This terrifying story about E Coli is enough to make even the most ardent baconatarian consider veganism.   Cargill produced hamburgers made by mixing up ground beef from different suppliers from all over the world.  You could test for E Coli when the slaughterhouse’s meat arrives but:

Unwritten agreements between some companies appear to stand in the way of ingredient testing. Many big slaughterhouses will sell only to grinders who agree not to test their shipments for E. coli, according to officials at two large grinding companies. Slaughterhouses fear that one grinder’s discovery of E. coli will set off a recall of ingredients they sold to others.

If you violate this unwritten agreement then:

The food safety officer at American Foodservice, which grinds 365 million pounds of hamburger a year, said it stopped testing trimmings a decade ago because of resistance from slaughterhouses. “They would not sell to us,” said Timothy P. Biela, the officer. “If I test and it’s positive, I put them in a regulatory situation. One, I have to tell the government, and two, the government will trace it back to them. So we don’t do that.”

The downside is obvious:

The potential pitfall of this practice surfaced just weeks before Ms. Smith’s patty was made. A company spot check in May 2007 found E. coli in finished hamburger, which Cargill disclosed to investigators in the wake of the October outbreak. But Cargill told them it could not determine which supplier had shipped the tainted meat since the ingredients had already been mixed together.“Our finished ground products typically contain raw materials from numerous suppliers,” Dr. Angela Siemens, the technical services vice president for Cargill’s meat division, wrote to the U.S.D.A. “Consequently, it is not possible to implicate a specific supplier without first observing a pattern of potential contamination.”

Why not avoid this altogether, use a whole piece of meat and grind it yourself? Because:

In all, the ingredients for Ms. Smith’s burger cost Cargill about $1 a pound, company records show, or about 30 cents less than industry experts say it would cost for ground beef made from whole cuts of meat.

On the other hand, Costco does test the input:

The retail giant Costco is one of the few big producers that tests trimmings for E. coli before grinding, a practice it adopted after a New York woman was sickened in 1998 by its hamburger meat, prompting a recall.

Craig Wilson, Costco’s food safety director, said the company decided it could not rely on its suppliers alone. “It’s incumbent upon us,” he said. “If you say, ‘Craig, this is what we’ve done,’ I should be able to go, ‘Cool, I believe you.’ But I’m going to check.”

Costco said it had found E. coli in foreign and domestic beef trimmings and pressured suppliers to fix the problem. But even Costco, with its huge buying power, said it had met resistance from some big slaughterhouses. “Tyson will not supply us,” Mr. Wilson said. “They don’t want us to test.”

So, why the difference between Costco and Cargill?  One company has a brand that is easily recognizable to consumers and the other doesn’t.   The branded product/firm faces a bigger reputational risk in terms of lost sales if it doesn’t do a careful job.  Hence, it has better incentives to monitor its product and ensure it is of high quality.  The court of public opinion has lower standards for conviction than the court of legal opinion.  Indeed, the deliberate lack of testing of inputs allows all parties to try to shift blame to another player to create reasonable doubt.

You would hope that the public opinion that can punish the retail end of the supply chain would filter back to through the whole supply chain.  But that does not seem to happen.  Consumer flight while it can be fatal to a retailer with a bad reputation is not well coordinated enough to exert pressure to the supplier.  Back to my Cheerios.