Economic impacts of food safety incidents in a modern supply chain: <i>E. coli</i> in the romaine lettuce industry

Abstract Food‐safety incidents disrupt impacted markets, cause destruction of edible product, shake consumer confidence, and impose economic losses upon participants across the implicated supply chain. Despite prevalence such incidents, we know surprisingly little about their chain impacts, especially in modern produce markets where contracts may impede diffusion price impacts through The November 2018 E. coli incident for romaine lettuce Central California roiled North American throughout fall well into 2019. Our study this benefited from access to disaggregate information on prices sales substitute leafy greens at all stages chain, enabling us overcome data limitations that have impeded prior studies. We decompose quantity components. Romaine growers were largely protected damage due fixed‐price provisions grower‐processor contracts. Economic incurred mostly by shippers processors, grocery retailers who pulled saleable product lost during after reduced demand. estimate total societal loss was range $276–$343 million. Widespread long‐lasting a food‐safety demonstrate benefit industries adopting mandatory standards improved traceability minimize occurrence incidents.