Market Incentives Raise Food Safety Bar

According to the results of a new survey, food safety expenditures by the meat and poultry industry during 1997-2001 were due mainly to compliance with regulatory requirements, though market incentives are challenging some in the industry to meet even higher standards than those required by law. Slaughter and processing plants today are increasingly reacting to stringent requirements for pathogen control set out by large meat and poultry buyers who reward suppliers who meet the standards and punish those who do not, in effect raising the food safety bar (see “Savvy Buyers Spur Food Safety Innovations in Meat Processing” in this issue).

The survey, sponsored by ERS and conducted by Washington State University, details the type, size, and motivating factors of meat and poultry industry investments in food safety since Congress mandated the Pathogen Reduction/Hazard Analysis Critical Control Program (PR/HACCP) in 1996. Surveys were sent to 1,725 slaughter and processing plants; 996 responded. Plants ranged in size from establishments with only a handful of workers slaughtering one or two animals per week to facilities with more than 1,000 workers producing millions of pounds of product per year.

Survey results indicate that over the 5-year period 1997-2001, the industry invested about $570 million on new food safety equipment and quality control/production personnel to meet regulatory requirements set by PR/HACCP and spent another $380 million per year to ensure that their plants remain in compliance. On top of these expenditures, the industry invested another $360 million to meet food safety requirements set by major meat and poultry buyers, such as McDonald’s restaurants and Kroger grocery stores, and by importing countries. The average investment of $180 million per year accounts for a sizable share of total industry capital expenditures of about $1.8 billion in 1997, as reported by the Bureau of the Census.

The survey results also show that large and small plants have responded differently to regulatory requirements. Large plants have complied with PR/HACCP by emphasizing investments in new equipment, while small plants have focused on improving sanitation and plant operating procedures. Large meat and poultry buyers, both U.S. and foreign, have imposed more stringent food safety demands than PR/HACCP, requiring suppliers to make greater use of equipment and testing and have more intensive cleaning and sanitation practices.