New Report From California Assesses Cost of Leafy Greens Food Safety Program

Author: Small Farms Center of UC Davis

Publish Date: Fall 2009

A new report from the Small Farm Center at UC Davis summaries California’s experience with the Leafy Greens Marketing Agreement (LGMA). In spring of 2007, a group of California handlers of leafy greens established the Leafy Greens Products Handler Marketing Agreement (LGMA) in response to the September 2006 E. coli outbreak that was attributed to spinach grown in the Salinas Valley. A voluntary program, the LGMA has been widely accepted by the produce industry, grocers and food service firms. Other states have adopted the LGMA including Arizona and Florida. In June 2009, a proposal for a national leafy greens marketing agreement was submitted to USDA’s Agricultural Marketing Service (USDAAMS). Although the LGMA is an agreement between handlers, many of its compliance requirements fall upon growers to implement, as it requires signatory members to source their leafy greens solely from growers found to be in compliance with a set of food safety provisions called “best practices.”

Since many of the compliance requirements of the LGMA and other food safety programs fall upon growers to implement, this study surveyed leafy greens growers in California during 2008 and 2009 to measure these compliance costs. Key findings from the report are:

• Growers’ costs for modifications made specifically for LGMA compliance averaged $13.60 per acre.

• Growers reported their seasonal food safety costs more than doubled after the implementation of the LGMA, increasing from a mean of $24.04 per acre in 2006 to New Report from California Assesses Cost of Leafy Greens Food Safety Programs $54.63 per acre in 2007.

• Growers with revenues in 2007 between $1 million and $10 million had the highest modification costs per acre ($18.05), followed by growers with revenues under $1 million ($14.82) and, lastly, growers with revenues over $10 million ($8.29).

• Seasonal food safety costs per acre followed the same pattern, with the costs for medium-size growers being 159 percent higher than the average for the largest growers.

• Previous research findings indicate a high degree of consolidation in the U.S. grocery sector; thus it is unlikely that growers have been able to obtain higher prices for their leafy greens in order to cover their increased food safety compliance costs.

Since growers with revenues over $10 million benefit from significant economies of size in complying with the LGMA and other food safety provisions, they have the greatest capacity to absorb these costs.

• Furthermore, growers with revenues over $10 million tend to hire food safety specialists to manage their compliance programs, while the owners/managers of operations with revenues under $1 million need to manage these complex programs themselves.

It is essential that the proliferation of public and private food safety standards in the leafy greens industry be addressed, while at the same time recognizing that a one-size-fits-all approach does not take into account the fact that leafy greens growers are a highly diverse group.