ERS research finds cost may factor in to food safety in the National School Lunch Program.

KANSAS CITY, Mo. – Economic incentives influence food-safety performance of ground-beef suppliers to the National School Lunch Program, according to a report from the US Department of Agriculture's Economic Research Service (ERS).

ERS began examining the food-safety performance of ground-beef suppliers after media reports in 2009 stated the Agricultural Marketing Service's food-safety standards for ground-beef suppliers to the school lunch program were less stringent than those of major restaurant chains. AMS strengthened its standards, but no agency had conducted an economic analysis of the effectiveness of AMS standards. The ERS report aimed to fill the gap.

In its report, ERS noted “...the award of contracts to low-cost bidders incentivizes establishments with low costs and, sometimes, with poor food-safety performance on Salmonella spp tests to seek approval to supply NSLP. The establishments that do win contracts to supply NSLP, however, still have to satisfy AMS standards. Under these requirements, only establishments with cost advantages in supplying ground beef free from Salmonella spp contamination have an incentive to submit bids on AMS contracts.”

Included among the agency's findings:

• The food safety performance of active AMS ground-beef suppliers to the school-lunch program exceeded the performance of inactive AMS and commercial market suppliers. This suggests that AMS standards encourage superior food safety performance. Data show that Salmonella spp contamination in ground beef was nearly absent.

• The food-safety performance of inactive AMS ground-beef suppliers was worse than that of all other ground-beef suppliers on tests that were one-half to one-tenth the Food Safety and Inspection Service tolerance for Salmonella spp. ERS said the weak results imply that AMS's emphasis on low costs may encourage suppliers that invest less in food-safety initiatives seek approval to supply ground beef to the National School Lunch Program.

• AMS ground beef suppliers that also sold products in the commercial market matched the food-safety performance of commercial suppliers and surpassed that of inactive AMS ground-beef suppliers on standards that were one-half, one-fourth and one-tenth the FSIS tolerances.

Some evidence suggests that AMS ground-beef suppliers consider their food-safety performance before bidding on NSLP contracts only if they are confident their food-safety performance meets AMS food-safety standards. AMS suppliers that don't bid on NSLP contracts sell their ground beef in the commercial market to other buyers.
ERS researchers used data from FSIS and AMS to estimate the effect of being a particular type of supplier (active and approved, inactive and approved, commercial supplier only) on the probability that the ground beef produced by the establishment exceeded the tolerance for Salmonella spp established by FSIS.