The development of private fresh produce safety standards: implications for developing Mediterranean exporting countries

Integration into global markets offers the potential for more rapid growth and poverty reduction for poorer countries. However, market barriers within advanced economies to agricultural imports have made it harder for developing countries to take full advantage of this opportunity. This article examines the impact of increasing demands for food safety and quality by European food retailers, and how the fundamental structure and culture of supplier organisations required by European retail chains are a major entry barrier for developing Mediterranean fresh produce exporting countries, and for developing countries in general. The long-term solution for such countries to sustain an international demand for their products lies in structural, strategic and procedural initiatives that build up the trust and confidence of importers/retailers in the quality and safety assurance mechanisms for their produce.     

Central American supermarkets’ private standards of quality and safety in procurement of fresh fruits and vegetables

In the context of near-absence of public food safety and quality standards, or the lack of effective implementation of them where they exist, and in order to increase product quality and consistency and differentiate their product from traditional produce retailers, leading supermarket chains in Central America are imposing private standards on their fresh produce suppliers. These are mainly for cosmetic quality, but emerging also are standards for fresh produce safety, in particular for leafy greens and some fruit. They are implementing the private standards at the same time they are cutting costs in order to compete with wetmarkets, via organizational change in the leading chains’ procurement systems (shifting away from use of spot markets and traditional wholesale systems toward centralized purchases and use of implicit contracts and specialized/dedicated wholesalers). They are coupling those changes with some actions to resolve idiosyncratic factor market failures facing farmers such as through provision of technical assistance. The implementation of these private standards of produce safety are good for consumers as they are among the few food safety practices by domestic food industry actors. But the tougher standards are a challenge for producers who need to make significant investments, implying the need for investment assistance and support services by governments. The paper presents field study findings for Costa Rica, Guatemala, El Salvador, Honduras, and Nicaragua from 2002 to 2004.     

Private incentives for adopting food safety and quality assurance

The competitiveness of food companies in national and international markets depends upon their ability to adopt production processes which meet food safety and quality requirements. Food safety and quality assurance affect the cost of carrying out transactions, and therein lies the private incentive for adopting voluntary quality assurance systems. While quality assurance systems have the potential to reduce transaction costs by serving as the seller's guarantee of safety or quality, they may also serve as trade barriers.     

Consumers’ willingness-to-pay for food safety labels in an emerging market: The case of fresh produce in Thailand

Food safety systems in emerging markets are currently facing a transformation period, becoming more stringent because of an increasing demand for safer food. Consequently, policy makers need to find strategies to increase food safety while giving the industry time to improve their performance. In Thailand, policy makers have adopted the strategy of upgrading food safety standards gradually. Government and private food safety brands and labels were introduced onto the market but little is known whether Thai consumers have preferences for them or not. This study is aimed at evaluating Thai consumers’ preferences for food safety labels and brands on fresh produce, using a surveyed based on discrete-choice experiments. A sample of 350 Thai consumers was surveyed in Bangkok and Nonthaburi in 2013. Quota sampling according to the shopping outlets and convenience sampling methods were adopted. Two hundred respondents were recruited at fresh-food markets and 150 respondents were recruited at supermarkets. We found that consumers are willing-to-pay more for both government led food safety label and private brands, but that there is high heterogeneity in their preferences. The high degree of social desirability for food safety labels confirms that food safety labelling policy should be supported. However, the provision of information and credibility are vital in order to mitigate the risk of consumer deception by self-claimed labels.     

Adoption of food safety and quality standards among Chilean raspberry producers – Do smallholders benefit?

The growing importance of food quality and safety standards in international markets is influencing production and marketing conditions of farmers worldwide. The effects of this development on small-scale farmers in developing countries are controversially discussed in the scientific debate. While small-scale farmers may benefit from standard compliance in terms of better market access and technology upgrading, non-compliance may lead to market exclusion and marginalization. The present study aims to identify the factors influencing a certification according to food safety and quality standards and the impact on farm management and income among exportoriented raspberry farmers in Chile. Survey data from 57 certified and 169 non-certified Chilean smallholder raspberry producers is analyzed. The analysis of the certification decision shows that small-scale farmers are less likely to implement food safety and quality standards. Once farmers are able to overcome the barriers and implement a food standard, we find that this has a positive effect on their quality performance and net raspberry income.     

Dis-harmony in European Natural Gas Market(s)—Discussion of Standards and Definitions

The European Union attempts to harmonise the European natural gas market(s). In general, this is supported on national levels. Nevertheless, such harmonisation is not yet fully accomplished: neither for the rules nor for the quality specifications nor for the physical quantities and their units. Even if the current economic impact of such dis-harmony is negligible, i.e. that market participants for the time being do not have to bear additional costs caused by the lack of harmonisation, participants in the commodity market are exposed to contractual risks. Potentially, this might lead to reduced competition and reduced liquidity of each single and the European internal market for natural gas. However, as the costs for a potential harmonisation of European gas markets are estimated to be significant, the dilemma is evident and the ‘political’ solution of the ‘harmonisation problem’ will necessarily deviate from the traders’ one.     

The impact of food safety standards on processed food exports from developing countries

This paper examines the impact of food safety standards on processed food exports in developing countries. A panel data econometric analysis of processed food exports in developing countries was undertaken. The Sanitary and Phytosanitary Standard (SPS) is incorporated into the model to capture the impact of food safety standards. The empirical model shows that food safety standards imposed by developed countries could impede processed food exports from developing countries. This could emerge because practically, SPS is less transparent than tariffs or quotas. There is an ample room for developed countries to tweak the standards stronger than necessary to achieve optimal levels of social protection, and to twist the related testing and certification procedures to make their competing imports more competitive. In addition, limited supply-side capacity of developing countries, especially in terms of resources, manpower as well as institution, constrains the countries to overcome food safety standards. Because of the potential benefits that could emerge from imposing food safety standards such as a reduction in transaction costs and trade friction, developing countries should view SPS not just as a trade barrier but also as an opportunity to upgrade quality standard and market sophistication. Supply-side capacity in developing countries needed to be improved, especially upgrading agriculture sector. Multilateral efforts are also needed to mobilize additional financial and technical assistance to help redress constraints in developing countries in meeting the required food safety standards imposed by developed countries.     

Food and health research in Europe: Structures,gaps and futures

BackgroundFood and health research is concerned with production, marketing, choice, regulation and policy for food as it affects health, and the mechanisms and control of diet-related diseases, nutrition and obesity. It covers positive and negative impacts of food on health, as well as issues related to under and over consumption of food. The European Union-funded study FAHRE (Food and Health Research in Europe) has described structures and identified gaps and needs for food and health research across Europe.MethodsFAHRE was conducted by a consortium of partners in 7 European countries, including private and public research organisations, university-based researchers and civil society organisations. National advisers in 32 European countries made reports on the structures of food and health research, and nine experts made reports on food and health research themes. At the end of this phase, a stakeholder conference was held to review and discuss the findings, and from this a Strategic Document was developed and distributed electronically for wider consultation at national level. This report presents the findings of the Strategic Document.ResultsFAHRE proposed that future research using public funding should address the global issue of unhealthy eating, including obesity, which causes preventable disability and disease, reduced working life and increased healthcare costs. FAHRE suggests a move of the focus of research from healthy food to healthy eating, and to overcome the existing separation between food research and health research through a shift of research towards food for health.EU member states have widely differing national systems for research management, and information is poorly standardised for comparisons. There are many research programmes in both food and health, usually managed by ministries of science, but rarely in collaboration with ministries of health. Industry mainly contributes ‘near product’ research: few industry small and medium enterprises are engaged with food and health research, nor are civil society organisations. EU food and health research has been focused within the agriculture research theme, and not sufficiently linked to health research.FAHRE recommends coordination of food and health research through an EU-level Coordinating Agency, with budget and representation from the three EU directorates Agriculture, Health and Research, the member states, and wider stakeholders including civil society and industry. There should be corresponding ‘food and health research agencies’ in the member states bringing together national policy-makers and stakeholders, and directing research funding. Food safety agencies may provide a model for this joint approach. Further proposals include strengthening social and policy research, accessing Structural Funds for research programmes, and more strategic approaches to determining research programmes and funding.ConclusionFood and health research in Europe should move from ‘healthy food’, which concentrates on food as a product, to research for ‘healthy eating’ which is concerned with appropriate intake and reducing disease. Coordination of research on this theme, at European level, and between member states, could deliver major economic and social returns.     

Strategic planning in a turbulent environment: evidence from the oil majors

The long‐running debate between the ‘rational design’ and ‘emergent process’ schools of strategy formation has involved caricatures of firms' strategic planning processes, but little empirical evidence of whether and how companies plan. Despite the presumption that environmental turbulence renders conventional strategic planning all but impossible, the evidence from the corporate sector suggests that reports of the demise of strategic planning are greatly exaggerated. The goal of this paper is to fill this empirical gap by describing the characteristics of the strategic planning systems of multinational, multibusiness companies faced with volatile, unpredictable business environments. In‐depth case studies of the planning systems of eight of the world's largest oil companies identified fundamental changes in the nature and role of strategic planning since the end of the 1970s. The findings point to a possible reconciliation of ‘design’ and ‘process’ approaches to strategy formulation. The study pointed to a process of planned emergence in which strategic planning systems provided a mechanism for coordinating decentralized strategy formulation within a structure of demanding performance targets and clear corporate guidelines. The study shows that these planning systems fostered adaptation and responsiveness, but showed limited innovation and analytical sophistication. Copyright © 2003 John Wiley & Sons, Ltd.     

An industry viewpoint on the role of farm assurance in delivering food safety to the consumer: The case of the dairy sector of England and Wales

Food safety, alongside food quality, remains a primary concern of both consumers and those along the whole food supply chain, leading to regulation by government alongside private third party certification. Much has been written about the value of these systems primarily from the perception of the consumer. This paper reports on a study that examined industry perceptions on the regulatory and assurance systems within the dairy sector of England and Wales. It found that the primary producer found value in both systems, although from a food hygiene focus regulation was seen to be more rigorous. Other stakeholders along the dairy food supply chain saw the assurance scheme as more rigorous. All stakeholders recognised the need to reduce duplication in delivering food safety through combining key elements of both systems with the added potential for better communication of both food safety and quality to the final consumer.     

The possibility of price umbrellas in Canadian manufacturing industries

The paper looks for evidence of ‘price umbrelias’ within Canadian manufacturing industries. Price umbrellas occur when relatively low-cost firms, trading-off market share against profit margins, set a price high enough to allow relatively high-cost firms to remain in business (the latter have an ‘umbrella’ held over them). The disaggregated data appear to show (1) that there are significant differences in average costs between the plants within an industry, (2) that the marginal costs of the low-cost plants are non-increasing with output. Together, these findings imply that output could be transferred from high- to low-cost plants with a reduction in total-industry costs, consistent with the existence of price umbrellas. The numbers are quite large.     

Search Costs and Investment in Quality

In this paper we analyze how lower search costs affect firms' incentives to invest in quality. We identify two conflicting effects. On the one hand, lower search costs increase incentives to invest in quality by eroding the market share of low quality firms and increasing the market share of high quality firms. On the other hand, by intensifying price competition, lower search costs adversely affect high quality firms more than low quality firms. The net effect of a change in the search cost on quality is shown to depend on the initial quality distribution. There is a critical value such that, if the proportion of high quality firms is initially below this value, lower search costs increase this proportion, whereas if the initial quality is above this value, lower search cost decreases the proportion of high quality firms. We show that our results are consistent with a ‘superstar effect.’     

A ‘Common Food Policy’ for Europe: How governance reforms can spark a shift to healthy diets and sustainable food systems

More than half of adults in the European Union (EU) are now either overweight or obese (53%). Non-communicable diseases (NCDs), many of which are diet-related, account for 70% of mortality in Europe and a growing share of healthcare costs. While eating habits have an important role to play in NCD prevention, consumption patterns across the EU are diverging significantly from recommended diets. There is growing consensus on the solution: a series of coordinated and wide-ranging policy interventions to build healthy ‘food environments’.This article argues that EU governance structures remain ill-adapted to the systemic nature of this and other challenges in food systems (e.g. climate change, biodiversity loss, food poverty): conflicting objectives and missed synergies are identified between different policy areas (agriculture, trade, health, environment, etc.) and between different levels of governance (EU, national, local). An integrated food policy framework – a ‘Common Food Policy’ – is therefore required to meet the EU’s public health and sustainability objectives. It identifies four distinct aspects of the governance shift required to promote healthy diets and build sustainable food systems in Europe: (i) coherence across policy areas; (ii) coherence across governance levels; (iii) governance for transition; and (iv) food democracy. Blueprints for a Common Food Policy are already emerging, and are ripe for consideration, development, and implementation by the European institutions.     

Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods too Low?

We analyse an oligopoly model incorporating horizontal differentiation and quality differences. High quality goods are overpriced and underproduced. When the market is fairly well covered, low quality products may be profitable when their net social contribution is negative, implying excessive entry. In a relatively uncovered market, even low quality goods are underproduced and there may be underentry. When fixed costs are independent of quality, the market tends to select the right firms. Otherwise, the market may produce low quality products when it should produce high quality ones. The model is calibrated using market data for yoghurt.     

Private food safety and quality standards for fresh produce exporters: The case of Hortico Agrisystems,Zimbabwe

There is evidence that the challenges of complying with stricter food safety and quality standards are acting to exclude small-scale producers from export supply chains for high-value agricultural products. The case of Hortico Agrisystems illustrates the considerable challenges and costs faced by supermarket suppliers in sourcing from a broad base of small-scale producers in the context of evolving food safety and quality standards. While small-scale producers are able to achieve levels of compliance at least equal to those of large-scale producers, multi-tiered and dynamic systems of control are required to maintain control. These need to include measures that facilitate compliance, incentives to reward good performance and penalties to punish non-compliance. In establishing a sustainable supply system in this context, both exporters and small-scale producers face a steep learning curve in adjusting to new requirements, further emphasising the need for supply chains to be responsive to change.     

Private voluntary standards in the food system: The perspective of major food retailers in OECD countries

The paper examines the main economic and institutional incentives which have driven major OECD food retailers in their use of private voluntary standards and discusses their growing role in shaping the agri-food system. It is based on interviews with quality and safety directors of major OECD retailers and a brief survey of retailers’ actual buyer practices. Though not all retailers are included, these firms account for over 70% of retail food sales in OECD countries. We find that the growing voice of civil society, changing legal and institutional frameworks, increased market concentration and buying power as well as their integration with financial markets has provided the setting for development of private standards. While food safety and quality standards are seen as key to maintaining and improving reputation as well as against legal liabilities, additional standards such as labour, environmental and animal welfare are also gaining ground as strategies for customer loyalty and market shares. The grass-roots retailer move in the harmonization of food safety standards is seen as an initial step towards a global approach to managing the food system, with harmonization of other standards likely in the future. Given their buyer power, these developments can be viewed as a way of governing the food system and will be important for both OECD and non-OECD food and agricultural sector evolution in the coming years.     

Differentiation strategies in ‘stalemate industries’

Empirical studies conducted at the Institut de Recherche de l'Entreprise (Lyon, France) show that, in ‘stalemate industries’ (cf. the BCG's typology, 1981), differentiation strategies are effective and profitable alternatives to the usual strategic recommendations. The knowledge of customers' behavior shows up several opportunities for differentiation, hidden by some kind of ‘strategic presbyopia’. Total quality or ‘zero default’ strategy (product quality regularity, punctuality of deliveries, quick response to unexpected orders, quick and correct answers to requests, short delivery times) is the major opportunity for differentiation. Such strategies are compatible with a low-cost position; excellent companies which succeeded in building this ‘total advantage’ (diferentiation + low cost) over their competitors enjoy the highest market share growth and profitability.     

Direct intervention or indirect support? The effects of cooperative control measures on farmers’ implementation of quality and safety standards

In recent years, labor-intensive agricultural products from developing countries have exhibited inferior performance in international trade due to quality and safety incidents, among which pesticide residue is a major issue. Aiming to improve food quality and safety in the context of cooperatives, we introduced three categories of control measures: outcome control, process control and social control. Based on the Pre-Harvest Interval Standard (PHIS), we selected three indices, farmers’ implementation rate of PHIS, absolute distance to PHIS and relative distance to PHIS, to evaluate appropriateness of pesticides use, reduction of pesticide residue and safety improvements of agricultural products. By using random sampling survey data, we empirically analyzed the marginal effects of control measures and their combinations on food quality and safety standards. The empirical results show that implementing process control, namely, unified production standards or supply of unified agricultural inputs, can comprehensively improve farmers’ implementation rate of PHIS, absolute distance and relative distance to PHIS respectively by 34.9%, 3.2 days and 46.0% on average. While the effects of outcome control (safety inspection) and social control (bonus-penalty incentive or training) are restricted to other measures. Therefore, we suggest cooperatives should take farmers’ features, implementation conditions and the effects of control measures into consideration in order to make a sustainable management plan for improving food quality and safety and enhancing competitiveness in international markets.     

Public–private partnerships and collective action in high value fruit and vegetable supply chains

Accessing developed country food markets entails meeting stringent food safety requirements. Food retailers impose protocols relating to pesticide residues, field and pack house operations, and traceability. To enable smallholders to remain competitive in such a system, new institutional arrangements are required. In particular, public–private partnerships can play a key role in creating farm to fork linkages that can satisfy market demands for food safety, while retaining smallholders in the supply chain. Furthermore, organized producer groups monitoring their own food safety standards through collective action often become attractive to buyers who are looking for ways to ensure traceability and reduce transaction costs. This paper compares the ways in which small producers of fruits and vegetables in Kenya and India have coped with increased demands for food safety from their main export markets.     

A transaction costs theory of equity joint ventures

This paper presents a transaction costs theory of equity joint ventures. It distinguishes between ‘scale’ and ‘link’ JVs. Scale JVs arise when parents seek to internalize a failing market, but indivisibilities due to scale or scope economies make full ownership of the relevant assets inefficient. Link JVs result from the simultaneous failing of the markets for the services of two or more assets whenever these assets are firm-specific public goods, and acquisition of the firm holding them would entail significant management costs.