Food inspection: Quality floors and ceilings?

Don Boudreaux's post on food inspections reminds me of an interesting American case. During the "mad cow" scare a few years ago, which hammered Canadian beef exports to the US and American beef exports to Asia, Creekstone Farms decided to give the customer what he wanted: beef fully tested for BSE. They built a testing lab, trained up the staff, and were ready to start testing 100% of their animals at slaughter.

Now, if the point of USDA food inspection is to ensure that all food consumed is of at least a certain quality - helping to help prevent food-borne illness - you'd expect them to have supported Creekstone's move. Or at least been indifferent to it. Of course, you'd be wrong. The USDA banned Creekstone from implementing its testing regime.

The USDA's line is that random testing is sufficient to ensure food security; moreover, as the tests aren't as reliable on younger animals, testing of all animals could not guarantee BSE-free product. False positives could cause alarm.

This has been working its way through the courts since 2006. Last September, the DC Circuit sent it back to the District Court; Creekstone hasn't yet announced whether it will continue with the case.

I can imagine a public interest story consistent with the USDA's position. I just don't believe it. The public interest story would be built around that Creekstone's move looks like an off-diagonal in a prisoner's dilemma game where the social optimum is testing of downer cows and older beasts and little testing of younger ones but where the Nash equilibrium is the (costly) 100% testing of all animals driven by irrational consumer fears. I don't find the story too plausible: guaranteed "GE-Free" or organic products haven't taken over the food market. Folks weigh quality, safety and "solidarity in consumption" against price. Another public interest variant would be that false positives in the 100% testing regime could lead to foreign demands for 100% testing of all beef and further restrictions on US exports. Again, I don't buy it. Surely Creekstone's first move on seeing a positive result would be to double-check with another $20 test kit. And perhaps even a third test to arbitrate if the results of the first two were in conflict. I can believe restrictions following a confirmed positive case, but false positives would be sorted out prior to that stage. I'm having a hard time seeing a reasonable public interest case; it looks more like the stifling of competition through quality ceilings.

The case has had plenty of coverage in the usual outlets. Boudreaux's post just brought it back to mind.