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By Nicole Goodkind

Foodborne illnesses kill 3,000 Americans each year. Nearly 130,000 more are hospitalized. The aggregate cost of foodborne illnesses to the U.S. economy in 2011 was $77.7 billion.

These are staggering numbers, and they're on the rise. The FDA had 37 recalls of fruits and vegetables in 2011, up from just two in 2005. Between 2006 and 2010 the rate of foodborne salmonella rose 10%.

Why is food in the United States so riddled with disease that it's killing citizens?

Stephanie Armour, Food Safety and Public Health Reporter at Bloomberg, investigated this question for a special report in this month's issue of Bloomberg Markets. What she found was deeply disturbing.

The Food and Drug Administration has an annual budget of $1 billion to fulfill its duties. Annual food sales in the United States equal $1.2 trillion.

Because of these budget constraints, the FDA is able to inspect ust 6% of domestic food producers and 0.4% of importers.

"The FDA doesn't really have the funding to do the inspections," says Armour in an interview with The Daily Ticker. "I mean it's a negligible amount that they're actually able to get to and look at visually. Instead a lot of private companies have used these third-party auditors. They're basically private inspection firms that go in, do the inspection, make sure the food handling is safe and let the companies know and give them a grade."

Unfortunately, these third-party auditors are far from ideal inspectors. They are not required to follow any federal standards and do not have to make their reports public. Some are financially linked to the companies they are inspecting.

"In some cases you have companies that are on the board of the inspecting companies that are writing the rules for food safety," explains Armour.

Third-party auditors only inspect areas that companies ask them to look at. Sometimes they do not see a factory before giving it a passing grade. Food that is imported into the U.S. often goes uninspected altogether.

These improper inspections kill people, says Armour.

"People have died after these food safety inspection firms have gone in and said 'everything's great.' They've given them superior scores and weeks later or even at the same time people have started getting sick and dying."

What is found to be acceptable by these inspectors is appalling. Plants that receive superior scores are often later found by the FDA to be packed with mold, cockroaches, rats and pigeons.

Abroad, it is not an uncommon practice for workers to defecate in fields where fruit grows.