Effects of Food Safety Events on U.S. Romaine Lettuce Prices

Romaine lettuce and leafy greens have been at the center of food safety concerns over the last several years. More specifically, romaine lettuce has been directly linked to seven(7) foodborne illness outbreaks and resulted in five(5) recalls over the eight(8) years period of January 1, 2012, to December 31, 2019. This paper estimates the effects that these food safety events have had on the price returns of romaine lettuce utilizing a series of Generalized Autoregressive Conditional Heteroskedasticity (GARCH) models. Importantly, the GARCH models allowed us to capture the effects of the recall and illness outbreaks on both the returns and volatility of the romaine price series. We find that three (3) of the seven (7) illness outbreaks resulted in marked increases in the price returns - between 4.1% and 9.6%. Conversely, three (3) of the five (5) recalls reduced price returns - between 30% and 57%. However, the volatility is not found to be significantly nor to affect the price volatility significantly. We conclude that recalls serve as a market correction in the romaine lettuce market. Consequently, a continued focus on increasing traceability with in the romaine lettuce market will help to reduce price fluctuation and limit the number of illnesses resulting from outbreaks.