Thursday, April 19, 2007

Globalization and Gluten

Yet more pet food recall:

Wilbur-Ellis Co. said on Thursday it was voluntarily recalling all lots of a rice protein concentrate its feed division had shipped to pet-food manufacturers.

Wilbur-Ellis said the recall was because of a risk that rice protein concentrate may have been contaminated by melamine, a chemical used to make plastics and fertilizers that can lead to illness or fatalities if consumed.

The announcement is the latest in a widening recall of dog and cat food products across the United States since mid-March. More than 100 brands of pet food have been recalled after reports of cases of pets developing kidney failure.

The U.S. Food and Drug Administration has received more than 14,000 reports of pet illnesses so far. Officials have confirmed just 16 deaths but believe the actual number could be higher.

Wilbur-Ellis' said it obtained rice protein from a single source in China and shipped it to five U.S. pet-food manufacturers, in Utah, New York, Kansas and two in Missouri.

The company said it had told the FDA on Sunday that a single bag in a recent shipment of rice protein concentrate from its Chinese supplier, Binzhou Futian Biology Technology Co. Ltd., had tested positive for melamine.

The conservatives like to think of free markets as God's fingers in our lives. Everything will be just fine if we let the "free markets" function. This religious view of something that is just a method of getting goods and services from their producers to their consumers is extremely dangerous. Extremely.

Every economist knows that markets can fail in the efficiency sense, that they might not exist in cases where it would be beneficial for them to exist, and that markets couldn't care less about fairness or equity. For all these reasons unregulated markets can cause problems. They can also function extremely well, of course. But we should never assume that they work in some divine sense, so that we can turn our monitoring eye off.

In this case the problem has to do with lack of information, one of those bugbears which make markets function less than optimally. It is not possible for the buyer to see that gluten is tainted just by looking at it. Testing, which costs money, is the only sure way of finding out. Because testing costs money some firms will not do as much of it as the consumers would like to see done, unless there is a regulatory mechanism which forces them. Well, the pet food markets are not regulated very much.

Here comes the paradox: It would have been in the interest of the pet food manufacturers to have government inspection and regulation. Because consumers are also unable to spot tainted pet food by simple visual inspection, their distrust will spread to all pet food brand names. The whole market will suffer, and many pet owners start cooking for their pets instead.

The link to globalization has to do with the fact that the environmental and health regulations are not identical across the world. The Chinese farmers can use products which are banned in the United States, for instance, and the same holds for other countries. This increases the level of uncertainty buyers face.
Also check out this odd post on the topic by the Horse's Ass, via TAPPED.