Can the Obama Administration Tame the Food-Safety Black Swan?

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At the recent food-safety conference I spoke about in my last blog, three coffee-break conversations emerged:

1. What can be done to tame the Black Swans – to prepare for and mitigate those unpredictable game-changers that occur, especially in large systems?

2. Do consumers expect too much from food safety?

3. How does one reconcile the realities of the food production with the demands of the consumer?

In other words, what can the industry do to predict and prevent food-safety problems? Is risk-free a realistic expectation in the global food world? Risk free may not be possible, but risk averse is possible. Barriers can be constructed.

Commonsense food-safety legislation is the first step. In the coming months, expect to see major changes in food safety. The Obama administration is very close to passing new food-safety legislation that will begin to tie up loose ends and close gaps in current food-safety laws.

The first step can be the hardest, but I argue that the next steps will be far more difficult.  Risk averse will require mandatory, not voluntary, changes in business practices for the food industry, such as stronger reporting structures for problems, and an end to slack inspection programs.

How we bargain shop ourselves into danger

At the conference, cost was a common argument against a 100 percent risk reduction for food-borne illness. Many cited consumer expectations for low-cost food as the biggest barrier. They are right. Taming the Black Swan can be expensive, but not as expensive as a loss of life or serious illness from hidden bacteria lurking in Romaine lettuce, a jar of peanut butter, or a carton of eggs.

Soon we will test the waters: new safety rules for eggs are going into effect this summer. For the first time ever, in July egg suppliers must refrigerate eggs, must test manure for salmonella, and they must report outbreaks to the FDA (it’s been voluntary thus far). Producers with more than 50,000 laying hens are required to be in compliance with the new rules by July 2010, while those with 3,000 to 50,000 laying hens will have until July 2012. The FDA said that approximately 30 deaths and hundreds of thousands of illnesses are caused each year by consumption of eggs tainted with salmonella enteritidis.

What will food safety cost us?

Consumers may see a tiny price hike. Last year, FDA estimated that it would cost the egg industry $81 million annually. But don’t let that number scare you, it’s a measly one cent per dozen, while the average cost for production of a carton of eggs is 44 cents, so there is more than enough room for profit margins. 

That said, the egg industry’s problems with reasonable price hikes are more opportunistic than justifiable. For instance, a recent class-action lawsuit against egg producers revealed that the egg industry may have allegedly killed off hens to reduce supplies and raise prices from 2004 to 2008. The Humane Society of the United States is calling for a criminal investigation, and this month several restaurants and food companies filed a class-action suit.

The egg lawsuit involves more than 40 percent of the eggs produced in this country, including Land O’Lakes Inc., Cal-Maine Foods Inc., Moark LLC, Norco Ranch Inc., Michael Foods Inc., Rose Acre Farms Inc., NuCal Foods Inc., and two suppliers for Eggland's Best.

An outbreak of food safety?

The suit may well get some attention. In March, U.S. Attorney General Eric Holder and Agriculture Secretary Tom Vilsack stood before a standing-room-only crowd at a college auditorium in Iowa and pledged to look into how agriculture is concentrated into a few corporate hands, how this may be breaking antitrust laws, and how this many be hindering small farming, and breaking antitrust laws.

Holder told the crowd that big is not bad. “We want everybody to have a fair shot,” he said. “Big is not necessarily bad, but big can be bad if power that comes from being big is misused. That is simply not something that this Department of Justice is going to stand for.”

How the antitrust scrutiny will play out is anyone’s guess. But it looks like the days of voluntary food-safety measures are over – the Obama administration is out to tame the Black Swans. 

Kimberly Stewart can be reached at eatingbetweenthelines@gmail.com

Read all of Kimberly Stewart's blogs here.

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