Will the benefits of safer food due to public sector
interventions be worth the expense? Even without tallying benefits
and costs, the answer is no if food safety is treated as
an item routinely bought and sold. If consumers could select a
desired level of safety in the same way that they select clothes or
books, the public sector could not make better food safety
decisions than consumers could make for themselves.
How can there be a market for safe food when safety cannot be
observed? Before assessing the benefits and costs of a particular
government program, researchers must be confident that a market for
food safety has failed to appear and that consumers cannot make
nformed choices. There are several reasons to suspect that a market
for food safety has failed to appear:
- It is difficult for consumers to determine whether a food is
safe or not. Food that is contaminated with disease-causing
pathogens may look, smell, and taste like food that is free of
- If consumers cannot observe differences until it is too late,
food suppliers may not have incentives to produce safer foods.
Manufacturers and suppliers might not be compensated for their time
and costs involved in producing safer foods.
- If consumers cannot discern safety differences, they may not be
willing to pay more for safety.
The private sector is actively trying to market food safety,
with numerous firms offering services to trace foods and
ingredients through the supply chain, providing better process and
inventory control, and improving capability to remove contaminated
products. Other firms offer certification that processes meet
particular safety standards, in the hope of making suppliers'
claims about food safty credible to consumers.
As defined by the International Organization for Standardization
(ISO), which develops voluntary international standards for
products and services, traceability is the "ability to trace the
history, application, or location of that which is under
consideration." This definition is necessarily broad because food
is a complex product and traceability is a tool for achieving a
number of different objectives. As a result, no traceability system
is complete; a system for tracking every input and process to
satisfy all objectives would be enormous and very costly.
Traceability systems are a tool to help firms manage the flow of
inputs and products to improve efficiency, product differentiation,
food safety, and product quality. U.S. private-sector food firms
have developed varying amounts and kinds of traceability, balancing
the private costs and benefits of traceability to determine the
efficient level of traceability. Firms determine the necessary
breadth, depth, and precision of their
traceability systems depending on characteristics of their
production process and their traceability objectives.
Traceability is the necessary information flow to make food safety
Tracing a particular food product may seem like looking for a
needle in a haystack. However, U.S. ranchers, farmers, food
manufacturers, and distributors have a number of incentives to keep
accurate records tracking their food production and distribution.
These records form a traceability system that provides information
on the flow of food and food products throughout the U.S. food
supply system and aids in tracking food to its source.
ERS researchers have investigated the amount, type, and adequacy
of traceability systems in the United States, focusing particularly
on the fresh produce sector, the grains/oilseeds sector, and the
An ERS report, Traceability in the U.S. Food Supply: Economic
Theory and Industry Studies describes the results of an
investigation into the amount, type, and adequacy of traceability
systems in the United States, focusing particularly on the fresh
produce, grains and oilseeds, and cattle/beef sectors. The results
stem from research into the market studies literature, interviews
with industry experts, and on-site interviews with owners, plant
supervisors, and/or quality control managers in fruit and vegetable
packing and processing plants; beef slaughter plants; grain
elevators, mills, and food manufacturing plants; and food
Researchers found that traceability systems vary across
industries as firms balance the private costs and benefits to
determine the efficient level of traceability. The private sector
has developed a number of mechanisms to address deficiencies in its
own traceability systems, including contracting, third-party
safety/quality audits, and industry-maintained standards. The
best-targeted government policies for strengthening firms'
incentives to invest in traceability are aimed at ensuring that
unsafe or falsely advertised foods are quickly removed from the
system, while allowing firms the flexibility to determine how to do
so. Policy options include timed recall standards, increased
penalties for distribution of unsafe foods, and increased
Labels for processed foods in the United States must convey
standardized information about content and nutrition. In addition,
some labels convey limited information related to food safety such
as safe-handling tips, safe storage practices, and safe cooking
temperature. Some consumers perceive quality attributes on labels
such as organic, pesticide-free or growth hormone-free, and country
of origin as providing safety information. Consumers, food
processors, third-party entities, and governments all play a role
in determining which of a food's many attributes are described on
food labels. Consumers use their purchasing power (their
consumption choices) and political activities to help determine
which attributes are described on labels. Private firms seek out
attributes that are attractive to consumers and voluntarily label
information about these attributes when the benefits of so doing
outweigh the costs.
Policymakers have a number of tools at their disposal to
influence market outcomes, including taxes, subsidies, and
production and marketing regulations. In recent years, policymakers
have increasingly turned to the use of information to influence
consumer and producer behavior. Information policy involves
providing or requiring information about specific product
attributes, the proper use of a product, or best production
practices. This is often achieved through labeling and education
programs. Food labeling can also be used to provide nutritional
information and dietary guidance (see Food Choices &
Health: Education, Information & Labeling).
ERS researchers have studied whether consumers have enough
information to make informed food choices. Clearly, different
policies would be called for depending on whether consumers and
food producers have enough information about the foods they are
buying and whether more information might substantially increase
the safety of the food supply. Researchers examined what can best
be done in the private sector to provide informative food labels
and what role can best be played by the public sector in providing
Governments, responding to public-welfare concerns or other
political considerations, may require that information on some
attributes be included on food labels. The appropriate level of
government intervention in labeling, whether establishing mandatory
labeling laws, providing services to enhance voluntary labeling, or
not intervening at all, depends on the type of information involved
and the level and distribution of the costs and benefits of
providing that information. Mandatory labeling, like other
information policy tools, is often portrayed as a low-cost policy
tool. However, the costs of labeling policy may be far-reaching and
the benefits may not be very large.
In recent years, lawmakers have faced a number of food-labeling
decisions, including initiatives concerning nutritional content,
dolphin-safe tuna, organic products, country-of-origin, and
biotechnology issues. Labeling decisions are increasingly going
beyond addressing consumers' information needs to include
determining the appropriateness of labeling policy for achieving
social objectives, such as improving human health and safety,
mitigating environmental hazards, averting international trade
disputes, or supporting domestic industries.
In response to interest in food labeling, including labeling to
achieve wide social objectives, ERS completed the study, Economics of Food
Labeling. This report examines the economic theory behind food
labeling and presents five labeling case studies (nutritional
labeling, dolphin-safe tuna labeling, organic products labeling,
country-of-origin labeling, and biotech labeling). The ERS report
shows that the appropriate role for government, whether
establishing mandatory labeling laws, providing services to enhance
voluntary labeling, or not intervening at all, depends on the type
of information involved and the level and distribution of the costs
and benefits of providing that information. Furthermore, mandatory
food-labeling requirements are best suited to alleviating problems
that arise when consumers do not have adequate product information
and are rarely effective in redressing environmental or other
"spillovers" associated with food production and consumption.
Consumer Food Safety
Individuals who are more vulnerable to foodborne illness
represent one potential target for food safety education. These
consumers may also represent a niche market for foods produced with
extra protection, such as irradiated foods. For many pathogens,
infection rates are highest among children under 10 and adults over
65. Children are at higher risk because of their lower body weights
and undeveloped immune systems (See "Children and Microbial Foodborne Illness" ). Pregnant women who develop foodborne illness
may pass the infection on to their fetuses, perhaps resulting in
miscarriage, congenital illness, or chronic neurological
Some consumers are less able to fight off foodborne illness
because of a weakened immune system, resulting from a gradual
decline with age, HIV infection, immunosuppressant medication
following organ transplant, and radiation or chemotherapy for
cancer or other illness. (See Tracking Foodborne Pathogens from Farm to Table:
Data Needs to Evaluate Control Options ).
ERS research shows that consumers who perceive higher risks of
contracting foodborne illness are more likely to follow food safety
recommendations, such as cooking hamburgers thoroughly. Consumers
who say they read safe handling labels on meat and poultry also
report that they follow food safety recommendations in greater
numbers than other consumers. But further research is needed to
determine whether these consumers were already concerned about
foodborne illness and thus more aware of food safety information
from labels and other sources (See Ralston, Katherine L. and C.T.
Jordan Lin. 2001. "Safe Handling Labels on Meat and Poultry: A Case
Study in Information Policy," Consumer Interests Annual,
vol. 47, pp. 1-8).
ERS research on consumer tradeoffs in food-safety decisions
focuses on the example of hamburger preferences at home and in
restaurants. Using the 1996 Hamburger Preparation Quiz, conducted
by the Market Research Corporation of America, ERS found that 10
percent of consumers had switched from cooking hamburgers rare or
medium-rare 5 years previously to cooking them medium-well or
well-done in 1996. This led to a decrease in the percentage of
consumers cooking hamburgers rare or medium-rare from 24 percent in
1991 to 20 percent in 1996. Almost three-fourths of the respondents
who switched from less well-done to more well-done explained they
had made the change because of the possibility of becoming ill.
Yet, not all consumers changed their behavior.
To explore these changes further, ERS used the Hamburger
Preparation Quiz to study the relationship between consumers'
hamburger cooking and ordering choices and their motivation to
avoid the risk of foodborne illness from unsafely cooked hamburger.
Risk-avoiding respondents ordered or cooked their hamburgers more.
However, respondents who highly valued tender, juicy hamburgers
were less likely to eat hamburgers cooked well-done (See "Awareness of Risks Changing How Hamburgers Are