11/10/2008 3:41:00 PM

Foodborne Illness—Information Gaps Erode The Supply Of Safety


Source of Article:  http://www.cattlenetwork.com/Content.asp?ContentID=267581


In 1999, the U.S. Centers for Disease Control and Prevention estimated that annually, one in three Americans becomes ill from a foodborne disease, one in 700 is hospitalized, and one in 60,000 dies. Many foodborne illnesses are preventable. Some reduction in food contamination can be accomplished with low-tech basic sanitation—hand washing. Cooking deactivates many pathogens. High-tech methods like irradiation can reduce contamination in raw and unprepared foods. And pathogen monitoring and testing can confirm whether procedures have been successful. So why do food recalls and safety concerns continue to make headlines?


There are two possible explanations for the persistence of food-related illnesses. One explanation is that consumers are unwilling to pay higher food prices in return for increased safety. Suppliers have to be compensated for the added cost of labor and capital equipment that would increase safety. If the increase in cost would be passed on to consumers and consumers are unwilling to pay the additional cost, suppliers will stop investing in food safety.


Another possibility is that there is an information gap that is causing the market for food safety to fail. Information problems might choke off any financial incentive to offer consumers safer food. Microbial contamination that causes foodborne illness is difficult for consumers to detect. Contaminated food might look, smell, and taste no different from uncontaminated food.


The information gap means buyers are likely to be wary of sellers’ claims. If food suppliers cannot convince consumers that they have gone to the trouble of producing very safe food, their compensation will not cover expenses and there will not be much safety offered to consumers.


Food suppliers have come up with ways to overcome information gaps. Having a well-known brand such as McDonald’s, Burger King, and Wendy’s creates an incentive to ensure that the food supplied to consumers is safe. A brand with a good reputation is a marketing advantage and represents an asset its owner has built through financial commitment. A single foodborne illness linked to the firm could damage the brand and reduce the value of the investment in brand building.


While food suppliers do not make explicit safety claims on retail food labels, safety claims do influence prices further back in the food supply chain. As agricultural commodities are transformed into foods, third-party certifiers are providing validation of quality attributes (including safety practices used in manufacturing plants), reassuring input buyers that a product’s attributes are as advertised. In the private sector, firms like SGS and AIB International, as well as many more, offer services to validate safety procedures and bolster market differentiation with respect to food safety.


When food providers produce foods that are treated as undifferentiated commodities, those producers may not have a name brand or the incentive to guard it. Policymakers may thus decide to intervene in the market to enforce an acceptable level of food safety for all consumers. USDA’s Food Safety and Inspection Service is responsible for the safety of meat, poultry, and egg products. As well as routine inspections of processing plants, it has promulgated rules requiring all meat and poultry establishments to develop and implement written sanitation standard operating procedures and to test for the harmful pathogens E. coli and Listeria. The U.S. Food and Drug Administration oversees food safety for all other foods.


The large question for policy is the extent to which the private sector has overcome information gaps. If branding and third-party certification lead to food safety levels that are above minimum government standards, government intervention cannot be cost effective. But branding and third-party certification are not universal, so consumers’ demands for safety may go unmet without government oversight.


Source: Amber Waves



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