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Deeply Flawed Economic Analysis Exaggerates Cost of FDA’s Produce Rule

Opinion

One of the healthiest things a person can do is to eat lots of fruits and vegetables — unless they’re contaminated with dangerous pathogens, that is. Contaminated produce has been responsible for an alarming number of deaths and illnesses in recent years, from Listeria-tainted cantaloupes that killed up to 43 people in 2011 to a Cyclospora outbreak linked to salad mix and cilantro that sickened 631 people in 25 states this past summer.

For this reason, the Food Safety Modernization Act (FSMA) directed the Food and Drug Administration (FDA) to set standards to ensure the safety of the fruits and vegetables in our food supply.

FDA’s proposed rule on produce safety would address some of the most likely sources of contamination on farms, including tools and equipment, water used in agricultural activities, and worker health and hygiene. At the Center for Progressive Reform, we submitted comments to FDA, urging the agency to issue the final produce rule as soon as possible and in its strongest, most protective, form.

We focused most of our attention on the economic analysis that accompanied FDA’s proposal. FDA found that the rule is easily justified on economic grounds, estimating annual benefits of $1.04 billion — representing 1.75 million avoided illnesses in the United States — and annual domestic costs of $460 million.

But, once we looked behind these numbers, it became clear that the rule’s benefits will be even more significant, and its costs considerably smaller, than FDA suggests. The agency’s estimates are built on flawed assumptions, and those flaws were greatly exacerbated by the White House Office of Information and Regulatory Affairs (OIRA) during the 13 months that it spent marking up the proposal and delaying its release. By misrepresenting the rule’s impacts, these distortions help to fuel needless negativity toward the rule from members of Congress, produce-industry associations, and farmers themselves.

Below are some examples of how the analysis overestimates the rule’s costs.

$113.5 Million for Washing Your Hands Before You Handle Food?

Fully one-quarter of the rule’s total cost — the largest single category of cost — is attributed to the rule’s requirement that farm personnel wash their hands before handling food. If a farm worker is just beginning work for the day, or donning gloves, or returning to work after using the bathroom, or has just touched a farm animal, FDA’s proposed rule would require that person to wash his or her hands before handling food. FDA estimates that the vast majority of farm workers do not now wash their hands before work or after being away from their work station, and that fully one-quarter do not wash their hands after using the toilet. The agency believes that requiring the simple act of hand-washing — a rule parents everywhere can understand — will help protect our produce from contamination.

So far, so good. However, after reaching this common-sense conclusion, the agency does something quite strange: It calculates the economic costs of hand-washing. Even though most everyone would agree that people who handle food should — even without a federal rule on the subject — be washing their hands after visiting the bathroom or touching a farm animal, FDA effectively reverses this common-sense presumption by treating hand-washing as a departure from the existing norm and, as such, an imposition of costs on the farm worker’s employer. Reversing the presumption in favor of hand-washing makes even less sense when one recalls that most farms are already required to allow their workers “reasonable use” of hand-washing facilities.

How does hand-washing end up “costing” $113.5 million? According to FDA, it’s the cost of “lost productivity.” Every hand-wash supposedly takes two minutes out of a worker’s time — most of it taken up with walking to and from the hand-washing facility — depriving the farm of 47 cents’ worth of the worker’s labor. Multiplied by all the farm workers in the country, this individually trivial cost adds up to $113.5 million per year.

OIRA played a major role in this wildly exaggerated estimate. Originally, FDA assumed each hand-wash would take one minute, but OIRA — without explanation — increased the time to two minutes, which doubled the total cost from $56.8 million to $113.5 million.

Far from an overwhelming financial drain, hand-washing should be treated as what it is: part of the regular course of everyday farm activities. One farm, after joining a voluntary food-safety program, started towing a few hand-washing stations behind a trailer, moving them around to different fields so they would be easily accessible to workers. The new requirements were an adjustment at first, but soon became part of the daily routine. The exotic suggestion of FDA’s economic analysis is not that people who handle food should wash their hands regularly, but that — depending on how the numbers come out — perhaps it would be best if they didn’t.

The Cost of Testing Agricultural Water

The proposed rule would require farmers to regularly test certain kinds of water sources for signs of fecal contamination, if the water is used for irrigation or if it directly contacts produce. FDA assumes that laboratory analysis of water samples would cost each farm thousands of dollars per year.

But, given the extended compliance dates for these water requirements — up to six years beyond the rule’s effective date for very small farms — it’s almost inevitable that the rule will spur the development of low-cost testing kits that can be used with little training “on farm,” and will increase competitiveness among suppliers of testing products and services. These developments, already in the making, will make testing significantly more affordable for small farms than the agency suggests.

The Cost to Exempt Farms

A farm that is exempt from the rule’s growing and harvesting standards would still have to let consumers know its name and business address. A farm that does not put labels on its food (labels that might already contain this information) will need to find another way to let consumers know its name and address. FDA believes that very small farms that sell directly to consumers will likely put up a sign near the point of purchase. FDA estimates the cost of this simple requirement to be $1,134 per year per farm.

Before going into the details, let us pause for a minute to consider what appears to be FDA’s operating assumption, which is that these farms do not already display their name and address at the point of purchase, and that only FDA’s rule will induce them to do so. It seems reasonable to assume the opposite, which is that farms have an incentive to lure consumers and build their loyalty by posting their name and address. If that’s correct, FDA’s requirement may not cost anything.

Originally, FDA estimated that a farm that sells directly to consumers would spend five minutes every two weeks to write its name and address on a piece of poster board — at an annual cost of $101 per farm. The agency thought it reasonable to assume that the farm operator would buy and prepare one poster board every two weeks because the poster “can get tattered and worn-out.” It seems equally reasonable to assume that, upon seeing this tattering and wearing out, the farm operator would choose a more durable method for displaying the farm’s name and address.

But OIRA veered in the opposite direction. It took FDA’s exaggerated cost to a whole new level by insisting that it would take a farmer an hour every two weeks to prepare the sign stating the farm’s name and address — bringing the cost up to $1,134 per farm. Unless a farmer chooses to write the name and address in Burgues Script – and needs to relearn this intricate calligraphic font every time it’s used — it is hard to see how this trivial task could take an entire hour.

Reading FDA’s analysis, one wonders whether the agency itself recognized the ridiculousness of it all. The agency pointedly observes: “We do not estimate a cost for the use of a marker to write on the poster since it is expected that this cost is minimal since the farmer will likely use something he has on hand.” Hilarious — if it were a segment on The Colbert Report rather than part of a serious attempt to assess the costs of food safety in this country.

On Exemptions to the Proposed Rule

The proposed rule already provides a number of exemptions and special provisions intended to ease burdens on small and low-risk farms. Some have argued that the proposed exemptions don’t go far enough, urging FDA to expand them further. It is completely understandable for small farms to be anxious as this new, unfamiliar regulatory framework is put into place, and they try to figure out where they fall among the various exemptions or how they have to modify their practices while operating on slim profit margins.

But there is evidence that many farms may be overreacting out of mistrust and uncertainty, misjudging just how broad these exemptions really are. As it is, 79 percent of all U.S. farms would be exempt from the rule, and those small farms that are still covered would have significantly extended compliance dates. In a survey of farmers conducted this past spring by an New York University graduate student, some of the respondents who made the most negative comments about the rule and suggested it would put them out of business actually turned out to be exempt.

For all these reasons, we believe that continuing FDA’s outreach efforts and clarifying points of confusion would be more effective, and more protective of public health, than expanding these exemptions any further.

© Food Safety News
  • mark

    “it’s almost inevitable that the rule will spur the development of low-cost testing kits that can be used with little training “on farm,” and will increase competitiveness among suppliers of testing products and services.” Please remember that any new “kit” will have to be scientifically verified as to its efficacy, normally done by AOAC International, and not a quick process.
    Further, please provide evidence that fecal coliforms in irrigation water correlate with the water containing pathogens. We accept this correlation in drinking water but does it apply to irrigation water?

    • John Mark Carter

      The earlier versions of these new “low-cost” kits will be very similar to standard microbiology lab tests. (I know this, because we’re already working on them.) They’ll be relatively more expensive but quick to validate. Later versions will use high tech stuff that takes more work and time to validate, and takes more market to become cost-effective. Eventually this will all be done through integrated technology that is available and inexpensive for small operations. Think of how your cell phone includes apps for photos and math calculations.
      As for the coliform connection, it’s difficult to prove their correlation with pathogens, because the incidence of pathogens is (thankfully) so vanishingly tiny. The “fecal” part of the expression “fecal coliform” reminds us that these bacteria come from poop. Poop contains billions or trillions of times as much fecal coliform as pathogens. But where there’s coliform there’s poop, and where there’s poop there’s pathogens.

    • Clancy Anderson

      Mark, Here is a very recent study show the may be little to no correlation on contaminated irrigation water on growing onions. http://www.cropinfo.net/crops/PrelininaryStudiesOnEcoliAndOnion_ExtCrS148_31Oct2013.pdf

  • Natasha

    Large-scale agriculture cuts corners to come up with an affordable product, but eventually everybody pays. Pesticides and fertilizers polluting our land and ourselves; now the honeybees are dying off. Overcrowding of animals requires regular use of antibiotics; now the ‘bugs’ are becoming resistant.

    Large-scale agriculture has done this to us, and now they are paying the price too.

  • John Mark Carter

    Here in California the Leafy Greens Marketing Association came up with voluntary hand washing as a critical component in providing safe produce. It’s voluntary but becoming steadily more compulsory and widespread. If consumers want safer food, they will pay for hand washing. If they are OK with risky food, they will buy cheap imports.

  • Clancy Anderson

    Here is an example of grower/industry trying to prove they should be exempt. http://www.cropinfo.net/crops/PrelininaryStudiesOnEcoliAndOnion_ExtCrS148_31Oct2013.pdf

  • Southern Tier Farmer

    I am smaller than a small farm. What I would call a “micro farm” Therefore I am exempt. This does not mean this abomination of a law will have an effect on my farm. The regulations concerning sanitizing of harvest bins and post harvest bins, animal exclusion, water testing and third party GAP audits will be pushed down to us. The large stores who like to advertise they are purchasing locally grown produce are beginning to require farms to prove they have met the food safety requirements. The larger farms can meet this as they are probably already doing it. The small farmers cannot afford this and the smaller stores out of fear of litigation will eventually follow suit. We are trying to head off the inevitable the best we can but being as small as we are and living in a highly regulated state we cannot afford the cost of hiring someone to spend the hours necessary to sanitize as often as the law will require. Not to mention the hours that will be spent trying to keep records on everything. Gone will be the wooden crates, baskets, totes. Now it will need to be plastic. Don’t forget the cost of the equipment to clean and test with plus the chemicals needed to sanitize. More costs! This law will shut down small (and micro) farms. Just wait and see. Oh, I ALWAYS wash my hands before handling the produce. How many people in their own homes do the same? Think of the customers and staff in restaurants. The next time you are in the produce section of a store watch to see how many people handle the produce and put it back. Ask them if they washed their hands before they touched it. What were they touching, picking, scratching, etc. before that? you cannot live in a bubble nor legislate one.