The Long-term Effects of Meat Recalls on Futures Markets

Matt Houser and Jeffrey H. Dorfman

No 285870, 2017 Conference, April 24-25, 2017, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: Over the past twenty years, there has been an increasing trend in the number of recalls. Despite increased safety control standards, foodborne disease outbreaks continue to impact the food supply. A common source of foodborne illness and fatal infection is beef from diseases such as E. coli 0157:H7, Listeria Monocytogenes, and Salmonella. Certain companies have even been bankrupted, unable to overcome the social costs and economic losses associated with recalls. We examine beef recalls over a twenty year period through an accumulated two-year index to see if there is a prolonged effect of recalls on current weekly cattle prices. We find that recalls act together, adversely impacting prices and decreasing farm-level revenue. The revenue drop is economically small; therefore, it is uncertain if beef recalls financially incentivize cattle producers to invest in food safety safeguards.

Keywords: Marketing (search for similar items in EconPapers)
Date: 2017-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:n13417:285870

DOI: 10.22004/ag.econ.285870

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