In light of recent outbreaks of foodborne diseases, Americans have become increasingly concerned with food safety. High profile cases of Salmonella enteritidis (S.e.) poisoning have focused attention on the safety of the egg industry. In 1995, there were twenty-nine outbreaks of salmonella poisoning in the United States, affecting 857 individuals, leading to twenty-eight hospitalizations and five deaths. Give such statistics, the USDA has recognized the importance of regulating the egg and poultry production industries in which there is a potential for salmonella transmission.

In response to growing concerns over the level of S.e. in table eggs, the USDA has been forced to consider new procedures for regulating the egg production process. Hazard analysis and critical control point (HACCP) is a relatively new concept in the food safety industry. Originally developed to ensure food quality in the space program, HACCP is a seven step procedure that establishes a means by which individual establishments identify and evaluate hazards that affect the safety of their products, institute controls to prevent those hazards from occurring, monitor the performance of those controls, and maintain records of that monitoring (MacDonald and Crutchfield 1996). In 1996, the USDA's Food Safety and Inspection Service (FSIS) announced that HACCP would be mandatory for all meat and poultry plants under its jurisdiction and that each plant would be required to develop a HACCP plan subject to FSIS inspection (Roberts et. al. 1996). Consequently, by late 1996, HACCP was being used by about ten percent of the meat and poultry plants in the northeast (Unnevehr and Jensen 1996).

In this paper we focus on the egg industry's response to the implementation of mandatory HACCP regulation. We argue that an important aspect of the egg industry is phytosanitary propensity, the inclination of firms, absent regulation, to produce to high phytosanitary standards. This propensity, we argue, varies across firms. We explore the implications of this view of the egg industry and conclude that the welfare effects of HACCP regulation can be skewed in the cross section and can bestow benefits, in equilibrium, on some firms while imposing costs on others. We also explore the food safety consequences of a non-regulatory government sponsored program: industry promotion through mandatory check offs. We discuss the possibly inhibiting effect of generic promotion on the incentives for firms to develop name brand identities, which could serve as private guarantees of food safety. It is important to understand that this effect is not a criticism of check off programs for reasons that they fail to do what they are set up to do. Rather, it is an unintended consequence of a program that may well enhance industry profit in the way that its proponents claim.

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