The Economic Implications of Using HACCP as a Food Safety Regulatory Standard

Science is identifying new food-borne pathogens and understanding their potential for serious consequences. Meanwhile, demand for safer food is growing, as consumers become more affluent, live longer, and better understand the links between diet and health. Additionally, trade in food products is a larger source of supply in may countries as both technical and trade barriers to food trade are reduced, and this can introduce new sources of risk into the food supply. To ensure the safety of the food supply, many governments are mandating the use of Hazard Analysis and Critical Control Point (HACCP) systems in food industries. This paper explores the controversies of mandated imposition of HACCP by examining the economic implications of using HACCP in food safety regulation. Disciplines Agricultural and Resource Economics | Agricultural Economics | Economics | Public Policy This article is available at Iowa State University Digital Repository: http://lib.dr.iastate.edu/card_workingpapers/258 Forthcoming in Food Policy. The Economic Implications of Using HACCP as a Food Safety Regulatory Standard By Laurian J. Unnevehr and Helen H. Jensen 1 (Revised December 15, 1998) The authors are Professor, Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, and Professor, Economics, Iowa State University. Senior authorship is shared. This work is supported in part by a grant from the USDA’s National Research Initiative (CSREES 96-35400-3750). The Economic Implications of Using HACCP as a Food Safety Regulatory Standard Several trends are bringing greater attention to food safety regulation in many countries. Science is identifying new foodborne pathogens and understanding their potential for serious consequences. Demand for safer food is growing as consumers become more affluent, live longer, and better understand the links between diet and health. The proportion of food obtained from food services is increasing, even in middle income countries, and this reduces consumer control over food handling and preparation. International trade in food products is a larger source of supply in many countries as both technical and trade barriers to food trade are reduced, and this can introduce new sources of risk into the food supply. These trends converge to create both public and private demand for greater food safety. At the same time, governments everywhere are trying to make more efficient use of public resources. Private markets often fail to provide for adequate food safety because the safety is not readily apparent to consumers and it is often very costly to test for the safety of product. Furthermore, producers or retailers may not be able to ascertain or certify the safety of foods given the wide array of microbial agents and their potential for hazard. Without the ability to fully capture returns to costly control of product hazard, firms lack incentive to implement controls for food safety. As a result, many governments are taking a new approach to ensuring the safety of the food supply: mandated use of the Hazard Analysis Critical Control Point (HACCP) system in food industries. Such a system focusses on verifiable control of the process. For example, the European Union Directive 93/43, effective in December 1995, requires food companies to implement HACCP (Grijspaardt-Vink, 1995). In the United States, HACCP was mandated