Food Consumption/Nutrition/Food Safety, Livestock Production/Industries, Q16, Q17, Q18,

Clark, F. Dustan

Goodwin, Harold L., Jr.

Hamm, Sandra J.

Thilmany, Dawn D.

English

Research Papers in Economics

CHOICES
The magazine of food, farm, and resource issues
3rd Quarter 2006 • 21(3) CHOICES 189
A publication of the
American Agricultural
Economics Association
3rd Quarter 2006 • 21(3)
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Policies to Protect Food Safety and 
Animal Health
H.L. Goodwin, Jr., F. Dustan Clark, Dawn Thilmany, and Sandra J. Hamm
JEL Classification: Q16, Q17, Q18
Protecting food safety and animal health is critical for
maintaining public health, consumer confidence, and
profitability of animal agriculture. Several developments in
North American animal agriculture have an increasing
impact on food safety and animal disease risks and the
methods used to manage these risks.
Demand for animal food production is increasing as
world population increases and developing countries have
more disposable income. Increased production to meet
this demand has led to more confined, concentrated and
intensified systems all over the world. In North America,
this intensification is regional, especially with poultry,
swine and cattle feedlots. Dairies are becoming fewer and
larger and are concentrating in geographic areas not tradi-
tional to dairy production. As animal production costs
increase without assurances of sector profitability, enter-
prise numbers continue to decline.
Driving forces in food safety and animal health across
North America include questions about feed additives,
biotechnology, foodborne diseases, links between animal
and human diseases, and traceability. Animal health and
food safety issues are closely related, yet in some cases
require separate strategies. Even if there are similarities in
the approaches that address animal diseases and food
safety, it is important to recognize that objectives and
desired outcomes are often different. Policies and practices
meant to protect domestic food supplies and herd/flock
health (breeding stock and egg/chick quarantines) may
serve as “trade barriers,” though they are not intended as
such.
Food Safety Dimensions
Foodborne microbial pathogens, which may result in
human illnesses, will continue to be the major focus of
food safety concerns. Estimates of the costs of human ill-
nesses and costs to the food industry attributed to food-
borne pathogens are well-documented (Buzby et al., 1996;
Crutchfield & Allhouse, 1998; Goodwin & Shiptsova,
2002; Unnevehr, 2003). Detailed treatment of this topic is
beyond the scope of this paper, the purpose of which is to
raise both new and ongoing issues related to food safety
and animal health and the interface of the two. This paper
draws on a much longer report, The Future of Animal Agri-
culture in North America (Farm Foundation, 2006).
Food safety and assuring consumers their food is safe
will continue to be a challenge for the industry. Private
sector efforts to minimize risks of recalls and protect brand
equity are part of an effective food safety strategy. The pro-
cessing sectors have adopted process control strategies
(Hazard Analysis and Critical Control Point or HACCP)
to reduce the risks of microbial contamination during
slaughter and processing. The production sector is adopt-
ing quality assurance programs to address specific product
quality and food safety issues, such as measures to reduce
the presence of harmful microbes in the live animal before
transport and slaughter. 
The incidences of bovine spongiform encephalopathy
(BSE) and E. coli contamination have brought demands
for adoption of traceability and quality assurance systems
to manage the animal products supply chain. The domi-
nance of international food retailers has been a key factor
in wide use of such systems, even when not demanded by
regulations. The rapid growth of supermarkets in develop-
ing countries and trade agreements are also driving food
safety concerns. 
Globalization of food trade provides greater food
choices, but presents the potential for confusion if consis-
tent standards in safety and labeling do not exist. Increased190 CHOICES 3rd Quarter 2006 • 21(3)
consumer sophistication and
advanced information technology
pose both a challenge and an oppor-
tunity for firms and government to
inform consumers and address their
concerns. Maintaining consumer
confidence requires not only mini-
mizing the risk of foodborne illness,
but responding to consumer con-
cerns through increased education
regarding safety of some practices
and/or labeling policies.
Animal Health Dimensions
Animal health is closely linked to
food safety and consumer confi-
dence, but is also central to the prof-
itability of the livestock and poultry
production sectors, and in some
cases, even national economies. In
addition to increased production
costs and lower revenues for farms
with a disease, trade restrictions due
to the presence of particular diseases
have an economic impact on all pro-
ducers in the industry. One cow test-
ing positive for BSE in the United
States resulted in the immediate loss
of $3 billion in annual beef exports
from 2003 to 2004 (Doud, 2006).
Joint efforts between research
universities and public agencies have
controlled and eradicated many ani-
mal diseases through advances in vet-
erinary medicine, basic research, edu-
cational programs, and animal
housing. However, without vigilance
and effective surveillance systems,
even eradicated diseases can return.
Vigilance is also necessary to guard
against potential terrorist attacks to
the food system. 
Several developments will play an
important role in meeting the chal-
lenge of protecting animal health.
Animal identification and tracking
systems would potentially allow
restricted animal movement within
or between countries while control-
ling disease, thus minimizing trade
distortions. Farm-level biosecurity
measures to reduce disease risk and
developments in vaccine research are
also providing new tools to lessen the
threat and impact of animal diseases
to farmers.
Globalization has increased both
export opportunities for North
American livestock and poultry and
the risk of introducing foreign ani-
mal diseases that could be economi-
cally devastating to these industries.
Even if the disease is not deadly and
is quickly contained, its presence can
have a prolonged economic impact
by disrupting exports and trade
within North America. To protect
animal industries and consumers
from importing disease or food safety
problems, sanitary and phytosani-
tary standards have become part of
most trade agreements. Phytosanitary
standards can be trade distorting and
protectionist, accentuating the need
for harmonizing standards and their
enforcement within the North Amer-
ican Free Trade Agreement
(NAFTA).
Providing traceability of animals
through production, processing and
marketing is an example of interac-
tions between efforts to protect both
food safety and animal health.
Advances in information technology
and improved infrastructure to trace
animal disease threats will provide a
vehicle to share more product infor-
mation through the supply chain.
Individual firms may utilize the
information infrastructure as part of
an enhanced process control system.
Advanced supply chain management
systems also allow for traceability of
food products, which facilitates
faster, more targeted recalls when
needed.
Policy Measures and Implications
Animal health and food safety are
important components of national
security in each of the North Ameri-
can countries. They are public goods
requiring public intervention or col-
laborative industry efforts rather than
individual producer actions (Unn-
evehr, 2004). The challenge is to
develop and implement policies that
most effectively protect a safe and
secure food supply and a competitive
livestock and poultry sector in North
America, given increasing concentra-
tion and intensification of animal
agriculture. Some components of a
comprehensive strategy for govern-
ment, business and research efforts to
protect food safety and animal health
are identified here. Many of these
will require additional resources.
There are various vehicles for financ-
ing these measures that will help pro-
ducers and consumers; check-off pro-
grams and reallocation of existing
program funds are one possibility.
Economic pressure in the industry
could make it more difficult to
obtain such funding, but increased
concentration in the industry might
make it easier to implement new
measures because a smaller number
of industry decision makers control
more of the supply. Larger firms may
be better able to cover the fixed costs
associated with protecting food safety
and animal health. Further, they have
greater incentives to provide food
safety, given that a bad publicity
event that erodes a firm’s reputation
or brand could have a significant
monetary effect. However, larger
firms may be better able to weather
temporary drops in revenue or
increased costs, somewhat reducing
this incentive.
Establish a NAFTA-wide, high-
level, authoritative, and accountable
coordinating mechanism for food safety3rd Quarter 2006 • 21(3) CHOICES 191
and animal health. Animal health
threats go beyond impacts on single
private entities to affect the entire
animal production value chain and
even the economy as a whole, under
the right circumstances. National
structures coordinated across
NAFTA countries and appropriate to
organizational and financial con-
straints faced by each could serve as a
focal point for engaging and enhanc-
ing partnerships among local, state,
and federal agencies and the private
sector (National Research Council,
2005). In the United States, several
federal and state agencies and various
animal and human health organiza-
tion programs are responsible for
food safety and animal health policy,
but there are implementation gaps,
ineffective communications, and fail-
ures in information sharing. The
2005 report by the National Acad-
emy of Sciences National Research
Council says the United States needs
a new high-level mechanism to coor-
dinate research and information
exchange and dissemination efforts
on new and emerging animal-borne
diseases, such as BSE, avian influ-
enza, and West Nile virus.
Strengthen publicly-funded basic
research efforts. In the United States,
state and federal government agencies
could re-emphasize the practice of
supplying formula funding on an
intermediate or long-term basis to
support ongoing basic research
efforts. The recent migration toward
predominately competitive funding
tends to emphasize hot-button issues
of an applied nature, rather than sup-
porting long-term, system-wide
innovations that would address the
animal health and food safety issues
outlined in this report. However, this
base funding should not be supplied
at the expense of Extension and pub-
lic education programs necessary to
effectively disseminate appropriate
information.
As the risks to animal health
evolve, so must mechanisms to
address them. To develop and imple-
ment effective and efficient tools,
work is needed to assess and predict
this evolution of risks, evaluate the
current system’s response capabili-
ties, identify areas where improve-
ments may be warranted, and com-
municate them effectively. Attention
should be given to risk research and
assessment, as well as communication
capacity among all stakeholders.
Develop a comprehensive NAFTA-
wide diagnostic, monitoring and sur-
veillance network. Such a cooperative
and functional network would multi-
ply the efficacy of networks in the
United States and Canada and estab-
lish a comparable functioning net-
work in Mexico. The network could
share access to stockpiles of vaccina-
tions and treatment agents for many
of the most probable and virulent
diseases and also serve as a clearing
house for methods to limit disease
spread by effectively utilizing quaran-
tine and animal disposal protocols.
Past cooperative eradication pro-
grams have set precedent and serve as
models for such a network. Eradica-
tion programs established jointly
between Mexico and the United
States for Foot-and-Mouth Disease
and screw worm successfully ended
the extensive and adverse impacts of
both animal health issues in North
America.
Enhance capabilities for rapid and
widespread information dissemination
to industry and the public. Both gov-
ernment and the industry would
benefit from fast and widespread
access and dissemination of informa-
tion when dealing with food safety or
animal health hazards. This informa-
tion is essential to retain consumer
confidence in the food system at
home and abroad. Establishment of
national traceability systems is
important. Increased public and pri-
vate investment could help reduce
disease transmission and enhance
public and animal health. Public
awareness supported by education
and training programs is critical to
food safety and animal disease pre-
vention. It may be possible to
develop training for the animal agri-
culture industry, including local,
regional, or national associations,
which focuses on strategic and tacti-
cal cooperation in the event of food
safety, animal health, or biosecurity
emergencies.
Increase government-sponsored,
food-animal veterinarian positions. A
National Academy of Sciences
National Research Council report
calls for stronger efforts to recruit
more veterinarians and other scien-
tists into veterinary research, noting
that a growing shortage of veterinary
pathologists, lab animal scientists and
other veterinary researchers is making
it more difficult to meet mounting
challenges. These positions could be
comprised of more private practice
food-animal veterinarians, more gov-
ernment public health veterinarians,
and more government veterinarians
in research. Sufficient economic
incentives attached to these positions
would increase attraction and reten-
tion of qualified personnel. Food-
animal veterinarians would be
directly involved in import inspec-
tions, live animal auctions, and mon-
itoring concentrated animal feeding
operations. 
Encourage and provide ongoing
support for developing new scientific
tools and technologies to enhance ani-
mal disease prevention, detection, and
diagnosis in North America. The cur-
rent animal health framework should
evaluate, validate, and implement
rapid prevention strategies to protect192 CHOICES 3rd Quarter 2006 • 21(3)
the health of the nation’s animal pop-
ulations. A gap in the current border
protection system is importation or
unnoticed transfer of animals pro-
duced under nonstandard commer-
cial conditions (exotic animals, back-
yard livestock, and poultry). There is
a documented lack of inspection pro-
tocols and procedures involving
health of these animals. Animals pro-
duced out of the mainstream put
national herds and flocks at risk
because they are not integrated into
the food security network.
Establish indemnity insurance for
animal agriculture. Although there
are provisions for indemnity pay-
ments to producers for animals with
value under $3,000, there are cur-
rently no government-backed insur-
ance programs for animal agriculture
that parallel those for crop agricul-
ture. Consequently, livestock produc-
ers are subject to absorbing cata-
strophic losses (destroyed animals,
market loss or collapse, business
interruptions) that may be associated
with animal health events, particu-
larly for breeding animals with value
over $3,000. Financial risk manage-
ment of animal diseases is an issue
that government and industry must
effectively address in partnership to
ensure that effective and efficient
financial risk management tools are
in place to deal with future animal
disease outbreaks. A revised and
strengthened indemnity program
could address this issue, reducing pri-
vate sector uncertainty, and thus
increasing reporting compliances and
cooperation. A broader production
certification program addressing food
safety, animal health, and emergency
management could also be devel-
oped.
Gain international approval for
full equivalency of food safety and ani-
mal health standards for trade. The
present lack of consistency in inter-
national standards and their enforce-
ment creates inequities in trade
among potential partners and may
well limit trading arrangements. It is
necessary to eliminate this artificial
trade barrier so that competitiveness
may be accurately evaluated and
gains from trade may be more fully
realized. There are currently pre-
scribed events and standards that sig-
nal conditions for which trade inter-
ruptions commence, but such signals
to recommence trade are not readily
apparent. A functioning mechanism
establishing “triggers” to allow trade
to resume once food safety and ani-
mal health concerns were alleviated,
could be implemented.
Summary
Protecting the safety of the food sup-
ply is essential to all countries. Can-
ada, Mexico, and the United States
spend significant resources to assure
that food is safe to eat and whole-
some. Animal health is closely linked
to food safety and consumer confi-
dence and is also central to the profit-
ability of the livestock and poultry
production and processing sectors.
The options discussed here offer a
range of public-sector involvement
and discretion on how to efficiently
utilize scarce government resources.
Many of these options will require
increased funding, but the benefits of
improved protection likely outweigh
the costs. Because producers and pro-
cessors all benefit from reduced risks,
developing funding mechanisms to
share the costs will be important.
Successful financing approaches must
also take into consideration the effect
of cost pressures, consolidation, and
vertical integration on incentives
faced by both producing and process-
ing firms. 
For More Information
Buzby, J.C., Roberts, T., Jordan Lin, 
C.-T., & McDonald, J. (1996). 
Bacterial foodborne disease: Medi-
cal costs and productivity losses. 
AER-741. USDA Economic 
Research Service, Washington, 
DC.
Crutchfield, S., & Allhouse, J. 
(1998). The economics of improv-
ing food safety. USDA Economic 
Research Service. National Public 
Policy Education Committee. 
Farm Foundation, Oak Brook, 
IL.
Doud, G., & McWright, J. (2006). 
2005 beef exports – is that a light 
at the end of the tunnel? Available 
online: http://www.beef.org/
uDocs/2005beefexports.pdf.
Farm Foundation. (2006). The future 
of animal agriculture in North 
America. Available online: 
www.farmfoundation.org/. Oak 
Brook, IL.
Goodwin, Jr., H.L., & Shiptsova, R. 
(2002). Changes in market equi-
libria resulting from food safety 
regulation in the meat and poul-
try industries. International Food 
and Agbusiness Management 
Review, 5, 61-74.
National Research Council. (2005). 
Animal health at the crossroads 
preventing, detecting and diag-
nosing animal diseases. National 
Research Council, Committee on 
Assessing the Nation’s Framework 
for Addressing Animal Diseases 
Report. Washington, D.C.
Unnevehr, L. (2003). Food safety: 
Setting enforcement standards. 
Choices, 18(1). Available online: 
http://www.choicemagazine.org/
2003-3/2003-1-03.htm.
Unnevehr, L. (2004). Mad cows and 
BT potatoes: Global public goods 
in the food system. American 3rd Quarter 2006 • 21(3) CHOICES 193
Journal of Agricultural Economics, 
86(5), 1159-1166.
H.L. Goodwin, Jr. (haroldg@uark.
edu) is Professor, and F. Dustan
Clark (fdclark@uark.edu) is Profes-
sor and DVM, Center of Excellence
for Poultry Science, University of
Arkansas, Fayetteville, AR. Dawn
Thilmany (thilmany@lamar.colo-
state.edu) is Professor, Department of
Agricultural & Resource Economics,
Colorado State University, Fort Col-
lins, CO. Sandra. J. Hamm (sham
@uark.edu) is Research Specialist,
Department of Agricultural Econom-
ics & Agribusiness, University of
Arkansas, Fayetteville, AR.194 CHOICES 3rd Quarter 2006 • 21(3)

Policies to Protect Food Safety and Animal Health

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