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As egg producers consolidate, problems of just one company can be far-reaching

By Lyndsey Layton
Washington Post Staff Writer
Tuesday, August 24, 2010; A01

The largest egg recall in U.S. history comes at a point of great consolidation in the egg industry, when a shrinking number of companies produce most of the eggs found on grocery shelves and a defect in one operation can jeopardize a significant segment of the marketplace.

Just 192 large egg companies own about 95 percent of laying hens in this country, down from 2,500 in 1987, according to United Egg Producers, an industry group. Most of those producers are concentrated in five states: Iowa, Ohio, Indiana, Pennsylvania and California.

"I don't think people have any idea when they see all these brand names in the stores that so many are coming from the same place," said Patty Lovera, assistant director of Food and Water Watch, a food safety organization. "It raises the stakes -- if one company is doing something wrong, it affects a lot of food."

That magnified effect is illustrated by the current recall: Just two Iowa producers, Wright County Egg and Hillandale Farms, have been implicated in a nationwide outbreak of Salmonella enteritidis, with the companies recalling 500 million eggs sold under 24 brands. "The size of this thing is kind of amazing," Lovera said.

The complexity of the distribution chain means additional recalls are likely as investigators wade through invoices and try to piece together where the affected eggs have ended up.

(More: See if your egg carton has been recalled)

"A few large manufacturers send product to wholesalers and distributors who repackage and sell it under other brand names," said Jeff Farrar, the FDA's associate commissioner for food protection, who said it can take days or weeks to figure out where tainted food has been sold. "Wright County Egg would sell large volumes of eggs to their customers, some of whom would package these eggs under different brand names or sell bulk eggs to their customers, who may repackage under different names."

As in the beef and hog industries, the consolidation of the egg business has been driven by economies of scale, said Dan Otto, an economics professor at Iowa State University.

Iowa, with its abundant corn, can supply cheap feed to egg companies. The companies have created massive campuses that include hatcheries, egg-laying facilities and multiple processing plants, where some eggs are broken and pumped as liquid into tanker trucks, while others are packaged whole for the wholesale or retail markets.

As the mega-producers have developed during the past 20 years, they have gone largely unregulated by government agencies responsible for making sure food is safe.

The Food and Drug Administration, which has responsibility for the safety of whole eggs, had never inspected the two Iowa-based facilities at the heart of the massive recall that began 10 days ago. Nor had the U.S. Department of Agriculture or the Iowa Department of Agriculture and Land Stewardship. In the case of Wright County Egg, the company had a history of labor and environmental infractions, including one that stemmed from workers handling manure and dead chickens with bare hands.

"It is shocking that nobody was in these facilities, but it also illustrates that egg-laying facilities have fallen into the crack between the government agencies that are responsible for food safety," said Caroline Smith DeWaal, director of food safety at the Center for Science in the Public Interest, an advocacy group.

Although it has broad authority to regulate the production of food, the FDA historically has inspected egg-laying facilities only if it suspected contamination, said Farrar. That is likely to change under a new agency rule that took effect in July. And food safety legislation pending on Capitol Hill would require the FDA to routinely inspect high-risk food facilities, including henhouses.

Under a long-standing regulatory divide, the USDA regulates the health of the chickens, not the eggs they produce. The agency has visited the producers at the heart of the outbreak, but only to grade the quality of their eggs as part of a voluntary program, according to USDA spokesman Caleb Weaver. Quality graders visit packaging facilities, not laying houses, Weaver said.

And while some states inspect farms and egg-laying facilities -- and several conduct vigorous inspection programs -- Iowa, the leading egg-producing state, does not, said Dustin Vande Hoef, spokesman for the state's agriculture department . "Clearly this is a tragic situation, but two federal agencies have been given the responsibility to ensure food safety and we count on them in that regard," Vande Hoef wrote in an e-mail.

Under legislation that has passed in the House and is expected to be taken up by the Senate in September, the FDA would be required to visit Wright County Egg and other similar producers annually. It would have access to internal company documents that show results of microbial testing and the company would be required to adopt a strategy to prevent contamination and prove that it follows the strategy. The bill also would require companies to keep uniform distribution records, making it easier and faster for the FDA to track contaminated food.

"This is a patchwork of government programs where everyone can point to someone else who they thought was doing the job," DeWaal said. "This debate over who regulates the hens and the eggs has been going on for 20 years. The bottom line is, these laying houses should be regulated."

Salmonella enteritidis infections can cause nausea, vomiting, abdominal pain, diarrhea and fever. The illness can be briefly severe but is rarely life-threatening. In people with depressed immune systems, such as AIDS patients, however, salmonella can cause fatal bloodstream infections. No deaths have been reported in the ongoing national investigation but the Centers for Disease Control and Prevention thinks that tainted eggs have sickened at least 1,300 people since May.

On Monday, the House Energy and Commerce Committee launched an investigation into the tainted eggs. Farrar said that about 20 FDA microbiologists and inspectors have been dispatched to the two Iowa plants. So far, microbial testing has not confirmed the presence of Salmonella enteritidis in either facility, but the agency is awaiting the results of further tests, he said.

If anything were to slow or reverse the consolidation of the egg industry, it would be a massive, costly recall, said economist Otto. "This might do it."

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