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Market Response to a Food Safety Shock: The 2006 Foodborne Illness Outbreak of E. coli O157:H7 Linked to Spinach

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  • Arnade, Carlos Anthony
  • Calvin, Linda
  • Kuchler, Fred

Abstract

In 2006 FDA announced that consumers should not eat fresh spinach in the wake of a large foodborne illness outbreak of E. coli O157:H7. This paper investigates response of consumers to the announcement. We use an AIDS demand model with 5 food safety shock variables and retail scanner data to analyze market response. Even fifteen months after the outbreak, predicted sales of spinach in bags were still down 10 percent from what they would have been in the absense of the food safety shock. After the outbreak, consumers shifted to other leafy greens such as bulk iceberg lettuce, other bulk lettuce, and bagged salads without spinach.

Suggested Citation

  • Arnade, Carlos Anthony & Calvin, Linda & Kuchler, Fred, 2008. "Market Response to a Food Safety Shock: The 2006 Foodborne Illness Outbreak of E. coli O157:H7 Linked to Spinach," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6448, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6448
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    References listed on IDEAS

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    1. Kuchler, Fred & Tegene, Abebayehu, 2006. "Did Bse Announcements Reduce Beef Purchases?," Economic Research Report 7251, United States Department of Agriculture, Economic Research Service.
    2. Arnade, Carlos Anthony & Pick, Daniel, 1998. "Seasonality and unit roots: the demand for fruits," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 18(1), January.
    3. Richards, Timothy J. & Patterson, Paul M., 1999. "The Economic Value Of Public Relations Expenditures: Food Safety And The Strawberry Case," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 2), pages 1-23, December.
    4. Calvin, Linda, 2007. "Outbreak Linked to Spinach Forces Reassessment of Food Safety Practices," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-8, June.
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    Cited by:

    1. Rudi, Jeta & Çakir, Metin, 2015. "Demand Spillovers of Food Recalls in Differentiated Product Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205313, Agricultural and Applied Economics Association.
    2. repec:wly:hlthec:v:26:y:2017:i:8:p:1067-1086 is not listed on IDEAS
    3. Bakhtavoryan, Rafael & Capps, Oral, Jr. & Salin, Victoria, 2012. "Impact of Food Contamination on Brands: A Demand Systems Estimation of Peanut Butter," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 3), pages 1-13, December.
    4. Rejesus, Roderick M. & Safley, Charles D. & Strik, Bernadine C, 2014. "Demand and Welfare Impacts of a Potential Food Safety Event in the Blackberry Industry," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169452, Agricultural and Applied Economics Association.
    5. Tselepidakis, Elina, 2015. "Food Safety and the Demand for Leafy Greens," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205583, Agricultural and Applied Economics Association.
    6. Villas-Boas, Sofia B & Toledo, Chantal, 2016. "Safe or Not? Consumer Responses to Recalls with Traceability," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2348568h, Department of Agricultural & Resource Economics, UC Berkeley.
    7. repec:cup:jagaec:v:46:y:2014:i:04:p:559-573_02 is not listed on IDEAS
    8. Zarebanadkoki, Samane & Zheng, Yuqing & Woods, Timothy & Buck, Steven, 2016. "Examining the Effect of Food Recalls on Demand: The Case of Ground Beef in the U.S," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236112, Agricultural and Applied Economics Association.
    9. Yuqing Zheng & Chen Zhen & Daniel Dench & James M. Nonnemaker, 2017. "U.S. Demand for Tobacco Products in a System Framework," Health Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 1067-1086, August.
    10. Bakhtavoryan, Rafael & Capps, Oral & Salin, Victoria, 2014. "The Impact of Food Safety Incidents Across Brands: The Case of the Peter Pan Peanut Butter Recall," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 46(04), pages 559-573, November.
    11. Bitsch, Vera & Koković, Nevena & Rombach, Meike, 2014. "Risk Communication and Market Effects during Foodborne Illnesses: A Comparative Case Study of Bacterial Outbreaks in the U.S. and in Germany," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 0(Issue 3), pages 1-18, September.
    12. Pouliot, Sebastien, 2011. "The FDA Food Safety and Modernization Act and the Exemption for Small Firms," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103885, Agricultural and Applied Economics Association.
    13. Oh, Miyoung & Hennessy, David A., 2014. "Upstream and Downstream Strategic Food Safety Interactions," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 174105, Agricultural and Applied Economics Association.
    14. Adalja, Aaron & Lichtenberg, Erik, 2016. "Foodborne Illness Outbreaks, Collective Reputation, and Voluntary Adoption of Industry-wide Food Safety Protocols by Fruit and Vegetable Growers," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235865, Agricultural and Applied Economics Association.
    15. Maria Aguiar Fontes & Eric Giraud-Héraud & Alexandra Seabra Pinto, 2013. "Consumers' behaviour towards food safety: A litterature review," Working Papers hal-00912476, HAL.
    16. Holderieath, Jason, 2016. "Spatiotemporal management under heterogeneous damage and uncertain parameters. An agent-based approach," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235850, Agricultural and Applied Economics Association.

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    Keywords

    Food Consumption/Nutrition/Food Safety;

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