Averting an epidemic: market solutions for Canada's food safety

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Towards the end of the summer, 38 people were infected by listeriosis, 18 of whom died.

This horrific epidemic gives rise to the serious question of how this could have happened. Some have been quick to blame free markets, others, the government. Perhaps the real cause of this sad event is simply the existence of the Canada Food Inspection Agency.

Most children are taught to avoid putting all their eggs in one basket because if they accidentally drop the basket, all of their eggs will crack.

This adage can be equally applied to food safety. Canadians have entrusted one single agency, the CFIA, to protect the entire Canadian food supply-- we have placed all food security in one basket.

Under one central food inspection agency, when bacteria or infectious disease slips through the cracks, it becomes a major crisis. The epidemic, as seen by the listeriosis outbreak, spreads like wild fire across the country. Canadians had, and continue to have, no other line of defence.

Further, the CFIA creates a moral hazard, a situation in which decisions are made ignorant to risk because you assume you will either be protected from harm or compensated if an unfortunate event occurs. As a result, Canadians rarely think about food security, they have transferred that duty to the CFIA.

If the CFIA did not exist, perhaps Canadians would be better off. Under this reality, corporations and individuals would be held responsible for food safety.

Just like in your intro to economics class, the Adam Smith invisible hand theory could apply to this situation. Where profitable opportunities exist, markets open and businesses will be created to meet those demands.

As a result of the abolition of the CFIA, new opportunities would be created for safety rating agencies and corporations would have major incentives to serve the safest foods possible.

As Maple Leaf Foods has demonstrated, food security is essential to the viability of a corporation. Listeriosis has and will continue to financially punish Maple Leaf. Unsafe food generally leads to bankruptcy. In order to keep a food brand popular, businesses must invest heavily in food safety.

When people buy cars, houses, electronics, go to restaurants or movies, they often check consumer reports, critical reviews and look for independent rating agencies. This system could also apply to food safety. Independent rating agencies would inspect food processing plants and assign different ratings accordingly. Consumers could then purchase food based on the ratings clearly labeled on food products.

Some may object, suggesting that perhaps the rating agencies and food plants could conspire and create faulty ratings. This is possible, but highly improbable. The rating agencies would depend on consumer confidence. If they were to practice such reprehensible behavior, they would lose consumers' faith, resulting in them going out of business.

One might then say it just takes a single bad apple and, similar to the CFIA and listeriosis, the immoral rating agency would allow an epidemic to occur. True, however, under a competitive model, there would be several rating agencies. One agency being wrong out of several would cause much less pernicious harm than one out of one being wrong.

No perfect solution exists. The Maple Leaf plant, from which listeriosis spread, is possibly the most sanitary plant in the country. Yet the listeriosis crisis still occurred. As the law of probabilities reminds us, there is always the chance of a horrible epidemic.

Canadians have a decision to make: diversify risk by allowing natural markets and the invisible hand to take its course or place all food safety eggs in one basket. The current food inspection system has failed Canadians. Maybe it is time for a change.





Sure, what we need is less regulation. Like the banks in the US?? They are very competitive and the regular guy is well protected by the free market economy - eh? That's why every country in the world is considering nationalising their banks.

Private, 3rd party auditors do exist and serve many large corporations. The government could hire them to do the auditing but that should be with clear national standards overseen by a public entity that can be held accountable. I am sure the public unions would not like this contracting out scenario though.

Part of the problem, as it relates to the size of outbreaks, is due to the size of companies producing the food. The bigger the company (and their production) the greater the pain and suffering when there is an outbreak.

Truth is nothing in life is guaranteed. The water we drink is being polluted daily, as is the air we breath all in the name of keeping our economy ticking along without having to think about, adapt to, or in any way consider the consequences.

I agree a lot could be done to improve the inspection programs. I also agree that our governments (at all levels) have substantial room for improvement. I do not want the 'invisible corporate hand' to control food safety. I remember when tobacco companies assured us that tobacco was safe to smoke.