The number of meat recalls, especially of beef, has increased since the 1990s thanks to a series of safety-related concerns, such as salmonella, the E. coli bacteria and "Mad Cow" disease. In addition to issues of food safety, beef recalls have economic effects as well, related to prices, exports of American beef, and the economic health of beef producers.
History
The largest beef recall in U.S. history occurred in 2008, when 143 million pounds of beef was recalled after U.S. Department of Agriculture inspectors found abusive practices, including the processing of ill cattle, at the processing plant from which the beef originated. A previous recall in 2007 involved 21 million pounds of frozen beef that may have been infected with the deadly E. coli bacteria.
Theories/Speculation
Economic theories of supply and demand suggest that a large beef recall would not only remove large amounts from beef from grocers, reducing the supply, but also could result in safety-conscious consumers purchasing less beef. Beef recalls could result in increased demand and thus, higher prices for other meats, such as chicken and pork, as consumers substitute these products for beef.
Effects
Research in 2002 by agricultural economists found that beef recalls appear to have a negative impact on cattle futures prices, but only in the short term. Any long-term change in the demand for beef resulting from recalls likely occurs over an extended period, according to the research article, published in the Agriculture and Resource Economics Review.
The Economic Research Service (ERS) of the U.S. Department of Agriculture found that beef purchases declined for two weeks after a December 2003 announcement that a cow in the state of Washington was infected with Mad Cow disease. ERS further reported, however, that consumer behavior then returned to pre-announcement levels.
Geography
The impact of the 2003 announcement in Washington state of Mad Cow disease had a greater effect on U.S. beef exports. Japan, a leading importer of American beef, banned U.S. beef imports for two years after the announcement. More than 60 other nations placed restrictions on U.S. beef as well, and exports dropped sharply. By 2007, overseas sales of U.S. beef had increased but remained short of pre-announcement levels.
Significance
Large beef recalls can have a devastating effect on individual beef producers. This was the case in 2007 after the recall of frozen beef produced by a Topps Meat Company facility in New Jersey. Less than two weeks after the recall, Topps, then the nation's largest producer of frozen hamburger patties, went out of business. This resulted in laid off employees and the loss of jobs in areas in which the company operated.
Potential
An increase in beef recalls has the potential to negatively affect the health of beef producers. Increased recalls could trigger more stringent regulatory actions by the government, which could raise beef prices for consumers. Consumer purchases could shift toward other meats, thanks to higher prices and perhaps deeper concerns about the safety of beef.
Tags: beef recalls, beef producers, 2003 announcement, after recall, American beef