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Costs of Overly Broad Recalls.

Nyssa Ackerley1, Ayesha Berlind1, Michael Black2

  • 1Eastern Research Group, Inc., 561 Virginia Road Building 4 - Suite 300 Concord, MA 01742, USA.

Journal of Food Protection
|January 8, 2025
PubMed
Summary

Overly broad food recalls, often due to unidentified outbreak sources, impose significant costs on businesses. This study estimates these spillover costs for producers, shippers, and retailers, highlighting the economic impact of widespread recalls.

Keywords:
AdvisoriesElicitationFoodOutbreaksRecallsSpillover

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Area of Science:

  • Food safety and supply chain management
  • Economic analysis of regulatory impacts
  • Public health policy

Background:

  • Overly broad food recalls, triggered by unidentified or misidentified outbreak sources following FDA advisories, lead to significant economic spillover costs.
  • Existing research lacks comprehensive estimates of these costs across different food supply chain entities.
  • Industry reluctance to share recall cost data necessitates independent estimation methods.

Purpose of the Study:

  • To estimate the per-firm spillover costs incurred by various food supply chain entities in response to overly broad recalls following FDA advisories.
  • To provide data that can inform policy discussions on the benefits of enhanced food traceability.
  • To fill the knowledge gap regarding the financial impact of widespread recalls on businesses.

Main Methods:

  • Utilized a formal structured elicitation methodology to gather expert estimates.
  • Collected data on the typical spillover costs experienced by producers, shippers/distributors, restaurants, and non-restaurant retailers.
  • Analyzed cost ranges based on firm type and size.

Main Results:

  • Median per-recall costs varied significantly by entity: producers ($3.0M–$72.7M), shippers/distributors ($0.1M–$2.3M), restaurants ($0.04M–$1.1M), and non-restaurant retailers ($0.1M–$3.1M).
  • Costs were found to vary widely depending on the type and size of the firm involved in the recall.
  • The study provides the first comprehensive per-firm cost estimates for entities affected by broad food recalls.

Conclusions:

  • Overly broad recalls result in substantial and varied economic burdens across the food supply chain.
  • The findings underscore the potential economic benefits of improved food traceability in mitigating these costs.
  • This research provides crucial data for policymakers evaluating food safety regulations and traceability initiatives.