
[00:46:46.700]of some of these gaps
[00:46:48.420]or other areas where attention is needed,
[00:46:52.470]whether that's improving the employee training program,
[00:47:00.840]whether it's revising some of the animal care practices
[00:47:07.890]to ensure that the program is being consistently followed
[00:47:12.950]or whether there's a true animal care issue.
[00:47:22.500]So, when we talk about auditing
[00:47:25.620]and tracking changes in terms of animal welfare
[00:47:33.350]and the progress that we've seen there.
[00:47:36.530]Particularly, this year in 2020,
[00:47:42.530]it's been interesting to mark the changes
[00:47:45.800]to the third-party audit process due to the pandemic.
[00:47:54.120]We've experienced a reduction in travel,
[00:47:56.780]fewer in-person onsite audits.
[00:47:59.850]In many cases, those have been
[00:48:01.970]at least partially replaced
[00:48:04.270]or replaced in the interim by a remote auditing.
[00:48:08.460]And remote auditing can occur a couple of different ways.
[00:48:13.250]It can occur by live video,
[00:48:16.260]where that can be facilitated by onsite staff,
[00:48:19.610]even through the use of a phone camera
[00:48:25.470]or using permanent or temporary equipment
[00:48:30.470]that can be fixed onsite or worn
[00:48:35.313]or carried by audit staff.
[00:48:40.040]So, something a little bit more permanent
[00:48:43.950]and higher quality than phone camera, for example.
[00:48:51.490]Random review of live video feed is also utilized
[00:48:57.290]and this would be remote,
[00:48:59.410]but it would be a random sampling of that live video.
[00:49:02.860]So, picking a random interval to scan
[00:49:07.210]and review video feed is also used.
[00:49:12.420]To this point in time,
[00:49:13.460]it's been used to enhance onsite auditing
[00:49:19.590]and we've seen an increase in that type of auditing.
[00:49:24.540]And I anticipate that that will only continue to increase,
[00:49:33.720]but per the installation
[00:49:36.330]of permanent remote video audit systems,
[00:49:40.380]that also include third party review just as I described,
[00:49:45.260]it's desirable because increased monitoring as possible,
[00:49:51.180]meaning that a review of the practices
[00:49:57.730]can occur more frequently without
[00:50:00.320]the expense associated with travel
[00:50:03.530]and also a reduction in the perceived auditor effect
[00:50:11.010]or the idea that staff will behave better
[00:50:18.350]in the presence of a visitor or a third party auditor.
[00:50:27.850]All of that to say that some of these changes
[00:50:31.770]that we've experienced in 2020
[00:50:35.610]are here to stay on some level.
[00:50:38.960]This isn't something that I envision
[00:50:45.320]will ever be exactly like it was prior
[00:50:49.170]to March of 2020.
[00:50:57.260]So, understanding that
[00:50:59.390]and working with a qualified firm
[00:51:04.370]to help implement effective audit strategies,
[00:51:09.780]both internal audit, as well as third-party audit.
[00:51:14.400]Those are key to a strong, successful audit program.
[00:51:26.330]Some of the additional benefits of remote auditing
[00:51:31.700]as we think about the longterm
[00:51:34.060]is the reduced risk of biosecurity breakdown,
[00:51:39.640]both human and fomite,
[00:51:45.300]the potential of introducing disease,
[00:51:51.050]either on a vehicle or on the auditor or equipment
[00:51:57.490]if we're on site physically less.
[00:52:03.120]Physically we've reduced the biosecurity risk
[00:52:06.740]that an auditor does pose to the site.
[00:52:11.770]We've reduced human health risk,
[00:52:14.310]both to the auditor and to the site personnel.
[00:52:24.920]I touched a little bit on the reduction in travel costs.
[00:52:31.640]So, one of the desirable features is again,
[00:52:36.550]increasing the frequency of visits
[00:52:41.420]or rather audits and data collection
[00:52:44.810]without the significant cost of travel each time.
[00:52:51.640]Some of the notable limitations include
[00:52:56.000]the ability for remote video audit equipment
[00:53:00.080]to be manipulated and controlled potentially onsite
[00:53:05.230]or during an audit.
[00:53:10.240]Connectivity or resolution issues.
[00:53:13.070]So, technical issues.
[00:53:17.190]Most of those are driven either by equipment quality
[00:53:21.400]or a reliable internet connection.
[00:53:25.620]But one of the things that I'm perhaps
[00:53:28.500]most concerned about is what I would call
[00:53:31.510]the lack of 360 degree awareness
[00:53:36.380]or the limitations that are imposed by the equipment.
[00:53:41.260]For example, the viewfinder,
[00:53:43.710]because of all of the human senses
[00:53:48.000]being in play during an in-person onsite audit.
[00:53:53.650]An auditor may be aware of noise hundreds of yards away
[00:54:02.440]and their attention may be drawn
[00:54:04.480]to an event that might not otherwise be captured.
[00:54:12.260]And the particular camera angle,
[00:54:14.700]if they're auditing remotely.
[00:54:26.410]When evaluating certain criteria,
[00:54:30.550]depending on the quality of equipment, depth perception
[00:54:36.170]and a true three dimensional perspective
[00:54:41.403]can also be limited in my experience.
[00:54:46.710]So, in some cases, because of lighting and angle
[00:54:52.120]assessing body condition accurately can be a challenge,
[00:55:02.270]But certainly not one that can be overcome.
[00:55:11.370]So, we've talked about some of the origin
[00:55:15.610]of animal welfare auditing.
[00:55:17.650]We've talked about the benefits of third-party on it
[00:55:20.610]and we've talked about some of the changes
[00:55:22.930]that we've seen to the third-party audit process,
[00:55:26.700]both over time,
[00:55:27.590]but also due to the unusual circumstances seen in 2020.
[00:55:35.020]And in summary,
[00:55:36.140]what I want to leave with you
[00:55:38.450]is that takeaway about the benefits of auditing.
[00:55:43.550]How the third-party process contributes
[00:55:46.770]to consumer confidence,
[00:55:48.850]that findings substantiate good practices.
[00:55:52.780]And when non-conformity's are identified,
[00:55:55.320]many animal care programs include a structure
[00:55:57.730]for correcting those non-conformity's
[00:56:01.040]and a path to reinstatement in good standing
[00:56:05.350]for facilities that have had non-conformity's.
[00:56:10.910]The findings of third-party audits help document
[00:56:14.860]and measure progress and improvement.
[00:56:17.210]And because of those key benefits,
[00:56:21.550]it's my opinion that we're not going
[00:56:24.550]to see a decrease in auditing as we move forward.
[00:56:29.060]I think it's very much here to stay.
[00:56:31.570]What I think we can expect is that it will continue
[00:56:34.610]to evolve and integrate technology
[00:56:38.180]in new and different ways.
[00:56:39.780]Though I don't anticipate that that technology
[00:56:44.210]will fully replace human involvement.
[00:56:47.330]Certainly not in the short-term
[00:56:49.920]because of some of the limitations
[00:56:51.850]that we see with the application of technology.
[00:57:01.770]And with that, I welcome your questions.

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Consumer Confidence and Benefits of Third Party Audits

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