Economic Incentives to Supply Safe Chicken to the National School Lunch Program

Abstract

This report examines the food safety performance of establishments supplying raw chicken to the National School Lunch Program (NSLP) through the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service’s (AMS) Poultry Products Purchase Program over 2006–12. This report focuses on the effectiveness of reputation as an incentive for producers to control Salmonella. To sell chicken through the Poultry Products Purchase Program, establishments must be registered with AMS and be in compliance with the standards imposed on all slaughter establishments by the USDA, Food Safety and Inspection Service (FSIS). Suppliers may exceed the FSIS standard, depending on their incentives. Raw chicken suppliers to AMS for the NSLP have an incentive to attain strong performance on Salmonella tests in order to ensure that they do not suffer product recalls, which, being associated with a highly visible customer, could harm their reputations for food safety and adversely affect profitability. However, suppliers also have an incentive to reduce costs, including those associated with food safety practices, to improve their profit margins. Findings indicate that AMS supplier concerns about increased scrutiny and the associated reputation effects when supplying the NSLP offset any incentive to underinvest in food safety to lower the costs of production.