Newswise — Popeye may be strong to the finish because he eats his spinach, but following an E. coli outbreak nationwide traced to bagged spinach, it may be the spinach industry that is finished -- at least financially. According to agricultural economists at Kansas State University, with the removal of all fresh spinach from the market, the short-term cost to spinach producers will be significant.
Because 70 percent of the nation's fresh spinach production, a $200 million-a-year industry, is concentrated in California, losses to individual producers will be substantial, according to K-State's Sean Fox, professor of agricultural economics, and John Crespi, associate professor of agricultural economics.
As a direct result of the outbreak, growers in the Salinas Valley area of California have begun plowing under their crops. That translates into no paychecks for the migrant workers who pick the crop and potential danger for the industry.
"At this point, we don't know how long the product will be kept off the shelf," Crespi said. "Exacerbating the short-run costs are the facts that the fresh product cannot be stored for very long and that the crop has a short harvest window before it goes to seed."
According to Fox, experience with other products suggests that isolated food safety incidents do not generally have a significant long-run impact on product demand, but this case may be different.
"For example, when we discovered the first U.S. case of mad cow disease, the negative impact on demand was very short-lived -- less than a month," Fox said. "In this case, however, the impact may be more substantial. We've had more than 130 confirmed cases, and more than 60 people have been hospitalized with severe symptoms. One person has died. Thus, from the perspective of the consumer, the risk is more immediate and more tangible."
In addition, according to Fox, when compared to beef, spinach is probably a much smaller part of the diet of most American consumers, making it easier to do without or to replace.
But Fox thinks the spinach industry is still likely to suffer from the E. coli outbreak.
"Fresh spinach consumption has grown dramatically in the U.S. over the past 15 years, and U.S. production has more than tripled since 1990," he said. "I suspect this incident will be a major setback for the sector."
The industry's ability to shift product from the fresh market to the lower-value processed market could be a factor in determining what the cost of this incident will be, Fox said.
But what is the spinach industry's loss, may be a gain for others in the produce industry.
"I've spoken to two local grocery stores and they indicate that, at this point, they are not seeing any reduction in sales of other fresh packaged vegetables," Fox said. "In fact, with spinach off the shelf, sales of mixed salads may be higher."
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