Lessons of the Listeria Outbreak: Do Locavores Make Us Less Safe?

As the death toll from listeria in cantaloupe reached 25 this week, marking the deadliest outbreak of foodborne illness in a quarter-century, some industry insiders are placing blame on the local foods movement. On economic grounds, they may have a point.

The contaminated melons were traced to a self-described small farm in Colorado that the FDA said had “poor sanitary” conditions. The FDA reported Wednesday that it found listeria in numerous areas of the farm’s packing facility, including a floor drain, a produce dryer, and a conveyor belt. Standing water and poorly designed equipment created “the perfect environment for listeria growth and spread,” according to one FDA expert. The farm claimed to have passed an outside audit just days before the outbreak that has sickened more than 100 people and devastated the cantaloupe industry. Farmers in California are plowing their crops under because of the collapse in demand.

That the outbreak occurred on a small farm selling principally to regional buyers is an obvious point, but also an important one because this kind of food contamination is less likely to occur at the large-scale farming operations that locavores love to hate. Consider first that local food systems largely ignore the important role comparative advantage plays in agriculture. Comparative advantage explains why corn is grown in Iowa, almonds in California, and winter vegetables in Florida. The different regions, with different soils, land qualities, climates, and opportunity costs specialize because they can produce their respective crops better than other regions. Comparative advantage implies significant gains from interregional and international trade. And it isn’t just relevant to costs of production and farm yields. It applies also to food safety.

Some regions are just safer places to grow certain crops than others—a point made recently by long-time food industry observer Jim Prevor at his “Perishable Pundit” website. Colorado, he notes, is a particularly unsafe place to grow cantaloupes, which are particularly susceptible to contamination because bacteria can hide out in the crevices of the melon’s rough skin. Rains splatter mud on the melons in Colorado, requiring them to be washed post harvest, a process that can lead to cross contamination among melons and create the moist conditions in which bacteria thrive.

In contrast, dry summers in California and Arizona create safe conditions for cantaloupe production because the crops are watered by drip irrigation and are much less likely to get dirty. Consequently, California cantaloupes bypass the rinsing phase and are packaged dry, sometimes right in the field. But the local foods movement kicks comparative advantage to the curb, favoring foods grown within a certain distance over foods grown in the best conditions.

The small farm is also likely to invest less in preventing food contamination than the big farm because its losses and legal exposure from any outbreak will be smaller. Even if the contaminated farm in Colorado grew half of the state’s 2,200 acres of cantaloupe, its loss from pulling its harvest is only $4 million in revenues. (The total U.S. harvest in 2010 was valued at $314 million.)

A larger farm has much more at stake, both in terms of lost harvest revenues and reputation. Reputation is critical to firms in the food industry as health scares can dramatically reduce demand well into the future. To large firms in the industry, an outbreak can mean hundreds of millions of dollars in foregone sales and liability. This creates a big incentive for these firms to invest in equipment, procedures, and testing to minimize the risk of food contamination at farms and packing sheds. Further, geographic concentration of production allows farms to work jointly and cooperatively to achieve food safety for their mutual protection.

It’s not just that the benefit of food safety investments (i.e., avoided losses) is lower for small farms. Their costs of achieving a given level of risk are often higher, too. Large firms exploit economies of size to achieve food safety standards more cheaply than small firms. A simple example is fencing a field to avoid animal intrusions and fecal contamination. The cost of fencing per unit area is decreasing in the size of the field. At $10 per foot, it costs $4000 to fence a 10,000 square-foot field. The cost of fencing a field 100 percent larger is only $5,650*, less than 50 percent more.

More generally, because of the fixed costs associated with prevention efforts, large firms have an advantage in mitigating against food contamination. They can spread the costs of equipment and personnel over larger quantities of output to lower their average costs. Thus it is no surprise that research by economists at UC Davis, and the USDA found that large food operations have lower costs for complying with food safety standards and are more likely to invest in equipment and pathogen testing to reduce contamination risk. Large firms also often hire food safety specialists to oversee food safety protocols and testing for contamination.

Because the costs of achieving low levels of contamination risk are so high for small farms, they were exempted from stricter food safety standards required by Food Safety Modernization Act signed by President Obama earlier this year. The act calls for the USDA to issue tighter standards for preventive measures and testing on farms and elsewhere in the food supply chain.

Food-safety costs are also greater for the taxpayer when dealing with small-scale, geographically scattered farming. The cost of monitoring regulatory compliance is smaller the fewer and more concentrated the farms become. In the locavore utopia, federal inspectors would have to travel to hundreds of local food sheds and inspect dozens, perhaps hundreds, of farms in each one. As the number of commercial farms increases, either the costs of labor and transportation associated with inspection go up, or the compliance level falls. The local foods movement, then, makes it more costly for the government to assure the food supply is safe.

Finally, assuming small farms are not inherently safer than large farms, then as food retailers endeavor to meet the demands of locavores by sourcing meats and produce from local farms, they must compromise on other priorities, like reducing contamination risk. Food retailers have many objectives in securing produce from suppliers, including minimizing cost and maximizing flavor. The many potentially conflicting objectives impede the retailer’s ability to achieve any one objective to the greatest degree possible. The retailer faces tradeoffs. Sourcing local food from smaller farms that are less effective in mitigating contamination risk almost surely comes at the cost of food safety, a point also m
ade by Mr. Prevor.

The recent listeria outbreak highlights the risk posed by accidental food contamination to consumers and farmers alike. Twenty-five dead. Hundreds sick. And millions of dollars of cantaloupe plowed into the ground. It’s a painful reminder of how much we rely on a safe and secure food system. And it is worth asking if a local food future will put us at greater risk.

*An earlier version incorrectly read, “At $10 per foot, it costs $4000 to fence a 1000 square-foot field. The cost of fencing a field 100 percent larger is only $6,000, a mere 50 percent more.”


Mark S

This is the most moronic thing I've ever heard. First off, most outbreaks and recalls happen with large agribusiness, the ones who supposedly are better equipped to make our food safe. Remember that massive turkey recall this year? That was Cargill, one of the giants of industrial agriculture. Furthermore, if you're a regional supplier with thousands of acres, you aren't a local farmer.

How much did Monsanto, Cargill, ConAgra, etc. bribe you to write this piece of trash?

Steve Sexton

***Is Jensen Farms small and local?

Jensen Farms describes itself as a small farm and it is clearly a niche player. It’s produce was distributed to at least 17 states, so it isn’t just a backyard mom and pop operation. But as best I can tell from information in press reports, it is smaller than the average cantaloupe farm.

Even though the farm’s produce was distributed across a number of states, it seems evident that the bulk of its cantaloupes were sold in Colorado or surrounding states. When the CDC last prepared a map of the listeria outbreak on September 29, 80% of the reported incidents occurred in Colorado, bordering states, and Texas, home to the farm’s distributor and separated from Colorado by only the narrow Oklahoma panhandle. Twenty percent of illnesses were reported in Colorado alone (See http://www.cdc.gov/listeria/outbreaks/cantaloupes-jensen-farms/093011/map.html).

Thus, despite isolated cases in other states, the outbreak remains largely a regional phenomenon. Furthermore, there is a long incubation period with listeria infection, so cases reported in other states could be the consequence of cantaloupe consumption during travel in the Colorado area. Finally, Jensen Farms boasts that its cantaloupes are available in major Colorado retailers that don’t source cantaloupes from Colorado on a national level, like Safeway, Wal-Mart and SamsClub. Thus, Jensen Farms was a local supplier.

***But there are major food-borne illness episodes at big farms, too

I have made an argument based on economic theory—that big firms have greater benefits from the provision of food safety and can do it at lower cost. Thus, they are expected to provide a higher level of food safety, or a lower level of risk, than small farms. Indeed, there are prominent examples where contamination has struck major growers and these cases are likely familiar because they attract national attention. But these examples don’t prove that large firms are less safe. In many cases, contamination at very small farms may go unnoticed by the national press public health officials. Many times people don’t even seek professional medical attention for food-borne illnesses, let alone alert public health officials. The best way to empirically determine whether large or small farms are safer may be to examine the results of farm inspections rather than the incidence of reported outbreaks. As the FDA undertakes greater inspection effort, there may be sufficient public data to test empirically. But even then, small farms are exempted from much of the new rule-making. Until compelling empirics are available, the best we can do is turn to theory, which I have argued predicts that large farms are safer.

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MossHops

"Until compelling empirics are available, the best we can do is turn to theory, which I have argued predicts that large farms are safer."

I think your post would have been better served to more explicitly state this upfront. You are proposing a largely unsupported hypothesis and you could have been more forthright about that fact in the original post.

From your original post you state "It’s not just that the benefit of food safety investments (i.e., avoided losses) is lower for small farms..." I hardly think this is true. If bad produce affects 25% of consumers within a 30 mile radius of a "local" farmer. His livelihood is gone. His farm, his name and his investment in his farm is ruined and most likely, his only option is to sell what he can and move on to another industry.

On the other hand, if a mass producer sickens .01% of the population roughly evenly dispersed throughout the U.S., they pay their fee (which historically hasn't been all that onerous), fire the safety inspector offer a public apology and move on. The personal loss for the big corp is very little compared to the personal loss for the local farmer. As such, I'd argue that the local farmer has far greater incentive to avoid food contamination.

I know this is an economics blog, but fundamentally what drives me to pursue local commerce is for purely selfish reasons. If you are my neighborhood farmer and your produce sickens me, or if you're a builder and your construction work is shoddy, or if you're are a lawyer and provide me with poor legal advice you'd be faced with a very uncomfortable situation as you will run into me in the street, you'll hear about my righteous anger from your friends and your good name will be sullied in the community. It is you who is on the line when we do commerce together. That, in turn, almost always "encourages" local producers to do work that they can be proud of.

To state it another way, is a farmer more cautious about the produce he raises for his family, or the produce that is being shipped across a continent? The further you are from "family," lower the quality of production. That is my hypothesis, but I believe it bears itself out in everyday life.

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Bill Marler

I love Freakonomics, but Steve you way overstate your position. No one would think that shipping 300,000 cases of listeria-tainted cantaloupes to 26 or more states and killing 25 with over 100 sickened is local Ag.

Here is something that I wrote of food safety and local Ag earlier this year:

I attended the Future of Food Conference in Washington D.C. this last week and was amazed by the speakers that author, Eric Schlosser, and the Washington Post put together. From Lucas Benitez, Co-Founder, Coalition of Immokalee Workers to Michael R. Taylor, Deputy Commissioner for Foods at the U.S. Food and Drug Administration, Wendell Berry, Author, Secretary of Agriculture, Tom Vilsack, Will Allen, Founder and CEO of Growing Power Inc. and even The Prince of Wales popped in only days after the wedding of the century for the keynote address.

It was truly, an impressive list of speakers with a deep commitment to issues surrounding the future of food, and with a clear commitment to a vision of small, organic agriculture. The discussions ranged from workers rights to GMOs, from frozen vegetables to global warming. Obesity was also discussed along with the trend of booming backyard gardens. Sustainability was the catchword of the day along with going local, organic farming and the ever present mantra, "know your farmer, know your food." Lunch was served family style touting local, organic agriculture – meat and vegetables. White House Chef Sam Kass shared recipes as some in the audience gushed how hot (not temperature) the President’s Chef was.

Food safety, in the broadest sense of food security (ending hunger) and healthfulness (being against processed foods), was discussed by many of the speakers - clearly, important issues that impact billions worldwide. However, food safety as I live it was not on the agenda. In fact, the only time it was discussed was when Barbara Kowlazcyk (mother profiled in Food Inc. who lost her son to E. coli O157:H7) asked one of the panels of speakers about food safety as she lives it. The response is the same response that I hear often – “know your farmer, know your food” – “if you can look your farmer in the eye, you know the food is safe.” To me it is not a satisfactory answer to Barbara and the 48,000,000 Americans that are sickened, the 125,000 hospitalized and the 3,000 deaths that occur each year with a foodborne illness.

True, in two decades of litigating foodborne illness cases in nearly every state, the vast majority of the victims were linked to mass-produced food and/or local food that had been consolidated and further processed. However, it might also be that mass-produced food outbreaks are simply easier to catch due too the numbers sickened, and that many outbreaks that get our attention cut across state borders.

Perhaps, local, sustainable, organic, non-GMO agriculture does in fact sicken less people, but, then again, perhaps not. Perhaps because the illnesses are fewer in numbers and localized, they are also not as easily linked. The reality – from a bacteria’s or viruses’ perspective – is that local food can become contaminated between the farmer you know, and the fork you put in your mouth, just as easily as sharing a meal at a chain restaurant, buying Salinas salad, Nebraska beef, Arkansas chicken or Chinese Tilapia. Bacteria or viruses simply do not make the distinction.

I am not quite sure why food safety at the Future of Food Conference was a topic to be ignored. Was it because it is a painful topic? Really, who wants to deal with the facts that something as good a local grass-fed, organic raw milk could have Campylobacter in it that would cause a mom to become paralyzed due to Guillain-Barre Syndrome? Or, was it because there is a belief in “foodie” or “foodiest” communities that if food is local, sustainable, organic and non-GMO it is by definition safe? I recall an email I received from a well-known writer shortly after a famous, local, grass-fed, organic raw milk cheese producer was linked to eight E. coli O157:H7 illnesses. The writer was perplexed that the cheese maker could have done such a thing given that those sorts of things only happen to mega-food manufacturers. His belief simply did not conform to his reality.

The movement represented at the Future of Food Conference ignores food safety at its peril. The movement has an opportunity to embrace food safety as yet another distinguishing feature of its brand of “real food.” Accepting that foodborne pathogens exist and need not be in our food does not detract from believing that food is safer if you “know your farmer, know your food.” I would simply add, “trust, but verify.”

Talking about food safety does not make your food less safe - it makes it safer. Believing something to be so does not in fact make it so. Making food safety as Barbara and I live it a part of the culture of the future of food will make our food safer now and in the future. Without food safety, local, sustainable, organic, non-GMO agriculture will remain a niche and that is no future at all.

Yes, I am a lawyer and I represent victims of food borne illness and many of the people in this recent horrible outbreak.

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Marc Brazeau

Alvy Singer: Well, that's funny because I happen to have Bill Marler right here.

Eric

I think the title of this article is totally misleading. This really does not have anything to do with Locavores. However, I do feel there are good points here to be gleaned from the article. This article has nothing to do with the sustainable foods industry/culture. It sounds to me like a medium sized farm had some quality control issues.

vboyder

You may want to check your facts. Jensen Farms was not a small farm. Look up the USDA's definition of small farm. And Jensen Farms sold to Krogers, which last time I checked was a national grocery chain. That having been said, bacteria don't differentiate by farm size, so every producer, small, medium or large, needs to have a good agricultural practices plan in place and follow it. Ironically, Jensen Farms had received clean bill of health from a third-party audit firm. Go figure.

Julian Gibbs

The solution does not lie in the hands of the farmers it lies in the hands of the consumer. If you want to avoid cavities - brush your teeth. If you want to avoid food poisoning wash your damn melon thoroughly before cutting it open. It really is that simple.

What the industrialization of our food system has done, is not make it safer for us to eat but make us stupid mindless drones that have no idea how to handle our raw food. If we're not careful our grand children will think cantelope grows in plastic containers all cut up rather than in cow and chicken poop on the ground.

J S

The post reminds me of some 'city folk' that came out wanting to buy a pig and their kids were asking "why doesn't it say 'oink'?" They've been trained to think factories in foreign states and countries grow chicken nuggets with hydroponics all ready for the microwave...

Leslie

WHOA!! Um, fact checkers needed. Jensen Farms ships over 400 acres of cataloupes per year to places like New York. That is not a small farm nor a part of the local food movement. Your premise is false man, sorry. I normally like Freakanomics because of the assumption that you pay attention to details like that. Looks like I made an ass out of both of us today. I hate to say you sound biased, and after today I will never assume anything of anyone. But, you sound pretty biased on this particular issue. If the operation were in fact small, and in fact a part of the local foods movement, then no one outside of Colorado would have been sick and in fact it's likely that no one outside of their county would have gotten ill. They wouldn't have produced enough product to breach their state, and they wouldn't have been geared towards selling outside of their state. I do think that government regulations of the food industry are important, but I also believe in working smart. Smart is having a food system with natural barriers inherent. Like, buying food within a 100 mile radius and knowing your grower. Instead of buying food across the country that may or may not be produced by a reputable person that your would vouch for.

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J S

I've been in a lot of large and small factories. From growing up on a small family farm to getting a BSME and an MBA to go build parts for the Automotive Industry at the OEM and supplier levels. And widen the scope too, that restaurant chain is a factory, as are many other products and services are delivered to a convenient supply center "near you".

You have to understand what goes on in 'factories', who works in them, and how they are run. Factories are gritty, not the land of fluffy bunnies. Some factories are great, some are certainly not - size doesn't matter for getting 'infections'. Where factory size _does_ matter is with its raw "killing potential" - when things go wrong they go very very wrong for a whole lot of victims.

Germs, viruses, and bacteria are small, you can't really see them now can you? People who study these things (I live with one), can show how a typical kitchen sink has more hazardous types of infection ability than that bathroom people clean with fall-out-gear (yes, now cleaning that sink more). Or a doctor's stethoscope or their script-writing pen can carry more funky things than most are concerned with, but should be. Keeping kids home from school when they are sick reduces potential spread in the 'school factory', just like mixing one 'bad melon' on the washing equipment enabled the spread of this tragedy. And so on.

This is a huge controversy that won't be solved by assuming that size is the sole reason for safety.

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