Meat + Poultry - December 2007 - 36

RECALL

of the costs of implementing HACCP
programs. Another message sent after Hudson and Beef America was that
single-plant operations were vulnerable. So the industry also saw a round
of consolidation as family owned businesses such as Moyer Packing and Taylor Packing in Pennsylvania sought to
protect their assets by selling to larger
companies.
Topps was forced to go out of business because of the economic impact
of the recall, it said. It was a privately
held business owned by a group of investors and they did not disclose annual sales. But its annual frozen ground
beef patty production (the amount of
the recall) constituted the majority of its
business. Many were shocked to learn
Topps wasn't consistently following its
own HACCP plan. Topps had been in
operation for 67 years and had built up
a solid East Coast business. It emphasized food safety on its Web site. So
why it allowed itself to be exposed to
ruin by not following its HACCP plan
adequately was a mystery. But the message to other beef processors was: Ignore a rigorous food-safety program
at your peril.

Costly results
The Topps recall couldn't have come at
a worse time for the beef industry. The
extensive publicity put the industry's
largest and most valuable product back
under public scrutiny. This was expected to have some impact on fourth-quarter ground-beef sales just when overall
beef demand was already being pressured from consumer concerns about
the economy and record-high pork and
poultry supplies.
The fi nancial cost to the industry
of this year's recalls isn't yet apparent.
But this author's research into the impact of E.coli recalls after Jack in the
Box revealed the pathogen might have
cost the beef industry as much as $2.7
billion in the following 10 years (See
"2.7 Billion," M&P, February 2003, page
26). By far, the biggest cost related to
a decline in demand caused by negative publicity about beef. Recalls could
38

MEAT&POULTRY

December 2007

have cost the industry $1.6 billion in
terms of lost demand, calculated agricultural economist Ted Schroeder, Kansas State Univ., Manhattan, Kan. Then
there was the additional cost in terms
of a decline in boneless-beef prices
immediately after the recall.
Beef processors incurred the second major cost. The 10-largest companies spent more than $400 million just
on food-safety intervention strategies
to reduce the chances of E. coli getting
into ground beef and other products.
They also incurred a huge increase in

"This year's recalls,
and especially the
Topps recall, was a
rude reminder that the
industry must renew
its vigilant approach
to E.coli."
operating costs. This was estimated at
$250 million but could have been much
higher. Other packers spent at least
$100 million. Packers also incurred additional costs whenever they initiated
a product recall.
The Jack in the Box tragedy was the
basis for the food-safety action that followed. It resulted in the introduction of
new inspection regulations, including
the introduction of hazard analysis and
critical control point regulations for all
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meat and poultry plants. The cost of
the Pathogen Reduction/HACCP Rule of
1996 was a direct consequence of the
identification and ongoing presence of
E.coli O157:H7 in ground beef.
USDA's Food Safety and Inspection
Service initially estimated the cost of
the 1996 rule at less than one-tenth of
one cent per pound of meat. But university researchers suggested a cost
of 1 cent to 1.3 cents per pound for
all meat and as much as 17 cents per
pound for beef.
This year's increase in recalls led
industry officials to urge all sectors
of the beef industry to renew their
vigilance in reducing E.coli's presence. Beef processors need to improve their efforts on the kill floor
and in test-and-hold procedures, they
said. Some of the renewed vigilance
began immediately as USDA in early
November introduced a checklist of
questions about food safety programs
at raw beef plants. USDA's in-plant inspectors used the checklist to verify
that plants were following their programs. Following the Topps recall,
USDA admitted its in-plant inspectors didn't have the training to review
whether plants were following their
food-safety programs or not.
One twist in this year's recalls is
that all came as a result of illnesses
being reported, whereas none was related to illnesses last year. Both factors led to concern about what might
have caused the recall spike and what
to do about it.
A combination of factors possibly
caused the increase, say some scientists.
Dramatic changes in the weather this
summer might have elevated the E.coli
levels being carried by cattle into processing plants. Immigration raids and
labor shortages that have led to lesstrained workers on the kill floor might
have led to a less vigilant approach inside plants, they say.
Others say there has not been any
data suggesting E.coli levels on live
cattle were any different compared to
last year. They attribute the spike more
to a failure at the plant level. Packers

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Meat + Poultry - December 2007

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