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The Potential For Recall Insurance To Improve Food Safety

Author

Listed:
  • Skees, Jerry R.
  • Botts, Aleta
  • Zeuli, Kimberly A.

Abstract

This paper explores the food safety implications of insurance products that compensate for business losses when food contamination causes a processing firm to initiate a recall. Discoveries of meat and poultry product contamination, in particular life-threatening pathogens, are increasing. The financial losses that follow a recall can be substantial as illustrated by several recent U.S. cases - Hudson Foods, Bill Mar, and Thorn Apple Valley Inc. Additionally, contaminated food product that escapes the current recall system poses a threat to consumer safety. The conceptual analysis presented here suggests that insurance underwriters could motivate earlier recalls and more diligent implementation of Hazard Analysis and Critical Control Point (HACCP). With sound underwriting, these changes could ultimately reduce the incidence of illness and death from foodborne pathogens.

Suggested Citation

  • Skees, Jerry R. & Botts, Aleta & Zeuli, Kimberly A., 2001. "The Potential For Recall Insurance To Improve Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 4(1), pages 1-13.
    • Handle: RePEc:ags:ifaamr:34369
    DOI: 10.22004/ag.econ.34369
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    References listed on IDEAS

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    1. Buzby, Jean C. & Roberts, Tanya & Lin, Chung-Tung Jordan & MacDonald, James M., 1996. "Bacterial Foodborne Disease: Medical Costs and Productivity Losses," Agricultural Economic Reports 33991, United States Department of Agriculture, Economic Research Service.
    2. John M. Antle, 1995. "Choice and Efficiency in Food Safety Policy," Books, American Enterprise Institute, number 53485, September.
    3. Buzby, Jean C. & Frenzen, Paul D., 1999. "Food safety and product liability," Food Policy, Elsevier, vol. 24(6), pages 637-651, December.
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    Cited by:

    1. A.G.J. Velthuis & M. Meuwissen & R.B.M. Huirne, 2009. "Distribution of direct recall costs along the milk chain," Agribusiness, John Wiley & Sons, Ltd., vol. 25(4), pages 466-479.
    2. Chebolu-Subramanian, Vijaya & Gaukler, Gary, 2014. "Product Recalls in the Meat and Poultry Industry: Key Drivers of Supply Chain Efficiency and Effectiveness," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Blecker, Thorsten & Kersten, Wolfgang & Ringle, Christian M. (ed.), Innovative Methods in Logistics and Supply Chain Management: Current Issues and Emerging Practices. Proceedings of the Hamburg International Conferenc, volume 19, pages 339-364, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    3. Pozo, Veronica F. & Schroeder, Ted C., 2016. "Evaluating the costs of meat and poultry recalls to food firms using stock returns," Food Policy, Elsevier, vol. 59(C), pages 66-77.
    4. Fritz, Melanie & Schiefer, Gerhard, 2009. "Tracking, tracing, and business process interests in food commodities: A multi-level decision complexity," International Journal of Production Economics, Elsevier, vol. 117(2), pages 317-329, February.
    5. Mojduszka, Eliza M., 2004. "Private And Public Food Safety Control Mechanisms: Interdependence And Effectiveness," 2004 Annual meeting, August 1-4, Denver, CO 19987, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Bridget M. Hutter & Clive J. Jones, 2007. "From government to governance: External influences on business risk management," Regulation & Governance, John Wiley & Sons, vol. 1(1), pages 27-45, March.
    7. Henson, Spencer J. & Hooker, Neal H., 2001. "Private Sector Management Of Food Safety: Public Regulation And The Role Of Private Controls," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 4(1), pages 1-11.

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