Producer Welfare Changes from Meat and Poultry Recalls

The number and volume of meat and poultry recalls has increased substantially in recent years. This is likely due to regulatory emphasis on foodborne illness resulting in an increased frequency of testing for pathogens. We use an equilibrium-displacement model to examine the effects of recall costs on the beef, pork, and poultry industries. Results suggest that higher recall costs may have actually increased producer surplus to the broiler industry because of consumer substitution among products and that most losses resulting from recalls are accruing to the beef and pork industries. Meat and poultry recalls are initiated when prod-ucts already in commerce are found to pose threats to public health. Thomsen and McKenzie argue that the recall mechanism is an important policy tool and that the role of the USDA Food Safety and In-spection Service (FSIS) in requesting and super-vising recalls can help to align private and social incentives with respect to levels of food safety pro-vided by markets. As with any policy tool, changes in the way it is used or implemented are an impor