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overview
Firms invest financial and human resources to prevent microbial pathogens,
carcinogenic chemicals, and other harmful substances from entering their
food products. Many firms invest only in resources mandated through regulation,
but many others choose an investment level that exceeds the regulated
standard. ERS research examines the costs of regulatory compliance and
private food safety investments and assesses the types of technologies
adopted. Much ERS research focuses on the incentives for making food safety
investments. These incentives include: genuine concern for producing pathogen-free
products, fear of a lost reputation for selling contaminated product,
contractual requirements with customers and suppliers, fear of lawsuits
arising from the sale of contaminated products, and State, local, and
Federal government regulatory requirements.
contents
features
 Meat and Poultry Plants' Food Safety Investments: Survey Findings—Results from the first national survey of the types and amounts of food safety investments made by meat and poultry slaughter and processing plants since the late 1990s provide evidence that market forces have worked in conjunction with regulation to promote the use of more sophisticated food safety technologies. From 1996 through 2000, U.S. plants as a group spent about $380 million annually and made $570 million in long-term investments to comply with USDA's 1996 Pathogen Reduction/Hazard Analysis Critical Control Point (PR/HACCP) regulation, according to a survey initiated by the Economic Research Service. The U.S. meat and poultry industry as a whole during the same period spent an additional $360 million on food safety investments that were not required by the PR/HACCP rule.
 Food Safety Innovation in the United States: Evidence from the Meat Industry—Recent industry innovations improving the safety of the Nation's meat supply range from new pathogen tests, high-tech equipment, and supply chain management systems, to new surveillance networks. Despite these and other improvements, the market incentives that motivate private firms to invest in innovation seem to be fairly weak. Results from an ERS survey of U.S. meat and poultry slaughter and processing plants and two case studies of innovation in the U.S. beef industry reveal that the industry has developed a number of mechanisms to overcome that weakness and to stimulate investment in food safety innovation. The report's findings are summarized in a two-page Research Brief. There's also a related Amber Waves article, Savvy Buyers Spur Food Safety Innovations in Meat Processing.
Managing
for Safer Food: The Economics of Sanitation and Process Controls in Meat
and Poultry Plants—Sanitation and process controls raised the
costs of producing meat and poultry by about 0.5 percent under food safety
standards prior to the 1996 Pathogen Reduction Hazard Analysis and Critical
Control Point (PR/HACCP) rule. There was no benefit, however, in trying
to avoid these food safety quality control costs before 1996, since plants
with poor performance records were more likely to exit their industry.
Estimates also suggest that PR/HACCP raised production costs by about
1 percent, but that benefits of HACCP still outweigh costs. The article, Weighing
Incentives for Food Safety in Meat and Poultry, in the April 2003
issue of Amber Waves highlights these
findings, showing how more stringent regulation and changes in the marketplace
have improved food safety, despite the rise in meat and poultry recalls.
Product Liability and Microbial Foodborne Illness—Less than a third of the jury
verdicts tracked by ERS from 1988-97 awarded compensation to plaintiffs
in foodborne illness cases. Even though firms responsible for microbial
contamination compensate relatively few foodborne illnesses, such firms
cannot ignore the potential legal consequences and catastrophic losses
of making or distributing contaminated food products that might cause
illness or death. Consumer Acceptance of Irradiated Meat
and Poultry Products—Food manufacturers have been slow to adopt
irradiation, perhaps because of the perception that relatively few consumers
are willing to buy irradiated foods. Half of the adult respondents to
a recent CDC survey were willing to buy irradiated ground beef or chicken,
and a fourth were willing to pay a premium for these products.
recommended readings
Food Safety
and Product Liability—This paper focuses on the U.S. product
liability system for food poisoning cases and examines the legal incentives
that firms receive to produce safer food. A sample of food poisoning lawsuits
is analyzed and one finding is that confidential settlements, health insurance,
and product liability insurance distort legal incentives to produce safer
food. Another finding is that even if potential plaintiffs can overcome
the high information and transaction costs necessary to file food poisoning
lawsuits, the monetary compensation provides weak incentives to pursue
litigation.
An Economic Assessment of Food Safety
Regulations—This benefit/cost evaluation of reducing foodborne
illness by requiring meat and poultry plants to use Hazard Analysis and
Critical Control Point (HACCP) systems finds that the benefits of HACCP
outweigh its costs by a substantial margin.
Probabilistic Risk
Assessment and Slaughterhouse Practices: Modeling Contamination Process
Control in Beef Destined for Hamburger—This paper uses Probabilistic
Risk Assessment to model four beef slaughterhouse practices in which alternative
pathogen-control approaches were employed. In the model, improvements
in hide removal make the most important contributions to reducing the
risk of E. coli contamination in cattle slaughter plants.
See all recommended readings...
newsletters
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Be sure to click on the "food safety" box.
related briefing rooms
related links
HACCP Implementation
by the Food Safety Inspection Service
New Inspection
System Leads to Further Reductions of Salmonella in Meat and Poultry
See all related links...
glossary
Brief definitions of the
economic and clinical terms used.
for more information, contact:
Michael Ollinger
web administration: webadmin@ers.usda.gov
page updated: September 3, 2004
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