E. coli in Europe may hurt U.S. produce sales

(Bloomberg) — Fresh and organic produce sales may decline in the U.S. because of an E. coli outbreak in Europe before rebounding once confusion over the cause is resolved, according to an industry group.

German officials backed away yesterday from comments that sprouts from an organic farm in Lower Saxony were the likely cause of the deadly E. coli case after initial tests at the farm failed to find traces of the bacteria. At least 23 people have died of the 2,429 stricken since May 2, the European Centre for Disease Prevention and Control said today.

Consumers in the U.S. may shy away from produce until they get clearer information on the cases in Europe and regain their confidence in food safeguards, Dave Gombas, senior vice president for food safety and technology with the United Fresh Produce Association, said in an interview yesterday.

"Getting consumer trust back is a very difficult thing," said Gombas, whose Washington-based group represents companies such as Dole Food Co. and Chiquita Brands International Inc. "Growers and handlers are following the right practices, and we have to let people know we are doing that."

German authorities originally blamed cucumbers in Spain, then focused on the organic farm near the German town of Uelzen. Officials of Lower Saxony state said yesterday that initial tests from the farm showed no evidence of the bacteria while some samples were still being checked.

CONTAMINATED SEED

Sprouts can't be ruled out as a cause of the outbreak because the bacterium may be gone from the farm where they were grown, scientists said. Traces may be undetectable now if the offending produce was grown from a depleted batch of contaminated seed weeks ago, said James Paton, head of the bacterial pathogenesis laboratory at the University of Adelaide in South Australia.

In the U.S., Democrats on the House Energy and Commerce Committee requested a hearing on lessons of the outbreak for the nation's food system. The European cases involve a strain that produces a toxin not usually seen in E. coli.

"What are the implications for the United States of a significant outbreak of what was previously an uncommon pathogenic strain?" the lawmakers, led by Representative Henry Waxman of California, said yesterday in a letter to the panel's Republican majority. "A better understanding of what sparked this major outbreak in the European Union will help us to determine the prospect for an outbreak of this pathogen in the United States."

IMPORT ALERTS

The U.S. Food and Drug Administration has "import alerts and mechanisms in place" to prevent European produce that may pose a risk from entering the country, Michael Taylor, the agency's deputy commissioner for foods, said today in Washington.

The U.S. imports "little or no produce from Europe so it's not a significant threat," he said. The outbreak is "almost a classic case of an emerging pathogen" that's a scientific challenge because "bacteria themselves change," he said.

United Natural Foods Inc. has yet to see a decline in sales, according to Mark Shamber, chief financial officer of the company, the largest distributor of organic and specialty products in North America.

UNITED NATURAL FOODS

The effect on consumers can't be evaluated until the source of the bacteria's spread is identified, said Shamber, whose business sells food to grocers including Target Corp., Whole Foods Market Inc., Costco Wholesale Corp. and Kroger Co.

United Natural Foods has fallen 6 percent in Nasdaq Stock Market composite trading from May 25, a day after the European cases became public through yesterday.

In a 2006 outbreak, spinach in California was contaminated by E. coli, killing three people and sickening 200. Cow feces had contaminated water onweb the farmland where the vegetable grew, a conclusion made after weeks of investigations as sales of the leafy green plummeted.

Episodes of contaminated eggs, peanut butter and meat have produced sales slumps at food companies whose products weren't making people sick.

The cases have prompted grocery stores to use signs and food labels to better inform consumers where their food comes from, said Jennifer Dennis, an associate professor of horticulture and agricultural economics at Purdue University in West Lafayette, Indiana. That should make consumers less likely to panic at an outbreak abroad, she said.

"I could see there being a little bit of skepticism, but in the long-term produce season I don't see things slipping" in the U.S., Dennis said.