Meat and Poultry Plants' Food Safety Investments: Survey Findings
by Michael Ollinger
, Danna Moore, and Ram Chandran
Technical Bulletin No. (TB-1911) 48 pp, May 2004
Inspectors from USDA's Food Safety and Inspection Service (FSIS)
traditionally conducted visual examinations of cattle and poultry
during slaughter and processing, looking for disease and other
obvious physical defects, and rejecting meat deemed to be
unwholesome. FSIS shifted the focus of its food safety inspection
procedures in 1996, when the agency promulgated the Pathogen
Reduction/Hazard Analysis Critical Control Point rule
The meat and poultry processing and slaughter industries have
adopted a number of voluntary food safety measures in response to
that change in focus, in addition to complying with the new
regulation. The PR/HACCP rule employs a system of checks at
critical control points where food safety is at risk, requires
plant operators to conduct tests for generic Escherichia coli (E.
coli), and imposes Salmonella performance standards. Implementation
began in 1997 and was mandated by early 2000 in all sizes and types
of meat and poultry slaughter and processing plants in the United
What Is the Issue?
Anecdotal accounts have been available since the 1980s on
industry efforts to ensure food safety. But there are no
comprehensive reports of how industry and government concern about
food safety have affected processing practices, technologies, and
investment decisions. ERS' Meat and Poultry Plants' Food Safety
Investments: Survey Findings provides information on the effects of
the FSIS regulation.
Prior to the ERS-initiated survey, very little data existed on
how the PR/HACCP rule has affected the types of food safety
technologies in processing/slaughter plants and the costs plants
have incurred and investments they have made independent of
PR/HACCP to ensure food safety. ERS initiated the survey in order
to obtain data that would provide a better understanding of how the
complex mix of technological developments, private markets, and
government regulation interact to provide safe and wholesome meat
and poultry products.
What Did the Study Find?
From 1996 through 2000, U.S. meat and poultry
slaughtering and processing plants as a group spent about $380
million annually and made $570 million in long-term investments to
comply with the PR/HACCP regulation. During the same time
period, the industry spent an additional $360 million on food
safety investments that were not required by the PR/HACCP rule.
Those figures are much higher than the cost estimate of $1 billion
to $1.2 billion spread over 20 years made by FSIS prior to
enactment of the regulation, but close to the $623 million in costs
projected by ERS in earlier research. FSIS considered primarily
administrative costs: recordkeeping, planning, testing, and capital
outlays. The ERS analysis also included the costs of hiring the
workers necessary to remain in regulatory compliance, and the
additional capital outlays necessary to bring each plant up to the
standards necessary for regulatory compliance. Notwithstanding the
higher cost estimate, projected health benefits still exceed
industry costs. A 1997 ERS study estimated benefits of $1.9 billion
in annual health cost savings linked with a reduction in foodborne
illness due to implementation of new food safety technologies.
Consumer prices of meat and poultry products have been
affected very little by PR/HACCP. ERS survey data suggest
that the PR/HACCP rule has raised beef and poultry slaughter plant
costs by about one-third of 1 cent per pound. These are average
prices per pound of beef and not the average cost incurred by each
plant. Small plants, which tend to produce more specialized
products, had much higher average costs than the giant plants,
which produce mainly commodity products, such as boxed beef. Since
plants must recover their costs, this means that while prices for
commodity products will rise very little, prices for more
specialized products, like cut-to-order beef, may rise as much as 2
or 3 cents per pound. It also means that small plants that do
compete in commodity markets may find it more difficult to remain
A meat or poultry plant's size was a strong predictor of
its choice of food safety technology. Large plants tended
to choose equipment and testing technologies; small plants relied
more on manual sanitation and adjusting plant operations.
Meat and poultry plants made significant new investments
to comply with the PR/HACCP rule. However, market forces
were also at work. Retail and restaurant customers of meat and
poultry plant products and officials receiving exported meat
products are vitally concerned about food safety and are in a
better position than consumers to ascertain the food safety of the
products that they receive. Using this position, they encouraged
the use of more sophisticated food safety technologies, an expanded
array of food safety practices, and a level of investment beyond
that required by the PR/HACCP regulation. U.S. plants that exported
products and/or those whose customers specified food safety
measures made greater investments in food safety operations than
other plants did.
The role played by markets in imposing strict food
safety standards on meat and poultry producers has public policy
implications. It suggests that information about plant
food safety performance provided by FSIS, such as plant quality
control performance ratings, could be used by meat and poultry
buyers in their purchasing decisions and may encourage greater
diligence in performing food safety-related tasks and elicit
greater investment in food safety technologies.
The ERS/WSU survey provided a substantial amount of data related
to PR/HACCP that will be explored more extensively in future
studies. Those studies will examine the perceived benefits of
PR/HACCP and the long-term rather than the short-term costs of
PR/HACCP. They also will examine the impact of plant
characteristics, food safety equipment, and processing practices on
plant quality control performance. The technological methods plants
use to provide food safety is another potential area of
How Was the Study Conducted?
ERS designed and funded the survey. Washington State
University's Social and Economic Sciences Research Center (SESRC)
conducted the survey in early 2001, completing it in May 2002.
Surveys forms were sent to 1,725 plants classified as cattle, hog,
or poultry slaughter plants or as cooked or raw meat processing
plants with no slaughter operations.
Of the 1,725 recipients, representatives from 996 plants
completed surveys and returned them to SESRC. The survey plants
ranged in size from establishments with only a handful of workers
slaughtering 1 or 2 animals per week to firms with more than 1,000
workers and producing millions of pounds of product per year.