Health Law

USDA Releases Study on Peanut Industry

By Dan Flynn and Suzanna Schreck

The U.S. Department of Agriculture's (USDA's) Economic Research Service (ERS) released a report on the economic impacts of the nationwide Salmonella outbreak traced to peanuts and peanut products produced by Peanut Corporation of America (PCA) this week.

Between January and April 2009, public health officials nationwide investigated the PCA Salmonella Typhimurium outbreak, which resulted in hundreds of confirmed illnesses and nine deaths. 

Although PCA processed less than two percent of the U.S. peanut supply, its peanuts and peanut products were included as ingredients in more than 3,900 products:  cakes, candies, cookies, peanut crackers, ice cream, snack mixes, and pet food produced by over 200 different companies all contained peanuts, peanut paste, or peanut butter produced by PCA and were recalled. 

In "Peanut Outlook:  Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts," the USDA ERS found that the PCA recall will not have a lasting impact on peanut demand and production.

Although some of the largest brands of peanut butter were unaffected by the Salmonella contamination, such as Jif, Peter Pan, Skippy, and Smuckers, the blowback from the recall severely damaged the entire industry. As a result, the immediate costs from the 2008-2009 recall were considerable for all producers and manufacturers, regardless of the recalled product.

Although Skippy and Peter Pan peanut products were unaffected by the outbreak, Skippy peanut butter sales fell 54 percent and Peter Pan sales fell 45 percent in the months after the recall. In the immediate aftermath of the nationwide outbreak, peanut butter sales plummeted 24 percent across the board, and experts estimated that total industry losses would amount to about $1 billion. 

Despite the massive short-term losses, the ERS report found that retail sales returned to previous-year costs just 4 months later. Peanut sales took the biggest hit in January and February 2009, but largely recovered by April 2009. One of the main reasons for the buoyancy, explained the ERS report, was the continued production of peanut products.

"Recalls of products containing peanuts were large in total, but did not dramatically restrict supplies of peanut products. Despite the temporary decline in retail consumer purchases, the volume of peanuts processed during the entire 2008/09 marketing year increased 1.5 percent from the previous year. Processing of peanut butter increased 9 percent from the previous year, from 1.35 billion pounds to 1.47 billion pounds, possibly because major brands of peanut butter were not recalled."

Instead, the report concluded, the farthest-reaching effects were increased media attention and discussions related to food safety. Economically, the production, supply, and use of peanuts will continue to be governed by fundamental supply and demand prospects, the report said. In past years, U.S. per capita peanut consumption has been steady. The ERS expects this to continue, forecasting an overall processing rate to rise at about the rate of population growth. Socially and politically, however, the ERS expects a significant change.

"Debate (will) be focused on the frequency of inspections, on-farm safety standards, preventative safeguards, recall authority, and the organization of public food safety agencies."

Full post as published by Food Safety News on February 04, 2010 (boomark / email).