Industry Economic Incentives for Food Safety Innovations

Recipient Organization
USDA/ERS
1800 M STREET NW
WASHINGTON,DC 20036

Performing Department
ECONOMIC RESEARCH SERVICE

Non Technical Summary
Food safety is not easily purchased in the marketplace. Rather it is an unknown product attribute to most purchasers. This research examines how to improve food safety performance. Case studies of successful innovations for food safety are studied to determine the economic incentives that brought about the innovations.

Animal Health Component

100%

Research Effort Categories

Basic

(N/A)

Applied

100%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
610	4099	3010	50%
712	5010	3010	50%

Knowledge Area
712 - Protect Food from Contamination by Pathogenic Microorganisms, Parasites, and Naturally Occurring Toxins; 610 - Domestic Policy Analysis;

Subject Of Investigation
4099 - Microorganisms, general/other; 5010 - Food;

Field Of Science
3010 - Economics;

Goals / Objectives
Theory and case studies are used to identify and analyze the private incentives for improving the safety of food in America. Case studies include innovations the industry has developed and is using to produce safer beef, including new equipment, new testing, and new management systems. Data will be collected and analyzed through interviews with firms to determine the most significant factors contributing to the innovation and identify the nature and magnitude of the economic incentives. The expanding role of the international marketplace and its impact on US food safety innovations will be discussed. The nature of the reserach, economic and contractual relationships among firms in the meat, equipment, microbial testing, and restaurant industries will be explored. The role of consumer acceptance of products and regulatory guidance and approval will also be analyzed for their impact on economic incentives to invest in and develop the innovations.

Project Methods
In a literature review, we will apply economic theory to analyze how missing or assymetric information about foodborne pathogens is likely to alter the market for food. Case studies, based on interviews with firms and review of websites and published literature, will examine the scope and uniqueness of the innovation, its success, and the source of the economic incentives for innovation of new processes and equipment to control pathogens.

Progress 10/01/03 to 09/30/04

Outputs
Two ERS publications were released in April 2004, AER 831 and a featured article in Amber Waves. The innovation work is being extended to examine public sector innovations. A book chapter is in draft form, "Public and Private Incentives for U.S. Food Safety Innovations." An AIB is also in draft form, "Government Innovations Enhance Private Incentives for Food Safety" by Tanya Roberts.

Impacts
An invited speech on private economic incentives for innovation and case studies to the interagency Risk Assessment Consortium, led to an invitation to speak to the FSIS's Office of Public Health and Science where 40 people attended and asked numerous questions.

Publications

Roberts, T., Laurian Unnevehr, U of Illinois, 2002, "Food Safety Incentives in a Changing World Food System", Journal of Food Control, Vol. 13, pp. 73-76

Progress 10/01/02 to 09/30/03

Outputs
Interviews have been completed for the two case studies of innovations in the beef industry. One is the invention of a new equipment system to pasteurize the surface of beef carcasses. The other is a microbial testing and management system to control pathogens in the production of hamburger patties. Data has been analyzed to determine the most signifant factors contributing to innovation and the most important economic incentives driving these innovations. Both case studies have been drafted and a rough draft of the theory section has been completed. Preliminary findings suggest that technology was not pushing these innovations. Instead the innovations were a response to foodborne disease outbreaks, regulatory recalls, and market concerns. Appropriability plays a critical role in food safety innovation.

Impacts
(N/A)

Publications

Roberts, T., Laurian Unnevehr, U of Illinois, 2002, "Food Safety Incentives in a Changing World Food System", Journal of Food Control, Vol. 13, pp. 73-76