Endogenous Adoption of International Agri-food Practices and Standards

Countries around the world carry very diverse sets of rules and practices when it comes to the regulation of agriculture. These differences stem from varying degrees of concern or perceived risk for food safety, animal and plant health concerns, and environmental protections and further the legacy of different regulatory traditions. Differences in standards across borders can in turn lead to sources of contention between trading partners. With growing concerns for climate change and increasing demand for food standards, major food systems are heading into different directions. Further, given the economic importance of market access and heterogeneity in demands for regulations across regions, production practices and standards by major global producers evolving under different spheres of influences. This study examines the adoption of international agri-food practices in the context of economic welfare tradeoffs between market access and costs of adoption, using the case of the EU’s Farm to Fork and Biodiversity Strategies. We introduce a modeling technique in our economic framework that endogenously determines a countries decision to adopt the EU’s farm to fork program. We present results based on if the benefits from joining (keeping trade markets open with other adopters, but enduring higher production costs) or greater than the benefits from not joining (closed trade markets, but no change in production costs). In addition, we use the recent departure of the UK from the EU to examine if the reduced size of the EU might affect other countries from participating in their policy.