Cyclospora outbreak puts food supply consolidation under scrutiny

The cyclospora outbreak food supply debate is widening beyond one contaminated ingredient. For everyday investors watching restaurant chains, food distributors and packaged salad companies, the issue is whether a more concentrated produce system can turn a local food safety problem into a national business risk.

CNBC reported that the current U.S. cyclospora outbreak has sickened thousands of people, with federal investigators looking at shredded iceberg lettuce distributed through Taylor Farms’ foodservice business. The ingredient reached Taco Bell restaurants and other foodservice customers in multiple states, according to CNBC.

Cyclospora is a parasite that can cause cyclosporiasis, a foodborne illness. Experts cited by CNBC said its long incubation period, the difficulty of tracing contaminated produce and criticism of the federal response have all complicated the investigation.

How can food supply consolidation affect a cyclospora outbreak?

Food supply consolidation means fewer companies handle a larger share of growing, processing and distributing food. If contamination enters a centralized system, the affected product can be mixed, processed and shipped across a much wider area than it would in a more local supply chain.

Dr. David Relman, a Stanford University professor of microbiology and immunology, told CNBC that shifts in how food is sourced and distributed have likely played some role in the outbreak. He said consolidation can allow a local contamination issue to be pooled with other product and then redistributed more widely.

Relman pointed to bagged lettuce as an example. A single head of lettuce has a limited path to the consumer, while chopped lettuce in a bag may include product from many heads and move through broad distribution networks.

Marion Nestle, professor emerita of nutrition, food studies and public health at New York University, told CNBC that consolidation raises the stakes when something goes wrong. She said centralized processing can increase the reach of a foodborne illness event.

Which companies show how concentrated the system has become?

The U.S. Department of Agriculture has described a long-running consolidation trend in agriculture and food distribution, driven by efficiency and national scale, according to CNBC.

Taylor Farms has expanded through acquisitions in recent years, including Earthbound Farm in 2019, Curation Foods in 2021 and Equinox Growers in March, CNBC reported. The company is under scrutiny because of the FDA investigation into shredded iceberg lettuce tied to the current outbreak.

Restaurant supply is also concentrated among broadline distributors, including Sysco, US Foods and Performance Food Group. These companies serve large numbers of restaurants and institutional kitchens across the country.

Regulators blocked Sysco’s proposed $8.2 billion purchase of US Foods in 2015 on antitrust grounds, according to CNBC. Since then, both companies have kept expanding through smaller deals involving regional distributors and produce processors.

Sysco has bought fresh food and distribution businesses including Paragon Foods in Pennsylvania, The Coastal Companies in the Mid-Atlantic and Greco and Sons, a specialty food distributor with 10 distribution centers. US Foods acquired Freshway Foods, a fresh fruit and vegetable processor, repacker and distributor serving the eastern half of the U.S., in 2016.

Do bigger food companies create more safety risk?

Timothy Lytton, a health and safety regulation expert at Georgia State University, told CNBC the answer is not clear. He said larger produce growers and processors often have more money to spend on testing, traceability, audits and quality control than smaller operations.

Lytton also pointed to California farmers market studies that found E. coli contamination on produce grown by small farmers, according to CNBC. He said farming models that place animals near crops can create food safety concerns.

Still, Lytton said recalls tied to large handler networks can become broader and harder to manage when contamination is found.

CNBC reported that it contacted major suppliers mentioned about safety precautions and tracing procedures. Sysco referred CNBC to the International Foodservice Distribution Association.

An IFDA spokesperson told CNBC that foodservice distributors keep records on where products come from, how they move internally and who receives them. The group said distributors have provided the FDA with traceback information within 24 to 48 hours during foodborne illness investigations.

Relman told CNBC that consolidation does not cause contamination by itself. The concern is what happens after contamination enters a system built to move large volumes of food quickly across many markets.

This story draws on original reporting from CNBC.