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Industry Compliance Costs: What Would They Look Like in a Risk-Based Integrated Food System?

Current policies designed to improve food safety rely on regulation and market incentives. However, the mix of both private and public incentives to improve food safety and the dynamics of industry response to regulation make analysis of the costs of food safety complex. The paper provides an overview of costs of food safety regulation and control in recent literature for both pesticide and microbial controls and draws lessons for identifying cost-effective food safety approaches. Four lessons emerge concerning industry compliance costs. First, the distribution of costs is likely to be more important than market price effects. Second, regulation has an impact on long-run incentives to invest in new technologies or inputs and therefore may bias the nature of productivity growth. Third, an analysis of costs informs the choice among regulatory alternatives; allowing market adjustments to mitigate costs and improving upon existing market incentives is likely to be the most effective ways to reach public health goals. And fourth, a risk-based systems approach can be the best way to understand the costs, incentives, and risk outcomes resulting from alternative interventions. However this approach is made difficult by patchwork regulatory authority across the food chain and lack of data required for risk assessment.

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Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 01-wp278.

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Date of creation: Jun 2001
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Handle: RePEc:ias:cpaper:01-wp278
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  1. Hayes, Dermot J. & Jensen, Helen H. & Backstrom, Lennart & Fabiosa, Jacinto F., 2001. "Economic Impact Of A Ban On The Use Of Over The Counter Antibiotics In U.S. Swine Rations," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(01).
  2. Jensen, Helen H. & Roberts, T. & Unnevehr, Laurian J., 1995. "Tracking Foodborne Pathogens from Farm to Table: Data Needs to Evaluate Control Options," Staff General Research Papers 10440, Iowa State University, Department of Economics.
  3. Laurian J. Unnevehr & Helen H. Jensen, 1996. "HACCP as a Regulatory Innovation to Improve Food Safety in the Meat Industry," Center for Agricultural and Rural Development (CARD) Publications 96-wp152, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  4. Ing-Marie Gren, 1994. "Cost efficient pesticide reductions: A study of Sweden," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(3), pages 279-293, June.
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