United States

Department

of Agriculture

Economic

Research

Service

Electronic

Report

Meat and Poultry

Plants’ Food Safety

Investments

Survey Findings

Michael Ollinger

Danna Moore

Ram Chandran

Technical

Bulletin

Number 1911
United States

Department

of Agriculture

www.ers.usda.gov

Electronic Report from the Economic Research Service

May 2004

Technical

Bulletin

Number 1911

Meat and Poultry Plants’

Food Safety Investments:

Survey Findings

Michael Ollinger, Danna Moore, and Ram Chandran

Abstract

Results from the first national survey of the types and amounts of food safety investments

made by meat and poultry slaughter and processing plants since the late 1990s provide evidence that market forces have worked in conjunction with regulation to promote the use of

more sophisticated food safety technologies. From 1996 through 2000, U.S. plants as a

group spent about $380 million annually and made $570 million in long-term investments

to comply with USDA’s 1996 Pathogen Reduction/Hazard Analysis and Critical Control

Point (PR/HACCP) regulation, according to a survey initiated by the Economic Research

Service. The U.S. meat and poultry industry as a whole during the same time period spent

an additional $360 million on food safety investments that were not required by the

PR/HACCP rule. Implementation of the regulation began in 1997 and was mandated by

early 2000 in all sizes and types of meat and poultry slaughter and processing plants.

The full HACCP surveys referenced in this technical bulletin are available at:

www.ers.usda.gov/data/haccpsurvey.

Acknowledgments

The authors gratefully acknowledge USDA’s Food Safety and Inspection Service, the

American Meat Institute, the American Association of Meat Processors, the North

American Meat Processors Association, the National Turkey Federation, and the National

Chicken Council for their assistance in developing the survey. ERS also thanks the many

plant operators and quality control experts who took time to respond to the survey.

About the Authors

Michael Ollinger and Ram Chandran are economists at USDA’s Economic Research

Service. Danna Moore is the assistant director at the Social and Economic Sciences

Research Center at Washington State University and was the principal investigator for

the survey.
Contents

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

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Survey Techniques and Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Appendix: U.S. meat trade associations’

letter of support of the survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

ii

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

National Agricultural Library Cataloging Record

Ollinger, Michael

Meat and poultry plants' food safety investments: survey findings.

(Technical bulletin (United States. Dept. of Agriculture); no. 1911)

1. Poultry plants--Sanitation--Economic aspects--United States.

2. Packing-houses--Sanitation--Economic aspects--United States.

3. Hazard Analysis and Critical Control Point (Food safety

system)--Government policy--United States.

I. Moore, Danna L.

II. Chandran, Ram.

III. United States. Dept. of Agriculture. Economic Research Service.

IV. Title.

HD9416

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and

activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs,

sexual orientation, or marital or family status. (Not all prohibited bases apply to all programs.)

Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-

2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-

W, Whitten Building, 1400 Independence Avenue, SW, Washington, D.C. 20250-9410 or call

(202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.
Summary

From 1996 through 2000, U.S. meat and poultry slaughtering and processing plants as a group spent about $380 million annually and made $570 million in long-term investments to comply with USDA’s 1996 Pathogen

Reduction/Hazard Analysis and Critical Control Point (PR/HACCP) regulation, according to an Economic Research Service/Washington State

University survey. The entire U.S. meat and poultry industry during the

same time period spent an additional $360 million on long-term food safety

investments that were not required by the PR/HACCP rule.

Averaged out over 1996-2000, the industry’s private and HACCP-required

long-term investments of $930 million came to about $180 million per year.

That average amounted to about 10 percent of the $1.8 billion the U.S. meat

and poultry industry spent in total investments annually over that period,

according to the Census of Manufacturers (U.S. Department of Commerce,

1999a, 1999b, 1999c). 

The industry’s annual investments in food safety measures are much higher

than the cost estimates made by USDA’s Food Safety and Inspection Service

(FSIS) prior to enactment of the regulation. FSIS estimated the U.S. meat and

poultry industry as a whole would spend less than $50 million per year to

comply with the PR/HACCP regulation, or $1 billion to $1.2 billion spread

over 20 years. ERS research projected the U.S. meat and poultry industry

would spend $623 million annually to comply with the regulation. Even with

the higher cost estimate, projected health benefits still exceed industry costs.

A 1997 ERS study estimated benefits of $1.9 billion in annual health cost savings linked with a reduction in foodborne illness due to implementation of

food safety technologies and PR/HACCP procedures (Crutchfield, 1997).

One reason for the disparity between the FSIS and ERS cost figures is that

FSIS considered only administrative costs: recordkeeping, planning, testing,

and capital outlays. The ERS analysis included those costs as well as the costs

of hiring the workers necessary to remain in regulatory compliance, and the

additional capital outlays necessary to bring each plant up to the standards

necessary for regulatory compliance.

The annual cost of HACCP compliance amounts to less than 1 percent of

the cost of meat and poultry products, an ERS analysis of survey data

shows. The PR/HACCP rule has raised beef and poultry slaughter plant

costs by about one-third of 1 cent per pound, the data suggest. These are

average prices per pound of beef and not the average cost incurred by each

plant. Small plants, which tend to produce more specialized products, had

much higher average costs than the giant plants, which produce mainly

commodity products, such as boxed beef. Since plants must recover their

costs, this means that prices for commodity products will rise very little,

while prices for more specialized products, like cut-to-order beef, may rise

as much as 2 or 3 cents per pound. It also means that small plants competing in commodity markets may find it more difficult to remain in business.

Designed and funded by ERS and conducted by Washington State

University’s Social and Economic Sciences Research Center (SESRC) in

iii

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
early 2001, the survey is the first national one to examine the effects of the

PR/HACCP rule and of private markets on plant costs and food safety technology use since the regulation went into effect. The ERS analysis of survey

results focused primarily on the extent to which meat and poultry plants

have been encouraged to adopt and use new food safety technologies and

practices to control pathogens. Meat and poultry plants made significant

new investments to comply with the PR/HACCP rule. However, market

forces were also at work, encouraging the use of more sophisticated food

safety technologies and an expanded array of food safety practices and

boosting investments by plants beyond those required by the PR/HACCP

regulation. 

The survey data show that a meat or poultry plant’s choice of food safety

technology was strongly influenced by the plant’s size and the strength of its

market incentives. Large plants favored equipment and testing technologies;

small plants relied more on manual sanitation and adjusting plant operations. U.S. plants that exported products and were subject to food safety

requirements by those customers, among others, made greater investments

in food safety operations across a range of technologies than plants that did

not export products to other countries. 

The 1996 PR/HACCP rule shifted emphasis from visual inspection of carcasses to control of pathogens using a system of checks at critical control

points where food safety is at risk, required plant operators to conduct tests

for generic Escherichia coli (E. coli), and imposed Salmonella performance

standards. Implementation of the regulation began in 1997 and was mandated by early 2000 in all sizes and types of meat and poultry slaughter and

processing plants in the United States.

In conducting the survey, SESRC sent surveys to 1,725 plants classified as

cattle, hog, or poultry slaughter plants or cooked or raw meat processing

plants with no slaughter operations. Of the original 1,725 plants, representatives from 996 plants completed surveys and returned them to SESRC. The

survey plants ranged in size from establishments with only a handful of

workers slaughtering 1 or 2 animals per week to ones with more than 1,000

workers and producing millions of pounds of product per year. The survey

questions and frequency of responses can be accessed on the ERS website at

www.ers.usda.gov/data/haccpsurvey.

iv

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
Introduction

Today, both government food safety agencies and private markets have roles

to play in ensuring a safe supply of meat and poultry. The Federal

Government, through the U.S. Department of Agriculture’s Food Safety and

Inspection Service (FSIS), inspects all animals for human consumption for

animal diseases and monitors processing and slaughtering plants to ensure

that they process meat in a sanitary fashion. Private markets provide added

incentives to produce safe meat and poultry products.

The purpose of this report is to examine the economic forces affecting food

safety expenditures, equipment use, and practices in the meat and poultry

slaughter and processing industries. More specifically, we consider the costs

of the 1996 Pathogen Reduction/Hazard Analysis and Critical Control Point

(PR/HACCP) rule and how this regulation and private markets encourage

the use of food safety technologies and practices to control pathogens.

This report uses the first national survey of meat and poultry plants on the

costs of the PR/HACCP rule and the use of food safety technologies.

USDA’s Economic Research Service (ERS) initiated this project in order to

obtain data that is important to achieving a better understanding of how the

complex mix of technology, private markets, and government regulation

interact to provide safe and wholesome meat and poultry products. The survey was implemented by Washington State University (WSU) and completed in May 2002. Altogether, nearly 1,000 plants responded to a survey that

was sent to all meat and poultry slaughter and processing plants deemed to

be mainly manufacturers and inspected by FSIS. The survey included about

15 questions on the costs and benefits of the PR/HACCP rule and about 35

questions on food safety technologies and practices in the meat and poultry

industries. The remaining questions dealt with plant characteristics. The

complete survey and the summary data are found on the ERS website at

www.ers.usda.gov/data/haccpsurvey.

We first develop a model of how the incentives provided by private market

mechanisms, such as product branding, interact with government regulation

to encourage food safety. We then discuss the survey methodology, describe

the data, and present results of food safety expenditures and technological

choices in the context of our model.

1

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
Background

USDA’s Food Safety and Inspection Service has enforced the Nation’s food

safety laws for meat products that move across State lines since 1890 and

for poultry since 1957. FSIS began monitoring meat and poultry sanitation

and process control activities more closely with enactment of the

Wholesome Meat Act of 1967 and the Wholesome Poultry Products Act of

1968. With outbreaks of foodborne illnesses during the 1980s and 1990s,

FSIS’ emphasis shifted toward the control of harmful pathogens, which cannot be seen by consumers, and away from traditional inspection of animal

carcasses for visible signs of diseases.1 To reflect this new emphasis, FSIS

promulgated the PR/HACCP rule on July 25, 1996.

The PR/HACCP rule mandates that each meat and poultry slaughter and

processing plant establish and implement standard sanitation operating procedures (SSOPs). These activities are cleaning practices that a plant performs to ensure that it is operating in a clean and sanitary manner. The rule

also requires plants to have and adhere to a HACCP plan. Under a HACCP

program, plants monitor points in their processing system that have the

potential of leading to a food safety hazard and take corrective actions when

they suspect that a critical level at one of these points has been breached. 

HACCP plans are based on seven criteria:

(1) assess all hazards,

(2) find all points where food safety is at risk (critical control points),

(3) set critical limits for each critical control point (CCP),

(4) develop procedures to monitor each CCP,

(5) determine corrective actions,

(6) implement a record-keeping system, and

(7) establish verification procedures (Unnevehr and Jensen, 1996). 

The PR/HACCP rule mandated that all slaughter plants conduct generic E.

coli testing to ensure the adequacy of their controls. In addition, plants that

slaughter animals or produce raw ground products have to adhere to

Salmonella performance standards. FSIS phased in the PR/HACCP rule

over a 3-year span starting in January 1998. The largest plants (those with

more than 500 employees) had to comply by the end of January 1998, small

plants (10 to 499 employees) had until January 1999, and very small plants

(fewer than 10 employees or annual sales less than $2.5 million) had to conform by the end of January 2000. All plants had to have sanitation standard

operating procedures (SSOPs) in place by January 1997, regardless of size.

(See Ollinger and Mueller (2003) for a more detailed discussion of

PR/HACCP and regulations that preceded it.)

2

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

1Medical experts indicate that foodborne illness outbreaks have always

been present. Advances in epidemiology, however, made it possible to identify the sources of illnesses that previously could not be identified. Some of

these sources, such as Salmonella,

have been common for many years

while others, such as E. coli O157:H7,

are a new danger.
Private Markets and Government Regulation

Play Roles in Ensuring the Use of Food Safety

Process Controls

The quality and characteristics of many food products that we buy can be

directly observed. For example, the ripeness of a banana can be determined

by its color, and its type can be ascertained from its physical dimensions.

For meat products, consumers can use government grading practices, e.g.,

lean ground meat, and visual observations to compare meat cuts by meat

texture, fat content, and type. However, consumers have no accurate way to

measure food safety and, thus, may unknowingly purchase and eat products

that are contaminated. In some cases, particularly for the elderly and the

very young, consumption of contaminated foods may cause serious illnesses

and even death.

If an illness outbreak does occur and health authorities are able to link the

illness to a particular food, then the sales of all producers of that type of

food may be adversely affected. Consumers have many food choices, and,

generally, believe each product is safe for consumption. If consumers learn

that someone became sick after consuming a particular type of product, then

consumers will select a different food product. If the adulterated product has

a brand, then consumers will avoid products produced under that brand.

However, if the product is unbranded or its source is unknown, then consumers will avoid the purchase of all products of that type, regardless of

source, because all products would have the same appearance, and, thus, be

potentially harmful.

A loss of consumer confidence in a company‘s products can be financially

devastating. Hudson Foods, for example, exited the hamburger patty business after it was held responsible for the production of hamburgers tainted

with E. coli O157: H7. For this reason, many companies have sought thirdparty accreditation of the safety of their meat products. For example, Wiser

(1986) asserts that the red meat industry sought food safety legislation

between 1890 and 1910 in order to assure export markets of the quality of

American meat exports. In recent years, it has been major meat and poultry

buyers, such as McDonald’s, Burger King, Kroger, and other large fast food

restaurants and grocery chains, rather than sellers, that have taken the lead

in assuring food safety. These companies recognize that, if they fail to deliver food safety, consumers will stop buying their products. Thus, they enter

into long-term contracts with suppliers in which they demand that their supplier adopt the most advanced food safety technologies and practices in

exchange for a guaranteed market for their products (Ollinger, 1996). In an

informal survey of nine large food retail firms, Kaufman (1994) found that

six of the surveyed firms mandated their own safety standards and seven

required adherence to either good manufacturing practices (GMPs) or

HACCP programs. Food safety quality-control programs required by

McDonald’s, Jack-in-the-Box, and other fast food chains illustrate that

industry’s strong commitment to food safety (Ollinger, 1996).

Restaurants, grocery stores, and other buyers and plants are made better off

by entering into contractual relationships stipulating higher quality. Buyers

benefit because there is a reduced threat of risking a reputation loss stemming

3

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
from an outbreak of foodborne illness. For example, Jack-in-the-Box lost

millions of dollars due to selling hamburgers tainted with E. coli O157:H7.

Meat suppliers benefit from increased sales and a more certain market for

their products (Golan et al., 2004).

Export markets provide a lucrative outlet for meat suppliers. Recent actions

taken by food authorities in Russia, South Korea, and other countries to

limit access to their markets have cost U.S. exporters millions of dollars in

lost sales and have forced U.S. suppliers to change operating procedures to

meet export market demands. Thus, export markets, like buyer requirements, may encourage firms to make investments in food safety process

controls.2

Major meat and poultry buyers can evaluate food safety because they know

the conditions under which the products were produced and can conduct

their own pathogen tests. However, low-volume buyers and consumers do

not have such capabilities. Moreover, even if consumers contract foodborne

illnesses from contaminated food products, they may not know the quality

of the food that caused it because there often is no direct linkage between a

sickness and the meat or poultry producer. Several factors account for this:

(1) A buyer may be unable to identify an illness as being due to foodborne

pathogens.

(2) Even if a buyer knows that sickness is due to a foodborne pathogen, it

may be difficult to determine the specific food that caused it, partly because

the evidence has already been consumed.

(3) Although the food may be identified, the place of purchase/consumption

may be unknown.

(4) If the place of purchase/consumption is known, the producer of the specific food may be unknown because the store may have bought meat or

poultry products from many suppliers, obscuring the producer’s identity.

Low-volume buyers and consumers can sometimes identify producers, however. If there is only one supplier of a generic product, then the source can

be identified. Market mechanisms too can help identify producers. Branded

products typically earn a price premium because of perceived higher quality.

Producers use brands to encourage repeat purchases, but brands also enable

consumers and food safety experts to identify the source of the pathogentainted product that caused the foodborne illness. The expense of a lost reputation for producing contaminated products can be devastating. As reported

by Alison Young of the Detroit Free Press (6-21-2001), Sara Lee incurred

$76 million in direct costs and lost over $200 million in sales after one of its

plants was implicated in the production of frankfurters containing Listeria

monocytogenes. This foodborne pathogen killed at least 15 people, caused 6

miscarriages, and seriously sickened 80 people.

4

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

2Some argue that the primary purpose of food safety import standards is

to restrict imports rather than enhance

food safety. Regardless of the motivation, the standards must be met, and

the effect is to improve food safety

quality.
Private Economic Incentives Encourage the

Use of Food Safety Process Controls

Markets impose food safety requirements up to the point at which it is no

longer profitable to do so, suggesting that plants would perform some food

safety process control tasks in the absence of any regulation. However, the

strength of the incentive varies by the type of market. Hence, the precise

number and comprehensiveness of the tasks necessary to maintain food

safety may or may not exceed the number and detail required by FSIS under

the 1996 PR/HACCP rule. We illustrate cost-per-pound levels of quality

control effort in figure 1 for both a case prior to the PR/HACCP rule and

another under the PR/HACCP rule. The cost levels are arbitrarily drawn but

do illustrate that mean PR/HACCP costs are equal to or higher than the

mean pre-PR/HACCP rule costs. This is true because regulation does not

prevent plants from undertaking quality-control actions that they deem necessary and usually requires some tasks that plants would not otherwise perform.3 We assume that plants would continue to perform tasks that they

consider essential but are not required under regulation.

The stars in figure 1 represent individual plant costs of process control

effort per pound of meat or poultry and are hypothetical points that are used

only to illustrate that different plants will choose to expend different levels

of process control effort and, thus, have differing expenditure levels. For

example, plant A expends less effort than the mean level that existed before

PR/HACCP, and plants A, B, and C put forth less effort than the mean level

of expenditures under PR/HACCP. Only plant D incurs greater process control expenses than the PR/HACCP rule level. Thus, plants A, B, and C

would incur positive but different costs in order to comply with PR/HACCP

while plant D incurs no regulatory costs. In terms of hypothetical market

arrangements, we hypothesize that plant A would represent a plant that sells

generic products that are commingled with products from elsewhere by buyers, giving it no identity with the buyer and the weakest incentive to invest

in food safety. Plants B, C, and D, on the other hand, represent plants serving export markets, facing buyer requirements, or selling branded products

or facing some other market arrangement that encourages the use of more

sophisticated food safety techniques. Evidence supporting these hypotheses

is provided in later sections.

5

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

3Presumably, plants do not perform

some tasks required under regulation

because they perceive the private benefits to be less than the costs. There is

also an administrative cost to plants in

that they must report quality control

efforts to the government. In the

absence of regulation, there would be

no reporting cost. 

Figure 1

Hypothetical mean cost per pound expended for food safety

process control under PR/HACCP and pre-PR/HACCP

Plant B

Plant A

Plant C

Plant D

Mean cost ($/lb)

pre-PR/HACCP costs

PR/HACCP costs
6

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Industry Characteristics

The U.S. meat and poultry slaughter and processing industries had $110

billion in sales in 1997 and ranged from slaughter plants selling only animal

carcasses to processors manufacturing ready-to-eat products for home

consumption. There are five main types of plants: cattle, hog, and poultry

slaughter plants, producers of cooked or otherwise further processed products

with no slaughter operations, and grinders and other processors with no

slaughter operations. 

Census of Manufacturing data show that there were 1,393 plants owned by

1,308 companies slaughtering animals other than poultry in 1997. A little

more than one-fourth of the 1,393 plants had fewer than 20 employees. The

large number of plants belies much higher four-firm concentration ratios in

cattle slaughter and large plant dominance in both cattle and hog slaughter.

MacDonald et al. (2000) show that four-firm concentration ratios in cattle and

hog slaughter were 71 and 43 percent, and that plants with more than 400

employees accounted for more than 70 percent of the value of shipments in

cattle and more than 85 percent of value of shipments in hog slaughter.

The poultry products industry generated about 60 percent of the sales volume

of the cattle, hog, and other nonpoultry animal slaughter industry. But, with

only 474 plants owned by 259 companies, poultry plants were, on average,

larger and more likely to be part of a multi-plant firm than were plants in the

red meat industries. Reflecting this larger plant size, Ollinger et al. (2001)

show that more than 80 percent of chicken and turkey slaughter output came

from plants with more than 400 employees. Despite the greater degree of

multi-plant ownership, four-firm concentration ratios were below 50 percent

in 1992 (Ollinger et al., 2001).

Raw-meat processing plants grind, marinate, and debone products while notraw meat processing plants cook, smoke, ferment, or otherwise process meat or

poultry. According to the 1997 Census of Manufacturers, there were 1,297 raw

meat further processors and cooked, smoked, fermented, or otherwise further

processed product processors. Industry concentration was not particularly high.

Four-firm concentration ratios in two main categories—pork products, not

sausage, and sausage products—were 31 and 38 percents in 1992 (Ollinger et

al., 1997). Moreover, the 1,297 plants were owned by 1,150 companies and

about one-half the plants had fewer than 20 employees in 1997.
Survey Techniques and Responses

A major stumbling block facing economists who analyze meat and poultry

food safety is a lack of data on the types of food safety technologies processing/slaughter plants are using, the types of markets served by the plants,

and the costs plants incur to ensure food safety. Given these limitations,

USDA’s Economic Research Service (ERS) funded a survey of meat and

poultry processing plants on their use of various food safety processing

practices and technologies and their costs of implementing and complying

with the PR/HACCP rule.

Researchers at ERS will use the data to examine the incremental costs of the

PR/HACCP rule on meat and poultry plants, the characteristics of plants

using particular types of food safety technologies, the impact of various

types of food safety technologies and practices on plant costs, the effect of

food safety technologies and practices on pathogen reduction, and the food

safety technology profile of plants exiting the industry. Economists will be

able to cite these results and the statistical information contained in this

report to support economic thought dealing with issues surrounding the use

of food safety practices.4

Techniques

ERS contracted with the Social and Economic Sciences Research Center

(SESRC), Washington State University at Pullman, to conduct a survey of

meat and poultry plants on their costs of complying with the PR/HACCP

rule and their use of food safety equipment, practices, and technologies.

After ERS created a questionnaire and received approval to proceed from

the Federal Office of Management and Budget (OMB), SESRC fielded a

two-part survey consisting of pilot and main studies in late summer 2001.

The study was deemed complete in May 2002.

SESRC used some innovative techniques that likely improved response

rates.5 The first step was to verify addresses and, to the extent possible, provide a person’s name to whom the survey information could be sent. The survey itself consisted of five contacts made over a 2-month period: a prenotification letter, a survey questionnaire, a followup postcard, a second questionnaire, and a final notice. SESRC sent letters from a high-ranking USDA food

safety official and five industry trade associations with the prenotification

letter and the first questionnaire to encourage support. The most important

innovation, however, was including a $5 incentive with the questionnaire in a

package sent to each recipient in the full survey by 2-day priority mail.

OMB stipulated that incentives could only be used if a pilot study demonstrated their effectiveness. As a result, SESRC conducted a pilot study in

which it packaged the questionnaire mailings differently for three separate

groups in each of the two main industries (meat and poultry). The three mail

packages were:

7

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

4The data cannot be made available

directly to economic researchers

because of concerns about confidentiality. However, it may be possible to

conduct cooperative studies with ERS

researchers who would use the data at

ERS.

5SESRC is under the direction of

Dr. Don Dillman, a renowned innovator in survey methodologies. This project was led by Dr. Danna Moore.
(1) questionnaire sent by first-class postage mailing, no money incentive,

(2) questionnaire sent by 2-day priority mail with no money incentive

enclosed, and

(3) questionnaire sent by 2-day priority mail with a $5 incentive enclosed. 

The response rate for the third option—priority mail plus incentive—was

about 20 percent greater than the priority/no incentive option and about 50

percent greater than the first class/no incentive option. The pilot study also

showed that the two types of mailings without incentives would not achieve

the same response rate as the priority mail plus incentive option even if the

savings from their lower postage and incentive costs were used in followup

mailings.

The use of letters of support from five meat and poultry industry associations was another innovative feature of the survey. One letter, shown in

appendix A, asks operators to provide information that would aid in understanding the true costs and effectiveness of the (FSIS) inspection system in

their plants. It adds that the information could help influence or affect the

way future changes are made in inspection requirements.

Responses

ERS drew the sample of plants surveyed by SESRC from the 2000 version

of FSIS’ Enhanced Facilities Database (EFD). The EFD contains a wide

variety of detailed data on plant activities for all plants monitored by FSIS.

It also contains some information on plants inspected by State inspection

agencies. In total, the EFD contains at least some information on the more

than 9,000 meat and poultry plants inspected by FSIS and State agencies.

The vast majority of these plants produce meat or poultry products as side

businesses. Data include the number and types of animals slaughtered,

Standard Industrial Classifications, plant sales, whether a plant produced

meat or poultry, and categorical data on process types. We also merged

pounds of meat production from the 1997 EFD dataset to these data because

the 2000 EFD does not have pounds of meat and poultry output.

The population of plants that we drew from the EFD included only the

1,725 plants that produce meat or poultry products as a primary business.

These plants consisted mainly of FSIS-inspected plants and included all forprofit meat and poultry slaughter facilities identified for 2000 in the EFD

and the largest cooked-meat and raw-meat further processors that were

defined in the EFD as meat packers (SIC 2011), meat processors (SIC

2013), or poultry slaughter or processors (SIC 2015). Canned meat and

poultry producers were excluded.

Table 1 describes the sample of plants and the respondents by type of production operation—either slaughter or processing. It shows that 996 (58 percent) of all plants responded to the survey. Hog slaughter plants had the

highest response rate at 67 percent while chicken slaughter plants had the

lowest response rate at 50 percent. Not all plants answered all questions but 

8

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
plants did complete most questions.6 Completed questionnaires were returned

by plants that slaughtered 42 percent of all cattle, 75 percent of all hogs, 42

percent of all chickens, and 48 percent of all turkeys, and accounted for 55

percent of all processed meat and poultry products from processors with no

slaughter operations. The overall survey response rate of 58 percent of all

plants was substantially higher than that achieved in recent surveys of much

smaller samples of plants by Hooker et al. (1999), who had a less than a 50-

percent response rate (41 out of 98 questionnaires) and Boland et al. (2001),

who report a 36-percent response rate (18 of 50 questionnaires).

We attribute the relatively high response rate to three factors:

(1) The survey was sponsored by a government agency whose reports are

widely read by policymakers and research institutes.

(2) The five major meat and poultry industry associations and the acting

undersecretary for food safety wrote letters of support of the survey and

were sent to respondents with the questionnaire.

(3) The use of a $5 incentive and 2-day priority mail encouraged survey

participation.

Survey Respondents

Survey participants varied substantially both in plant size and types of

inputs and outputs. In tables 2-6, we show how plant output in terms of volume and product composition varies by plant size. For each slaughter industry, we include all plants that slaughter a particular animal species, e.g., cattle, regardless of whether that plant also slaughters other animals, e.g., hogs.

Thus, the cattle slaughter plant category contains all plants that slaughter

cattle, including those that also slaughter hogs. Since the hog slaughter plant

category is structured in the same way, plants slaughtering both hogs and

cattle are included in each classification.

The size percentile ranking in each of the first five tables is based on total

pounds of output as indicated in the survey (see Q41 for output and Q47

and Q49 for output mix for red meat and see Q42 for output and Q48 and

Q50 for output mix for poultry). We use a percentile ranking to reflect plant

size rather than the very small, small, and large plant size categories used by

FSIS because a percentile ranking gives a direct measure of output over five

plant sizes for a particular type of output.

9

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

6The survey was not designed to be

a nationally representative sample of

all plant types. In addition to excluding all nonmanufacturing plants, the

sample includes only those plants that

responded to the survey, making the

sample inherently biased. There does

appear to be a fair degree of balance

in the responses in that the share of

total output of plant respondents

closely tracks the number of plants

that participated. 

Table 1—Survey sample description

Plant type Population Respondents Percent

Cattle slaughter 108 55 51

Hog slaughter 114 76 67

Cattle and hog slaughter 185 121 65

Chicken slaughter 181 91 50

Turkey slaughter 33 19 58

Chicken and turkey slaughter 21 12 57

Processing only 1,063 622 62

Total 1,705 996 58

Source: ERS.
10

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 2—Animal inputs per plant by plant size for cattle and hog

slaughter plants1

Cattle slaughter Hog slaughter

Size percentile Size percentile

Input type 0-19 80-99 0-19 80-99

-------Number of animals slaughtered per year-----

Animal inputs:

Cattle 161 191,781 142 19,952

Hogs 387 0 542 1,848,234

Other animal inputs 36 0 203 25,319

Number of plants 28 30 37 47

1Animal inputs based only on plants reporting one or more animal input.

Source: ERS.

Table 3—Product output share by plant size for cattle and

hog slaughter plants1

Cattle slaughter Hog slaughter

Size percentile Size percentile

Product type 0-19 80-99 0-19 80-99

Percentage of output

Raw meat products:

Carcasses 22.0 26.3 14.6 29.5

Ground beef or pork 19.2 11.2 20.7 10.6

Trim or other boneless 

beef or pork 14.8 27.9 11.1 14.2

Subprimal and fabricated cuts. 10.2 15.2 11.6 17.7

Other raw meat products 8.0 9.3 6.4 5.7

Total raw meat products 74.2 89.9 64.4 77.7

Cooked or otherwise further 

processed products 25.8 10.1 35.6 22.3

Mean pounds of output 

(1,000s of pounds per year) 186 260,127 340 259,308

Number of plants 28 27 42 47

1Average output shares are based on all reporting plants. About 40 percent of all plants did not

respond to question about cooked products. Similarly, 20 percent of all plants failed to respond

to questions about raw product outputs.

Source: ERS.

Table 4—Animal inputs per plant and mean output by plant size for

poultry slaughter plants1

Mean output by plant size

Size percentile

Input type 0-19 80-99

Birds per year (thousands)

Animal inputs:

Chickens 1,081 597,457

Turkeys 22 53,135

Other poultry 855 10,169

Mean pounds of output

(1,000s of pounds per year). 8,459 236,146

Number of plants 20 25

1Animal inputs based only on plants reporting one or more animal input.

Source: ERS.
11

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 5—Product output share by plant size for

poultry slaughter plants1

Size percentile

Product type 0-19 80-99

Percentage of output

Raw poultry products:

Cut-up poultry and parts 45.9 43.7

Raw chicken processed beyond cutup, such as marinated or deboned 17.4 27.4

Other raw poultry products 33.1 13.6

Total raw products 96.4 84.7

Cooked or otherwise further

processed products 3.6 15.3

Mean pounds of output

(1,000s of pounds per year) 8,459 236,146

Number of plants 19 25

1Average output shares are based on all plants. About 40 percent of all plants did not respond

to question about cooked products. Similarly, 20 percent of all plants failed to respond to questions about raw product outputs.

Source: ERS.

Table 6—Mean plant output and product output share by plant size for

processors with no slaughter operations1

Cooked meat Raw meat

processors— processors—

no slaughter no slaughter

Size percentile Size percentile

Product type 0-19 80-99 0-19 80-99

Percentage of output

Raw meat products:

Carcasses2 0.6 1.8 1.6 5.2

Ground beef or pork 11.0 5.8 20.1 22.9

Trim or other boneless beef or pork 9.0 2.9 13.9 9.7

Subprimal and fabricated cuts 2.6 3.2 8.6 8.7

Other raw meat products 9.7 7.5 16.2 19.3

Total raw meat products 32.9 21.2 60.4 65.8

Cooked or otherwise further 

processed products:

Bologna, frankfurters and other

luncheon meats 15.2 19.7 9.6 6.0

Pepperoni and other fermented,

aged, dry or semi-dry products 8.6 8.5 3.8 1.6

Cooked beef or pork such as roast

beef or oven-cooked hams 6.9 15.7 6.0 8.9

Smoked products, such as bacon 8.6 15.3 5.4 6.5

Other cooked or further processed

products 27.8 19.6 14.8 11.2

Total cooked meat products 67.1 78.8 39.6 34.2

Mean pounds of output

(1,000s of pounds per year) 3,698 91,518 4,407 101,848

Number of plants 63 67 67 77

1Average output shares are based on all plants. About 40 percent of all plants did not respond

to questions about cooked products. Similarly, 20 percent of all plants failed to respond to

questions about raw product outputs.

2Producers that also sell products or serve as intermediaries for other processors may

have animal carcasses that they sell or ship intact even though their plant may not slaughter

animals.

Source: ERS.
By contrast, plant categories specified by FSIS are based on the number of

employees. If plants produce a substantial amount of nonmeat products,

then most employees would have tasks devoted to nonmeat production.

Thus, the FSIS designation reflects overall plant size but not the size of the

meat or poultry operation.

Processing practices for the largest cattle slaughter plants differed dramatically from those of their smaller competitors. Plants in the top quintile

slaughtered, on average, 60 times more cattle per year than the average of

plants in the 2nd through 4th quintiles and butchered no other animals. By

contrast, cattle slaughter plants that were smaller than the first quintile, on

average, slaughtered more hogs than cattle, with the smallest plants slaughtering less than one head of cattle per day. Types of outputs also differed.

Trimmings—boneless meat as a byproduct of fabricating other meat products or meat trimmed from bones for the direct purpose of producing boneless meat, such as ground meat—made up a large share of output from large

cattle slaughter plants, while a sizeable share of meat products from small

plants were further-processed products. 

The tables also show that the smallest hog slaughter plants processed only 2

hogs per day while the largest ones butchered almost 7,700 per day and, in

contrast to cattle slaughter plants, handled animals other than their primary

species (hogs). In terms of outputs, fabricated cuts constituted the largest

share of output from the biggest hog slaughter plants while the smallest

plants did more further-processing.

Due to confidentiality requirements, we combined chicken and turkey

slaughter under the more general poultry slaughter category. The largest

poultry plants slaughtered almost 600 times more chickens and 2,000 times

more turkeys per year than the smallest plants (table 4). Nearly half of poultry slaughter plants’ output was in the form of cut-up poultry parts and

about a fourth was processed beyond cut-up parts (table 5). Except for the

largest plants, poultry slaughter establishments sold less than 10 percent of

their products as further-processed products. The bigger share of cooked

products for the largest plants is likely due to proportionately more turkey

slaughter plants, which typically produce more poultry hams and luncheon

meats than do chicken slaughter plants (Ollinger et al., 2000).7

ERS survey data from 350 cooked-meat processing plants with no slaughter

operations show that about three-fourths of their output came from cooked,

smoked, fermented, dried and other further-processed products and the

remainder from raw processed products (table 6). About two-thirds of the

products from raw-meat processors without slaughter operations were raw

meat products. Ground beef and pork was the main product group, accounting a fifth of output. Carcasses claimed a very small share of output for both

types of processors.

12

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

7“Cooked products” refer to all

products subjected to heat treatment.
Findings

In this section, we summarize and interpret results of the ERS survey in the

context of our economic model. The questionnaire contains three categories

of questions. One major category asked operators about their costs of complying with the PR/HACCP rule and included some subjective assessments

of the benefits and costs of the regulation. Also included in this category are

questions asking about food safety investments not required under

PR/HACCP. More than half the questions in the questionnaire dealt with

food safety technology and production practices. As described earlier, these

questions deal with equipment, production practices, sanitation, testing, and

dehiding. The third category of questions asks about plant characteristics,

including questions about plant production volume, output and input mixes,

and types of markets served by plants. 

PR/HACCP Rule Costs

The expenditures required for compliance under PR/HACCP for five meat

and poultry industries are shown in table 7. Costs in tables 7-10 are tabulated only for those plants responding to all cost questions. As shown, poultry

plants incurred 2 times as much in variable costs and more than 50 percent

more in fixed costs than the next highest cost industry. These high costs are

partly due to a much larger average plant size. Raw meat processors with no

slaughter operations had the lowest costs.

The data in table 7 are from the ERS questionnaire. Capital expenditures are

the total of property, plant, and equipment required (Q11 of the survey) and

13

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 7—The cost of compliance per plant with the PR/HACCP rule in

various industries1

Industry

Slaughter Processing

Cattle Hog Poultry Cooked Raw 

Expenditure type meat meat 

Dollars (thousands)

Capital expenditures:2

Property, plant, and equipment 281.5 251.8 630.7 376.0 259.5

expenditures required to comply

with PR/HACCP 

HACCP planning costs 6.8 7.4 8.7 8.5 7.3

Total long-term expenditures 288.3 259.2 639.4 384.5 266.8

Variable costs due to PR/HACCP:3

Production worker wage 61.8 44.5 141.8 48.6 37.4

Quality control (QC) worker wages 36.8 42.6 101.6 47.5 38.1

Nonlabor variable costs 111.5 31.9 259.8 62.1 41.0

Total variable costs 210.1 119.0 503.2 158.2 116.5

Number of plants 135 104 58 198 143

1Mean values are based on the number of respondents who answered all questions.

2Capital expenditures are longrun costs, meaning that they are either one-time costs or costs

that are incurred over a period longer than 1 year. Fixed costs are expenditures since the

PR/HACCP rule was mandated in 1996 and are based on estimates derived from Q11, Q12,

and Q13 and the methodology described above. Since we do not know precisely when these

costs were incurred, they are not assigned a net present value.

3Variable costs are annual costs and are based on Q14 (nonlabor variable costs) and Q7

(labor costs). See www.ers.usda.gov/data/haccpsurvey for complete text of the questions.

Source: ERS.
planning labor (Q15B) required complying with the PR/HACCP rule. Planning

labor was converted to costs by multiplying the average wage rate for meat

or poultry slaughter or processing industries from Census Bureau publications, divided by a 270-day work-year times the number of total planning

days required to develop HACCP and sanitation plans, as reported in Q15B.

Production worker costs and quality control worker costs are based on question Q7A and Q7B, average Census wages, and a 270-day work-year.

Nonlabor variable costs come from Q14.

We also projected our within-survey estimates of the costs of the PR/

HACCP rule to the industry as a whole. We estimate that total meat and

poultry slaughter and processing industry investment amounted to about

$570 million in HACCP-required investments and $380 million in variable

costs per year to maintain HACCP quality-control programs.

The estimates of total PR/HAACP fixed costs and PR/HACCP variable

costs were made in the following way:

• For the slaughter industries, we obtained total investments by size class

and industry by multiplying the total expenditures made by all of the

survey respondents in a particular size class and industry times the

inverse of the respondents’ share of output from all plants in that group.

• For cooked and raw meat processors with no slaughter operations, we

multiplied total investment expenditures within each size class and

industry by the inverse of their share of cooked or raw processed products from all plants in that group.

• Industry estimates are, then, the sum of expenditures of the size classes.

Market Mechanisms’ Effect on HACCP

Implementation Costs

At least three types of plants are more exposed to a competitive demand for

greater food safety investments: those that are subject to food safety requirements embedded in contracts; those that are exporters whose products are

inspected by food safety authorities in importing countries; or those that have

brand names, which require greater plant attentiveness to food safety process

control. These plants would likely have made many of the investments

required under PR/HACCP before it became mandatory and, thus, should

have a lower cost of complying.

Plants that are subject to buyers’ food safety requirements, export meat or

poultry products, or sell products under their own brand names had modestly lower costs of compliance with the PR/HACCP rule (table 8).8 Cattle and

hog slaughter facilities and cooked meat processing plants (no slaughter

operations) that were subject to the same market mechanisms generally had

lower fixed costs, and poultry slaughter plants subject to market mechanisms had lower variable costs. 

A very sharp difference in costs between plants subject to market mechanisms

and those not subject to these forces would suggest that market mechanisms

impose the same kinds of requirements as those mandated under the

14

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

8Fixed costs for red meat are based

on survey questions Q11 and Q15B

and variable costs are based on questions Q7 and Q14 for red meat. The

questions are identical for poultry.

Questions asking about plant output

markets (e.g., exports) are Q42

(exports), Q43 (local or national distribution), Q44 (buyer requirements),

and Q45 (branded products). 
PR/HACCP rule. The very modest difference actually observed, however,

indicates one of two things: (1) either the requirements imposed by market

mechanisms and those mandated under the PR/HACCP rule are very different, suggesting that both plants subject to market mechanisms and those not

subject to these forces had a similar number of tasks to perform to be in regulatory compliance; or (2) plants subject to market mechanisms and those

not subject to these forces had a similar number of tasks to perform in order

to be in compliance with PR/HACCP because the regulation requires only

tasks that most plants would perform regardless of whether they were subject to market forces (like plant A in figure 1).

We suspect that one question was poorly worded and may have elicited

unintended responses from plants selling products under their own brand.

15

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 8—Plants subject to selected market mechanisms have lower

fixed costs necessary for compliance with PR/HACCP1

Market mechanism

Buyer food Product sold 

safety requirements Export market under own brand

Plant type No Yes No Yes No Yes

Dollars per pound

Cattle slaughter:

Variable costs2 0.021 0.022 0.021 0.021 0.018 0.023

Fixed costs3 0.025 0.024 0.024 0.020 0.031 0.021

Number of plants 66 54 90 45 24 112

Hog slaughter:

Variable costs 0.023 0.030 0.021 0.024 0.019 0.022

Fixed costs 0.012 0.007 0.029 0.019 0.040 0.025

Number of plants 55 32 71 33 12 91

Poultry slaughter:

Variable costs 0.011 0.008 0.022 0.008 D 0.010

Fixed costs 0.006 0.008 0.009 0.007 D 0.008

Number of plants 18 33 9 47 3 53

Cooked meat processing/

no slaughter:

Variable costs 0.016 0.019 0.016 0.014 D 0.032

Fixed costs 0.050 0.023 0.043 0.025 D 0.020

Number of plants 104 99 128 75 3 195

Raw meat processing/

no slaughter:

Variable costs 0.012 0.015 0.017 0.007 D 0.018

Fixed costs 0.018 0.015 0.019 0.013 D 0.014

Number of plants 75 64 93 46 D D

1Plants are in five meat and poultry slaughter and processing industries.

2Variable costs are annual costs and are based on Q14 (nonlabor variable costs) and Q7 (labor

costs. See www.ers.usda.gov/data/haccpsurvey for complete text of the questions.

3Fixed costs are expenditures since the PR/HACCP rule was mandated in 1996 and are based

on estimates derived from Q11, Q12, and Q13 and the methodology described in section 8.

Notes: Number of plants varies because all plants did not respond to all questions.

D: Disclosure violation, meaning information is suppressed.

Source: ERS.
Our intent for the question asking plants whether they sell products under

their own name was to see if the plant produced branded products for consumers. However, it appears that plants took it to mean whether their product was shipped to a buyer with the producer’s name on the product, regardless of whether it was going to consumers or a vendor to be repackaged or

further processed. Given this meaning, virtually all poultry plants and

processors without slaughter operations answered affirmatively and even

most cattle slaughter plants, which typically produce products that are sold

under store brands in grocery stores, responded positively. 

Plant Characteristics Affect Expenditures for

Compliance with PR/HACCP

We considered three dimensions in which the PR/HACCP rule may have

differential effects. First, we examined the PR/HACCP rule and plant size.

Economists, such as Thomas (1990) and Ollinger and Fernandez-Cornejo

(1998), among others, found that regulation adversely affects research productivity more in small firms than in larger ones in the pharmaceutical and

pesticide industries. Pashigian (1984) found that environmental regulation

of production facilities favored large factories over smaller ones and capitalintensive industries over more labor-intensive ones. These size and industry

effects suggest that small plants may have higher regulatory costs per pound

of meat or poultry than larger ones under PR/HACCP and that differential

costs may exist between poultry and red meat plants.

Second, the costs of implementing the PR/HACCP rule also could vary by

the degree of sophistication of a plant’s quality control program prior to

PR/HACCP. Since product testing, use of a plant schematic that identifies

critical control points, and periodic reviews of the schematic and production

process to ensure plant process control are essential components of HACCP,

plants employing these practices prior to promulgation of the PR/HACCP

rule may have had lower PR/HACCP compliance costs.

Third, there are also some indirect effects of regulation. On the one hand,

product quality, i.e., shelf life for meat and poultry products, may rise

because of better control over pathogens. On the other hand, plants imposing a higher quality standard may have to either slow production lines, shut

down lines more frequently to make adjustments necessary to meet stricter

standards, or discard more products.9

Plant Size and the Costs of PR/HACCP

The costs of PR/HACCP per pound of meat or poultry in slaughter and processing industries for the largest and smallest plants and the entire industry

are shown in table 9. The weighted cost is much lower than the average cost

per pound per plant because the very largest plants have minuscule costs per

pound and those plants produce most of the output.10 If plants were of generally equal size, then average cost per pound per plant would equal the

weighted cost per pound.

The table shows that unweighted variable costs were three times higher for

the smallest relative to the largest cattle slaughter plants, and fixed costs 

16

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

9Plants can attain a higher level of

product quality by either modifying

production processes or discarding

products that do not meet the standard.

If they modify their production processes, then production costs rise. If

they discard products that fail to meet

the new standard, then the cost of

product waste rises.

10The weighted average cost is

weighted by plant output. We do this

by summing costs within a percentile

grouping and then summing output

within the same grouping. Cost per

pound is then the sum of costs divided

by the sum of output. The unweighted

cost is the mean of cost per pound of

all plants.
were more than six times larger.11 Estimates show that the average costs per

pound per plant were around 1.5 to 2.5 cents per pound in variable and

fixed costs for cattle and hog slaughter plants. The three right columns show

that the weighted cost per pound is much lower than mean cost per pound

per plant. For both hogs and cattle slaughter, the weighted cost per pound

was less than one-half of a cent and about one- seventh the average cost per

pound per plant.

The cattle and hog slaughter industries are comprised of a few very large

plants that produce most of the output and numerous smaller plants that produce a blend of commodity and niche products. In cattle slaughter, plants in the

80th to 99th percentiles produce about 90 percent of all output and most of that

quintile’s output was produced by a few giant plants. The giant plants, in turn,

17

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

11The fixed costs are the costs of

compliance with the PR/HACCP rule

since its inception in 1996. We do not

know precisely when plants made their

investments, so these costs are not all

in current dollars. Despite this inaccuracy, the magnitude of the differences

suggests differences in costs. Larger

plants had to comply with the PR/

HACCP rule before the smallest

plants; thus, their investments would

have likely been made before the

smaller plants, suggesting that their

fixed costs may have actually been

higher in current dollars than those of

smaller plants. 

Table 9—PR/HACCP costs of plants subject to market mechanisms1

Unweighted mean Industry weighted 

cost per pound2 mean cost per pound3

Size percentile Size percentile

Plant type 0-19 80-99 Mean 0-19 80-99 Mean

Dollars per pound

Cattle slaughter:

Variable costs 0.023 0.008 0.022 0.010 0.003 0.0033

Fixed costs 0.055 0.009 0.022 0.020 0.004 0.0045

Number of plants 17 27 135 17 27 135

Hog slaughter:

Variable costs 0.016 0.005 0.014 0.008 0.001 0.0020

Fixed costs 0.050 0.008 0.026 0.022 0.003 0.0043

Number of plants 23 22 96 17 22 96

Poultry slaughter:

Variable costs 0.025 0.004 0.010 0.023 0.004 0.0037

Fixed costs 0.013 0.004 0.008 0.012 0.003 0.0047

Number of plants 14 9 58 14 11 58

Cooked meat processing /no slaughter:4

Variable costs 0.018 0.005 0.016 0.015 0.005 0.007

Fixed costs 0.079 0.019 0.036 0.057 0.015 0.018

Number of plants 50 37 198 50 37 198

Raw meat processing/no slaughter:5

Variable costs 0.020 0.005 0.013 0.006 0.003 0.0046

Fixed costs 0.027 0.012 0.017 0.006 0.005 0.0080

Number of plants 25 26 139 25 26 139

1In the five meat and poultry slaughter and processing industries we left out intermediate percentiles from 20-79 because they follow a trend of higher to lower costs.

2Plants are in five meat and poultry slaughter and processing industries.

3Many plants answered only some of the questions. We used only plants reporting all variable

and fixed costs. The average costs are the average costs for that percentile category only.

4The weighted average cost is weighted by plant output. We do this by summing costs and

then summing output. Cost per pound is then the sum of costs divided by the sum of output.

The unweighted cost is the mean of cost per pound of all plants.

5Estimated number of plants producing cooked or raw processed meat is based on either

cooked or raw meat output as a share of total output, as indicated in the survey. For example,

plants with more than 50 percent of their output coming from cooked products were defined as

cooked meat processors.

Source: ERS.
have very low costs of compliance with PR/HACCP, making the weighted

regulatory cost per pound much lower than the average cost per pound per

plant. Poultry slaughter and the processing industries have similar effects.12

The substantial gap between the weighted cost per pound and average cost

per pound per plant suggests heterogeneous price changes in the meat and

poultry industries. The largest plants produce commodity products, like cutup and boneless meat and poultry, and sell their products in mass markets.

For these products, the largest plants drive prices and their costs, in turn,

determine their prices. So, price increases would be imperceptible for commodity-like raw red-meat products. For smaller plants that produce commodity products that compete with commodity products from the giant

plants, this means an erosion of profitability and a necessity to either exit

the industry or shift to other products.13

Plants that produce unique products or produce products in small batches that

compete against other small plants might be able to recover all of their

PR/HACCP costs by raising prices. These plants would typically be the very

smallest plants. Thus, it is the plants in the middle between the very small

plants and the very largest plants that will feel the most cost pressures due to

PR/HACCP. Effects should be similar for hog and poultry slaughter industries.

Meat Type and the Costs of PR/HACCP

The weighted cost of compliance with the PR/HACCP rule per pound of

output in the poultry slaughter industry was about equal to that of cattle and

twice as high as that for hog slaughter (see table 9, last column). Antle

(2000) estimated cost of poultry production as about half that of beef.

Combined, these imply that the percentage price increase in the cost of

poultry products due to PR/HACCP is about twice that of beef. 

One major difference between poultry plants and red meat plants is that

poultry slaughter plants tend to be more vertically integrated into processing. Thus, it may be appropriate to compare the cattle and hog slaughter

costs plus the red meat processing costs with the poultry slaughter costs. For

raw products, costs due to PR/HACCP become about the same for beef and

poultry, but remain lower for pork relative to poultry. Beef and pork costs

plus either raw processing or cooked processing costs exceed those for poultry, suggesting that beef and pork costs may be greater than poultry in both

percentage and absolute values. In either case, however, the average cost is

less than 1 cent per pound. 

Process Control Programs and Costs Prior to

PR/HACCP

Now consider how having a more sophisticated process control program

prior to PR/HACCP affected the cost of implementing the PR/HACCP rule.

Process control programs prior to PR/HACCP were assumed to consist of

systems that enable plant operators to identify critical control points, monitor performance at the critical control points, verify cleanliness through testing, and respond to deviations from standards. See questions Q17, Q18, 

and Q29 in the survey.

18

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

12Large-plant compliance costs with

PR/HACCP may be somewhat lower

than those of smaller plants because

they would have been more likely to

have had to comply with buyer

requirements prior to PR/HACCP.

13Hooker et al. (1999) argue that

small plants facing cost pressure in one

market could shift to other products or

simply stop production of their unprofitable product lines.
PR/HACCP costs of compliance for plants with process control programs

prior to PR/HACCP were either lower or about the same as plants without

these programs prior to PR/HACCP (table 10). Variable cost differences

were quite small except for cattle and hog slaughter plants and small raw

meat processing plants. Fixed costs of compliance were lower for large cattle slaughter plants and all small plants with process control programs prior

to PR/HACCP. For other plants, fixed costs of compliance were comparable. These cost differences suggest that a process control program prior to

PR/HACCP had many components similar to the requirements promulgated

under the PR/HACCP rule and that these similarities gave plants with these

programs lower costs of compliance with PR/HACCP. 

Indirect Effects of the PR/HACCP Rule

Changes in food safety process controls have both positive and negative

indirect impacts on production costs. Roberts and Pinner (1990), for example, found that better control of the pathogen Listeria monocytogenes led to

an increase in product shelf life. The PR/HACCP rule appears to have had a

similar effect. Survey results indicate that about 9 percent of respondents

19

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 10—PR/HACCP costs for plants with pre-PR/HACCP

process control program 

Plant size1

Small Large

Process control prior to Process control prior to

PR/HACCP PR/HACCP

Plant type No Yes No Yes

Dollars per pound Dollars per pound

Cattle slaughter:

Variable costs 0.036 0.020 0.016 0.008

Fixed costs 0.039 0.025 0.016 0.006

Number of plants 47 10 57 21

Hog slaughter:

Variable costs 0.035 D 0.019 0.008

Fixed costs 0.059 D 0.017 0.016

Number of plants D D 60 12

Poultry slaughter:

Variable costs 0.016 D 0.005 0.004

Fixed costs 0.011 D 0.002 0.005

Number of plants D D 16 11

Cooked meat processing /no slaughter:

Variable costs 0.020 0.020 0.012 0.009

Fixed costs 0.058 0.020 0.024 0.022

Number of plants 78 24 62 34

Raw meat processing/no slaughter:

Variable costs 0.019 0.011 0.011 0.008

Fixed costs 0.019 0.006 0.017 0.017

Number of plants 55 14 52 22

1Large plant size is defined as any plant in the 50th or higher percentile in all industries, except

for hogs, in which the cutoff for large plants was the 70th or higher percentile. The cutoff was

changed in order to avoid potential confidentiality concerns.

D: suppressed due to confidentiality concerns

Source: ERS.
stated that their products’ shelf lives increased by more than 1 week and 21

percent said that their products’ shelf lives increased by less than 1 week.

Only about 1 percent of respondents claimed a decrease in shelf life. The

remainder reported no change in shelf life.

Implementing a new process control program or making an existing program more stringent can have two indirect effects on production costs:

• On the one hand, products may better satisfy buyers and result in a

reduction in product recalls, an improvement in product yields, and a

decline in plant downtime if the plant formerly had a poorly functioning

process control program.

• On the other hand, a more stringent process control program may reject

products that formerly would have been sold to buyers and may cause a

plant to shut down more frequently in order to comply with new process

control requirements. 

A case study of Texas American Beef (Golan et al., 2004) indicates that

Texas American Beef instituted a process control program to reduce product

recalls and then successfully implemented a program that led to a competitive advantage in pathogen control technology. Thus, this privately motivated process control program generated substantial benefits to its developer.14

Government mandated process controls, however, differ in that no plant

gains a competitive edge over its rivals because all plants must comply with

the same standard. Plants can gain an advantage only if they perform at a

level greater than the industry mean.15 Thus, companies like Texas

American Beef may have a quality level comparable to that of Plant D in

figure 1 while the rest of the industry would reside at the horizontal bar. If

the regulatory standard becomes more stringent, then companies, such as

Texas American Beef, would have to increase their food safety process control standards even further to distinguish themselves from their competitors.

The PR/HACCP rule raised regulatory stringency by raising the acceptable

level of food safety and the stringency of process control requirements.16

Plants could deal with the regulation by either removing meat that failed to

meet FSIS standards as it occurred in production or increasing work effort

and processing complexity to prevent the production of the off-quality meat

or poultry from happening in the first place.17 If a plant removed meat or

poultry that failed to meet FSIS standards from production as it occurred,

then processing yields may have declined because product that would have

otherwise been sold must now be rejected. ERS survey data suggest that

many plants followed this route. Only about 2 percent of the 963 plants

reporting on plant yields believed that yield improved with the introduction

of the PR/HACCP rule, while about 25 percent believed that yield

decreased. The remainder reported no change. See question Q10 in the survey to review the survey question.

Some plants that increased processing complexity by adding a new step, such

as a steam vacuum cleaner to remove fecal matter, to the production process to

meet more stringent pathogen-control standards would incur the cost of greater

downtime because those plants would have to shut down when the new step in

the production process failed. However, if a plant that had been experiencing

20

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

14This is not to say that production

costs actually dropped. Product recalls

may have declined because products

that would have formerly been

released for sale were held and then

either sold for alternative uses or discarded. Texas American Beef did

reduce some of this rejected meat as it

further developed its process control

program but a detailed study of its

costs is not available. It is clear, however, that improving its process control

program gave Texas American Beef a

competitive advantage at a time when

buyers were becoming more discriminating in their purchasing behavior

and enabled it to increase market share

at the expense of its competitors. 

15For example, automobiles produced by American companies have

improved in quality over the past 30

years; yet many Japanese automobiles

sell at a premium because they have

even higher quality. The important

point is that relative quality matters.

16Regulatory stringency increased

in two ways. First, in production,

slaughter plants now have to conduct a

test for E. coli and comply with a

generic E. coli standard, and slaughter

and ground meat plants must adhere to

a Salmonella standard. Neither type of

testing was required prior to

PR/HACCP. Additionally, plants must

keep records on and adhere to their

SSOP and HACCP practices. Second,

in the marketplace, FSIS increased the

number and sensitivity of tests for

harmful pathogens. This increased diligence has led to a sharp spike in product recalls. See “Weighing Incentives

for Food Safety in Meat and Poultry”

in the April 2003 issue of Amber

Waves for further discussion about the

nature of the recalls.

17The PR/HACCP rule specifies

two process standards—SSOPs and

HACCP plan implementation—that

require plants to perform specified

functions. There are also two performance standards—E. coli and

Salmonella testing that indicate a failure in the food safety system. Plants

could avoid such failures by either

improving their food safety system or

testing animals and meat for E. coli

and Salmonella and discarding those

that are not acceptable. Either

approach can achieve a safe food supply. The last option—test and discard—is very costly, however.
frequent shutdowns due to poor processing practices introduced an improved

process control program, then production downtime may have been reduced.

ERS survey data (Q9 in the survey) suggest that many more plants realized an

increase than a decrease in production downtime.

Now consider the four components of the PR/HACCP rule—compliance

with the HACCP plan, SSOPs, the zero fecal matter/generic E. coli standard, and the Salmonella standard—and changes in annual downtime. About

12 percent of all plants said they had more than 24 hours of annual downtime due to HACCP compliance and 46 percent said they had between 0

and 24 hours of additional downtime. Only 4 percent indicated a reduction

in production downtime. Plants gave a similar report for SSOPs, but had a

more positive experience with the zero fecal matter standard and Salmonella

testing. For the fecal matter standard, 18 percent of all plants said the

requirement reduced downtime while only 7 percent said that downtime

rose by more than 24 hours; 29 percent indicated a rise in downtime of less

than 24 hours. Similarly, 15 percent of all plants said the Salmonella standard reduced downtime while only 2 percent said that downtime rose more

than 24 hours; 20 percent indicated a rise in downtime of less than 24 hours.

Overall, 54 percent of all plants said that they suffered downtime due to one of

the four components of PR/HACCP with no offsetting downtime reductions in

another component. Only 6 percent of all plants said that downtime declined in

at least one of the components and did not change in the others. About 13 percent of all plants realized reductions in downtime due to one component but

then had offsetting increases in downtime due to other components. The

remainder of the plants had no changes in downtime due to PR/HACCP.

Food Safety Investment

Total fixed capital investment in food safety includes the expenditures

required for compliance with regulation and the private investment motivated

by market conditions. The cost of government regulation includes costs that

firms otherwise may not incur. Privately motivated investments, on the other

hand, are those expenditures that plants are not required to make in order to

comply with regulation and for which the discounted net return to the firm is

greater than or equal to the cost of the initial amortized expenditure. This

independent private investment includes the cost of installation, the price of

the equipment, lost downtime during installation, and transportation costs.

Improvements in firm profitability come from cost savings due to reductions

in labor costs and material usage, a longer shelf life, and higher prices accruing to a higher quality product. For food safety, a reduction in business risk

is an important motivating factor. New technologies and more frequent use

of existing practices increase the likelihood of adhering to FSIS standards

and make it less likely that a plant will be either subject to a product recall or

identified as the source of a foodborne illness.

Table 11 shows the estimated mean level of independent private investments and capital expenditures required for compliance under PR/HACCP

for five meat and poultry industries. For the 136 cattle slaughter plants

responding to all investment questions, the mean level of independent private investment was about $181,500 per plant and total capital expenditures and HACCP planning costs required for compliance with PR/HACCP

21

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
amounted to about $288,000. Of the five industries, poultry slaughter had

the highest level of private investment ($500,000 per plant) while raw meat

processing had the lowest level of private investment at about $130,900 per

plant. See Q11 in the survey for the precise wording of the question soliciting information. 

Private plant investment estimates are based on the expenditures required to

comply with the PR/HACCP rule. We assumed that plants made private

investments only if their survey response indicated that they made food

safety process control investments beyond those mandated under

PR/HACCP (Q12 in the survey). If plants did and they responded affirmatively to another question asking whether their private investment exceeded

their PR/HACCP-required investment (Q13 in the survey), we make a lower

bound estimate by assuming that private investment equaled PR/HACCP

expenditures. For plants indicating that they made investments in addition to

those mandated under PR/HACCP but also responding that this investment

did not exceed their PR/HACCP costs, we assumed that private investment

was one-half the PR/HACCP investment. Finally, we assumed that private

investment equaled zero if the plant indicated that it made only PR/HACCPrequired investments. Total respondent investment per industry, the sum of

investments across all respondents, was then adjusted as outlined in section

6 to obtain private industry investment. We acknowledge that these are

rough, but we believe that they do provide a general feel for the amount of

investment put forth by meat and poultry slaughter and processing plants.

22

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 11—Mean privately motivated capital expenditures and capital

expenditures required for compliance with PR/HACCP1

Industry

Slaughter Processing

Cattle Hog Poultry Cooked Raw 

Expenditure type meat meat

Dollars per plant (thousands)

Capital expenditures:

Expenditures required

to comply with 

PR/HACCP 281.5 251.8 630.7 376.0 259.5

Privately motivated

investment, not needed

to comply with PR/HACCP 181.5 227.6 501.7 298.2 130.9

HACCP planning costs 6.8 7.4 8.7 8.5 7.3

Total long-term expenditures 469.8 486.8 1141.1 682.7 397.9

Number of plants 136 104 56 203 143

Note: Mean values are based on the number of respondents who answered all questions.

1In the meat and poultry slaughter and processing industries.

Source: ERS.
The Paths Plants Took To Comply With the

PR/HACCP Rule

The components of the PR/HACCP rule that deliver the most benefits in

terms of food safety process control are of major importance to policymakers. To meat and poultry processors, the lowest cost way to comply with

PR/HACCP is of primary importance. Economists, on the other hand,

believe that additional process control should be added up to the point at

which the cost of process control equals the benefits of improved public

health. This balance of process control costs and public health outcomes

may or may not be equal to the level of food safety process control achieved

through compliance with PR/HACCP regulation.

Two types of regulatory standards—performance and process standards—

exist to achieve regulatory goals. Performance standards allow plants to use

any means necessary to reach an established goal that is linked to a public

good, such as improved health. Process standards mandate specific processes that manufacturers must achieve in order to comply with the regulation.

HACCP contains elements of both: generic E. coli and Salmonella performance standards and SSOP and HACCP process standards.

Economists generally believe that process standards are more costly than

performance standards because some required tasks may not be necessary to

reach desirable outcomes. However, process standards do reduce the uncertainty of regulatory compliance because as long as the plant executes the

necessary tasks it is in compliance, whereas performance standards require a

plant to first investigate a quality breakdown and then develop a solution.

Determining the solution and then implementing ways to carry it out can be

both costly and time-consuming and require repeated approaches to problem

solving. We consider the aspects of the PR/HACCP rule that plants felt were

most beneficial and most costly, as follows.

Questions 1-3 of the survey asked plant operators how they perceived the

costs and benefits of the PR/HACCP rule. Tables 12a-13b indicate the perceived benefits and costs associated with aspects of the PR/HACCP rule.

First, consider the SSOPs and HACCP plans. The tables show that managers in all industries except poultry slaughter believed that SSOPs delivered the most benefits for pathogen control, yet far fewer plants said it was

the most costly component of the PR/HACCP rule. A substantial number of

plants also thought that HACCP plans were the most important component

for pathogen control, but a much larger number claimed it was the most

costly way to achieve it. Small plants incurred sharply higher relative costs

of creating and implementing HACCP plans. Nearly twice as many of the

smallest slaughter plants relative to the largest ones believed that compliance with HACCP plans was the most costly aspect of the PR/HACCP rule.

Operator frustration over the costliness of HACCP plan development implementation account for the overwhelming majority of written comments on

the HACCP plan. One operator was particularly expressive, saying:

“Our plant is small (18 employees) but has a very complex product mix,

from fresh beef and pork cuts all the way to finished, ready-to-eat products.

23

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
24

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 12a—Slaughter plants' rating of part of PR/HACCP rule 

considered most beneficial for pathogen control1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

component most beneficial

Cattle slaughter:

SSOPs 41.0 32.0 36.0

HACCP plan 16.0 25.0 23.0

E. coli testing, zero fecal requirement 37.0 36.0 36.0

Salmonella testing 0.0 0.0 1.0

Other 6.0 7.0 4.0

Number of plants 48 49 255

Hog slaughter:

SSOPs 36.0 49.0 40.0

HACCP plan 25.0 16.0 23.0

E. coli testing/zero fecal requirement 32.0 26.0 30.0

Salmonella testing 0.0 9.0 3.0

Other 7.0 0.0 4.0

Number of plants 42 47 210

Poultry slaughter:

SSOPs 37.0 21.0 24.0

HACCP plan 33.0 37.0 29.0

E. coli testing/zero fecal requirement 26.0 32.0 28.0

Salmonella testing 4.0 5.0 16.0

Other 0.0 5.0 3.0

Number of plants 33 24 124

1Responses are based on Q2 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

Source: ERS.

Table 12b—Processing plants' rating of part of PR/HACCP rule 

considered most beneficial for pathogen control1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

component most beneficial

Cooked meat processing, no slaughter:

SSOPs 44.0 49.0 45.0

HACCP plan 36.0 35.0 37.0

E. coli testing/zero fecal requirement 14.0 11.0 13.0

Salmonella testing 4.0 0.0 1.0

Other 2.0 5.0 4.0

Number of plants 68 73 368

Raw meat processing, no slaughter:

SSOPs 48.0 45.0 44.0

HACCP plan 36.0 34.0 36.0

E. coli testing/zero fecal requirement 12.0 17.0 14.0

Salmonella testing 2.0 2.0 2.0

Other 2.0 2.0 4.0

Number of plants2 65 58 327

1Responses are based on Q2 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

2Two raw meat processing plants have missing rank data.

Source: ERS.
25

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 13a—Slaughter plants' rating of parts of PR/HACCP rule 

considered most costly1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying PR/HACCP

component most costly

Cattle slaughter:

SSOPs 7.0 2.0 6.0

HACCP plan 48.0 37.0 43.0

E. coli testing/zero fecal requirement 41.0 49.0 43.0

Salmonella testing 4.0 4.0 4.0

Other 0.0 8.0 4.0

Number of plants 48 49 255

Hog slaughter:

SSOPs 12.0 15.0 11.0

HACCP plan 53.0 28.0 45.0

E. coli testing/zero fecal requirement 30.0 31.0 34.0

Salmonella testing 5.0 26.0 8.0

Other 0.0 0.0 2.0

Number of plants 42 47 210

Poultry slaughter:

SSOPs 9.0 4.0 5.0

HACCP plan 41.0 21.0 26.0

E. coli testing/zero fecal requirement 34.0 63.0 50.0

Salmonella testing 16.0 8.0 16.0

Other 0.0 4.0 3.0

Number of plants2 33 24 124

1Responses are based on Q3 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

2Twenty-four poultry plants have missing rank data.

Source: ERS.

Table 13b—Processing plant rating of components of the PR/HACCP

rule that is most costly varies by plant size1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying PR/HACCP

component most costly

Cooked meat processing, no slaughter:

SSOPs 12.0 17.0 14.0

HACCP plan 55.0 47.0 58.0

E. coli testing/zero fecal requirement 16.0 28.0 18.0

Salmonella testing 9.0 4.0 4.0

Other 8.0 4.0 6.0

Number of plants 68 73 368

Raw meat processing, no slaughter:

SSOPs 10.0 11.0 10.0

HACCP plan 62.0 51.0 59.0

E. coli testing/zero fecal requirement 13.0 28.0 21.0

Salmonella testing 8.0 7.0 6.0

Other 7.0 3.0 4.0

Number of plants2 65 58 327

1Responses are based on Q3 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

2Two raw meat processing plants have missing rank data.

Source: ERS.
To cover our many types of products, we had to develop and implement 19

separate HACCP plans, plus the SSOP procedures. Needless to say, this

took a huge amount of time and resources. Our HACCP team of 9 individuals (half the plant [employees]) met for 1 to 2 hours on a weekly, sometimes

biweekly, basis for 14 months. Additionally, one person worked half-time

for two and a half years. Our direct labor cost for HACCP and SSOP plan

development was well over $100,000. During this process, there were several false starts, as the ‘rule’ seemed to be constantly changing, a moving target if you will. Our plant has four certified people. Each of us attended separate HACCP certification training courses (3-day sessions required by law)

and each of us brought back new or different requirements.”

Now consider the perceived costs and benefits of E. coli testing and the zero

fecal matter standard. As shown in the tables, a similar number of meat

plant respondents regarded these two as most beneficial and most costly.

However, the attitudes of managers of poultry plants differed sharply: half

the plant managers viewed E. coli testing and the zero fecal standard as

most costly while about only one-fourth of plant managers viewed it as

most beneficial. This sentiment was most pronounced for the managers of

large plants. More than 60 percent of these plant managers thought the E.

coli testing and the zero fecal matter standard was most costly while only

about 30 percent believed that it was most beneficial. 

The Paths Plants Would Prefer To Take To Best

Control Pathogens

It is one matter to ask a plant about compliance and another to ask plants

the practices they might use to best control pathogens independent of any

regulation. Ideally, the two would match. Questions 4, 5, and 6 ask plant

operators about their preferred approach to control pathogens and the costliness of that method. 

Tables 14a and 14b demonstrate clearly that plant size and, to a lesser

degree, animal species and type of product have strong influences on how

plants choose to control pathogens. Table 14a shows that the smallest cattle

and hog slaughter plants prefer to concentrate on changes in product flow

while their larger, more capital-intensive competitors and most poultry

plants focused much more on equipment.18 A large number of plants in all

categories except large poultry plants viewed frequency of cleaning as the

best way to control pathogens.

Table 14b shows that product flow and frequency of cleaning are important

to processing plants of all sizes, whereas equipment was viewed as much

less useful for pathogen control than it was in slaughter plants. It is also

important to note that proportionately more raw meat processors regarded

relationships with suppliers as the best way to control pathogens, probably

because the PR/HACCP rule places responsibility for compliance with the

Salmonella standard with grinders. Yet, plants that grind meat and poultry

must rely on their suppliers to provide pathogen-free meat and poultry

because, unlike slaughter plants, they have no means of reducing pathogens

in meat supplies after their products are contaminated.

26

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

18Changes in product flow are

adjustments to the production flow to

enhance food safety. For example, a

travel route for a bin of raw/unprocessed meat may be redirected from

one route passing through a finished

product area to another route that

avoids this area, thereby reducing the

potential for cross-contamination.
Taken together, tables 14a and 14b indicate an interaction between the tools

required to control pathogens and plant production technology and product

mix. Large, high-speed slaughter facilities must process animals quickly in

order to be profitable and so rely on high-speed equipment as much as possible to control pathogens. Small, more labor-intensive slaughter operations,

by contrast, can control pathogens by ensuring a smooth product flow and

intensive cleaning. Intermediate sized plants may use some equipment to

control pathogens, but must still rely substantially on manual means of control. Large poultry slaughter plants, perhaps the most automated of all plants,

rely almost exclusively on equipment to best control pathogens. Processing

plants, in contrast, have few mechanical means of controlling pathogens;

thus, they must rely on cleaning and product flows, and, for raw-meat

processors, assurance from suppliers that their inputs are pathogen-free.

Tables 15a and 15b indicate plant operators’ perceptions of the costliness of

various operational changes. Except for small plants in two categories, managers regarded equipment as the most costly way to control pathogens while

27

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 14a—Slaughter plants' rating of food safety operation 

considered most beneficial for pathogen control1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

plant operation most effective

Cattle slaughter:

Grower practices 11.0 0.0 11.0

Product flow 30.0 7.0 24.0

Product rework 3.0 3.0 3.0

Frequency of cleaning 32.0 26.0 26.0

New equipment 14.0 45.0 22.0

Facilities improvement 5.0 17.0 12.0

Other 5.0 2.0 2.0

Number of plants 48 49 255

Hog slaughter:

Grower practices 22.0 7.0 12.0

Product flow 28.0 12.0 29.0

Product rework 0.0 5.0 3.0

Frequency of cleaning 28.0 21.0 19.0

New equipment 10.0 43.0 23.0

Facilities improvement 6.0 12.0 11.0

Other 6.0 0.0 3.0

Number of plants 42 47 210

Poultry slaughter:

Grower practices 0.0 23.0 10.0

Product flow 18.0 9.0 12.0

Product rework 4.0 5.0 2.0

Frequency of cleaning 25.0 9.0 12.0

New equipment 39.0 41.0 51.0

Facilities improvement 7.0 14.0 9.0

Other 7.0 0.0 4.0

Number of plants 33 24 124

1Responses are based on Q4 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

Source: ERS.
only the managers of large plants believed that equipment is most useful for

pathogen control. Small plants claimed that the frequency of cleaning is

effective and less costly than equipment, but still costly. A substantial number of plant managers also viewed product flow as useful, but a much lower

number regarded it as most costly. A sizeable number also regarded facilities improvement as quite costly. Overall, large plants appeared to favor

equipment-based process control approaches, while smaller plants preferred

either the frequency of cleaning or product flow process control programs.

Construction of a Food Safety Technology Index

The ERS survey contained approximately 35 questions dealing with food

safety technology and practices covering five broad categories: food safety

equipment, testing, plant operations, sanitation, and dehiding (cattle slaughter only). These questions queried plant managers about how their plants

controlled pathogens. Examples of each type of question include the use of

equipment to heat carcasses, amount of pathogen testing, quantity of worker

training, frequency of sanitation practices, and use of negative air pressure

around the carcass in the dehiding area. We have included all of the questions and frequency of responses in the survey. In the meat questionnaire,

questions Q19-Q40 and Q52-Q65 deal with food safety technologies. The

poultry food safety technology questions are Q20-Q41 and Q53-Q65.

A practice adhered to by quality control managers in meat and poultry

plants is to consider food safety technology as a system in which a plant

28

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 14b—Processing plants' rating of food safety operation

considered most beneficial for pathogen control1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

plant operation most effective

Cooked meat processing, no slaughter:

Grower practices 4.0 9.0 11.0

Product flow 27.0 17.0 22.0

Product rework 2.0 6.0 4.0

Frequency of cleaning 39.0 28.0 29.0

New equipment 16.0 16.0 15.0

Facilities improvement 12.0 22.0 16.0

Other 0.0 2.0 3.0

Number of plants 68 73 368

Raw meat processing, no slaughter:

Grower practices 17.0 21.0 15.0

Product flow 27.0 11.0 23.0

Product rework 2.0 13.0 6.0

Frequency of cleaning 29.0 17.0 26.0

New equipment 15.0 17.0 14.0

Facilities improvement 10.0 17.0 14.0

Other 0.0 4.0 2.0

Number of plants2 65 58 327

1Responses are based on Q4 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

2Two plants have missing rank data.
marshals several different types of equipment or practices to control food

safety.19 In this vein, we consider the overall system of food safety.

However, it is more precise to compare similar technologies and production

practices, e.g., equipment of one plant to equipment of another rather than a

mixture of technologies and practices, such as equipment and sanitation

because plants may use similar equipment but have different sanitation,

making the two plants appear to have much different technologies than actually occurs. As a result, we created five food safety technology indexes—

food safety plant operations, testing, sanitation, equipment, and dehiding

(cattle slaughter)—that correspond with the five different types of food safety technology questions in the survey. 

We adhered to three principles in creating the food safety technology index.

First, the rating system should be monotonic because more intensive operations should yield greater food safety protection than less intensive ones. By

monotonic, we mean that plants with more intensive cleaning or with a specific piece of food safety equipment have higher scores than plants with less

29

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 15a—Slaughter plant rating of food safety operation that is 

most costly1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

plant operation most costly

Cattle slaughter:

Grower practices 0.0 0.0 3.0

Product flow 5.0 9.0 11.0

Product rework 5.0 2.0 4.0

Frequency of cleaning 29.0 13.0 16.0

New equipment 37.0 42.0 35.0

Facilities' improvement 22.0 29.0 27.0

Other 2.0 5.0 4.0

Number of plants 48 49 255

Hog slaughter:

Grower practices 0.0 2.0 3.0

Product flow 5.0 0.0 11.0

Product rework 3.0 4.0 4.0

Frequency of cleaning 20.0 7.0 12.0

New equipment 36.0 55.0 39.0

Facilities' improvement 28.0 30.0 27.0

Other 3.0 2.0 4.0

Number of plants 42 47 210

Poultry slaughter:

Grower practices 0.0 4.0 3.0

Product flow 13.0 4.0 6.0

Product rework 13.0 4.0 8.0

Frequency of cleaning 17.0 13.0 11.0

New equipment 43.0 58.0 58.0

Facilities' improvement 10.0 13.0 10.0

Other 4.0 4.0 4.0

Number of plants 33 24 124

1Responses are based on Q5 in the survey. Intermediate percentiles not included because

they follow a trend established by the highest and lowest rated plants.

Source: ERS.

19A multiple-hurdle system in a

high-volume cattle slaughter plant may

involve a battery of steam vacuum

units, a carcass pasteurizer, organic

sprays, and other related equipment.

Each type of equipment reduces

pathogen levels but none completely

eliminates them.
intensive cleaning or without the same piece of equipment. Second, one

should be able to make food safety technology comparisons on the basis of

similar technology types since some types of technology, such as plant operations, may have different purposes and long- and short-term effects than

other technologies, such as equipment. Thus, the relevant comparisons are

the equipment rating of one plant versus that of another and sanitation of

one plant versus that of another, etc. 

Third, since food safety quality control requires a systematic approach, we

considered a variety of technology components within each technology type.

For example, steam vacuum units, carcass pasteurizers, and other food safety

equipment are equipment technologies. More precisely, we used questions

Q21, Q24, Q25, Q30-Q35, and Q51 to construct a plant’s operations technology index, Q26-Q28 for the testing technology index, Q36-Q40 for sanitation for the sanitation technology index, Q19, Q20, Q22, Q23, Q52-56 for

the equipment technology index, and Q51 and Q58-Q65 for the dehiding

technology index.20 For poultry slaughter, the questions for each category are

Q22, Q25, Q26, Q31-Q36, Q53, and Q54 for the plant operations index,

Q27-Q29 for the testing index, Q37-Q41 for the sanitation index, and Q20,

Q21, Q23, Q24, and Q55-62 for the equipment technology index.

Following the three underlying principles, the indexes were constructed as

follows. First, we grouped similar technologies and practices into one of the

five types of food safety practices and technologies described above, such as

30

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

20Dehiding refers to all the manufacturing operations, equipment, facilities, and sanitation practices associated

with hide removal. It is a very important operation because, if done correctly, animal carcasses will not be

exposed to harmful pathogens even if

they are present in the animal’s feces

or on its hide.

Table 15b—Plant operation processing plants believe is most effective

way to control pathogens1

Size percentile All plants

Plant type 0-19 80-99

Share of plants saying

plant operation most costly

Cooked meat processing, no slaughter:

Grower practices 7.0 3.0 4.0

Product flow 7.0 13.0 9.0

Product rework 6.0 7.0 11.0

Frequency of cleaning 28.0 12.0 19.0

New equipment 19.0 32.0 25.0

Facilities' improvement 28.0 32.0 29.0

Other 5.0 1.0 3.0

Number of plants 68 73 368

Raw meat processing, no slaughter:

Grower practices 13.0 9.0 7.0

Product flow 7.0 9.0 8.0

Product rework 7.0 11.0 7.0

Frequency of cleaning 27.0 7.0 20.0

New equipment 20.0 35.0 28.0

Facilities improvement 20.0 25.0 26.0

Other 6.0 4.0 3.0

Number of plants2 65 58 327

1In terms of share of plants by plant size. Responses are based on Q5 in the survey.

Intermediate percentiles not included because they follow a trend established by the highest

and lowest rated plants.

2Two plants have missing rank data.

Source: ERS.
testing. Second, we valued all questions equally with a maximum value of

“1” and a minimum value of “0.” Third, we assigned the most intensive

operation within each question a value of 1 and the least intensive a value of

0. For example, equipment usage questions and similar questions had just

two possible responses: 1 or 0. Many sanitation and plant operations questions, however, had multiple answers. For these questions, we assigned a 1

to the operation that generates the most food safety, a 0 to the operation

generating the least food safety, and an intermediate value between 0 and 1

for operations providing intermediate food safety performance. Finally, we

created a technology index for each technology category by summing the

values of the responses for each of the questions within that category—plant

equipment, testing procedures, plant operations, sanitation, and dehiding—

and dividing by the number of questions, yielding an index value between 0

and 1. For the overall technology category, we divided the total of all technology questions by the total number of food safety technology questions.

Consider the following example. Suppose that a sanitation question asks

whether a plant cleans its processing line once per week, less than daily but

more than weekly, or daily. Using our approach, the plant would be

assigned 0 points for weekly cleaning, 0.5 point for less than daily but more

than weekly cleaning, and 1 point for daily cleaning. Suppose also that there

are five questions under the sanitation category. The maximum number of

points a plant could achieve would be 5 and the minimum would be 0.

Since the index value equals the number of points (5 or fewer) divided by

the number of questions (5) the index value ranges from 0 to 1.

There are many other ways to create food safety indexes. For our index, we

assumed that all pathogen-control activities within a category were of equal

importance. For example, sanitizing knives is of equal importance to washing hands. However, it may be that sanitizing knives is more important than

washing hands, in which case knife sanitation should have a heavier weight

than handwashing in the sanitation index. Alternatively, we assumed a linear

scale between the least and most stringent measure within a question. For

example, if there were three possible responses for product cooling, the end

points garnered 0 or 1 point while the intermediate response generated 0.5

point. Yet, a log or other scale could have also been used and would have,

likewise, been monotonic. Finally, the five categories may not be of equal

importance. For example, it may be that sanitation and cleaning is more

important than equipment. To partially accommodate this concern, we

emphasize the categorical, e.g., index of pathogen-control equipment, rather

than the overall pathogen-control plant rating in our discussion.

Large Plants Have Much Higher Equipment

and Pathogen-testing Technology Index Values

Table 16a compares the food safety technology index of the largest plants

with the smallest plants in three slaughter industries. The table shows that

the smallest plants had much lower technology index values overall. Most

of the difference is due to a substantial variation in equipment and testing

for all three industries and dehiding for cattle slaughter. Sanitation and operating procedures were nearly the same. The greatest difference in sanitation is

31

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
the eight points separating the smallest and largest cattle slaughter plants.

The operations’ difference ranged from 4 to 11 points. 

The differences in index values between small plants and large ones make

sense. In cattle slaughter, equipment that raises carcass temperature to 160

degrees Fahrenheit or more to control pathogens can cost more than $1 million. Yet, the smallest cattle slaughter plants butchered an average of less

than one cattle per day (table 2), and even plants in the second largest size

grouping (80th percentile), slaughtered only about 60 cattle per day. By contrast, plants in the largest size category processed more than 100 cattle per

hour. If we assume that equipment has a useful life of 5 years, then the cost

is more than $1,200 per head of cattle for the smallest plant and about $1

per head for the largest plant. Of course, some equipment is cost-effective

for small plants and they do adopt these technologies. If they did not, their

ratings would be 0. Nonetheless, their equipment index value is naturally

going to be a lot lower than that of large plants.

The costs of product testing are also higher for smaller plants because large

plants have sufficient needs to create in-house quality control operations

that can perform microbiological testing at a lower cost than that which is

available on the market and to small plants.

32

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 16a—Technology index for slaughter plants for five types of food

safety technologies1

Size percentile All plants

Plant type 0-19 80-99

Technology index

Cattle slaughter:

Overall tech/methods 0.43 0.62 0.50

Equipment 0.32 0.55 0.39

Testing 0.34 0.75 0.51

Dehiding 0.26 0.45 0.36

Sanitation 0.51 0.59 0.56

Operations 0.59 0.70 0.62

Number of plants 48 49 255

Hog slaughter:

Overall tech/methods 0.42 0.57 0.49

Equipment 0.35 0.46 0.38

Testing 0.27 0.70 0.49

Sanitation 0.50 0.55 0.55

Operations 0.58 0.62 0.60

Number of plants 42 47 210

Poultry slaughter:

Overall tech/methods 0.50 0.67 0.61

Equipment 0.48 0.74 0.65 

Testing 0.38 0.75 0.65

Sanitation 0.54 0.55 0.55

Operations 0.59 0.63 0.61

Number of plants2 26 27 148

1Index values derived from Q19-65 in the meat survey and Q20-62 in the poultry survey. See

the text for how the index was determined. Intermediate percentiles not included because they

follow a trend established by the highest and lowest rated plants.

2Twenty-four poultry plants have missing rank data.

Source: ERS.
It may be that large plants have to test much more frequently than smaller

plants. Large plants are exposed to much greater risk of being found responsible for a foodborne illness outbreak. For example, a plant slaughtering 100

head of cattle per hour on 2 shifts would produce about 960,000 pounds of

beef per day while the smaller plant would produce only 600 pounds, suggesting that the larger plant has a much, much greater chance of being subject to a product recall.

Sanitation and operating procedures can be more easily adjusted to accommodate plant size than can equipment because they are proportional to volume. For example, a superior sanitation practice, such as cleaning and sanitizing a cutting utensil after each carcass or cut of meat, has similar costs

per cut of meat regardless of plant size. Nonetheless, these procedures still

tend to favor large plants. Cleaning drains, for example, is a fixed cost over

a period of time, so it has a cost that is more easily spread across many

units, i.e., by large plants. 

The dehiding process represents an intermediate case in which some costs

are fixed, such as maintaining negative air pressure in the dehiding area, and

other costs, such as cleaning knives and hands after each carcass, are more

variable. Thus, food safety process control index values for small plants are

lower than for larger plants but the difference is not as great as for equipment and testing or as modest as for sanitation and operating procedures.

Table 16b shows the food safety, process control index for processing plants

with no slaughter operations. Notice that the overall index differential narrows

33

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 16b—Technology index for processing plants for five types of

food safety technologies1

Size percentile All plants

Plant type 0-19 80-99

Technology index

Cooked meat processing, no slaughter:

Overall tech/methods 0.53 0.64 0.57

Equipment 0.46 0.64 0.55

Testing 0.46 0.74 0.51

Sanitation 0.55 0.55 0.61

Operations 0.61 0.69 0.62

Number of plants 68 73 368

Raw meat processing, no slaughter:

Overall tech/methods 0.52 0.64 0.55

Equipment 0.51 0.66 0.55

Testing 0.36 0.75 0.55

Sanitation 0.51 0.51 0.51

Operations 0.61 0.68 0.63

Number of plants2 65 58 327

1Index values derived from Q19-65 in the meat survey and Q20-62 in the poultry survey. See

the text for how the index was determined. Intermediate percentiles not included because they

follow a trend established by the highest and lowest rated plants.

2Two raw meat processing plants have missing rank data.

Source: ERS.
considerably from the slaughter industry. This is mainly due to fewer equipment options available for controlling pathogens. It is also important to

observe the sizeable jump in the testing index value as plants grow in size.

This rise again illustrates that large plants place a greater reliance on testing. 

Market Mechanisms Encourage the Use of a

More Extensive Food Safety Technology

Market mechanisms, such as buyer requirements, export inspections, and product brands, have emerged as ways for buyers to better control seller incentives

to underinvest in food safety. In each case, sellers reveal their identities, making themselves subject to greater scrutiny for food safety performance, in

exchange for greater revenues per pound of meat or poultry or a secure market

for their output. Empirically, we should observe a higher food safety technology index rating for plants that are subject to market mechanisms. 

Table 17a shows the food safety process control index values for food safety

equipment, testing, dehiding (cattle slaughter only), sanitation, and plant

operations for three slaughter industries under three market mechanisms.

Index values for equipment, testing and dehiding (cattle slaughter only)

were nearly twice as high for cattle and hog slaughter plants subject to

buyer food safety requirements or engaged in export markets than for plants

not subject to these market mechanisms. In contrast to the differences for

plant size, sanitation and operations were also distinctly higher for cattle

slaughter. Selling products under one’s own brand name appeared to have

no impact on the food safety technology index. We attribute this to a poorly

worded question (discussed earlier). Poultry slaughter plants exhibit similar

but more muted differences between plants subject to market mechanisms

and those not subject to them.

Meat and poultry processors subject to market mechanisms (table 17b) also

have higher food safety technology index values, but differences are

restricted to equipment and testing. Index values for sanitation and operating procedures are nearly the same. We attribute this difference from the

slaughter industries to the product mix of meat processors. Lawrence et al.

(2001) provide evidence showing that most processing plants sell products

under brand names or can otherwise be linked to a product purchased by a

consumer. So, virtually all of the plants are subject to market mechanisms.

Equipment and testing index values may differ because of variations in size

rather than because of greater market pressure.

Now consider how these food safety technology ratings square with the

results for compliance costs with PR/HACCP. Recall that plants subject to

market mechanisms had PR/HACCP compliance costs that were only modestly lower than the costs of plants not subject to market mechanisms.

Combining that information with results concerning the food safety process

control technology indexes provides evidence that market mechanisms

encouraged plants to have process control systems that exceed the

PR/HACCP standards. These data also suggest that FSIS required many

tasks under the PR/HACCP rule that were different from those prompted by

market mechanisms (otherwise plants subject to market mechanisms would

have much lower compliance costs with the PR/HACCP rule).

34

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
35

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 17a—Technology index for slaughter plants for five types

of food safety technologies1

Market mechanism

Buyer food Product sold under 

Process control safety requirements Export market plant's own brand2

method No Yes No Yes No Yes

Technology index

Cattle slaughter:

Overall tech/methods 0.43 0.63 0.43 0.64 0.52 0.50

Equipment 0.30 0.56 0.28 0.62 0.42 0.38

Testing 0.35 0.77 0.36 0.79 0.57 0.50

Dehiding 0.28 0.48 0.28 0.51 0.41 0.35

Sanitation 0.51 0.61 0.54 0.60 0.60 0.55

Operations 0.58 0.68 0.59 0.68 0.62 0.62

Number of plants3 128 98 169 84 43 210

Hog slaughter:

Overall tech/methods 0.44 0.60 0.44 0.59 0.44 0.50

Equipment 0.32 0.53 0.29 0.56 0.34 0.39

Testing 0.34 0.74 0.36 0.73 0.40 0.50

Sanitation 0.55 0.57 0.56 0.53 0.59 0.55

Operations 0.59 0.64 0.58 0.63 0.52 0.61

Number of plants4 106 66 138 68 25 180

Poultry slaughter:

Overall tech/methods 0.55 0.64 0.49 0.64 0.59 0.62

Equipment 0.57 0.68 0.45 0.68 0.60 0.65

Testing 0.51 0.70 0.39 0.69 0.53 0.65

Sanitation 0.53 0.56 0.49 0.57 0.65 0.55

Operations 0.57 0.61 0.62 0.61 0.61 0.61

Number of plants5 29 65 16 94 12 99

1Index values derived from Q19-65 in the meat survey and Q20-62 in the poultry survey. See

the text for how the index was determined. Intermediate percentiles not included because they

follow a trend established by the highest and lowest rated plants.

2Products may or may not be sold to consumers. Selling a product under one's own name

could be shipping a labeled product to further processor that repackages the meat or poultry

under its own name and resells it.

3Twenty-nine plants did not indicate customer requirements; 2 plants did not indicate exports; 2

plants did not indicate products under own brand.

4Thirty-eight plants did not indicate customer requirements; 4 plants did not indicate exports; 5

plants did not indicate products under own brand.

5Fifty-four plants did not indicate customer requirements; 38 plants did not indicate exports; 37

plants did not indicate products under own brand.

Source: ERS.
36

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Table 17b—Technology index for processing plants for five types of

food safety technologies1

Market mechanism

Buyer food Product sold under 

Process control safety requirements Export market plant's own brand2

method No Yes No Yes No Yes

Technology index

Cooked meat processing,

no slaughter:

Overall tech/methods 0.51 0.64 0.53 0.63 0.55 0.57

Equipment 0.46 0.65 0.49 0.65 0.51 0.55

Testing 0.47 0.78 0.51 0.78 0.67 0.61

Sanitation 0.55 0.57 0.56 0.56 0.53 0.56

Operations 0.60 0.66 0.61 0.65 0.61 0.63

Number of plants 202 166 230 138 12 356

Raw meat processing,

no slaughter:

Overall tech/methods 0.49 0.62 0.52 0.61 0.56 0.55

Equipment 0.45 0.67 0.51 0.64 0.55 0.55

Testing 0.40 0.72 0.45 0.73 0.55 0.54

Sanitation 0.50 0.53 0.50 0.52 0.47 0.51

Operations 0.61 0.66 0.63 0.64 0.67 0.62

Number of plants 179 148 215 112 30 297

1Index values derived from Q19-65 in the meat survey and Q20-62 in the poultry survey. See

the text for how the index was determined. Intermediate percentiles not included because they

follow a trend established by the highest and lowest rated plants.

2Products may or may not be sold to consumers. Selling a product under one's own name

could be shipping a labeled product to further processor that repackages the meat or poultry

under its own name and resells it.

Source: ERS.
Conclusions

This report uses data from the first national survey of meat and poultry

plants on the costs of the PR/HACCP rule and the use of food safety technologies to address issues central to the food safety control efforts made by

meat and poultry plants and FSIS. It provides estimates of the expenditures

made by the industry both to comply with the PR/HACCP rule and for their

own privately motivated food safety investment decisions. It also gives a

snapshot of the types of food safety technologies and practices used by the

industry. Finally, it provides strong evidence that market mechanisms

encourage the use of more sophisticated food safety technologies and an

expanded array of food safety practices. The complete survey and the associated summary data can be seen in on the ERS website at:

www.ers.usda.gov/data/haccpsurvey/.

The survey provides a substantial amount of data related to PR/HACCP that

will be explored more extensively in future studies. These studies will turn

to investigation of the perceived benefits of PR/HACCP as well as the longrun costs of PR/HACCP rather than the shortrun costs described here. We

will also examine the impact of plant characteristics and food safety equipment and processing practices on plant quality control performance and consider the technological paths plants use to provide food safety.

The Influence of the PR/HACCP Rule

Estimates based on the ERS survey suggest that meat and poultry plants

incurred $570 million in fixed costs and $380 million in annual variable costs

to comply with the PR/HACCP rule; those cost estimates are much higher than

the cost estimate of $1 billion to $1.2 billion spread over 20 years made by

FSIS prior to enactment of the regulation. Depending on the useful life of the

fixed assets, the cost estimate based on survey data is close to the $623 million

in annual fixed and variable costs projected by ERS with an alternative

methodology in a previous publication (see Ollinger and Mueller, 2003).21

Results are also consistent with results from a much smaller survey (Boland et

al., 2001) and estimates by Antle (2000). Notwithstanding the higher than

anticipated costs of these estimates, projected benefits still exceed industry

costs. Crutchfield et al. (1997) provide an estimate of $1.9 billion in annual

health savings when using the most conservative valuation technique and

assuming 20-percent effectiveness at reducing foodborne illnesses caused by

meat and poultry. 

A major reason why our cost estimate is much greater than that made by FSIS

is that FSIS considered only the administrative costs associated with recordkeeping and planning, the direct cost of testing, and a small estimate of capital

outlays whereas this report includes these costs, the costs of hiring the workers

necessary for remaining in regulatory compliance, and the capital outlays necessary to bring each plant up to the standards necessary for compliance with

regulatory standards. This broader definition of the costs of the PR/HACCP

rule is necessary because regulatory costs should include all costs that a plant

incurs to perform tasks that it would not do in the absence of regulation.

ERS survey data suggest that the PR/HACCP rule has raised beef and poultry slaughter plant costs by about one-third of 1 cent per pound. However,

37

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

21Given the nature of the fixed

costs, a reasonable economic life of

the fixed assets might be 3 to 5 years.

If a 3-year life occurred, then the previously estimated costs and costs

obtained from this survey are nearly

identical.
these are average prices per pound of beef and not the average cost incurred

by each plant. Small plants, which tend to produce more specialized products, had much higher average costs than the giant plants, which produce

mainly commodity products, such as boxed beef. Since plants must recover

their costs, this means that prices for commodity products will rise very little, while prices for more specialized products, like cut-to-order beef, may

rise as much as 2 or 3 cents per pound.22 In terms of industry structure,

small plants that produce specialty products probably will not be affected

that much by PR/HACCP because they have some pricing flexibility, but

small plants producing commodity products may face stiffer cost pressures,

causing some to exit the industry. From a policy perspective, these plant

exits and higher costs are acceptable if the expenditures for food safety are

needed to better control pathogens.

Taken at the surface, it appears that compliance costs as a percent of the

total cost of production are lower for beef and pork than for poultry since

beef costs about twice as much to produce as poultry, as shown by Antle,

2000. However, since many of the beef and pork products must also be further processed but poultry does not, one should add raw and cooked meat

processing costs to the slaughter costs. After making this adjustment, survey

data suggest that beef and pork costs would rise by about three-fourths of 1

cent per pound—about twice as much as poultry, but about the same as a

percentage of costs.

There are some other indirect costs and benefits associated with the

PR/HACCP rule. We cannot say whether, on balance, these other factors

increase or decrease costs. ERS survey results suggest that product shelf life

increased at about 25 percent of all meat and poultry plants. However,

plants also suffered additional costs due to declines in production yields and

increases in production downtime.

The cost of the PR/HACCP rule is a substantial sum, but it is still much less

than the cost of irradiating meat and poultry, which kills all harmful

pathogens and is one way to ensure pathogen-free meat or poultry. For

example, irradiated ground beef costs 10 cents to 30 cents more—a 5-percent to 10-percent price premium—at Wegmans Food Markets in

Pennsylvania by the Lancaster Farming newspaper in October 2002.23

The ERS survey also provided information about the components of the

PR/HACCP rule perceived to be most beneficial for pathogen reduction and

the aspects considered to be most costly. More plants in all industries except

poultry slaughter, regardless of size, believed that the SSOPs had the greatest impact on pathogen reduction, yet very few plants perceived them to be

the most costly. A large number of plants also said that HACCP plans and

their use had a substantial impact on process control, but a much larger

number felt that the use of a HACCP plan was the most costly aspect of the

PR/HACCP rule. Many plants also felt that the zero fecal matter/E. coli

standard is one of the most important aspects of the PR/HACCP rule for

pathogen control and a similar number of plants felt that it is the most costly. On balance, these data suggest that plant operators believe more stringent

SSOPs are the most cost-effective way to achieve pathogen reduction and

HACCP plans are the least cost-effective. HACCP recordkeeping requirements appear to be particularly troublesome for operators. (See box.)

38

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

22Actual price increases seen by

consumers depend on a number of 

factors. First, retailers may choose to

either mark prices up more or less than

its cost increase. Second, long-term

demand for the product can change,

altering consumers’ willingness to pay

a higher price. Third, price increases

in one product encourage buyers to

consider the purchase of alternatives,

resulting in greater product price 

pressure. 

23The irradiation process does heat

treat the meat or poultry product, so,

technically, ground irradiated meat is

not the same as ground unirradiated

meat. Price premiums also depend on

tradeoffs between taste and safety.

Many consumers prefer the taste of

unirradiated meat to irradiated meat

and may actually demand a price premium for unirradiated meat. Under

these conditions, retailers may not

even choose to sell irradiated products

because the extra processing makes

the meat or poultry more costly to produce. Note also that producers of irradiated products still have to comply

with the PR/HACCP rule.
Survey responses suggest that operators are supportive of performance standards. Yet, testing is much more costly for smaller plants than for larger ones

because many larger plants have their own laboratories with a specialized

workforce and do testing as part of a daily routine. Thus, government support

39

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

Comments Provide Operator Insights into 

How To Shape the PR/HACCP Regulation

A number of the survey respondents (43) expressed their views about the

PR/HACCP rule in written comments. In general, these comments and data

reported in this report show a general acceptance of three components of the

PR/HACCP rule—SSOPs, zero tolerance for fecal matter/generic E. coli

testing, and the Salmonella standard. Only the requirement that all plants

maintain and implement a HACCP plan drew a substantial number of negative

written comments. A disproportionately larger number of plants commented

that the plan requirement was the most costly aspect of the PR/HACCP rule,

compared with the number of plants that answered that the requirement was

the most beneficial part of the rule.

A large majority of the written comments said that the HACCP plans and tasks

were necessary. Indeed, about 25 percent said that a HACCP program

improved their process control performance and only about 10 percent said

HACCP provided no benefits or the tasks themselves were too costly. The

chief complaint was about the additional paperwork burden (both recordkeeping and HACCP plan development) and inspector inconsistencies. About

60 percent of the responses said that the paperwork costs outweighed the

benefits of the HACCP tasks and about 25 percent said that inspector inconsistencies of enforcement led to much higher costs. 

It is quite natural to expect the processing-plant operators who are most negatively affected by the HACCP/PR rule to express complaints, but small-plant

operators may have a point. A large number of plants inspected by FSIS have

fewer than 10 employees, and the plants produce numerous products in small

batches. Under these small-batch/multiproduct operating conditions, plants

have frequent product changeovers and short production runs that may never

reach a steady-state condition. Yet, process control programs such as a

HACCP plan monitor production flows, implying that fewer and fewer benefits are realized for shorter and shorter production runs. Moreover, even as the

benefits of HACCP programs diminish for multiproduct plants, the costs rise

because, for each product, separate HACCP plans may have to be written,

records may have to be maintained, and it may be necessary to monitor

different points and follow different procedures. Thus, the smallest plants,

which often have very complex product mixes, face very high costs; yet, may

have staffs of two or three workers and low revenues, making the recordkeeping costs per dollar quite high.

Formalized HACCP plans may also be less necessary in small plants. Top

management is much better able to directly monitor quality in a small plant

than in a large one because top management is often performing manual

product processing tasks, performing cleaning and sanitation, and directly

handling the product. In larger plants, by contrast, recordkeeping traditionally

has been and continues to be essential for maintaining food safety process

control since this is the only means a top manager has to monitor food safety.

The perverse result is that costs of developing and implementing HACCP

plans are higher in small plants; yet, these plants have the most direct control

over production by top management.
may be necessary if extensive testing for Listeria monocytogenes, E. coli

O157:H7, or other pathogens becomes mandatory. The alternative would be

disproportionately higher costs for smaller plants relative to larger ones.

Despite the costs of the PR/HACCP rule, some plants invested still larger

sums in food safety, presumably because their customers demanded it. Buyer

and export market requirements and product branding are among the market

mechanisms that encourage producers to enhance food safety process controls. This report shows that plants subject to market mechanisms, particularly buyer and export market requirements, used a more sophisticated food

safety quality control system than other plants, while at the same time incurring compliance costs similar to those incurred by other plants. 

Food Safety Technology and Practices

Plant size and product markets played a major role in the types of equipment and processing practices employed by meat and poultry plants. To

measure the differences, we created five indexes of food safety plant technology for each of the five technology categories: equipment, testing, dehiding, sanitation, and plant operations. 

Index values, which ranged from 0 to 1, varied substantially across plants.

Large plants typically relied on sophisticated equipment and testing while

smaller plants tended to focus more on SSOPs and plant operations. Plant size

also played a role in the types of changes plants felt best controlled pathogens.

Larger plants tended to place much more emphasis on the purchase of new

equipment and changes to facilities while smaller plants tended to focus more

on the frequency of cleaning and product flows. This makes a lot of sense.

More than one-half of all plant managers believed that equipment and plant

facilities changes were most costly. Since this requires a fixed investment and

since larger plants have the capacity to make full use of it while smaller plants

may not, large plants could realize much lower per-unit costs.

A central theme of this report is that market mechanisms encourage food

safety investments.24 Retail and restaurant customers of meat and poultry

plant products and government inspectors receiving exported meat products

are in a better position than consumers to ascertain the food safety of the

products that they receive because they can conduct microbiological testing

and impose production standards on their suppliers. Cost information from

the ERS survey supports the market effect hypothesis. Plants subject to

stricter market mechanisms had much higher food safety index values than

other plants for equipment and testing and higher but less robust differences

in SSOPs and plant operations.

The role played by markets in imposing strict food safety standards on meat

and poultry producers has important public policy implications. It suggests

that information about plant food safety performance provided by FSIS,

such as plant quality control performance ratings, could be used by meat

and poultry buyers in their purchasing decisions, and may encourage greater

diligence in performing food-safety-related tasks and elicit greater investment

in food safety technologies.

40

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA

24The level of investment required

through market mechanisms may or

may not be the socially optimal level.

Since the optimal level cannot be precisely determined, buyers could

demand a level of food safety that

costs more than the benefits in

improved health. On the other hand,

buyers could demand less food safety

than optimal, suggesting that underinvestment exists. Regardless of whether

buyers demand a level of food safety

that is greater, less than, or equal to

the social optimal level, it appears certain that the buyers acting through

market mechanisms demand greater

food safety than that offered under

PR/HACCP.
References

Antle, John M. “No Such Thing as a Free Lunch: The Cost of Food Safety

Regulation in the Meat Industry,” American Journal of Agricultural

Economics (82)310-322. 2000.

Boland, Michael, Dana Peterson-Hoffman, and J.A. (Sean) Fox.

“Postimplementation Costs of HACCP and SPCPs in Great Plains Meat

Plants,” Journal of Food Safety (21)195-204. 2001.

Crutchfield, Steven R., Jean C. Buzby, Tanya Roberts, Michael Ollinger,

and C.T. Jordan Lin. Economic Assessment of Food Safety Regulations:

The New Approach to Meat and Poultry Inspection, AER-755. USDA,

Economic Research Service, 1997. Available at www.ers.usda.gov/publications/aer755

Golan, Elise, Tanya Roberts, Elisabete Salay, Julie Caswell, Michael

Ollinger, and Danna Moore. Food Safety Innovation in the United States:

Evidence from the Meat Industry, AER-831. USDA, Economic Research

Service, 2004. Available at www.ers.usda.gov/publications/aer831

Hooker, Neal H., Nayga Jr., Rodolfo M., Siebert, John W. “Producing,

Preserving, and Marketing Food Safety Attributes—Preserving and

Communicating Food Safety Gains,” American Journal of Agricultural

Economics (81)1102-1106. 1997.

Kaufman, Phil. Unpublished survey of food safety practices in nine U.S.

supermarket chains. USDA, Economic Research Service. 1994. 

Kaufman, Phil. Unpublished survey of food safety practices in nine U.S.

supermarket chains. USDA, Economic Research Service. 1994. 

Lancaster Farming newspaper, October 2002.

Lawrence, John D., Ted C. Schroeder, and Marvin L Hayenga. “Evolving

Producer-Packer-Customer Linkages in the Beef and Pork Industries,”

Review of Agricultural Economics (23)370-385. 2001.

MacDonald, James, and Michael Ollinger. “Scale Economies and

Consolidation in Hog Slaughter,” American Journal of Agricultural

Economics (82):334-346, 2001.

Ollinger, Michael, and Valerie Mueller. 2003. Managing for Safer Food:

The Economics of Sanitation and Process Controls in Meat and Poultry

Plants. AER-817. USDA, Economic Research Service. 2003. Available:

www.ers.usda.gov/publications/aer817

Ollinger, Michael, James MacDonald, and Milton Madison. Structural

Change in U.S. Chicken and Turkey Slaughter. AER 787. USDA.

Economic Research Service, 2001. Available at: www.ers.usda.gov/publications/aer787

Ollinger, Michael, and Jorge Fernandez-Cornejo. “Innovation and

Regulation in the Pesticide Industry,” Agricultural and Resource

Economics Review. April 1999, pp. 15-27.

41

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
Ollinger, Michael E. “Implementing HACCP in U.S. Meat Plants: Role of

Incentives in Changing the Behavior of Firms, Managers, and

Employees.” Paper presented at the 1996 American Agricultural

Economics Association meetings as part of “Microbial Food Safety

Information, Economic Incentives, Behavior Change, and Marketplace

Impact” symposium. Salt Lake City, Utah. 1996.

Pashigian, B. Peter. “The Effect of Environmental Regulation on Optimal

Plant Size and Factor Shares,” Journal of Law and Economics (27)1-28.

1984.

Roberts, Tanya, and Robert Pinner. “Economic Impact of Disease Caused by

Listeria Monocytogenes,” Miller, A.J., J.L Smith, and G.A. Somkuti

(eds.), Foodborne Listeriosis. Washington, DC, Society for Industrial

Microbiology, 1990.

Thomas, Lacy Glenn. “Regulation and Firm Size: FDA Impacts on

Innovation,” Rand Journal of Economics (21)497-517. 1990.

Unnevehr, Laurian J. and Helen H. Jensen. “HACCP as a Regulatory

Innovation to Improve Food Safety in the Meat Industry.” American

Journal of Agricultural Economics (78)764-769. 1996.

U.S. Department of Agriculture, Food Safety and Inspection Service.

Enhanced Facilities Database. 1997.

U.S. Department of Agriculture, Food Safety and Inspection Service.

Enhanced Facilities Database. 1999.

U.S. Department of Commerce, Census Bureau. Animal (Except Poultry)

Slaughtering, 1997. Part of 1997 Economic Census of Manufacturing

Industry Series EC97M-3116A. 1999a.

U.S. Department of Commerce, Census Bureau. Meat Processed from

Carcasses, 1997. Part of 1997 Economic Census of Manufacturing

Industry Series EC97M-3116B. 1999b.

U.S. Department of Commerce, Census Bureau. Poultry Processing, 1997.

Part of 1997 Economic Census of Manufacturing Industry Series

EC97M-3116A. 1999c.

U.S. Department of Health and Human Services, Centers for Disease

Control and Prevention. “Preliminary FoodNet Data on the Incidence of

Foodborne Illnesses-Selected sites, United States, 2002.” Morbidity and

Mortality Weekly 52(15)340-343. 2003.

Wiser, Vivian, “Meat and Poultry Inspection in the United States

Department of Agriculture,” Vivian Wiser, Larry Mark, and H. Graham

Purchase (eds.). Journal of NAL Associates (11)4-5, January-December.

1986.

42

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA
Appendix

Date: August, 2001

To FSIS Contact:

The U.S. Congress has requested a report assessing the costs incurred by the

meat and poultry industry of implementing and administering the

HACCP/Pathogen Reduction rule (the rule), which was promulgated in

1996. Your participation is essential for providing accurate information.

The Social and Economic Sciences Research Center (SESRC) of Washington State University will gather the information for analysis by the

Economic Research Service, an agency of the U.S. Department of Agriculture. SESRC has been advised to contact you because you may the one best

able to respond to questions about the costs of the rule. So, please take a

few minutes to complete the attached questionnaire.

The information you provide will not be used as individual data about your

operation, but rather will be combined to show overall costs and trends

regarding the implementation of HACCP in your plant. Thus, the results

will aid in the understanding the true costs and effectiveness of the inspection system in plants like yours. It could also help influence or affect the

way future changes are made in the inspection program requirements.

Again, your cooperation is appreciated. Thank you in advance for your

consideration.

Sincerely, 

Mark Dopp Bernard F. Shire

Senior Vice-President for Director, Legislative and Regulatory Affairs

Regulatory Affairs American Association of Meat Processors 

American Meat Institute (AAMP) 

(AMI)

Marty Holmes

Executive Vice-President

North American Meat Processors Association (NAMP)

43

Meat and Poultry Plants’ Food Safety Investments: Survey Findings/TB-1911

Economic Research Service/USDA