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Egg Recall Fallout Continues

posted on August 27, 2010

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Hello, I'm Mark Pearson. Equity markets rallied Friday after the government reported U.S. economic growth didn't slow as much as feared in the second quarter of 2010.

In a revision of previously released data, the Commerce Department reported U.S. gross domestic product -- the value of all goods and services produced domestically -- grew by 1.6 percent in the April-to-June period. That's down from its earlier estimate of 2.4 percent, but not as bad as expected by many economists.

In the wake of Thursday's close below 10,000, the Dow Jones Industrials rallied nearly 165 points Friday on the news.

Comments from Ben Bernanke also helped send stocks higher. The Federal Reserve chairman reaffirmed his optimism for economic growth next year and said the Fed was ready to take additional steps to stimulate the economy if needed.

The upturn in stocks Friday may indicate investor sentiment is on the rebound. Stocks have been declining steadily since early August on a series of weak reports on the economy.

But any improvement in the short-term outlook would be welcomed by America's egg producers who find themselves in the unenviable position of "center stage" in the largest egg recall in U.S. history. Andrew Batt explains.


The repercussions of a salmonella outbreak linked to a pair of Iowa egg producers continues to reverberate throughout the national economy. As grocery stores pull recalled egg cartons from shelves, poultry producers have braced for a consumer backlash.

According to the United Egg Producers, the more than half-a-billion recalled eggs represent only 1 percent of annual nationwide production. Nevertheless, the wholesale price of eggs has soared 40 percent in the two weeks since the recall began.

Professor Daniel Otto, Economist, Iowa State University: "."

Daniel Otto, an economics professor at Iowa State University specializing in the egg industry, says American consumers have witnessed various food recalls in recent years but the egg industry has never seen a recall of this scope.

Professor Daniel Otto, Economist, Iowa State University: ""

According to Otto, the egg industry diverges into two primary sectors: the wholesale egg market, best known to consumers in the grocery store AND the liquid egg market utilized, primarily, by restaurants and bakeries.

Professor Daniel Otto, Economist, Iowa State University: "."

According to the Centers for Disease Control, the salmonella outbreak, traced to Iowa producers Wright County Eggs and Hillandale Farms, has already sickened nearly 1,500 consumers.

But Dr. Darrell Trampel, an Iowa State University poultry veterinarian, believes the outbreak could have been avoided if the producers had vaccinated their eggs.

Dr. Darrel Trampel, Iowa State University Extension: ""

Trampel says rodents are responsible for most of the salmonella found in eggs.

Dr. Darrel Trampel, Iowa State University Extension: "Despite some best efforts by egg producers, mice get into the operation as carriers of salmonella and their droppings find their way into the hens and then into the eggs."

The nationwide outbreak has provided ample fodder for critics of modern production agriculture, including the outspoken author and producer Michael Pollan.


Producers of the documentary "Food, Inc." have seized the egg recall as an opportunity to target large-scale industrial agriculture as the root cause of salmonella infections in poultry.

But Trampel contends, so-called free-range chickens are equally vulnerable to the bacteria.

Dr. Darrel Trampel, Iowa State University Extension: ""

This week, officials with the Food and Drug Administration, or FDA, confirmed mice droppings were, in fact, to blame for the tainted eggs.

Salmonella-laden feed was found at a grain bin operated by Wright County Eggs and it's controversial owner Austin "Jack" Decoster.

Decoster has had numerous run-ins with state and federal officials due to a litany of health and safety violations dating back to the 1990's in both Iowa and the State of Maryland.

Tom Miller, Iowa Attorney General (2000): "Today, we are classifying Jack Decoster as a habitual offender of environmental regulations for a series of violations."

Iowa's officials dubbed DeCoster as the state's first-ever "habitual violator" in 2000 after numerous legal disputes over manure discharge from his hog confinements. DeCoster has remained out of the public eye since the egg recall, but Congressional leaders have already subpoenaed the controversial hog and poultry producer to appear at food safety hearings in Washington on September 14.

The growing profile of recalled eggs and sickened consumers has heightened prospects of food safety legislation currently languishing on Capitol Hill.

The FDA Food Safety Modernization Act, written by a bipartisan team of U.S. Senators, has yet to reach a full floor vote.

After nearly a decade of failed attempts to steer similar legislation through the Senate Agriculture Committee during his tenure as Chairman, Harkin shepherded the reforms through the Senate Health and Education Committee in his initial term at the helm.

The Iowa Democrat contends the FDA Modernization Act would bolster inspection, surveillance, and traceability of food products by federal officials. And since current recalls, technically, are voluntary on the part of the company in question, the measure would empower FDA to order mandatory recalls for contaminated food products.

But consumer concerns and heightened awareness from livestock producers and may not be enough to push major food safety reforms through Capitol Hill.

Congress is scheduled to return from its August recess on September 13, and will (likely) consider the thornier issues of tax policy and stimulus spending, before adjourning for the midterm elections.

For Market to Market, I'm Andrew Batt.


Tags: agriculture chickens economy eggs food safety health Iowa news outbreak poultry recall salmonella