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Economic damages of food-safety incidents in complex markets: 2018 E. coli outbreak and romaine lettuce

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Authors

Ashley Spalding, USDA Economic Research Service
Rachael E. Goodhue, UC Davis
Kristin Kiesel, UC Davis
Richard J. Sexton, UC Davis

Publication Information

California Agriculture 77(1):22-29. https://doi.org/10.3733/ca.2023a0002

Published online June 27, 2023

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Abstract

Food-safety incidents are costly for everyone in the leafy greens industry. However, it is challenging to estimate the size and distribution of these costs in today's complex supply chains. Extensive use of formal contracts in markets such as leafy greens obscures prices and other terms of trade from the public view. Using proprietary data on prices and sales from a major leafy greens processor operating in the retail and food-service sectors, we are able to separately estimate short-run damages associated with the November 2018 romaine Escherichia coli advisory for grower-shippers, processors, retailers, and food-service operators. Due to fixed prices in grower-processor contracts, growers were only minimally impacted by the advisory. Processors, meanwhile, lost approximately $55.3 million from price and quantity impacts. Retailers incurred $14.1 million in losses after pulling product from distribution channels and shelves. Food-service operators were less impacted because lower prices offset losses from destroying potentially contaminated products. Moving forward, the best way to mitigate losses during food-safety incidents is fast and efficient traceability.

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Economic damages of food-safety incidents in complex markets: 2018 E. coli outbreak and romaine lettuce

Ashley Spalding, Rachael E. Goodhue, Kristin Kiesel, Richard J. Sexton
Webmaster Email: sjosterman@ucanr.edu

Economic damages of food-safety incidents in complex markets: 2018 E. coli outbreak and romaine lettuce

Share using any of the popular social networks Share by sending an email Print article
Share using any of the popular social networks Share by sending an email Print article

Authors

Ashley Spalding, USDA Economic Research Service
Rachael E. Goodhue, UC Davis
Kristin Kiesel, UC Davis
Richard J. Sexton, UC Davis

Publication Information

California Agriculture 77(1):22-29. https://doi.org/10.3733/ca.2023a0002

Published online June 27, 2023

PDF  |  Citation  |  Permissions

Author Affiliations show

Abstract

Food-safety incidents are costly for everyone in the leafy greens industry. However, it is challenging to estimate the size and distribution of these costs in today's complex supply chains. Extensive use of formal contracts in markets such as leafy greens obscures prices and other terms of trade from the public view. Using proprietary data on prices and sales from a major leafy greens processor operating in the retail and food-service sectors, we are able to separately estimate short-run damages associated with the November 2018 romaine Escherichia coli advisory for grower-shippers, processors, retailers, and food-service operators. Due to fixed prices in grower-processor contracts, growers were only minimally impacted by the advisory. Processors, meanwhile, lost approximately $55.3 million from price and quantity impacts. Retailers incurred $14.1 million in losses after pulling product from distribution channels and shelves. Food-service operators were less impacted because lower prices offset losses from destroying potentially contaminated products. Moving forward, the best way to mitigate losses during food-safety incidents is fast and efficient traceability.

Full text

Full text is available in PDF.

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