United States

Department

of Agriculture

Economic

Research

Service

Agricultural

Economic

Report

Number 828

International Trade

and Food Safety

Economic Theory and

Case Studies

Jean C. Buzby, editor

Electronic

Report
Abstract

Food safety regulations and the perception of risk are different among countries. This

can lead to persistent trade frictions and even reduce food trade. These differences may

also lead to increased dialogue between countries, with improved food safety systems

the result. Although little disruption to trade has occurred for food safety reasons (considering the total volume of food trade), trade issues or crises related to food safety are

wide ranging. These issues and crises challenge policymakers and industries to both protect domestic food supplies and nurture international markets. Meanwhile, consumers in

developed countries are demanding safer food. Risk reduction measures and quality certification programs can not only pre-empt food safety crises, but can better position

exporters in emerging overseas markets. However, coherency between trade and food

safety goals requires public intervention and investment and/or private costs.

Keywords: Food safety, international trade, regulation, Salmonella, BSE, produce,

seafood, trade liberalization.

Acknowledgments

The authors are grateful to Nicole Ballenger and Mary Bohman for the comments and

guidance they provided on this manuscript. Special thanks go to Bob Macke, Ed

Scarbrough, and Kitty Smith for reviewing the manuscript. We also wish to thank the following for reviews of particular chapters: David Abler, Ed Allen, Chris Braden, Julie

Caswell, Roberta Cook, Dave Egelhofer, Todd Furey, Donna Garren, Elise Golan, Jack

Guzewich, Karen Hulebak, John W. Jones, Stephen Koplin, Barry Krissoff, Ludwig

Lauwers, Robert S. Lijewski, Gary Lucier, Michael McElvaine, Sherri McGarry, Kenneth

Nelson, Tsunehiro Otsuki, Steven Patricio, Susan Pollack, Douglas Powell, Cathy Roheim,

Lee Schatz, Jim Schaub, Kathleen Segerson, Ann Marie Hillberg Seitzinger, David Skully,

Mary Snyder, Agapi Somwaru, Felix Spinelli, Mary Stanley, Chuck Stoffers, Teresa

Thorne, Peter J. Vardon, and Mike Villaneva. Dale Simms and Tom McDonald edited this

manuscript. Wynnice Pointer-Napper assisted with the production of this manuscript.

United States

Department

of Agriculture

www.ers.usda.gov

Electronic Report from the Economic Research Service

November 2003

Agricultural

Economic

Report No. 828

International Trade and Food

Safety: Economic Theory and

Case Studies

Jean C. Buzby, editor
Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .v

Chapter 1. Introduction and Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

(Jean C. Buzby and Laurian Unnevehr)

Chapter 2. Economic Theory and Conceptual Relationships Between 

Food Safety and International Trade . . . . . . . . . . . . . . . . . . . . . . . . . .10

(Lorraine Mitchell)

Chapter 3. Resolving Trade Disputes Arising From Trends in Food Safety 

Regulation: The Role of the Multilateral Governance Framework . . .28

(Donna Roberts and Laurian Unnevehr)

Chapter 4. International Trade of Meat/Poultry Products and Food 

Safety Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

(Kenneth H. Mathews Jr., Jason Bernstein, and Jean C. Buzby

Chapter 5. Produce, Food Safety, and International Trade: Response to U.S.

Foodborne Illness Outbreaks Associated with Imported Produce . . .74

(Linda Calvin)

Chapter 6. Mycotoxin Hazards and Regulations: Impacts on Food and 

Animal Feed Crop Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

(Erik Dohlman)

Chapter 7. International Trade and Seafood Safety . . . . . . . . . . . . . . . . . . . . . .109

(Jane Allshouse, Jean C. Buzby, David Harvey, and David Zorn (FDA))

Chapter 8. The Belgian Dioxin Crisis and Its Effects on Agricultural 

Production and Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125

(Jean C. Buzby and Ram Chandran)

Attachment A—Belgian-Luxembourg exports, 1989-1999 . . . . . . . . . . . . . . . .137

Attachment B—Belgium-Luxembourg monthly production indices of key 

agricultural products, 1998-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139

ii ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Summary

This report presents ERS research on the interaction between food safety and international trade. Food safety challenges are mounting and crises like “mad cow

disease” are becoming more pronounced. Growth in world food trade means that

U.S. consumers are more dependent on the food safety measures used in other countries and that there are greater opportunities for U.S. food exports. 

This research was performed by examining the conceptual relationships between

food safety and international trade and by examining the meat and poultry, produce,

food/animal feed crop, and seafood sectors for trends in trade, food safety regulation,

and the resolution of incidents and disputes related to both. 

Food safety regulations and standards evolve differently around the world as countries respond to food safety crises and prepare for perceived exposure to emerging

food safety risks. Regulations and standards worldwide are shaped by: (1) countries’

experiences with food safety, (2) inherent food safety risk levels in each country’s

food supply (e.g., livestock host factors), (3) countries’ and industries’ ability and

willingness to allocate resources to control these risks, and (4) differences in

consumers’ food safety perceptions and, hence, preferences for targeting risk reduction efforts. For example, countries’ perceptions about Salmonella risks in poultry

vary tremendously, as do their commitments and methods of control. As a result,

countries’ trade restrictions for Salmonella vary by type, extent, and duration.

These differences in regulations and standards among countries can lead to international trade conflicts or disputes and can ultimately affect global patterns of

food demand and reduce trade. In particular, food safety-related disputes among

trading partners may arise from:

● New or more stringent standards and rapidly changing food safety regulations,

● The difficulty of separating the roles of food safety and non-science issues (e.g.,

consumer preferences) in regulatory decisionmaking,

● Difficulties in determining whether an equivalent safety outcome has been

achieved when process standards are used,

● Strong differences in consumer risk perceptions and preferences,

● Newly identified or unfamiliar hazards, and

● Increased trade volumes from new or less proven sources.

Therefore, the causes of food safety-related trade disputes are varied, complex, and

tenacious. For example, the 1989 European Union ban on animal growth hormones

originated from concerns there about the effects of hormones used in beef production on human health. The scientific basis of the ban was later successfully challenged by the U.S. and Canada, but the European Union (EU) has still not lifted its

ban. This is the only food safety dispute that has advanced to a World Trade

Organization dispute panel.

Although differences in standards and regulations may lead to conflicts and

disputes, they may also spur fruitful dialogue between countries, causing some

countries to alter and improve their food safety systems. For example, regulatory

agencies worldwide are increasingly adopting the Hazard Analysis and Critical

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● iii
Control Point (HACCP) system as a foundation for new regulations to control

microbial pathogens in food.

There has been relatively little disruption to food trade for safety reasons when

considering the magnitude of global food and agricultural trade ($436 billion in

2001), notable changes over the past decade in food consumption, production, and

trade (for example, the increased consumption of food away from home, greater livestock concentration, and increased volume of food trade); the vast number and

variety of food categories and products traded; the roughly 200 countries participating in food trade; and challenges to food safety that include pathogens, pesticide

and drug residues, food additives, environmental toxins, persistent organic pollutants,

unconventional agents such as those associated with “mad cow disease,” and

zoonotic diseases. However, the globalization of the food supply could introduce

new food safety risks, revive previously controlled risks, and spread contaminated

food wider. For the United States, there is no evidence as to whether food safety

risks are increasing, remaining stable, or decreasing with trade. 

Trade frictions related to food safety can be persistent, and any coherency between

trade and food safety goals will likely require private costs and/or public intervention and investment. Global food trade will continue to increase due to improvements in transportation, infrastructure, and marketing networks, and to global

increases in per capita income levels and populations. Consumers in developed

countries are demanding certain attributes in food, like safety. Therefore,

improving food safety and expanding international trade are compatible—even

mutually reinforcing—goals. Governments and the private sector must react

quickly to new food safety crises in order to minimize human illness and financial

losses. But governments also invest in food safety to protect human health and

expand food markets indefinitely. The private sector will be similarly pre-emptive

where market incentives are strong. 

iv ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Abbreviations and Acronyms

BSE Bovine spongiform encephalopathy

CODEX Codex Alimentarius Commission

COI Cost of illness

ERS Economic Research Service

EC European Commission

EU European Union

FAS Foreign Agricultural Service

FDA Food and Drug Administration

FSIS Food Safety and Inspection Service

GATT General Agreement on Tariffs and Trade

HACCP Hazard analysis and critical control point 

NMFS National Marine Fisheries Service

SPS Sanitary and phytosanitary

USDA U.S. Department of Agriculture

WTO World Trade Organization

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● v
Background

I

ncreased international food trade means that countries share the responsibility for food safety, which

pertains all along the food supply chain from producers to consumers. With increased international food

trade, this supply chain transcends international borders. Consumers benefit from worldwide trade through

lower prices, year-round supplies, and a greater quality

and variety of food. However, globalization of the food

supply could introduce new food safety risks, revive

previously controlled risks, and spread contaminated

food wider. For food producers, food safety issues can

raise production costs, influence reputation, and close

off international markets. 

Trade in international markets may introduce new

costs for addressing and managing food safety hazards. Most internationally traded food poses no human

health risks, with food safety incidents rare considering the total volume of trade. Trade disputes over food

safety, however, can be persistent, and may require

public intervention/investment and private costs to

overcome. This report highlights how food safety disputes and challenges arise and are resolved.

Although food safety standards are frequently viewed

as technical barriers to trade, improvements in food

safety and expanded international trade are likely compatible and even mutually reinforcing. Domestic and

international firms share and respond to the same

incentives to provide safer food. Reputation and sales

can be enhanced for those exporting firms and industries making noticeably safer products, whereas firms

implicated in a food safety crisis may suffer a wide

range of business losses. From our research here, we

believe that, over time, food safety should continue to

improve worldwide with the spread of private and public food safety control efforts, increased scientific

understanding about food safety, and improved dialogue between countries. 

Food safety risks are defined here as they pertain to

human health, covering well-established and perceived

impacts from agents and sources including: (1) microbial pathogens (i.e., illness-causing bacteria, viruses,

parasites, fungi, and their toxins); (2) residues from pesticides, food additives, livestock drugs, and growth hormones; (3) environmental toxins such as heavy metals

(e.g., lead and mercury); (4) persistent organic pollutants (e.g., dioxin); (5) unconventional agents such as

prions associated with bovine spongiform encephalopathy (BSE) or “mad cow disease” in cattle; (6) zoonotic

diseases that can be transmitted through food from animals to humans (e.g., tuberculosis); and (7) foods produced or processed with practices perceived to involve

risks, such as irradiation. Scientists generally agree that

food safety risks are low relative to many human health

risks such as cancer and heart disease. Among food

safety hazards, human health risks are highest from

foodborne pathogens such as Campylobacter and

Salmonella, each of which causes well over a million

illnesses annually in the United States (Mead et al.,

1999). These are also common pathogens worldwide.

Food safety and trade issues related to it are becoming

more pronounced. There has been an increased scientific

awareness of the public health risks from unsafe food,

including both acute and long-term health consequences

(Lindsay, 1997). Many foodborne pathogens and diseases, such as new pathogenic strains of E. coli, are

emerging as technological improvements enable their

detection (Käferstein et al., 1997). Also troubling is

accumulating evidence that some pathogens are becoming resistant to certain antibiotics (GAO, 1999; Tauxe,

1997). Public health authorities are growing more

engaged with food safety as improvements in information and reporting systems accompany greater concern

about food safety in general (Käferstein et al., 1997). 

The traditional foodborne outbreak scenario is changing (Tauxe, 1997). In the past, outbreaks were mostly

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 1

Chapter 1

Introduction and Overview

Jean C. Buzby and Laurian Unnevehr1

1Economist with the Food and Rural Economics Division,

Economic Research Service, and Professor, Department of

Agricultural and Consumer Economics, University of Illinois. 
acute and highly local and resulted from a high level

of contamination. Now, we see relatively more outbreaks from low level contamination of widely distributed commercial food products affecting many

counties, States, and nations. This development has

been attributed to changes in food production and distribution and to the growth of international trade.

The U.S. food system is changing at all levels—consumption, production, and trade. These changes alter the

nature and incidence of food safety risks. In the past

few decades, consumption of poultry, fish, fruits, and

vegetables has increased (Regmi, 2001), as has consumption of prepared foods and foods consumed away

from home (Lin et al., 1999). Meanwhile, the demand

for better food safety has tended to increase with growing consumer affluence and awareness of food safety

issues (Hooker and Caswell, 1999). Food production

has changed notably, leading to a different set of food

safety risks for the food industry to manage. For example, U.S. aquaculture production increased by over 50

percent between 1990 and 2000 (NMFS, 2002) and the

aquaculture share of total world production has also

increased (FAO, 2000). Farm-raised fish pose a different

set of food safety challenges than does wild-caught

seafood. Farm-raised fish are subject to contamination

from residues by production inputs (e.g., vaccines, feed

additives, and antibiotics), whereas wild-caught seafood

are more likely subject to contamination from, say, histamine (FDA, 2001). 

Shifts in food consumption have led to some of these

changes in food production, while other changes are

driven by advances in technology and by comparative

advantages of nations. Shifts in food consumption

coincide with increased trade and changes in the composition of world agricultural trade (Regmi, 2001). Not

only are trade volumes increasing—especially of fresh,

minimally processed, or high-value foods—but countries like the United States are looking to imports for a

wider variety of safe food year-round. 

There is no scientific evidence that food imported into

the United States, as a whole, poses greater food safety

risks than domestically produced food (Zepp et al.,

1998). Concern remains, however, for products such as

seafood because more countries are exporting to the

United States and some of these countries have poor

internal control systems and/or are in tropical areas

where toxin and bacteria hazards are intrinsically higher

(Ahmed, 1991). In general, importing countries have

limited ability to enforce their standards outside their

borders and may view exporters’ standards as inadequate or unreliable (Lichtenberg, 2003). Establishing the

equivalence of another country’s regulatory system is

difficult (see chapter 3). Although risks from imported

food sources are similar to the kind and extent of risks

from domestic sources, the United States has less food

safety oversight over countries from which we import,

which are increasingly from developing countries. 

In general, less developed countries are adapting to

higher standards of food safety oversight as they enter

new markets, and technical assistance helps with this.

Often, higher standards apply only to production for

export markets (see chapter 5). Both public and private

sectors are helping to safeguard imported food. For

example, private importers may set safety standards for

imports over and above those set by the U.S. Government. However, reducing a residue tolerance, for example, does not necessarily provide additional protection

from disease or injury. Governments in exporting countries may work with their industries to ensure food safety

as well.

Although over a dozen Federal agencies share jurisdiction over food safety (e.g., education, enforcement,

inspection, monitoring, outbreak management, research,

and surveillance), four have major regulatory roles: the

Food Safety and Inspection Service (FSIS) in the U.S.

Department of Agriculture (USDA), the Food and Drug

Administration (FDA), the Environmental Protection

Agency (EPA), and the Department of Commerce’s

National Marine Fisheries Service (NMFS) (IOM,

1998).2 These four agencies actively monitor imports

and, in some cases, survey the safety of production

abroad. In general, FDA oversees almost all import

inspections, which include testing for pesticide residues

or sanitary violations. Meat and poultry products fall

under FSIS jurisdiction, and this agency carries out

audits of foreign plants to ensure that sanitation meets

U.S. standards. FSIS also re-inspects imports of these

products using statistical sampling techniques to verify

that exporting countries’ inspection systems are working.

FSIS and FDA share responsibility for egg product

imports (IOM, 1998). For seafood, NMFS conducts a

grading program and a voluntary inspection of fishing

vessels, seafood products, and processing plants; FDA

has regulatory responsibility for seafood safety, including imports (IOM, 1998). FSIS requires that exporting

2 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

2 For FSIS, see www.fsis.usda.gov, for FDA, see www.fda.gov, for

EPA, see www.epa.gov, and for NMFS, see www.nmfs.noaa.gov
countries have food safety systems equivalent to those in

the U.S., while FDA lacks such authority, relying mostly

on port-of-entry sampling to determine if imports meet

U.S. standards (GAO, 1998).

With heightened awareness of food safety concerns and

the rapidly changing food system, food safety standards

are becoming more stringent and responsive to new hazards (see chapter 3). Countries that trade internationally

may have different desired levels of food safety and food

safety regimes, as well as different costs of complying

with regulations. These differences may lead to trade

conflicts or reductions in trade (see chapter 2). These

differences may, on the other hand, lead to increased dialogue between countries and cause some to change or

even improve their food safety systems.

Who Manages and Ensures 

Food Safety?

Food safety, both domestically and internationally, is

managed and ensured by both private and public sector

efforts (Caswell and Henson, 1997). 

Private Sector

The private sector, both here and abroad, has strong

incentives to prevent food safety crises and to mitigate

their impact if they arise. Firms implicated in a crisis

may suffer from reputation lost, stock prices reduced,

plants closed for cleanup or permanently shut down,

food poisoning lawsuits filed, premiums raised for

product liability insurance, and demand for product

reduced enough to threaten entire markets or industries

(Buzby et al., 2001). For example, the Guatemalan

raspberry industry shrank from 85 producers to 3 once

caught in the spotlight of repeated Cyclospora outbreaks from contaminated raspberries (see chapter 5). 

Many sectors have great potential for growth in world

markets and so have added incentives to produce safer

food (e.g., see chapter 4 on the growth of the red meat

sector). As safety and quality attributes are increasingly demanded by consumers, the private sector

responds.3 For example, the seafood sector exhibits

increased market segmentation, with wealthier countries favoring higher valued, safer products while less

wealthy countries favor lower valued products with

fewer food safety assurances (Wessells, 2002). In general, the private sector pioneers food safety advances.

Firms such as Nestle, in fact, have developed food

safety assurance standards beyond mandated ones

(USDEC, 2001).4 Importers often target their food

safety efforts to sell to large supermarket chains with

particular food standards (e.g., regarding produce). 

For branded products, private-sector diligence may

help firms improve their international competitiveness

when their products are perceived to be noticeably

safer. Private approaches fostering food safety include

self regulation, vertical integration, third-party certification, and common approaches to risk identification,

assessment, and management such as Hazard Analysis

and Critical Control Point (HACCP) systems and voluntary guidelines or Good Agricultural Practices

(GAPs). Vertical integration is growing in the United

States and is characterized by a single firm controlling

the flow of a commodity across two or more stages of

production (Martinez and Reed, 1996). It can better

guarantee the safety and quality of a firm’s inputs and

enhance the ability to trace product ingredients or

processes back through the food production and marketing chain. Traceback capability is critical in the

event of a food safety problem; it can help identify the

source of the contamination. Tracing such incidents

forward can eliminate other firms or products as

potential sources of contamination (see chapter 5).5

Third-party certification provides assurances to consumers that the information supplied by firms is correct (Golan et al., 2000) (e.g., the International

Organization for Standardization has its ISO 9000

series or “EN 29000” in Europe). HACCP essentially

identifies, monitors, and controls hazards at critical

points in food production and processing. Many producer groups have instituted quality assurance programs, and firms often use a mix of approaches.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 3

4 Of course, the amount of market share that firms can capture

from increased food safety efforts will depend on how well consumers can distinguish the safer product, how willing they are to

pay for the safer product, and how well firms communicate that

their products are safer to consumers.

5 Note traceback is different than traceabilty. Traceability is established when information about a particular attribute of a food product is systematically recorded from creation through marketing

(Golan et al., 2002). 

3 Although the Food and Agriculture Organization of the United

Nations considers food safety to be one attribute of food quality,

the U.S. Food Industry considers food safety and quality as separate attributes. Therefore, we follow the latter usage in this report.
Public Sector 

Although the private sector has strong incentives to

produce safe food, market signals to producers are

imperfect. Consumers often cannot discern the safety

of their food before buying it, and so their preference

for safer food may not be reflected in the price they

are willing to pay. Also, market transactions do not

include all of the social costs of food safety (e.g., medical costs, lost work time) (Buzby and Roberts, 1997).

Additionally, high transaction and information costs,

combined with the structure of the legal system, limit

the effectiveness of litigation for compensating ill consumers and providing firms with signals to produce

safer food (Buzby et al., 2001). Therefore, in addition

to private sector approaches, government regulation is

necessary to ensure food safety.

New approaches to food safety regulation emerged in

industrialized countries during the 1990s following

advances in science, changes in markets, and increased

awareness of food safety risks. There are seven main

trends for food safety regulation in industrialized

nations (see chapter 3). Regulatory agencies are

increasingly:

● Organized into one agency that can focus on food

safety,

● Using risk analysis to design regulation,

● Stressing a farm-to-table approach in addressing

food safety hazards,

● Adopting the HACCP system as a basis for new

regulation of microbial pathogens in food,

● Adopting more stringent standards for many food

safety hazards,

● Adding new and more extensive regulation to 

handle newly identified hazards, and

● Improving market performance in food safety

through provision of information.

These trends cut across commodities (see chapters 4,

5, 6, and 7). However, each food sector may also face

unique issues, such as BSE in cattle and bovine products, histamine poisoning in seafood, and mycotoxin

(toxic byproduct of mold infestations) risks in grains. 

Different food safety standards and regulations naturally evolve around the world, even when countries

have similar levels of economic development. For

example, standards may differ because countries disagree about science—countries may have different

scientific standards or they may interpret the same

science differently. Food safety contamination can

vary greatly among countries because of differences

in available technology (e.g., refrigeration), plant and

livestock host factors (e.g., herds exhibit varying

infection rates, endemic diseases), food production

practices (e.g., use of veterinary drugs), cultural differences (e.g., routine consumption of raw seafood),

and geographic or climatic differences (e.g., colder

climates may kill some pathogens) (Buzby and

Roberts, 1999). These differences among countries

may affect the relative risks or imports of food from

different countries. 

When the U.S. sets standards that affect imports or

negotiates access to other markets with different standards, it does so under the rules set out by the

Agreement on the Application of Sanitary and

Phytosanitary (SPS) Measures, which was established

under the World Trade Organization in 1995. The SPS

Agreement was a result of the 1986-93 Uruguay

Round of Multilateral Trade Negotiations. This

Agreement addresses food safety regulations and provides a framework for determining the legitimacy of

regulations that restrict trade and for resolving potential trade conflicts. Under the SPS Agreement, WTO

members recognize several principles, including:

● Transparency: Member nations are required to

publish their regulations and provide a mechanism

for answering questions from trading partners.

● Equivalence: Member nations must accept that

SPS measures of another country are equivalent if

they result in the same level of health protection.

● Science-based measures: SPS measures must be

based upon risk assessments and must be chosen

so as to minimize distortions to trade.6

● Harmonization: Member nations recognize the

desirability of common SPS measures. Three

international organizations are recognized as

sources of internationally agreed-upon standards:

the Codex Alimentarius Commission (Codex) for

human health measures, the International Office of

Epizootics (OIE) for animal and human health

measures, and the International Plant Protection

Convention (IPPC) for plant health measures.

4 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

6 Risk assessments identify the sources and incidence of risks, and

identify possible control strategies.
The SPS Agreement also establishes dispute resolution

mechanisms. Because of improved transparency and

the international SPS framework established for food

safety, many disputes are diffused or resolved before

reaching a formal dispute process. Several chapters in

this report refer to the SPS Agreement, because it has

played a role in the negotiation of trade disputes or

potential disputes over food safety standards. For

example, the emergence of BSE has created many difficulties for trade of live cattle and bovine products,

and international organizations have helped prompt

new standards to control BSE in the beef supply. 

One area of controversy is the difference in food safety

standards that exists among countries (e.g., mycotoxin

risk assessments and standards, see chapter 6). Codex

has facilitated the discussion of internationally acceptable standards, and the SPS Agreement has eased negotiations among countries concerned about new standards

proposed by the European Union (EU) and by others.

Food safety issues examined in this report for other

commodities, such as produce, seafood, and poultry,

have been addressed either through private efforts to

meet standards or through bilateral negotiations over

acceptable standards and systems of oversight. 

In essence, the private and public sectors have

responded to consumer demand for quality and safety

by developing and implementing common approaches

for quality and safety control, management, and assurance (Regmi, 2001), often working in partnership. The

extent of public versus private responsibility varies

among commodities and food products. Public and private approaches are often intertwined with each other

and with multilateral coordination mechanisms (e.g.,

Codex and HACCP). For example, the public sector

mandates HACCP for some foods, while the private

sector voluntarily implements it for other foods. In

another example, the fruit and vegetable sector is using

third-party certification to reduce microbial and other

hazards, and this certification is based on GAPs provided by FDA. 

How Do Food Safety Disputes

in Trade Arise? 

The dynamic nature of food trade, the emergence of

new hazards, and remaining differences in regulatory

approaches and capacity can still spur disputes over

differing food safety standards. In particular, food

safety disputes in trade may arise from the following

(see chapter 3):

● The appearance of new hazards and/or increased

trade volumes from new sources can lead to food

safety incidents or disputes in trade (see chapters

4, 5, and 8 for examples);

● Rising standards and rapidly changing food safety

regulations in industrialized countries can create

challenges for developing countries (see chapters

5, 6, and 7 for examples);

● If new or more stringent standards are process

standards, then it is more difficult to determine

whether an equivalent safety outcome has been

achieved (see chapters 4 and 7 for examples); 

● Strong differences remain with respect to consumer risk preferences, consumer perceptions, and

the role of non-science issues in regulatory decisionmaking (see chapters 3 and 4).

The causes of food safety and international trade disputes are complex and likely to persist for some time. 

Recently, several new food safety hazards have disrupted trade. BSE, for one, emerged in the mid-1990s

and instigated new regulations, some of which have

proven contentious among trading partners (chapters 3

and 4). And the Belgian dioxin crisis temporarily suspended the trade of wide range of products (e.g., pork,

cheese, and poultry) in many countries (chapter 8). 

What Food Safety-Related

Trade Disputes and Challenges

Arise in U.S. Commodity

Sectors? 

Health risks from internationally traded agricultural

products outweigh risks from domestically produced

products in at least one important respect—trade can

spread pathogens, pests, and diseases into countries traditionally free of these hazards. In essence, animal,

plant, and human health concerns with domestic agricultural products tend to stem from endemic pathogens,

pests, and diseases, and the responses to these hazards

are often established and ongoing. Hazards introduced

through international trade may pose a whole new set of

problems unfamiliar to the importing country. These

problems may threaten trade and the economic health of

the importing and exporting country. BSE, for example,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 5
has affected a number of U.S. domestic industries even

though there has never been a BSE case identified in the

United States (chapter 4).

Food safety challenges are different across commodity

and food types because of the nature of the products.

First, it matters whether the product is highly perishable. The potential for faster decomposition means

a shorter shelf life, greater food handling challenges,

and fewer leftovers to test in the event of an outbreak.

Raw foods tend to pose higher risks than cooked or

processed foods and may be more likely to pose risks

of cross contamination.7 Animal products such as

meat, poultry, seafood, dairy products, and eggs are

the foods most likely to cause outbreaks of human illness in the United States (CAST, 1994, p. 32).8 In

recent years, the variety of foods associated with foodborne illness (e.g., salami, lettuce, bean sprouts, and

raspberries) has increased (Tauxe, 1997), perhaps with

improvements in detection and traceback. In particular,

foodborne outbreak investigations are tracing a greater

proportion of outbreaks to fresh produce (Tauxe,

1997). Less perishable foods such as grains tend to

pose fewer acute food safety challenges (e.g., mycotoxins) (chapter 6). 

Second, the nature of the human health risks associated with food matters. Do risks lead to illnesses that

are acute or chronic, of low or high severity, and/or

low or high incidence? The nature of risks determines

how the risk is regulated and controlled, and its associated costs. For example, most food safety hazards

from seafood, meat, and poultry are from the immediate health risks of ingesting foods contaminated with

pathogens and their toxins, so regulation and testing

tends to focus on reducing these kinds of contamination. On the other hand, human health risks from contaminated grain products generally stem from

increased cancer risk due to long-term exposure to

mycotoxins, so surveillance and prevention measures

are aimed at these hazards. Food safety concerns from

produce involve both the immediate health risks from

pathogens and the chronic risks from long-term exposure to pesticide residues, and so testing is for both

types of hazards.

Third, whether the food safety issue is linked with

productivity in the commodity sector also matters.

Meat and poultry are singular commodities in that their

human and animal health issues are often linked. Some

pathogens such as Salmonella and E. coli O157:H7

exist naturally in the gastrointestinal tracts of animals

and birds (Wells et al., 1998). Some pathogens can

impair the health of the animal, and contaminate meat

and poultry during slaughter if the gastrointestinal tract

is punctured or if the hides, feathers, and hoofs are contaminated when animals enter the slaughterhouse (IFT,

2002; Feinman, 1979). Animals fed mycotoxin-contaminated grain can become ill, which can lower animal

productivity (weight gain, milk or egg production)

(CAST, 2003). Animal byproducts must be destroyed if

mycotoxin residue levels exceed standards (CAST,

2003). Mycotoxin levels are higher when crops are

under stress or stored in improper conditions, so well

managed crops would suffer less contamination and

reduce waste. This improves the incentives for food

safety diligence (CAST, 2003).

Fourth, differences in challenges across commodity

sectors also depend on the extent of vertical coordination and joint cooperation among stakeholders in

the sector. Well-developed mechanisms for coordination enhance the ability of a commodity sector to share

costs and incentives arising from food safety improvements. Such mechanisms can also facilitate traceback

and recalls if outbreaks occur. For example, grower

organizations in produce have spearheaded traceback

systems to protect the reputation of their particular

crops (chapter 5). Without a rapid and effective system

for traceback, sectors may face serious financial consequences if their products are erroneously implicated

with a food safety crisis. For example, the California

Strawberry Commission estimated that growers in the

central coast of California lost $16 million in revenue

during June 1996 when their products were falsely

implicated with the Cyclospora outbreak later attributed to Guatemalan raspberries (Mishen, 1996). 

Although food safety issues, challenges, and

approaches differ among sectors, food safety incidents

can compromise markets, market share, and business

or product reputation across the board. All commodity

sectors are concerned with protecting their product’s

reputation for safety in both domestic and international

6 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

7 Although processing and refrigeration can kill or slow growth of

some hazards in perishable foods, they do not result in zero risk.

Some pathogens such as Listeria can grow and even multiply

under refrigerated conditions, and some toxins and mycotoxins can

remain harmful after cooking or processing. 

8 The extent of product co-mingling may also be important. For

example, the nature of ground beef is such that one hamburger

may contain meat from many cows and any existing contamination

can be spread throughout a batch of hamburger, making thorough

cooking even more important (chapter 4).
markets (see chapters 4 and 5). Furthermore, producers

in all commodity sectors prefer to have regulations and

standards applied in the same way to imports and

domestic production, so that they can compete on an

equal basis to provide safe food (see chapter 4 for an

example of differential application of standards). 

Trade Frictions Over Food

Safety Persistent but

Surmountable

Food safety concerns and new food safety regulations in

industrialized nations have led to trade frictions. Though

all countries value food safety, the best means of ensuring it and the extent of control necessary is debatable—

and is debated. For example, the United States and the

EU have disagreed over both risk standards and methods of risk management (e.g., the role of scientific and

economic analysis; level of product standards; risk

equivalence of different process standards) (chapter 3).

Such trade frictions can be persistent. For example,

mycotoxin contamination is recognized as a risk that is

difficult or impossible to control, and under the precautionary principle, some countries may set new standards

on certain mycotoxins despite unclear scientific evidence about health risks (chapter 6). 

Ultimately, facilitating trade without compromising consumer protection is an inherently challenging task (chapter 6). Any coherency between trade goals and food

safety goals will likely incur private costs and/or public

intervention and investment. International institutions are

working toward harmonizing trade and food safety goals

and the private sector is also contributing, particularly

where market incentives are strong. When a food safety

crisis arises, both governments and the private sector

react quickly to minimize human illnesses and financial

losses. With the Cyclospora outbreak attributed to

Guatemalan raspberries in 1996, FDA, Health Canada,

the Canadian Food Inspection Agency, and Guatemalan

officials joined forces, while the Guatemalan Berry

Commission developed a system to characterize farms

according to food safety risks (chapter 5).

There has been remarkably little disruption to trade for

food safety reasons, despite large increases in the volume, value, and variety of food trade. Global food and

agricultural trade has increased from $138 billion in

1975 to $436 billion in 2001. For the United States at

least, there is no evidence that food safety risks are

correlated with trade volume. 

Food safety can enhance trade as more prosperous consumers worldwide demand certain attributes, like safety.

Both market share and value could grow for producers

who can manage and certify quality and safety. Trade

provides consumers with a year-round supply of a wider

variety of food. If a food safety crisis does occur, international markets and crisis-free exporters offer a source

of flexibility in satisfying demand.

Because the government and private sector have limited

resources to devote to food safety, it is important to target them effectively. More research is needed to support priority setting. FDA product sampling is already

targeted to products with higher risks to human health.

But how to monitor and set standards for foods produced in different ways under different regulatory 

systems? Research might explore what kind of standards (e.g., process or product) provide for easier 

monitoring and assurance of food safety in trade and

explore the relative cost of these standards. 

Food sectors quickly respond and adjust food safety

practices after food safety incidents (e.g., the private

sector response to Cyclospora outbreaks). Meanwhile,

consumers tend to adapt and regain trust in the food

supply when new private/public oversight efforts are

announced (or simply with the passage of time). 

The complexity of food safety issues in trade means

that disputes and difficulties will continue to arise.

Nevertheless, the many similarities in regulatory

approaches among industrialized nations may enable

greater agreement about higher standards. As industrialized countries with major markets adopt new regulations, there is incentive for other countries to follow

suit (Vogel, 1995). Furthermore, government can help

the private sector allay food safety concerns, by providing guidelines for good agricultural practices (see

chapter 5). Private certification of compliance with

these guidelines can facilitate trade, even when standards and requirements differ among countries. 

Food trade will continue to expand with growth in

demand, increased market access, and reductions in

technical barriers. Food safety enhancement is essential to consumer welfare and product reputation. Both

U.S. consumers and producers have an interest in seeing improved food safety and expanded food trade.

This report highlights the issues that must be managed

if this is to happen.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 7
References

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IA. 2003.

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Aquaculture,” 2000. www.fao.org/DOCREP/003/

X8002E/X8002E00.htm, accessed July 21, 2003.

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kaferste.htm

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lindsay.htm.

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haccp4c.pdf 

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and B. Smith. “E. coli O157 and Salmonella—

Status on U.S., Dairy Operations,” U.S. Dept. Agr.,

Animal and Plant Health Inspection Serv., National

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Zepp, G., F. Kuchler, and G. Lucier. “Food Safety and

Fresh Fruits and Vegetables: Is There a Difference

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Agr., Econ. Res. Serv., VGS-274 (April 1998):

23-28.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 9
Summary

The market has incentives to provide some degree

of food safety, as firms depend on their reputations for repeat sales. However, the market generally does not provide the socially desirable amount of

food safety for two reasons. First, consumers cannot

determine how safe food is before buying it. Even when

consumers purchase foods, they often cannot tell

whether a particular food was responsible for making

them ill or whether consuming it might have long-term

health consequences. Food safety measures can increase

costs for firms, and this lack of information reduces the

incentives for a firm to provide safe food. Consumers

will not necessarily be able to assign the appropriate

credit or blame to firms that provide safe and unsafe

food respectively. Indeed, when consumers learn of a

food safety incident and the unsafe food cannot be attributed to a particular firm, consumers might simply stop

consuming that type of food altogether. 

Second, when consumers eat unsafe food and become

ill, costs extend beyond consumers themselves to

healthcare workers, employers, and family members.

Consumers don’t usually take these costs to others into

account when they consume food. Thus, society would

like consumers to devote even more resources to making certain that their food is safe in order to avoid

these extra costs.

Government regulation is an attempt to increase the

amount of food safety provided by the market, as the

market alone will usually not provide the socially desirable level of food safety. Regulations can specify particular processes that a firm must use to produce food, or

they can simply specify a level of safety for the final

food product. The latter are generally considered more

efficient, as they allow the firm to select the least expensive method of arriving at the desired product.

Regulations often raise costs for firms, but consumers

are often willing to pay more for safer food. However,

firms might have a difficult time communicating

improved safety to consumers.

When countries trade internationally, the same issues

arise, with a few additional concerns. Regulations might

differ across countries, as countries have different types

of regulations, different levels of tolerance for food

safety risks, different costs of producing safer food, and

different levels of accidental contamination. If a regulation imposed by the government of one country is more

stringent, its firms will have higher costs and may be

unable to sell their goods as cheaply as foreign firms

not subject to the regulations. Consumers will pay more

for safer food, but the firm’s ability to communicate its

food safety level—and the consumers’ inability to take

social costs into account—can leave the domestic firms

at a disadvantage. These regulatory differences can create conflicts across countries.

When countries disagree over food safety regulations for

imports, several outcomes can occur. The domestic

country can ban less regulated foreign foods. If the foreign producers really cannot provide the safer food as

cheaply as domestic firms, this could benefit consumers.

However, if foreign firms could provide food that is

cheap and safe, consumers lose from a ban. If the foreign firms decide that the value of the domestic country’s market is high enough, the foreign firms can adopt

the domestic country’s costlier food safety regulations. If

these regulations spread throughout the foreign country’s

industry, this can improve food safety for the foreign

country’s own consumers. Finally, the countries can

negotiate their way to a compromise solution, if both

feel that the costs they must incur are worth the benefit

of maintaining the trading relationship.

10 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Chapter 2

Economic Theory and Conceptual

Relationships Between Food Safety 

and International Trade

Lorraine Mitchell1

1 The author is an economist with the Market and Trade

Economics Division of the Economic Research Service.
Introduction

This chapter discusses the basic economic theory

behind food safety regulation, and its predicted effects

on trade. Food safety issues are becoming increasingly

important in the arena of international food trade. As

countries begin to lower agricultural tariffs and

become increasingly integrated into world markets,

they purchase more food from abroad. As consumers

grow wealthier, they also focus more on the attributes

of their food, its safety, nutrition, and environmental

friendliness. Increased income can mean an increased

willingness to pay for such characteristics. 

Consumers demand food safety, and food producers are

willing to provide it. However, consumers often lack

information about products that they buy, and might

not consider social costs, like lost workdays resulting

from a foodborne illness, in their purchasing decisions.

This incomplete information, coupled with the costliness of some food safety provisions, can mean that the

government needs to regulate food safety.

Indeed, most nations have laws that regulate the safe

production of food within their borders, but no country

has jurisdiction over production outside of its borders.

A country can regulate the products entering its borders, but enforcing these standards is difficult and

costly, as it requires sampling and testing many shipments. Consumers therefore consume not only food

from abroad, but also the services of other countries’

food safety regimes. The desired level and form of

food safety regulation may vary among countries, and

exporting firms might have difficulty complying with

multiple safety regimes. Differences in food safety

regulations can lead to trade conflicts, but can also

lead to increased dialogue on food safety standards.

Some conflicts over food safety lead to reductions in

trade, while other conflicts are settled amicably.

Sometimes, conflicts can even lead to improvements in

food safety, as firms comply with the stricter safety

regimes of their trading partners.

Demand for Food Safety

Food Safety is Valued by Consumers

Consumers value a safe food supply. Since food is a

necessity, consumers value knowing that their food is

free of toxins, foreign material, and pathogens. Food

safety concerns have increased as wealth has risen.

Now that many consumers in the industrialized world

have adequate quantities of food, they (or their governments) can spend resources to ensure that their food is

safer. For example, Hayes et al. (1995) found that U.S.

consumers were willing to pay a premium of 15 to 30

percent per meal to reduce their risk of becoming ill

from their meal, while a number of studies cited by

Baker (1999) found that consumers are willing to pay

a premium for reduced pesticide residues in produce.

Another study found that the premium consumers

were willing to pay for food with low pesticide

residues increased with income (Huang et al., 2000,

1999). In a number of experiments and surveys, consumers have indicated that they would be willing to

pay more for food with lower risks of disease; however, these experiments might not reflect how consumers will actually behave in a market setting, as

consumers’ attitudes on surveys sometimes differ from

their documented behavior at the cash register

(Caswell, 1998). Food safety scares, like the Bovine

Spongiform Encephalopathy (BSE or “mad cow disease”) problem in the European Union (EU), or the E.

coli outbreak in the Western U.S., have raised awareness about food safety issues. Additionally, food travels long distances from producer to consumer, and

many foods are perishable. Modern food processing

facilities, refrigerated transport, and research on temperatures, pathogens, and toxins have all improved

food safety. As consumers know that such technologies are available, they will likely hold producers to a

high standard.

Consumer Demand Reflects Only

Some Benefits of Food Safety

Consumers can lack adequate information about their

food purchases, preventing them from demanding the

level of food safety they would choose if they had

complete information.2 Additionally, even if consumers have adequate information, their individual

purchases may not reflect the desire of the wider society for food safety.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 11

2 When an economic agent does not know which of several possible

outcomes (safe food, unsafe food) will result from a transaction,

economists say the market is characterized by imperfect information.

When one party to a transaction does not know as much about the

good being exchanged as the other does (for example, a consumer

does not directly observe how meat is handled), economists say the

market is characterized by asymmetric information. 
Food Safety Is Not Always Observable

Consumers cannot always readily observe the safety

level of their food. A consumer usually cannot know

whether food is contaminated until after purchasing it

(Segerson, 1999; Caswell, 1998). Even if the consumer becomes ill from eating food, linking the illness

to a particular food out of many consumed is often difficult (Segerson, 1999; Buzby et al., 2001; Caswell

and Mojduszka, 1996). Indeed, if the food is contaminated with toxins, like carcinogens, the consumer

might be not be able to observe any adverse effects for

many years, if ever, and might not be able to attribute

any adverse health consequences to a particular food

(Antle, 1996).3 Thus, firms have less incentive to provide food safety than they would if food safety were

directly observable by the consumer prior to purchase.

Consumers Don’t Consider Food Safety Effects

on Society as a Whole

Consumers may not demand as much food safety as

would be socially desirable, neglecting to take all the

social costs of their purchases into consideration

(Segerson, 1999, Golan et al., 2001). Inadequate food

safety can result in illness, which imposes private costs

on the consumer, but which also creates social costs in

the form of additional resources allocated to medical

care and lost workdays. For instance, outbreaks of E.

coli O157:H7 in fast food restaurants during the early

1990s created clusters of illness in several Western

States, with over 700 people affected. Several victims

died, and many patients experienced pain and suffering.

Some spent costly stays in intensive care units or visited

emergency rooms, and some might experience lifelong

health problems, with long-term implications for healthcare resources (Buzby, 2002; Foulke, 1994). In such

cases, the patients’ relatives had to put aside other activities in order to care for them. In addition, public health

resources had to be mobilized to trace the source of 

the outbreak. 

Thus, health care resources, employers, and other sectors of the economy share the costs of inadequate food

safety with the original consumer of the unsafe food.

This reduces both producers’ incentives to produce

safe food and consumers’ incentives to consume safe

food, because neither group bears the full costs of their

actions. Even if producers matched the food safety

they provide with the amount that consumers demand,

a more socially beneficial outcome would occur if producers’ provision of food safety met the demand of

consumers plus the demand of health care resources,

employers, public health departments, and other

affected sectors of the economy. 

Implications of Food Safety 

Demand for Firms

Since consumers demand some degree of food safety,

firms have an incentive to supply safer food (Holleran et

al., 1999). Reputations for providing safe food are valuable assets that firms have an incentive to protect. A firm

can develop an edge over its competitors if it produces

food using a technique known to enhance food safety

(Reardon and Farina, 2001). Likewise, a firm can suffer

increased costs or a loss of sales and equity, sometimes

permanently, if someone becomes ill from eating one of

its products (Buzby et al., 2001; Dolan and Humphrey,

2000; Henson and Northen, 1998; Segerson, 1999;

Thomsen and McKenzie, 2001). Odwalla, a “natural”

juice company, lost millions in sales and suffered a stock

price decline of 68 percent when customers contracted

E. coli from drinking its apple juice (Buzby et al., 2001;

San Jose Business Journal, 1997). In another instance,

Perrier, a leading mineral water company, lost 50 percent

of its U.S. market share when one of its shipments was

contaminated with benzene (Kunreuther and Slovic,

2001). Richards and Patterson (1999) find that negative

publicity about the safety of a food product has a very

persistent effect on prices. 

Food Safety Can Be Costly to Supply

Implementing food safety standards can increase costs

for firms. If food processors need, for example, to

increase the cooking temperatures for their foods, they

will need to pay more for energy, and will need to

cook each unit of product longer, perhaps raising labor

costs. If firms are required to use sterile packaging,

they might have to add more steps or inputs to their

assembly line. If certain pesticides are banned, farmers

might have to use less effective ones, thus losing a

larger percentage of their crop to pest damage. 

However, some standards might not raise costs much at

all. For example, some of the more toxic pesticides can

be replaced with less toxic ones for similar prices.

Jensen et al. (1998) found that improving food safety in

12 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

3 When a good has a characteristic (e.g., overall effects on longrun

health) that is not directly observable even after the buyer has purchased and consumed it, economists refer to that characteristic as a

credence attribute.
the meat industry raised costs for producers and that

costs varied with the particular safety option chosen.

Antle (1999) cites a number of studies that quantify the

costs of complying with various food safety regulations.

Ollinger and Mueller (2003) find that implementing

HACCP (Hazard Analysis and Critical Control Points)

systems in meat-processing plants added just under one

cent per pound to the cost of meat processing. 

Firms have incentives to protect their reputations, and

so might implement state-of-the-art food safety practices without any prodding from the government.

Additionally, as consumers might be willing to pay

more for food that they perceive as safer, firms have

another incentive to implement food safety regimes.

The higher prices consumers are willing to pay could

compensate firms for the costs of food safety provision. A firm will adopt more stringent food safety

practices if the cost is smaller than the resulting benefit to the firm in the form of reduced risk of losses,

reduced liability, and higher consumer willingness to

pay for the safer food. 

Increasingly, food producers in wealthy countries engage

in long-term contracting with their suppliers, and carefully vet those suppliers for food safety compliance.

Some firms use international and third-party standards

and certifiers in order to reduce the costs of verifying

that suppliers are using safe production methods and to

reduce the costs to suppliers (Henson and Northen,

1998). Segerson (1999) frames the problem slightly differently, noting that a firm will voluntarily improve food

safety standards if the benefits to the firm, plus the

decrease in damages a firm would have to pay to injured

consumers from selling the safer food, outweigh the

costs that the firm will have to pay to implement new

safeguards. If the cost is greater than these benefits to the

firm, firms might not adopt more stringent practices

unless the government mandates them.

Imperfect Information Changes

Incentives and Costs

Food safety levels are difficult to observe, and this can

change the incentives for firms. If the firm perceives

that consumers underestimate the chances of a food

safety incident, then firms will produce more of the

unsafe food than consumers would desire to purchase

if they knew the risks (Segerson, 1999). Producers

have less of an incentive to provide information about

their products if they believe that consumers perceive

the products to be less harmful than they actually are

(Zarkin and Anderson, 1992). 

A special case of this inability to identify the source of

illnesses occurs when a food safety problem is identified

with a particular bulk product or products from a particular country. If a product produced by a particular firm

makes some people ill, but that particular firm’s goods

are hard to identify in the marketplace, consumers may

eschew all products in that category (chapter 5). This, in

turn, can reduce other firms’ desire to provide safe

goods. Even if the other firms spend a great deal to provide safe food, consumers still might not buy their products if they cannot tell the difference between the safe

products and the unsafe one produced by the firm with

the lower standards. The firms spending money on food

safety will not be compensated for their extra expenses

by increased consumer demand or willingness to pay for

their safer products (Akerlof, 1970; Antle 1996). 

In chapter 5, Calvin notes several cases in which a particular type of fruit supplied by a particular supplier

caused illness. In these cases, demand fell for that fruit

across all suppliers, not just the one implicated in the

food safety crisis. For instance, when imported strawberries caused an outbreak of salmonellosis in 1997, U.S.

strawberry producers suffered a decrease in sales, despite

the fact that their product was uncontaminated; the same

happened to U.S. cantaloupe producers. In such cases,

firms can take safety precautions and still suffer reduced

demand; likewise, firms that do not take safety precautions impose costs not just on themselves, but on other

firms as well. A firm might therefore think that safety

precautions are not worth the costs, whereas they would

be worth the costs if firms were responsible for the costs

they impose on their fellow firms by damaging the reputation of the industry (Segerson, 1999). 

Because consumers perceive a product generally, rather

than a specific firm’s product, as safe or unsafe, firms

might find it in their best interest to implement safety

standards for the industry as a whole (chapter 5).

Industry standards are probably easier to achieve among

a small number of firms. Coordination costs are kept to

a minimum. Additionally, if some firm does not comply

with the standards and sells unsafe food, the source of

the food safety crisis is easier to pinpoint. With many

firms, just negotiating a set of standards might be problematic, and enforcing the regulations might be more

difficult if the source of unsafe food cannot be traced to

a particular firm out of the many in the industry.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 13
Even if a particular food product can be identified as the

source of a food safety problem, several companies

might have handled the product. A package of cheese

might have been produced by one firm, shipped by

another, and sold to the consumer by yet a third firm. If

the cheese contained an unsafe number of pathogens, it

might be difficult to determine whether the contamination resulted because the cheese was packaged improperly, or because the shipper or the retailer stored it

improperly. This difficulty in assigning responsibility

could again reduce the incentive to provide safe food. 

Additionally, if the cheese is associated with the brand

name of one of those firms, the other two are more insulated from the negative effects on their reputations,

because the market will not effectively route demand

away from their firms to other, safer firms. In such a

case, the firm whose reputation is on the line would be

willing to pay to have the other two firms provide adequate safety standards. Indeed, Henson and Northen

(1998) note that this is the method preferred by UK

retailers, who sell many items under their own name

brands and therefore have a great deal to lose in liability

and reputation if a food safety incident occurs. However,

the unobservability of food safety makes it difficult for

the firm that cares about its reputation to be certain of

the work of the other two without carefully observing

the whole production process. Therefore, they note,

many retailers are asking suppliers for third-party certification of their production facilities, which reduces the

monitoring costs for retailers.

Indeed, even in cases where firms might wish to provide

food safety to their consumers, it is frequently difficult

for them to do so, since they themselves find it hard to

detect unsafe food. There are many types of food safety

hazards, and contamination can occur at many different

stages. Pathogens can also multiply over time, causing

the danger to increase (Unnevehr and Jensen, 1996). 

A Gap Exists between Socially

Desirable and Market Outcomes

While economic theory suggests that firms should have

an incentive to ensure that their products are safe from

pathogens, toxins, and other hazards, these incentives

are not always as strong as they need to be. The market

outcome—that is, the intersection of supply and

demand—can fail to achieve the efficient or socially

desirable amount of food safety in two ways. The first

source of market failure stems from the lack of consumer information. The market supplies the level of

safety that consumers can currently observe, not the

level of food safety that consumers would want if they

could observe all of the safety attributes of their food. In

such cases, the market might produce too much of the

unsafe food, and too little of the safe food. 

The market’s failure to provide the efficient level of food

safety information can have substantial consequences. If

consumers become concerned about the safety of the

food supply, or particular food items, they will reduce

their consumption of such items, thereby shrinking the

food sector, or parts of it, below the amount of food that

consumers would prefer to consume if they had adequate

information about the safety of their purchases, and

could tell the difference between safe and unsafe food

(Akerlof, 1970). Also, if consumers are unable to evaluate the true risks of food consumption, they can experience more illness and incur more costs than benefits

from consuming some foods. Henneberry et al. (1999)

found that the amount of negative information that consumers received about pesticides on produce reduced the

demand for some varieties of produce and increased the

demand for others. Thus, consumers’ concerns changed

the composition of their diet, altering the pattern of production and consumption from what it would be if consumers had more information. 

The gap between society’s ideal level of food safety

and that which consumers demand for themselves constitutes a second source of market failure. Ideally, society would like food safety to be provided to the point

that reflects consumer demand for food safety, plus the

demand of public health providers and employers for

food safety. However, producers only have incentives

to take consumer demand for a particular product into

account, not the demand of the rest of society, as consumers’ willingness to pay determines the price that

the producer receives. 

Countries as a whole incur substantial costs when food

safety incidents occur. One USDA study indicates that

five types of foodborne illness collectively cost the

U.S. $6.9 billion in 2000 (Roberts, 2001). Another

USDA study, using simulations, indicates that implementing the Hazard Analysis and Critical Control

Points (HACCP) program to reduce foodborne illness

in meat and poultry resulted in economywide gains of

$9 billion, not including the benefits of reduced work

days lost (Golan et al., 2000). Another study estimated

that the benefits of implementing HACCP policies

would be $7-$42 billion (Crutchfield et al., 1997).

14 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
These estimates generally exclude some costs, like

pain and suffering and public health agencies’ expenditures on foodborne disease.

Potential Ways to 

Close the Gap

Litigation

Consumers, and sometimes other members of society,

can attempt to recover some of the costs of unsafe food

from food producers by seeking redress through the

court system. In countries with a functioning tort system,

a party who is injured by consuming unsafe food can sue

the firm that produced the food for damages (Antle,

1996). Such suits should provide incentives for firms to

provide safer food rather than risk the court costs, damage costs, and negative publicity of a lawsuit, but the

incentives are limited by the difficulty of proving conclusively that a producer’s food caused the illness.4 Buzby

et al. (2001) found that one-third of jury trials in food

poisoning cases resulted in verdicts in favor of the consumer. Most cases were settled before they reached trial. 

Education and Information Provision

Governments can use food safety education as an

alternative to regulation. Requiring firms to disclose

information about the foods they produce and educating the public about food safety could allow consumers to make better choices about the foods that

they consume (Caswell and Mojduszka, 1996). Van

Ravenswaay and Hoehn (1996) note that publicly provided information on food safety could result in

changes in consumers’ purchasing behavior and food

preparation practices that would reduce the number of

food safety incidents. Labeling and education would

address the consumer’s lack of information, which is

one of the market failures that leads to food safety

problems (Caswell and Mojduszka, 1996). However,

education would not address the second form of market failure—that consumers demand less food safety

than society would like (Golan et al., 2001). 

Government Regulation

When markets and legal institutions fail to provide the

socially optimal level of some good, like food safety,

economic theory suggests that governments can bridge

the gap. Governments can take a number of policy initiatives to induce producers to provide higher levels of food

safety. Governments could, in theory, tax unsafe food,

raising the firm’s costs of providing unsafe food and

therefore creating an incentive to provide safer food.

However, this assumes that a society can measure the

amount of unsafe food that is sold, which would be difficult. Most governments, therefore, turn to regulation, setting minimum safety standards that food producing firms

have to meet before they can sell their products.

Regulations are generally classified as product standards and process standards. Product standards specify characteristics that a product must attain before it

is considered safe to sell. For example, most industrialized countries have maximum residue levels (MRLs)

for pesticides. If a food has pesticide residues above

this amount, a vendor cannot legally sell that food. In

Great Britain, the government, under the doctrine of

due diligence, assigns the responsibility for verifying

food safety to food retailers, rather than setting specific procedures for processing foods. 

Process standards specify techniques that must be used

to process or package foods, with the belief that certain

production techniques make food more likely to be safe.

For instance, some governments require that processed

meat products be raised to a certain temperature to kill

bacteria before packaging. Ideally, such process restrictions are based on research, like studies of the percentage of bacteria killed at each temperature. In practice,

such studies are not always available, although knowledge in this area is increasing rapidly.

Governments might have motives beyond food safety

for certain regulations. Some food safety regulations

also achieve some other purpose, like protecting the

environment, animal welfare, or worker welfare. For

instance, DDT was banned in the 1970s not only

because the residue on foods was considered dangerous

for consumers, but because the pesticide also bioaccumulated. Small animals ate sprayed plant life, fish that

lived in streams absorbed runoff from farms, and larger

animals that ate these small animals and fish accumulated huge quantities of the toxin in their tissues. In particular, eagles and other birds of prey were threatened

by DDT, and since the ban, their populations have

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 15

4 Buzby et al. (2001) note that plaintiffs were hindered by long

incubation periods for foodborne illness, a lack of food evidence,

inadequate laboratory test results, and the fact that it is difficult to

pinpoint which of many foods consumed caused the illness.
recovered a great deal (Muir, 2001). In this case, a

process standard (banning a particular production

process) was used; simply setting a residue standard for

food might not have met the environmental goal.

The Effect of Government Regulation

on Supply 

Are certain standards more costly than others? Economic

theory indicates that product standards are often cheaper

to implement than process standards, as product standards give firms more flexibility to choose the least

costly production methods that meet the standards

(Unnevehr and Jensen, 1996; MacDonald and

Crutchfield, 1996). For instance, if a firm is told that its

products cannot exceed a certain maximum level of pesticide residue, then it can choose the most cost-effective

method for attaining that standard, which could include

reducing the amount of pesticide applied, reducing the

number of applications, switching pesticides, or altering

the last date of application before harvest. If the government told the producer which of those methods to use,

the government might not select the lowest cost method

(Segerson, 1999). Indeed, one production method might

be the low-cost method for one firm, while another

method might be cheaper for another firm (Antle, 1996). 

However, this general principle is not true in all cases.

If one herbicide is banned because it is deemed too

toxic, then producers might be able to switch to a similarly priced alternative. Additionally, standards for

final products must be verified in some way, either by

inspection or testing of samples, both of which can be

costly, particularly in the case of pathogen contamination (Unnevehr and Jensen, 1996; MacDonald and

Crutchfield, 1996). Hence, the relative expense of

process and product standards has to be evaluated case

by case. 

In response to the relative expense of these types of standards, many countries are adopting HACCP requirements, which require firms to identify points in the

production process where food safety is likely to be

compromised, and to put in place procedures that prevent such compromise. HACCP requirements feature

characteristics of both product and process standards.

Firms must adhere to the procedures in their HACCP

plans, but are allowed to define those procedures. Firms

must also meet standards for pathogens in their products,

and testing is required. Such plans have proven to be

cost-effective (Henson and Caswell, 1999). These plans

allow the firm to choose the most cost-effective methods

of prevention, and prevention can be less expensive than

testing or remediating a product (Unnevehr and Jensen,

1996). Both the U.S. and the EU require producers of

certain food products to implement HACCP plans.

Whatever type of regulation the government chooses,

most regulations will increase production costs for at

least some firms. In isolation, these cost increases generally shift back the supply curve of a firm, which results

in a new market equilibrium where firms produce fewer

goods at a higher price. One could also say that less safe

food was overproduced before the regulations were put

in place, since the production costs that firms paid did

not reflect the true cost to society of the less safe food,

which should include the costs of illness, lost workdays,

and other costs to society. Sometimes, industry opposes

individual government regulations, which can increase

costs and reduce production. 

With regulation, however, consumers would be more

willing to buy the food products, since they are now getting a safer good for their money (Unnevehr, 2000). This

represents a shift out of the demand curve, with consumers now willing to buy more of the safer food and to

pay a higher price. Indeed, fresh milk sales in the U.S.

are probably much higher than they would be if consumers did not have the security of knowing that milk is

pasteurized. However, the individual consumer is not

able to capture all of the benefits of having the safer

food; some of these benefits go to society. Therefore, in

some cases, consumers might not be willing to pay as

much as it costs for the product to meet the most socially

beneficial safety standard. In such cases, the net effect

would be a decrease in sales with a higher price,

although this higher price better represents the true cost

of supplying the food product with the higher level of

food safety (fig. 2.1).

Additionally, firms have difficulty in passing on the

information about food safety improvements to consumers. Some firms advertise when they undertake an

improvement in food safety, even when such an

improvement is a response to stronger regulations.

After the E. coli O157:H7 incidents in the 1990s,

some fast food chains sent out press releases announcing that they would be increasing the mandated cooking temperatures for their beef. Many juice companies

now advertise the fact that they pasteurize their products. Firms are only required to label juices if they are

unpasteurized, but firms label their pasteurized juices

to reassure the consumer. 

16 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Firms might also try to obtain third-party certification as

evidence that they are complying with a particular set of

safety standards. In other cases, particularly if the public

is not aware of a food safety problem prior to the implementation of a regulation, or is unaware of the magnitude of the incremental increase in safety, then the

regulation might not result in an increase in demand for

the new, safer product. 

Food safety standards affect not only the industry in

which they are implemented, but also other related

industries. If prices of a particular food rises, consumers

might consume less of that food and increase their

demand for another food, which will alter that second

food’s equilibrium price (MacDonald and Crutchfield,

1996). Suppliers to that industry might also find themselves subject to more stringent standards (Henson and

Northen, 1998). Thus, the regulations might affect not

only the market equilibrium in the regulated industry,

but markets in other industries as well.

Food safety standards can also have implications for

industry structure. If regulations require a large initial

expenditure on equipment, such regulations might give a

cost advantage to large firms that can afford this expenditure, and their scale means that the additional cost per

unit is amortized over a large number of units

(MacDonald et al., 1996). Firms might also integrate

vertically (with retailers becoming processors and/or

processors starting to run farms) in order to better control food attributes. Results here are mixed. Henson and

Northen (1998) report that retailers tend to prefer asking

processors for outside certification, as opposed to running processing firms themselves. Kilmer et al. (2001),

however, report that vertical integration among strawberry producers is associated with lower pesticide

residues, but the same is not true for tomato producers.

In order to decide whether or not to enact a particular

food safety regulation, governments must weigh the

costs to the firms and the consumers who now pay

higher prices against the benefits to consumers, employers, and public health resources of improved food safety.

Henson and Caswell (1999) point out that many governments have found this assessment difficult to achieve,

given the wide array of standards to evaluate and the

myriad of grounds on which those regulations are based.

Trade Implications

We have seen how concerns about food safety affect

the domestic food production sector. Concerns about

information, incentives for firms to provide food

safety, and deviations of market outcomes from

desired outcomes all affect the price, quantity, and

qualitative attributes of food supplied. Firms may incur

extra costs. Government regulation may prove necessary. How do those factors change when we introduce

international trade into the picture?

Food safety concerns have some of the same implications for international trade as for domestic trade, but

with the added complication that consumer preferences and government regulations may differ from

country to country, creating the potential for rivalry

and conflict. The 190 or so countries of the world all

have established different regimes for food safety, and

thousands of different foods are regulated. Differences

in trade regulations can put either domestic or foreign

firms at a competitive disadvantage in selling their

products. Trade conflicts frequently result when countries enact different types of regulations, have different

desired levels of food safety, or have different costs in

complying with regulations. Countries can resolve

these conflicts in a number of ways, including ceasing

to trade, adopting each other’s regulations, or recognizing each other’s regulations. 

Demand for Food Safety

Consumers throughout the world desire a safe food

supply. However, the extent of that desire might differ

from country to country. Consumers are also generally

willing to pay more for safer food, but the amounts

they are willing to pay might differ. Consumers in very

poor countries might have to balance expenditures on

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 17

Figure 2.1

Market impact of a food safety regulation

S1

S2 (includes new food 

safety regulations)

D1

D2 (reflects desire for

safer food)

Q2 Q1

P2

P1

P

Q
other health threats against that of food safety. Wealthy

countries therefore sometimes have more stringent

standards for pesticides and microorganisms than

developing countries do.

Consumers might have different desired levels of risk.

One country might want to push risk as close to zero as

possible, while another might regard some slightly

higher level of risk as acceptable, because driving the

risk to zero would be extremely costly. Economists have

found that the desire to tolerate risk varies significantly

across individuals. Men tend to be less “risk averse” than

women (Jianakopolos and Bernasek, 1998). Wealth tends

to increase risk aversion up to a certain level, after which

risk aversion declines with wealth, while the opposite is

true for age (Halek and Eisenhauer, 2001). One’s perception of risk also depends on one’s ability to mitigate the

risk or to cope with an adverse outcome (Smith et al.,

2001). To the extent that such factors differ across countries, willingness to tolerate risk differs. Some studies of

asset markets have found different levels of risk aversion

in different countries (Hamori, 1998). Further, countries

might have similar valuations of risk, but might disagree

on what to do when the risks are unknown. 

Consumers might also have difficulty making evaluations at very low levels of risk, which might lead to

very different standards in different countries. 

Implications for Firms

Firms still have incentives to provide safe food to consumers, even if those consumers are in a different

country. Indeed, Holleran et al. (1999) note that there

are incentives for foreign firms to provide safe food to

capture international market share, just as there are

incentives for firms to provide safe food to maintain

domestic market share. If that incentive to provide safe

food is large enough, firms might establish their own

standards. This can be true as firms begin operating in

an international arena as well. Firms can sell food

abroad in one of two ways. They can open processing

plants in other countries (often called foreign direct

investment), or they can ship their food abroad (international trade). Raw and bulk food is often shipped.

Some processed food is shipped, but a great deal is

manufactured under license or by a subsidiary in the

country to which the firm wishes to sell. 

Foreign direct investment. As food processing firms

open plants in many different countries, their private

standards might be modeled after their production

facilities in wealthy countries (Reardon and Barrett,

2000). Nestle, for instance, sets stringent standards for

suppliers to its plants that operate in a number of

developing countries (USDEC, 2001). 

These internal standards stem from the fact that firms

desire reputations for food safety (Reardon, 2001). It is

sometimes costly to communicate food safety attributes

to the consumer, so firms might rely on their international reputations to do so (Reardon et al., 1999).

However, since most of the food processing firms began

in nations with stringent safety standards, the firms

might simply be adopting stringent standards for their

worldwide operations to reduce transaction costs by having standardized procedures. Whatever the reasons, the

firms from wealthy countries that open branches in other

countries usually do so to produce for the host country’s

market, so the production at those facilities generally is

not traded. The host country also has the legal right to

impose food safety standards on these foreign-owned

processing plants operating in their country.

Trade. Improving food safety standards can increase

costs for firms. In addition to more expensive methods

of production associated with food safety standards,

trade also comes with some extra costs. Verifying that

foreign countries have actually adopted the domestic

food safety standards can be quite costly. Sending

inspectors abroad is expensive, limiting the number of

inspections an importing country can perform. If

domestic governments inspect foreign firms, they can

bear the costs, or they can bill foreign firms. If governments require foreign firms to obtain third-party certification, the costs will be borne by the foreign firms,

but could be passed on to domestic consumers. 

Foreign firms undertaking trade also undertake several

risks as well. If compliance with the regulations requires

a lot of fixed investment costs in the form of new equipment, foreign firms risk the investment without certainty

of obtaining certification. In addition, even if they undertake certification, they might experience random transitory events, like disease outbreaks, that prevent them

from complying with their trading partners’ food safety

regulations for short periods of time. 

The same problems that lead to a need for regulation

domestically can lead to a need for government regulation in the international trade environment. Consumers

do not consume as much safe food as society would

like them to. Consumers also lack information about

the safety level of the foods they eat, and the inability

18 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
of consumers to distinguish between safe and unsafe

food can reduce the incentive for firms to provide safe

food. Consumers might assume that if one firm’s product is unsafe, all brands of that good are unsafe. 

In the international arena, there are two complications

to add. A firm’s products might be labeled unsafe if

some other firm has produced unsafe versions of that

product, even if that other firm is in another country.

California berry producers suffered a reduction in

demand when consumers became ill from eating berries

grown in Guatemala (chapter 5). Consumers could not

differentiate the safe berries from the unsafe ones.

Additionally, firms located in particular countries can

find that their country’s reputation matters in determining whether they can sell their goods abroad. Several

studies indicate that consumers form opinions about the

general quality of goods coming from a particular country (Chisik, 2002). When consumers receive inadequate

information about the products they purchase, they can

make errors that reduce their welfare, eschewing products they might really want to buy and embracing products that might be unsafe. Firms therefore lose some of

their incentive to provide safe food, since they can

spend money on food safety and still lose sales as the

result of an outbreak. Conversely, they can spend little

on food safety, and might not lose as many sales as they

would if consumers knew their food was less safe. If a

country’s goods are perceived as poor in quality, there is

less incentive for firms in that country to improve quality if they don’t believe they can convince consumers to

pay them the high quality premia (Chisik, 2002; Basu

and Chau, 1998).

Government Regulation in the 

International Arena

These information shortcomings generally lead governments to regulate food safety. However, in the case

of international trade, each country enacts its own

unique set of food safety regulations. A country’s ability to regulate firms outside its borders is limited to

import restrictions. These differences in food safety

regulations across countries can create conflict.

If governments impose regulations on domestic firms,

and such regulations raise costs for producers, then producers might suffer a loss of sales. This problem can be

compounded in the context of international trade. If

domestic producers must adhere to regulations that raise

costs of production, but foreign firms do not have to

meet the same requirements, then the foreign firms can

offer their products at lower prices, undercutting the

domestic firms and capturing a larger market share.

Although consumers are willing to pay more for a safer

good, if they cannot distinguish between the more heavily regulated, and presumably safer, domestic good and

the less regulated imported good, they will not be willing to pay what the safer good is worth to them.

The amount of market share that foreign firms capture

will depend on how willing consumers are to pay for

the safer product, how well they can distinguish the

safer product, and how well firms communicate to

their customers that their products are safer. Figure 2.2

illustrates the case where the foreign supplier is not

bound by the new stringent food safety regulations, but

domestic producers are, so that the new domestic supply curve reflects higher costs.5 The demand curve

remains unchanged, reflecting the assumption that

consumers are only willing to pay more for a safer

good if they can identify it. The result is a loss in market share for the domestic firm, and an increase in the

cheaper imports. In such cases, consumer groups interested in food safety and domestic producers sometimes form political coalitions to pressure the

government to impose the same standards on foreign

firms as domestic firms (Vogel, 1995). 

Indeed, governments already have a motivation to

impose such standards, namely a safe food supply,

whether foods are domestically produced or imported.

Since governments do not have the power to regulate

production in other countries, they usually set standards

for imports that require foreign producers to meet the

same product standards that domestic firms must meet or

to prove that they use the same production techniques

required of domestic producers. Foreign firms then have

to pay the higher costs of complying with the standards,

and might have to raise their prices, making their prices

more similar to those of domestic firms.

Some governments have even set standards for particular foreign products higher than those for like domestic

products. The foreign firms then must pay the higher

costs of complying with the more stringent standards,

and might have to charge a higher price than domestic

firms. The foreign firms might even be kept out of the

market altogether. Chile, for instance, has banned the

import of fresh poultry. However, domestic firms are

allowed to sell fresh poultry (see chapter 4). This pracEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 19

5 Figures 2.2-2.3b reflect the assumption that the domestic country

is a price-taker on the world market.
tice protects domestic producers from foreign competition. Such practices are generally forbidden by World

Trade Organization regulations, but enforcement of

those regulations can be difficult. 

Trade Conflicts

Many different trade conflicts over food safety regulations occur every year. It is difficult to determine how

many trade conflicts occur every year or how costly

those conflicts are. However, in 1999, almost $400 billion worth of agricultural trade took place worldwide.

Clearly, world food trade is not paralyzed by conflicts

over food safety regulation. Some trade, however, could

be inhibited by conflicts over regulations. Recent studies

suggest that excessive technical barriers to trade, which

include food safety regulations, might be responsible for

measurable losses for agricultural exports from the U.S.

(Henson and Caswell, 1999; Roberts and DeRemer,

1997). Other countries also experience losses. 

Trade conflicts follow four common patterns. The first

two stem from differences in preferences for food

safety, and the second two stem from differences in the

cost of providing food safety.

(1) One country might use a process standard, while

another uses a product standard, or each country

might have different process standards. While both

product and process standards may result in a similar

good or the use of similar production techniques, the

fact that the requirements are different might result in

one country’s exclusion of another country’s products,

or even mutual product exclusion.

Alternatively, one country might require the use of one

process, while another country requires the use of a different process. The U.S. and EU, for instance, have different mandated standards for their meat producers. The

U.S. requires producers to adhere to HACCP plans, and

the government inspects the final product (FSIS, 1998).

The EU also uses HACCP plans, but has very specific

practices that it requires its meat producers to use,

including checking pig hearts for a specific type of disease and mandating that meat casings be purchased

from EU-approved firms (Caswell and Hooker, 1996;

FSIS, 2002). While these two approaches can result in

meat of similar hygiene levels, the production methods

differ. In the early 1990s, this caused a great deal of

trade disruption, as the EU revoked the export certification of many U.S. meatpacking plants (USTR, 1996).

The EU also bans the use of hormones for growth promoton in livestock production, while the U.S. allows the

use of some (see chapter 4).

(2) Countries might have different levels of safety 

standards. Countries have different levels of tolerance

for risk, and they might have different levels of willingness to pay for a reduction in their risk of consuming

unsafe food. Thus, one country might have a pesticide

residue or bacteria level standard that differs from those

of its trading partners. For example, the EU has recently

adopted a very stringent standard for aflatoxin on

peanuts that could substantially reduce African peanut

exports to the EU (Otsuki et al., 2001). Indeed, countries vary widely in the actual levels of aflatoxin

allowed on foods (see chapter 6). Also, countries might

differ in their perceptions of the level of risk, particularly when risks are unknown, which can also lead to

differences in regulations. 

(3) Complying with a safety standard might be more

difficult for foreign firms than for domestic. Several

types of regulations can be more difficult for foreign

firms to comply with than for domestic firms. For

example, the importing country may have a regulation

that requires inspection or certification by a domestic

agency. In such cases, it can be very difficult and

costly for a foreign firm to determine what the regulations are, comply with them, and then obtain inspectors from the domestic agency. 

Additionally, a foreign firm might have particular local

conditions that make complying with safety standards

very expensive or even impossible. An exporting country

20 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Figure 2.2

Foreign trade with a new food safety 

regulation affecting only domestic producers

Sdomestic (old)

Sforeign (old)

D (old)

Qdom

(new)

Qdom

Imports (old)

Sdomestic (new)

Pworld

P

Q

Qtotal

Imports (new)
might use pesticides that aren’t used in the importing

country, and are therefore not approved there. The presence of BSE in Europe, for example, and the difficulty

of testing for BSE, makes it difficult for a livestock producer in the EU to convince foreign markets of the

safety of his or her product. 

The costs and logistics of complying with food safety

regulations might be prohibitive for firms in some

countries. In developing countries, specialized equipment, industrial engineers, and local government

inspection might all be substantially more scarce and

therefore more expensive to obtain. Therefore, poorer

countries might have greater difficulty complying with

food safety regulations imposed by their trading partners (Unnevehr, 2000).

(4) A new safety problem might arise, or accidental

contamination might take place. Countries might agree

in principle on food safety regulations, but one country

might suddenly have difficulty in complying with

those regulations. In 1998, when dioxin accidentally

contaminated a large quantity of animal feed in

Belgium, thereby contaminating animal products, the

U.S. banned imports of animal products from Belgium

temporarily (see chapter 8). In such cases, countries

might agree on acceptable levels of food safety, but it

has suddenly become prohibitively expensive or

impossible for one country to meet the desired standard. Interruptions of trade are often temporary, as the

exporting country works to correct the sudden change

in food safety. Conflicts can arise if the importing

country and the exporting country disagree on the conditions that must be met for products to return to

acceptable levels of food safety.

Consequences of Trade Conflicts

Countries can resolve their trade conflicts in a number

of ways. The particular resolution chosen is often

driven by the relative sizes of the costs of the regulations and the benefits of the trade flows. Three possible patterns of solving problems of differing standards

include trade bans, adopting regulations of trading

partners, or bilateral negotiation.

(1) Cessation of trade / trade bans. Some countries,

unable to resolve their differences over food safety

regulations, have simply ceased trading the product in

question. This occurs if producers in the foreign country decide that the higher prices they can charge for

the safer goods in the highly regulated market of their

trading partner are not enough to meet the costs of

complying with those regulations, and if the demanding country is willing to forgo cheaper imports in favor

of the greater perceived food safety it receives from

the highly regulated domestic good. 

Trade might also cease for legal reasons if the domestic

country imposes a trade ban. These bans might occur if,

for instance, the gap between domestic and foreign regulations is simply too large to allow producers to satisfy

both sets. For example, the EU refuses to accept U.S.

chicken exports, treated with chlorine. The EU does not

allow decontamination of poultry with chlorine while

U.S. producers find it very difficult to meet stringent

U.S. pathogen standards without the use of chlorine. A

U.S. producer would find it difficult to comply with both

sets of regulations. A country might also enact a legal

trade ban when it feels that its trading partner cannot

provide safe products at any reasonable price. For

instance, the U.S. and many other countries have banned

beef imports from Europe due to the presence of BSE. 

When trade ceases, if the domestic country is not a

major buyer of the good, then the foreign producers 

will sell their goods elsewhere. If, however, the domestic country is a major buyer, the demand for the foreign

country’s goods falls, reducing the price. In contrast,

in the domestic country, reduced trade results in a

reduction in the supply (domestically produced goods 

+ imported goods) of the good, increasing the price.

However, now consumers are presumably getting a safer

good, as reflected by the new demand curve shown in

figures 2.1, 2.3a, and 2.3b. If the foreign firm is really

incapable of providing food of the desired safety level at

an affordable price, then if the food safety gain is large

enough compared with trade gains, trade should not

take place. Additionally, if verification abroad or the

risks of random safety crises prove to be too expensive

for either the domestic or foreign party to willingly

absorb, then trade might cease, because the domestic

country is the lowest-cost producer of food safety and

food safety information for that particular good. 

In figure 2.3a, the domestic firm experiences the

higher costs of providing the safe food. The increase in

costs is even larger for the foreign firms, a fact that is

reflected in the higher world price. The new higher

world price, above the new domestic price, reflects the

fact that other countries cannot supply the safer good

at a price the domestic consumer is willing to pay. If

the food safety gain is large enough, the domestic

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 21
country will move from equilibrium point A-A’, with

imports, to equilibrium point B, with no imports.

In the case of a strictly legal trade ban—i.e., the foreign

supplier could provide satisfactory goods, but does not

because the two countries simply have regulations that

differ—consumers are missing the opportunity to purchase the imported goods. When the domestic government implements the new food safety regulations, again,

both domestic and foreign firms experience an increase

in production costs. In this case, however, while the safer

imported goods (sold at the new world price) are more

expensive than imported goods that do not implement

safety regulations (sold at the old world price), the

imports are still less expensive than the domestic goods.

The new world price is below the domestic price. Before

the new food safety regulations, the domestic market

imported goods from the foreign country because such

goods had characteristics the consumers wanted at a

price they were willing to pay. If costs increase by similar amounts, for both foreign and domestic consumers,

and if extra costs for foreign producers are not high, then

trade may still be beneficial. If the transactions do not

take place because of a trade ban, both domestic buyers

and foreign sellers usually lose. In figure 2.3b, this

would be akin to consumers paying the higher domestic

price rather than the new world price available with

trade. Domestic consumers and producers move from

equilibrium point A-A’ to equilibrium B, at a higher

price and lower quantity consumed (but a higher quantity domestically produced). Consumers would be better

off with trade in the new, safer good at equilibrium C-C’,

with more consumed (but less domestically produced) at

the new world price than at point B. 

Ceasing trade or trade bans can be quite costly, although

the total cost depends on a number of factors. If trade

ceases because the foreign country is unable to supply a

good of the desired safety level, then the citizens of the

home country have decided that the costs are worth the

benefits. The foreign exporters lose revenue, but can frequently sell the goods elsewhere for a lower price. If,

however, the trade conflict represents a dispute over differences in regulations, rather than the inability to provide a safe product, then domestic consumers lose as

well as foreign producers. 

Private domestic firms can lobby for restrictions that

keep foreign products out of the domestic market. If

the costs of this lobbying are less than the market

share that the domestic firm gains by keeping the

whole domestic market, a firm has some incentive to

do this. This kind of lobbying can therefore be costly

to the domestic country, but only if the lobbying

results in keeping out goods that would satisfy consumers’ needs for safe food at a lower cost. 

In many cases, however, legal trade bans or cessation of

trade might well be transitory, particularly if the food

safety problem is temporary. In such cases, the costs of

trade exceed the benefits in the short run, but if the foreign country is able to mitigate the food safety problem,

trade once again becomes beneficial, and lifting the ban

results in greater benefits than costs. For instance, after

the Belgian dioxin crisis, trade between Belgium and its

22 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Figure 2.3a

A new food safety regulation applies to both 

domestic and imported goods, but foreign 

firms cannot comply

B

A A’

Sdomestic (new)

Ddomestic (new, 

reflects desire 

for safer food)

Qdom

(new)

Qdom

(old)

Pworld

(old)

Ddomestic

(old)

Sdomestic (old)

Pworld (new)

Pdom (new)

P

Q

Imports

(old)

Figure 2.3b

A new food safety regulation applies to both 

domestic and imported goods, and both 

foreign and domestic firms can comply

C C’

B

A A’

Sdomestic (new)

Ddomestic (new, 

reflects desire 

for safer food)

Qdom

(new)

Qdom(old)

Pworld (old)

Ddomestic

(old)

Sdomestic (old)

Pworld (new)

imports

(new)

Pdomestic

(import ban)

Qdom (with trade ban)

P

Q

imports

(old)
partners resumed (see chapter 8). The U.S. detains some

seafood imports if testing indicates that they are tainted

(see chapter 7). While costly for the individual importer

and exporter, such episodes do not necessarily result in

long-term losses to consumers and producers. 

(2) Foreign firms comply with domestic regulations or

adopt domestic standards. Some countries will simply

comply with or adopt the standards of their trading

partners. This can occur when a country cannot negotiate a reduction in standards, when a country can meet

the standards set by its trading partner, albeit at greater

expense, and/or when the higher standards give some

kind of marketing advantage. In this way, firms in the

foreign country find that keeping their share in the

importing country’s market, perhaps with a premium,

is worth the costs of complying with the regulations.

Such costs include not only the increased costs of

complying with the regulations, but also the information costs of finding out what the regulations are,

which can be high if the regulations are complex and

very different from the foreign firms’ own domestic

safety regime. Verification costs and the risk of random food safety crises must be added to the costs of

compliance and weighed against the gains of receiving

high prices for safe food in the domestic market. In

figure 2.3b, the market moves from the equilibrium AA’ to C-C’, where the increase in world prices reflects

the increased costs of the food safety standards.

Consumers here receive the benefit of having both foreign and domestic suppliers of the new, safer food,

which allows them to pay a lower price than they

would at equilibrium B, which represents sales of the

new safer food but without any foreign suppliers. 

Any two countries, of any income levels, who have

divergent regulations can and have used this strategy.

However, Baldwin (2002) suggests that the dynamics of

adopting similar regulations can depend on the parties to

a trade dispute. When industrialized nations, each with

their own standards, experience a conflict, it is difficult

to get one to adopt the other’s standards, so protracted

negotiations can follow, and eventually they may recognize the equivalency of each other’s laws. Baldwin further notes when one country is a developing country and

one is an industrialized country, their laws might be too

divergent to allow mutual recognition. Thus, the developing country will sometimes conform to the industrialized nation’s standard. 

Countries can agree to comply with the standards of

their trading partners only for the purposes of exporting, or they can agree to adopt their trading partners’

standards. The latter process is called harmonization

(Hooker, 1999). Harmonization can also refer to two

countries adopting a third standard, discussed below.

One of the more positive spillovers of having to meet

stringent foreign standards for exports is improvement

in the safety and quality of domestic production

(Donovan et al., 2001; Vogel, 1995). For instance, if a

firm operating in a developing country has to purchase

state-of-the-art equipment in order to produce for

export to wealthier countries with higher safety standards, then the food produced for the domestic market

could also become safer. If the new equipment represents a one-time expenditure, the price will probably

not rise substantially, and the safer food might be

affordable. However, the safer food might be more

expensive if the costs of running the machinery are

substantially higher. In such cases, the firm might sell

cheaper food domestically, using the less expensive,

less safe production process (Donovan et al., 2001). 

(3) Bilateral negotiation. Compromises can occur when

countries each perceive that losing trade will be more

costly than altering its standards or regulations.

Negotiations take place between governments, since

individual firms usually (although not always) have limited influence on another country’s regulations. If a

compromise is desired, countries have a number of

options from which to choose. Either or both parties can

attempt to recognize the other’s regulations, hammer out

a compromise, or adopt or accept international standards or standards set by a third party (see chapter 3;

Henson and Caswell, 1999; Sykes, 1999; Dolan and

Humphrey, 2000; Holleran et al., 1999; and Hooker,

1999). Two countries agreeing to adopt a third standard

is one form of harmonization. Recognizing each other’s

standards is often referred to as “mutual recognition,”

while gradually moving standards closer together is

referred to as “coordination” (Hooker, 1999). These

three types of policy action all require at least one country to alter its standards in some way, incurring costs in

order to keep the benefits of trading internationally for

food. In one prominent case, the U.S. and the EU have

arrived at an agreement that has allowed them to resolve

some of their problems with conflicting standards for

the safety of meat products. U.S. firms wishing to

export to the EU may obtain certification from the

USDA, thereby avoiding the costly overseas inspection

problem. The USDA, in turn, certifies that the firms are

using EU-approved production processes in addition to

meeting U.S. domestic standards. 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 23
Common or third-party standards include those set by

the Codex Alimentarius. Some countries have adopted

some of the Codex standards. International standards

would ideally seem to reduce the costs of negotiations

over a bilateral standard. Indeed, Casella (2001) theorizes that when a number of countries with divergent

standards begin to trade, they can benefit from adopting common standards, since it reduces the costs of

conforming to more than one set of standards. Yet, she

also points out that countries are better off with two

sets of standards rather than one, so that they can

appeal more exactly to the tastes of different sets of

consumers. With two sets, each set of standards can be

chosen to appeal to the tastes of a different set of consumers, while one set of standards might be rather far

from the tastes of each set of consumers. Additionally,

agreement on any third standard may itself be difficult

and costly. Baldwin (2002) notes that trying to negotiate a solution in which the two parties agree on a third

standard that both will adopt is rarely successful.

Rather, some suggest that mutual recognition of each

other’s standards is preferable, citing the fact that the EU

member states found it much easier to recognize each

other’s standards than to agree on new ones that all

would adopt (Baldwin, 2002; Vogel, 1995). However, if

two countries are experiencing trade conflicts because

they find their trading partners’ standards do not satisfy

their desire for reduced risk, mutual recognition is not

necessarily an easy solution either. Indeed, economists

have begun to recognize that individual consumers often

require more compensation to give up a good once they

have it, than they were willing to pay for the good in the

first place (Kahneman and Tversky, 1991). Thus, if a

country perceives that it is giving up a level of food

safety that it has achieved, then they may be unwilling to

compromise, even if the less expensive food they can

purchase from abroad would appear to compensate them

amply for a small reduction in food safety.

Bilateral negotiation will occur when a highly regulated

country does not wish to lose a lower cost supplier, or

fears that its trading partner might retaliate against a

stringent standard with stringent standards or tariffs of

its own. The domestic country must perceive these benefits from trade to be greater than any reductions in

food safety they might incur with a less stringent standard, increased costs of verification under the new standard, or increased costs resulting from their own

producers’ having to alter their production practices. In

order to be willing to compromise, the foreign supplier

usually must perceive that keeping their share of the

home country’s market is worth some potential

increase in the cost of producing for the domestic

country under the new regulations. Economic theory

suggests that there are numerous possible solutions

when two economic actors attempt to negotiate a contract. If the home country is an important buyer of the

foreign country’s products, then it is more likely to be

able to exert influence and push for a supply of product

closer to its own standard. If the foreign country is an

important supplier of the good in question, then the foreign country will be able to exert influence in the negotiations, since it is likely that the costs of obtaining

alternative supplies will be high for the home country. 

Conclusions

As advances in science and increases in wealth put

greater focus on food attributes, both firms and governments find themselves increasingly responding to consumer demands for food safety. Firms have incentives to

provide safe food, but in some cases, the market and

legal incentives are insufficient to give consumers the

level of protection that a society as a whole would like.

In such cases, governments enact food safety regulations, and at some point, the regulations of trading partners are bound to conflict, as countries choose different

types of regulations and different levels of stringency

from the wide array of options available. 

When conflicts occur, countries may stop trading in

some items, one or both countries may alter their standards, or they may maintain both standards. The

option countries choose should depend on the cost of

implementing the strict standards compared with the

price that consumers are willing to pay for safe food,

and also on country differences in the costs of complying with the new standards. If firms find it too difficult

and costly to satisfy the demand of consumers in the

markets of their trading partners, they might forgo

trade or try to lobby for a change in their trading partners’ regulations or a compromise solution. If, however, firms can charge an adequate premium in the

market with more stringent standards, they might

adopt the standards of their trading partners, which

can, under certain conditions, eventually improve food

safety in the domestic market.

24 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
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Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 27
Summary

This chapter examines current trends in food regulation, to see how they may influence international trade and to ascertain if, when, and how

multilateral mechanisms can resolve trade conflicts. New

approaches to food safety regulation that emerged in

industrialized countries during the 1990s include:

● The growing use of risk analysis,

● Establishing public health as the primary goal of

food safety regulation,

● Emphasizing a farm-to-table approach in addressing food safety hazards,

● Adopting the Hazard Analysis and Critical Control

Point (HACCP) system as a basis for new regulation of microbial pathogens in food,

● Increasing the stringency of standards for many

food safety hazards,

● Adding new and more extensive regulation to handle newly identified hazards, and

● Improving market performance in food safety

through provision of information.

These regulatory trends have several implications for

how food safety standards affect international trade in

food products. Some new regulatory developments are

likely to mitigate potential barriers to trade. For example, new kinds of regulation or public intervention that

focus on voluntary provision of information (e.g., certification for certain kinds of production practices) can

facilitate trade, even when standards and requirements

differ among countries. Other trends, though, may

impede trade. For example, if new or more stringent

standards are in the form of process standards, (e.g.,

under HACCP systems), it can be difficult to determine if imported products are as safe as those produced domestically. Whether certain kinds of process

requirements are necessary to achieve an equivalent

risk outcome can be subject to dispute.

The 1995 Agreement on the Application of Sanitary

and Phytosanitary Measures (SPS Agreement), negotiated by World Trade Organization (WTO) members,

recognizes the need for countries to adopt SPS regulations while establishing a framework to reduce their

trade distorting aspects. Under these rules, WTO members reported 187 complaints related to food safety

regulations from 1995 to 2001, which provides some

evidence of the extent to which new food safety regulations have created barriers to trade. 

Three of the principles under the SPS Agreement—

science-based risk assessment, equivalence, and harmonization—directly address some aspects of food safety

regulation that create the potential for trade disputes.

Progress toward realization of these principles is

reviewed here to see how well the SPS Agreement and

supporting institutions have addressed emerging issues

arising from regulatory trends. The agreement’s requirements for the use of scientific risk assessment, for example, have led to the resolution of a number of disputes.

Less progress can be reported in reducing transaction

costs to trade through equivalence or harmonization.

Multilateral institutions continue to work on

projects—such as identifying the types of technical

assistance that best help developing countries meet food

safety requirements in key export markets—to achieve

welfare-enhancing trade. 

28 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Chapter 3

Resolving Trade Disputes Arising from

Trends in Food Safety Regulation

The Role of the Multilateral 

Governance Framework

Donna Roberts and Laurian Unnevehr1

1 Donna Roberts is an agricultural economist with the Economic

Research Service; Laurian Unnevehr is a Professor in the

Department of Agricultural and Consumer Economics, University

of Illinois at Urbana-Champaign.
Introduction

New developments in food safety regulation, including

new and more stringent standards for many hazards,

occurred in many countries during the past decade.

Both existing and emerging measures to protect human

health can affect trade in agricultural products by

increasing the costs of imports or prohibiting them

entirely. The imposition of new performance standards

(such as maximum residue levels for pesticides) or

process standards (such as the required use of filters

for irrigation water) may alter the cost of foreign supplies relative to domestic production. Requirements for

certifying compliance with importers’ standards may

effectively prohibit imports from countries that lack

adequate regulatory infrastructure, even if individual

foreign firms can meet importers’ standards. Such

costs from reduced trade must be balanced against the

public health benefits of safer food, and the market

benefits of increased consumer confidence. It is the

balance of such costs and benefits among countries

that makes these measures so controversial in international trade. 

During the last round of multilateral trade negotiations, exporters voiced concerns that sanitary and phytosanitary (SPS) measures to protect animal, plant, or

human health were sometimes used to shield domestic

industry from foreign competition, and that such protectionist pressures would increase as other trade barriers such as tariffs fell. The 1995 Agreement on the

Application of Sanitary and Phytosanitary Measures

(SPS Agreement) was therefore negotiated by the

WTO to provide a set of multilateral rules that would

recognize the legitimate need for countries to adopt

SPS regulations while establishing a framework to

reduce their trade distorting aspects. To implement this

agreement, the WTO relies in part on three multilateral

standards organizations, and also draws on the expertise of other international scientific organizations.

Together, these institutions, along with their principles,

rules, standards, and enforcement mechanisms, comprise the multilateral governance framework for food

safety regulation (Josling et al., forthcoming). 

The impact of SPS measures on trade and welfare is

largely unknown, primarily because we lack systematic information on the incidence of these measures

themselves and because of underdeveloped methods of

economic assessment (Beghin and Bureau, 2001;

Maskus and Wilson, 2001; Roberts et al., 1999).

However, there is substantial evidence that disagreements over SPS measures are becoming more important over time due to several trends. Reduction in traditional trade barriers, growth in trade of fresh and

minimally processed foods, growth in trade of livestock products, and increased consumer awareness and

demand for safety have all contributed to increased

disagreements over SPS measures and allegations that

they pose barriers to trade (Unnevehr, 2000; Henson

and Loader, 1999; Dyck and Nelson, 2000; Buzby and

Roberts, 1999). 

Resolving trade conflicts over food safety regulation is

viewed as possibly one of the biggest challenges facing the international trade system. It is widely recognized that a perceived failure to accommodate

legitimate differences in food regulations could

increase opposition to trade liberalization in general.

Effective governance of the interface between food

safety regulation and trade relies on the efforts of multilateral institutions and national regulatory authorities. 

Current Trends in the

Regulatory Environment

Several changes in the global food system—increased

scientific understanding of foodborne hazards,

increased international trade in food products, and

changes in how consumers obtain and prepare

food—have brought renewed attention to food safety

regulation in many countries. The science of public

health is now better able to identify new foodborne

pathogens and other hazards, estimate the incidence

and severity of foodborne illness, and trace hazards to

their sources. Increased public awareness of microbial

pathogens has raised public concern about this type of

foodborne hazard. In industrialized countries, consumers carry out less food preparation, consume more

fresh and minimally processed foods, and consume

more meat and seafood products. A greater share of

consumption is now imported in many countries,

including many fresh products. These changes in consumption patterns alter the sources and incidence of

risk and reduce consumer control over food safety, at

the very time that increasingly affluent consumers are

demanding a higher level of safety. 

Some well-publicized crises have brought these

changes to the attention of the public. In 1993, an outbreak of Escherichia coli O157:H7, a new and more

virulent strain of E. coli, was linked to consumption of

undercooked hamburger contaminated with the bacEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 29
terium. The outbreak caused over 700 illnesses and 4

deaths in several Western States. This pathogen drew

further U.S. media attention later in the 1990s when

outbreaks were associated with unpasteurized fruit

juice and bagged salad lettuce. In 1996, bovine spongiform encephalopathy (BSE), or “mad cow” disease in

cattle, was linked epidemiologically to the emergence

of new variant Creutzfeldt-Jakob disease (vCJD) in

humans who had consumed meat contaminated with

the BSE causative agent. Consumers in the UK and

elsewhere in Europe where BSE has been found in cattle were especially affected. And in 1999, supplies of

several animal-derived foodstuffs produced in Belgium

were contaminated with dioxins associated with animal feed prepared from tainted fats and oils. The

resulting food recalls and disruptions in trade crippled

the Belgian economy. These outbreaks or incidents

have often resulted in new food safety regulation.

New approaches to food safety regulation emerged in

industrialized countries during the 1990s following

these changes in science, markets, and consumer

awareness. The following discussion presents seven

main trends in regulation worldwide:

(1) The growing use of risk analysis,

(2) Establishing public health as the primary 

goal of food safety regulation,

(3) Emphasizing a farm-to-table approach in 

addressing food safety hazards,

(4) Adopting the Hazard Analysis and Critical 

Control Point (HACCP) system to regulate 

microbial pathogens in food,

(5) Increasing the stringency of standards for 

many food safety hazards,

(6) Adding new and more extensive regulation

to handle newly identified hazards, and,

(7) Improving market performance in food 

safety through provision of information.

The new approach to food safety regulation is based

upon risk analysis, which includes risk assessment,

risk communication, and risk management. Risk

assessment is to be science-based, and includes identification of the sources and incidence of the risk, as

well as identification of possible control strategies.

The results of risk assessment must then be communicated, inviting public participation in the risk management process. Risk management entails choosing the

appropriate level of protection and selecting suitable

interventions or control options. 

This approach to food safety regulation was recommended in reports by the National Research Council

of the National Academy of Science (NRC, 1985;

NRC, 1987) for U.S. food safety regulation, and is

generally embraced by U.S. agencies. For example,

FDA and USDA have recently carried out risk assessments for S. enteritidis in shell eggs, E. coli O157:H7

in hamburger, BSE in beef cattle, antibiotic-resistant

Campylobacter in poultry, Vibrio vulnificus in shellfish, and Listeria monocytogenes in ready-to-eat meat

products. These risk assessments have generally been

undertaken to see whether new regulation is warranted.

The 2002 European Food Law embraces this approach

as well, as do all of the European food safety agencies

in member states of the European Union. The Joint

Institute for Food Safety and Applied Nutrition at the

University of Maryland lists several publicly available

food safety risk assessments carried out by government agencies in other countries, including Canada,

Denmark, the Netherlands, and the United Kingdom

(JIFSAN, 2002). 

The primary goal of food safety regulation is public

health. In the past, some food safety agencies have had

multiple mandates relating to other issues such as food

quality, industry promotion, or animal health. To more

clearly focus food safety regulation on public health and

consumer protection, several countries have reorganized

their food safety regulatory agencies in order to refocus

and to integrate previously scattered functions:

● Australia and New Zealand established the

Australia and New Zealand Food Authority or

ANZFA in 1991 to create uniform food regulation

in both countries; in July 2002, the Food

Standards Australia-New Zealand agency was

established and charged with setting standards for

primary products;

● Canada established the Canadian Food Inspection

Agency in 1997 to unify inspection activities previously spread across several agencies;

● France established the Agence Francaise de

Securite Sanitaire des Aliments (AFSSA) in 1999

to provide systemwide authority for risk assessment and intervention;

● The United Kingdom Food Standards Agency was

created by an act of Parliament in 1999, and is set

30 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
up to be a quasi-independent watchdog to protect

public health and consumer interests;

● Ireland created the Food Safety Authority in 1998; 

● The European Union (EU) created a new Food

Safety Authority in early 2002, following earlier

reorganization of EU directorates in 1997 to address

consumer protection in response to food safety concerns following the BSE crisis (Vos, 2000). 

In the United States, FDA has always had public

health protection as its sole mandate. However, 12

Federal agencies have some responsibility for food

safety, and many have other public goals in addition to

public health. To better focus food safety activities in

the U.S., greater coordination among the various regulatory agencies has been established at the Federal

level (President’s Council on Food Safety, 2001). 

Regulatory agencies increasingly recognize that a

farm-to-table approach is often desirable for addressing food safety hazards. Many foodborne hazards can

enter food at many points during the production

process. Once present in food, some hazards can multiply or cross-contaminate other foods during transportation, processing, and preparation. Thus, control of

foodborne hazards may involve interventions at many

points in the food production and distribution system.

Interventions at one level may influence control

options at subsequent points in the supply chain from

producer to consumer. Finally, there may be tradeoffs

among controls at different levels in terms of the risk

reduction achieved and the costs incurred. Thus, for

many hazards, the ideal risk assessment examines the

entire food production and distribution system. 

The farm-to-table approach is clearly articulated in the

new EU Food Law as a principle for future food safety

regulation. However, the EU policy also recognizes

that different kinds of regulatory measures may be

needed at the farm level, due to the difficulties of controlling hazards in a farm environment. In the United

States, the farm-to-table approach was used in developing new regulatory approaches to S. enteritidis in

eggs (see box). 

Countries are increasingly adopting the Hazard

Analysis and Critical Control Point (HACCP) system

as a basis for new regulation, often of microbial

pathogens in food. HACCP requires identification of

critical control points and development of procedures

for monitoring controls and addressing any failures in

control. Often, firms or industries are given some flexibility in determining control points and critical limits,

so that implementation of HACCP is adaptable to

many different contexts. The imposition of regulations

mandating HACCP systems reflects a growing recognition that it is important to prevent and control hazards before they reach the consumer.

In 1996, the USDA’s Pathogen Reduction/HACCP

Regulation mandated the use of HACCP in meat and

poultry slaughter and processing plants in order to

reduce microbial pathogens (USDA, 1996). The FDA

mandated HACCP for seafood plants in 1995 (FDA,

1995), and for fruit juice in 2001 (FDA, 2001). Canada

also requires HACCP for fish, seafood, meat, and

poultry plants. In the European Union, HACCP was

mandated in 1993 for the entire food system, though it

has been implemented in different ways within member countries. 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 31

The risk assessment of Salmonella enteritidis (SE)

carried out by the FDA and the USDA's Food Safety

and Inspection Service and Animal and Plant Health

Inspection Service examined the interdependence

among control options at different stages of processing and handling. It provided the basis for an action

plan (President's Council on Food Safety, 1999). The

risk assessment model indicated that multiple interventions would achieve more reductions in SE illness than would a single point of intervention.

The action plan identifies a set of activities at each

stage of the production chain. Producers and

packer/processors can choose between two strategies

designed to give equivalent performance in terms of

reduction in SE at the egg production and

packer/processor stages. The first strategy focuses on

farm-level testing and egg diversion; the second strategy directs more resources to the packer/processor

level and includes a lethal treatment, or “kill step”

(and HACCP plan) at this stage. Both strategies

include regulatory presence on the farm (e.g., control

of chicks from SE flocks) and at the packer/processor

(e.g., washing, mandated prerequisite programs of sanitary controls). In addition to these interventions, the

action plan sets refrigeration standards for the distribution and retail stages to ensure that reductions in SE

are preserved at later stages in the food supply chain.

Box 3.1—Farm to Table Risk Assessment 

for Salmonella enteritidis in Eggs
Over and above the general principles in the new regulatory approach, there is also a trend toward more

stringent standards for many food safety hazards.

HACCP regulations frequently consolidate existing

codes of hygienic practice or sanitation standards with

new requirements. For example, the 1996 Pathogen

Reduction/HACCP Regulation for U.S. meat and poultry plants also required written sanitation procedures

and pathogen tests to verify that HACCP is reducing

hazards. These standards are in addition to previous

sanitation requirements for plants. In the EU, earlier

HACCP directives have been replaced by a new directive in 2000 that extends requirements for recordkeeping and corrective action. 

Standards for other kinds of hazards have changed.

The U.S. Food Quality Protection Act, passed in 1995,

mandates that no harm result to infants and children

from aggregate exposure to all pesticide residues. This

has brought about a reassessment of all currently registered pesticides, beginning with the widely used class

of chemicals called organophosphates. In the EU, new,

unified standards were proposed for aflatoxins on

crops in 1998. In unifying standards across member

states, the new standards reduced allowable levels of

residues in most countries. Comments on this change

from EU trading partners led to some revisions in the

unified standard that was implemented in 2001 (and

modified in 2002). 

In addition to more stringent food safety standards,

newly identified hazards have brought about new and

more extensive regulation. For example, BSE poses both

animal and human health risks. Its mode of transmission

among cattle or between animals and people is not fully

understood. New regulations in the United Kingdom

and elsewhere—regarding animal age at slaughter, monitoring of animal herds, testing of animal brains at

slaughter, exclusion of specified risk materials (brain,

spinal cord, eyes, tonsils, etc.) from meat products and

meat cuts, and exclusion of mammal products from cattle feed—are designed to reduce the risk of transmission. These regulations are extensive, covering every

step of the food production and distribution system from

animal feed to meat butchering. They also have had an

impact on a wide range of byproducts, including gelatin

used in pharmaceuticals. 

Another example of newly identified hazards is the

growing awareness of potential transmission of antibiotic resistance from food animals to humans. This has

led to new regulations regarding the nontherapeutic use

of antibiotics in food animals, most notably in the EU,

where such uses are banned entirely. In the U.S., such

uses are under review, and the FDA has issued new

guidelines for assessing the risk of resistance to antibiotics used in feeds.

Other new approaches to food safety regulation

attempt to improve market performance through provision of food safety information. These approaches

include the use of voluntary guidelines or standards,

provision of third-party certification, provision of

information through labeling, establishing legal liability for food safety, and establishing voluntary or

mandatory systems for traceability (table 3.1). Such

interventions may improve performance by providing

information or incentives that encourage consumers to

choose safe food and reward producers for its provision. The public role in these new approaches, and the

degree to which they are mandatory or voluntary,

varies among countries. 

Unresolved Public 

Policy Issues 

These new trends in food safety regulation have come

about mostly over the past decade. As these trends are

still evolving in many countries, three public policy

issues remain unresolved. First, the role of scientific

and economic analysis in risk management varies

widely among countries. In the United States, regulations must be science-based. Economic analysis is

mandated for major regulations with an estimated economic impact over $100 million and for all food safety

regulation within USDA (Executive Office of the

President, 1993). Economic analysis played a role in

the design of the Pathogen Reduction/HACCP

Regulation, as analysis of the fixed cost implications

led to staggered implementation dates for plants of different sizes. In the European Union, risk management

decisions may include “other legitimate factors” that

extend beyond scientific and economic analysis

(Henson, 2001). Such factors include consumer concerns, the environment, animal welfare, and other

political or economic factors, such as the impact on

small farms. In Australia and New Zealand, costbenefit analysis with risk assessment is extensively

used. For example, in the 1998 redesign of food safety

regulation, the regulatory approach that was chosen

balanced expected benefits to consumers and industry

against the costs of regulation to industry and government. Such analysis in Australia, Canada, and New

32 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Zealand pays particular attention to international markets and the impact of new regulations on trade as an

important economic dimension.

Second, controversy surrounds the role of standards. In

the United States, a recent court decision declared that

USDA could not shut down a meat grinding plant for

failing to pass a performance standard based on

Salmonella incidence. The USDA is currently reviewing the role of microbiological performance standards,

and it is not yet clear what role these may play in addition to sanitation process standards. In the EU, the

mandate for HACCP in all parts of the food production and distribution system is not always practical for

small retail establishments, so in many cases regulation instead relies on codes of hygienic practice

(Jansen, 2001). These more prescriptive process standards do not really follow the HACCP model of prevention and control. 

The role of process and performance standards in regulating different kinds of hazards is changing. Inputs that

are added during the production process are often subject to performance standards, such as tolerances for

pesticide residues. However, some inputs are subject to

process standards such as withdrawal times for antibiotics in animals or required recordkeeping for use of

growth hormones. It is more difficult to set performance

standards for microbial hazards, as they can enter the

food supply at many points during production and distribution, and can grow or cross-contaminate other

foods. Regulation of microbial hazards has often meant

setting process standards, such as standard sanitation

procedures or codes of hygienic practice. Microbial hazards may be more frequently subject to performance

standards in the future, as the need to verify HACCP

systems is recognized and new tests are developed that

provide more timely and specific results. 

A third unresolved issue is regulatory agency capacity

and authority. In many cases, existing regulations

require review or removal in order to implement new

kinds of regulation. This kind of review took place in

Canada, the United States, and the United Kingdom to

reduce regulatory burden and to ensure consistency in

how regulations are applied. Another issue is whether

existing regulatory authority extends throughout the

food system. When it does not, then certain kinds of

intervention may not be possible. The EU Food Law

establishes regulatory authority for the entire food production/distribution system, but such authority does

not exist to the same extent in the United States.

USDA’s Food Safety and Inspection Service does not

have authority to regulate at the farm level. In some

cases, FDA or the USDA’s Animal and Plant Health

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 33

Table 3.1—Information-based approaches to food safety interventions

Approach Example Public sector role Food safety benefit

Guidelines UK voluntary guidelines for farms to 

reduce Salmonella in pigs

U.S. voluntary Good Agricultural 

Practices to reduce microbial hazards 

in fresh fruits and vegetables 

Third-party USDA Quality Through Verification 

certification program certifies that fresh produce is 

produced under HACCP

Netherlands IKB programs for livestock 

producers

Labeling U.S. required safe handling labels on 

fresh meat and poultry products

EU novel food regulation requires labeling 

of novel foods

Liability UK 1990 Food Safety Act Establishes responsibility Improves safety by providing 

for food safety incentives for producers to follow 

practices that minimize hazards

Traceability EU Food Law establishes as principle for Establish information and Facilitates tracing problems in case 

food safety policy marketing channel requirements of outbreak; can provide incentives 

for producers to improve safety

Japan requires traceability in beef sector

Public sector can develop

guidelines or certification that

is science-based, directed

toward public health, and

credible to consumers

Identify where information

critical to facilitate consumer

choice; respond to consumer

demand for information

Reduces market failure where information previously lacking; alters

hazard incidence in some cases

Reduces hazards, but only where

guidelines or certification adopted;

and reduce transaction cost in 

markets for safety.
Inspection Service may regulate food safety at the

farm level, but this is not the focus of either agency.

What Are the Implications for

International Food Trade?

Regulatory trends, associated unresolved public policy

issues, and the growth in world food trade have several

implications for how food safety standards affect international trade in food products. First, the simultaneous

move toward improved safety among industrialized

countries creates the potential for convergence around

higher standards. That is, as developed countries with

major markets adopt new regulations, there is incentive

for other countries to follow suit (Vogel, 1995). New

regulations are undertaken in some countries in response

to other countries’ actions. This rationale has been

explicitly mentioned in regulatory impact analysis in

Australia and Canada, for example. USDA’s survey of

35 countries that export meat and poultry to the United

States also attests to the demonstration effect of stringent

food safety standards in importing countries (World Food

Chemical News, 2000). More than a third of the 29

respondents to the survey indicated that they had

adopted HACCP in all (not just exporting) establishments, while nearly half had adopted HACCP for at least

some of their nonexporting establishments. Such convergence likely reduces the potential for trade disputes.

New kinds of regulation or public intervention that

focus on provision of voluntary information, such as

certification for certain kinds of production practices,

can facilitate trade, even when standards and requirements differ among countries. The FDA developed

guidelines for minimizing microbial hazards, so-called

Good Agricultural Practices (GAPs) (FDA, 1998).

While not mandatory for market access, these guidelines provide a basis for exporters to privately certify

food safety to produce wholesalers in the U.S. (see

chapter 5). In another example, a USDA certification

program for meat producers enables U.S. firms to

export to the EU if they voluntarily apply to USDA for

certification that they meet EU requirements (which

are different from U.S. regulations). A USDA certificate then accompanies export shipments. 

Although some new regulatory developments might

mitigate potential barriers to trade, the appearance of

new hazards, or increased trade volumes from new

sources, can lead to food safety incidents or disputes

in trade. A disease outbreak or newly identified hazard

often leads to disruptions in trade and may strain relations with trading partners. In the Belgium dioxin crisis, the Belgian government was criticized for not

providing timely information to other countries that

imported implicated products. The BSE discoveries in

the United Kingdom disrupted trade between that

country and other members of the EU. In the United

States, the first food-related outbreak from Cyclospora

in the United States led to an import ban on

Guatemalan raspberries (see chapter 5). 

The imposition of new, higher standards—as well as

remaining differences among countries in how standards are developed and applied—can also lead to

trade disputes. In particular, rising standards and the

rapid change in food safety regulation in the industrialized countries creates challenges for developing

countries, many of which have seen rapid growth in

food exports since the 1990s (Unnevehr, 2000; Henson

and Loader, 1999). For example, the proposed new

standards for aflatoxin in the EU had a disproportionate impact on exports from developing countries

(Otsuki et al., 2001). These countries may lack infrastructure to ensure basic sanitation in processing and

transport, as well as public oversight to certify certain

kinds of safety. The issue of equivalence in safety outcomes has been identified by developing countries as

important in implementation of the SPS Agreement.

New or more stringent process standards entail greater

difficulties in determining whether an equivalent safety

outcome has been achieved. While HACCP may be

widely accepted as an approach to food safety, specific

HACCP regulations for specific food sectors may result

in different outcomes. As required HACCP systems

may or may not be linked to specific performance standards, it can be difficult to determine if imported products are as safe as those produced domestically

(Hathaway, 1995). Other kinds of process controls, such

as recordkeeping or traceability requirements,2 can

impose objectionable costs on trading partners. Whether

such requirements are necessary to achieve an equivalent risk outcomes can be a matter of dispute. For example, the United States is concerned that new EU

regulations regarding control of feeds to prevent BSE

could impose unreasonable costs on the U.S. feed

industry, given that the EU’s own risk assessment indi34 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

2 Traceability requirements are recordkeeping systems used to help

keep foods with different attributes separate from others (Golan et

al., 2002)
cates that the probability of BSE appearing in the

United States is negligible (Schwartz, 2001). 

Strong differences remain with respect to consumer

risk preferences, consumer perceptions, and the role of

nonscience issues in regulatory decisionmaking. Both

consumer risk preferences and consumer perceptions

are at issue in the longstanding disagreement between

the U.S. and the EU over use of growth hormones in

beef (see chapter 4). Nonscience issues such as the

preservation of small farms are a consideration in EU

decisions about inputs like growth hormones or r-BST

(recombinant bovine somatotropin, a synthetically produced version of a naturally occurring hormone

intended to increase milk production). Differences in

perception and willingness to assume unknown risks

are evident in more recent disagreements over the

acceptability of genetically modified organisms

(GMOs) and labeling of foods produced through modern biotechnology. Furthermore, nonscience issues

such as ethical concerns about genetic modification are

at play in the dispute over modern biotechnology.

Food safety issues may be difficult to separate from

other contentious issues in cases like these. 

In summary, changes in regulatory approach may lead

to some convergence in food safety standards, but the

dynamic nature of food trade, the onset of new hazards,

and differences in regulatory approach and capacity still

instigate disputes and disruptions to trade.

Disruptions to Trade From Food

Safety Regulation: Evidence

From the WTO

The SPS Agreement was established under the WTO in

1995, as a result of the 1986-93 Uruguay Round of

Multilateral Trade Negotiations. This Agreement provides a framework for determining the legitimacy of SPS

measures that restrict trade and for resolving potential

trade conflicts. Its requirement for regulatory transparency, key to enabling judgment about the purpose or

design of a measure, is achieved by “notifications” (to

the WTO) of proposed changes in regulations that could

affect trade. Trading partners are then entitled to comment on the proposed changes. If differences cannot be

resolved in bilateral discussions, countries can raise the

matter in the WTO SPS Committee. These complaints

provide some evidence of the extent to which new food

safety regulations have created barriers to trade. 

Complaints Raised in the WTO’s 

SPS Committee

WTO members submitted more than 2,400 SPS notifications to the WTO between 1995 and 2001. Each

notification indicates, among other things, what the

proposed measure is, which product or products it is

applied to, if it is based on an international standard,

and when it is expected to come into force. These notifications provide an opportunity for trading partners to

raise questions or objections to proposed measures in

the SPS Committee before they are adopted as regulations. WTO members have taken advantage of this

notification process, registering 187 complaints (or

counter notifications) in the SPS Committee between

1995 and 2001 (table 3.2).3 More than half (108) were

related to human health measures (i.e., food and feed

regulations). Developed countries were most often the

source (68 percent) as well as the target (67 percent)

of counter notifications that identified food and feed

regulations as unjustified trade impediments. Both

developed and developing countries cited the measures

of developed countries in the majority of counter notifications related to human health. The complaints by

developed countries (42) outnumbered those by developing countries (30) in this category, suggesting that

access to the same scientific information and technologies still leaves ample scope for disagreement over

food safety measures. 

An examination of the counter notifications by commodity and hazard provides some insight into the

sources of current tensions over regulations in international agricultural markets. Most notable are the number

of counter notifications related to the regulation of

transmissible spongiform encephalopathies (TSEs),

which include BSE. TSE measures alone accounted for

nearly half of the counter notifications related to food

safety regulations since 1995, indicating the significant

disruption to international trade caused by the BSE outbreak (table 3.3). This impact is related to the fact that

cattle, the source of BSE, provide so many food and

industrial products, including meat and milk for human

consumption, gelatin for pharmaceutical purposes,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 35

3 Other WTO committees have formally adopted the term “counter

notifications” to reference complaints recorded in the minutes or

reports of committee meetings. The SPS Committee has not done so.

Complaints are variously recorded under “information from members,” “specific trade concerns,” and “other business” in the committee minutes. The term counter notification is used here to help

distinguish the complaints raised in the SPS Committee from the

complaints that proceed to formal dispute settlement in the WTO. 
semen for breeding, and other byproducts used in cosmetics, commercial animal feed, and elsewhere. The EU

and Switzerland together registered more than half of

these complaints, which were often directed at the initial emergency measures adopted by countries in 1996.

The EU itself later became the target of 10 complaints

following implementation of its new, extensive BSE

regulations. Examples include Chile and Peru’s complaints against the EU’s ban on the use of fish meal in

ruminant feed, and Australia’s complaint against EU

restrictions on selected cosmetics.

The discovery of elevated levels of dioxin in Belgian

animal feedstuffs also led to immediate restrictions on

exports of a wide array of European animal products

in 1999 (see chapter 8). The EU subsequently raised

objections to the emergency dioxin measures of nine

of its trading partners who, in the view of EU officials,

maintained restrictions on animal products when these

actions were no longer justified. 

The fact that more counter notifications (82) were

related to the regulation of animal products than any

other product category is not surprising in view of the

significant impact of the BSE and dioxin events.4 The

number of counter notifications (14) related to pathogen

36 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Table 3.2—Complaints (counter notifications) in the SPS Committee against trade partners, 1995 - 20011

Complaints by developed countries Complaints by developing countries

Human Plant and Human Plant and Total

Respondents: health animal health Other2 Subtotal health animal health Other Subtotal

Developed 

country 42 15 1 58 30 23 1 54 112

Developing 

country 31 18 1 50 5 16 1 22 72

Multiple 

countries -- 1 -- 1 -- 2 -- 2 3

Total 

complaints 73 34 2 109 35 41 2 78 187

1 Entries exclude “repeat interventions” made by WTO members who registered complaints against the same measure more than once.

2 Includes complaints about administrative issues and horizontal regulations that address multiple health objectives.

Source: WTO Summaries of the Meetings of the Committee on Sanitary and Phytosanitary Measures, G/SPS/R series, 1995-01 and authors'

calculations.

Table 3.3—Distribution of complaints (counter notifications) related to human health measures in the SPS

Committee, 1995 - 20011

Complaints against measures regulating:

Commodity TSEs2 Food Foodborne Toxins and Veterinary Pesticide Other3 Total

additives pathogens heavy metals residues residues

Multiple animal products 44 -- -- 8 -- -- -- 52

Meat and meat products 4 -- 8 2 2 -- -- 16

Multiple agricultural products -- 1 -- 13 -- -- 2 16

Dairy/Eggs -- -- 6 1 -- -- 2 9

Processed products -- -- -- 5 -- 1 3 9

Feedstuffs 2 -- -- 1 2 -- -- 5

Horticultural products -- -- -- -- -- 1 -- 1

Cereals -- -- -- -- -- -- -- 0

Total 50 1 14 30 4 2 7 108

1 Entries exclude “repeat interventions” made by WTO Members who registered complaints against the same measure more than once.

2 transmissible spongiform encephalopathies (TSEs) include bovine spongiform encephalopathy (BSE).

3 Complaints related to measures that regulated multiple hazards or genetically modified products, or had unknown objectives.

Source: WTO Summaries of the Meetings of the Committee on Sanitary and Phytosanitary Measures, G/SPS/R series, 1995-01 and authors'

calculations.

4 This total reflects counter notifications related to restrictions in

the following categories: multiple animal products (52), meat and

meat products (16), dairy and eggs (9), and feedstuffs (5).
control measures for meat, dairy, and eggs was also a

factor in the number of complaints against measures regulating animal products. The regulation of other products

drew far fewer complaints. Together, the number of

counter notifications related to regulations applied to

“multiple agricultural products” (16), processed products

(9), horticultural products (1), and cereals (0) accounted

for fewer than one-fourth of the total counter notifications related to human health measures.

The WTO Secretariat has aggregated the 108 separate

food safety-related counter notifications into 40 issues

or “special trade concerns.” The Secretariat reports resolution or partial resolution in 16 of these cases

(WTO, 2001a). 

Has Multilateral 

Oversight Helped 

Resolve Trade Disputes?

The framework that governs the interface of trade and

food safety regulation includes the SPS Agreement and

the multilateral organizations that are charged by the

WTO to further implementation of the agreement. The

SPS Agreement rests on two premises: that basing

domestic standards on international norms will reduce

conflicts and lower transaction costs, and that requiring

scientific justification for standards that deviate from

these international norms makes it more difficult for

countries to shelter domestic industries behind unnecessarily restrictive SPS regulations. The role of international standards and the work of scientific organizations

are therefore critical to the WTO’s objectives of averting

trade disputes and increasing welfare-enhancing trade. 

Provisions of the SPS Agreement

Prior to 1995, rules for SPS measures in the 1947

General Agreement on Tariffs and Trade (GATT) had

allowed measures that were “necessary to protect

human, animal or plant life and health” but stipulated

that measures should not constitute disguised restrictions or create unnecessary trade barriers. The WTO

SPS Agreement reiterates earlier commitments under

the GATT, but also requires regulators to: (1) base

measures on a scientific risk assessment (sciencebased risk management); (2) recognize that different

measures can achieve equivalent safety outcomes

(equivalence); and (3) allow imports from distinct

regions in an exporting country when presented with

evidence of the absence or low incidence of pests or

diseases (regionalization).5 Adoption of international

standards (harmonization) is encouraged, but not

required (see box).

In addition to setting out the rights and obligations of

WTO members, the SPS Agreement also establishes

enforcement mechanisms. These mechanisms include

the notification procedures and the establishment of an

SPS Committee to discuss these issues on a continuing

basis. WTO dispute resolution mechanisms for resolving conflicts between countries in a timely manner are

also available. These mechanisms include formal consultations between the parties to a dispute, followed by

adjudication by a WTO panel and the WTO Appellate

Body if required.

Institutions in the Multilateral 

Governance Framework

Other intergovernmental organizations besides the

WTO itself contribute to the implementation of the

SPS Agreement by creating international standards or

advancing scientific understanding of foodborne risks

and their mitigation. The SPS Agreement identifies

three organizations to promote harmonization through

adoption of international standards: the Codex

Alimentarius Commission (Codex) for human health

measures; the International Office of Epizootics (OIE)

for animal and human health measures; and the

International Plant Protection Convention (IPPC) for

plant health measures. Firms and governments have

relied on the standards of these organizations—sometimes referred to as the “three sisters”—to facilitate the

international exchange of agricultural goods for several decades, but their role has become more prominent since the SPS Agreement. The agreement does

not require countries to adopt international standards,

but those that do so are presumed to be in compliance

with their WTO obligations. 

While the SPS Agreement itself does not reference any

other institutions, the SPS Committee also draws on the

expertise of official observer organizations. The World

Health Organization (WHO) and the Food and

Agriculture Organization (FAO), which are well positioned to convene expert scientific panels on issues of

emerging importance and to distribute their findings, are

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 37

5 Regionalization is more germane to the regulation of plant and

animal health than food safety. 
among the most influential observer organizations. Their

work on BSE, biotechnology, and other issues has been

key to the resolution of some conflicts, particularly those

arising over emergency measures adopted by countries

in response to newly identified hazards.

Implementation of the SPS Agreement

Three of the principles under the SPS Agreement—

science-based risk management, equivalence, and harmonization—directly address some aspects of food

safety regulation that create the potential for trade 

disputes. 

Science-Based Risk Management

The obligation to base regulations on scientific risk

assessment clearly reduces the latitude for disingenuous use of SPS regulatory interventions. In each of the

three SPS disputes6 to reach the WTO Appellate Body

since 1995, the regulations at issue were judged to violate this requirement. 

38 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

The SPS Agreement requires:

● Science-based risk management (Articles 2 and 5):

SPS measures must be based upon scientific principles and sufficient scientific evidence; more particularly, measures must be based on a risk assessment. Measures should be chosen so as to minimize distortions to trade and must be no more trade

restrictive than necessary to achieve a country's

“appropriate level of protection.” Members are to

avoid variation in the levels of health protection

provided by its measures if this variation creates a

disguised restriction on trade. Countries may adopt

a provisional measure to avoid risk, but must seek

information and carry out a risk assessment to justify permanent use of a trade-restricting measure.

● Equivalence (Article 4): A WTO member must

accept that the SPS measures of another country are equivalent to its own if it is objectively

demonstrated that the exporter's measures

achieve the importer's appropriate level of protection, even if the measures themselves differ.

● Regionalization (Article 6): A country is

required to allow imports from regions that are

free or nearly free of pests or diseases.1

These obligations are balanced by a recognition of:

● National sovereignty (Article 3): A country may

choose a measure that differs from the international standard to achieve its appropriate level of

protection as long as it complies with the other

rules of the Agreement. This recognizes that individual nations may be unwilling to subscribe to

uniform measures for all hazards. 

The Agreement endorses:

● Harmonization (Article 3): Members are urged

(but not required) to adopt international standards. A country that does adopt the standards

of the three designated international organizations is presumed to be in compliance with its

WTO obligations. 

The Agreement also establishes enforcement 

mechanisms, including:

● Notification: A WTO member is required to publish its regulations and provide a mechanism for

answering questions from trading partners.

● WTO SPS Committee: The WTO Committee

meets three to four times a year to develop guidelines and discuss contentious SPS measures on a

continuing basis.

● Dispute settlement: Mechanisms include formal

consultations between the parties to a dispute,

followed by adjudication by a WTO panel if

required. Decisions by trade dispute panels may

be appealed to the WTO Appellate Body.

Box 3.2—Principal Provisions of the WTO's Agreement on the Application of Sanitary 

and Phytosanitary Measures

1 This provision is more germane to the regulation of plant or

animal hazards.

6 The three cases were EU—Hormones (brought by the U.S. and

Canada); Australia—Salmon (brought by Canada); and Japan—

Varietal Testing (brought by the U.S.).
However, the impact of the risk management requirements extends far beyond formal dispute settlement.

The clear obligation to base measures on science has

led to the resolution of many issues before they

advance to dispute settlement. In particular, food

safety measures that discriminate among sources of

supply attract close scrutiny, and sometimes are seen

to lack scientific rationale. For example, an exemption

to a ban on sauces containing benzoic acid that

Australia had granted to New Zealand during their

transition to a common food standards system was

replaced with a tolerance level for all imports following a Philippine complaint in the SPS Committee.

Similarly, Spain modified its regulatory regime for

cadmium and copper residues in squid that held

imports to higher standards than EU products in

response to a U.S. complaint.

Disagreements over less overtly discriminatory measures have been resolved by means of updated risk

assessments. For example, Australia rescinded its 1994

ban on three kinds of raw milk cheeses from

Switzerland following completion of its 1999 risk

assessment that indicated that Swiss processing protocols attained at least the same level of pathogen

destruction as pasteurization in hard cheeses (though

not for semi-hard or soft cheeses). Further study similarly led Korea to amend its new Food Code to exempt

poultry meat destined for further processing and cooking from its zero tolerance standard for Listeria,

thereby allowing imports of Thai frozen chicken to

resume (WTO, 2002a). 

While the obligation to base measures on risk assessments can often avert trade disputes, it cannot do so in

all cases. Relevant risk assessments may not be available

to inform regulatory responses to new hazards.

Emergency measures have only accounted for 17 percent

of the total SPS measures notified to the WTO, but

because such measures are generally very trade restrictive, they often give rise to complaints if importers fail to

modify policies as new evidence emerges. For example,

many countries suspended imports of European dairy

products immediately following the March 1996

announcement of a possible link between BSE and its

human variant, vCJD. Most countries rescinded these

bans when the OIE and the WHO reaffirmed that existing scientific data did not indicate that these products are

BSE vectors. However, the EU had to repeatedly petition

Argentine regulators before they modified restrictions on

dairy products—including Belgian chocolate, German

milk powder, and Swedish cacao oil butter—in 2001. 

Risk assessments also do not avert disagreements over

measures that reflect extremely conservative approaches

to mitigating scientifically verified risks. For example,

11 countries (supported by 11 others) objected to the

EU’s proposed regulation to lower tolerances for aflatoxin, a naturally occurring carcinogenic class of 

chemicals, in a wide range of foodstuffs in March 

1998 (WTO, 1998a). The new tolerances were to be

enforced by new sampling procedures that exporters

also regarded as onerous. The World Bank estimated

that the new regime for cereals, dried and preserved

fruits, and edible nuts would result in an annual export

loss of $650 million for nine African countries while

achieving 1.4 fewer deaths per billion inhabitants than

Codex standards (Otsuki et al., 2001).

The SPS Agreement protects a country’s right to

choose its “appropriate level of protection,” stating

only that when choosing these levels, members should

(not “shall” which indicates a legal obligation) “take

into account the objective of minimizing negative trade

effects.” The U.S. Statement of Administrative Action

to Congress states that this provision, along with other

language in the Agreement, “explicitly affirms the

rights of each government to choose its levels of protection including a ‘zero risk’ level if it so chooses”

(President of the United States, 1994). The national

sovereignty principle reflected in the risk management

provisions of the Agreement thus provides leeway for

a country to adopt measures that achieve incremental

risk reductions regardless of the cost (for its trading

partners or its domestic consumers). These provisions

were necessary to secure the support of developed

countries during the negotiations, but by allowing policies that vary significantly from the norm they widen

the scope for trade disputes, even among developed

countries themselves. 

The requirement to use the least trade restrictive

means to achieve the appropriate level of protection

did contribute to the resolution of many of the complaints related to the EU’s proposed aflatoxin regime.

The EU eventually decided to adopt the international

standard for aflatoxin in groundnuts (15 parts per billion (ppb)) in lieu of the 10 ppb level it had originally

proposed, agreeing with exporters that further processing (for confectionary products) or sorting (for direct

human consumption) would lower residues to 10 ppb

in final products. The EU also adopted a less costly,

but equally rigorous sampling procedure to enforce its

new standards (WTO, 1998b). However, not all complaints were resolved: developing countries, particuEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 39
larly Bolivia and Argentina, continue to raise objections to some of the aflatoxin tolerances that were not

revised (WTO, 2002a).

Other considerations besides scientific evidence and

risk aversion sometimes factor into risk management

decisions, leading to divergent policies that restrict

trade. For example, recent developments in the regulation of food irradiation illustrate how other factors can

lead to dissimilar policy choices despite a strong international consensus about the risks and benefits of this

technology. The FAO, the International Atomic Energy

Agency (IAEA), and the WHO concluded in 1980

(and in several followup studies) that the irradiation of

any food up to a specified dose is safe and does not

alter the nutritional content of food. In fact, the WHO

encourages the use of irradiation in order to reduce the

incidence of foodborne diseases caused by microorganisms (European Communities, 2001). The United

States has long approved the use of irradiation for

spices, and has more recently approved its use for a

number of other food products, including meats and

meat products, fruits and vegetables, and juices.

However, other developed countries have been more

reluctant to allow the use of this technology. European,

Canadian, and Australian regulators currently allow

dried herbs, spices, and other minor products to be

irradiated, but have encountered resistance to permitting irradiation of other products from consumer and

domestic industry representatives.

In fact, EU authorities have been considering irradiation regulations for more than 10 years. Despite the

repeated recommendations of the EU’s Scientific

Committee on Food to allow the irradiation of products such as fish, fresh meats, poultry, produce, and

raw milk cheeses, consumer concerns about the safety

of this technology and related questions about the

“technological need” for this form of pathogen control

persist (European Communities, 2001). Current EU

Commission proposals for a list of products that may

be irradiated have drawn criticism from the United

States in the SPS Committee as the list includes only a

few products such as frogs’ legs, peeled shrimp, herbs,

spices, and seasonings (WTO, 1998c). 

While countries’ increasing reliance on scientific risk

analysis to inform food safety policies has led to a

convergence of standards, a number of gaps remain.

This is true even among trading partners who are at

the forefront of this trend, as the WTO counter notifications indicate. For some of these complaints, the

SPS Agreement’s requirements to base measures on

scientific risk assessments and to use the least trade

restrictive means for achieving public health goals

have led to the quick resolution of trade conflicts, particularly those involving transparently discriminatory

measures. The Agreement’s science requirements have

also prodded authorities to revisit regulations whose

longevity could be attributed to simple inertia rather

than overt protectionism. The SPS Agreement provides

no further elaboration of risk management principles,

other than the recommendation to minimize trade

effects when choosing levels of risk reduction. The

countries that negotiated the SPS Agreement judged

that it was inappropriate for the WTO to be more prescriptive about risk management, seeing Codex as the

better forum for the development of best regulatory

practices related to food safety.

Some guidance has been provided by Codex7 but, as

yet, there is still disagreement over the role of precaution and “other legitimate factors” in Codex debates as

well as in regulatory policy (as in the aflatoxin and

irradiation cases) (Codex Alimentarius Commission,

2001). Eventual agreement on risk management principles in Codex may further narrow the scope for trade

disagreements, but these principles are unlikely to

eliminate disputes over the question of the best course

of action to take, given the scientific evidence. Science

is descriptive, not prescriptive; a risk management

decision will therefore always require a choice among

different policy options, each with different costs and

benefits. Options that severely limit market access to

achieve extremely incremental health benefits are

likely to be contentious, even if based on science. 

Equivalence

Article 4 of the SPS Agreement requires members to

accept other countries’ measures as equivalent to their

own if an exporter can demonstrate that its measures

achieve the importer’s desired level of SPS protection.

This provision recognizes that regulatory flexibility

allows countries to allocate scarce resources efficiently

rather than identically. The Agreement also promotes

trade based on equivalence of SPS measures by requiring members to enter into consultations for bilateral

40 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

7 Two of the most important Codex documents providing risk management guidance are the “Statements of Principle on the Role of

Science in the Codex Decision-making Process and the Extent to

which Other Factors are Taken into Account” (or “General

Principles”) and the “Working Principles for Risk Analysis.”
and multilateral equivalence agreements upon request

by the exporter. 

Equivalence determinations usually involve process standards, since countries are better able to compare performance standards, which stipulate observable and/or

testable attributes of end products. An enormous number—and arguably a growing proportion—of SPS measures are process standards. The equivalence obligation

therefore has the potential to yield significant benefits in

international markets for products such as cheeses,

meats, fresh produce, and seafood for which process

standards are key to managing microbial risks.

Although the SPS Committee has urged members to

submit information on their bilateral equivalence

arrangements, few have done so (WTO, 2001b).

Consequently there is no systematic accounting of

achievements to date.8 However, the use of equivalence is still rare in international food trade

(Gascoine, 1999.) The United States and the EU did

sign a framework agreement for recognizing equivalence of some SPS measures for selected animal

products in July 1999, after 6 years of occasionally

high-profile negotiations over matters as minute as

the colors of wall paint in food-processing facilities.

This framework agreement applies to $1 billion in

EU exports of dairy products, fish, and meat to the

United States, and $1 billion in U.S. exports of fish,

hides, and pet food to Western Europe. The exporting country must still comply with the importing

country’s measures that are not included in the

framework agreement, including those regulating

food and feed additives and animal drug residues.

Both the EU and the United States also recognize the

equivalence of some measures for selected meat and

dairy products from Australia, Canada, and New

Zealand. However, numerous regulatory differences

remain in contention even between countries generally recognized as having rigorous regulatory standards that are rigorously enforced. 

Often, differences hinge not only on the equivalence of

different process standards themselves, but also on how

conformance with different standards is ascertained.

There is inevitably more discretion in enforcement of

process standards than for performance standards,

which is why institutional capability and integrity figures so importantly in equivalence determinations. In

many instances, equivalence is controversial because

judgment about such matters, unsurprisingly, differs

between exporters and importers. In other instances,

there is disagreement between governments and domestic consumer groups.

Different views on the appropriate roles for the private

and public sector in conformity assessment have likewise given rise to trade disputes among developed countries. For example, the United States rejected Australia’s

1997 “Project 2” proposal to replace government officials with company-paid inspectors in meat export

plants. Some Australian officials thought that this 

rejection lacked a legitimate rationale, but did not bring

the matter to the WTO (World Food Chemical News,

1997b). U.S. regulators subsequently approved

Australian exports under a revamped program that

increased the role of government oversight, but redeployed government resources from traditional inspection

duties to verification of control strategies, in line with

changes being considered under USDA’s HACCP-based

inspection models project (USDA, 1999). 

Differences over government and industry roles in certification have also held up EU recognition of the

equivalence of the U.S. production and inspection systems for food-grade gelatin. U.S. exports to the EU

have been suspended since June 2000, when the

European Commission’s new BSE-related regulations

came into force. The European Commission has indicated that all U.S. gelatin safety measures, with the

exception of two issues pertaining to the source of raw

material and certain end-product specifications, are

equivalent to corresponding EU measures. However,

the EU is currently unwilling to import U.S. gelatin

until there is more FDA oversight of industry self-certification of compliance with the two “non-equivalent”

measures (WTO, 2002a). 

Given the problems that developed countries have had

with equivalence, developing countries have questioned whether this provision of the SPS Agreement

will actually provide many export opportunities for

them (WTO, 1998d). Some equivalence arrangements

between developing and developed countries do exist,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 41

8 More systematic assessment of the impact of equivalence in

global food trade will be possible in the future as the result of the

Committee’s recent actions to increase the transparency of equivalence arrangements. The Committee revised its recommended procedures to provide for the notification of equivalence of SPS

measures in 2001 and finalized the notification format in June

2002. In its Decision on the Implementation of Article 4, the

Committee noted that equivalence could be accepted for a specific

measure or measures related to a certain product or categories of

products, or on a systemswide basis (WTO, 2001c).
especially for seafood products.9 However, developing

countries—echoing the claims of developed countries—have argued that developed countries often

require “compliance” rather than equivalence of measures. Even developing countries that have had substantial success as agricultural exporters—such as Brazil,

Mexico, and Thailand—have gone on record to note

the difficulties in gaining recognition of equivalence

(WTO, 1999; WTO, 2001a). Globally, the limited

access to developed country markets for poultry meat

illustrates both the potential and challenge of equivalence. Of the 144 countries that are WTO members,

only 15 are eligible to export fresh, chilled, or frozen

poultry meat to the EU, 4 may export to the United

States, 1 can ship to Canada, and none are allowed to

export to Australia.10

Developing countries aired their concerns related to

equivalence and other SPS Agreement commitments in

“implementation negotiations” undertaken by the

WTO General Council in May 2000 after the 1999

Seattle Ministerial Conference failed to launch a new

round of trade negotiations (WTO, 2001d). In

response, the SPS Committee began to consider how it

could advance implementation of the Agreement’s

equivalence provisions. To date, the Committee has

identified options for expediting equivalence determinations, urged the international standards organizations

to produce equivalence guidelines, and developed procedures to increase the transparency of such arrangements through notification (WTO, 2001c). The

standards organizations quickly supported the WTO’s

initiative: both Codex and the OIE have completed

draft guidelines for judging equivalence.11

Together, these efforts may further the objective of

regulatory flexibility, but significant constraints

remain. First, the administrative burden of equivalence

determinations is often significant, involving evaluation of infrastructure, overall program design and

implementation, and specific technical requirements.

The United States has stated that its experience indicates the potential for equivalence may be limited

because the actual trade benefits often do not justify

this administrative burden (WTO, 2000).12 Second,

recognizing the equivalence of an alternative regulatory regime may require national regulators to offer

the same alternative to domestic producers, requiring

new or revised domestic regulations. Finally, measures

may be specified in legislation, leaving little scope for

regulators to consider other options. For example, the

U.S. Egg Products Inspection Act of 1970 requires

continuous inspection of processed eggs by government inspectors, a standard that is currently met by

only one other country (i.e., Canada). 

Harmonization

The SPS Agreement’s endorsement of harmonization

stems from repeated complaints by exporters that complying with divergent SPS measures substantially

increases the transaction costs of trade. Firms that ship

products to several different markets stand to gain

more from harmonization than from equivalence if

harmonization results in lower production and certification costs per unit.

Harmonization can also benefit consumers, especially

if the origins of regulatory heterogeneity are the result

of chance events, information differences, or interest

group capture. Harmonization is more likely to be

inappropriate if incomes, tastes, and risks are the primary sources of variation in national regulations.

Differences in risk perceptions, available market

information, the incidence of risks in production, and

traditional methods of food processing and preparation all lead to differences in food safety outcomes

among countries. Thus, the benefits of a food safety

standard may exceed its costs in one country, but not

necessarily elsewhere.

42 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

9 The EU, for example, has stated that 62 countries have been recognized as implementing an equivalent system of inspection and

certification for fishery products; another 41 await equivalence

evaluations, but can currently export fishery products to individual

member States on the basis of bilateral agreements (WTO, 2002b).

10 In addition to the four countries that are permitted to export

fresh, frozen, and chilled poultry to the United States (Canada,

Great Britain, France, and Israel), some plants in northern Mexico

may also re-export U.S.-origin poultry meat to the United States

after minimal processing. 

11 Codex adopted “Guidelines for the Judgement of Equivalence

Agreement Regarding Food Imports and Export Inspection and

Certification Systems” (GL-34) in 1999, but has yet to adopt its

“Guidelines for the Judgement of Equivalence of Sanitary

Measures Associated with Food Inspection and Certification

Systems.” The OIE’s “Judgement of Equivalence of Sanitary

Measures relating to International Trade in Animals and Animal

Products” is also still under consideration by members.

12 The United States has also cautioned that equivalence does not

imply mutual recognition: under the equivalence provisions of the

SPS Agreement, market access is contingent on a scientific determination that an exporter’s alternative measure achieves the level

of SPS protection required by the importer, not on reciprocity.
However, the impact of harmonization on trade

appears to have been constrained as much by the lack

of international standards as by normative considerations since the SPS Agreement came into force. The

majority of 1995-99 notifications from WTO members

stated that no international standard existed for the

notified measure. Underinvestment in the development

of international standards has led not only to too few

international standards, but also to too many outmoded

standards, which may account, in part, for the low

adoption rate for those standards that do exist. Over

the first 4 years of the SPS Agreement, partial or full

acceptance of international standards as a percentage

of total notified measures was highest for the lowermiddle income countries (38 percent), followed by

high-income (22 percent), lower income (20 percent)

and upper-middle income countries (17 percent)

(Roberts et al., 1999). 

Still, international standards did settle some trade disputes. The OIE’s continually updated assessments of

potential vectors of BSE have been especially important in the wake of a crisis that has affected so many

traded products. Countries cited OIE recommendations

as the basis for resolution or partial resolution of 3 of

the 13 “specific trade concerns” related to BSE measures. In these cases, Chile, India, and Slovakia (as well

as Argentina) lifted bans on imports of dairy products

or animal genetics as the result of the OIE’s repeated

assessments that these products would not transmit the

disease (WTO, 2001a). The BSE outbreak has been a

dramatic, but not isolated, example of a new hazard

spawning new and extensive regulation. Information

dissemination via international standards will be

important not only to health authorities, but also to the

trade system in these instances.

The nature of international standards is also important

in assessing their impact on trade and trade disputes.

Over the past decade, international standards organizations have allocated more of their resources to the

development of metastandards—which identify common approaches to risk identification, assessment, and

management—rather than international standards per

se. Exporters’ anticipated gains from international

metastandards may be smaller than from international

standards, as adherence to the same general guidelines

still leaves scope for countries to develop different regulatory regimes for foodborne risks. For example,

countries that follow Codex’s 1997 General Principles

of Food Hygiene guidelines, which provide a template

for HACCP programs, still have substantive differences in their requirements for meat imports, as the

EU’s 1997 ban on U.S. poultry meat illustrates. Thus,

the international standards organizations have contributed more to the trading system in recent years by

setting out scientific approaches to regulation than by

promulgating standards that are identical across adopting countries. 

Conclusions and 

Implications

Recent trends in food safety regulation create the

potential for both more and less dispute in international food trade. Disputes may be eased by the similarity in regulatory trends and approaches among

industrialized countries, such as the growing use of

risk analysis and the adoption of HACCP requirements. Disputes may arise from the increased stringency of food safety standards; sudden actions taken

in response to a food safety crisis; the difficulty of

determining equivalence of risk outcomes from new

process standards; differences in risk management

approaches; and differences in the capabilities of countries at different levels of development. 

The principles and mechanisms established in the SPS

Agreement appear to be well-targeted to the potential

sources of disputes, averting, diffusing, and resolving a

number of food safety-related disputes since 1995. The

SPS Agreement’s requirements for transparency of

regulatory regimes have promoted symmetry of information among WTO members. The establishment of

the SPS Committee has provided a forum for airing

grievances and made it easier to identify and track

contentious regulations. These mechanisms have facilitated the resolution of disputes between countries at

every level of development. 

The large number of complaints by developed countries

against the measures of other developed countries suggests that some gaps remain in convergence around SPS

regulatory principles. The requirements to base measures on science and adopt minimally trade distorting

measures still leaves scope for substantial disagreement

among countries at the same level of development.

Differences in the use of precaution are one source of

variation in food safety policies. Under the SPS

Agreement, countries have been able to adopt measures that are substantially more conservative than the

norm, as the EU’s new aflatoxin regime illustrates.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 43
Countries are also able to exercise caution by provisionally adopting measures to mitigate risks that are

not fully understood. Most countries did so when the

BSE crisis emerged in 1996, initially banning all

bovine products from all 15 members of the EU.

However, the right to exercise caution is balanced in

the Agreement by the obligation to seek additional

information to justify the permanent use of a measure,

an obligation that benefited European exporters as

more evidence emerged about the country/product

sources of BSE risk. The balance struck by the SPS

Agreement in the BSE case and in other instances

seems to have accommodated legitimate variation in

policies attributable to risk aversion or uncertainty,

while disallowing trade restrictions that are based on

protectionism or inertia. 

The SPS Agreement has been less successful in reducing

transaction costs to trade resulting from diverse regulations. Determining equivalence in risk outcomes has

proven challenging. At a minimum, it may raise monitoring costs to determine that complex process standards

are followed in the exporting country. Further difficulties

arise when production practices and the incidence of

risks vary widely across countries, making it difficult to

determine if a process standard will lead to an equivalent

risk outcome. Institutional barriers are also a factor, as

when policy instruments are specified in legislation.

Thus, food safety standards, especially process standards, are likely to be contentious in international trade.

The international standards organizations have improved

the functioning of food markets, but more by improving

the quality of regulation (which benefits consumers) than

by reducing the transaction costs of exporting to different markets (which benefits exporters). 

Multilateral institutions continue to work on an array

of projects to improve the current governance of food

safety and trade. For example, the Codex Commission

aims to increase the relevance of its standards in international trade by adopting a “fast track” approval procedure for some standards, creating more working

groups to address new issues, and increasing the number of its meetings to speed the adoption process.

These institutional innovations are likely to lead to

more immediate and concrete results than the continuing debate over the development of risk management

principles. Other initiatives, such as the identification

of the types of technical assistance that best help

developing countries meet food safety requirements in

key export markets, could also yield important benefits. But responsibility for increasing welfare-enhancing trade ultimately rests with national authorities who

determine whether the spirit as well as the letter of

their international obligations are fulfilled. 

44 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
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46 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
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Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 47
Summary

As our food system changes at all levels (consumption, production, and trade), these changes

alter the nature and incidence of food safety

risks. Greater consumer affluence and awareness of food

safety issues tends to lead to a greater demand for safety.

The three case studies in this chapter represent food

safety issues that affect international trade of high-value

meat and poultry products. The first case study is of

Bovine Spongiform Encephalopathy (BSE) or “mad-cow

disease,” which began in the United Kingdom (UK) and

has caused regulatory changes affecting both imports

and market access worldwide. This case study shows

that while live cattle and beef exports from the United

Kingdom were decimated by three BSE crises (1988,

1996, and 2000), and have not recovered, total European

Union (EU) exports of these products have been far less

affected to date. For a brief period of time after each of

the three BSE crises, EU domestic consumption of beef

declined sharply. While EU domestic consumption of

beef has gradually increased back to its long-term trend,

prices have not recovered, suggesting some shift in

demand. During the 1996 crisis, BSE became a human

health issue when a connection between BSE and a new

human variant of Creutzfeldt-Jakob disease (vCJD) was

announced in the UK. BSE has affected the rendering

industry and, because bovine byproducts and rendered

products are used as intermediate inputs in so many

products, effects have spread to the cosmetic, feed, medical, pharmaceutical, and other sectors. 

The second case study, chosen to represent microbial

food safety risks, focuses on Salmonella and covers

the issue of zero or near-zero tolerance for Salmonella

in poultry imposed by some countries. The Salmonella

case study shows that many countries have trade

restrictions for Salmonella in poultry and these restrictions vary by type (specific products or processing),

extent (inspections of slaughter facilities, production

practices), and duration, making compliance challenging for exporters. The technical ability to monitor and

detect Salmonella and other pathogens is increasing

and has led to major concerns about the difficulties in

meeting the increasingly stringent or near-zero tolerance standards for Salmonella imposed by some countries. Also at issue is the inconsistency between

standards for domestic and imported poultry.

Some foodborne pathogens, including Salmonella,

have the potential to develop resistance to drugs used

in livestock production so that the association of livestock drug use with drug-resistant foodborne

pathogens and drug residues have potential implications for international trade. The third case study

examines that issue, again using Salmonella as an

example. There is accumulating evidence that some

pathogens are becoming resistant to antibiotics. Some

countries (for example, in the EU) prohibit the lowlevel (subtherapeutic) use of certain antimicrobial

drugs as growth promotants in livestock production or

have proposed such prohibitions based on their perception that there is enough evidence linking livestock

drug use and human antibiotic effectiveness in treating

foodborne illnesses, including salmonellosis.

48 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Chapter 4

International Trade of Meat/Poultry

Products and Food Safety Issues

Kenneth H. Mathews, Jr., Jason Bernstein, and Jean C. Buzby1

1Kenneth Mathews is an economist with the Market and Trade

Economics Division, Economic Research Service (ERS), USDA.

Jason Bernstein is an economist with the Foreign Agricultural

Service (FAS), USDA. Jean C. Buzby is an economist with the

Food and Rural Economics Division, ERS, USDA.
Introduction

This chapter focuses on food safety concerns surrounding meat and poultry products and their associated

impacts on international trade. These high-value products are widely traded internationally. The impacts from

food safety concerns on meat and poultry trade are particularly important to the United States because of the

high value and volume of U.S. exports of these products

(table 4.1). U.S. exports of cattle, sheep, hogs, poultry,

and many of their products account for roughly 10 percent of the value of cash receipts for those livestock

species at the farm level. In terms of volume, about 20

percent of U.S. poultry production and 8.5 percent of

U.S. beef production was exported in 2001. Although

the United States is not a major importer of poultry,

imports of meats and live animals are important, particularly imports of young live animals.

In the short run, meat and poultry trade varies due to

year-to-year fluctuations in supply and demand. Supply

may be affected by factors such as exchange rates and

animal disease incidents that cause temporary trade

restrictions. Demand factors that affect meat and poultry

trade include changes in tastes and preferences, population growth, responses to food safety issues, and growth

in income. Imports and exports for a particular sector

may increase simultaneously due to differences in the

supply and demand for different types of products produced within that sector. For example, U.S. consumers

tend to prefer white poultry meat, and consequently the

United States tends to export dark poultry meat. In general, poultry markets are subject to a mix of trade and

national regulations combined with traditional and nontariff barriers (Orden et al., 2002). Historically, nontariff trade barriers have also been important in markets

for other meats.

Meat and poultry trade has increased over time, and

continued increases are projected over the next few

decades, both in the United States and worldwide.

World exports of poultry have increased dramatically

and now account for about 10 percent of world consumption (Orden et al., 2002). Of all U.S. animal and

crop exports, red meat exports increased the most over

the last two decades. The 5-year average volume of

U.S. red meat exports rose over 300 percent between

1981-85 and 1996-2000. 

In its 1999 report on Animal Agriculture and Global

Food Supply, the Council for Agricultural Science and

Technology projected growth in international trade for

livestock and livestock products, especially meat products (CAST, 1999). Predicting a 63-percent increase in

global demand for meat through 2020, the CAST report

attributed 88 percent of the projected increase to developing countries, with China accounting for half of that

increase. Two specific reasons were cited for this projected increase in global demand for meat. First,

increased urbanization due to increasing populations

and rising incomes have increased per capita demand

for meat, milk, and eggs. Second, increased global

demand for meat reflects the increased demand for

high-quality protein to improve children’s growth, cognitive development, and health in countries where consumption of animal products is traditionally low.

Meanwhile, per capita consumption of red meat has

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 49

Table 4.1—U.S. livestock product exports and

imports

Fiscal year

2001 2002 2001 2002

—1,000 units— —$ million—

Exports

Animals, live — — 727 696

Meats and preps., 

excl. poultry1 (mt) 2,442 2,590 5,193 5,113

Dairy products — — 1,121 1,031

Poultry meats (mt) 2,810 2,586 2,084 1,879

Fats, oils, and 

greases (mt) 1,049 1,339 320 454

Hides and skins, 

incl. furskins — — 1,933 1,776

Cattle hides, whole — — 1,437 1,121

Imports

Animals, live — — 2,198 2,022

Meats and preps., 

excl. poultry1 (mt) 1,600 1,656 4,091 4,187

Beef and veal (mt) 1,056 1,067 2,645 2,749

Pork (mt) 399 439 1,039 992

Dairy products — — 1,728 1,841

Poultry and products — — 258 317

Fats, oils, and 

greases (mt) 106 99 62 63

Hides and skins, 

incl. furskins — — 162 136

Wool, 

unmanufactured (mt) 21 12 53 31

1 Includes beef, pork, variety meat, and processing.

Source: Agricultural Outlook Statistical Tables, February 2003,

accessed March 27, 2003:

www.ers.usda.gov/publications/Agoutlook/AOTables/AOTables.htm
declined in the United States (Haley, 2001) and in some

other developed countries, although U.S. per capita consumption of poultry has increased (Regmi, 2001).

This growth in meat and poultry exports has been

accompanied by several food safety disputes. From the

perspective of the United States, perhaps the best-known

market access problem arising out of a food safety issue

is the 1989 beef hormone ban that adversely affected

Canadian and U.S. exports of beef to the European

Union (see box 4.1, “The Hormone Case...”). Other

examples of food safety concerns negatively affecting

U.S. exports of meat and poultry products include suspicion of E. coli on beef products exported to Japan and of

Salmonella on poultry products exported to Russia. An

example of how a food safety concern not endemic to

the United States can still negatively affect U.S. production and trade is Bovine Spongiform Encephalopathy

(BSE) in cattle and its potential link to variant

Creutzfeldt-Jakob disease (vCJD). BSE is the focus of

the first case study here, the second covers Salmonella in

poultry products, and the third discusses drug resistance.

These food safety issues have caused changes in policies

and trade flows worldwide. 

Food Safety for Meat 

and Poultry

Ensuring food safety for internationally traded meat

and poultry is particularly challenging because these

products are perishable and can be contaminated by a

variety of food safety hazards. Meat and poultry, along

with other raw foods of animal origin (i.e., raw eggs,

unpasteurized milk, and raw shellfish), are the foods

most likely to cause foodborne illness outbreaks

(CAST, 1994, p. 32). 

Meat and poultry can be contaminated during production processes in many ways. In addition to physical

contaminants like bones, hair, and other items, meat

and poultry can also be contaminated with hormones,

drugs, and other compounds that can leave residues in

food, or by pathogens that can pass from animals or

the environment to humans through contaminated raw

food products or processing steps (table 4.2). Of

bovine products, ground beef poses higher risks from

E. coli O157:H7 than whole cuts of meat. The nature

of ground beef is such that one hamburger may contain meat from many cows so any existing contamination can be spread throughout a batch of hamburger,

making thorough cooking even more important. 

Pathogens such as E. coli O157:H7 and Salmonella are

commonly found in the gastrointestinal tract of animals and birds (Wells et al., 1998). Contamination of

meat and poultry can occur during slaughter if the gastrointestinal tract is punctured or if there is contamination on the hides, feathers, and hoofs when animals

enter the slaughterhouse (IFT, 2003; Feinman, 1979).

During processing, poultry are eviscerated, then generally chilled in a cold water bath, and sprayed with a

cleansing solution. The cold water bath is somewhat

controversial because it can spread pathogens to previously uncontaminated carcasses. Beef animals are also

eviscerated, and the carcasses are sprayed with a

cleansing solution, but then they are air chilled rather

than dipped in water. 

In general, improvements in food safety, such as safe

canning procedures, pasteurization of milk, and disinfection of water supplies have successfully contributed

to the control of many foodborne diseases. Similarly,

to improve meat and poultry safety, existing technologies, such as irradiation, and new technologies, such as

steam pasteurization, continue to be developed,

refined, and adopted.

Links Between Animal and 

Human Health 

More than 200 known pathogens are transmitted

through food and pose human health risks (Mead et

al., 1999). Many of the more important foodborne diseases are caused by pathogens such as Salmonella,

Campylobacter, Clostridium, and Listeria, some of

which are zoonoses.2 Additional diseases are thought

to be zoonoses, but conclusive evidence demonstrating

the animal and human disease relationship is missing

(e.g., Johne’s disease in dairy cattle and Crohn’s disease in humans (Collins, 1995; Thoen and Williams,

1994)). Some pathogens have changed or evolved

recently into much more virulent strains (e.g., E. coli

O157:H7 and Salmonella Typhimurium DT-104).

Some strains of these bacterial pathogens have the

added threat that through genetic variations, they have

developed resistance to some antibiotic drugs. 

The links between animal and human health are complex. In addition to the direct food safety links, there

50 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

2 Zoonoses are disease-causing agents in both animals and humans

and which can be passed between the two.
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 51

While there is some controversy whether the EU hormone ban is a measure to protect food safety or to

protect EU beef producers, there is little doubt that it

originated from consumer concerns about the effects

of hormones on human health (Kerr and Hobbs,

2000). Roberts (1998) clarifies this point:

The original ban was proposed in response to

public anxieties that emerged in the late 1970s

and early 1980s following widely publicized

reports of ‘hormone scandals’ in Italy. In 1977,

some northern Italian school children exhibited

signs of premature development which investigators suspected was linked to illegal growth hormones in veal or poultry served in school lunches.

Although exhaustive examination of possible

causes of the abnormalities produced no concrete

conclusion, a public furor rose over the use of

hormones in livestock production. Then, in 1980,

numerous supplies of veal-based baby food in

Italy were found to contain residues of the illegal

growth promotant diethylstilbestrol (DES), a synthetic hormone used as a feed additive to increase

productivity in animal production (p. 386).

In response to these human health concerns, the

European Commission (EC) banned the use of certain

hormones for farm animals (Directive 81/602). In

1985, the EU further extended this ban to include all

natural and synthetic hormones for growth promotion

and prohibited imports of meat from animals using

hormones (Directives 88/146 and 88/299). The import

ban went into effect in January 1989. 

In the only food safety disputes to advance to a World

Trade Organization (WTO) dispute panel, the United

States and Canada challenged the science basis for the

EU ban on growth hormones in beef production. The

EU’s defense of its measure rested on its claims that the

international standards for these hormones did not meet

its public health goals and that the ban represented a

precautionary approach to managing uncertain risks. 

The WTO Appellate Body upheld the original panel’s

decision that the EU’s ban violated the provisions of the

Sanitary Phytosanitary (SPS) Agreement (Roberts,

1998). Both decisions affirmed the right of WTO members to establish a level of consumer protection higher

than the level set by international health standards. The

ban was nonetheless judged to be in violation of the

SPS Agreement as it was not backed by an objective

risk assessment (in violation of Article 5.1 and Article

3.3). The panel and judges also rejected the EU’s use of

the “precautionary principle” in its legal defense, as

there is no explicit reference to this principle in the

treaty. The SPS Agreement does recognize a conditional precautionary principle in Article 5.7, which

allows countries to provisionally adopt measures “on

the basis of available pertinent information” while seeking additional information “necessary for a more objective assessment of risk.” However, the EU could not

defend its permanent ban under this provision.

Significantly, the Appellate Body did overturn the

panel’s ruling that the ban violated Article 5.5, which

requires countries to avoid variation in the levels of

health protection provided by its SPS measures, if such

variation results in discrimination or creates a disguised restriction on trade. The judges concurred with

the panel that EU policies regarding the use of growth

promoting substances in animals were “arbitrary and

unjustifiable” as the EU allowed their use in pork.

However, they disagreed that the ban was “a disguised

restriction on trade,” perhaps in deference to public

anxieties that emerged in the late 1970s and early

1980s following widely publicized reports of illegal

veterinary drug use in Italy and France. But although

the Appellate Body was willing to acknowledge that

the ban was originally motivated by “consumer concerns” rather than by protectionism, the overall outcome of the case suggests that the WTO will rule

against measures based on popular misconceptions of

risks as well as more overtly discriminatory measures. 

The EU did not fulfill its obligation to bring its measure into compliance with the SPS Agreement by the

May 1999 deadline, stating that it needed more time

to complete risk assessments. The WTO consequently

authorized the United States and Canada to increase

tariffs on $128.1 million of EU exports until the EU

complied with the ruling or provided compensation

for the ban by lowering other trade barriers. The parties continue to discuss options such as increased

market access for hormone-free beef and labeling, but

the case has not yet been settled. Both the ban and

the retaliatory tariffs remain in place. 

Box authored by Donna Roberts (ERS) and 

Laurian Unnevehr (University of Illinois)

Box 4.1—The Hormone Case and the WTO Dispute Panel
also appear to be tradeoffs between protecting human

and animal health. For example, the use of antimicrobial drugs for livestock may protect animal health by

reducing pathogens, but may pose some risks to

human health through decreased effectiveness of some

human antibiotics (CAST, 1994). However, scientific

uncertainty surrounds these tradeoffs. Much remains

unknown about the impacts of livestock drug use on

human health. For example, while it is known that

antibiotic use in livestock production can lead to an

increase in the presence of resistant bacteria in livestock and farms, the actual origins of the resistant bacteria or the resistance factors are not known. Also

unknown is the extent to which livestock drug use is

responsible for human foodborne illnesses due to

resistant bacteria.

Increased trade in livestock products also increases

the risk of introducing pathogens or foreign animal

diseases into countries. Risks from internationally

traded products differ from risks from domestic products in at least one important respect. With livestock

52 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Table 4.2—Animal diseases or pathogens that have human health implications1

Human diseases

or conditions Annual

Foods beyond gastrointestinal fatalities 

Disease/pathogen Source affected symptoms in U.S.2 Comments

Prions

Bovine spongiform Cattle Brain, nerve Variant Creutzfeldt-Jakob’s 0 (>115 BSE is always fatal in cattle 

encephalopathy (BSE) tissue, eyes, disease (vCJD) worldwide as is vCJD in humans

ileum since 1996)

Bacteria

Campylobacter Poultry, cattle, Raw milk, Reactive arthritis, 99 Leading cause of known 

pork poultry, beef, Guillain-Barré syndrome bacterial foodborne illness

pork, shellfish in the U.S.

Escherichia coli O157:H7 Cattle Ground beef, Hemolytic uremic 52 Children under 5 years of age

raw milk syndrome (HUS) are particularly vulnerable to 

this pathogen and to HUS

Listeriosis monocytogenes Many birds, Hot dogs, Sepsis, meningitis, 499 Can cause stillbirths and 

mammals, and luncheon meat, bacteremia, acute spontaneous abortions

other animals and numerous febrile gastroenteritis

other foods

Salmonella (non-typhoid) Poultry, cattle Meat, poultry, Reiter’s syndrome, 533 Second leading known 

milk, eggs, and reactive arthritis bacterial cause of foodborne 

numerous other illness in the U.S.

foods

Yersinia Swine Pork, milk, or Joint pain 2 Most infections are 

milk products uncomplicated and resolve 

completely

Parasites

Toxoplasma gondii Swine and Pork, Chronic reactive arthritis, 375 The primary source of 

contact with insufficiently Reiter’s syndrome, infection for animals is feed

domestic cats’ cooked miscarriage, birth contaminated with cat feces 

litter boxes hamburger defects and possibly with rodent

tissues. 30 to 60 percent of 

adults in the U.S. have 

Toxoplasma antibodies

1 According to the U.S. Centers for Disease Control and Prevention (CDC), more than 200 known diseases are transmitted through food. In the interest of

space, this table is only a partial listing of source species, foods affected, and chronic complications. 

2Annual human fatalities in the United States from all food sources provided by Mead et al. (1999) and by DEFRA (2002) for BSE. 

Source: Adapted from CAST (1994), Frenkel (1990), Mead et al. (1999), Orriss (1997), Thoen and Williams (1994), and Reuters (5/15/96).
products produced and consumed domestically, any

animal and human health concerns stem from

endemic diseases or pathogens, and responses to

problems are often established and ongoing or evolving. Diseases or pathogens introduced through internationally traded livestock products may not be

endemic and may pose a whole new set of problems

unfamiliar to the importing country. 

Foreign animal diseases can threaten trade and the

economic health of the importing country and some

pose potential threats to food safety and human health.

Recent examples, not all of which are food safety concerns, include the Canadian BSE outbreak in 2003, the

exotic Newcastle Disease outbreaks in the United

States in 2002, the 2001 Foot and Mouth disease

(FMD) outbreak in the UK, the 1997 FMD outbreak in

Taiwan, the Avian Influenza outbreaks in Asia since

1995 and, the Avian Influenza outbreaks over the last

decade in the United States. Not all of the foreign animal diseases in these examples caused food safety

issues per se, but they did disrupt international trade in

livestock products, and, in the case of the highly pathogenic form of Avian Influenza in Hong Kong, caused

human deaths (Cardona, 2003).

Case Study 1: 

Bovine Spongiform

Encephalopathy (BSE)

Bovine Spongiform Encephalopathy (BSE) or “madcow disease” is a highly publicized food safety concern (see box 4.2). The associated human disease, a

newly labeled variant of Creutzfeldt-Jakob Disease

(vCJD), is believed to be caused by consuming BSEcontaminated meat. The BSE case study demonstrates

how major changes in international trade regulations

and standards for live cattle, bovine products, and

many other products can result from a disease with a

relatively low probability of infection but a high fatality rate. vCJD is always fatal and has caused over 115

deaths worldwide since 1996 (UK Dept. of Health,

Sept. 9, 2002). 

This case study chronicles three BSE episodes and

their trade impacts on the EU (1988, 1996, and 2000).

Because of data limitations on industry costs incurred

to meet domestic and international food safety standards, trade volumes and values are used as proxies for

measuring the effects from BSE. 

The Issue

BSE is a major food safety concern for several reasons, including: (1) the uncertainty of exactly how the

disease is transferred to humans, which means that we

have limited knowledge of how to prevent it, (2) the

uncertainty of the total number of BSE and vCJD

cases, partly due to the long incubation periods in both

cattle and humans, (3) the inability to destroy the

“prion,” the agent believed to cause BSE and vCJD,

(4) the lack of a cure for BSE and vCJD, and (5) the

ability to confirm the presence of the disease only

through postmortem testing. As we shall see, BSE is

also a major animal health issue affecting production,

consumption, and trade. 

While cases of BSE have been found in many countries, over 95 percent of all BSE cases have been in the

United Kingdom (UK) (table 4.3).3 Estimated total

costs to the UK alone from BSE-related market losses

and for slaughtering, disposal, and selective cull

schemes are over $5 billion (Watson, 2000). The BSE

case study is presented chronologically and analyzes

the less obvious impacts of BSE during the last 15

years on the volume and value of EU beef exports.

The EU is the third largest beef exporter (after the

United States and Australia). Understanding the

impacts of a crisis like BSE is complicated as countries have many ongoing trade programs to meet the

various domestic goals. EU trade policies are particularly complex and the introduction of new countries

into the EU over time complicates the analysis of trade

data series. The case study also provides a general discussion on the effect that BSE has had on countries

worldwide, both on countries where BSE is endemic

and where it is not, and the effects on other sectors

beyond livestock and beef.

The 1988 Episode: Emphasis on

Animal Health Concerns

The first BSE episode occurred in 1988 with the discovery of about 2,500 cases of BSE-infected cattle in

the UK. More BSE-infected cattle in the UK were

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 53

3 No cases of BSE have been confirmed in the United States. A

BSE risk assessment conducted by the Harvard Center for Risk

Analysis and commissioned by the U.S. Department of Agriculture

(USDA) shows that the risk of BSE occurring in the United States

is extremely low and current early protection systems would prevent its spread here. Canada has experienced two cases of BSE, the

first in 1993, and the second on May 20, 2003.
quickly discovered, with over 7,000 additional cases in

1989 and a peak of 37,000 cases in 1993 (fig. 4.1).

This BSE outbreak was not really considered a food

safety issue at the time, and early trade restrictions

were imposed largely in response to the effects of BSE

on animal health. By mid-1989, Australia, Israel, New

Zealand, Sweden, and the United States had banned

imports of live cattle from the UK, while Canada,

Japan, Morocco, and South Africa introduced requirements that live cattle imports from the UK be certified

as BSE-free. These trade restrictions caused a significant decline in UK live cattle exports. By 1990, UK

live cattle exports were little more than a fifth of their

1988 level and have never recovered (table 4.4). UK

exports, however, constituted only a small share of EU

exports even before BSE, and restrictions on UK cattle

did not have a commensurate effect on either EU or

world live cattle trade. Indeed, total EU live cattle

54 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

BSE is a chronic, degenerative disease affecting the

central nervous system of cattle. The incubation period

usually ranges from 2 to 8 years, and most cases in

Great Britain have occurred in dairy cows between 3

and 6 years of age. Following the onset of clinical

signs, the animal’s condition deteriorates until it dies or

is destroyed. There is no vaccine or treatment for BSE.

BSE was first discovered in 1986 in Great Britain and,

to date, over 95 percent of all BSE cases have occurred

in the United Kingdom (UK). However, while there

has been a decline in the number of newly identified

cases of BSE in the UK due to recent prevention and

control efforts, cases have been confirmed in other

European countries with new cases discovered in

Austria, Finland, and Slovenia in 2001. No cases of

BSE have been confirmed in the United States in over

a decade of active surveillance. There have, however,

been two confirmed cases in Canada. 

In 1996, government officials in Great Britain

announced that there was a possible link between BSE

in cattle and a variant of Creutzfeldt-Jakob Disease in

humans (vCJD). BSE in cattle and vCJD in humans

belong to the family of diseases known as the transmissible spongiform encephalopathies (TSE), which cause

the brain to have a spongelike appearance when examined under a microscope. vCJD is rare, invariably fatal,

and characterized by progressive deterioration of brain

tissue. The precise link between BSE and vCJD is

unknown. However, many scientists now believe that

humans contract vCJD by ingesting the causative agent,

thought to be a prion or abnormal protein, in products

made from brain, spinal cord, and some other organs

from BSE-infected cattle (Lorains et al., 2001). In particular, epidemiological data suggest that BSE may

have originally been caused by feeding cattle meat and

bone meal made from sheep infected with a mutant

form of scrapie or from feeding cattle protein contaminated with a previously unidentified TSE. Changes 

in rendering practices in the early 1980s may have

enhanced the causative agent’s survival in meat and

bone meal, resulting in the recycling of infected cattle

back to cattle. This increased the size of the epidemic.

BSE is transmitted through contaminated feed and

maternally. There is no evidence that BSE spreads

through contact between unrelated adult cattle (e.g.,

within a herd) or from cattle to other species by 

contact. 

Currently, tests cannot detect BSE in living cattle or

vCJD in living humans. Microscopic postmortem

examination of brain tissue and tests for prion protein

are the primary laboratory methods used to confirm a

diagnosis. As of September 2, 2002, vCJD had caused

115 deaths in the UK (UK Dept. of Health, 2002), and

there have been some deaths outside of the UK (e.g.,

in France and the Republic of Ireland). No cases of

vCJD have been detected in the United States except

for one individual who had lived in the UK.

BSE has had a substantial impact on the UK’s livestock industry and has altered international trade patterns. As of May 30, 2003, 180,078 head of cattle on

35,796 farms had been diagnosed with BSE in Great

Britain. These animals, herdmates, and progeny, totaling over 5 million head, were destroyed. Even though

there have been no confirmed cases of BSE or vCJD

in the United States, the threat of BSE has increased

consumer concerns about food safety and has caused

the United States to impose international trade

restrictions and to increase expenditures for BSE surveillance and other measures in order to protect animal and human health.

Source: Adapted from Buzby and Detwiler, 2001.

Box 4.2—Bovine Spongiform Encephalopathy (BSE) and Variant Creutzfeldt-Jakob 

Disease (vCJD)
exports expanded between 1989 and 1996. Austria,

Finland, and Sweden joined the EU in 1996, accounting for part of this increase (i.e., membership was 12

countries during 1988-1995 and 15 countries during

1996-2001).

The 1988 BSE outbreak also affected UK beef exports,

but not as much as exports of live cattle. By early

1991, many countries had imposed bans on imports of

UK beef, and other countries had placed stringent certification requirements on beef imported from the UK

(e.g., Cyprus and Hong Kong).4 One beef subcategory, UK exports of bone-in beef to other EU

countries, showed a significant decline between 1990

and 1991, but then quickly recovered in later years,

surpassing its pre-1988 levels.5 UK exports of boneless beef also declined in the first few years after the

1988 outbreak, but had fully recovered by 1995. 

The 1988 outbreak had little long-term effect on total

volume of EU beef exports. While the volume of EU

exports increased by 5 percent between 1988 and

1990, the value of these EU beef exports declined by

almost 37 percent with most of the decline between

1988 and 1989, suggesting a downward shift in

demand (table 4.4).

The 1996 Episode: A Switch to 

Human Concerns

The 1996 BSE episode began with the discovery of

BSE-infected cattle in EU countries outside the UK

(France, Ireland, and Portugal) and a March 1996

announcement of a potential link between vCJD and

eating BSE-infected meat. By 1996, 13 vCJD cases

had been reported in the UK. Media reports highlighted the slow, agonizing death suffered by vCJD

patients as well as a perceived inability of UK and EU

authorities to understand and control the spread of

BSE and vCJD. Although, the number of newly confirmed BSE cases in the UK in 1996 was almost half

of those discovered in the previous year (DEFRA,

2002), long incubation periods for BSE and vCJD

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 55

Table 4.3—Number of reported cases of BSE in

cattle in the United Kingdom1 and worldwide2

Country Reported cases

United Kingdom 180,078

Ireland 1,274

France 829

Portugal 787

Switzerland 432

Spain 302

Germany 253

Belgium 113

Italy 88

Netherlands 60

Denmark 13

Slovakia 12

Japan 7

Czech Republic 5

Poland 5

Slovenia 3

Canada 2

Liechtenstein 2

Luxembourg 2

Austria 1

Finland 1

Greece 1

Israel 1

1 Source: May 30, 2003, data from Department for Environment,

Food and Rural Affairs (DEFRA)(2001), www.defra.gov.uk/

animalh/bse/bse-statistics/bse/general.html accessed July 23, 2003.

2 Source: Feb. 21, 2003, data from the Office International des

Epizooties (OIE) website. See original table on OIE website for

details and caveats about cases by year of confirmation:

www.oie.int/eng/info/en_esbmonde.htm

4 Countries that imposed bans include Algeria, Bahrain, Brazil,

Canada, China, Egypt, Iran, Iraq, Jordan, Morocco, Saudi Arabia,

Syria, Tunisia, Turkey, United Arab Emirates, and Russia. 5 The UK was never a large exporter of bone-in beef in any case.

Figure 4.1

Confirmed cases of BSE in the United Kingdom

by year of clinical onset peaked in 1993

Cases

4461,641

6,958

13,038

22,931

35,276

37,011

26,098

15,710

8,879

4,934

3,502

2,703

1,633

1,103

940

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1987 89 91 93 95 97 99 2001

Source: Crown copyright, 2002. UK Department for Environment, 

Food and Rural Affairs (DEFRA) website (www.defra.gov.uk) 

by permission of HMSO Licensing Division.
caused concerns about how high human and animal illness tallies would reach.

Evidence of a link to vCJD quickly turned BSE from

an animal health issue to a food safety issue. The EU

temporarily banned all UK beef exports to other EU

countries and the rest of the world. Additionally, most

countries imposed a total ban on imports of beef and

live cattle from the UK, and several countries also

imposed either a ban on beef or live cattle from the

EU or a ban on imports from those European regions

where BSE was discovered. Between 1995 and 1997,

UK exports of beef to non-EU countries dropped by

99 percent and exports to EU countries dropped by 97

percent. UK exports of live cattle, already at very low

levels as a result of the 1988 episode, fell to zero. 

Outside the UK, there were fears that the 1996 BSE

episode would affect total EU and world beef consumption and trade for years, if not permanently. A

series of media reports predicted that the sudden drop

in beef consumption in some EU member states

(sometimes by as much as 20 percent) would last for a

long time and would quickly spread to other countries

and regions outside the EU. Several international consumer, environment, and health advocacy groups

implied that BSE in the EU was a sign of a large,

worldwide epidemic and recommended eating other

meats besides beef or switching to a more vegetarian

diet.6 There were fears that BSE could eventually spell

the demise of the entire beef market.7

In retrospect, these fears were exaggerated. Total EU

exports of beef barely declined in the first couple of

years after the second episode (1996-1997) and sales

from the world’s major beef exporters either remained

stable or increased over this time.8 Not until 1998 did

EU beef exports decline considerably, about 30 per56 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Table 4.4—EU (excluding intra-trade) and UK (extra-EU) exports of live cattle and beef, 1988-2000

Live cattle Beef

EU1 UK EU1 UK EU1 UK

— Head — — Metric tons — — Million US$ —

1988 60,627 315 615,360 27,475 1,945.4 75.6

1989 61,187 249 851,240 26,554 1,340.1 66.6

1990 68,212 66 647,059 16,457 1,230.9 33.4

1991 161,879 41 1,026,691 24,159 1,382.4 49.0

1992 169,447 82 972,385 19,789 1,472.8 50.2

1993 286,542 16 829,198 34,490 1,229.3 69.0

1994 295,830 31 784,609 45,931 1,259.0 85.0

1995 387,787 33 730,159 50,395 1,171.7 93.3

1996 501,828 0 727,848 12,535 1,167.9 23.2

1997 287,119 0 740,465 401 1,132.6 0.0

1998 266,225 0 521,789 151 888.3 0.0

1999 330,758 —2 694,054 165 1,018.1 0.0

2000 306,982 3 433,282 181 585.2 0.0

Nov-00 25,575 0 38,841 42 60.6 0.0

Dec-00 13,356 0 27,275 26 40.6 0.0

Jan-01 12,205 0 26,850 4 34.5 0.0

Feb-01 6,377 0 34,786 13 38.3 0.0

1 Austria, Finland, and Sweden joined the EU in 1996. Therefore, data represent EU-12 during 1988-95 and EU-15 during 1996-2000.

2 Number not confirmed.

Source: Eurostat and H.M. Customs and Excise.

6 Examples include: (1) “Worldwide Meat Trade Might Have Spread

Disease,” International Herald Tribune, Dec. 23, 2000; (2) NOVA

television program, “The Brain Eater,” Aug. 17, 1999; (3) MSNBC

report “Where’s the Beef,” March 23, 2001; and (4) E-The

Environment Magazine, “The Case Against Meat,” Jan./Feb. 2002.

7 “Worldwide Meat Trade Might Have Spread Disease,”

International Herald Tribune, Dec. 23, 2000.

8 World exports of beef and pork increased steadily between 1992

and 2000 (USDA, Sept. 2001).
cent, but that decline was due more to a downturn in

the Russian economy than to any long-term decline in

world import demand. In fact, world beef imports

remained steady between 1995 and 2000. After 1998,

as the Russian economy started improving, so did EU

beef exports, increasing 33 percent between 1998 and

1999. The 1999 depreciation of the Euro also made

EU export refunds less expensive and EU beef exports

more attractive.9 Although BSE spread to other countries both within and outside the EU from 1996 to

1999, the outbreaks were usually limited to one or two

cases at a time and did not cause a worldwide panic

until later in 2002, when new cases were identified in

Japan and Israel.

Several reasons account for why the 1996 BSE

episode had a much smaller and shorter-term effect on

import demand and exports than some had predicted:

(1) Predictions of a large, permanent switch from

beef consumption to consumption of other

meats or a more vegetarian diet as a result of

BSE were exaggerated.10 While EU consumers are consuming more pork and poultry

and less beef per capita over time, this trend is

a gradual one. The source of this long-term

trend is likely caused by long-term changes in

the eating habits and demographics of EU

consumers, and not driven primarily by food

safety issues such as BSE and growth hormones (EC, 1997; EC, 1998). However, shortterm changes in EU meat consumption may be

caused by information about BSE and its associated risks described in the press (Verbeke et

al., 2000; Verbeke and Ward, 2001). 

(2) After the 1996 episode, the UK adopted an

extensive set of programs to ensure that cattle

used for beef production were BSE-free.

These actions included the Over Thirty Month

Cattle Slaughter Rule, which as the name

implies, mandated that all cattle over 30

months of age be destroyed (BSE is not

believed to affect cattle below this age) and a

ban of all meat and bone meal (thought to be a

carrier of BSE) in cattle feed. These actions

led to fewer BSE cases in the UK from 1996

to 2001 (fig. 4.1). Many EU countries also

adopted similar initiatives.

(3) During 1996-99, both EU beef consumption

and production were below pre-BSE levels,

leaving export quantities virtually unchanged.

This helped stabilize the EU beef market.

(4) Prices for cattle and beef from the UK and the

EU also declined, implying a downward shift

in demand in response to risks associated with

beef consumption. These price declines helped

move products in markets that might otherwise

have shown decreases in quantities traded (fig.

4.2 and table 4.4).

The 2000 Episode: A Widening

Epidemic

The October 2000 BSE episode occurred just as EU 

initiatives to bring stability to the domestic beef market

had started to be effective. Like the 1996 episode, the

2000 BSE episode was prompted by the discovery of

more BSE cases in European countries outside the

UK.11 Also of importance, the first vCJD cases were

discovered outside the UK in France and received a lot

of media attention. The discovery of BSE in countries

outside the UK was in part due to increased postmortem

testing of cattle. By 2001, every EU country had

reported at least one case of BSE.

The trade effects from the October 2000 BSE episode

were felt immediately. EU beef exports dropped 30

percent between November and December 2000, while

remaining UK beef exports fell by almost 40 percent

(table 4.4). Despite this being the third BSE episode in

the EU, EU beef exports appear to have quickly recovered in the following months. Between January and

February 2001, EU beef exports had risen almost to

their pre-December 2000 levels. Even UK beef exports

showed some signs of recovering during this period,

although they were nowhere near their pre-BSE levels.

The drop in EU exports during December 2000 did not

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 57

9 The declining value of the Euro against many currencies reduced

the export subsidy (difference between the world price and EU

intervention price for beef) to practically nothing. This allowed the

EU to export beef without fear of violating their WTO commitments on export subsidies.

10 Adda (forthcoming) analyzed panel data from 2,798 French

households before and after the March 1996 announcement linking

BSE to vCJD (between Jan. 1, 1995, and June 24, 1996) and found

no evidence of participants’ becoming vegetarian, although households did reduce their expenditures on beef and switched to other

animal protein substitutes.

11 In 1996, Portugal reported 31 BSE cases, France reported 12

cases, and Ireland reported 74 cases of BSE. In 2000, Portugal

reported 150 cases, France 162 cases, and Ireland 149 cases.
cause a drop in world beef exports, as exports from the

United States and Australia made up the difference.

Measures added by the EU in January 2001 to ensure

the safety of the beef supply may have helped dampen

the impact of this crisis. For example, the Over Thirty

Month Cattle Slaughter Rule was extended to other

EU members and a ban was imposed on all animal

feed (not just cattle feed) containing meat and bone

meal. USDA’s Economic Research Service (ERS) estimates that this EU ban on meat and bone meal feeding

will cause the EU to import an additional 1.5 million

tons of soymeal per year to replace meat and bone

meal in livestock feed rations (USDA, 2002). 

In February 2001, a major FMD epidemic broke out in

the UK and spread to other EU countries, affecting EU

trade of cattle, swine, and sheep and their products

(Buzby et al., 2001; Mathews and Buzby, 2001).

Because FMD is infectious through live animals and

their products and countries typically stop exporting

these products when FMD is confirmed, this FMD

outbreak led to temporary market closures, affecting

world exports and imports of these products (FAS,

Oct. 2001). By the following month, EU beef exports

had fallen by more than 80 percent due to FMD, a

larger decline than during any of the three BSE crises.

Conclusions From the BSE Case Study

Although UK exports of live cattle and beef plummeted to nearly zero as a result of the three BSE crises

and have not yet recovered, the total volume of EU

exports has been much less affected to date. Also, for a

brief period of time after each BSE episode, domestic

consumption in the EU declined sharply but then gradually increased to resume its long-term, downward

trend (fig. 4.3). This longer-term trend in beef consumption began before the first BSE crisis. In essence,

the effects of BSE on EU beef consumption and trade

volumes were short-lived. Both the official USDA and

European Commission forecasts predict a similar pattern for the future, estimating that long-term patterns

in beef consumption and trade volumes for the next 6

to 8 years will not be greatly affected by BSE (see box

4.3) (EC, 1998; USDA, 2002). 

EU beef prices, however, did not recover following the

three episodes, suggesting a downward shift in

demand for beef and severely affecting trade values. A

number of studies provide additional evidence that

consumer demand in the UK and EU has shifted

downward due to BSE (Burton and Young, 1996;

Verbeke, et al., 2000; Lloyd, et al., 2001; Verbeke and

Ward, 2001; Henson and Mazzocchi, 2002). The 3-

year average value of EU beef exports fell by 45 percent between 1988-90 and 1998-2000, largely because

of the decline in prices (figs. 4.2 and 4.3).12 Other factors also affected prices, including changes in EU

country currencies associated with adoption of the

Euro (Bowles, 2003). Jin and Koo (2003) found evi58 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Figure 4.2

Nominal EU beef prices and consumption, 

1991-2000

€/100 kg

Source: OECD. Directorate for Food, Agriculture, and Fisheries.

1991 93 95 97 99

60

80

100

120

140

10

12

14

16

18

20

22

kg/person

Consumption 

(kg/person)

Price

(€/100 kg)

Figure 4.3

EU domestic beef consumption during the 

three BSE crises (1988, 1996, and 2000)

Million metric tons

Source: USDA Production, Supply, and Distribution database, 

1980-2001; baseline projections, 2002-2011.

6

7

8

9

1980 1990 2000 2010

Trend Beef consumption

12 Negotiations are currently underway to resume UK exports to

Russia and Egypt, so UK exports may show improvement in the

near future.
dence for changes in consumer demand for beef in

Japan, which they attributed to BSE, despite accounting for other factors, such as changes in importing

countries’ real income levels, third-country effects, and

exchange rates.

Although some developed countries are changing their

consumption patterns away from red meat (such as the

United States and EU), world beef exports have

increased during the past 12 years, largely due to middle-income countries’ increasing their beef consumption (Regmi et al., 2001). This worldwide increased

demand for beef along with price declines in the EU,

indicative of a downward shift in demand in the EU,

have moderated the decline in total EU beef export

quantities. In general, fears of eating UK beef because

it might be tainted with BSE have not spread to fears

of eating beef from the EU. This is partly due to new

EU efforts such as slaughtering schemes and feed

restrictions that help assure consumers that the EU

beef supply is free of BSE contamination. Nor have

fears of eating UK beef spread to consumption of

other livestock species.

BSE has caused countries to impose numerous additional safeguards to protect animal and human health.

In addition to the Over Thirty Month Cattle Slaughter

Rule and EU bans of meat and bone meal in all animal

feed, BSE-related safeguards to protect animal and

human health include surveillance systems, new regulations for domestic production, and international trade

restrictions. Countries that do not have endemic BSE

(the United States, for example) have also imposed

regulations, import restrictions, and other measures to

prevent the disease from crossing their borders and to

mitigate its impact if it should be found. For example,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 59

Some distinctions should be made regarding consumption and demand. First, consumption and

demand are not the same. For a commodity, consumption is production plus imports minus exports

and net of changes in storage stocks. For example, all

the beef that is produced and imported will be consumed (or exported or wasted) at some price. Beef

production is generally stable due to cattle cycles and

long production lags except for all but the most drastic changes in cattle inventories like the 30-month

cull for BSE or the 2001 depopulation of livestock in

the UK due to foot-and-mouth disease. If consumption remains relatively constant or continues on a

downward trend, as beef consumption appears to

have done in the UK, a quick glance at prices may

give some indication about what is happening to

demand. Demand is an economic term representing

the quantity removed from the market for each price.

Demand is affected by income, prices of substitute

and complementary products, and other factors. 

Recent studies have argued that while EU beef consumption may have recovered (Q below), beef

demand has not (Thompson and Tallard, 2003).

Significantly lower prices (e.g., a move from P1 to P2

in the figure below) for relatively similar quantities of

beef consumption (Q in the figure below) indicate a

downward shift in demand in the UK (Lloyd et al.,

2001; Atkinson, 1999) (move from D1 to D2 in the

figure). Earlier, Burton and Young (1996) attributed a

“long-term” loss in UK beef’s market share of 4.5

percent to the first BSE outbreak. Prices have not

recovered relative to consumption. Whether the same

demand shifts are observed for the EU has not yet

been demonstrated in the literature. 

Most economic forecasts do not predict any longterm trade or consumption effects from the BSE

crises in the EU. However, these forecasts are based

on the assumption that EU beef consumption has

fully recovered or is fast approaching its long-term

trend. If beef consumption is still short of what

demand would have been in the absence of BSE, it

would indicate that studies have underestimated the

effects of BSE on demand and, consequently, trade

that is, trade effects from BSE would be larger if

demand were taken into account. More research

needs to be completed on this topic.

Box 4.3—Consumption Versus Demand

P1

P2

D1

Q

D2
as a result of BSE, the United States enacted a regulation prohibiting meat and bone meal in all ruminant

feed. In addition to policy changes in response to BSE,

markets have also changed. For example, U.S. beef

exports to Japan have not yet recovered from Japanese

consumers’ responses to their domestic BSE outbreak.

In turn, as safety standards are raised worldwide, market access for some exports from both endemic and

nonendemic countries has been affected. For example,

EU regulations related to BSE are preventing the

importation of U.S. gelatin into the EU until all U.S.

production and inspection systems and measures are

found to be equivalent to those in the EU (see chapter

3). This is occurring even though the U.S. has not had

any cases of BSE.

In addition to gelatin, feed, livestock, and beef, BSE has

affected many other sectors, including the rendering

industry and cosmetic, medical, and pharmaceutical sectors. The indirect effects on so many other sectors occur

because bovine byproducts and rendered products are

commonly used as intermediate inputs in many products.

Consequently, trade restrictions affect many sectors.

Some of these restrictions are not supported by science.

For example, many countries suspended imports of

European dairy products following the 1996 BSE crisis

and then later rescinded these bans when the World

Health Organization and the International Office of

Epizootics for animal and human health measures reaffirmed that existing scientific data did not identify these

products as BSE vectors (see chapter 3). 

Policy changes associated with BSE have resulted in

significant disruptions to international trade. As discussed in chapter 3 of this report, the number of complaints (or counter notifications) to the World Trade

Organization related to the regulation of transmissible

spongiform encephalopathies, which include BSE,

account for nearly half of all counter notifications

related to food safety regulations since 1995.

Case Study 2: 

Salmonella and International

Meat Trade

Unlike vCJD, which has claimed relatively few lives

worldwide (115 in the UK as of Sept. 2, 2002, according to the UK Dept. of Health), foodborne pathogens

cause an estimated 5,000 deaths annually in the United

States alone, out of an estimated 76 million foodborne

illnesses (Mead et al., 1999). Foodborne pathogens

affect international trade through standards and regulations adopted by countries and sporadic bans on shipments of specific items. 

In addition to other measures described later in this

chapter, countries commonly use import bans to reduce

food safety risks. Because the term “ban” is used in

many ways, we make a distinction between bans and

standards in this chapter. We use “standards” to refer to

laws, rules, or regulations that establish the food safety

standard for a country and that remain in place over

time. An example of a standard is the requirement by

some countries that all imported poultry must be cooked

or canned. We use “bans” to refer to short-term or sporadic responses by a country to infractions of their standards; bans usually apply to specific shipments for

specified periods. An example of a ban is the denial of

access to a country of a specific shipment of poultry that

tested positive for Salmonella contamination at the port

of entry. Here, “bans” may also apply to narrow groups,

a company for example.

World poultry trade for the 5 years ending in 2002

amounted to about 11-12 percent of world poultry

production.13 With meat and poultry consumption

expected to increase in future years (CAST, 1999),

this export share of world production will likely

increase despite the divergent sanitary and phytosanitary (SPS) standards across countries and despite

the likelihood that increased poultry exports will

come from the few countries (Brazil, Canada, China,

EU, Hungary, Thailand, and the United States)

already exporting 80 percent of poultry and poultry

products. The variety in SPS standards that importing countries impose on exporting countries has contributed to the number of disputes raised to the WTO

SPS Committee (Orden et al., 2002). Complaints referencing poultry products accounted for 8 percent of

total cross notifications raised within the first 5 years

of the SPS Committee’s authority (Orden et al.,

2002). These disputes can disrupt trade. 

While several types of pathogens have been identified in

animal product imports and have resulted in trade interventions (e.g., E. coli O157:H7 and Campylobacter),

Salmonella appears to be the most contentious in terms

of trade disputes. For example, Salmonella is the only

60 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

13 USDA, Agriculture Outlook Statistical Tables, table 23,

www.ers.usda.gov/publications/Agoutlook/AOTables/, as accessed

on April 17, 2003.
pathogen mentioned by name as a trade concern in

poultry import requirements imposed by many countries. Therefore, this second case study focuses on

Salmonella and its implications for food safety and

international trade. 

Each year in the United States alone, nontyphoidal

Salmonella causes an estimated 1.3 million cases of

foodborne illness, 15,608 associated hospitalizations,

and 553 deaths (Mead et al., 1999).14 The proportion

of illnesses attributed to Salmonella-contaminated

meat and poultry is unknown. More severe cases of

salmonellosis tend to occur in the very old, the very

young, and the immunocompromised. Human illness

from foodborne Salmonella has a higher infection rate

than vCJD but a lower fatality rate. Salmonella-related

food safety issues are important to international trade

for several reasons:

(1) Salmonella contamination occurs in a wide

range of internationally traded animal and

plant products, including poultry, eggs, beef,

pork, dairy products, seafood, and fruits and

vegetables.

(2) Salmonella is a common cause of foodborne

illness worldwide and the second leading bacterial cause of foodborne illnesses in the

United States, following Campylobacter. 

(3) Salmonella is the leading cause of death attributed to known foodborne illnesses in the

United States (Mead et al., 1999). 

(4) Many countries impose Salmonella restrictions

that limit trade in meat and poultry products.

(5) Such restrictions are sometimes inconsistent

with domestic standards or are applied more

strictly on imports.

(6) Some national standards are based on zero—or

near zero—tolerances, levels that are difficult to

achieve. These standards and restrictions are

inconsistent between countries and lack a

widely accepted scientific foundation. 

(7) Countries vary in their commitments and

resources allocated to reducing Salmonella at

the various production, slaughter, and processing stages, which have spillover effects to trade.

Salmonella is very difficult to control, although

some countries, particularly Scandinavian countries, have invested large amounts of resources

to minimize this pathogen in hog operations

(Hayes et al., 1999) and in poultry (e.g., see

Molbak et al., 1999, for Denmark). Developing

countries have fewer resources to devote to

reducing Salmonella in food production to meet

strict tolerances. Additionally, countries may

have reduced incentives to devote more

resources to Salmonella reduction if other disease problems prevent them from exporting in

international markets, such as endemic

International Office of Epizootics (OIE) List A

diseases (diseases with potential for rapid

spread and serious socioeconomic consequences) (Seitzinger, 2002).

The primary issue in this case study concerns the

range of importing countries’ tolerance standards for

Salmonella contamination in poultry. Because of data

limitations, the Salmonella case study describes the

pathology of the disease and the trade restrictions

imposed by various countries. 

Concerns About a Range of Tolerance 

Standards for Salmonella

The WTO Agreement on the Application of Sanitary

and Phytosanitary Measures in April 1994 (see chapter

3) gives each WTO member the right to determine its

own level of SPS protection. Countries impose different standards and regulations to handle the risks of

pathogen contamination from processing and other

stages of production. For example, U.S. producers

commonly add chlorine to the cold water bath to

reduce pathogen levels in poultry while some countries

do not allow chlorine to be used for domestic or

imported poultry. Countries’ trade restrictions for

Salmonella in poultry vary by type of restriction (by

specific products or processing methods), extent

(inspections of slaughter facilities, production practices), and duration of the trade interruption. For

example, some countries require certification of

slaughtering and processing facilities while others rely

on exporters’ domestic inspection systems. These

diverse national standards make compliance challenging for exporters, particularly if the standards have

zero or near-zero tolerances for Salmonella. 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 61

14 Salmonellas are divided into two groups in the human health literature, typhoidal and non-typhoidal. Typhoidal Salmonella causes

typhoid fever, a disease associated with contaminated water and

poor sanitation, while other salmonellas cause foodborne illnesses.

There is also a group of salmonellas that causes diseases in birds

or animals, but not in humans.
Two main concerns arise when countries impose nearzero or zero tolerances for Salmonella contamination in

imported meat products, especially poultry. First, a zero

risk may not be feasible from either a policy or producer standpoint. In the case of Salmonella, a zero-risk

policy may keep out all imports. Some scientists believe

that Salmonella is ubiquitous in the environment and

that continuous testing will find it, particularly with

increased precision of diagnostic tools. Second, for

most risks, the cost to achieve further risk reductions

increases as the risk level approaches zero. Costs of

preparing poultry products to meet zero-tolerance

import standards of some countries would be in addition

to costs incurred from the implementation of Hazard

Analysis and Critical Control Point (HACCP) measures

required of U.S. federally inspected meat and poultry

processors and slaughterhouses (USDA, July 25,

1996).15 As part of HACCP, USDA’s Food Safety and

Inspection Service (FSIS) tests raw meat and poultry

products for Salmonella. 

The range of standards can be seen in FSIS library of

countries’ export requirements. Table 4.5 presents data

on Salmonella-related requirements for the top 10

importers of U.S. broilers.16 Russia and Estonia currently require Salmonella testing of certain imports

and have low- or zero-tolerance policies, and Japan

explicitly reserves the right to test for Salmonella.

Although only 3 countries covered in table 4.5 have

Salmonella-specific requirements, other countries

have regulations that indirectly deal with Salmonella

and other foodborne pathogens. For example, some

countries reserve the right to subject imports to general microbial testing, which would likely include

testing for Salmonella and which would lead to the

rejection of shipments that test positive for

Salmonella. Chile was also included in the table as it

provides an example of a different standard. Chile

effectively imposes a zero-tolerance regulation for

imports by declaring that fresh/frozen (raw) poultry

is not eligible for importation; only fully cooked or

canned poultry products are eligible (FAS, 2002). As

proper cooking and canning kills Salmonella, this

regulation means that the allowed imports are

Salmonella-free. Bilateral consultations between the

United States and Chile on Salmonella began as

early as 1992. Historically, the United States has

been concerned that Chile holds poultry imports and

its domestic poultry to different Salmonella standards and that Chile has not substantiated the claim

that Salmonella is more prevalent in imports from

the United States than in Chilean poultry stocks

(WTO, 2001). 

In addition to Chile, four other countries (the Czech

Republic, El Salvador, Honduras, and Slovakia)

applied zero-tolerance standards for Salmonella in

1996, according to the WTO (2001). Like the U.S.

response to Chile, the U.S. response to these four

countries in October 1996 was that this standard 

was discriminatory because these countries did not

have eradication and surveillance systems capable 

of reaching this high standard in domestic products,

yet expected imports to follow this standard (WTO,

2001). Negotiations between the United States 

and these five countries on Salmonella standards

continues.

There are several examples where U.S. poultry exports

to Russia, the Ukraine, and other countries have been

periodically interrupted when Salmonella contamination was found in shipments or suspected in imported

meat or poultry products. In 1995, Russia was the

leading importer of U.S. poultry meat, importing about

1.6 billion pounds of broiler and turkey meat valued at

almost $600 million (not including indirect shipments

through Baltic countries). Requests to certify the

absence of Salmonella was a key issue of contention in

1995-96, when Russia threatened to embargo U.S.

poultry meat exports. The Russian position on this

threatened embargo was based on the claim that U.S.

poultry products did not meet the health requirements

set forth in a 1993 bilateral agreement regarding

Salmonella standards. This claim was partly based on

some legitimate concerns (e.g., a spoiled shipment of

frozen U.S. poultry meat in June 1995). The threat of

this ban prompted Tyson Foods Inc., the largest U.S.

poultry producer, to announce plans to scale back pro62 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

15 HACCP systems identify potential sources of pathogen contamination and establish procedures to prevent contamination and their

transmission to humans through food. HACCP plans generally follow seven steps: conduct a hazard analysis; identify critical control

points (CCP) for physical, biological, and chemical hazards; establish critical limits for preventive measures associated with each

CCP; establish CCP monitoring requirements; determine and perform corrective actions; establish recordkeeping systems; and conduct verification procedures.

16 Note that the U.S. imports very little poultry (table 4.1). The top

poultry exporters are the U.S. (2,825,000 mt) Brazil (947,000 mt),

Hong Kong (791,000 mt), France (416,000 mt), China (410,000

mt), and Thailand (323,000 mt) (FAS, March 2001). Note that

countries may also be transhipment points for international trade

(e.g., Hong Kong). 
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 63

Table 4.5—Import requirements for poultry and quantities for the top 10 importers of U.S. broilers and for Chile 

Importing Products eligible for import from the U.S.1 Salmonella-specific Imports from US2

country regulations/requirements1

Mil. pounds

Hong Kong Fresh/frozen poultry and poultry products Products may be subjected to laboratory 1,291

examination for microbiological contamination 

and positive-testing shipments refused entry

Russia Poultry and poultry products, excluding Negative Salmonella test results must be presented 986

consumer-size packages of ground poultry, to FSIS veterinarian before export certification can 

mechanically deboned poultry, and giblets be issued; consignments are ineligible if there are 

more than 1 (in 5 minimum) positive samples

Latvia Poultry and poultry products, except No separate Salmonella-specific requirements 500

mechanically separated and ground products; 

must be certified as not having been fed material 

originating from sheep 

Mexico Fresh/frozen poultry and poultry products No separate Salmonella-specific requirements 325

Japan All domestic poultry, except duckling giblets, Japanese Ministry of Health reserves the right to 224

coloring agents in raw products, and poultry test shipments of ground and mechanically deboned 

and poultry products from or passing through poultry for Salmonella and to reject positive-testing 

Pennsylvania shipments

China Fresh/frozen poultry products No separate Salmonella-specific requirements 163

Canada Federally inspected poultry and poultry No separate Salmonella-specific requirements 157

products, except carcasses, parts, or mechanically 

separated poultry parts containing kidneys or sex 

organs

Korea Poultry and poultry products, except those No separate Salmonella-specific requirements 131

imported into the U.S. from a third country

Estonia Poultry and poultry products Mechanically deboned poultry product is tested 247

for Salmonella at the port of entry; positive-testing 

shipments will be denied entry

Poland Fresh/frozen poultry and poultry products and No separate Salmonella-specific requirements 98

poultry trimmings, except frozen ground and 

mechanically deboned poultry

Chile Fully cooked and canned products Cooking and canning requirement effectively means --3

no Salmonella

1 FSIS, 2002.

2 Economic Research Service, 2002. Average for 1999-2000. 

3 Not listed separately.
duction by over 5 percent (Associated Press, March

18, 1996). High-level negotiations ensued and trade

was resumed. 

Later in 2002, there was a short-lived Russian ban on

U.S. poultry meat exports as Russia cited Salmonella

and antibiotic use in poultry production. Partly as a

result of this 2002 ban, poultry exports from the

United States for 2002 dropped by 13 percent, and

U.S. poultry exports to Russia dropped by 35 percent.

Orden et al. (2002, p. 162), reporting results from a

spatial equilibrium model, suggested that an imposition of sanitary restrictions by Russia on U.S. imports

of low-value poultry products would be mitigated

because there are sufficient arbitrage possibilities in

world markets—as long as the restriction is not

imposed on other exporters. However, the restriction

was imposed on countries other than the United States

(e.g., the Netherlands) and there were real impacts on

prices for U.S. poultry exporters.

Similarly, poultry trade between other pairs of countries has been interrupted by real or perceived

Salmonella contamination. For example, in September

1999, McDonald’s temporarily suspended poultry sales

in Lithuania after Lithuania banned a Polish company’s delivery of 1.5 tons of cooked products contaminated with Salmonella (Reuters, Sept. 2, 1999). 

The United States also has restrictions on poultry meat

imports, largely to keep certain animal and/or human

diseases out of the country. For example, imports are

restricted from regions where Exotic Newcastle

Disease is known to exist. In fact, currently only four

countries (Canada, Great Britain, France, and Israel)

are permitted to export fresh, frozen, and chilled poultry to the United States, although some plants in northern Mexico may also re-export poultry meat of U.S.

origin back to the United States after minimal processing (see chapter 3). As a major poultry producer, however, the United States does not and would not be

likely to import significant quantities of poultry in the

absence of these restrictions (table 4.1).

Responses to breaches in countries’ Salmonella standards have taken the form of temporary bans with

corrective action or refusals of specific contaminated

shipments of products. Vertical integration in the

U.S. poultry industry protects producers from some

risks, but the importance of poultry exports combined with the possibility of new or extensive

Salmonella-related embargoes, bans, or new zero- or

low-tolerance standards poses financial risks for

many integrated producers.17

Conclusions From the Salmonella

Case Study

Many countries have trade restrictions for Salmonella

and these restrictions vary widely by type (specific products or processing methods), extent (inspections of

slaughter facilities, production practices), and duration.

Some countries have zero- or low-tolerance standards for

Salmonella in imported poultry while others reserve the

right to test for Salmonella or permit imports of cooked

or canned products only, which in practice implies a

zero-tolerance standard for Salmonella. These standards

affect international trade in livestock products and could

also affect the choice of production technologies used in

exporting countries. For example, an exporter may

choose not to trade with a country having a zero-tolerance standard if the net gains to trade do not cover the

costs of meeting the standard. Despite the permanent

standards for Salmonella, trade interruptions due to

Salmonella are mostly shortlived bans against specific

products or rejections of specific contaminated shipments. Some countries’ import standards are inconsistent

with their domestic standards; to avoid running afoul of

WTO regulations, such differences need to be based on

science or legitimate differences in risk preferences, otherwise they might face allegations that they are being

used as trade barriers. Further research is needed to

determine whether world poultry trade would be higher

if countries were to harmonize around lower standards or

vice versa. Also, further research is needed to increase

our understanding of the size of food safety diversions

relative to total world poultry trade.

Case Study 3: 

Concerns about the Potential

Trade Impacts from AntibioticResistant Salmonella

Another dimension of the potential trade impacts from

pathogen-food safety issues, and the focus of this third

64 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

17 The U.S. poultry industry is very different from the U.S. beef

industry. Although both poultry and beef production are moving

toward fewer and larger producers, poultry operations are currently

more integrated, while beef operations remain dispersed among a

greater number of smaller independent operations. One cost-reducing benefit of low-level antimicrobial drug feeding is the ability to

have greater numbers of livestock at one facility.
case study, is the capacity of many foodborne

pathogens, including Salmonella, to develop resistance

to antimicrobial drugs. This case study discusses three

elements of this issue and trade implications: (1) the

increasing drug resistance observed in Salmonella, (2)

the controversy over the extent to which antibiotic

drug use in livestock production contributes to the

development of drug-resistant pathogens, and (3) the

potential for food contamination with drug residues.

Increasing Drug Resistance

Drug use in livestock is implicated in antimicrobial

resistance in humans because many antimicrobial drugs

used for livestock are the same as or similar to drugs

used for humans. Some pathogens can pass from livestock to humans, either directly through contact

(Feinman, 1979; Fey et al., 2000; Holmberg et al.,

1984) or through food products that are improperly

processed, handled, or prepared. Some foodborne illnesses in humans caused by resistant pathogens have

been traced to livestock products (Gashe and

Mpuchane, 2000; USDA, 1997; White et al., 2001) and

have been linked to live animals on farms (Feinman,

1979; Holmberg et al., 1984; Molbak et al., 1999). 

In livestock trade, the importing country not only sets

product standards (e.g., the zero tolerances for

Salmonella), they may also set process standards (e.g.,

the EU hormone ban) (FAS, 2003). They may also

require government verification of the standard which

can lead to a virtual ban in two ways—the cost of verification is prohibitive (e.g., hormones), or the government

is unable to provide the desired verification and certification (FAS, 2003). While not now directly a trade

issue, drug use by livestock could become more of an

international trade issue if prohibitions against domestic

production technologies in importing countries were

expanded to more fully cover imports. For example,

Russia and the Ukraine both periodically threaten or

impose temporary prohibitions on imports of U.S. poultry products based on drugs or chemicals used in production (e.g., Reuters, Jan. 23, 2002). These

prohibitions could mean that exporters who use the

implicated antibiotics in animal production would have

to sell their products to other countries (perhaps at

lower prices), incur higher transportation costs, or

destroy contaminated shipments altogether. Data are not

readily available on the magnitude of imports diverted

because of this issue. To date, no country has proposed

formal prohibitions against therapeutic uses of livestock

drugs (i.e., antibiotic use for treatment of disease),

which would have animal welfare implications.

S. Typhimurium (hereafter referred to as Typhimurium)

is the type of Salmonella most often mentioned in discussions about antibiotic resistance from livestock drug

use. Typhimurium strains have caused numerous human

illnesses and deaths worldwide. Typhimurium DT-104 is

particularly troublesome, with a hospitalization rate

double that of other foodborne Salmonella infections

and a fatality rate 10 times higher (WHO, 1997). 

Human illness from DT-104 was first recognized in

England and Wales in the 1960s, but resistant DT-104

has been known only since the 1980s (Threlfall, 2000).

The first resistant isolates were taken from gulls and

exotic birds. The resistance was not isolated from

humans until 1989, and was then isolated from cattle

over the next 5 years (Threlfall, 2000). It has also been

isolated from poultry, swine, other domestic animals,

and wild animals (USDA, 1997). DT-104 has been

detected mainly in industrialized countries with more

concentrated livestock production technologies (e.g.,

Austria, Canada, Denmark, France, Germany, UK, and

the United States) (USDA, 1997).

About 95 percent of DT-104 strains are resistant to

ampicillin, chloramphenicol, streptomycin, sulfonamides, and tetracycline (GAO, 1999), antibiotics commonly used to treat human illnesses. Since 1996, UK

scientists have also reported resistance to fluoroquinolones (GAO, 1999). This resistance to fluoroquinolones occurs in about 14 percent of DT-104 strains

in the UK (GAO, 1999), but is currently rare in the

United States (Marano et al., 1999). In the United States

alone, there are an estimated 68,000 to 340,000 human

illnesses from S. Typhimurium each year with resistance to five antibiotics, and most of these illnesses were

probably due to DT-104 (Glynn et al., 1998).

Pathogens affecting livestock and pathogens affecting

humans are often of different types or are often present

in differing concentrations. For example, while many

of the same Salmonella serotypes are found in both

humans and livestock, the 5 most common types of

Salmonella in cattle (of 26 serotypes identified) were

different from the 5 most common human types identified by the U.S. Centers for Disease Control and

Prevention as associated with human illnesses (USDA,

1995). This difference in primary serotypes emphasizes the fact that we do not have a thorough understanding of the epidemiological link between humans

and animals.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 65
While some pathogens appear to be widespread in

terms of infected U.S. livestock operations and markets, their prevalence in livestock populations

appears much lower. The share of animals that tested

positive for Salmonella, Escherichia coli, or other

selected bacteria has ranged from 1 to 5 percent,

while the number of livestock operations or markets

that had at least one positive test has ranged from 

10 to 67 percent (USDA, 1995, 1996b, 1998, 2000).

The prevalence of drug resistance in bacteria from

these samples, however, is not known. While some

samples likely contained resistant strains of bacteria,

it is unlikely that all samples contained resistant 

bacteria.

Livestock Drug Controversy

Some countries (e.g., EU member countries) prohibit

the low-level (subtherapeutic) use of certain antimicrobial drugs as growth promotants in livestock production. Others have proposed such prohibitions based on

policymakers’ perception that enough evidence links

livestock drug use and human antibiotic effectiveness

in treating foodborne illnesses. In the United States,

several bills have been introduced to prohibit antibiotics from at least some uses in animal agriculture

(e.g., H.R. 3266 on Nov. 9, 1999, H.R. 3804 on Feb.

27, 2002, S. 2508 on May 13, 2002, and S.1460 and

H.R. 2932, both on July 25, 2003). In June 2000, the

WHO adopted a statement of principles proposing that

use of antimicrobial livestock drugs to promote growth

be terminated. In June 2001, the EU prohibited all but

four antimicrobial drugs used as growth promotants in

livestock production (Mathews et al., 2001). The four

remaining drugs will be phased out by 2006 (European

Council, 2002). 

Livestock Drug Residues

A related issue concerning antibiotic drug use in livestock pertains to antibiotic drug residues that are considered unsafe yet remain in some internationally

traded animal products (see box 4.4). Some importing

countries have refused entry to shipments testing positive for these drug residues. Others have invoked temporary bans on shipments from specified countries.

For example, the EU’s veterinary committee recommended that the EU suspend imports of some meats

and seafood from China because of antimicrobial drug

residues in farm-raised shrimp and prawns (Reuters,

1/28/02).18

The EU has prohibited the subtherapeutic use of some

antimicrobial drugs in livestock production and other

countries have proposed such prohibitions because of

their concerns about possible effects on resistance in

foodborne pathogens. These restrictions could extend to

antimicrobial drug use in livestock production by exporting countries and could also force changes in production

technologies. A concern of the United States is the science base for these and other food regulations. Countries

vary in what they accept as sound science, which is particularly important in risk assessments.

Conclusion

Increased urbanization, increasing populations, and rising incomes have increased per capita demand for meat,

milk, and eggs worldwide. The increased demand for

high-quality protein to improve children’s growth, cognitive development, and health has also contributed to

increased global demand for meat and poultry. Concerns

about food safety hazards in meat and poultry have

motivated public and private efforts to ensure safer food

and to protect markets, both domestically and internationally. These food safety hazards are particularly worrisome if they make a large number of people ill

worldwide (e.g., Salmonella) or if they are particularly

virulent (e.g., BSE).

Public sector responses have ranged from position

statements (WHO, FAO, and OIE) to regulations

affecting imports and exports, such as minimum standards for pathogen, chemical, and residue contaminants in imported food products. The regulations

related to these standards range from rejection of specific shipments (e.g., for Salmonella) to longer term

bans against all potentially contaminated products

(e.g., against imports of live cattle from the UK

because of BSE concerns). Food safety standards and

regulations vary by country but are evolving in

response to the WTO principles, emerging food safety

incidents and risks, and new technology. 

Impacts and regulations often extend beyond the sectors directly affected by a food safety issue. For example, BSE has affected the rendering industry and feed,

66 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

18 The United States has embargoed shipments of aquacultural

products contaminated with chloramphenicol.
gelatin, cosmetic, pharmaceutical, and medical sectors.

In many countries, new rules and regulations for feedstuffs have been put in place to allay public sector concerns over BSE and food safety threats such as vCJD.

But new regulations to solve one food safety problem

can create new trade challenges. For example, higher

EU standards for gelatin are currently blocking U.S.

gelatin exports to the EU even though BSE has never

been identified in the United States. Countries worldwide, with and without endemic BSE, are affected by

the crisis both in terms of market access for exports

and new, targeted restrictions for imports.

International food safety standards concerning

Salmonella and poultry vary by type (specific products

or processing), extent (inspections of slaughter facilities, production practices), and duration. These bans

usually pertain to contaminated shipments, but governments may also impose temporary bans against specific products from specific producers or countries.

Meanwhile, production and process standards can

extend to drugs administered to livestock even when

residues have not been identified as a problem (e.g.,

threatened Russian ban against poultry) and in part,

because of concerns that some pathogens, such as

Salmonella, can develop resistance to drugs meant to

kill them. 

This variety in standards is one example of national

sovereignty where each WTO member has the right to

determine its own level of SPS protection. Part of the

diversity in standards may reflect differences in the

science base among countries. Two challenges related

to Salmonella facing international bodies are how to

handle “zero-tolerance” standards when science suggests that zero risk is infeasible, and how to ensure

that any differences between standards for domestic

and imported products are based on science or legitimate differences in risk and are not simply trade barriers in disguise. 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 67

Drugs administered to livestock can affect human

health and food safety through drug residues in food

products. Small amounts of such residues have been

deemed safe for human consumption worldwide by the

Food and Agriculture Organization (FAO) and the Food

and Drug Administration (FDA). The FDA, for example, established 1.5 milligrams per person per day as

the acceptable daily intake (ADI) of noncarcinogens.

For antimicrobial drugs, this is a level that should produce no effects on the human intestinal bacteria. Other

antimicrobial drugs have not been approved for use in

livestock production or have been outlawed.

Residues from some antibiotics are considered unsafe

at any level. FDA has not established ADIs for these

drugs. For example, chloramphenicol is still used occasionally to treat diseases in aquacultural operations in

China, India, Indonesia, Malaysia, Thailand, and

Vietnam, all of which are major exporters of shrimp. Its

use has declined in these areas as information reaches

farmers about its toxicity—it has caused leukemia and

can cause genetic damage, possibly leading to cancer.

The chemical has, however, found its way into livestock

feeds and livestock products in Europe. 

Developing new drugs is expensive. Drug manufacturers and sellers must abide by increasingly stringent

and time-consuming regulations and legislation when

developing new drugs for use on either humans or

animals. The Animal Health Institute estimates that

only 1 in 20,000 discovered chemicals becomes available for farm use. Approval of a new drug can take a

decade or longer.

Major legislation affecting animal drug use and

residue levels since 1989:

Nutrition, Labeling, and Education Act of 1990—

Pre-empts State requirements about food standards,

nutrition labeling, and health claims.

Animal Medicinal Drug Use Clarification Act 

of 1994—Allows licensed veterinarians to prescribe

human drugs for use in animals under certain 

conditions.

Animal Drug Availability Act of 1996—Adds flexibility to animal drug approval process.

Food and Drug Administration Modernization Act

of 1997—Regulates advertising of unapproved uses

of approved drugs.

Box 4.4—Antibiotic Residues
In addition to public sector approaches, private

approaches to reduce food safety risks are becoming

more widespread and stringent (Caswell and Henson,

1997) and are helping firms improve their international

competitive positions in cases where the products are

perceived to be safer. Private sector approaches for

meat and poultry include self-regulation, vertical integration (to ensure quality/safety of inputs and traceability, for example), voluntary or mandatory HACCP

systems, and third-party certification such as the

International Organization for Standardization. For

example, in the United States, McDonald’s has

imposed antibiotic restrictions on its livestock suppliers (Lipsky, 2003), even though the U.S. government

does not believe this is necessary (FAS, 2003).

Effective implementation of such private sector

approaches is key to enhancing food safety, in tandem

with public approaches (e.g., country-of-origin labeling). Some of these private responses may have supply

implications for exporting countries.

Many producer groups have voluntarily developed

guidelines for their members aimed at enhancing the

safety of their commodities.19 These “Quality

Assurance Programs” are designed to ensure wholesome livestock products. They include elements aimed

at reducing pathogens and at properly using pharmaceuticals (Committee on Drug Use in Food Animals, 1998).

Other private organizations that have adopted guidelines

for antimicrobial drug use include the American

Veterinary Medical Association, American Association

of Bovine Practitioners, and American Association of

Swine Practitioners (USDA, 1999). Several U.S. producers have also reduced or plan to reduce their use of

certain antibiotics to ease consumers’ fears (Burros,

2002; Kilman, 2002). For example, several U.S. poultry

producers have begun withdrawing their use of the fluoroquinolone drug Baytril. 

Some ongoing meat and poultry disputes have highlighted the difficulty in separating actions designed to

ensure food safety of imported food products from

actions to erect trade barriers using SPS standards as

the justification. For example, Russia restricted or

threatened to restrict poultry imports several times

over the past decade, justified in part by its zero tolerance for Salmonella contamination and the use of certain antibiotics in U.S. poultry production that are not

registered in Russia. Even after the United States made

changes to meet Russian demands, Russia imposed

import tariffs and quotas in 2003. These restrictions

and tariffs are crucial in terms of trade because Russia

is the world’s largest importer of broilers (FAS,

3/11/02). Ukraine continues to ban U.S. poultry even

after a protocol was negotiated that met its concerns

(FAS, 2003).

The twin goals of ensuring food safety and protecting

trade can be enhanced through transparent and immediate public responses to food safety crises, as well as upto-date prevention and monitoring efforts. Transparent

and immediate public response to food safety crises is

necessary to protect consumer confidence in the food

supply and in the government (Pickelsimer and Wahl,

2002). For example, consumer confidence in the UK

declined in 1996 when the British government reversed

its previous position that BSE was not related to human

illnesses. Given emerging food safety issues and the

spread of known problems to new regions (e.g., spread

of BSE to Japan and Canada), it is increasingly important for policymakers to anticipate foodborne hazards

and, if these hazards materialize, to launch control

measures that mitigate their effects on human health,

animal health, and international trade. Ideally, actions

should be commensurate with the food safety risks to

human and animal health. 

68 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

19 The Committee on Drug Use in Food Animals (1998) provides

examples of these producer groups, which include the National

Pork Producers Council, National Cattlemen’s Beef Association,

National Milk Producers Federation, American Sheep Industry

Association, American Veal Association, National Broiler Council,

National Turkey Federation, United Egg Producers, Catfish

Farmers of America, National Aquaculture Association, and U.S.

Trout Farmers Association. 
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Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 73
Summary

Outbreaks of foodborne illness in the United

States associated with imports of fresh produce

affect not only consumers and the growers of the

contaminated product, but also frequently other suppliers

to the U.S. market, including U.S. producers. Because

most produce is highly perishable, the United States

depends on seasonal imports for a year-round supply of

some items. Often by the time someone falls ill from an

imported product and an investigation identifies both the

product and its origin, that country may no longer be

exporting the product to the United States. For example,

a foreign grower may just supply the United States for a

brief market window before the U.S. season begins. Of

course, many foreign suppliers have much longer seasons. The negative publicity about an outbreak will often

affect whichever suppliers are selling their product at

that time—often U.S. producers—whether they had anything to do with the outbreak or not. 

The impact of a foodborne illness outbreak on trade

depends on whether foreign producers can quickly

correct the contamination problem and convince buyers that their product no longer poses a risk. This

chapter reviews outbreaks of foodborne illnesses associated with Guatemalan raspberries, Mexican strawberries (contaminated either in Mexico or the United

States), and Mexican cantaloupe. In the Mexican

strawberry case, after just one outbreak and an initial

collapse of trade, strawberry trade rebounded in the

following years. In the Guatemalan raspberry and

Mexican cantaloupe cases, the U.S. Food and Drug

Administration (FDA) refused to accept these products

into the United States after outbreaks in consecutive

years. The Guatemalan raspberry industry has never

really recovered from the experience although it is

now free to ship to the United States under a rigorous

food safety program. The impact of the ongoing cantaloupe problem on future trade is still unknown.

FDA, the Centers for Disease Control and Prevention,

the produce industry, retailers, and foreign governments have worked together to keep unsafe produce

off the market and resolve food safety problems. The

FDA's voluntary guidelines for good agricultural practices (GAPs) provide recommendations to growers,

both domestic and foreign, on how to reduce microbial

hazards. FDA emphasizes that GAPs only reduce the

risk of microbial contamination and cannot eliminate

the risk. If invited by a foreign government, FDA will

often visit an area associated with an outbreak to try to

identify practices that are inconsistent with GAP

guidelines. FDA also provides training in foreign

countries on GAPs. 

Many individual growers have responded to increased

concern about foodborne illnesses (and attendant

financial losses) by improving their food safety systems. Grower organizations have been instrumental in

developing better food safety and traceback systems to

protect the reputation of their particular crops. While

individual farmers might not want a contamination

problem traced to their operation, the industry as a

whole is more concerned with accountability.

Retailers, who face unwanted publicity in a foodborne

illness outbreak, have also taken the initiative by

demanding more stringent food safety programs from

their suppliers. Some demand that their produce suppliers have third-party audits to verify that they are

complying with GAP guidelines.

74 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Chapter 5

Produce, Food Safety, 

and International Trade

Response to U.S. Foodborne Illness Outbreaks

Associated with Imported Produce

Linda Calvin1

1 Agricultural economist with the Market and Trade Economics

Division, Economic Research Service.
Introduction

The U.S. food supply is one of the safest in the world

(Crutchfield and Roberts, 2000). In the mid-1990s,

however, outbreaks of foodborne illnesses linked to

microbial contamination of both domestic and imported

produce focused attention on the potential for contamination at the grower and shipper level (Tauxe, 1997).2

For example, in 1996 the potentially dangerous bacterium Escherichia coli O157:H7 was linked to

California lettuce associated with farm-level contamination. In the same year, a very large foodborne illness

outbreak was linked to imported Guatemalan raspberries contaminated at the farm level with the parasite

Cyclospora. The economic impacts of outbreaks made it

clear to the produce industry, particularly those sectors

associated with contaminated produce, that improved

food safety programs were necessary. The U.S. government also became more involved in produce food safety

at the farm and shipper level. 

In the United States, responsibility for food safety of

imported foods resides with USDA’s Food Safety and

Inspection Service (FSIS) and the U.S. Food and

Drug Administration (FDA). FSIS deals with meat,

poultry, and some egg products, and FDA covers all

other food products, including produce. Both agencies

require imported foods to meet domestic food standards. FSIS allows only imports from countries with

food safety systems it deems to be equivalent to those

in the United States, thus putting the burden for safety

on the exporting country. Unlike FSIS, FDA does not

have legal authority to require that imports of the

products it covers be produced with food systems

equivalent to those in the United States. 

Food safety concerns can focus on pesticide residues,

microbial and chemical contamination, and the effects

of biotechnology. FDA randomly tests both imported

and domestic produce for pesticide residues. FDA

also randomly tests chemical residues, although this

testing is much more limited in scope. Concern about

microbial contamination is relatively new.

Biotechnology, an important determinant of trade

flows for other agricultural products, is not yet a central concern for fruit and vegetables. Traditionally,

FDA has relied on inspections at the port of entry to

ensure safety of the products. While this worked well

for food safety issues such as detecting pesticide

residues exceeding U.S. tolerance levels, testing for

microbial contamination is a completely different

challenge. The FDA tolerance for microbial pathogens

is zero, so it would deny entry to any produce with

contamination that could be detected, but testing for

microbial contamination is not very successful.

Microbial contamination is often low level and sporadic so it can be difficult to detect. Also, if perishable

produce is held at the border while microbial tests are

completed, it may deteriorate in quality to the point

where it cannot be sold. In comparison, if produce has

pesticide residues that exceed the legal tolerance, it is

likely to be pervasive and contamination would show

up in random testing. FDA does targeted sampling for

microbial contamination when there are concerns

about a specific product.

In 1997, President Clinton announced the Produce and

Imported Food Safety Initiative, which called for additional resources to improve domestic standards and to

ensure that imports were equally safe (Crutchfield,

1999). Three broad areas of action were identified.

First, the President directed FDA to seek new legal

authority to require equivalence in food safety systems

in foreign countries (but there has been no change in

legislation). Second, the initiative targeted more

resources at improving inspection activities abroad by

providing technical assistance. This has been an important means of improving food safety abroad. Third, the

initiative focused on providing guidance to both

domestic and foreign producers on good agricultural

practices (GAPs). 

In 1998, FDA published voluntary guidelines for

both domestic and foreign producers on GAPs for

reducing microbial contamination (FDA, 1998).

Although voluntary, GAPs are now an important part

of the produce industry. FDA does not have mandatory food safety requirements with respect to microbial contamination for the fresh produce industry.

This situation provides incentives to the produce

industry to voluntarily adopt GAPs and ensure that

food safety does not become a bigger issue. FDA

and the produce industry have developed a good

working relationship and have made important

improvements in food safety. FDA could impose

mandatory food safety standards for fresh produce if

deemed appropriate. For example, in the late 1990s,

there were three foodborne illness outbreaks associEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 75

2 Shippers are the first marketers in the produce distribution chain

and are often involved with harvesting and packing produce, a

stage at which contamination may occur. Many shippers are vertically integrated grower-shippers.
ated with fruit juice—one E. coli O157:H7 outbreak

associated with apple juice and two Salmonella outbreaks associated with orange juice. Two people

died. In 2001, FDA published a final rule requiring

juice processors to use hazard analysis and critical

control point (HACCP) principles (FDA, 2001b).

FDA also requires HACCP for seafood processors.

These mandatory requirements also apply to

imported products.

FDA promotes adoption of GAPs as a means to minimize microbial contamination, instead of relying on

relatively ineffective testing at the border to detect

problem produce. According to FDA, even with

GAPs it is not possible to eliminate microbial contamination for produce although it is possible to

reduce the risk. For fresh and fresh-cut produce,

there is no effective microbial elimination step such

as pasteurization for milk. 

GAPs provide growers with a structure to evaluate different practices and their potential to reduce microbial

food safety hazards so they can develop a food safety

program tailored to their own operations (see box 5.1).

Many grower practices—such as water sampling or

worker hygiene programs—could reduce the risk of

microbial contamination. Each grower must evaluate the

benefits and costs of investing in risk-reducing practices. This assessment will vary by crop, environmental

conditions, and individual grower situation. 

It is not always clear how much additional investment in food safety practices is enough. A foodborne

illness outbreak may occur if a farmer cuts corners

and fails to adopt a practice considered standard in

the local industry. Other outbreaks may represent

cases where growers and scientists misjudge what 

is required to prevent problems and growers 

underinvest in food safety practices. The science and

tools available to growers to reduce the risk of contamination are still evolving. Of course, with uncertainty, growers may also overinvest in food safety

precautions. There is always the concern that a practice may be a technical but not an economic success.

Some segments of the produce industry are undoubtedly more advanced than others in their efforts to

reduce these risks, but there is no systematic survey

of growers to identify their progress.

This chapter examines one aspect of the food safety

issue, the private and public responses to U.S. foodborne illness outbreaks due to microbial contamination

associated with imported produce.3 Even when the

contaminated product is imported, the U.S. industry is

often affected and both domestic and foreign growers

need to take action to protect their economic well

being. The chapter begins with information on microbial contamination of produce and the role of produce

imports in U.S. consumption. Three examples of foodborne disease outbreaks follow which demonstrate

how growers, grower organizations, governments in

the United States and abroad, and retailers responded

to contamination problems. The analysis also includes

a brief look at the impact of contaminated imports on

trade. The three examples are: (1) imports of

Guatemalan raspberries associated with Cyclospora,

(2) imports of Mexican strawberries associated with

hepatitis A (contaminated either in Mexico or the

United States), and (3) imports of cantaloupe from

Mexico associated with Salmonella.

4 In each case, the

contamination occurred, or may have occurred, at the

grower or shipper level. Then the analysis turns to a

comparison of the private and public responses to food

safety problems demonstrated by the three case studies.

Concluding comments focus on lessons learned and

areas for future research.

Foodborne Illness Outbreaks

Despite heightened concern about food safety, the vast

majority of growers for the U.S. market, both domestic

and foreign, has never been involved in food safety 

76 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

3 This study does not examine pesticide residue contamination. A

study of U.S. winter vegetable imports from Mexico showed that

pesticide residue violations were relatively infrequent (Calvin and

Barrios, 1998). In 1997, FDA tested 3 percent of total shipments

through Nogales, Arizona, and only about 3 percent of the tested

products were in violation of pesticide residue standards. Of the

winter vegetables—tomatoes, bell peppers, cucumbers, eggplant,

summer-type squash, and snap beans—only snap beans had any

violations. Of course, the winter vegetable industry in Mexico is

well established. When Guatemala began exporting snow peas, a

nontraditional export, in the late 1980s, it had a serious problem

with pesticide residues that took several years to control. A program to pretest shipments in Guatemala to ensure they would pass

FDA inspections finally resolved the problem. 

4 Cyclospora is a protozoan parasite that causes cyclosporiasis, a

potentially debilitating diarrhea that can last for three weeks or

more. The disease is treatable and is only considered potentially

life threatening to those with compromised immune systems. The

hepatitis A virus causes liver disease. The bacterium Salmonella

causes salmonellosis, which is characterized by diarrhea, fever, and

abdominal cramps. Most people recover without treatment but it

can cause death in some cases when the infection spreads beyond

the intestines.
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 77

There are many sources of potential microbial contamination for produce and some regions will face more

challenges than others. Some of the major sources at

the grower and shipper level include: soil, water, green

or inadequately composted manure, dust in the air,

wild and domestic animals, human handling, and contaminated equipment (FDA, 2001e). Sources of water

contamination include water used for irrigating, mixing

with pesticides, washing and rinsing produce, and

making ice to cool produce. Different food safety practices can mitigate the chances of contamination. Other

factors unique to specific plants also affect the probability of contamination.

Good agricultural practices (GAP) principles provide growers with guidelines to reduce the potential

for microbial contamination of their products.

Guidelines cover growing, harvesting, sorting, packing, and storage operations. National-level guidelines on GAPs enhance the consistency and

scientific basis of food safety programs developed

by public and private institutions. Using GAPs

reduces but does not eliminate all risk—an unobtainable goal with current technologies. 

Growers and shippers are directed to evaluate their

operations in terms of water quality; manure/municipal biosolids; worker hygiene; field, facility, and

transport sanitation; and traceback capabilities.

Traceback is the ability to track food from the consumer point of purchase back to the grower.

Recommended practices are provided to mediate each

risk. Since there are numerous potential ways to

reduce risk, FDA encourages growers to pick the

most cost-effective combination of practices.

Therefore, two growers in different areas with different environmental conditions could both adhere to

GAP principles but use different methods to do so. 

GAP guidelines do not outline specific testing and

monitoring regimes because scientific data is lacking

for establishing more specific guidelines (FDA,

2001e). The GAP guidelines state “Water quality

should be adequate for its intended use. Where water

quality is unknown or cannot be controlled, growers

should use other good agricultural practices to minimize the risk of contamination.” The guidelines do

not specify how to measure whether water quality is

adequate; no one knows for sure and what is adequate

varies by crop. For example, irrigation water for a

crop that matures on the ground may need to be

cleaner than water for an orchard crop. 

Use of the GAP guidelines can be broken down into

three stages. First, growers and shippers can use GAPs

to evaluate their food safety system and assess needs.

Some large firms with food safety staff may evaluate

their own systems. Some smaller growers might hire a

third-party audit firm to do an evaluation. FDA does

not regulate third-party audit firms. In 2001, a FDA

report estimated the cost of an evaluation at $300-$500

per farm (FDA, 2001e). An evaluation would include a

review of the current food safety system and an assessment of what additional practices might be needed to

reduce the chance of contamination, including the documentation necessary to assure continuous compliance

with GAPs.

Once growers have a food safety system evaluation and

needs assessment, they may decide to adopt new practices to reduce risks. The cost of implementation

depends on the particular crop, the existing food safety

system, and the environment in which the growers

operate (e.g., some areas may have more water contamination problems to contend with than others). Some

typical practices that a farmer might adopt could

include: water testing; water treatment programs; development of a documentation system to corroborate practices and trace product; and provision of additional

hygiene facilities for workers. 

Growers may opt to have their food safety program

audited periodically by third-party audit firms. Some

retailers now require third-party audits to verify that

growers and shippers are in compliance with GAPs.

In 2001, FDA estimated the typical cost of an audit to

be similar to the cost of an evaluation, about $300-

$500 per farm (FDA, 2001e).

Box 5.1—Microbial Contamination and FDA’s Good Agricultural Practices (GAPs)
outbreaks. It is difficult to assess the exact incidence of

foodborne outbreaks associated with produce and how 

it has changed over time. The Centers for Disease

Control and Prevention (CDC) collect data on all

reported foodborne outbreaks. The average annual number of foodborne illness outbreaks associated with fresh

produce, both domestic and imported, more than doubled between 1973-87 and 1988-91, from 4 per year to

10 (Tauxe et al., 1997). The increasing trend appears to

have continued through 1997 (Sivapalasingam, 2002).

More recent data are not yet available. 

What does this trend indicate? The data are incomplete

so it is difficult to generalize about food safety outbreaks beyond saying the number reported has

increased. Researchers assume that most sporadic cases

and many outbreaks of foodborne diseases are unreported since a case cannot be reported unless individuals seek medical care. Many outbreaks are never

definitively linked to a particular contaminated product

or source. In the case of perishable fruit and vegetables,

by the time the authorities begin to investigate, the

physical evidence has usually been consumed or discarded. As a result, it is not possible to say anything

authoritative about the incidence of contamination for

various types of fruit and vegetables. It is also not possible to say whether imported produce is any more prone

to food safety problems than is domestic produce (Zepp

et al., 1998).

The data also include outbreaks associated with contamination at all levels. Produce can be contaminated

at the grower or shipper level, at some intermediate

level of the distribution system, or at the final point of

service (retail store, foodservice establishment, or private residence, etc.). Data are limited and inconclusive

regarding what percent of outbreaks are attributable to

contamination at the grower or shipper level compared

with other points along the distribution chain, or

whether contamination at any one level is increasing. 

Efforts are underway to further investigate the incidence of food safety problems in produce. As part of

the Produce and Imported Food Safety Initiative,

USDA’s Agricultural Marketing Service (AMS) is

implementing the Microbiological Data Program, a

nonregulatory program that will provide baseline

information on microbial contamination of produce. A

select group of produce items, both domestic and

imported, are being tested for pathogenic E. coli and

Salmonella (AMS, 2001). There is industry concern,

however, that since USDA is testing at terminal markets and chain store distribution centers, it will not be

clear where any detected contamination occurred

(Produce News, 2002). A problem might be mistakenly attributed to the farm level when it could have

occurred somewhere else along the distribution chain.

On the other hand, a finding of no contamination at

the terminal market and chain store distribution center

level would shift concern towards problems at the final

point of service.

For the Produce and Imported Food Safety Initiative,

FDA collected data on the incidence and extent of

pathogen contamination (FDA, 2001a). Beginning in

March 1999, FDA tested domestic and imported produce items for three microbial pathogens—Salmonella,

Shigella, and E. coli O157:H7.5,6 Salmonella and

Shigella were both found in imports and domestic

products, but no E. coli O157:H7 was found in either.

The focus of these studies was to identify problems

resulting from failures to implement adequate GAPs

and good manufacturing practices (GMPs).7 The testing program was not intended to determine whether

imported or domestic produce is more prone to safety

problems since the statistical properties of the samples

did not allow broad conclusions about general food

safety of produce or comparisons between countries. 

Policymakers and researchers are concerned about

why reported food safety outbreaks associated with

produce are increasing. Better reporting due to

improved outbreak investigations and better diagnostics have undoubtedly contributed to some of the

increase (FDA, 2001e). Some scientists, however, do

not believe that better reporting alone explains the

increased level of outbreaks (Tauxe et al., 1997). It is

difficult to sort out the competing factors. 

78 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

5 The Shigella bacteria causes shigellosis, an infectious disease

characterized by diarrhea, fever, and stomach cramps. People with

severe cases can usually be treated with antibiotics. Those with

milder cases will usually recover without antibiotics. 

6 For the imported produce survey, FDA sampled broccoli, cantaloupe, celery, cilantro, culantro, loose-leaf lettuce, parsley, scallions, strawberries, and tomatoes from 21 countries. The crops

were selected based on a combination of five factors that contributed to overall food safety risk: previous association with outbreaks, structural characteristics that might provide a particularly

hospitable environment for bacteria, growing conditions, degree of

processing, and importance in U.S. consumption (FDA, 2001a).

7 GMPs are FDA regulations for food processors. FDA recommends firms packing raw, intact fruit and vegetables use GMPs,

but they are not required to do so. Firms packing fresh-cut products, like bagged salads, are required to use GMPs.
One explanation for increased foodborne illnesses is new

and emerging pathogens. Several outbreaks in the 1990s

were due to these pathogens, and scientists had to

develop new practices to avoid contamination. The

microbial pathogen E. coli O157:H7 was identified in

1982 and was initially associated with ground hamburger.8 In the early 1990s, E. coli O157:H7 was first

associated with a number of produce items. The parasite

Cyclospora was described definitively only in 1994 and

has been linked to numerous outbreaks since.

Cyclospora has only been associated with a few products—raspberries, basil, and lettuce—although many

cases could not be traced to a particular product.

Another potential explanatory factor behind the rise in

outbreaks attributed to produce is the change in U.S.

consumption habits. U.S. per capita consumption of

fresh fruit and vegetables (not including juices and other

processed products) increased from 249 pounds in 1981

to 339 pounds in 2000, an increase of 36 percent. The

types of food consumed have also changed. The typical

grocery store carried 345 produce items in 1998, compared with 173 in 1987 (Calvin et al., 2001). 

Retailers now routinely provide produce items that

were once considered seasonal on a year-round basis.

Most produce is highly perishable and cannot be

stored to provide a year-round supply, so imports are

important. However, even storable produce is sometimes imported; apple imports provide consumers with

different varieties and qualities (e.g., fresh-harvest

apples from Southern Hemisphere countries during the

spring versus stored apples). In 2000, imports

accounted for 19.5 percent of fresh fruit consumption

(excluding bananas), up from 3.1 percent in 1975.9

Similarly, in 2000, imports accounted for 13.6 percent

of fresh vegetable consumption (excluding fresh potatoes), up from 5.7 percent in 1975 (table 5.1). 

Bananas top the list of per capita fruit consumption in

the United States, with imports accounting for 99.6

percent of consumption. Likewise, 76.1 percent of

pineapples, another tropical product, are imported. For

a storable crop like apples, imports are 7.2 percent of

consumption. For grapes, which are now available

every month of the year, the import share increased

from 5.9 percent in 1975 to 44.1 percent in 2000. For

the vegetable and melon category, 37.4 percent of cantaloupe consumption was imported in 2000, up from

12.4 percent in 1975. Less than 1 percent of lettuce is

imported because it can be produced year-round

domestically. Tomatoes, bell peppers, and cucumbers

have high import shares due largely to winter imports

from Mexico and increasing greenhouse imports, particularly from Canada.

There is no reason, however, to assume that imports

are more prone to food safety problems than domestic

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 79

8 One of hundreds of strains of the E. coli bacterium, E. coli

O157:H7 produces a powerful toxin that can cause severe illness.

Infection often produces bloody diarrhea, but most people recover

without antibiotics or other specific treatment. Some people, particularly children and the elderly, may develop hemolytic uremic

syndrome, a life-threatening disease that causes kidney failure. 

9 Data are not true consumption data from consumer surveys but

rather disappearance data (production for the fresh market plus

imports and minus exports equals disappearance—a proxy for

consumption).

Table 5.1—Fresh fruit and vegetable consumption

and imports

Per capita Imported share of

consumption consumption

Item 2000 1975 2000 1975

— Pounds farm weight — — Percent —

Fruit:1

Bananas 28.4 17.6 99.6 99.9

Apples 17.4 19.5 7.2 2.2

Oranges 11.7 15.9 8.5 0.8

Grapes 7.3 3.6 44.1 5.9

Peaches 5.5 5.0 6.4 0.3

Grapefruit 5.1 8.4 3.0 0.6

Strawberries 5.0 1.8 5.8 8.9

Pears 3.2 2.7 20.6 3.5

Pineapples 3.2 1.0 76.1 48.0

Tangerines 2.8 2.6 25.7 9.5

Vegetables and melons:2

Potatoes 47.2 52.6 5.7 1.2

All lettuce 32.0 23.5 0.7 0.0

Onions 18.3 10.5 9.3 4.0

Tomatoes 17.6 12.0 32.9 21.9

Watermelon 13.9 11.4 11.5 5.9

Cantaloupe 10.8 5.2 37.4 12.4

Carrots 10.4 6.4 5.5 4.4

Sweet corn 9.2 7.8 2.1 0.0

Cabbage 9.1 8.9 3.5 0.3

Bell peppers 7.0 2.5 19.6 12.6

Cucumbers 6.4 2.8 41.4 21.6

Broccoli 6.0 1.0 6.3 0.0

1 For citrus, the year reflects the end of the harvest; for noncitrus,

the beginning of the harvest.

2 ERS traditionally reports melons with vegetables. Consumption is

on a calendar-year basis.

Source: Fruit and Tree Nut Yearbook, and Vegetable and

Specialties Yearbook, ERS, USDA.
produce. Many growers in foreign countries specialize

in exports. For example, in the Mexican winter vegetable industry, growers are producing to comply 

with relevant U.S. government standards (pesticide

residues, microbial contamination, etc.) as well as

demands of their U.S. marketer and final buyers such

as a particular retail chain. Growers are well aware of

the food safety requirements. If prices are favorable,

they may sell some of their production to the domestic Mexican market but produce grown in Mexico for

the domestic market could not easily be sold into the

U.S. market. 

Much of the U.S. and foreign produce industry has

developed a global focus. A network of business relationships tie domestic and foreign producers and

encourage high standards of food safety (see box 5.2).

However, with improvements in communications,

storage technology, and transportation, it is possible

to acquire commodities from many new areas. In

recent years, imports have arrived from many nontraditional suppliers. The Caribbean Basin Initiative and

the Andean Trade Preference Act have eliminated tariffs on many agricultural items and encouraged

imports from these areas. The share of total volume

of fresh produce imports (excluding bananas) from

three traditional suppliers—Mexico, Chile, and

Canada—dropped from 81 percent in 1990 to 72 percent in 2000. Less traditional suppliers have

increased their market share of imports. For example,

in 1990 only 10 percent of asparagus imports came

from Peru, compared with 47 percent in 2001.

Similarly, Costa Rica and Guatemala accounted for

17 percent of cantaloupe imports in 1990 and 60 percent in 2001.

Another consumption trend that may affect outbreaks is

the growing share of food eaten at foodservice establishments, potentially increasing the number of people handling produce before it is eaten (and the chance of

contamination). In 2001, 47.4 percent of total food

expenditures went to the foodservice sector, up from

33.4 percent in 1970 (ERS, 2002).

Three Examples of Foodborne

Illness Outbreaks Associated

With Imports

Three case studies examine recent food safety problems: (1) disease outbreaks due to Cyclospora contamination of Guatemalan raspberries, which began in 1996,

(2) the 1997 outbreak of hepatitis A associated with

strawberries from Mexico, and (3) the 2000-2002 outbreaks due to Salmonella contamination associated with

Mexican cantaloupe. By coincidence, all three cases

deal with fruit but this does not imply that vegetables

are not also associated with foodborne illnesses. 

Raspberries and Cyclospora

In the spring and early summer of 1996, CDC and

Health Canada received reports of more than 1,465

cases of foodborne illness due to Cyclospora in the

United States and Canada (for more details on the raspberry case, see Calvin et al., 2002). There were no fatalities. This was a very large outbreak compared to others

associated with fresh produce. On June 8, 1996, the

Texas Department of Health issued a health warning

that erroneously identified the source of the problem as

California strawberries, then at peak production. On

July 18, 1996, the CDC and the Ontario Ministry of

Health issued a statement reporting that Guatemalan

raspberries were the most likely source of the outbreaks.

The California Strawberry Commission estimated that

this false alarm led to $16 million in lost revenue to

growers in the central coast of California during the

month of June (Mishen, 1996).

By the time raspberries were identified as the source 

of contamination, the Guatemalan raspberry spring season was over so no immediate regulatory action was

taken. FDA and CDC sent a team of investigators to

Guatemala later that year to observe growing conditions

and to better understand the berry industry there.

Because the disease was relatively new to scientists, no

one knew which raspberries were contaminated, how

they became contaminated, or how to solve the problem. The CDC concluded, after considering the many

differences in various aspects of the distribution systems

for the implicated raspberries, that simultaneous and

persistent contamination on multiple farms was the

most likely explanation for the outbreak (Herwaldt et

al., 1997). Subsequent research, based on the events for

which well-documented traceback data were available,

indicated that the 1996 outbreak could have been

accounted for by as few as six farms (Herwaldt et al.,

1999). Traceback is the ability to track food from the

consumer point of purchase back to the grower. FDA

provided advice/technical assistance and suggested

using GAPs (then under development), GMPs, and sanitation standard operating procedures.

80 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
A grower organization, the Guatemalan Berry

Commission (GBC), developed a system to characterize

farms according to risk and allowed only certain farms

to export. However, the plan had no enforcement mechanism for the 1997 spring season and another outbreak

of foodborne illness (with no fatalities) in the United

States and Canada was again traced to Guatemalan

raspberries. Either the new practices were not completely implemented, were ineffective, or were not

directed at the true source of contamination (Herwaldt

et al., 1999). After consulting with FDA, the GBC voluntarily stopped raspberry exports to the United States

on May 30, 1997. Guatemala estimated that stopping

exports in the middle of the spring season resulted in a

loss of $10 million in income (Powell, 1998). 

After a second season with Cyclospora contamination problems, both the GBC and the government of

Guatemala realized that more stringent controls and

enforcement were required. In November 1997, the

Guatemalan government created a commission to

lead the effort to improve food safety. This gave the

GBC’s certification process enforcement power that

was critical to making any export plan manageable.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 81

A firm importing produce into the United States to

supply the offseason market will want a product that

is equal in quality to their own to maintain their reputation. This takes planning. The pressure to coordinate year-round production, often in far-flung

locations, and provide food safety assurances may

favor both horizontal and vertical integration or coordination (Wilson et al., 1997; Hennessey, 1996). For

example, a U.S. grower-shipper may decide to collaborate with a foreign grower-shipper to provide a year

round supply with particular characteristics—horizontal integration or coordination. A U.S. shipper

may decide to collaborate with a foreign grower for

the same reason—vertical integration or coordination. 

U.S. firms have many types of interests in foreign

production to expand their season. For the U.S. firm,

it is important that the foreign product be consistent

with the quality their firm sells from domestic

sources. For example, a U.S. firm may grow product

on its own farms in a foreign country for sale in the

U.S. market. A U.S. firm might also have a joint venture with a firm in a foreign country to produce a

crop to be sold in the United States. In some cases,

U.S. firms may merge with a foreign supplier. Many

U.S. shippers and grower-shippers also market for

foreign growers and charge a sales commission.

Some U.S. grower cooperatives have foreign members who must meet domestic production standards 

These suppliers must develop relationships with reliable foreign growers to provide these products.

Suppliers may travel frequently to foreign production

regions to cement the relationship with their growers.

The suppliers may send agronomists to check on production and crop conditions. Some even have staff living in foreign countries. The stakes are high when

procuring product from another country. In any of

these situations, if the product has food safety problems and cannot be sold, the U.S. supplier may not

have adequate supplies for its customers, a serious

problem in the competitive produce industry. On the

other hand, selling a substandard product may damage

the firm’s reputation if a foodborne illness outbreak is

traced back to the firm. The stakes are also high for the

foreign producer too. Many foreign countries have

very specialized produce industries geared almost

exclusively towards exports. If products are not acceptable in the U.S. market they often have few alternative

markets. For example, some of the products grown in

Mexico for export to the U.S. market, such as bell peppers, cherry tomatoes, and eggplant, have virtually no

alternative domestic market. 

Large foreign suppliers are following the same trend

in horizontal and vertical integration in reverse. For

example, some large Mexican and Chilean winter

suppliers are expanding into production or joint ventures in the United States and other countries to provide a year-round supply for their U.S. buyers.

Foreign growers have also vertically integrated by

acquiring marketing operations in the United States.

This provides foreign growers with the ability to better market fruit and vegetables since they directly

control the quality of their production. For example,

many of the shippers located in Nogales, Arizona,

where winter vegetables from Mexico enter the

United States, are really just the marketing arms of

large Mexican growers. In the 1996/97 season, 63

percent of the tomatoes in Nogales were sold by

these vertically integrated, Mexican-owned firms

(Calvin and Barrios, 1998).

Box 5.2—Ties That Bind the Domestic and Foreign Produce Industry
In December 1997, FDA, not yet convinced that

Guatemala had adequately addressed the Cyclospora

contamination problem, issued an import alert for

Guatemala for the following spring season, putting

all shipments from the country under detention without physical examination (DWPE) and denying

imports entry into the United States. Denying all

imports of raspberries based on country of origin

rather than rejecting products from a specific shipper

with problems was an unusual response, and one

used only after all other means of resolving the

problem were exhausted. Generally, FDA collects

random samples at the border, preventing entry of

products that fail inspections. FDA can also detain a

product without physical examination if the shipper

has failed previous FDA port inspections or if FDA

has other information indicating that the product

might violate standards. The product may remain in

DWPE status until the shipper proves that the product meets FDA’s standards.

Denying imports without physical evidence was very

rare in 1997, and in this case the import alert was

based only on epidemiological evidence about past

outbreaks and FDA observations on current production practices. Not until 2000 did FDA actually

observe Cyclospora on a Guatemalan raspberry (Ho

et al., 2002). Since 1997, FDA has become less

reluctant to deny imports on epidemiological evidence alone.

FDA, Health Canada, the Canadian Food Inspection

Agency, and Guatemalan officials consulted to consider improved intervention strategies for raspberry

production. Beginning in the spring 1999 season, the

United States allowed entry of raspberries produced

under the Model Plan of Excellence (MPE), a joint

program of the GBC and the government of

Guatemala. Farmers are only allowed to join the MPE

program and export by complying with a detailed program of food safety practices and successfully passing

Guatemalan government inspections and FDA audits.

Food safety practices include the use of filters for

water and better worker hygiene facilities. The program also requires a code applied to each clamshell of

raspberries, which allows traceback to an individual

grower. Traceback and traceforward capability is critical in the event of a food safety problem. These tools

can be used to revoke the export authority of any firms

associated with a food safety problem in order to

maintain the integrity of the MPE. In some cases,

traceback can be used to eliminate Guatemalan raspberries as a potential source of contamination. In

spring 1999, there were several outbreaks in the

United States and Canada due to Cyclospora but the

GBC could show, using its traceback and traceforward

capabilities, that Guatemalan raspberries were not

served at the events associated with the outbreaks. In

2000, there were two outbreaks associated with

Cyclospora contamination of raspberries traced to one

Guatemalan farm that was consequently removed from

the MPE program. There have been no further outbreaks associated with Guatemalan raspberries since

2000. In 2002, only three raspberry growers remained

in the MPE program. In 1996, before the contamination problem began, the number of growers was estimated to be 85. 

The MPE program is a process standard. GAPs, for

example, recommend that water quality be adequate for

its intended use, but the MPE program requires farmers

to use a nominal 1 micron filter as a prefilter to remove

particulate matter and an absolute 0.45 micron filter for

water used on plants and for employee hygiene. When a

food safety problem becomes intractable, a process standard may be necessary rather than relying on the more

flexible GAPs. Some firms might have been able to produce a safe product without the expensive filters, so a

process standard may introduce inefficiency. However,

the MPE process standard may have resolved the food

safety problem faster, reducing economic losses, than if

the industry had relied on voluntary GAPs.

The problem with raspberries affected other products.

U.S. demand for Guatemalan blackberries also declined;

blackberries were never cited as a definitive cause of any

foodborne illnesses in the United States, although they

were in Canada. In addition to possible food safety concerns, blackberries faced decreased demand because

retailers prefer to buy a range of berry products all from

one buyer if possible. When Guatemala could provide

only blackberries, many buyers purchased berries from

other regions that could provide the desired mix of

berries. The blackberry industry has, however, fared

much better than the raspberry industry; in 2001, U.S.

imports of Guatemalan raspberries were 16 percent of

1996 levels and blackberries were 55 percent of their

1996 level. Guatemala has a voluntary food safety program for the much larger blackberry industry but it is

much less rigorous than the MPE.

When confronted with the food safety problems in

Guatemala, many berry shippers made alternative

plans. One Guatemalan shipper closed all his domestic

82 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
operations and began production in Mexico. A large

Chilean firm that ships to the U.S. and Europe had

raspberry operations in Guatemala but after the first

outbreak this firm stopped shipping raspberries from

Guatemala and began to develop production in

Mexico. This change of strategy might have occurred

even without the Cyclospora problems; it is cheaper to

transport raspberries from Mexico by truck than from

Guatemala by airfreight. 

While Guatemala worked to increase food safety standards, other competitors, particularly Mexico, made

inroads into its spring and fall market niches in the

U.S. market (fig. 5.1). Prior to the 1996 outbreaks, the

size and growth of Guatemalan and Mexican exports to

the United States were very similar. With outbreaks in

1996 and 1997, many U.S. buyers decided to purchase

raspberries elsewhere. Some buyers still feel that there

is no reason to take a risk when there are alternate

sources of raspberries. Others are reassured by the

MPE, arguably the strictest industrywide program for

raspberry production in the hemisphere.

In addition to the changes in Guatemala, the outbreaks

led to improved private food safety programs for raspberry producers in Chile, Mexico, and the United

States (although none of these countries were associated with Cyclospora contamination of raspberries).

After the Cyclospora problem had such an adverse

impact on the California strawberry industry, the

California Strawberry Commission (CSC) developed a

food safety program. California raspberry shippers

(and their growers) also use this plan since all raspberry shippers also market strawberries.

Strawberries and Hepatitis A

In March 1997, more than 200 schoolchildren and

teachers in Michigan contracted hepatitis A. Cases

were reported in other States as well (Hutin et al.,

1999). It was quickly determined that the source of the

contamination was frozen strawberries processed by a

firm in California. The processor had used fresh strawberries shipped to the United States in April 1996, a

year earlier, from Baja California, Mexico. Most of the

Mexican berries had been sold in the fresh market and

some were sold to the processor (FAS, 1997). FDA

was able to determine that California-grown strawberries were not the source of contamination. However,

FDA could not determine whether the Mexican-growers fruit was contaminated in Mexico at the farm level

or at the California processor. The product was not

contaminated in Michigan. 

General concerns about the safety of fresh strawberries

affected demand for berries from all sources. The

monthly price received by growers fell 40 percent from

March to April in 1997, compared with an average

decline of 16 percent for the years 1990-1996 and 1998-

2000. Initial estimates from the CSC put losses at $15

million with later estimates at $40 million, but both estimates are subject to debate (Richards and Patterson,

1999). As some of the California growers had joint 

ventures in Mexico, they shared in the financial losses

there too.

The 1996 outbreak associated with Cyclosporacontaminated raspberries, when California strawberries

were initially and incorrectly implicated, increased the

strawberry industry’s awareness of their vulnerability to

food safety problems. Following that outbreak, the CSC

began developing the voluntary Quality Assurance Food

Safety Program to help producers improve their food

safety standards and mitigate microbial contamination.

The CSC worked with FDA and the California

Department of Health Services to develop the program.

This was one of the earliest good agricultural practices

programs for the produce industry that focused on mitigating microbial contamination. An industrywide food

safety program is expensive and the CSC has spent

about $250,000 to date. 

California standards for production practices and documentation were already fairly rigorous, but the CSC’s

Quality Assurance Food Safety Program strengthened

both. Traceback is a critical part of the voluntary program. If there is a problem, the industry wants to be

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 83

Figure 5.1

U.S. imports of raspberries, 1990-2001

Metric tons

Source: U.S. Department of Commerce.

Mexico

Guatemala

1990 92 94 96 98 2000

0

200

400

600

800

1,000

1,200

1,400

1,600

Chile
able to say the product is not from California or trace

the product back to the field and isolate the problem

farm from the rest of the industry. Growers use a variety

of traceback systems. The best systems include information on shipper, date, field, and picker on each box.10 It

is not enough to just have safe products; growers must

be prepared to quickly demonstrate their food safety

program in the case of an outbreak. The Quality

Assurance Food Safety Program encourages farmers to

always have all their documents regarding food safety

ready in the case of emergency. This includes documents regarding water, soil, and any fruit testing; pesticide and fertilizer use; and records of hygiene practices. 

This program was introduced in November 1996 and

was in effect, although still in its infancy, when the

strawberry problem occurred in 1997. Although the contaminated product was frozen strawberries, consumer

confidence in fresh strawberries was also shaken. In

response to a second year of media scrutiny, the CSC

was prepared to deflect unwanted attention from their

industry. The CSC announced that fresh California

strawberries were not responsible for the outbreak and

that because growers were using a sophisticated food

safety program they were unlikely to ever be responsible

for such an outbreak. Researchers estimated the impact

of positive and negative publicity in this case. Prices

responded more strongly to bad news than good news,

so it is very important to prevent or stop negative publicity as soon as possible (Richards and Patterson, 1999).11

Before the outbreak of hepatitis A associated with strawberries, the growers in Mexico were members of the

California Strawberry Commission. After the outbreak,

the Commission decided to limit membership to

California producers to maintain the California focus

and a consistent message in its marketing program.

However, because the Baja California and California

strawberry industries are so integrated, with growers in

Mexico marketing through California shippers, the

Mexican producers still benefited from the CSC’s food

safety research.

Although it was never proven that the contamination

occurred in Mexico, the outbreak had a serious impact

on the Baja California, Mexico industry. The United

States imports very small amounts of fresh strawberries—just 6 percent of total U.S. consumption in

2001—and almost all of that is from Baja California,

Mexico. The Baja California season runs from January

to July, with the highest production typically in April.

Baja California production augments the low winter

supply in the United States. Figure 5.2 shows the

importance of Mexican strawberries during the winter

for firms offering a year-round supply. 

The publicity surrounding the hepatitis A outbreak had

an immediate effect on fresh strawberry shippers from

Baja California. Figure 5.3 shows the precipitous decline

in fresh strawberry shipments from Mexico in April

1997, compared with 1996. Due to the collapse of market demand in the United States, the primary market for

Baja California producers, U.S. shippers told their

Mexican growers to stop harvesting, and about 200

hectares of strawberries in Baja California were left

unharvested (out of 563 planted hectares). 

In response to the outbreak, the Baja California strawberry growers and their local grower organization

established more stringent food safety standards

(FAS, 1998). Since most of their production is

exported, the growers needed to ensure their product

would be accepted in the United States. Growers

started using third-party audits immediately for strawberries as well as other produce items. Many of the

large U.S. third-party audit firms have operations

abroad in important growing areas. Some growers

84 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

10 In the case of strawberries, information on the picker was fairly

easy for many shippers to incorporate into their traceback programs. Because the strawberry industry uses an hourly wage as

well as a piece-rate payment, the industry already had to be able to

tie product to individual pickers.

11 Two other aspects of the outbreak kept the news in the public

eye. The processor illegally sold the frozen berries as U.S.-grown

berries to the National School Lunch Program, which requires

domestic product (Richards and Patterson, 1999). Also, many

schoolchildren were immunized against hepatitis A as a precautionary measure when there was concern that some of the contaminated product might have been served in Los Angeles area schools.

Figure 5.2

U.S. monthly strawberry shipments, 2001

1,000 cwt

Source: Agricultural Marketing Service, USDA.

Mexico

Central

California

Jan. Mar. May July Sep. Nov.

0

500

1,000

1,500

2,000

2,500

3,000

California

Mexico

Florida
adopted the CSC’s food safety program. In an integrated industry, new practices in the United States are

quickly adopted in Baja California. 

FDA officials went to the California processor and the

Mexican strawberry fields to inspect operations but

results regarding the origin of the contamination were

inconclusive. FDA provided training on GAP recommendations that were just being developed. These recommendations provided guidelines similar to those of

the CSC program. The Mexican state-level department

of agriculture was instrumental in disseminating information on FDA’s GAP recommendations to growers.

Since that time, they have also hosted FDA and the

California Department of Food and Agriculture,

among others, for classes on food safety (Avendaño,

2002). At the time of the outbreak, there was no effective way to test for the presence of hepatitis A on

strawberries so there was no increased microbial surveillance specifically targeted at this pathogen. FDA

was also involved with the recall of frozen strawberries and processed products made with the berries. In

the case of produce consumed in fresh form, there is

rarely any product to recall by the time an outbreak is

detected and the source is identified. 

Although fresh strawberry imports from Mexico in

1997 were only 47 percent of 1996 levels, imports in

1998 increased to 86 percent of the earlier level. In

1999, U.S. imports of fresh strawberries from Mexico

were at record levels. This outbreak had only a shortrun impact on fresh trade.12 Apparently U.S. shippers

were confident that their Mexican strawberry growers

had taken adequate precautions. 

Cantaloupe and Salmonella

In 2000, 2001, and 2002 there were outbreaks of

Salmonella associated with Mexican cantaloupe.

Mexico exports cantaloupe from various regions during its long export season; in each case, contaminated

cantaloupe came only from one region in the south.

While Mexico only supplied 7.2 percent of total U.S.

consumption in 2001, Mexico and Central America are

the major suppliers during the winter season (fig. 5.4

shows suppliers in 1999, the last year of trade without

Salmonella contamination problems).

In 2000, cantaloupe from southern Mexico were implicated in a Salmonella poona outbreak. Forty-seven

people became sick in March and April and by late

May cantaloupe was implicated (Anderson et al.,

2002). The outbreak occurred during the spring when

Mexico ships a large volume of cantaloupe to the U.S.

market. By the time the outbreak was traced to cantaloupe, the Mexican season was coming to a close.

U.S. producers then bore the brunt of consumer backlash against cantaloupe. The outbreak was traced to a

particular shipper in Arizona selling cantaloupe from

southern Mexico. FDA issued an import alert for this

shipper and one farm. In the fall, FDA visited the farm

in southern Mexico. Although scientists are more

familiar with Salmonella than emerging pathogens like

Cyclospora, they cannot always determine exactly how

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 85

Figure 5.3

Strawberry shipments from Mexico, 1996-1997

1,000 cwt

Source: Agricultural Marketing Service, USDA.

1997

1996

Jan. Mar. May July Sep. Nov.

0

50

100

150

200

250

12 U.S. imports of frozen strawberries from Mexico were higher in

1997 than in the previous year. Frozen strawberries come from

central Mexico and were apparently not affected by concerns about

food safety problems in Baja California.

Figure 5.4

U.S. cantaloupe supply, 1999

1,000 cwt

*Central California shipments are estimated.

Source: Agricultural Marketing Service, USDA.

Jan. Mar. May July Sep. Nov.

0

1,000

2,000

3,000

4,000

Mexico

Texas

Central

America

California Desert

Central

California*

Arizona

Rest of

the world
the contamination occurred and how to definitively

resolve the problem. The primary host for Salmonella

is animals, followed by humans. A firm shipping product contaminated with Salmonella is most likely failing to follow GAPs and GMPs. FDA prepared an

adverse findings report, which identified farm activities that were inconsistent with GAPs and GMPs; FDA

does not tell a farmer how to fix the problem. When

the distributor provided documentation demonstrating

corrective actions taken to respond to FDA’s adverse

findings, the import alert was lifted and the firm and

farm resumed exporting to the U.S. market. 

In late spring 2001, two additional outbreaks of

Salmonella attributed to cantaloupe occurred (first

Salmonella poona and then Salmonella anatum). Fifty

people were sickened and two died from Salmonella

poona (Anderson et al., 2002; FDA, 2001c). Fewer

people were sickened in the Salmonella anatum outbreak. Although Salmonella can cause serious and

sometimes fatal infections in young children, frail or

elderly people, and others with weakened immune systems, healthy people who become infected generally

experience less severe medical problems. Based on the

traceback investigation, FDA determined that the contaminated cantaloupe in 2001 came from the same farm

in Mexico and shipper in Arizona that were implicated

in the 2000 outbreak. The firm is a large shipper of

winter melons from Mexico and has been in the business for 30-40 years (The Packer, 2001). Either implementation of the new practices was inadequate or the

changes failed to address the problem. Again, by the

time cantaloupe from Mexico were determined to be

the culprit, most of the Mexican shipping season was

over. FDA announced that anyone who had any cantaloupe from this company should remove it from sale,

and the company issued a recall of its cantaloupe.

Growers from northern Mexico were still selling small

volumes to the United States. Some shippers in Arizona

told their Mexican growers to sell to the Mexican market. On May 25, 2001, FDA issued an import alert for

the distributor and grower that is still in effect in early

2003. The firm cannot ship cantaloupe to the United

States but it can still ship honeydew melons. 

In May 2002, an outbreak of Salmonella poona in the

United States and Canada was associated with

Mexican cantaloupe shipped through McAllen, Texas.

Fifty-eight cases were identified (Anderson et al.,

2002). The importing firm issued a voluntary recall

and FDA issued an import alert (FDA, 2002a). This

was the third season of outbreaks traced to southern

Mexico. The Mexican government is investigating the

source of contamination. 

U.S. cantaloupe imports from Mexico in the 2001-

2002 season were 64 percent of the previous season’s

volume (fig. 5.5). However, one large multinational

firm’s decision to move operations to Central America

accounts for at least some of the decline. Other factors

behind declining imports from Mexico include production problems and increasing input costs. Honeydew

imports in 2001-2002 were 97 percent of the previous

season’s volume. Unlike the case in Guatemala where

problems with raspberries affected demand for blackberries, commercial buyers do not seem to be particularly worried about honeydew melons from Mexico.13

Repeated outbreaks within an industry prompt several

concerns. First, the industry fears that when people get

sick, investigators may immediately, and incorrectly,

focus on the product with a history of trouble. Second,

the produce industry is concerned that FDA might issue

a consumer warning about eating the contaminated produce.14 Third, growers are concerned that if a problem

looks like it affects more than a few growers, the FDA

might decide to initiate an import alert against all producers from a particularly country, as in the case of

Guatemalan raspberries. Fourth, there is concern that an

ongoing problem could hurt the reputation of other

products from the same region. Fifth, FDA introduced a

mandatory food safety program for fruit and vegetable

juices after three outbreaks. FDA always has the option

of making food safety programs mandatory—something

most growers would like to avoid. 

The California cantaloupe industry’s efforts to promote

food safety predate the 2000-2002 Salmonella outbreaks

associated with Mexican cantaloupe. Over the years,

cantaloupe has been associated with several other foodborne disease outbreaks. Outbreaks of Salmonella in the

86 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

13 Although all field-grown melons mature on the ground and are

therefore exposed to potentially contaminated soil and irrigation

water, cantaloupe appear to be particularly susceptible to microbial

contamination, perhaps because of the rough webbing on the rind,

which may harbor pathogens (FDA, 2001a). Smooth-skinned honeydew melons, which are often grown in similar areas, appear to

be less prone to contamination problems. 

14 Beginning in 1995, there were numerous outbreaks traced to

sprouts that the industry could not seem to resolve. In 1998, FDA

warned high-risk groups to avoid eating raw alfalfa sprouts. Then

in 1999, FDA broadened the warning to include all consumers, not

just those at high risk, and all types of raw sprouts (FDA, 1999).

This warning was repeated in 2002 and expanded to include lightly

cooked mung bean sprouts (FDA, 2002c).
United States in 1990, 1991, and 1997, and in Canada in

1991 and 1998 were traced to cantaloupe (FDA, 2001d).

In 1991, the news about contaminated cantaloupe

emerged in August, when half of the large Central Valley

crop in California is shipped (fig. 5.4). The U.S. cantaloupe industry initiated a food safety program called

the “Melon Safety Plan” (Tauxe, 1997). Once the crisis

was over, however, the program ran out of money and

sputtered to a stop. 

Since 1998, the California Melon Research Board,

which represents all California melon producers,

except watermelon growers, has spent more than

$300,000 on funding melon food safety research at the

University of California at Davis. Growers who

remember the economic chaos of the 1991 outbreak

and are concerned about the potential impact of any

new food safety problems fund the research. This

group of California growers, with the largest cantaloupe production in the United States, views this

investment in food safety as critical for the reputation

of their industry. This research focuses on California

cantaloupe and while the general principles of this

research will be widely applicable, the specifics will

not. California melons are mostly field packed and

forced-air cooled. In other parts of the United States,

Mexico, and Central America, shed packing and cooling with cold water or ice are more common and these

practices pose different food safety challenges. 

Beginning in 2000, the California Cantaloupe

Advisory Board (a marketing order for California cantaloupe grown north of Bakersfield) began requiring

additional traceback information on cantaloupe boxes

as part of their State marketing order (this program

was voluntary in 1999). This was not a very difficult

process. California cantaloupe is packed in the field

and the Board had already contracted with the

California Department of Food and Agriculture to

inspect cantaloupe during harvest for quality control

and apply an inspection sticker to every box (growers

pay the Board a per-box fee for this service).

Cantaloupe from this area cannot be sold without the

sticker identifying the county and shipper. The new

program requires information on the packing date,

field, and packing crew, which allows a grower to

trace the problem right back to a particular part of a

field. Some growers had already been providing this

additional information. Adding this additional traceback information to the box was neither particularly

costly nor complicated. It did take some administrative

changes, however. 

To be able to require traceback, the members of the

Board had to propose a change to their marketing

order and vote on it. Their original marketing order

covered grades and quality standards. The new 

marketing order specifically approves “such grade 

and quality standards of cantaloupes as necessary,

including the marking or certification of cantaloupes

or their shipping containers to expedite and implement

industry practices related to food safety” (California

Department of Food and Agriculture, 2000). If another

outbreak were to occur, this program would allow the

industry to immediately pinpoint the source of the

problem or deny that the problem is due to California

cantaloupe, depending on the situation. This may be

the only mandatory program for produce in the United

States that requires such detailed traceback information on each box. 

The Mexican cantaloupe industry is also concerned.

In FDA’s first round of microbial testing of produce,

both imported (1999-2000) and domestic (2001-

2002) shipments of cantaloupe tested positive for

Salmonella. The FDA followup survey (beginning in

January 2001) on imported cantaloupe showed no

contaminated samples from Mexico. CDC contends

that the interpretation of the 2001 results are limited

by the small size—only 29 samples (Anderson et al.,

2002). Mexican industry insiders feel that the initial

results from the FDA served as a wake-up call to

growers; an indication that normal operations would

not be sufficient and that the cantaloupe industry

would have to be seen as proactive on the food safety

issue to maintain its reputation. This may be particuEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 87

Figure 5.5

U.S. imports of cantaloupe from Mexico 

and Central America

1,000 metric tons

Source: U.S. Department of Commerce.

Mexico

Central America

1990 92 94 96 98 2000

0

100

200

300

400
larly important when cantaloupe from Central

America are also available during much of the

Mexican season. Results from the 2002 sampling

program are not yet publicly available. 

In 2001, the Mexican government agency in charge of

food safety, Servicio Nacional de Sanidad, Inocuidad y

Calidad Agroalimentaria (SENASICA), began developing a food safety program for cantaloupe. The program is based on planting permits, production

programs requiring GAPs and GMPs for growers and

packinghouses, and monthly melon testing. The program also includes more sophisticated traceback capability. As in other cases, it is imperative to identify any

grower or packer that harms the integrity of a food

safety program. All exports must have an international

phytosanitary permit, which will only be issued if

compliance with GAPs and GMPs is certified (The

Packer, 2002c). FDA and SENASICA were discussing

this program in early summer of 2002. Parts of this

system were in place on a voluntary basis in some

states in fall 2002. Also in 2002, FDA and SENASICA

began preparing to conduct joint training for government inspectors and farmers.

U.S. cantaloupe growers lobbied FDA to take a more

aggressive role in this evolving case (this was apparently not the case in the raspberry outbreaks). On

October 28, 2002, FDA issued an import alert against

all cantaloupe imports from Mexico (FDA, 2002d).

Although the outbreaks had been traced just to two

States in southern Mexico (Michoacan and Guerrero),

FDA justified the countrywide import alert because of

FDA samples showing Salmonella contamination in

cantaloupe from other States (Sonora, Jalisco, Colima,

Coahuila, Mexico, and Tamaulipas). Also, FDA was

concerned that with a regional approach, melons from

restricted regions could be commingled with melons

from a nonrestricted area. On November 4, 2002,

Canada issued a similar import alert for all Mexican

cantaloupe (CFIA, 2002).15

Mexican growers have complained about the timing of

the decision—just as growers in Sonora were ready to

begin harvesting cantaloupe for the U.S. market. They

also complained that the penalties FDA is imposing

are higher than those for U.S. cantaloupe producers

with similar food safety problems. While FDA samples showed Salmonella contamination in shipments

from several regions of Mexico, samples from the U.S.

in 2001 also showed contamination, but the U.S. growers are not faced with similar restrictions (FPAA,

2002). Also, for Mexican growers to be removed from

the countrywide import alert, they will have to demonstrate higher food safety standards than U.S. growers.

An individual Mexican firm can petition FDA to

remove their firm from the import alert by providing

documentation of their food safety program.

According to the import alert announcement “after

reviewing these submissions, FDA, either solely or in

conjunction with the relevant Mexican regulatory

authority may conduct a limited number of onsite

inspections of the growing/processing areas to audit

the validity of the information submitted to FDA. FDA

intends to give first priority to firms or growers who

have their operations inspected by a third-party audit

firm that has expertise in agricultural and transportation processes.” A third-party audit showing compliance with GAPs will not necessarily be enough to be

removed from the import alert list. In contrast, U.S.

cantaloupe growers are not required to use GAPs,

although many comply voluntarily.

November 2002 saw developments on both sides of the

border. On November 8, Mexico presented a formal

complaint to the World Trade Organization’s Sanitary

and Phytosanitary Committee claiming that the U.S.

import alert against all Mexican cantaloupe was not consistent with U.S. trade commitments with respect to discrimination, protectionism, and unnecessarily trade

restricting actions (SAGARPA, 2002). On November 13,

the Mexican government published legislation that gave

the government legal authority to require all cantaloupe

growers to comply with the new food safety program.

On November 20, importers associated with the 2000

and 2001 outbreaks were indicted in the United States

on Federal charges of “trying to impede and defeat lawful government functions of the U.S. Customs Service

and the U.S. Food and Drug Administration” in their

traceback efforts (The Packer, 2002d). The importers

entered a plea of not guilty and the trial, initially scheduled for January 2003, has been delayed. On November

27, 2002, FDA authorized imports from two farms from

the northern Mexican state of Sonora (The Packer,

2002e). This paper only covers events through

November 2002 in a case that will continue to evolve.

88 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

15 In the raspberry case, between 1998 and 2000, either the United

States or Canada had an import alert but never in the same year.

Since Cyclospora was an emerging pathogen, it was not clear what

actions were adequate to resolve the problem. This inconsistency in

policy raised concerns in Guatemala about the scientific basis of

trade policy. 
Summary of Responses to 

Food Safety Problems

Private Response

In a food safety outbreak, the grower’s first line of

defense is to adopt GAPs if they are not already in

place.16 Some growers develop their own food safety

programs that are even more stringent than FDA’s

GAP guidelines. However, it is often difficult to

determine how contamination occurred and what

practices are adequate to resolve the problem. In

Guatemala the problems took several seasons to

resolve and the exact means of contamination was

never determined. It is not clear how long it will take

to solve the problem in Mexico since neither the

extent of the problem nor the source of contamination have yet been identified. 

In the past, an individual grower could adopt a better

food safety program when faced with a food safety problem, but it was difficult to signal to buyers that the firm’s

product was safer than that of others in the industry. In

the raspberry case, the two market leaders—large U.S.

and Chilean firms—adopted new food safety programs

for all their growers in different countries. These firms

are so large that the cost of improved practices and additional testing was likely small compared with the losses

associated with a potential food safety problem and

damage to their reputation. If consumers and large-scale

buyers recognize the brand name, then these firms may

be able to maintain consumer confidence even if other

firms’ reputations suffer from a food safety problem. 

The growth in the use of third-party audits for GAPs

has provided growers with a new tool to indicate that

appropriate practices are in place. An audit can reduce

asymmetric information between the grower and shipper and between the shipper and commercial buyers. In

the late 1990s, with GAPs in place, third-party auditors

began to verify food safety programs for field operations as being in compliance with these guidelines.

While FDA developed GAPs, the private sector has

developed the third-party auditing industry for microbial

contamination.17 There is no government oversight of

third-party audit firms—an issue that concerns many in

the produce industry (The Packer, 2002a). Standards

may vary between auditing firms and between retailers

requiring use of audits. Growers and shippers are concerned that this raises their costs if they need to have

different audits for different buyers. 

Another concern regarding third-party audits for

microbial food safety is that this focus is relatively

new for produce. The third-party audit industry has its

roots in pesticide residue testing and auditing of

indoor HACCP programs. Examining produce for pesticide residues is much easier than looking for microbial contamination. Although adherence to GAP

guidelines and successful third-party audits of food

safety programs do not guarantee food safety, FDA is

concerned that some outbreaks have been traced back

to firms that have successfully completed third-party

audits.18 An audit can verify that growers are using

certain food safety practices that should help reduce

microbial contamination but it is much harder to

observe the potential for contamination. For example,

GAP guidelines say that water must be adequate for its

intended use. An auditor may take water samples in an

attempt to provide a more comprehensive assessment

of risk. However, water samples can be problematic

since water contamination is not necessarily a constant

presence. A sample of surface water that tests negative

for microbial organisms on one day indicates nothing

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 89

16 Of course, some firms already had sophisticated food safety

practices in place, even before the more recent concern with food

safety. Many of the largest firms have their own food safety programs with trained scientists overseeing production and packing

operations. This is particularly important for the new fresh-cut

products like bagged salads which often have consumer-recognized brands. Investment in food safety protects the brand name.

Branding is becoming more common in produce; in 1997, 19 percent of retail produce sales were branded products, compared with

only 7 percent in 1987 (Kaufman et al., 2000).

17 In 2001, USDA’s AMS began a pilot program offering thirdparty audits for produce in several States, the Fresh Produce Audit

Verification Program (AMS, 2002). The AMS audits are similar to

private audits. The AMS program does not seek to influence the

third-party audit industry, just to provide another source of the

same service. The program is run through the State departments of

agriculture. AMS has inspectors at shipping-point locations and

has experience working with growers. This program grew out of a

request from New Jersey growers. Currently, the program is

offered in New Jersey, California, and Oregon. It is just starting in

Washington and Florida. The cost of an AMS audit is similar to

those offered by the private sector. The typical audit takes 5-6

hours. In California, an audit costs $65 per hour plus $31 per hour

in travel costs (The Packer, 2002b).

18 This concern has become more obvious in the import alert for

Mexican cantaloupe, which states that FDA will conduct their own

investigations and not rely solely on third-party audits. This is similar to FDA conducting audits of Guatemalan raspberry farms in

the early stages of the MPE program.
about the chances of contamination on another day.

Tests of water from wells that are protected from surface contamination are more helpful; for example, a

yearly sample from such a well might be sufficient to

determine the overall water quality.

Growers have another reason to adopt GAPs and use

third-party audits. In 1999, Safeway, the third largest

U.S. food retailer, expanded their food safety program

to require all their suppliers of certain commodities to

verify that they follow government food safety standards and specifications in production and packing.

Some other retailers have followed suit. To qualify as a

Safeway supplier, a grower must have an independent

third-party auditor verify that they are using GAPs for

production and GMPs for packinghouses. Requiring

verification of use of GAPs and GMPs was a new idea

and met with initial opposition. Domestic and imported

produce sold by Safeway must meet the same standards.

Research covering a select group of U.S. fruit and vegetable shippers indicates that in 1999, almost half of

those studied provided third-party audits for GAPs or

GMPs for at least one of their buyers. While shippers

were not always happy about complying with this

request, most indicated that they would implement verification programs in response to changing buyer preferences (Calvin et al., 2001).

In each of the case studies, shippers tried to distance

themselves from those associated with a food safety

problem. Shippers can reduce their risk by requiring

growers to provide third-party audits or by dropping

growers with less sophisticated food safety programs

or more challenging environments. The problems in

Guatemala may have helped the small but growing

industry in Mexico since shippers could satisfy most

of their needs with Mexican raspberries. Mexico cantaloupe growers may face a similar situation in the

future if U.S. buyers decide to reduce their risks by

switching to Central American cantaloupe. 

Grower Organization Response

Grower organizations have also been important forces

for resolving food safety problems. Beginning in the

mid-1990s, the fresh produce industry became aware

of the potential cost of food safety problems related to

contamination at the farm level. Many trace this

heightened awareness to the well-publicized 1996 outbreak of E. coli O157:H7 that was traced to mesclun

(lettuce mix) grown and packed on one small farm in

California. This was the first reported multistate outbreak of E. coli O157:H7 associated with lettuce

(Hilborn et al., 1999). It was also one of the earliest

cases clearly identifying microbial contamination at

the farm level. 

Concerned about potential government regulation,

the Western Grower’s Association, which represents

the California and Arizona produce industry 

(including almost all U.S. lettuce production), and the

International Fresh-cut Produce Association, took the

initiative and developed their own set of guidelines for

fresh produce food safety. Similarly the CSC developed its own set of guidelines following the raspberry

contamination problem in 1996. FDA’s GAP guidelines published in late 1998 built, in part, on these earlier industry efforts.

One grower organization has been active in providing

guidance to the third-party audit industry. The United

Fresh Fruit and Vegetable Association has developed a

training program on food safety auditing. Growers

were concerned that some auditors experienced only in

indoor audits were unfamiliar with the produce industry and outdoor settings where some factors cannot be

controlled. This program also serves a need for continuing education for growers interested in evaluating

their own food safety programs.

Grower organizations have become more concerned

about the reputation of their crops for food safety. A

very large and important firm may be able to maintain

its reputation despite the actions of others in the industry, but most firms must rely on the overall reputation

of the industry. Retail buyers may know that a particular firm has never been associated with an outbreak,

has a strong food safety program, and has successful

third-party audits for adherence to GAP principles, but

consumers generally do not have that great a knowledge of the industry. News reports of an outbreak associated with a particular grower may affect consumer

perceptions about all growers of that product in that

same area or anywhere else. 

A grower organization’s effort to build a reputation for

food safety is a public good. At least in the short run,

everyone benefits from the reputation for safety even if

they are not investing in improved food safety. In each

of the three cases studied, grower organizations have

focused on developing systems to trace products from

final selling point back to the grower, which encourages grower responsibility and reduces the free-rider 

90 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
problem.19,20 In the case of an outbreak, a grower

organization that encourages traceback can prove to

the public that their product is not responsible for the

problem. Or, where the industry is responsible for the

outbreak, the responsible grower or growers can be

identified and damage can be limited. 

In the raspberry case, the Guatemalan food safety program with its traceback and traceforward capabilities

is mandatory. With the California Strawberry

Commission, the Quality Assurance Food Safety

Program is voluntary but the Commission is confident

that all shippers use some sort of traceback, although

the degree of sophistication varies. The Baja California

strawberry growers appear to follow the California

Strawberry Commission’s program closely. In the case

of cantaloupe, the California Cantaloupe Advisory

Board’s traceback program is mandatory. Mexico’s

new cantaloupe food safety program with enhanced

traceback is also mandatory.

This level of traceback capability may not be representative of other industries who have not yet faced food

safety problems, even though traceback capability is

an integral part of GAPs. The difficulty of implementing a traceback program may vary by crop because of

particular harvesting or marketing practices. For example, products that are packed in the field can easily be

labeled with the origin of the product. If products are

harvested and then packed in a central facility, a little

more care is required to maintain traceability. Crops

like tomatoes present a particular traceability challenge. They are often harvested, packed, and then sent

to repackers where tomatoes from several producers

may be commingled before being resorted by maturity.

Government Response

FDA’s most important contributions to improving food

safety for produce is the development of guidelines for

food safety practices. The value of GAPs will increase

as science provides more answers regarding how to

reduce risk of microbial contamination.

Because it is so difficult to identify microbial contamination on produce, FDA cannot rely on random testing

at the border to detect contaminated produce. FDA

will do inspections when there is reason to think there

might be a problem. Because of the problems with

cantaloupe in recent years, FDA conducts microbial

testing on imported and domestic cantaloupe. Instead

of focusing on testing, FDA has concentrated much of

its efforts on education in foreign countries. All efforts

to solve food safety problems abroad reduce the burden on the consuming public and on the FDA and

CDC, which investigate outbreaks. In 1997, FDA spent

6,274 hours investigating the Cyclospora-contaminated

raspberries (U.S. GAO, 1999).

When invited by a foreign government, FDA will visit

individual farms associated with contamination problems and identify practices that are not consistent with

GAPs. Findings compiled from these visits are used to

identify trends for future training and guidance development. FDA, in association with the University of

Maryland, teaches food safety practices in the United

States and abroad through the Joint Institute of Food

Safety and Applied Nutrition. This program has provided classes on GAPs. In addition, FDA provides training for conducting farm investigations. In 2002, FDA

conducted several training courses in Mexico on how to

do farm investigations for produce. 

When an outbreak is associated with imported produce, FDA must determine whether the problem can

be easily solved or whether the individual firm or

country should not be allowed to ship to the United

States until the problem is fixed. Traditionally, FDA

relies on laboratory identification of pathogens on a

product before making decisions on withdrawing a

product from the market or banning its import. This is

a problem for fresh produce, which is rarely available

for analysis when an outbreak develops. Over time,

FDA has become more comfortable with making decisions based on epidemiological evidence alone. The

Cyclospora case in Guatemala was the first big produce case that relied solely on epidemiology. The

Mexican Salmonella case demonstrates again the

reliance on epidemiology.

The role of FDA varies depending on the case. For

Guatemalan raspberries, FDA eventually banned all

imports because an individual farm could not be idenEconomic Research Service/USDA International Trade and Food Safety / AER-828 ● 91

19 Even before recent food safety problems and emphasis on using

GAPs, some firms voluntarily adopted traceback programs as a

good business practice.

20 The Federal Government does not currently require traceback 

nor monitor voluntary activities (Golan et al., 2002). However,

the newly enacted Public Health Security and Bioterrorism

Preparedness and Response Act of 2002 will eventually require

some traceability capability (FDA, 2002). Although farmers are

exempt, shippers and most other firms in the distribution channel

will be required to be able to identify where any product came from

and where it went to (“one up, one down”). FDA must publish their

regulations for establishing this system by December 12, 2003.
tified and the problem seemed pervasive. FDA and

CDC sent researchers to Guatemala to investigate the

industry and provide assistance in developing a production system to minimize the potential of microbial

contamination. FDA’s role in the Mexican strawberry

case appears to have been limited at the farm level,

particularly since no one could determine where the

contamination occurred. In this case, however, the

strawberries were processed so FDA was involved in

the recall of the processed product. With a fresh product, there is often no product to recall. In the Mexican

cantaloupe case, FDA first issued import alerts for

three firms selling cantaloupe associated with

Salmonella outbreaks. In late 2002, FDA banned all

cantaloupe imports from Mexico. FDA is evaluating

petitions from individual Mexico growers for exemption from the ban. 

State organizations, such as the California Department

of Food and Agriculture, are also involved in food

safety outreach programs to producers in other countries. Again, the motivation is self-interest since contamination problems traced to imports can have such

negative impacts on U.S. producers.

As the case studies demonstrate, in most cases foreign

governments have tried to resolve food safety problems,

although perhaps not as aggressively as desired by the

United States in the early stages. In Guatemala, the government became involved in the GBC’s efforts to

develop a workable and enforceable food safety plan. In

the strawberry case, the industry in Baja California

acted almost as a part of the U.S. industry and benefited

in an indirect way from food safety initiatives of the

CSC. Mexican government activities appear to have

been limited to the state level in that case. In November

2002, the Mexican government put into place a food

safety program to try to resolve the cantaloupe problem. 

Conclusions

Food safety and produce trade are clearly compatible;

the vast majority of imports are never associated with

food safety outbreaks. Producers in the United States

and foreign countries, grower organizations, governments, and commercial buyers are actively involved in

improving food safety. 

Producers are self-motivated to provide safe produce

because of the financial consequences of an outbreak

traced back to their operation. Of course, there are

always some cases where people will not invest sufficiently in food safety practices because they think their

product is safe or they deliberately cut corners. As traceability improves, however, the probability that responsibility for contaminated food will fall on those farmers

with inadequate food safety programs will increase. 

Grower organizations are motivated because of the 

public good nature of a product reputation. Since an 

outbreak anywhere can have a negative impact on consumers’ perceptions of the product, grower organizations

must do something to try to reassure the public that their

product is safe and distinguish themselves from other

groups of growers associated with a problem. 

Fears of economic and reputation losses if a contaminated produce item is traced to their firm motivate

retailers and other commercial buyers to demand high

food safety standards. Buyers want to know about a

grower’s food safety plan. Some demand third-party

verification of compliance with GAPs and GMPs. 

In the United States, FDA encourages farmers to follow

guidelines to reduce microbial contamination in produce. It does have the power to impose mandatory food

safety programs if necessary. With respect to trade,

FDA restricts imports from individual firms or all producers in a region or country when food safety problems cannot be resolved. FDA has been active in

promoting improved food safety abroad. In both Mexico

and Guatemala, microbial food safety programs have

traditionally been voluntary. Government programs

became mandatory for the particular products after food

safety problems resulted in U.S. import alerts. 

There is no reason to think that this trend toward more

sophisticated food safety programs is any more difficult for foreign growers to cope with than for domestic

growers. However, increased concerns about microbial

food safety programs pose particular challenges for

smaller farmers in both the United States and foreign

countries. When there are food safety problems, the

costs of production increase for everyone producing

for the U.S. market. New fixed costs, such as purchasing a water filtration system, would be particularly

problematic for small producers spreading the cost of

the new investment over smaller volume of output.

Also, smaller farmers (or geographically dispersed

farmers) might not be able to support the grower

organizations that have been so important in resolving

food safety problems. 

The case studies show that failure to resolve food safety

problems quickly can have serious impacts on an indus92 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
try and trade. A major policy challenge is to determine

when government intervention may be required to

resolve a problem. Science is not as definitive as desired

when trying to make decisions about trade and food

safety. While some practices clearly increase the probability of microbial contamination, it is often difficult for

FDA and others to identify the source of contamination

and the new practices that would yield safer food. There

is a chance that too aggressive a stance would unnecessarily restrict international trade when using GAPs

might resolve the problem in the next season. In the

hepatitis A outbreak linked to strawberries, if the contamination occurred in Mexico, use of GAPs alone may

have been sufficient to solve the problem (or it may be a

sporadic problem that might pop up again in the future).

Restricting trade can be economically devastating for an

industry, as in the Guatemalan raspberry case. However,

the raspberry and cantaloupe cases show that it can take

several years to resolve a problem and in both cases the

foreign governments intervened. In these cases a more

moderate response may be inadequate, leading to more

outbreaks and economic losses in affected industries.

In each case, damage was not limited to the producers

of the contaminated product. Anyone producing a product for the U.S. market, including U.S. growers, may

be caught in the consumer backlash against a product

and will probably have to adopt more stringent food

safety programs. Given the widespread impacts of food

safety outbreaks, there may be opportunities for grower

organizations in different countries to organize joint

efforts to resolve problems. Organizations would have

to weigh the negative fallout of a food safety problem

originating with their competitors against the potential

gain if their competitors’ sales were restricted. The

costs and benefits would vary by industry.

The case studies show the actions of growers, grower

groups, and governments caught up in foodborne illness outbreaks. Future research should investigate what

other sectors of the produce industry, which have not

yet faced the economic disruption of a foodborne illness outbreak, are doing to prepare for the possibility.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 93
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96 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Summary

The risk of contamination by mycotoxins is an

important food safety concern for grains and

other field crops. Mycotoxins are toxic byproducts of mold infestations affecting as much as one-quarter of global food and feed crop output. Food

contaminated with mycotoxins, particularly with aflatoxins, a subcategory, can cause sometimes-fatal acute

illness, and are associated with increased cancer risk. 

To protect consumers from these health risks, many

countries have adopted regulations to limit exposure 

to mycotoxins. As with many food safety regulations,

domestic and trade regimes governing mycotoxins 

often take the form of product, rather than process, standards. The World Trade Organization’s Sanitary and

Phytosanitary Agreement states that these standards must

be based on sound risk assessments. However, diverging

perceptions of tolerable health risks—associated largely

with the level of economic development and the susceptibility of a nation’s crops to contamination—have led to

widely varying standards among different national or

multilateral agencies. For example, of the 48 countries

with established limits for total aflatoxins in food, standards ranged from 0 to 50 parts per billion. 

In the United States, aflatoxins are not commonly cited

as a reason for import “refusals” by the Food and Drug

Administration (FDA), the Federal agency that enforces

mycotoxin regulations. In 2001, only 4 of 1,781 FDA

import detentions of cereals (grain) and cereal products

(which include consumer-ready processed products)

were due to aflatoxins, although detentions were more

common for contamination of nut and seed imports.

Nevertheless, several studies indicate that the economic

costs of enforcing standards, and the lost trade opportunities stemming from unharmonized global product standards on mycotoxins, are substantial:

● One study estimated that crop losses (corn, wheat,

and peanuts) from mycotoxin contamination in the

United States amount to $932 million annually, in

addition to losses averaging $466 million annually

from regulatory enforcement, testing, and other

quality control measures (CAST, 2003).

● Wilson and Otsuki (2001) estimated that, for a

group of 46 countries—including the United

States—the adoption of a uniform aflatoxin standard based on international Codex Alimentarius

Commission (Codex) guidelines would increase

trade of cereals (grains) and nuts by more than $6

billion, or more than 50 percent, compared with

the divergent standards in effect during 1998.

There are several reasons why trade disputes related to

the setting of regulatory standards on mycotoxins could

persist, or even worsen. First, mycotoxin contamination

is recognized as an unavoidable risk. Codex, for example, notes that many factors that influence the level of

contamination in cereals and grains are environmental—

such as weather and insect infestation—and therefore are

difficult or impossible to control. Second, perceptions of

tolerable health risks are not likely to narrow significantly in the near future since they appear to hinge

largely on the level of economic development and the

susceptibility of a nation’s crops to contamination.

Finally, under the “precautionary principle,” some countries may set new standards on certain mycotoxins for

which scientific evidence of a health risk is unclear.2

One strategy to lower both the health risks and the

economic costs associated with mycotoxins is to

increase awareness among food producers and handlers of practices which would minimize mycotoxin

contamination, and to encourage the adoption of

process-based guidelines such as good agricultural

practices (GAPs) or good manufacturing practices

(GMPs).

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 97

Chapter 6

Mycotoxin Hazards and Regulations

Impacts on Food and Animal Feed Crop Trade

Erik Dohlman1

1 Agricultural economist with the Market and Trade Economics

Division, Economic Research Service, USDA.

2 The "precautionary principle" is a term referring to the use of

environmental or health precautions in situations where the extent

or source of a particular risk is unclear.
Introduction

Concerns about human health arise when grains and

other field crops are found to contain unsafe chemicals,

additives, or other contaminants. Many countries have

established sanitary and phytosanitary (SPS) regulations

to protect consumers from these health risks, while

seeking to balance health benefits with the potential

trade disruptions, economic losses, and market uncertainties that regulations can cause. Among grains and

other field crops, perhaps the most prevalent—if publicly unrecognized—source of food-related health risks

are naturally occurring poisonous substances called

mycotoxins. Consuming grains or other foods contaminated with certain mycotoxins can be fatal if the toxins

are present at very high levels. Long-term exposure to

mycotoxins can increase cancer risk, and suppress the

immune system, among other health problems. 

Although humans face health risks stemming from the

contamination of grains with other naturally occurring

substances, mycotoxins are unique in that they are produced naturally on the grain, and their presence (at least

initially) is usually associated with uncontrollable factors

such as climatic conditions.3 The presence of mycotoxins can also be distinguished from plant infestations that

affect grains—such as TCK smut and Karnal bunt infestations which are still subject to SPS-related import controls designed to protect the quality of domestically

produced crops—but pose no food safety risk.

Mycotoxins are produced by certain fungi (e.g.,

Aspergillus ssp., Penicillium ssp., and Fusarium ssp.)

that grow on human food and animal feed ingredients

such as corn, sorghum, wheat, barley, peanuts, and

other legumes and oilseeds. Five broad groups of

mycotoxins—aflatoxin, vomitoxin, ochratoxin A,

fumonisin, and zearalenone—are commonly found in

food and feed grains (table 6.1). Among mycotoxins,

probably the most widely recognized risk comes from

aflatoxins. Aflatoxins are extremely potent carcinogenic and mutagenic substances that first came into the

public spotlight—and were formally identified—in the

early 1960s following the deaths of more than 100,000

young turkeys on a poultry farm in England. The socalled Turkey X disease was eventually tied to high

levels of aflatoxin in Brazilian peanut meal imported

as a feed ingredient. Aflatoxin contamination is most

common in African, Asian, and South American countries with warm and humid climates, but also occurs in

temperate areas of North America and Europe. These

five groups of mycotoxins all pose health concerns and

are subject to SPS or other regulatory measures. 

The fungi (mold) that produce mycotoxins can emerge

either in the field (in soil, decaying vegetation, and

grains undergoing microbiological deterioration) or

during postharvest transportation or storage.

Temperature stress is an important cause of fungi

growth on crops in the field, and high moisture content

(water activity) and temperature are associated with

the growth of fungi in stored grain. Detection and control of the fungi is a continuous concern since the

fungi can become established and remain with the

commodity anywhere along the production, storage,

transportation, and processing chain. A further concern

is that the absence of visible mold does not guarantee

the grain is free from mycotoxin, and cooking or processing the food product does not necessarily rid it of

mycotoxin contamination. For example, molds contaminated with aflatoxins have been isolated in

processed food products such as bread, macaroni,

cooked meat, cheese, and flour (Guerzoni, 1999).

For the consumer, a food safety concern is potential

exposure to mycotoxins through consumption of food

from contaminated crops, which can produce acute

and/or long-term health problems. Consuming food

products that contain high levels of certain mycotoxins

can cause the rapid onset of mycotoxicosis, a severe illness characterized by vomiting, abdominal pain, pulmonary edema, convulsions, coma, and in rare cases,

death. Although lethal cases are uncommon, acute illnesses from mycotoxins, particularly aflatoxins (aflatoxicosis), have been reported from many parts of the world,

usually in developing countries. Some notable outbreaks

include the deaths of 3 Taiwanese in 1967, and the

deaths of more than 100 people in Northwest India in

1974. Both outbreaks were attributed to aflatoxin contamination, of rice in Taiwan and corn in India.

Vomitoxin was responsible for another large-scale incident of mycotoxicosis in India in 1988.

Although more difficult to directly associate with

mycotoxin contamination, an equal, or perhaps even

greater, food safety concern than acute illness is the

long-term effects of lower-level mycotoxin consumption, particularly the risks of cancer and immune deficiency. Aflatoxin B1 was placed on the list of known

human carcinogens by the International Agency for

98 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

3 For example, dioxins also occur naturally—sometimes as a result

of forest fires or volcanic eruptions—but they are often the

byproduct of industrial processes (see chapter 8).
Research on Cancer (IARC) in 1988, and other mycotoxins are suspected or known to be carcinogenic or to

have other adverse health consequences (table 6.1).4

Aflatoxins are a particular concern for populations

with a high incidence of hepatitis B because the relative rate of liver cancer in people with hepatitis B is up

to 60 times greater than normal when those people are

exposed to aflatoxin (Miller, 1996, p. 4). 

In addition to direct risks to humans from consumption

of mycotoxin-contaminated grains, there are indirect

health risks to those who consume animal products containing residues of carcinogenic mycotoxins.

Mycotoxins can be detected in meat, milk, and eggs

from animals that have consumed feed ingredients containing mycotoxins, and many countries have tolerance

standards for mycotoxin residues in these products. 

Another concern related to the consumption of mycotoxin-contaminated feed by livestock is the potential

for economic losses from animal health and productivity problems. Aflatoxins in feed are known to be associated with liver damage in animals, reduced milk and

egg production, poor weight gain, and recurrent infections due to immunity suppression. The young of any

particular species are most vulnerable, but the degree

of susceptibility varies by species. 

Regulatory Actions

As with many public food safety regulations, domestic

and trade regimes governing mycotoxins in most countries take the form of product, rather than process, standards. That is, tolerance levels for the amount of

mycotoxin in a product are established rather than regulating the production or treatment of the commodity

along the marketing chain (Henson and Caswell, 1999).

The United States began regulating the concentration of

mycotoxins in food and feed in 1968, following some of

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 99

Table 6.1—Common mycotoxins, commodity affected, and health effects

Mycotoxin Commodities Fungal source(s) Effects of ingestion

Aflatoxin B1, B2 Corn, peanuts, and many Aspergillus flavus Aflatoxin B1 identified as potent human

G1, G2 other commodities Aspergillus parasiticus carcinogen by IARC.1 Risk of human

toxicosis. Adverse effects in various

animals, especially chickens.

Deoxynivalenol Wheat, corn, and barley Fusarium graminearum Human toxicoses in India, China, Japan,

Nivalenol Fusarium crookwellense and Korea. Toxic to animals, especially 

(Vomitoxin) Fusarium culmorum pigs.

Zearalenone Corn, wheat Fusarium graminearum Identified by the IARC as a possible

Fusarium culmorum carcinogen. Affects reproductive system

Fusarium crookwellense in laboratory animals and pigs.

Ochratoxin A Barley, wheat, and many Aspergillus ochraceus Suspected by IARC as human carcinogen. 

other commodities Penicillium verrucosum Carcinogenic in laboratory animals 

and pigs.

Fumonisin B1 Corn Fusarium moniliforme Suspected by IARC as human carcinogen. 

plus several less Toxic to pigs and poultry. Cause of 

common species equine eucoencepha-lomalacia (ELEM),

a fatal disease of horses.

1International Agency for Research on Cancer.

Source: adapted from GASCA, "Mycotoxins in Grain." Group for Assistance on Systems Relating to Grain after Harvest. 

Technical Center for Agricultural and Rural Cooperation (CTA), the Netherlands, Technical Leaflet No. 3. 1997.

www.fao.org/inpho/vlibrary/x0008e/X0008E00.htm#Contents.

4 Specifically, “mycotoxins may be carcinogenic (e.g., aflatoxin

B1, ochratoxin A, fumonisin B1), estrogenic (zearalenone and I

and J zearalenols), nephrotoxic (ochratoxins, citrinin, oosporeine),

dermonecrotic (trichothecenes), or immunosuppressive (aflatoxin

B1, ochratoxin A, and T-2 toxin).... Much of the published information on toxicity comes from studies in experimental animals,

and these may not reflect the effects of mycotoxins on humans and

other animals.... [Nevertheless] residues in animal products of carcinogenic mycotoxins, such as aflatoxin B1, M1, and ochratoxin

A, pose a threat to human health, and their levels should be monitored” (Orriss, 1997, p. 2). 
the early incidents of animal and human health problems

related to mycotoxins. A study by the United Nations’

Food and Agriculture Organization (FAO) on worldwide

regulations for mycotoxins revealed that at least 77

countries now have specific regulations for mycotoxins.

Thirteen countries are known to have no specific regulations, and no data are available for about 50 countries,

many of them in Africa (Van Egmond, 1999).5 Survey

data by the FAO also reveal that the number of countries

adopting mycotoxin regulations grew significantly from

the mid-1980s to mid-1990s, and that the range of tolerance levels vary widely (Van Egmond, 1999). In 1996,

for example, 48 countries had established tolerance levels for total aflatoxins in food—up from 30 in 1987—

with standards ranging from 0 parts per billion (ppb) to

50 ppb. For the 21 countries with total aflatoxins standards on animal feeds, the tolerance levels ranged from 0

ppb to 1,000 ppb (table 6.2).

According to the Joint FAO/World Health Organization

(WHO) Expert Committee on Food Additives (JECFA),

the scientific body that develops advisory international

standards on food additives and contaminants for the

Codex Alimentarius Commission, reaching consensus on

maximum levels for aflatoxin (and other mycotoxin)

standards is complicated by the fact that:

levels of contamination of foodstuffs vary

tremendously around the world, and ... with

respect to trade, the perspectives of delegations differ profoundly. Those representing

countries in which aflatoxin contamination is

not prevalent want low standards because they

do not wish to see the quality of their food

supply degraded. Those delegations from

countries in which aflatoxin contamination is a

problem because of their climatic conditions

naturally wish to have standards in which

higher levels of contamination are permitted

so that they can trade their products on world

markets (Hermann, 1999, p. 3).

Thus, for a large number of countries, the risks associated with mycotoxin contamination are generally recognized and the levels entering the food chain subject to

limitations. Enforcing these limitations naturally imposes

costs on domestic producers and consumers (e.g., of

monitoring, testing, destroying the crop or diverting it to

lower valued use). At the same time, when the cost and

benefit analyses—or risk assessments—underlying

domestic regulations lead countries to set different tolerance standards, these divergent standards can also affect

producers in other countries, disrupt trade, and result in

trade disputes. 

U.S. Regulatory Provisions

In the United States, authority to regulate mycotoxins

(i.e., aflatoxin, fumonisins, and vomitoxin) is established

by the Federal Food, Drug and Cosmetic Act (FFDCA),

which is enforced by the Food and Drug Administration

(FDA). The FDA has established specific “action” levels

for aflatoxin present in food or feed and “advisory” levels for other mycotoxins. The action and advisory levels

are designed to provide an adequate margin of safety to

protect human and animal health (Robens, 2001; USDA,

1998). The standard for aflatoxins is 20 ppb for human

food and animal feeds (corn and other grains) intended

for immature animals or unknown destinations. Except

for mandatory aflatoxin testing on U.S. corn exports,

however, mycotoxin testing for domestically produced or

imported foods and feed ingredients is not required by

law. That is, testing for mycotoxins in grains that are not

exported is voluntary, and contamination levels are not

considered part of official grading standards for agricultural commodities. The FDA does have a monitoring

program, however, and “reserves the right to take appropriate enforcement actions when circumstances warrant

such actions” (CAST, 2003, p. 109). 

The U.S. Department of Agriculture’s Grain Inspection,

Packers and Stockyards Administration (GIPSA) also

offers aflatoxin testing for corn, sorghum, wheat, and

soybeans as “official criteria” under the United States

Grain Standards Act, and has an official understanding

with the FDA that it will report to them samples that

exceed established action levels. In the event this occurs,

any action by the FDA on a lot sample that tests above

that level is taken on a case-by-case basis, and can

involve diverting the commodity to alternative uses with

less stringent standards (e.g., corn for ethanol production

or “finishing” beef cattle), and will only rarely require

disposal (table 6.3).

In addition, purchasers may regularly test grains as part

of their routine quality control efforts (Lijewski, 2002),

and contracts between buyer and seller may be contingent upon achieving an aflatoxin (or other mycotoxin)

100 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

5 Most of the existing mycotoxin regulations concern aflatoxins in

food, and in fact all countries with mycotoxin regulations at least

have tolerances for aflatoxin B1 (considered the most toxic aflatoxin) or the sum of the aflatoxins B1, B2, G1, and G2 in foods

and/or animal feed.
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 101

Table 6.2—Medians and ranges of maximum aflatoxin tolerance levels and number of countries 

with regulations (1987, 1996)

1987 1996

No. of No. of

Category Median Range countries Median Range countries

— Parts per billion — Number — Parts per billion — Number

B1 in foodstuffs 4 0-50 29 4 0-30 33

B1+B2+G1+G2 7 0-50 30 8 0-50 48

in foodstuffs

B1 in foodstuffs 0.2 0-5.0 4 0.3 0-5.0 5

for children

M1 in milk 0.05 0-1.0 13 0.05 0-1.0 17

B1 in feedstuffs 30 5-1,000 16 20 5-1,000 19

B1+B2+G1+G2 50 10-1,000 8 50 0-1,000 21

in feedstuffs

Source: Adapted from Van Egmond, Hans, “Worldwide Regulations for Mycotoxins.” Third Joint FAO/WHO/UNEP International Conference on

Mycotoxins. MYC-CONF/99/8a, March 1999.

Table 6.3—Product standards for aflatoxins (United States, European Union, and Codex Alimentarius)

United States1 European Union2

Product Standard Product Standard

Parts per billion Parts per billion

Raw peanuts (industry standard). 15 Peanuts, nuts, dried fruit, and processed products 4 (2)

thereof, intended for direct human consumption.

Human food, corn, and other grains intended for 20 Peanuts to be subjected to sorting or other 15 (8)

immature animals (including poultry) and for dairy physical treatment, before human consumption

animals or when its destination is not known. or use as an ingredient in food.

For animal feeds, other than corn or 20 Nuts and dried fruit to be subjected to sorting 10 (5)

cottonseed meal. or other physical treatment, before human 

consumption or use as an ingredient in food. 

For corn and other grains intended for breeding 100 Cereals and processed products thereof 4 (2)

beef cattle, breeding swine, or mature poultry. intended for direct human consumption or an 

ingredient in food.

For corn and other grains intended for 200

finishing swine of 100 pounds or greater.

For corn and other grains intended for finishing 300

beef cattle and for cottonseed meal intended for

cattle, swine, or poultry.

Codex

Peanuts intended for further processing. 15

1 Food and Drug Administration (FDA) standard unless otherwise noted. 

2 Numbers in parentheses refer to separate standard for aflatoxin B1 alone. 

3 Additional standards exist for “complementary feedingstuffs.”

Sources: USDA (GIPSA), 1998; Otsuki et al., 2001; EC, 1999. 

Feed materials and complete feedstuffs with the (50)

exception of:3

- feed materials from peanuts, copra, palm-kernel,

cottonseed, corn and products processed thereof, (20)

- complete feedstuffs for dairy cattle (5)

- complete feedstuffs for pigs and poultry (20)

(except young animals)

- other complete feedstuffs. (10)
level at, or even below, FDA-established action or advisory levels.6 According to a private commodity analyst,

most grain purchase contracts of corn processors specify

aflatoxin levels below the FDA standard, often 10 ppb or

less (Brenner, 2002). Under industry guidelines developed by the U.S. Peanut Administrative Committee,

mandatory testing and a separate industry standard of 15

ppb does exist for aflatoxins in raw peanuts. 

Testing for aflatoxins in imported foods is not required,

but the FDA does test samples of food and feed imports

on a regular basis, and import refusals are authorized

under the FFDCA. Between 1987 and 1997, the FDA

inspected an average of about 500 samples of imported

foods and feed per year for aflatoxins, with about 4 percent of samples testing above the 20 ppb level, almost

exclusively in food products (CAST, 2003, p. 43). In

2001, the FDA recorded more than 2,100 detentions of

imported cereals (grains), cereal products, nuts, and

seeds due to food safety concerns, although just 29 of

the detentions were due to aflatoxins. 

Multinational Standard Setting 

and the SPS Agreement

At the international level, the Codex Alimentarius

Commission of the United Nations (henceforth “Codex”)

has, since 1963, developed general principles of food

safety and hygiene designed to promote food safety and

facilitate trade, including the setting of advisory standards on natural and environmental toxins such as mycotoxins (FAO, 2002).

Codex standards are advisory, not mandatory, and the

data in table 6.2 demonstrate that national standards

vary widely, with aflatoxin standards for foods fluctuating from zero tolerance to more than three times the

Codex standard of 15 ppb.7 Nevertheless, within the

regulatory framework of the World Trade Organization

(WTO), the Sanitary and Phytosanitary (SPS)

Agreement—while not ceding authority over food

safety standards from national governments—maintains

that measures which conform to Codex standards,

guidelines, or other recommendations are science-based,

appropriate, and nondiscriminatory (Park et al., 1999). 

Henson and Caswell (1999) point out that the SPS

agreement essentially requires WTO members to justify the food safety regulations that they apply and

demonstrate that any trade distortive effects (costs) are

proportionate to the potential health benefits. Food

safety regulations can be justified either by simply

adopting international standards (i.e., Codex standards), which are assumed to be unchallengeable, or

by conducting a scientific risk assessment of the health

concerns addressed by the food safety regulation.8

Thus, the SPS agreement represents an effort to promote transparency in the establishment of food safety

regulations and, if possible, to harmonize regulations

based on sound risk assessment principles. Ultimately,

the goal is to facilitate trade without compromising

consumer protection.

However, the idea that there can be a uniform assessment of how to balance human safety concerns with

“proportionate” impacts on trade can be both problematic and controversial. Some argue that food safety

regulations, particularly standards stricter than those

proposed by Codex, impose unfair economic, and even

safety, burdens on lower-income food exporting countries. The argument is that such standards limit export

opportunities because compliance is either too costly

or unachievable given a lack of technical capacity,

infrastructure, and food hazard management experience. Stricter regulations in importing countries are

even cited as an additional health risk burden on the

exporting country population since only the best quality foods leave the country, leaving commodities with

higher levels of mycotoxin contamination for the

domestic population (Cardwell et al., 2001).

102 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

6 Testing is also provided for processed products such as corn

meal, corn gluten meal, corn/soy blend, popcorn, rice, and other

products governed by the Agricultural Marketing Act of 1946.

7 It should be noted that the only crop for which Codex has

adopted a mycotoxin standard is peanuts, with a total aflatoxin

(B1+B2+G1+G2) standard of 15 ppb. Codex has also established a

standard for aflatoxin M1 in milk and a 50 ppb standard for the

mycotoxin patulin in apple juice and apple juice ingredients. It is

also considering a proposed maximum of 5 ppb for ochratoxin A

in raw wheat, barley, rye, and derived products.

8 The adoption of stricter standards than those prescribed by the

Codex Alimentarius to achieve a lower level of risk is allowed under

the SPS agreement, but according to Henson and Caswell (1999, p.

599), the setting of national standards are supposed to meet certain

criteria. Risk assessment should involve generally recognized techniques, must be supported by currently available scientific evidence

(or “pertinent information”), must demonstrate that the level of protection is appropriate given the level of risk that the country aims to

achieve, and must show that actions taken to achieve the desired

level of protection do not impede trade unnecessarily.
Economic Impact on

International Trade

The economic losses associated with mycotoxin contamination are difficult to assess in a consistent and

uniform way, and no comprehensive analysis of the

costs to U.S. and foreign crop and livestock producers

is available. The lack of information on the health

costs and other economic losses from mycotoxininduced human illness is partly due to the difficulty of

establishing cause-and-effect relationships between the

mycotoxins and the chronic diseases they are suspected of causing. However, with an estimated 25 percent to 50 percent (Miller, 1995) of the world’s food

crops affected by mycotoxins, the economic costs are

likely to be considerable.9 Numerous reports focusing

on different countries/regions, commodities, toxins,

and cost categories (e.g., costs of regulations, testing,

production loss, trade losses) offer some indication of

these losses.

For the United States, one study using FDA sample

data and computer simulations estimated that crop

losses from mycotoxin (aflatoxin, fumonisin, and

deoxynivalenol) contamination of corn, wheat, and

peanuts averaged $932 million annually (CAST,

2003). Additional losses averaging $466 million stem

from efforts to prevent or reduce contamination

(through regulatory enforcement, testing, and other

quality control efforts). In this study, livestock losses

were estimated at only $6 million annually. However,

an earlier report estimated that, in some years, production losses to the U.S. poultry and swine industries

have surpassed $100 million (CAST, 1989).

Numerous other reports of economic losses to specific

commodities in selected years—due to complete loss

of the crop value or diversion into discounted markets

such as feed or ethanol use—indicate that for the U.S.,

economic losses from mycotoxins are primarily confined to domestic crop producers and their potential

downstream users, including export markets.10

As for imports into the United States, data on import

refusals by the FDA during 2001 reveal that the presence of aflatoxins was not a commonly invoked reason

for detaining food product imports into the United

States that year—because contaminated products were

detected and diverted to other uses before exportation,

or perhaps because the U.S. does not import a large

volume of products most susceptible to aflatoxins

(e.g., peanuts or corn). In 2001, there were 1,781

import detentions of cereals (grain) and cereal products (which include consumer-ready processed products), and another 387 detentions of nuts and edible

seeds. However, only 29 of the detentions were due to

aflatoxins, only 4 in the cereal and cereal product category. Of the 1,781 detentions in this category, only 52

were due to “naturally occurring” safety concerns

(other than “filth”): 47 detentions for Salmonella, 4 for

aflatoxins, and 1 for Listeria. The majority of detentions were due to labeling or branding issues, or the

presence of unsafe additives.

For developing countries, lost export opportunities to

developed countries—which typically have more stringent mycotoxin limitations—appear significant. The

potential for disruptions to developing-country food

exports resulting from regulatory actions in high income

markets is underscored by the fact that the majority—

nearly 70 percent—of developing Middle East and

African country food exports are destined for highincome countries.11

In some cases, developing countries have experienced

market losses due to persistent mycotoxin problems or

the imposition of new, stricter regulations by importing

countries. Thailand was once among the world’s leading

corn exporters, regularly ranking among the top five

exporters during the 1970s and 1980s. But partly due 

to aflatoxin problems, Thai corn regularly sold at a 

discount on international markets, costing Thailand

about $50 million per year in lost export value

(Tangthirasunan, 1998). According to FAO estimates,

the direct costs of mycotoxin contamination of corn and

peanuts in Southeast Asia (Thailand, Indonesia, and the

Philippines) amounted to several hundred million dollars annually, with most of the losses accounted for by

corn (Bhat and Vasanthi, 1999). India also saw exports

of peanut meal to the European Union (EU) drop by

more than $30 million a year when the EU imposed

new mycotoxin regulations in the early 1980s (Bhat and

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 103

9 Alternatively, Park et al. (1995) estimate that the actual global

production of commodities at “high risk,” including corn, peanuts,

copra, palm nuts, and oil seed meal, comes to about 100 million

metric tons, a significant but smaller proportion of global production than cited by Miller (1995).

10 Some other examples of estimated losses in the U.S. include:

peanuts - $25 million/year (1993-96); cottonseed - $20-$50 per ton

discount (Arizona); barley - $406 million between 1993 and 1998

(Minnesota, N. Dakota, S. Dakota); wheat - $300 million (1996) in

Red River Valley (Minnesota, N. Dakota, S. Dakota) (Robens, 2001).

11 Otsuki et al., 2001. Data are from the mid-1990s. Only 16 percent

of Middle East and African country food trade was intraregional.
Vasanthi, 1999). Total peanut meal imports by the current 15 EU member countries fell from over 1 million

tons in the mid-1970s to just 200,000-400,000 tons

annually after 1982. 

Balancing Food Safety Costs and

Benefits From Trade: The Case of EU

Mycotoxin Regulations 

Several recent studies have helped to crystallize the fact

that the setting of tolerance levels for mycotoxins

involves clear, but controversial, tradeoffs between

human health and economic opportunity. One study

measured the potential health impacts on cancer death

rates from the adoption of two alternative standards for

aflatoxin. Motivated by a proposed harmonization of EU

mycotoxin standards at a level lower (more stringent)

than advisory standards set by Codex Alimentarius, several other studies looked at the trade impacts of different

aflatoxin standard harmonization scenarios.

In 1997, the JECFA—which provides scientific advice

to Codex—evaluated the potential risks of aflatoxins

and considered the possible impact of two alternative

aflatoxin standards (10 and 20 ppb) on human health.

Two examples were developed, a European diet with 1

percent of the population testing positive for hepatitis

and a Far Eastern diet with 25 percent testing positive

for hepatitis. The JECFA study concluded that, for the

first example (European diet), implementation of a 20-

ppb standard would lead to a risk of 41 cancer deaths

per year per 1 billion persons. Adoption of the lower

10-ppb standard would reduce the risk to 39 cancer

deaths per year per 1 billion persons, or 2 lives per

year for a population of 1 billion persons. The same

change in standards would lower cancer deaths by

about 300 persons per year per 1 billion people for the

Asian diet (and high incidence of hepatitis) scenario

(Herrman and Walker, 1999). 

Also in 1997, the EU proposed a new harmonized standard for aflatoxins, provoking a number of complaints

by nonmember countries. The proposal recommended

establishing a standard of 4 ppb of total aflatoxins

(B1+B2+G1+G2)—2 ppb for B1 alone—in cereals

(grains), edible nuts, dried and preserved fruits, and

groundnuts (peanuts) intended for direct human consumption. This level represented a stricter standard than

the standards in effect in most EU countries at the time,

and considerably lower than Codex recommendations

and standards in many developing countries (table 6.3).

Codex, for example, has a recommended standard of 15

ppb for total aflatoxins in peanuts, and the average

African standard for peanuts was as high as 44 ppb—14

ppb for aflatoxin B1 (Otsuki et al., 2001).

The originally proposed standard was relaxed for some

categories of use following complaints by Argentina,

Australia, Bolivia, Brazil, Canada, India, Mexico,

Pakistan, Peru, and Uruguay. These countries argued

that “the EC [European Commission] requirements not

only departed from the Codex Alimentarius recommendations, but also had considerable social and economic impacts on the concerned countries” (WTO,

1998, p. 3). The subsequently proposed standards,

implemented in March 2001 (and amended in 2002),

were nevertheless still more stringent than those previously in place for eight of the EU countries, and the

standards for cereals and nuts intended for direct

human consumption were not relaxed from the originally proposed level (Otsuki et al., 2001). 

A widely cited journal article by Otsuki et al. (2001)

found that cereal (and cereal preparations) exports by 9

African countries to the EU during 1998 would have

declined by 59 percent, or $177 million, if the EU had

harmonized their aflatoxin regulations at the proposed

limit and enforced this limit on all shipments.

Alternatively, the adoption of the somewhat more lax

Codex standard by the EU would increase the African

country cereal (and preparations) exports to the EU by

$202 million, a 68-percent increase. For edible nuts and

dried and preserved fruits, the estimated decline in

African exports to the EU would be $220 million (47

percent) if the EU harmonized its regulations at the proposed level, but would increase $66 million (14 percent)

if the Codex standard was adopted.

Another study by the World Bank (Wilson and Otsuki,

2001) broadened the analysis to evaluate the impact on

grain and tree nut trade among 15 importing and 31

exporting countries, including the United States.

Among the countries studied, the uniform adoption of 

a Codex standard of 9 ppb for aflatoxin B1 would

increase cereal and nut trade by $6.14 billion, or more

than 50 percent, compared with the (1998) status quo.12

104 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

12 The study assumes that, for all cereals and nuts, the countries

would adopt standards based on the current Codex advisory standard for peanuts. The Codex standard for peanuts is 15 ppb for all

aflatoxins combined, but Wilson and Otsuki assume that aflatoxin

B1 comprises, on average, about 60 percent of the total level of

aflatoxin contamination (or about 9 ppb).
The impact on the United States would amount to more

than $700 million in increased exports.13

Similarly, adoption of a proposed European Union

standard of 2 ppb for aflatoxin B1 by all countries

included in the study would reduce trade by $6.05

billion, compared with status quo regulations. The

results also show that, since less developed countries

generally have less stringent standards for aflatoxin,

less developed countries that conduct trade with one

another will lose more export opportunities than

developed countries. Under a scenario where all

countries adopt a uniform standard that maintains

global trade at baseline (1998) levels, the distribution of trade shifts to favor developed-country

exports and reduces less developed country exports

by 10 percent.

Process Standards Complement

Product Standards and Can

Accomplish Similar Goals

The studies cited earlier clearly illustrate that food

safety regulations—particularly product standards such

as specific tolerance levels—have significant economic

consequences, and that different perceptions about

appropriate tradeoffs between health and economic

losses are the source of potential conflict between

countries. With this in mind, what strategies can be

used to diffuse trade frictions, and at the same time

help reduce economic losses from mycotoxin contamination and divergent standards? 

A common method of minimizing food safety risks is

the adoption of good agricultural practices (GAPs) at

the preharvest level and good manufacturing practices

(GMPs) at the processing and distribution stages.

These strategies—implemented independently by private groups, or required by public agencies—can be

used to control and minimize risk throughout the production, handling, and processing chain. These can

complement product standards, and potentially reduce

overall economic losses. In the United States, for

example, a standard practice among grain processors is

to clean corn before any manufacturing process in

order to sift out broken kernels and screenings that are

more susceptible to mycotoxin infestation. Grain purchasers also conduct a regular program of testing following harvest to determine whether there are any

mycotoxin problems in particular supply areas

(Brenner, 2002).

In its 34th session held in March 2002, a Codex

Committee on Food Additives and Contaminants

(CCFAC) report recommended that GAPs and GMPs

be used to establish formal hazard analysis and critical

control point (HACCP) food safety systems to identify,

monitor, and control mycotoxin risks all along the

food production chain (Codex, 2002). Park et al.

(1999) suggest steps that can be taken at five stages of

food production to lower mycotoxin contamination. At

the preharvest stage, for example, insect control, adequate irrigation, crop rotation, and other practices can

help minimize initial contamination in the field (table

6.4). During storage, properly dried crops should be

protected from moisture, insects and rodents, and

monitored for temperature, moisture, and humidity

changes. Electronic or hand-sorting can be conducted

before processing.

HACCP principles are thus likely to be among the

most effective means of lowering risks and economic

losses, especially since prevention of mycotoxin contamination is widely considered more practicable than

decontamination.14 However, an effective long-term

strategy for controlling and monitoring mycotoxin

risks in developing countries most susceptible to the

problem may require technical assistance from public

agencies and improved adherence to quality control

measures and HACCP principles by private actors. In

India, for example, one report noted that more than

one-quarter of tested corn samples exceeded the Indian

tolerance limit of 30 ppb, and that if Codex standards

were applied, nearly one-half (47 percent) of the samples would have to be rejected (Van Egmond, 1995, in

Bhat and Vasanthi, 1999)—indicating high levels of

contamination most likely caused by improper drying

or storage.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 105

13 This compares to a survey-based estimate that places the impact

of “questionable” SPS-related food safety regulations on U.S. agricultural exports at $2.29 billion. Of this, $1.02 billion of the trade

impact was to grain and feed grains, with “the Americas” accounting for the major share (69 percent) of the losses, followed by East

Asia (14 percent), Europe (11 percent), and Africa (6 percent). No

information on the specific nature of the SPS barriers was given

(Thornsbury et al., 1997).

14 According to Codex (1997), “to date there has been no widespread government acceptance of any decontamination treatment

intended to reduce aflatoxin B1 levels in contaminated animal

feedingstuffs.”
Conclusion

Although not publicly prominent, food safety issues

related to international trade in cereals and grains and

other crops—particularly those pertaining to mycotoxin regulations—are economically important. Most

countries do recognize that placing standards on the

level of mycotoxins entering the food chain is prudent,

but diverging perceptions of how to balance economic

costs and health benefits have become a source of

trade friction between countries. For export-reliant

developing countries lacking the means to implement

stronger quality control measures, the issue is especially relevant. 

For several reasons, trade disputes related to the setting of regulatory standards on mycotoxins are likely

to persist. First, mycotoxin contamination is recognized as an unavoidable risk. Codex (2002) notes that,

in the field, many factors that influence the level of

contamination in cereals and grains are environmentally related—such as weather and insect infestation—

and are therefore difficult or impossible to control.

Second, perceptions of tolerable health risks are not

likely to narrow significantly in the near future since

they appear to hinge largely on the level of economic

development and the susceptibility of a nation’s crops

to contamination. Finally, using the precautionary

principle, some countries may set new mycotoxin 

standards which lack internationally accepted risk

assessments.

To minimize the initial risk of mycotoxin contamination and consequently lessen the likelihood that tolerance levels will be exceeded, private sector actors or

public agencies can consider implementing process

standards based on GAPs, GMPs, and HACCP principles. Developing countries are likely to require technical assistance and economic support to implement

these strategies.

106 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Table 6.4—Possible HACCP application stages for agricultural commodities, food products, and animal feeds

Stage Commodity Hazard Corrective action

Preharvest Cereal grains, oil Mold infestation -use crop resistant varieties

seeds, nuts, fruits with subsequent -enforce effective insect control programs

mycotoxin formation -maintain adequate irrigation schedules

-perform good tillage, crop rotation, weed control, etc.

Harvesting Cereal grains, oil Increase in mycotoxin -harvest at appropriate time

seeds, nuts, fruits formation -maintain at lower temperature, if possible

-remove extraneous material

-dry rapidly to below 10 percent moisture.

Postharvest, Cereal grains, oil Increase and/or -protect stored product from moisture, insects,

storage seeds, nuts, fruits occurrence of environmental factors, etc.

mycotoxin -store product on dry, clean surface.

Post-harvest, Cereal grains, oil Mycotoxin -test all ingredients added

processing seeds, nuts, fruits carryover or -monitor processing/manufacturing operation to 

and manufacturing contamination maintain high-quality product

-follow good manufacturing practices.

Animal Dairy, meat Transfer of mycotoxin -monitor mycotoxin levels in feed ingredients

feeding and poultry to dairy products, -test products for mycotoxin residues.

products meat and poultry products

Source: Park, Douglas, H. Njapau, and E. Boutrif. “Minimising [sic] Risks Posed by Mycotoxins Utilising [sic] the HACCP Concept.” Third Joint

FAO/WHO/NEP International Conference on Mycotoxins, Tunis, Tunisia. MYC-CONF/99/8b, 1999.
References

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Contamination of Foods and Feeds: Overview,

Occurrence and Economic Impact on Food availability, Trade, Exposure of Farm Animals and

Related Economic Losses.” Third Joint

FAO/WHO/UNEP International Conference on

Mycotoxins. Tunis, Tunisia, Mar. 3-6, 1999. 

Brenner, Kyd. DTB Associates. Personal

Correspondence. June 14, 2002.

Cardwell, K.F., A. Desjardins, S.H. Henry, G.

Munkvold, and J. Robens. “Mycotoxins: The Costs

of Achieving Food Security and Food Quality.”

APSnet. American Phytopathological Society.

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Codex Alimentarius Commission. “Code of Practice

for the Reduction of Aflatoxin B1 in Raw Materials

and Supplemental Feedingstuffs for Milk Producing

Animals.” CAC/RCP 45, 1997.

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Codex Alimentarius Commission. “Proposed Draft

Code of Practice for the Prevention (Reduction) of

Mycotoxin Contamination in Cereals, Including

Annexes on Ochratoxin A, Zearalenone, Fumonisins

and Tricothecenes.” Codex Committee on Food

Additives and Contaminants, Thirty-fourth Session,

Mar. 2002.

Council for Agriculture Science and Technology.

“Mycotoxins: Risks in Plant, Animal, and Human

Systems.” Task Force Report 139, . Ames, IA. 2003.

Council for Agriculture Science and Technology.

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116, Council for Agriculture Science and Technology.

Ames, IA. 1989. Cited in Miller (1995).

European Communities (EC). “Council Directive

1999/29/EC on the undesirable substances and

products in animal nutrition.” Official Journal of the

European Communities, April 1999.

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June 13, 2002.

Food and Agriculture Organization of the United

Nations. “A Forum for Safer Food.” News &

Highlights, 2002. www.fao.org/news/2002/020106-

e.htm, accessed Jan. 29, 2002.

GASCA. “Mycotoxins in Grain.” Group for Assistance

on Systems Relating to Grain after Harvest. Technical

Center for Agricultural and Rural Cooperation (CTA),

the Netherlands, Technical Leaflet No. 3. 1997.

www.fao.org/inpho/vlibrary/x0008e/X0008E00.

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Guerzoni, Maria. “Position Paper on Some Aspects

Concerning Foodborne Diseases and Food Toxicity

in the Mediterranean Areas.” The Techno-Economic

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in the Mediterranean, 1999. Accessed from

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odtoxicityguerzoni.pdf

Henson, Spencer, and J. Caswell. “Food Safety

Regulation: an Overview of Contemporary Issues.”

Food Policy, 24. (1999): 589-603.

Herrman, J., and R. Walker. “Risk Analysis of

Mycotoxins by the Joint FAO/WHO Expert

Committee on Food Additives (JECFA).” Third

Joint FAO/WHO/UNEP International Conference

on Mycotoxins. Tunis, Tunisia, Mar. 3-6, 1999.

Lijewski, Bob. Grain Inspection, Packers and

Stockyards Administration (GIPSA), U.S. Dept.

Agr.. Personal correspondence. May 3, 2002.

Miller, J.D. “Foodborne Natural Carcinogens: Issues

and Priorities.” African Newsletter, 6, Supplement

1, (1996):1-9. http://www.occuphealth.fi/e/info/

anl/index.htm, accessed Mar. 8, 2002.

Miller, J.D. “Mycotoxins.” International Institute of

Tropical Agriculture, Mycotoxins in Food in Africa

Workshop, Benin. November 6-10, 1995.

www.fao.org/inpho/vlibrary/new_else/x5422e/x5422

e03.htm#mycotoxins, accessed Mar. 12, 2002.

Orriss, Gregory. “Animal Diseases of Public Health

Importance.” Emerging Infectious Diseases, 3, 4

(October-December, 1997). www.cdc.gov/ncidod/

eid/vol3no4/orriss.htm, accessed Mar. 5, 2002.

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Otsuki, Tsunehiro, J. Wilson, and M. Sewadeh.

“Saving Two in a Billion: Quantifying the Trade

Effect of European Food Safety Standards on

African Exports,” Food Policy, 26, 5 (October,

2001): 495-514.

Park, Douglas, H. Njapau, and E. Boutrif.

“Minimizing Risks Posed by Mycotoxins Utilizing

the HACCP Concept.” Third Joint FAO/WHO/NEP

International Conference on Mycotoxins, Tunis,

Tunisia. MYC-CONF/99/8b, 1999.

Robens, Jane. “The Costs of Mycotoxin Management to

the USA: Management of Aflatoxins in the United

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top.html, accessed Mar. 2, 2002.

Tangthirasunan, T. “Mycotoxin Economic Aspects.” In

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Thornsbury, S., D. Roberts, K. DeRemer, and D.

Orden. “A First Step in Understanding Technical

Barriers to Agricultural Trade.” Proceedings of the

Twenty-Third International Conference of

Agricultural Economists. Sacramento, California,

1997. 

U.S. Department of Agriculture (USDA), Grain

Inspection, Packers and Stockyards Administration

(GIPSA). “GIPSA Backgrounder: Aflatoxin,”

September, 1998. www.usda.gov/gipsa/newsroom/

backgrounders/b-aflatox.htm, accessed Mar. 1, 2002.

Van Egmond, Hans. “Worldwide Regulations for

Mycotoxins.” Third Joint FAO/WHO/UNEP

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Vardon, Peter, C. McLaughlin, and C. Nardinelli.

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United States.” Center for Food Safety and Applied

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Draft, Feb. 2000. 

Wilson, John, and T. Otsuki. “Global Trade and Food

Safety: Winners and Losers in a Fragmented

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the Secretariat.” Committee on Sanitary and

Phytosanitary Measures. G/SPS/R/12, 1998.

108 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Summary

Seafood safety, in relation to international trade,

is particularly important to the United States for

several key reasons. U.S. per capita fish consumption has increased more than 50 percent since

1980 and is projected to continue increasing over the

next 20 years (Blisard et al., 2002). Also, imports’

share of total U.S. fish consumption now accounts for

more than 75 percent of total consumption, compared

with less than 50 percent in 1980. Finally, an increasing number of countries are exporting seafood to the

United States and some of these countries have poor

internal control systems and/or are in tropical areas

where toxin and bacteria hazards are intrinsically

higher (Ahmed, 1991). 

The U.S. Food and Drug Administration (FDA)

detains and inspects samples of imported seafood at

the port of entry and refuses adulterated shipments.

The 2001 FDA import detention data for seafood products indicates that out of 130 countries represented, 80

had violations for adulteration (safety, packaging

integrity, or sanitation problems). Detention rates in

terms of value were low, with an average of 0.46

detentions per $1 million of imports. Of the 6,405 violations, 84 percent were for adulteration, with

Salmonella accounting for 34 percent of all adulteration violations. Shrimp, by far the largest import

item, accounted for one-quarter of all detentions.

Public and private entities are using measures to

ensure safer seafood in addition to end product testing

and inspection. Hazard analysis and critical control

point (HACCP) systems have been implemented

increasingly by private industry for seafood, sometimes voluntarily and sometimes as mandated by

Federal governments. Other actions being taken

include investment in new technologies and equipment

and in identity preservation systems.

As most contamination problems are from Salmonella

in shrimp and prawns, risk reduction efforts theoretically could be focused on that bacterium. Shrimp is

primarily an aquaculture product, so improvements in

sanitation and production practices perhaps could

make substantial differences in the occurrence and

extent of Salmonella contamination. However, for the

foreseeable future, shrimp will continue to be produced primarily by developing nations and dominate

seafood trade moving from developing nations to

developed nations (Wessells, 2002). One hurdle is that

many less developed countries have difficulty meeting

developed countries’ quality and safety standards

because of a lack of sufficient funds to invest in quality control measures, more adequately trained staff,

and expensive equipment (Rahman, 2001). 

Continued growth in international seafood markets

may increase market segmentation where wealthy

countries demand higher valued seafood products with

food safety ensured, while less wealthy countries consume lower value species with fewer safety assurances

(Wessells, 2002). This means that the degree of food

safety could become, to some extent, a source of product differentiation.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 109

Chapter 7

International Trade and 

Seafood Safety

Jane Allshouse, Jean C. Buzby, David Harvey, and David Zorn1

1 Allshouse, Buzby, and Harvey are economists with the Economic

Research Service; Zorn is an economist with the Food and Drug

Administration.
Introduction

There have been several major developments affecting

international seafood trade since the 1970s. Most importantly, during 1976-78, the jurisdiction over coastal

waters by coastal nations was expanded to 200 nautical

miles offshore. This changed which countries imported

or exported particular types of seafood (Wessells and

Wallström, 1994). In essence, while most oceans remain

a common property resource, nations have limited privatization giving them some control over maintaining fish

stocks and determining appropriate levels and procedures for harvest (Wessells and Wallström, 1994). Also,

technological advances in fishery operations have

increased productivity and in turn altered patterns of

trade. These advances have at the same time added pressures on wild fish stocks, which are inherently finite. 

Another development is the considerable growth in

aquaculture to supplement wild harvests. In the United

States alone, aquaculture production increased from 570

million pounds in 1990 to 880 million pounds in 2000

(National Marine Fisheries Service, 2001). Similar

growth can be seen in the aquaculture share of world

fish and seafood production (fig. 7.1). Aquaculture has

caused trade friction in instances where it has led to an

oversupply of certain species, resulting in drastically

reduced prices and charges of “dumping” of product

(e.g., charges by the U.S. International Trade

Commission that Norway dumped salmon into the U.S.

market in 1989). Meanwhile, governments, particularly

in developed countries, are increasingly recognizing the

importance of monitoring the state of aquatic ecosystems and managing human interventions (FAO, 2000).

Two widely publicized marine resource management

examples are import restrictions on tuna harvested with

methods that do not minimize dolphin bycatch and

shrimp harvested in nets without turtle-excluder devices.

Although international disputes for seafood can arise

from different stances on jurisdiction, marine resource

management, and aquaculture, the focus here is on

seafood safety and international trade. In general, countries are increasingly concerned about seafood safety,

particularly as trading patterns shift among developed

and developing countries.

The United States is one of the world’s largest producers, exporters, and importers of fish and fishery products.

According to the Food and Agriculture Organization’s

(FAO) 2000 statistics, the United States ranked fifth in

terms of volume of overall fisheries production (aquaculture and wild catch together), fourth in terms of volume

of exports, and second in terms of volume of overall

imports. Figure 7.2 shows that the total amount of

seafood imported into the United States has been

increasing over time. At the same time, the level of U.S.

seafood exports has been sustained.

In relation to international trade, seafood safety is particularly important to the United States for several reasons. First, fish consumption has increased over 50

percent since 1980 and a USDA study projects continued increases over the next 20 years (Blisard et al.,

2002). Second, the average import share of total U.S.

consumption for fish and shellfish is increasing. It was

110 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Figure 7.1

World production from capture fisheries 

and aquaculture

Million tons

Source: FAO, 2000.

1950 55 60 65 70 75 80 85 90 95 2000

0

20

40

60

80

100

120

140

Aquaculture

Capture fisheries

Note: Aquaculture quantities prior to 1984 are estimates.

Figure 7.2

Volume of U.S. exports and imports of edible 

seafood, 1991-2001

Billion lbs

Source: NMFS, 2002.

Exports

Imports

1991 93 95 97 99 2001

0

1

2

3

4

5
56.3 percent in 1990 and 68.3 percent in 2000.

Although there is no evidence that imported food, as a

whole, poses higher food safety risks than domestically

produced food (Zepp et al., 1998), the FDA has less

direct access to food safety information on foreign

seafood production and processing practices. Third, an

increasing number of countries are exporting seafood

to the United States and some of these countries have

poor internal control systems and/or are in tropical

areas where toxin and bacteria hazards are intrinsically

higher (Ahmed, 1991). Fourth, FDA import detentions

for “fishery/seafood products” accounted for almost 27

percent of the total number of detentions in 2001, second only to the “vegetable/vegetable products” category. Fifth, the large proportion of imported seafood

raises concerns about potential food security concerns.

Our heavy reliance on imported seafood means that any

significant concerns over seafood safety have the

potential to disrupt the flow of trade, reduce supplies to

consumers, and limit sales for producers. Combined,

these factors suggest that ensuring seafood safety is a

task that will become more difficult.

FDA detains and inspects samples of imported seafood

at the port of entry, refuses adulterated shipments,

inspects foreign processors who wish to export to the

United States, and inspects seafood importers in the

United States. The Federal agency that governs fishery

resources is the National Marine Fisheries Service

(NMFS) in the U.S. Department of Commerce’s

National Oceanic and Atmospheric Administration

(NOAA). A brief discussion is presented of some of the

implications for policymakers. Seafood trade, in general,

is complex because of diverse harvest methods, production areas, and markets, and because fish is not a homogenous commodity (Wessells and Wallström, 1994).

Therefore, seafood safety issues are complex.

U.S. Seafood Exports 

and Imports

In 2000, the U.S. fish and fishery harvest was estimated at 9.1 billion pounds (edible and nonedible),

having peaked in 1993 and 1994 at just over 10 billion

pounds. The domestic catch is composed of a large

number of fish, shellfish, mollusk, and crustacean

species, but a handful of species dominate the catch.

The total landings (catch) of cod, flounder, menhaden,

pollock, salmon, crab, shrimp, and squid accounted for

6.9 billion pounds, or 76 percent of the total catch in

2000.2 The value of this total harvest was estimated at

$3.5 billion (see box 7.1).

The United States is a major producer and exporter

of fish and fishery products, on a value basis, but the

United States imported roughly $6.8 billion more

edible seafood than it exported in 2001: the U.S.

imported $9.9 billion (4.1 million pounds) and

exported $3.2 billion (2.6 million pounds) (NMFS,

2002) (fig 7.3).3 Imports and exports are relatively

similar to the domestic harvest in that a small number of species dominate the trade picture. Shrimp

products made up the largest single import item.

Imported shrimp products alone were estimated at

883 million pounds and were estimated to be worth

$3.6 billion. The four species next in importance in

terms of import values were tuna ($829 million),

lobster ($728 million), crab ($368 million), and fresh

and frozen salmon ($335 million). This would place

the combined values of these products at $5.9 billion, or 60 percent of the value of all U.S. fisheries

imports.

In general, seafood trade with the United States is less

restricted than trade for other agricultural products and

has no heavy quotas or duties on imports. The vast

majority of seafood products are tariff free. Probably the

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 111

Figure 7.3

Value of U.S. exports and imports of edible 

seafood, 1991-2001

$ billion

Source: NMFS, 2002.

Exports

Imports

1991 93 95 97 99 2001

0

2

4

6

8

10

12

2 Menhaden was probably mostly for industrial uses such as to

make fish oil and meal for poultry feed.

3 In 2001, the United States imported a total of roughly $18.5 billion in seafood, of which $8.7 billion was for nonedible seafood,

and exported roughly $11.8 billion of seafood, of which $8.6 billion was nonedible. 
best example of imports that enter the country with no

tariff is frozen shell-on, head-off shrimp. This is the

most common product form of imported shrimp and

accounted for almost $3 billion in imports in 2001.

Imports of fresh or frozen Atlantic salmon, either as

whole fish or fillets, also enter with no tariff. The highest tariff rates on seafood imports were for tuna in an

airtight container in oil (35 percent) and sturgeon

roe/caviar (7.5 percent) (Koplin, 2002). One explanation

for the lack of tariffs or very low tariff rates on most

seafood is that traditionally imported seafood were

products not available from local fishermen or not available in sufficient quantities. Additionally, restrictions

may have lessened over time due to General Agreement

on Tariffs and Trade (GATT) negotiations.

The United States imports seafood from many countries. The largest suppliers of seafood to the United

States tend to be large producers of the top four

seafood imports by value (i.e., shrimp, crab, salmon,

and tuna). In 2001, Canada and Thailand were by far

the largest suppliers, followed by China, Mexico,

Chile, Vietnam, and Ecuador. Developing countries

supply about half of all seafood exported worldwide

(Sun and Caswell, 2002), and Asia is the leading

region in seafood exports, with 36.5 percent of the

total (Cato, 1998).

U.S. seafood exports are dominated primarily by

shipments of salmon products, surimi, lobster, caviar

(i.e., sturgeon roe), and other roe. U.S. seafood

exports was sold primarily to Japan and Canada.

These two countries accounted for almost 55 percent

of export value in 2001. In particular, Pacific salmon

harvested by the United States and not consumed in

the western States is generally exported in large

quantities to Japan. Meanwhile, the U.S. imports

large amounts of farmed Atlantic salmon from

Canada and Chile for consumption on the East Coast.

Surimi, a processed seafood product, uses pollock as

the major ingredient. The roe exports are a combination of products from herring, salmon, pollock, sea

urchin, and other species. 

Seafood Safety

Seafood is processed into a wide range of products and

is consumed in many forms (e.g., smoked, canned,

salted, dried, fresh, frozen, and raw). While thorough

cooking destroys most harmful organisms if any are

present, raw oysters and clams have been popular in the

United States and these products have been linked to ill112 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

When using monetary values to measure production,

imports, and exports, values are not all estimated at

the same stage of production. Export value is the

“free alongside ship” value, or the value of the product at the port of export, based on the sales price

including inland freight, insurance, and other

charges incurred prior to exportation. Production

values are typically ex-vessel prices, that is, the

value of the catch at the dock where the vessel is

offloading. Also, export values per pound from the

United States are usually significantly lower than

import values per pound to the U.S. This is because

the mix of species exported is different than the mix

of species imported, and because the level of processing varies. Some of the seafood exported from

the United States is low value-added or low value,

whereas, a large percentage of the seafood imported

to the United States is high value-added (e.g., filets)

or high-value (e.g., shrimp). In fact, a significant

quantity of seafood produced in the United States is

exported to countries with significantly lower labor

costs for processing and then reimported into the

United States for consumption. This is part of the

explanation of how the same country could be both

a major importer and exporter of seafood. Lower

labor costs and manageable transportation costs permit firms to profitably exchange substantial quantities of seafood in international commerce and still

provide consumers with high quality seafood at

affordable prices.

The other part of the explanation for countries being

both importers and exporters of seafood is that harvests of seafood, like that of most agricultural commodities, are seasonal. Seafood producers use their

access to international markets to stabilize their revenues. When a given species is in season in one

country, some of the catch can be exported to other

countries where that same species is out of season. 

Therefore, both seafood producers and consumers

have an interest in maintaining open markets for

international trade to provide an almost year-round

supply of seafood to as many potential customers as

possible. If this is to be the case, then issues of

seafood safety must be addressed and controlled as

they arise.

Box 7.1—Measuring the monetary value 

of seafood
ness from Vibrio vulnificus and other pathogens.4 The

1998 FDA Food Safety Survey of U.S. adults found that

12 percent said they ate raw oysters (Fein and Riggins,

1998). Most seafood-associated illness reported by U.S.

consumers point to consumption of raw bivalve mollusks

and to unspecified and unknown foodborne illnesses

with Norwalk-like viral gastroenteritis symptoms

(Ahmed, 1991). 

A National Academy of Sciences report indicates that

most of the seafood sold in the United States is wholesome and unlikely to cause illness (Ahmed, 1991).

However, some unknown portion of the estimated 76

million foodborne illnesses that occur each year in the

United States (Mead et al., 1999) are attributed to

seafood. According to the U.S. Centers for Disease

Control and Prevention (CDC), surveillance data for

foodborne disease outbreaks indicates that 6.8 percent of

the 2,751 outbreaks during 1993-97 were attributed to

consumption of shellfish and other fish (Olsen et al.,

2000). However, these data do not capture unreported

outbreaks or sporadic cases of foodborne illness, and so

the true share of foodborne illness due to contaminated

seafood is unknown.

On a global scale, the extent of illness from contaminated seafood is high. The World Health Organization

(WHO) estimates that 40 million people become

infected each year from trematode parasites by consuming raw or inadequately processed shellfish, freshwater

fish, and aquatic plants (WHO, 1995). Data are not

available on the extent of foodborne illnesses worldwide

from all types of seafood hazards, which include:

● Bacteria. A number of different bacteria potentially

can be found in seafood. Some examples are Vibrio

parahaemolyticus, Listeria, Salmonella, and

Staphylococcus.

● Viruses. Illnesses from viruses, such as the

Norwalk virus, can be associated with the consumption of shellfish, particularly raw shellfish.

● Toxins. Some naturally occurring toxins can accumulate in fish and mollusks. Examples include

ciguatera found in some large tropical reef fish;

domoic acid found in shellfish and mollusks; saxitoxin, also found in shellfish; and histamine in

dolphin (i.e., mahi) and tuna.

● Parasites. A number of fish species are at risk of

having parasites such as roundworms. This normally becomes a human health problem only when fish

are eaten raw or not fully cooked. The FDA Model

Food Code requires freezing to destroy these organisms in fish for raw consumption.

● Chemicals. Chemicals can be a localized problem

in freshwater species, but can also affect ocean

fish. Chemical contamination can result from local

spills or dumping of pesticides, industrial chemicals, heavy metals, and petroleum products.

In general, many kinds of contamination can affect

both farm-raised and wild-caught seafood. Different

countries allow the use of different vaccines, feed

additives, and antibiotics for farm-raised fish and fishery products and therefore, in some cases, residues

from these production inputs may cause food safety

concerns (FDA, 2001). On the other hand, wild-caught

seafood may be more likely affected by other kinds of

contamination such as from histamine (FDA, 2001).

For the most part, seafood is more perishable than

livestock or poultry. The potential for relatively faster

decomposition gives seafood a shorter shelf life and

makes handling more difficult.

FDA Import Detention 

Data for Seafood

The Federal Food, Drug and Cosmetic Act (FFDCA)

was enacted to protect the health and safety of

Americans and to protect them from mislabeled or

adulterated domestic or imported food products. In

particular, Section 801 directs the FDA to detain any

seafood imports that appear to violate the Act. FDA

may take a “detention action” based on:

(1) Regular detentions, which include shipments

where physical analysis or records show that

the food appears to violate the FFDCA and

other acts enforced by the FDA, or 

(2) Detentions without physical examination

(DWPE), which include:

(a) automatic detentions based on past violative history of individual processors, countries,

or geographic areas, or 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 113

4 Although Vibrio vulnificus causes fewer than 50 foodborne illnesses in the United States each year, it has the highest case fatality rate (39 percent) and second highest hospitalization rate (91

percent) of known foodborne pathogens (Mead et al., 1999). In a

case study, Buzby and Frenzen (1999) analyze product liability

lawsuits associated with Vibrio vulnificus in raw oysters.
(b) detentions based on import alerts, which

may cover one or more firms or countries, and

arise from new food safety concerns that are

identified by U.S. officials and perceived to be

a threat to human health. 

DWPE have a substantial deterrent effect on the incentive to ship tainted or suspect seafood into the United

States, and also illustrate food safety concerns of U.S.

officials. DWPE are included in this analysis as they

represent the large majority of detentions.

FDA provided us with monthly data on detentions in 

the form of electronic Import Detention Reports (IDR).

Each IDR provides insight into the range and number of

possible import violations. Here we analyzed FDA

import detention data for “fishery/seafood products”

with each record in the IDR representing one detained

shipment. Each record generally includes data naming

the country, product, product code, product description

(e.g., frozen shrimp), manufacturer, city and state of the

manufacturer, detention type, sample number, and reasons for detention. Some limitations or caveats of the

IDR data for seafood products include:

● Only a small percentage of all seafood imported

into the United States is physically inspected,

meaning that the detention data likely does not capture all food safety problems. On average, during

1999-2001, less than 1 percent of shipments were

detained for any of the above reasons, and even

fewer were physically sampled for contamination.5

However, the sampling strategies by FDA and other

agencies are designed to focus enforcement and

inspection efforts on areas that have the highest

probability of having a problem (Ahmed, 1991).

● The sample of detentions includes many shipments that are found to pose no food safety problems and are released so that trade is resumed.

That is, most detained shipments are released with

re-examination, new documentation, or new labeling. Other detained shipments are re-exported

elsewhere or destroyed. On average, during 1999-

2001, 78 percent of detained shipments were

released for import into the United States.6 The

large percentage of shipments that are released

after being detained reflects the cautious approach

that FDA takes in protecting human health.

● The FDA data provided to us did not include the

dollar value of detained shipments. 

FDA separates the reasons for seafood detentions into

two main categories, misbranding and adulteration, and

three smaller categories (table 1). Misbranding includes

untruthful labeling or lack of labeling whereas adulteration deals with safety, packaging integrity, or sanitation

problems (Caswell and Wang, 2001). 

In 2001, FDA listed a total of 4,912 detentions for

seafood products, which includes 6,405 violations

(detentions can be for multiple violations). Of the violations, 83.6 percent were attributed to adulteration,

14.3 percent were for misbranding, and 2 percent for

insanitary manufacturing, processing, or packing. Two

types of adulteration accounted for slightly more than

half of all violations. Salmonella was the most common violation (34 percent) for adulteration with

seafood coded as “filthy” as the second most common

violation (27 percent) (table 7.1). 

Of the approximately 130 countries that export seafood

products into the United States, 86 had one or more

shipments detained in 2001 and 80 had violations for

adulteration. Although Salmonella was the most common violation, other potential violations occurred in a

greater number of countries. Salmonella violations

occurred in 42 percent of the countries with detentions,

whereas over 75 percent of countries had products

detained for being “filthy” and 63 percent of countries

had products detained for “no process,” meaning that

the manufacturer had not filed information on its

scheduled process.

Because of this chapter’s emphasis on food safety, the

focus here is on violations for adulteration. The

smaller category titled “insanitary manufacturing, processing, or packing” is listed separately in table 7.1,

but is combined with adulteration for the remainder of

this analysis as it also has implications for food safety. 

Table 7.2 breaks down the FDA import detentions for

adulteration by exporting country. The number of

detentions by country is hard to interpret alone

because of the variation in number and magnitude of

shipments from a particular country. Therefore, we

computed detention rates (i.e., the number of FDA

detentions per $1 million imports to the United States)

114 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

5 According to data provided by Mary Snyder of the FDA’s Office

of Seafood, 11,686 import shipments were detained at the port of

entry by FDA out of 1,650,350 line entries during 1999-2001 (or

<1 percent). 

6 Of the 11,686 detained shipments during 1999-2001, 9,120 were

later released (some with reconditioning).
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 115

Table 7.1—FDA violations for detaining fishery/seafood products, 2001

Violation No. of % of all Violation description No. of

code violationsviolations countries

Total violations 6,405 100.0 86

Adulteration 5,356 83.6

Salmonella 1,832 28.6 The article appears to contain Salmonella, a poisonous and deleterious 36

substance which may render it injurious to health.

Filthy 1,460 22.8 The article appears to consist in whole or in part of a filthy, putrid, or 62

decomposed substance or be otherwise unfit for food.

No process 683 10.7 It appears that the manufacturer has not filed information on its scheduled 54

process as required.

Insanitary 351 5.5 The article appears to have been prepared, packed or held under 25

insanitary conditions whereby it may have been contaminated with filth,

or whereby it may have been rendered injurious to health.

Needs acid/Needs fce 336 5.2 It appears the manufacturer is not registered as a low acid canned food 42

or acidified food manufacturer.

Poisonous 231 3.6 The article appears to contain a poisonous or deleterious substance 38

which may render it injurious to health.

Listeria 170 2.7 The article appears to contain Listeria, a poisonous and deleterious 11

substance which may render it injurious to health.

Histamine 123 1.9 The article appears to contain Histamine, a poisonous and deleterious 11

substance which may render it injurious to health.

Imptrhaccp 41 0.6 The food appears to have been prepared, packed or held under insanitary 5

conditions, or may have become injurious to health, due to the failure

of the importer to provide verification of compliance.

Unsafe col 41 0.6 The article appears to be, or to bear, or contain a color additive which is unsafe. 14

All other violations1 88 1.4 Violations includes those for food that—appears to have been prepared or 46

packed under insanitary conditions, contains excessive sulfites, contains 

or been packed in containers that have poisonous substances, contains 

unsafe food additives, contains unsafe pesticides, has had inadequate processing, 

consists of a filthy, putrid or decomposed substance, contains an off odor, or has 

been held in swollen or leaking containers.

Insanitary manufacturing, processing, or packing

Mfr insan 130 2.0 The article appears to have been manufactured, processed, or packed, 27

under insanitary conditions.

Misbranding 914 14.3

Nutrit lbl 200 3.1 The article appears to be misbranded in that the label fails to bear the required 33

nutrition information.

Lacks firm 140 2.2 The food is in package form and appears to not bear a label containing the 32

name and place of business of the manufacturer, packer, or distributor.

Usual name 136 2.1 It appears that the label does not bear the common or usual name of the food. 28

List ingre 87 1.4 It appears the food is fabricated from two or more ingredients and the label 29

does not list the common or usual name of each ingredient.

Lacks n/c 84 1.3 The food is in package form and appears to not have a label containing 25

an accurate statement of the quantity of the contents in terms of weight, measure,

or numerical count and no variations or exemptions have been prescribed.

False 70 1.1 The labeling for this article appears to be false or misleading 13

No English 47 0.7 Required label or labeling appears not to be in English. 21

Labeling 46 0.7 The article appears in violation of FPLA because of its placement, form, 21

and/or contentsstatement.

Sulfitelbl 40 0.6 The labeling appears false and misleading because it appears to contain 4

sulfites, but thelabel fails to declare the presence of sulfites, a fact material to 

sulfite-sensitive individuals who must avoid the ingredient.

All other violations1 64 1.0 Violations include those for food that—appears to be offered for sale under 35

the name of another food, appears to contain an unlabeled chemical preservative, 

required labeling is not visible enough, purports to be for special dietary uses and 

its label does not bear required nutritional information, appears to contain additives 

which are not declared on the label, or appears to be represented as a food for which 

a standard of identity has been prescribed and does not appear to conform to that definition.

Note: Two smaller FDA categories not show here. Complete list of violations are available upon request.

1Each individual violation in these groups represent less than 0.5 percent of all violations.

Source: Computed by the authors using FDA Import Detention Reports, January-December, 2001.
using census data on the value of imports obtained

from the National Marine Fisheries Service website.7

The top three countries in terms of the number of violations in 2001 were Vietnam, Thailand, and

Indonesia—all among the top eight exporters of

seafood products to the United States. Vietnam had

580 detentions worth $478 million in exports, resulting

in a rate of 1.21 detentions per $1 million of exports.

This detention rate is almost triple the average for all

countries (0.46). Although Thailand had the second

highest number of detentions (407), it also had the second highest value of exports and a detention rate

below average (0.25). Canada, the number one

importer in terms of value, had the lowest detention

rate (0.03). Again, two caveats are that only a small

percentage of products are inspected, and enforcement/inspection efforts are focused on areas with the

highest probability of having a problem. 

An earlier study by Sun (2002) computed the detention ratios for fishery products by country over 1997-

2000 and found that most ratios remained low.

However, the ratios for some countries, including

Vietnam, fluctuated wildly.

Table 7.3 breaks down the FDA seafood product

detentions for adulteration by class and product. Fish

was the most implicated class, with 45.3 percent of all

detentions. This is not surprising since this category

contains more than 60 types of fish and includes highvolume products such as tuna and salmon. However,

when looking at individual products, by far, the most

implicated product was shrimp and prawns (marine

plus aquaculture combined), accounting for more than

one-quarter of all detentions. This finding was

expected because shrimp was by far the largest single

import item, with 40 percent of the value of seafood

imports in 2001. 

Table 7.4 looks more closely at the number of violations

in the 2001 FDA detention data to determine the types

of seafood products detained for different reasons.

Shrimp and prawns ranked the highest in terms of the

number of violations for 6 of the top 11 violation codes

for adulteration. In particular, shrimp and prawns

accounted for 58 percent of the Salmonella violations

(fig. 7.4) and 48 percent of the violations for filth.

In summary, out of 130 countries represented in FDA

import detention data, 86 had one or more violations

in 2001 for one or more reasons and 80 of these had

violations for adulteration. Detention rates in terms of

value were low, with an average of 0.46 detentions per

$1 million of imports. Of the 6,405 violations, 83.6

percent were for adulteration, with Salmonella

accounting for 28.6 percent of the adulteration violations. More than one-quarter of the detentions were for

shrimp and prawns (marine plus aquaculture) which

was expected because shrimp is by far the largest

seafood import item. 

Seafood Safety Incidents

Affecting International Trade

In general, it appears that seafood safety issues have

been less publicized in the media than the food safety

issues linked to some of the other agricultural products covered in this report. Nevertheless, international

disputes over seafood safety have affected trade

opportunities for producers, exporters, and importers.

In 1994, the Spanish government rejected two shipments of squid from the United States. The squid was

found to contain copper in excess of 20 parts per million (ppm), which Spain had established as the maximum allowable amount of copper.8 The 20-ppm level

was advantageous to Spanish squid producers because

Spanish squid naturally has lower levels of copper than

116 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

7 www.st.nmfs.gov/st1/trade/trade_prdct_cntry-com.html, accessed

April 2002. 8 Copper is an essential trace mineral nutrient.

Figure 7.4

U.S. FDA violations for Salmonella, by 

seafood product, 2001

Source: ERS calculations using 2001 FDA Import Detention Reports.

Shrimp 

& prawns

58%

Lobster—5%

Milkfish—4%

Tilapia—4%

Oysters—3%

Squid—3%

Catfish—2%

Eel—2%

Other—19%
squid from other countries. After a few months the dispute was resolved and the U.S. went on to export a

record $16 million of squid to Spain in 1994 (USDA

Foreign Agriculture Service, 1995).

In 1997, the European Commission (EC) banned

shrimp imports from Bangladesh because processing

plants in Bangladesh did not meet EC standards. The

estimated net cost of this August-December 1997 ban

after considering shipments diverted to other countries

was $14.7 million to the Bangladesh frozen shrimp

processing industry (Cato and Lima dos Santos, 1998).

As in many other less developed countries (LDCs),

many plants in Bangladesh have difficulty meeting the

required quality and safety standards because of a lack

of sufficient funds to invest in quality control measures, more adequately trained staff, and expensive

equipment (Rahman, 2001). The Bangladesh

Department of Fisheries, Fish Inspection, and Quality

Control has verified and certified compliance of

seafood products for only 20 percent of the seafood

processing companies that previously were shipping to

the European Union (EU) (Cato, 1998). This ban

affirms the apprehension of some LDCs that evolving

standards under the WTO will become a major market

access issue (Rahman, 2001).

Since 1997, Kenya and some other countries surrounding Lake Victoria have faced a series of food safetyrelated restrictions of their fish exports (Henson et al.,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 117

Table 7.2—FDA import detentions for adulteration of fishery/seafood products versus value of 

imports, 2001

U.S. fishery/ Number of detentions 

Country1 Detentions seafood imports per $1 million imports

Number % of total Mil. dol. % of total Number

Total2 4,431 83.1 9,533.6 93.4 0.46

Vietnam 580 13.1 477.9 5.0 1.21

Thailand 407 9.2 1,607.7 16.9 0.25

Indonesia 366 8.3 382.1 4.0 0.96

Ecuador 321 7.2 392.8 4.1 0.82

India 312 7.0 296.1 3.1 1.05

Taiwan, Republic of China 270 6.1 185.7 1.9 1.45

Philippines 246 5.6 148.1 1.6 1.66

Korea, Republic of (South) 206 4.6 74.1 0.8 2.78

China (Mainland) 150 3.4 659.1 6.9 0.23

Mexico 122 2.8 487.0 5.1 0.25

Japan 114 2.6 120.2 1.3 0.95

Chile 85 1.9 483.4 5.1 0.18

Bangladesh 68 1.5 94.1 1.0 0.72

Brazil 68 1.5 155.4 1.6 0.44

Canada 64 1.4 1,945.4 20.4 0.03

Norway 52 1.2 115.1 1.2 0.45

Nicaragua 40 0.9 81.6 0.9 0.49

Costa Rica 32 0.7 78.4 0.8 0.41

Honduras 30 0.7 123.1 1.3 0.24

Australia 24 0.5 70.1 0.7 0.34

Panama 24 0.5 104.0 1.1 0.23

Venezuela 21 0.5 118.7 1.2 0.18

Iceland 20 0.5 151.7 1.6 0.13

Argentina 19 0.4 105.1 1.1 0.18

Russia 19 0.4 215.4 2.3 0.09

Guyana 10 0.2 58.4 0.6 0.17

New Zealand 9 0.2 112.2 1.2 0.08

Fiji 5 0.1 57.3 0.6 0.09

1 Includes only countries with at least 0.5 percent of total imports. Complete list of countries available upon request.

2 Excludes import detentions from U.S. territories included in tables 7.1, 7.3, and 7.4.

Source: Computed by the authors using FDA Import Detention Reports, January-December, 2001 and National Marine Fisheries Service,

Foreign Trade Information website: http://www.st.nmfs.gov/st1/trade/trade_prdct_cntry.html, accessed April 2002.
2000). Salmonella contamination in Nile perch from

Kenya in April 1997 led to border testing of all Nile

perch consignments. Later, a cholera epidemic in East

Africa in December 1997 resulted in a European

Commission ban of imports of fresh fish products

from Kenya, Mozambique, Tanzania, and Uganda until

June 1998. The World Health Organization and Food

and Agriculture Organization issued statements that

the ban was not scientifically justifiable and the

restrictions were lifted in June 1998. For Mozambique

alone, the ban resulted in a loss of $60,000 in trade per

month while the ban was in place, which means that

about 30 tons of fish were not traded to the European

Union market (Cato, 1998). Following reports of pesticide poisoning of fish from Lake Victoria, another

round of restrictions began in April 1999 that prohibited all fish exports from Lake Victoria to the EU

(Henson et al., 2000). As a result of these events,

employment in the sector declined and industrial fish

processing companies reduced capacity or closed

(Henson et al., 2000).

In January 2002, the EU suspended shrimp and prawn

imports (and other products of animal origin) from

China because of residues from a banned antibiotic,

chloramphenicol, and because of general deficiencies

in the Chinese residue control system (McGovern,

2002). This antibiotic is used in some animal and

seafood feed to control disease. It has been linked to

fatal leukemia and anemia in humans. The FDA

response was to step up surveillance for chloramphenicol residues and residues of other unapproved aquaculture drugs in shrimp and crayfish imports from all

countries and to modify its testing methods so as to be

able to detect the antibiotic at 0.3 part per billion,

equal to that of Canada and the EU. Products with

118 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Table 7.3—FDA import detentions for adulteration of fishery/seafood products, by class and 

product, 2001

Class and product Number of Percent of total Number of 

detentions detentions countries

Total 4,451 100.0 80

Fish 2,016 45.3 73

Tuna (Albacore, Yellowfin, Skipjack, etc.) 367 8.2 27

Swordfish 224 5.0 37

Sardines (Brisling, Sprats, Pilchards, etc.) 171 3.8 32

Mahi Mahi 122 2.7 11

Mackerel 104 2.3 26

Salmon (Humpback, Silver, King Sockeye, etc.) 95 2.1 17

Milkfish 94 2.1 3

Other1 839 18.8 55

Crustaceans 1,308 29.4 41

Shrimp and prawns 1,043 23.4 35

Crab 126 2.8 14

Lobster 120 2.7 10

Other2 19 0.4 7

Aquaculture harvested fishery/seafood products 413 9.3 20

Shrimp and prawns 365 8.2 13

Other3 48 1.1 11

Shellfish4 224 5.0 31

Other fishery products5 222 5.0 36

Other aquatic species6 226 5.1 18

Mixed fishery/seafood products7 37 0.8 13

Engineered seafood8 5 0.1 2

1 Includes anchovy, barracuda, bass, blue fish, bonito, bream, carp, catfish, cod, corvina, croaker, cusk, dace, eel, escolar, filefish, flounder,

gourmay/gourami, groupers, hake, halibut, herring, jack, kingfish, marlin, mud fish, mullet, perch, pike, pickerel, pollack/pollock, pompano, puffer,

rockfish, suary, scad, shark, sheatfish, smelt, snake head, snapper, sole, spot fish, tilapia, totoava, trout, turbot, wahoo, white fish, whiting, yellowtail, and other products not classified. 2 Includes crayfish, langostino, and other products not classified. 3 Includes catfish, clams, frogs, mussels, oysters, salmon, tilapia, and other products not classified. 4 Includes abalone, arkshells, clams, cockles, conch, conchmeat, mussels, oysters, scallops, and other products not classified. 5 Includes caviar/roe, fish maw, fish paste, fish sauce, gefilte fish, shark fin, and other products

not classified. 6 Includes cuttlefish, frog legs, octopus, sea cucumber, sea urchin, snails, squid, and other products not classified. 7 Includes

chowders, stews, bisques, hors d'oeuvres, salads, stuffed pastas, tuna sandwiches, and other products not classified.8 Includes crab and surimi

used for imitation crab and other products not classified.

Source: Computed by the authors using FDA Import Detention Reports, January-December 2001.
detectable levels of chloramphenicol will be detained

and refused entry into the United States (FDA Press

Release, 2002.). Also, the U.S. temporarily suspended

shrimp imports from China. 

Although some of these seafood safety incidents

appear to have resulted in relatively limited and shortterm interruptions of trade and economic impacts,

costs could continue to accrue from continued market

diversions (i.e., lost market share), loss of momentum

in the sector, decreased prices, and reduced capacity

due to temporary or permanent plant closures. The

above examples illustrate that food safety restrictions

can act as barriers to trade as they can for any type of

food. Despite the advantages of some developing

countries in terms of preferential trading arrangements,

food safety incidents can impose costly requirements

on developing countries beyond their ability to afford

compliance (Henson et al., 2000).

Public and Private Actions To

Ensure Safer Seafood

Federal regulation of seafood imports has tended to

focus on end product testing and inspection, except for

where memoranda of understanding (MOU) are in

place (Ahmed, 1991, p. 15).9 More recently, HACCP

systems have been increasingly implemented by private industry for seafood, sometimes voluntarily and

sometimes as mandated by governments. HACCP

plans generally follow seven steps: conduct a hazard

analysis; identify critical control points (CCP) for

physical, biological, and chemical hazards; establish

critical limits for preventative measures associated

with each CCP; establish CCP monitoring requirements; determine and perform corrective actions;

establish recordkeeping systems; and conduct verification procedures. This system has become one of the

more common public actions used to ensure safer

seafood, particularly in developed countries. 

Canada was the first country to establish a mandatory

food inspection program for fish and fishery products

based on HACCP principles. In 1992, Canada adopted

the Quality Management Program (QMP) whereby all

federally registered fish processing establishments in

Canada must implement a system of procedures,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 119

Table 7.4—FDA violations for adulteration of fishery/seafood products by reason for contravention 

and main products detained, 2001

Violation No. of Main products detained

code violations

Total violations 5,486

Adulteration

Salmonella 1,832 Shrimp/prawns, 58%; lobster, 5%; milkfish and tilapia, each 4%; oysters and squid, 

each 3%.

Filthy 1,460 Shrimp/prawns, 48%; tuna, 11%; mahi mahi, 7%; crab 4%, conch/conchmeat, 3% .

No process 683 Sardines, 20%; tuna, 17%; mackerel, 7%; herring, 5%; salmon and shrimp/prawns, 

each 4%; anchovy, clams, and octopus, each 3%.

Insanitary 351 Shrimp and prawns, 69%; crab, 4%.

Needs acid/Needs fce 336 Tuna, 18%; sardines, 17%; herring, 8%; mackerel, 7%; crab, 6%; anchovy and 

shrimp/prawns, each 5%; snails, 4%.

Poisonous 231 Swordfish, 87%.

Listeria 170 Salmon, 17%; fish roe/caviar, 14%; crab and shrimp/prawns, each 11%; pollack, 10%.

Histamine 123 Mahi mahi, 53%; tuna, 32.

Imptrhaccp 41 Milkfish, 39%; tuna and groupers, each 17%.

Unsafe col 41 Shrimp/prawns, 29%; seafood salad, 17; fish roe, 12%.

Mfrhaccp 32 Shrimp/prawns, 41%; tuna, 34%.

Other 56 Shrimp/prawns, 34%; swordfish, 9%; anchovy and milkfish, each 5%.

Insanitary manufacturing, processing, or packing

Mfr insan 130 Anchovy and clams, each 12%; oysters, 12%; mackerel, 7%; mussels and pollack, 

each 6%.

Note: See table 7.1 for definitions of violation codes.

Source: Computed by the authors using FDA Import Detention Reports, January-December, 2001.

9 FDA has had other programs in place for a long time to address

food safety issues, such as the low acid canned food regulations to

reduce the risk of botulism.
inspections, and records. Meanwhile, importers who

wish to be in product compliance with federal regulations may develop a quality management system and

provide details through a Quality Management

Program for Importers (QMPI) submission to the

Canadian Food Inspection Agency (CFIA, 2002). 

In 1991 and 1994, the European Commission adopted

regulations concerning health conditions for production and marketing of fishery products, and again

these were roughly based on HACCP principles

(FAO, 2000). In 1995, the FDA promulgated a

HACCP program for fish and fishery products stipulating that importers of seafood to the United States

must meet the same HACCP standards as U.S seafood

processors (Federal Register, Dec. 18, 1995). Since

then, other developing and developed countries have

made similar initiatives. The level of U.S. seafood

exports has been sustained despite the U.S. HACCP

regulation for fish and fishery products. This means

that increased seafood regulation need not have a significant detrimental effect on international seafood

trade at the current levels of production. Although

higher safety standards raise seafood production costs,

the increasing worldwide demand for high-quality

seafood has offset these cost increases (Sun and

Caswell, 2002).10

Inspection protocols and regulatory limits for contaminants vary tremendously across countries (Ahmed, 1991,

p. 15), and HACCP systems vary as well. For example,

the EU regulations apply to the whole production chain

whereas the U.S. seafood HACCP regulations apply

only to processors (FAO, 2000). WHO/FAO Codex

Alimentarius incorporated HACCP in its general guidelines in 1997, thus creating a starting reference for trade

disputes under the WTO Agreement on the Application

of Sanitary and Phytosanitary Measures (FAO, 2000). 

Meanwhile, private industry may invest in new technologies and equipment that ensure safer food and

may take certain measures to reduce food safety risk

(which may or may not be part of HACCP systems)

such as rapid cooling, irradiation, proper processing,

and good temperature control at all stages of the production and distribution chain. Additionally, some

companies voluntarily test for Vibrio, histamine, or

other contaminants. The leading trade association for

fish and seafood products in the United States is the

National Fisheries Institute, founded in 1945. One

component of their mission is food safety education

for the seafood industry, which includes scientific and

technical information on key issues such as HACCP,

irradiation, mandatory recalls, mercury, and voluntary

seafood inspection services. 

Identity preservation is another means of ensuring

safety, one that is attracting attention in the international trade arena. Under an identity preservation system, information about the origin of a “lot” of food

follows that lot from harvest all the way to the consumer. An identity preservation system has been in

place since 1925 for molluscan shellfish harvested in

the United States. This system is under the auspices

of the National Shellfish Sanitation Program (NSSP).

The NSSP is a Federal, State, and industry voluntary

cooperative program that relies on regulatory controls

by State shellfish authorities to ensure safe molluscan

shellfish. Among other requirements, the NSSP

requires that containers of raw shellfish have identity

tags that stay with the shellfish from harvest to sale to

the consumer. The tags must include the identity of

the shellfish harvester/dealer and the date and location

of harvest. Lot identity of the shellfish must be maintained throughout the production and marketing chain.

The identity preservation system has been very helpful to authorities in the control of foodborne illness.

But it is not a complete solution to the seafood safety

problem. Tags may be lost or switched and the existence of tags does not control pathogens and other

hazards. Other regulations include certification of

domestic and international growing waters for

bivalves to be consumed in the United States. Many

foodborne illnesses each year are still associated with

consumers eating raw molluscan shellfish in the

United States. 

Regulations for other forms of labeling (e.g., countryof-origin labeling) may be motivated more by concerns other than food safety. For example, as of

January 2002, an EC regulation requires seafood and

fish products to be labeled with information on the

harvest area, harvest water type, commercial species

name, and whether the product was cultivated or wild.

This regulation will help government officials police

120 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

10 More significant are the differential effects that safety standards

have across countries that supply seafood to the U.S. market. Sun

and Caswell (2002) indicate both positive and negative effects on

volume exported to the U.S. in excess of 30 percent for different

seafood exporting nations. Both developed and developing countries experienced sizable negative effects. While large positive

effects were mainly experienced by developed nations, smaller

positive effects were experienced by some developing nations (Sun

and Caswell, 2002).
the Common Fisheries Policy and to help inform consumers (WorldCatch, 2001).11

Currently, U.S. Customs requires importers to provide

documents that include the country of origin for seafood

products. Some specific seafood products additionally

are labeled as either farm-raised or wild harvest.12 In the

Farm Security and Rural Investment Act of 2002,

Section 10816 contains two new labeling requirements

pertaining to seafood. The first requirement is that

seafood must have country-of-origin labels.13 The second requirement is that the labeling has to distinguish

between farm-raised and wild harvest seafood products.

Implications for 

Policymakers

This chapter has three main conclusions, some of

which have implications for policymakers.

Point 1: Salmonella is a potential target for risk reduction efforts.

The FDA detention data showed that Salmonella was the

most common contaminant resulting in adulteration of

fish and fishery products. Interestingly, the meat and

poultry chapters of this report also found that Salmonella

was a key food safety concern for those products and the

U.S. Centers for Disease Control and Prevention outbreak data show that Salmonella was the most common

cause for bacterial foodborne disease outbreaks in produce during 1993-97.14 Therefore, Salmonella might be

a food safety problem to target for increased risk-reduction efforts in food production, particularly given that

Salmonella is a leading cause of foodborne illness in the

United States and worldwide. 

Point 2: Most Salmonella contamination detentions

are for shrimp. 

As most Salmonella contamination in fish and fishery

products are with shrimp, risk reduction efforts could

be focused here. And, as over one-quarter of shrimp

production is from aquaculture, improvements in sanitation and production practices could perhaps make

substantial differences in the occurrence and extent of

Salmonella contamination. But this won’t solve all the

problems because unlike meat and poultry, where

Salmonella may be a naturally occurring bacteria in

the animals’ digestive tracts, for seafood, Salmonella

contamination is often due to cross-contamination

introduced later during the processing stage.

However, for the foreseeable future, shrimp will continue to be produced primarily by developing nations

and dominate seafood trade from developing nations to

developed nations (Wessells, 2002). Many less developed countries may have difficulty meeting the

required quality and safety standards because of a lack

of insufficient funds to invest in quality control measures, more adequately trained staff, and expensive

equipment (Rahman, 2001). 

Point 3: International seafood markets will continue

to expand and become increasingly segmented.

The FAO report The State of the World Fisheries and

Aquaculture (2000) predicts that international trade of

fish and fishery products will grow in two ways. First,

fish processing in developing countries will increase

due to its attractiveness as an employment-generating

opportunity for low-wage workers, particularly in displaced fishing communities, and due to the increased

demand for value-added fishery products. Second,

developing countries increasingly will become important markets for these products. Fish is becoming a

greater source of animal protein around the world—

average annual per capita fish consumption has

increased from 9 kilograms in the early 1960s to 16

kilograms in 1997 (FAO, 200).

The FAO report (2000) also predicts that by 2030,

more than 50 percent of fish supplies will be from

aquaculture and that imports will account for an

increasing share of consumption in wealthy countries.

In the United States, the average import share of fish

and shellfish consumption increased from 56.3 percent

in 1990 to 68.3 percent in 2000. In general, an increasing share of imports means that wealthy countries will

likely want to remove most trade barriers so that these

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 121

11 The Common Fisheries Policy is the system of quotas and tariffs

that the EU uses to manage fisheries and aquaculture issues from

harvest to consumption.

12 The term “wild harvest” fish means naturally born or hatcheryraised fish or shellfish that are harvested in the wild. The term

“wild fish” excludes net-pen aquaculture, primarily salmon, or

other farm-raised fish.

13 To be labeled as a product of the U.S., farm-raised fish have to

be hatched, raised, and processed in the U.S. For wild fish to be

labeled as a product of the U.S., it must be harvested in U.S.

waters or a U.S. territory and it must also be processed in the U.S.

or a territory of the U.S.

14 The caveats about outbreak data apply here as well: the data do

not capture unreported outbreaks or sporadic cases of foodborne

illness.
products will become less expensive (FAO, 2000).

However, wealthy countries also tend to want higher

levels of food safety and tend to be willing to pay

more for food safety. In the future, we may see greater

evidence of market segmentation where wealthy countries such as the United States, Japan, and EU members demand higher valued seafood products with food

safety ensured, while less wealthy countries consume

lower value species (e.g., carp) with fewer safety

assurances (Wessells, 2002). This means that the

degree of food safety could become, to some extent, a

source of product differentiation.

Governance over marine resources is complex because

of intersecting goals arising out of concerns for food

safety, marine resource management, worker safety,

and market access.15 In particular, food safety disputes

often require a delicate balancing between the costs of

mitigating human health risks and benefits of open

trade. Trade for seafood is particularly complex

because of the large number of species traded, countries involved, and production processes used. 

HACCP as an international trade standard for ensuring

safe seafood will continue to evolve and be adopted by

more governments. And, if countries develop similar

HACCP requirements for seafood, this will facilitate

trade. Currently, the United States does not have

equivalence agreements with other countries for

HACCP for seafood products, partly because they are

difficult to achieve. Therefore, we have limited reach

or control over the actual practices used by seafood

importers into the United States, and there will continue to be special challenges that arise from seafood

trade between developed and developing countries.

122 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

15 The most dangerous occupation in the world is fishing at sea

(FAO, 2000).
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Blisard, N., B.-H. Lin, J. Cromartie, and N. Ballenger.

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Buzby, Jean C., and Paul Frenzen. “Food Safety and

Product Liability,” Food Policy, 24,6(Dec. 1999):

637-651.

Canadian Food Inspection Agency (CFIA). “Canada’s

National Fish and Fish Products Inspection and

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Inspection Agency,” www.inspection.gc.ca/english/

anima/fispoi/natcane.shtml, accessed Feb. 21, 2002.

Caswell, J.A., and J. Wang. “Quantifying Regulatory

Barriers to Asian-U.S. Food Trade,” Journal of

Agribusiness 19,2(2001):121-128.

Cato, J.C. “Seafood Safety—Economics of Hazard

Analysis and Critical Control Point (HACCP)

Programmes.” FAO Fisheries Technical Paper No.

381, Rome: Food and Agriculture Organization, 1998.

Cato, J.C., and C.A. Lima dos Santos. “European

Union 1997 Seafood-Safety Ban: The Economic

Impact of Bangladesh Shrimp Processing,” Marine

Resource Economics 13(1998):215-27.

Federal Register. “Procedures for the Safe and

Sanitary Processing and Importing of Fish and

Fishery Products: Final Rule,” 60, 242(Dec. 18,

1995):65095-65200.

Fein, S. B., and T. A. Riggins. “Trends in Food Safety

Practices, Concern, and Awareness 1988, 1993, and

1998.” Presented at the Food and Drug Admin.-U.S.

Dept. Agr. Food Safety Educ. Working Group meeting, July 28-29, 1998, Washington, DC.

Food and Agriculture Organization, United Nations.

“The State of World Fisheries and Aqua-culture,

2000.” ISBN 92-5-104492-9, Rome, Italy, 2000.

www.fao.org/DOCREP/003/X8002E/X8002E00.htm,

accessed June 7, 2002.

Henson, S., A.-M. Brouder, and W. Mitullah. “Food

Safety Requirements and Food Exports from

Developing Countries: The Case of Fish Exports

from Kenya to the European Union,” American

Journal of Agricultural Economics, 82,5(2000):

1159-69.

Koplin, Steven. National Marine Fisheries Service,

National Oceanic and Atmospheric Administration,

U.S. Dept. of Commerce. Personal communication,

Aug. 22, 2002.

McGovern, D. “EU Suspends Chinese Shrimp Imports

Over Food Safety Concerns,” WorldCatch News

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Mead, P. S., L. Slutsker, V. Dietz, L. F. McCaig, J. S.

Bresee, C. Shapiro, P. M. Griffin, and R. V. Tauxe.

“Food-Related Illness and Death in the United

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Oct. 1999):607-625. www.cdc.gov/ncidod/eid/

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and L. Slutsker. “Surveillance for Foodborne Disease

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Sun, Y., and J.A. Caswell. “The Impact of Stricter

Food Safety Measures on Trade Between Developed

and Developing Countries,” Grant # FDA F61050

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Food Safety Regulations in Three U.S.-Asian

Trading Groups,” Journal of Agribusiness 16,2(Fall

1998):115-128.

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World Fisheries: Implications for U.S and E.C.

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Extra Labeling,” The Wave, Oct. 23, 2001.

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124 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Summary

The Belgian dioxin crisis began in January 1999

when animal feed in Belgium was contaminated

with cancer-causing dioxin and polychlorinated

biphenyls (PCBs). Dioxin-contaminated feed was then

fed to chicken, swine, and other food animals, subsequently affecting a large array of agricultural industries and temporarily interrupting trade with the United

States and more than 30 other countries.2 This chapter

provides some analysis of agricultural exports and production effects of the crisis. It complements previous

chapters by providing an example of a food safety 

crisis that resulted from an isolated event involving a

persistent organic pollutant and that affected a wider

range of food sectors than most other food safety

issues. 

Belgium-Luxembourg exports were adversely affected

by the crisis in the short run. Export growth rates for

the decade prior to the crisis were positive for five key

agricultural categories (eggs, dairy products, swine

products, poultry products, and “other” meat products). However, the percentage change in the growth

rate between 1998 and 1999, representing the shortrun

effects of the crisis, dropped and became negative for

eggs, swine products, and dairy products, with the

largest decline for “other meat” products (-32.1 percent). Although the growth rate for poultry products

also fell dramatically, it remained positive at 2.3 percent during 1998-99.

The dioxin contamination originated in animal feeds,

yet other production sectors were far more affected in

percentage terms. This study use Belgium-Luxembourg

monthly production data from the Belgian Ministry of

Economic Affairs, National Institute of Statistics (NIS)

(1999). Poultry meat products, meat and meat products,

and slaughtering of cattle were especially hit hard by

the crisis, Other product categories such as fish and fish

products, actually benefited as buyers switched to products not implicated in the contamination. Feed production even increased slightly in July 1999 due to a

temporary slaughter ban that initially kept many animals

on the farms. 

Dioxin and/or PCB contamination in feed has occurred

in several countries since the Belgian dioxin crises,

though to a lesser extent. This crisis was a large-scale,

isolated event and did not represent an ongoing or

evolving food safety problem. One challenge illustrated by the 1999 crisis is the fine balance between

gathering sufficient information on such an event (e.g.,

source, cause, human and animal health risks) and the

timely and accurate release of information to the public and to trading partners. Overcoming this challenge

will be important for governments and implicated

industries in order to minimize damage to food markets and maintain consumer confidence in both the

food supply and in governments’ ability to handle food

safety crises.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 125

Chapter 8

The Belgian Dioxin Crisis and 

Its Effects on Agricultural 

Production and Exports

Jean C. Buzby and Ram Chandran1

1 Authors are economists with the Food and Rural Economics

Division of the Economic Research Service.

2 The terms “swine” and “swine products” are used hereinafter

instead of “hogs” or “pork products” in order to be consistent with

the category names used in the Belgian data.
Introduction

The Belgian dioxin crisis exemplifies a food safety

crisis that: (1) arose from a large-scale, isolated contamination event as opposed to an ongoing or evolving problem, (2) involved a persistent organic

pollutant as opposed to other food safety hazards,

such as pathogens, (3) adversely affected multiple

agricultural sectors and countries importing from

these sectors, and (4) may have been the result of

some form of deliberate contamination. Shortly after

the Belgian government announced the crisis in late

May 1999, the media alleged that the contamination

was the result of the deliberate or accidental use of

motor oil or some other industrial oil in an animal

fat mixture (Lok and Powell, 2000). However, the

Belgian government has not provided an official

confirmation of the source of the contamination or

how it occurred (Lok and Powell, 2000). A more

recent and scientific article attributes the crisis to a

fat mixture made with mineral oil containing

PCBs—“most likely oil from discarded transformers

originating from a waste recycling center” (van

Larebeke et al., 2001). Because the public announcement of the crisis occurred at one point in time, it is

possible to compare Belgian food production and

trade before and after the crisis. However, this chapter is not meant to be a report of a comprehensive

economic analysis.

Background on Dioxin

Dioxin is a general term for hundreds of chemicals

that are highly persistent in the environment. Dioxins

are created as a byproduct of chemical processes.

Some are created from natural causes such as forest

fires and volcanic eruptions; dioxins can be found

throughout the natural world (in soil, water, and air,

for example). Accidental and uncontrolled fires at

landfills also add to dioxin levels. Exhaust emissions

and processes such as pulp and paper bleaching, incineration, and the manufacturing of steel, chemicals, and

paint also release dioxins and contaminate the environment (EC, July 20, 2001). Absorbed dioxins accumulate in body tissue and pose cancer and other human

health risks—in general, the higher up the food chain,

the greater the accumulation (WHO, 1999). Any dioxins released into the environment can accumulate over

time in human and animal fatty tissue (EC, July 20,

2001). Contamination with polychlorinated biphenyls

(PCBs) is often accompanied by dioxin contamination

so both are often evaluated together.3 The U.S. Food

and Drug Administration (FDA) website provides

extensive information on dioxins.4

Studies suggest that 80 percent (EC, July 20, 2001) to

95 percent (preliminary EPA estimate, 1994) of human

exposure to dioxin is through the food supply, primarily through the dietary intake of animal fats from

meat, poultry, and dairy products. At least in the

United States, human exposure has also occurred historically from industrial accidents and from working in

industries that produce dioxin as a byproduct, or

through drinking contaminated breast milk. Dioxin in

feed is thought to be the main contributing factor to

the dioxin level in food from animals and animal products, though animals can also be exposed through contaminated soil, air, and water (EC, July 20, 2001).

There is no international agreement on target levels for

several reasons, including analytical method difficulties, lack of data (e.g., typical levels), and the lack of a

clear distinction as to what level of dioxin is considered as “safe.” However, the World Health

Organization has elaborated a “tolerable daily dose.”

Consumers have only a limited ability to restrict their

exposure to foodborne dioxins (e.g., consuming lowfat dairy products and trimming fat from meat) and

therefore national governments have essential roles in

monitoring food safety and acting to protect public

health (WHO, 1999). In general, dioxin contamination

comes from either “background” contamination from

the sources previously described or from specific, isolated incidents, which are rare. In July 1997, U.S.

agencies found elevated levels of dioxin in some

chicken, eggs, farm-raised catfish, and animal feed

(FDA, March 13, 2003). A lengthy investigation

traced the source of this incident to feed produced

with “ball clay” from one Mississippi mine. The clay

was used as an anticaking agent in soybean meal and

has since been prohibited by FDA from use in any

animal feed.

126 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

3 PCBs are fluids that used to be used as transformers and insulators in some industrial settings in the United States. PCBs are

more readily measurable, though dioxins drive health concerns.

For simplicity, the term “dioxin” is sometimes used to cover both

dioxin-like PCBs and dioxins.

4 The Interagency Working Group on Dioxin (IWG) has developed

very detailed information about dioxins on their website and this

covers four topics: (1) general information about dioxins, (2)

overview of the draft EPA dioxin report, (3) food safety questions

and answers, and (4) risk assessment questions and answers.

www.cfsan.fda.gov/~lrd/dioxinqa.html
Governments move quickly to stop dioxin contamination

at the source if the source can be identified and removed.

Countries have different ways of dealing with contamination, though both the United States and European

Union have stringent laws for industrial sources that are

driven by what technology can control (Winters, 2002).

The European Commission (EC), the EU’s governing

body, recommends an overall strategy to reduce exposure to dioxins, including actions that reduce dioxin levels in the environment, animal feed, and food, with

emphasis given to the sources of major importance (typically fish oil and fish meal) (EC, July 20, 2001).

Although, in principle, a similar broad-based strategy is

followed in the United States, the EU has set regulatory

limits for dioxin in food whereas the U.S. doesn’t have

such limits because of concerns about lack of scientific

basis. Some countries seek dioxin testing certification

which is very expensive and only available from private

sources (FAS, 2003).

Efforts to reduce dioxins over the past two decades have

resulted in a downward trend in dioxin exposure for

Europeans (EC, July 20, 2001). Similarly, dioxin levels

in the U.S. environment have declined since the 1970s.

The U.S. Environmental Protection Agency (EPA), State

governments, and industry are working together to

reduce the production of manmade dioxins (FDA,

July/Aug. 2000).

The Belgian Dioxin Crisis

The Belgian dioxin crisis began in January 1999,

quickly spread across national borders, and had serious

trade impacts. The crisis occurred when 60-80 tons of

fat used in animal feed in Belgium was contaminated

with almost 1 gram of cancer-causing dioxin and 40-

50 kilograms of PCBs (van Larebeke et al., 2001). The

contamination occurred when a fat smelting company

added dioxin-contaminated oil to a mixture of fats for

later use as a feed ingredient. This contaminated fat

was then purchased by at least 10 feed mills and was

used to make approximately 500 tons of contaminated

animal feed—versus over 28,000 tons/week average

production and use of feed in Belgium (van Larebeke

et al., 2001). The contaminated feed was distributed

mostly to poultry farms but also to rabbit, calf, pig,

and cow breeding and raising farms in Belgium, with

some distributed to Germany, France, and the

Netherlands (van Larebeke et al., 2001). In Belgium

alone, 746 pig farms, 445 poultry farms, 393 bovine

farms, and 237 dairy farms used feed from the 10 producers of contaminated feed (van Larebeke et al.,

2001). The following chronology of the crisis is abbreviated from a description in Lok and Powell (2000),

which was based primarily on a 1999 Belgian government website:

● January 18-19, 1999—Fat mixture was contaminated with dioxin at Verkest, a fat and oil processing plant.

● End of January 1999—Contaminated fat was supplied to feed manufacturers and used to make feed,

which was sold to broiler chicken, egg, pork, and

beef producers.

● During February 1999—An animal feed manufacturer, the Da Brabender firm, noticed problems

with hens used to produce 1-day old chicks.5

● March 3, 1999—Da Brabender notified their insurance company and this led to an investigation by Dr.

Destickere, a veterinarian [and head of the West

Flanders Inspectorate]. 

● Next 2 weeks in March 1999—Dr. Destickere concluded that the most likely source of the problem

was the fat in animal feed.

● March 18, 1999—Da Brabender sent a sample of

suspect animal feed produced in January 1999 for

analysis. 

● March 19, 1999—Da Brabender notified the

Belgian Ministry of Agriculture.

● A few days later—The Belgian government began

investigating and testing.

● April 21, 1999—Dr. Destickere reported his suspicions about dioxin as the source to the Belgian

Ministry of Agriculture.

● April 26, 1999—Test results found high dioxin

concentrations in feed and chicken fat samples.

● May 26, 1999—Test results found high dioxin levels in breeding eggs for hatching and in mother

hens on farms that purchased from suspect feed

manufacturers. This meant that there were high

levels of dioxin in eggs and chicken on the market

in April.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 127

5 The media reported that the first signs of contamination detected

by poultry farmers included direct biological health effects such as

hens laying fewer eggs or not thriving, nervous system problems in

chicks, and a declining ratio of hatched eggs.
● May 27, 1999—The Belgian Ministry of

Agriculture notified the public and the European

Commission (EC) about the situation.

On May 28, 1999, Belgium banned the domestic sale

of all Belgian-produced chicken, meat, and eggs, withdrawing these products from retail stores (Ashraf,

1999). Later the Belgian government widened the list

of products potentially contaminated with dioxin

(FAS, June 7, 1999). As a result of the crisis, more

than 200 butcher shops closed temporarily in Belgium

and consumers rushed to buy organic eggs and other

products that were not suspect (FAS, June 7, 1999).

Lok and Powell (2000) detail the actions the Belgian

government took to mitigate and resolve the crisis.

On June 4, 1999, the U.S. Food and Drug

Administration (FDA) issued an import bulletin to

detain certain products at the port of entry. On June 11,

1999, FDA issued an import alert (No. 99-24) to detain

certain products at ports of entry until importers provided lab test results showing that shipments were free

of detectable levels of PCBs and/or dioxins (FDA, June

11, 1999). Products in this initial import alert included

eggs, products containing eggs, game meats from

Belgium, France, and the Netherlands, all animal feeds

and feed ingredients, and pet foods from all European

countries (FDA, June 11, 1999). This list was later

expanded to include milk-containing products such as

soups and cheese (FDA, June 23, 1999). The Food

Safety and Inspection Service (FSIS) of the U.S.

Department of Agriculture (USDA) also issued import

alerts and took subsequent actions. The U.S. import

alerts from this crisis were canceled in early 2000 (personal communication with FDA on Sept. 21, 2000).

Within 2 to 3 weeks of the May 27 announcement,

more than 30 countries issued different combinations

of temporary consumer advisories, import bans, and

import alerts of potentially contaminated foods and

animals from Belgium, select EU countries, or the EU

as a whole (Lok and Powell, 2000).6 More products

were added to the lists of suspected products as the

crisis unfolded (e.g., chocolates) (Lok and Powell,

2000). Much later, the EU raised objections to the

emergency measures of nine of its trading partners

who maintained restrictions on animal products when

these actions were no longer justified in the view of

EU officials (see chapter 3). 

As dioxin risks are long-term health hazards and hard

to detect and attribute to specific causes, it will take

time to determine if international measures to mitigate

the crisis were successful in terms of protecting human

health: to date, no human illnesses have been linked to

this incident. Van Larebeke et al. (2001) estimate that

the stochastic incremental cancer risk associated with

the Belgian PCB and dioxin crisis varies between 44

and 8,316 cancer deaths in the Belgian population

(roughly 10 million). They caution that huge uncertainties exist with their estimates, such as the pathogenic potency of the PCBs and dioxin.

Estimated Economic Impacts

of the Belgium Dioxin Crisis

Ideally, an economic analysis of the Belgium dioxin

crisis would require careful evaluation of the: (1)

domestic products that are directly and indirectly

affected by the contamination, (2) agricultural sectors

providing these products to domestic and international

markets, and (3) shortrun and longrun effects of the

crisis. For example, costs from the crisis would

include costs from new regulations for feed ingredients. However, it would be difficult to estimate these

costs as BSE and foot and mouth disease also likely

contributed to such legislation (FAS, 2003). Because

of data availability and the more descriptive goals of

this chapter, we focus here almost exclusively on the

direct effects of the crisis on Belgian food production

and exports in select markets or sectors. 

Estimated Impact on Exports

To analyze the impact of the Belgian dioxin crisis on

Belgium-Luxembourg exports of agricultural products,

we aggregated data from the United Nations Statistics

Division on agricultural products into five product categories: dairy, swine, “other meat” (i.e., nonswine and

nonpoultry), and poultry products, and eggs (see

attachment A).

In general, Belgian exports of dairy products far

exceed other categories of Belgian agricultural

exports (table 8.1). Between 1990 and 1995, the

exports of dairy products grew steadily and then

showed a few years of declining exports. Part of the

128 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

6 For example, countries that took action included Australia,

Canada, Cyprus, Germany, Hong Kong, Portugal, Russia, Saudi

Arabia, Singapore, South Africa, and Thailand.
drop between 1998 and 1999 is likely due to the

Belgium dioxin crisis because many countries,

including the United States, banned the import of

milk products from Belgium. Exports of swine products and “other meat” products also dropped between

1998 and 1999. Poultry exports grew consistently

over this time period while egg product exports

changed little (fig. 8.1). 

To more closely analyze the short-run economic

effects of the Belgian dioxin crisis, we compared the

longrun growth of exports of eggs and poultry, swine,

other meat, and dairy products over the decade prior to

the 1999 crisis against the shortrun effects, as measured by the percent change in exports between 1998

and 1999 (table 8.2 and fig. 8.2). These data suggest

that the Belgium dioxin crisis had a shortrun economic

impact on the export market. The estimated growth

rates for the 10 years between 1989 and 1998 were

positive for all five product categories. However,

between 1998 and 1999, the growth rate dropped and

became negative for eggs, swine, and dairy products,

with the largest decline for other meat. The change in

poultry exports between 1998 and 1999 remained positive but dropped dramatically from its longrun growth

rate of 19.1 percent. 

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 129

Table 8.1—Belgium-Luxembourg world exports of key agricultural products, 1989-99

Product category 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

— Metric tons —

Dairy products 1,184 1,156 1,402 1,586 1,586 1,719 1,890 1,711 1,622 1,741 1,676

Swine products 391 382 459 482 540 562 604 630 635 685 588

Meat products1 176 198 234 239 271 259 262 281 333 308 209

Poultry products 68 81 98 123 149 160 188 218 293 328 335

Eggs 89 94 93 98 83 110 108 105 127 118 111

1 Here “meat” refers to meat other than swine and poultry.

Source: Computed from United Nations Statistics Division’s COMTRADE database, 2002.

Figure 8.1

Belgium-Luxembourg world exports of key 

agricultural products

1,000 metric tons

Dairy products

Poultry products

1989 91 93 95 97 99

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Eggs

Swine products

Meat products

Source: Computed from United Nations Statistics Division's 

COMTRADE database, 2002.

Table 8.2—Comparison of the growth of BelgiumLuxembourg exports of key agricultural products

Product category Rate of growth Change of growth

(1989-99) (1998-99)

Percent

Eggs 3.1 -6.0

Meat products 6.5 -32.1

Swine products 6.4 -14.2

Dairy products 4.4 -3.7

Poultry products 19.1 2.3

Source: Computed from United Nations Statistics Division's 

COMTRADE database, 2002.

Figure 8.2

Comparison of the growth of BelgiumLuxembourg world exports of key agricultural 

products using percent rate of growth between 

1989-99 and 1998-99

Percent

Source: Computed from United Nations Statistics Division's 

COMTRADE database, 2002.

-40

-30

-20

-10

0

10

20

30

Meat

Dairy

Eggs

Poultry

Swine

Percent change of growth (1998-99)

Percent rate of growth (1989-98)
The Belgium Foreign Trade Bulletin (FGTB) reports

that “it is interesting to note that the statistical data for

September, October, November, and December show a

recovery in exports, so that it seems that the effects of

the dioxin crisis had become virtually nonexistent by

then.”7 Any estimation of the exact amount of the

long-run effect on exports will require more detailed

data for a longer time period for these industries and

other directly and indirectly affected industries.

Estimated Impacts on Production

The Belgian Ministry of Economic Affairs, National

Institute of Statistics (NIS) conducted a study on the

impact of the dioxin crisis on meat production (1999).

Data in this report were based on an index of production

per working day (1995=100). The NIS report (1999)

compared the change in production, processing, and preserving of key agricultural products in Belgium during

the first 9 months of 1999 with data for the first 9

months in 1998. Although the dioxin contamination

began in January 1999, the major impacts were felt in

June, immediately after the Belgium public, the EU, and

the rest of the world were notified of the crisis in late

May. Overall, when considering the relative importance

of the different subsectors, the dioxin crisis caused an

estimated decrease in total food industry production of

10 percent in June 1999, 2.5 percent in July and August,

and 1.5 percent in September (NIS, 1999). If construction is excluded, the net impact on the total food industry

was a decline of 1.2 percent, 0.3 percent, 0.3 percent,

and 0.2 percent respectively for the months June through

September (NIS, 1999). 

Here we take a closer look at 6 of the 15 agricultural

sub-sectors in the NIS report, those that were either

directly and adversely affected or profited from the 

crisis:8

1) Poultry meat products,

2) Meat and meat products,

3) Slaughtering of cattle,

4) Dairies and cheese making, and

5) Fish and fish products,

6) Prepared feeds for farm animals.

Monthly production indices (1998-99) for each of

these six product categories are provided in attachment

B. Table 8.3 presents the change in the production

index for each product category for the first 9 months

of 1999 from its corresponding index for the first 9

months of 1998. We developed figure 8.3 so that the

impacts from the crisis and patterns of change for

these six categories could be more easily identified

and compared.

In general, the three meat industry categories (poultry

meat production, meat and meat product production,

and slaughtering of cattle) were the subsectors hit hardest in terms of declines in monthly production/processing and preserving. Clearly, the sharpest production

declines occurred in June 1999, right after the public

announcement about the crisis in late May. An analysis

of the long-term effects of the crisis would require more

recent data. However, the worst impacts for all six categories seemed to be over in July 1999 with the different

subsectors gradually returning to pre-crisis levels over

subsequent months. 

Poultry meat products had the steepest drop in the data

series, 53.5 percent lower in 1999 than in 1998. This is

not surprising because the first bans resulting from the

crisis included the domestic sales of Belgian-produced

chicken meat and egg products and exports of Belgian

chicken products. Although one might expect a larger

drop for feed production, the amount of feed contaminated by dioxins was small compared with that produced and used each week in Belgium, and the feed that

was contaminated was distributed widely, mostly to

poultry producers. 

There were negative percent (index) changes during

the entire first 9 months of 1999 for the production,

processing, and preserving of meat and meat products.

This is consistent with the declining trend in the

demand for these products. During 1995-98, consumption of fresh meat in Belgium declined heavily, as it

did in most of the other EU countries (Verbeke and

Ward, 2001). In particular, the gradual long-term

decline in per capita beef consumption is likely caused

by long-term changes in the eating habits and demographics of EU consumers (EC, 1997; EC, 1998; see

chapter 4). However, the largest drop in Belgian production of meat and meat products was observed during June 1999 (-42.4 percent). The decreased cattle

slaughter was likely a function of several factors such

as temporary slaughter bans, which kept many animals

on the farms. 

130 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

7 Source: BFTB - Statistics / Annual Study Belgium’s Foreign Trade

in 1999. URL: www.obcebdbh.be/import_en/info-centerr/tradestatistics/annual-study/1999/as-sbreakdown_en.html

8 Other categories not covered here include a wide range of products

such as beverages, tobacco, cocoa, bread, condiments, and seasoning. 
In the production category “dairies and cheese making,” declines were more subtle and seemed to quickly

return to monthly decreases. The NIS report considers

this category one of the indirectly affected subsectors.

While several production categories showed marked

declines after the announcement, others, such as fish

and fish products, showed increased production and

profited from the dioxin problem. Monthly changes for

fish and fish products show some natural fluctuation,

perhaps due to seasonal changes or harvest factors.

However, the June 1999 index was 24.4 percent higher

than in June 1998. This likely reflects consumers’ belief

that these food products posed lower risks from dioxin

contamination, and consumers may have substituted fish

products for meat and swine products. In particular,

according to the U.S. Foreign Agricultural Service

(FAS), Belgian seafood consumption rose 50 percent in

June 1999 due to the crisis, with increased shellfish

sales offsetting a decreased market for other kinds of

seafood (FAS, June 13, 2001).

Another production category that appeared to benefit

from the crisis, at least in the short run, was prepared

feeds for farm animals. The July increase was likely due

to the temporary slaughter ban that kept many animals

on the farms, creating a greater demand for animal

feeds (NIS, 1999). Although the dioxin contamination

originated in animal feeds, other production sectors

were far more affected in percentage terms.

The Belgian swine industry suffered when test results

in June 1999 confirmed dioxin contamination of swine

on some farms (FAS, Aug. 1, 1999). Contaminated

swine farms were depopulated. On other farms, swine

facilities became overcrowded because of reduced

demand, adding unnecessary feed costs, limiting stable

space, and prohibiting fatteners from buying piglets

and starting new fattening cycles. Increased quantities

of pork were put into storage because of reduced markets. The Belgian pork sector received limited financial aid from the Belgian government for this crisis

and received no financial aid from the European

Commission (FAS, Aug. 1, 1999). 

Summary of Impacts 

The combination of slaughter bans, large price concessions, and reduced markets after the dioxin crisis posed

an economic burden on consumers, food producers, and

food exporters. On August 16, 2003, the EC approved a

Belgian aid agreement that would reimburse farmers 80

percent of market price of their losses (Lok and Powell,

2000). The Belgian government estimates that the dioxin

crisis cost 465 million ($493 million), with about 100

million ($106 million) attributed to the loss in the swine

sector (where 1999 1.00= US$ 1.06) (FAS, Feb. 1,

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 131

Figure 8.3

Monthly change in Belgium-Luxembourg 

production/processing and preserving of 

agricultural products indices between 

1998 and 1999

% change

Jan. Mar. May July Sep.

-60

-50

-40

-30

-20

-10

0

10

20

30

Meat and meat products

Fish and fish products

Poultry meat products

Slaughtering of cattle

Dairies and cheese making

Prepared feed for farm animals

Source: Belgium Ministry of Economic Affairs, National Institute 

of Statistics, 1999.

Table 8.3—Monthly change in Belgium-Luxembourg production/processing and preserving of agricultural

products indices between 1998 and 1999

Product category Jan. Feb. Mar. Apr. May June July Aug. Sep.

Percent

Poultry meat products 4.3 13.4 11.9 1.5 1.8 -53.5 -31.6 -22.1 -9.1

Meat and meat products -6.6 -5.7 -0.9 -7.0 -3.8 -42.4 -19.3 -19.7 -13.5

Slaughtering of cattle -7.0 -8.1 -5.6 -8.2 -5.4 -29.5 -9.8 -18.2 -17.6

Dairies and cheese making -3.4 -3.6 -3.0 -2.7 -2.9 -8.7 -2.0 -3.2 -9.1

Fish and fish products -1.1 9.6 16.8 -5.4 4.6 24.4 13.8 -9.5 15.1

Prepared feeds for farm animals 0.7 0.5 1.8 3.5 8.5 1.7 6.8 2.4 -6.1

Source: Belgium Ministry of Economic Affairs, National Institute of Statistics, 1999.
2001, pg. 18, 19).9 And as other EU countries were also

affected by export bans, the cost of this incident worldwide will likely be higher. 

The economic impact of the Belgian crisis was relatively small compared with the Belgium economy’s

GDP (1999) of $266 billion in 1999, but was important

for agriculture, which accounted for 1.4 percent of GDP

or $3.7 billion.10 In 2000, on the heels of the Belgian

dioxin crisis, Belgium confirmed its first case of bovine

spongiform encephalopathy (BSE). This BSE crisis cost

Belgium an additional 250 million (FAS, Feb. 1, 2001)

(chapter 4 provides more details on BSE).

These costs of the dioxin crisis are, however, offset to

some extent by gains obtained in industries and countries

that provided substitute products. In response to the

Belgian dioxin scare and the temporary removal of some

food products from Belgian supermarkets, Belgian consumers became more concerned about food safety and

many began consuming more produce, organic eggs, and

other organic products. The dioxin crisis also prompted

increased consumption of mutton, lamb, and horsemeat

(FAS, April 17, 2000). The clearest example of a Belgian

food industry that profited from the dioxin crisis is the

appreciably increased production of “fish and fish products” [includes shellfish] in June and July 1999 (NIS,

1999). And, in the German market, there appears to have

been temporarily increased demand for pork and slaughter hogs (FAS, Aug. 1, 1999). 

Although one might expect that food imports may have

helped reduce or mitigate some of the impacts of the

Belgian dioxin crisis on the domestic economy, United

Nations trade statistics for 1989-2001 show that meat

imports into Belgium-Luxembourg actually fell in 1999

from its 10-year high. The fall in meat imports in 1999

likely reflects, in part, the decreased demand for meat

following the crisis. For example, per capita consumption of beef and veal in Belgium also decreased in 1999,

probably partly due to the dioxin crisis (FAS, Feb. 1,

2001, p. 7).11

Public and Private 

Sector Response

As with the BSE crisis, the dioxin scare illustrates that a

food safety crisis can impose high financial and political

costs on industries and countries. The Public Health

Minister and the Agriculture Minister resigned after if

became clear that the Belgian government had known

about the dioxin crisis for weeks before announcing it

to the public and the EC (Ashraf, 1999). The Dutch

Minister of Agriculture also resigned after similar criticism (Lok and Powell, 2000). Public confidence in both

the food supply and the Belgian government was shaken

and, partly because of this, the ruling party was later

ousted in a national election (Lok and Powell, 2000).

In addition to mitigation actions, the dioxin crisis and

general concerns about dioxins resulted in several

responses by the public sector. First, the Belgian government created a new agency called the Federal

Agency for Safety of the Food Chain in response to

the lack of public communication and internal mechanisms that exasperated the crisis (FAS, Aug. 17, 2000).

This new agency has broad responsibilities that ensure

food safety from farm to table and once fully implemented, it will be placed under the Ministry of Public

Health (FAVV, 2002).12 Second, this new agency instituted a traceability and monitoring system to extend

the existing SANITEL system for the mandatory identification of cattle. A meat traceability component

extends the system to other animals and beyond the

slaughterhouse (BELLTRACE) and a monitoring component—Contaminant Surveillance System (CONSUM)—tests for chemical and microbiological

contamination of feedstuffs and all animal food products such as eggs, oils, fats, dairy, fishery, and derived

products (FAS, Nov. 5, 2001). The goal of this monitoring system is early detection of contamination.

Third, the Belgian government will execute certain

decisions taken by the EC concerning dioxins.

For example, the EC asked the EU’s Standing

Committee on Animal Agriculture and Nutrition

(SCAN) and the Scientific Committee on Food (SCF)

for scientific opinions about the contamination of feed

and food by dioxins and closely related PCBs. As a

132 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

9 Of this amount, 165 million was for the Ministry of Agriculture

and 300 million was for the Ministry of Public Health (FAS, Feb.

1, 2001). No further description was provided in the publication.

10 www.state.gov/www/background_notes/belgium_0006_

bgn.html, accesssed May 17, 2002.

11 Pork consumption also fell in 1999 due to the dioxin crisis

(FAS, Feb. 1, 2001, p. 14) and live pig exports increased considerably, particularly to Dutch slaughterhouses (FAS, Feb. 1, 2001,

p. 14). Another factor affecting pork production is EU legislation

against nitrate emissions (FAS, Feb. 1, 2001, p. 13).

12 Previously, food safety in Belgium was controlled by five agencies and is now covered instead by one new agency that falls under

the authority of the Ministry of Public Health. See FAS June 26,

2000 report for details on the agency’s seven assignments.
result, two reports were released in November 2000.

The SCF report established a temporary tolerable

weekly intake (TWI) for dioxins and dioxin-like PCBs

of 14 pg/kg body weight (EC, Nov. 22, 2000). These

were updated on May 30, 2001. Meanwhile, the SCAN

report’s main conclusion is that fish oil and fishmeal are

the most heavily contaminated feed materials, followed

by animal fat (EC, Nov. 6, 2000). The report recommended an emphasis on reducing the most contaminated materials. Both reports recommended an

integrated approach that would reduce dioxin contamination all along the food chain, a more systematic and

coordinated generation and collection of comparable

and reliable data, and a continuing reduction of emissions to the environment. 

Given these two reports and an earlier White Paper on

Food Safety that identified the need to set standards for

contaminants in feed and food (EC, Jan. 12, 2000), the

EC proposed a strategy to reduce dioxin in animal feed,

the environment, and food in July 2001 (EC, July 20,

2001). In October 2001, the EC adopted this strategy

(EC, Oct. 25, 2001). In essence, this strategy has two

parts. The first part identifies short to medium-term (5

years) and long-term (10 years) actions that combined

are intended to provide a comprehensive understanding

of the dioxin/PCB problem and existing trends to assist

future evaluation and policymaking. The second part

has three components: (1) maximum levels to set regulatory limits for dioxin in foods and feeds, (2) action

levels to serve as early warning indicators of undesirable dioxin levels so measures can be taken to eliminate the sources and pathways of contamination, and

(3) target levels to bring food and feed, over time,

down below the SCF’s recommended TWI of 14 pg/kg

body weight for dioxins. 

The U.S. government also monitors potential dietary

sources of dioxins. Since 1995, the FDA has tested several hundred samples a year, primarily fish and foods

sold at retail outlets (FDA, 2000). Meanwhile, EPA and

the FSIS test for dioxins in U.S. beef, pork, and poultry. In 1999, as part of the Total Diet Study, FDA

started dioxin monitoring in 200 of the most commonly

consumed foods in the United States (FDA, 2000). The

U.S. also began monitoring animal feeds that may contribute to the dioxin levels in some foods (FDA, 2000).

FDA’s monitoring program has been successful in identifying elevated levels of dioxin in some mineral components of animal feed and is taking action to stop

distribution of any contaminated product (for example,

see FDA, February 28, 2003).

Dioxin Crisis and Belgian Consumers

During the crisis, Belgian consumers switched to other

food products to avoid dioxin-contaminated products

either voluntarily or as a result of limited access to

foods in supermarkets and stores. Some apparently

crossed into England, France, or Germany in search of

untainted food. Meanwhile, some Belgian towns opened

dump sites so that local residents could leave suspect

foods for destruction (BBC news, June 5, 1999).

The dioxin crisis caused a high awareness and anxiety

about food safety in Belgium that served as background stress for consumer reaction to another scare,

this time over Coca-Cola (Nemery et al., 1999). Within

a month of the announcement about the dioxin crisis,

schoolchildren and others across Belgium began complaining about nausea, headaches, and other symptoms

that they believed were caused by drinking bottled

Coca-Cola. There were never any significant lab or

physical findings to support these claims and some

people believed that features of this outbreak pointed

to mass hysteria or mass sociogenic illness (Nemery et

al., 1999).13 There was intense media coverage about

the Coca-Cola scare on the tails of intense media coverage about the dioxin incident. 

Conclusion

The Belgian dioxin crisis illustrates that an international food safety crisis can have significant, shortterm impacts on the implicated industries and the

exporting country. The dioxin crisis affected a large

array of agricultural industries in Belgium (e.g., feed,

meat, poultry, cattle slaughter, dairy and cheese making) and interrupted trade with the United States and

more than 30 other countries (Lok and Powell, 2000).

The crisis also illustrates how consumers react to

crises in the short run, switching to nonsuspect products (e.g., organic eggs). More recent data and more

research are needed to clarify if there are longrun

impacts from the crisis, the extent of such impacts, and

whether the possibility that the contamination could

have been intentional (in some way) had any impact

on consumer food safety perceptions.

Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 133

13 Mass sociogenic illness “can be defined as a constellation of

symptoms of an organic illness, but without identifiable cause,

which occurs among two or more persons who share beliefs

related to those symptoms” (Philen et al., 1989).
As a result of this crisis, Belgium took multiple

actions to minimize the spread of the contamination,

resolve the problem, and be better prepared for similar

crises (e.g., creation of a single federal agency to cover

food safety from farm to table). However, the monthlong period between when the government was first

notified of the problem and when it was publicly

announced was seen as irresponsible by many stakeholders and therefore, the Belgian government lost

credibility, trust, and authority and received little credit

for all the positive and proactive measures that were

taken (Lok and Powell, 2000). Despite the government’s explanation that the delay was to first confirm

whether the dioxin had entered the human food supply,

by the time of this explanation, criticism and discussion focused on the government instead of on those

responsible for the contamination or on the extant regulation, surveillance, and enforcement that allowed the

crisis to occur (Lok and Powell, 2000). 

In general, many factors come into play in the identification of a food safety crisis, including the existing

surveillance systems and the way that the contamination manifests itself in animals and humans (e.g.,

declining ratio of hatched eggs, time to develop acute

or chronic illness in humans). On the one hand, the

financial stakes of erroneously announcing a crisis can

be high, so regulators have some reason to be cautious

about prematurely alerting the public and trading partners about a potential crisis until there is sufficient,

accurate information on the source, extent, and risk

posed by the crisis. For example, the California

Strawberry Commission estimated that growers in the

central coast of California lost $16 million in revenue

to during June 1996 when their products were falsely

implicated as the cause of the Cyclospora outbreak

later attributed to Guatemalan raspberries (Mishen,

1996) (see chapter 5). On the other hand, a greater

time lag between the initial contamination and its

identification and control can extend and magnify the

impacts of a food safety crisis on production, trade,

and consumption. And, any public information lag

about a potential food safety crisis can be a point of

criticism used against governments. 

A persistent challenge in major food safety crises will

be the fine balance between gathering sufficient, accurate information on such an event (e.g., source, cause,

human and animal health risks) and the timely release

of information to the public and trading partners.

Overcoming this challenge will be important for governments and implicated industries to minimize damage to food markets and maintain consumer

confidence in both the food supply and in governments’ ability to handle food safety crises.

134 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
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136 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 137

Attachment A—Belgian-Luxembourg exports, 1989-1999

Products 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Metric tons

Meat products 

Bovine meat,fh,ch,w.bone 95,803 110,098 123,608 117,085 111,447 94,805 86,958 80,303 83,850 74,097 59,686

Bovine meat,fh,ch,bnless 8,753 16,012 14,065 11,228 13,418 11,718 12,894 12,778 14,988 14,735 18,413

Bovine meat,frozn,w.bone 4,680 1,089 1,566 5,831 3,461 981 988 3,344 4,519 2,291 2,141

Bovine meat,frz,boneless 7,579 10,197 23,548 28,303 35,441 33,395 39,983 42,082 36,044 21,651 13,528

Meat of sheep,frsh,chlld 2,648 2,947 2,602 2,393 1,803 1,570 2,348 1,283 2,064 2,744 4,248

Meat of sheep, frozen 1,966 1,572 1,502 1,576 3,613 6,192 7,254 5,406 6,532 8,155 9,604

Meat of goats 10 4 24 56 2 - - 3 3 1 1

Meat of horses,mules,etc 10,160 10,198 12,377 13,523 22,934 23,831 22,493 29,281 30,315 29,735 8,127

Edible offal,bov.frsh,ch 1,843 2,364 2,028 2,583 6,051 5,797 9,666 10,126 10,929 15,554 3,621

Edible offal,bov.,frozen 4,791 5,461 7,950 9,441 10,175 10,050 9,999 12,281 10,802 7,126 23,699

Ed.off.sheep,horse,fh,ch 137 211 134 43 127 91 114 134 144 255 765

Ed.off.sheep,horse,frozn 307 472 250 440 324 430 360 481 614 789

Meat,ed.off,rabbit,hares 1,675 1,473 965 1,719 1,914 1,371 1,265 1,387 1,740 1,975 1,671

Other meat,edible offal 210 338 333 429 2,712 3,404 1,152 1,440 1,824 2,595 3,944

Bov.meat,dried,smkd,salt 323 341 434 263 208 161 179 74 48 15 18

Oth.mt,off.flr.dr,sk,slt 750 694 616 603 592 1,594 1,763 6,270 6,120 6,469 970

Extract,juice meat,fish 76 26 119 75 29 77 284 75 193 140 143

Sausage of meat,offl.etc 10,315 11,057 15,661 16,490 31,142 34,360 35,611 48,548 90,626 87,611 31,676

Liver,preprd,presrvd,nes 19,590 18,276 21,040 21,486 20,348 21,482 22,560 21,167 24,628 26,422 20,241

Bov.meat,prpd,prsrvd,nes 2,402 2,717 2,986 3,361 3,253 5,945 4,053 3,016 4,561 4,121 4,676

Oth.meat,prpd,prsrvd nes 1,679 1,972 2,340 2,325 2,240 1,698 1,756 1,803 2,206 1,998 2,266

Swine products

Meat of swine,frsh,chlld 163,253 164,759 225,308 255,158 303,100 312,721 380,216 389,984 375,100 422,131 400,652

Meat of swine, frozen 127,924 113,315 122,308 111,642 108,060 120,409 100,011 103,040 100,301 102,969 94,898

Edible offal,swine,fh,ch 3,740 3,555 4,724 6,007 14,476 12,928 13,596 19,036 24,564 27,200 20,494

Edible offal,swine,frzen 17,546 17,336 17,872 20,894 20,695 25,518 23,130 24,449 29,002 31,743 218

Hams,shoulders with bone 2,683 2,118 1,934 1,641 2,944 2,087 1,607 2,022 1,895 2,042 1,893

Bellies (streaky) 5,496 4,969 5,029 4,006 6,493 7,419 5,883 7,092 7,186 7,433 6,635

Oth.pigmeat,dry,salt,smk 20,209 17,974 18,431 15,638 13,597 12,488 12,618 13,484 14,286 12,223 10,580

Pork,prepred,presrvd,nes 49,968 58,022 63,839 66,734 70,205 68,847 67,009 71,081 82,199 79,709 52,911

Poultry products

Poultry,whole,frsh,chlld 4,692 9,086 11,311 13,651 18,734 18,372 17,128 21,617 25,405 27,868 28,598

Poultry,whole, frozen 24,076 23,878 26,379 29,396 29,821 23,792 21,305 19,559 26,313 27,625 19,577

Liver,goose,duck,fh,chll 567 467 429 179 337 222 135 107 340 226 329

Poultry,parts,frsh,chlld 19,407 24,417 32,671 44,233 53,674 55,613 62,189 70,339 101,174 115,008 111,551

Poultry,prts,frzn.ex.liv 15,222 17,564 19,217 25,292 34,713 46,949 69,532 84,304 112,687 130,182 123,283

Poultry livers, frozen 114 309 498 558 812 796 703 - - - 28,843

Poultry,prprd,prsrvd,nes 4,052 5,010 7,815 9,709 10,706 13,919 17,303 22,420 26,905 26,609 22,903

Eggs

Birds’ eggs, in shell 47,730 49,207 47,963 52,991 42,293 71,956 66,493 70,359 82,115 76,431 76,226

Egg,unshelld;yolks,dried 664 893 1,175 1,117 1,728 2,177 1,343 1,848 3,477 3,488 4,295

Egg,unshelld;ylk,not dry 32,690 37,022 36,015 34,552 29,876 24,476 30,142 22,358 27,624 25,872 19,340

Egg albumin 8,348 6,770 8,275 9,147 9,358 11,213 10,444 10,647 13,302 11,950 10,798

--Continued
138 ● International Trade and Food Safety / AER-828 Economic Research Service/USDA

Attachment A—Belgian-Luxembourg exports, 1989-1999--Continued

Products 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Metric tons

Dairy products

Milk,fat cont.1% or less 112,910 108,801 136,778 117,727 109,296 109,303 117,855 89,192 102,680 93,358 68,845

Milk,cream fat cont.1-6% 513,589 478,418 564,070 693,685 683,570 801,064 823,817 779,161 682,509 690,327 693,046

Cream,fat content 6%+ 23,402 18,186 21,645 33,628 21,850 34,248 30,397 45,477 45,926 91,210 93,388

Milk,solid, to 1.5% fat 84,832 63,038 83,660 90,003 102,217 76,406 150,836 88,946 65,808 62,361 90,491

Milk,crm solid 1.5%+ fat 36,126 34,430 69,614 72,173 99,578 119,699 176,401 115,213 92,427 90,237 71,961

Milk,cream unsweetened 20,370 30,875 41,327 62,800 24,765 25,477 28,560 18,271 34,342 78,552 54,366

Milk,cream, sweetened 12,576 16,626 20,423 20,940 20,057 11,936 20,329 16,185 12,239 12,854 15,663

Yogurt 34,675 47,892 62,897 73,052 90,978 85,281 90,533 106,609 122,552 142,647 165,474

Buttermilk 9,731 12,414 11,365 14,184 18,370 30,762 37,597 44,828 40,642 36,063 32,538

Ice cream 58,694 63,856 69,690 60,955 62,692 69,319 68,151 68,636 75,842 90,454 92,927

Whey 102,768 103,497 106,480 122,462 94,220 66,948 76,097 78,660 94,564 88,949 56,171

Milk products nes 452 1,355 734 11,914 24,546 53,470 29,264 40,833 31,349 30,670 15,159

Butter,other fat of milk 116,658 107,278 132,469 119,244 133,541 127,367 125,094 105,345 111,332 116,825 107,338

Cheese, powdered, grated 207 430 522 907 971 1,085 1,566 919 1,082 1,948 3,523

Processed cheese, whole 29,622 39,383 45,490 51,793 54,016 48,937 49,036 49,892 51,730 51,709 51,601

Blue-veined cheese 418 425 453 492 540 461 416 305 325 357 443

Fresh cheese,unfermented 794 1,290 1,232 1,616 2,088 6,302 6,516 5,449 7,345 10,975 10,226

Other cheese, curd 25,703 28,223 33,204 38,400 42,657 50,732 57,301 57,445 49,187 51,461 53,034

Source: United Nations Statistics Division, COMTRADE database, 2000.
Economic Research Service/USDA International Trade and Food Safety / AER-828 ● 139

Attachment B—Belgium-Luxembourg monthly production indices of key agricultural products, 1998-99

Product category Jan. Feb. Mar. Apr. May June July Aug. Sep.

Production, processing, and preserving of meat and meat products

Year 1998 128.7 121.9 127.3 132.6 135.3 130.2 122.4 119.5 120.3

Year 1999 120.2 115.0 126.1 123.3 130.2 75.0 98.8 95.9 104.0

% change from 1998 to 1999 -6.60 -5.66 -0.94 -7.01 -3.77 -42.40 -19.28 -19.75 -13.55

Production and preserving of poultry meat

Year 1998 142.2 128.8 140.1 151.8 162.6 159.1 154.9 137.3 138.9

Year 1999 148.3 146.1 156.8 154.1 165.5 74.0 105.9 107.0 126.2

% change from 1998 to 1999 4.29 13.43 11.92 1.52 1.78 -53.49 -31.63 -22.07 -9.14

Slaughtering of cattle

Year 1998 109.7 100.9 108.5 106.8 103.5 100.4 90.1 94.2 101.4

Year 1999 102.0 92.7 102.4 98.0 97.9 70.8 81.3 77.1 83.6

% change from 1998 to 1999 -7.02 -8.13 -5.62 -8.24 -5.41 -29.48 -9.77 -18.15 -17.55

Processing and preserving of fish and fish products

Year 1998 107.3 106.6 112.1 133.7 127 119.8 119.6 123.5 112.3

Year 1999 106.1 116.8 130.9 126.5 132.9 149.0 136.1 111.8 129.3

% change from 1998 to 1999 -1.12 9.57 16.77 -5.39 4.65 24.37 13.80 -9.47 15.14

Operation of dairies and cheese making

Year 1998 109.7 101.8 109.8 107.1 107.6 104.5 85.7 89.6 99.3

Year 1999 106.0 98.1 106.5 104.2 104.5 95.4 84.0 86.7 90.3

% change from 1998 to 1999 -3.37 -3.63 -3.01 -2.71 -2.88 -8.71 -1.98 -3.24 -9.06

Manufacture of prepared feeds for farm animals

Year 1998 120.5 111.8 119.3 121.4 114.3 111.8 111.4 109.8 110.3

Year 1999 121.4 112.4 121.4 125.7 124.0 113.7 119.0 112.4 103.6

% change from 1998 to 1999 0.75 0.54 1.76 3.54 8.49 1.70 6.82 2.37 -6.07

Indices per working day (1995=100)

Source: Select production categories from the report by the Belgium Ministry of Economic Affairs, National Institute of Statistics titled 

“The Impact of the Dioxin Crisis on Belgian Production,” 1999.