E. Coli Outbreak Hurts Spinach Farming Industry, Restaurants

The recent outbreak of E. Coli has proven deadly for possibly three Americans, and has wreaked havoc on the spinach farming industry.

Nevertheless, some regional businesses--whose produce is not linked to the California farm region at the source of the outbreak--have found the scourge beneficial to their bottom lines.

Time will tell how much the outbreak, whose first case was reported Aug. 23, will cost U.S. farmers. Estimates vary, ranging from $100 million per month, to $200 million for the entire episode. In 2005, spinach was a $325 million industry in the U.S. Growers in California, where three-quarters of domestic spinach is grown and where the bad spinach is believed to have come from, estimate resulting losses to be about $1 million per day.

"It's a big one," said Marion Nestle, chairwoman of New York University's Department of Nutrition, Food Studies and Public Health, guessing that the total cost would be "hundreds of millions." "They're plowing crops under."

But the ultimate and necessary cost to producers might be a drastic overhaul to current farming and irrigation practices, she said. The Salinas Valley, where the tainted spinach is believed to have originated, has a history of problems with food safety, and sales could be hurt until consumers are certain that growers have worked to prevent future outbreaks.

"If it's something in the spinach, then it was something that happened in the field and the growers have a really big problem," Nestle said. "If it's groundwater or irrigation water, that's upstream water, that means that animal waste has gotten into the water supply. None of this is very nice to talk about."

Over the past decade, the Food and Drug Administration has repeatedly warned Salinas farmers to clean up their act, in response to, among other things, roughly 20 other E. coli outbreaks. In 1998, the FDA issued a remarkable advisory about lettuce, warning that some was being grown in unsanitary conditions that included tainting with animal waste, and followed up with another sternly worded letter to California farms in November.

Nestle said she guesses the E. coli came from dairy farms upstream, a theory supported by Vernon, N.J., organic dairy farmer Jonathan White, who noted that the toxic strain of the bacteria implicated in the outbreak has been found in the stomachs of cattle in high-production dairy farms.

The closest comparison, Nestle said, might be the E. coli incident that forced juice-maker Odwalla to recall its product in 1996. In that case, apple pickers used bad fruit that had fallen on the ground, which resulted in one death and the sickening of 66 people. The company paid a $1.5 million fine, pleaded guilty to 16 misdemeanor charges, and introduced flash pasteurization to its juices. The recall itself cost the company $6.5 million. The company took responsibility for its mistakes, largely salvaged its reputation, and was later sold to Coca-Cola Co. (KO) for $181 million.

"But they were lucky," Nestle said. "They [found out exactly what] happened from the quality-control inspector who saw [the bad apples being picked off the ground for use] and warned them. Unless the spinach industry figures out the exact chain of causation, it will be hard to know what to do to prevent this from happening again."

The spinach scare has been devastating to restaurateurs like Nancy Horn, of Reno, Nev. Her 38-seat restaurant, Dish Cafe and Catering, specializes in vegetarian options, and includes spinach on several of its sandwiches. Since the outbreak, business is down on the restaurant side: Her average daily sales of $1,000 have declined between $250 and $350, and her catering business has seen "a huge drop."

"It's been horrible," Horn said. "People are really freaked out about it. We had to just dump the produce.

"Our business is based on a lot of fresh vegetables and vegetable items, and we've had to take real mainstays off the menu. We're trying to be creative, but you really can't substitute spinach; it's kind of a unique thing and it's really good for you. People get addicted to that, and once it's gone, they look for a substitute and there really isn't one."

Some have avoided the profit pinch by offering substitutes of the same color. In Chicago, where the traditional stuffed pizza includes a generous filling of fresh spinach, Giordano's has stopped sales of the popular pie, which was one of its top sellers. Instead, hungry Chicagoans are chowing down on broccoli pizzas, Giordano's marketing director Dan Hull said.

"The effect has been virtually nil," he said. "We've gone from one case to three cases of broccoli a day."

Martin Wiedmann, associate professor of food science at Cornell University, said the overall effect of the spinach ban will be relatively small, especially when compared to recent concerns over beef consumption spurred by mad cow disease.

"Overall, the impact of spinach is so small, and, in comparison, meat consumption was on a much higher level in the first place" he said. "Spinach isn't exported as much as beef, for one, and the U.S. consumer will eat lettuce instead."

Organic farmers see it as a chance to extol the merits of decentralized and non-corporate produce. Spinach from local farms hasn't been linked to the recent E. coli outbreak.

"If anything, the food scare and others like it are good for business at the farmer's market," said Gabrielle Langholtz, manager of special products for the Greenmarket, which oversees 44 farmers markets throughout New York City. "The American public starts to pay attention to how their food is grown, and where and by whom, and they get to [the point where they] want the opportunity to know their farmer. The food you get at a greenmarket comes from a de-centralized food system, and it's safer."

Langholtz said sales of spinach and leafy greens have seemed brisk since the FDA warnings, but couldn't provide a figure, as farmers aren't required to report their sales.

Montgomery, N.Y., farmer Morse Pitts, who describes himself as "what organic used to be," said that more people are buying spinach from him now.

"Our people understand that the warning not to buy spinach has nothing to do with anything local, and they know it's good local stuff," Pitts said. "I think they're buying it more out of spite [for the blanket FDA warning and corporate farming]."