Sunday, October 4, 2009

Hamburgers, Food Safety, and Network Economics

Today's New York Times has an article that may convert everyone to vegetarianism. The article documents the trail that a hamburger, which was adulterated with E. coli, most likely took that resulted in the paralysis of a young female consumer. The article Trail of E. Coli Shows Flaws in Inspection of Ground Beef states that the prefrozen hamburger patty that she consumed had parts that originated in Texas, Nebraska, South Dakota, and even Uruguay! The processor noted that such processing was cheaper by about 25%. Clearly, the true costs are not being appropriately assigned.

What is also extremely frightening is that certain beef suppliers will only sell their "product" to processors that do not check the quality of their beef. There is, hence, tacit agreement or collusion between decision-makers in tiers of the food supply chain to explicitly and outrightly ignore quality of the product. And here we are speaking about food that we eat!

Food safety was a topic of Dr. Helander's presentation on September 18, 2009 in our speaker series at the Isenberg School. She (as the article also notes) stated that it appears that incidents of food adulteration are becoming more and more common. Ironically, other countries (and especially the continent of Europe) are paying much closer attention to the safety of the food that its consumers eat and are passing appropriate regulations and legislation. Indeed, a few years back I was on the doctoral dissertation of a student, Mr. Diogo M. Souza Monteiro, whose dissertation was entitled, Theoretical and Empirical Analysis of the Economics of Traceability Adoption in Food Supply Chains. He is now a professor in England. He had also been a student in one of my Management Science classes in which we used my Network Economics book and had done a very nice project on vertical integration in food supply chains. He also cited several of our papers on supply chains and risk management in his dissertation.

Also, his dissertation advisor, Professor Julie Ann Caswell, had delivered a talk on food safety and what it would take the first year of our speaker series.

A very interesting paper of theirs, which cites my Network Economics book, focuses on the multi-ingredient nature and the economics of food supply chains and traceability.