采用食品安全的私人激励和质量保证

,a,*,c,a,b,c,Food Policy 24 (1999) 669683/locate/foodpolPrivate incentives for adopting food safety andquality assurance,Erin Holleran, Maury E. Bredahl b, Lokman Zaibet,Department of Agricultural Economics, University of Missouri, 200 Mumford Hall, Columbia, MO65211, USACenter for International Trade Studies, Department of Agricultural Economics, University ofMissouri, 200 Mumford Hall, Columbia, MO 65211, USADepartment of Agricultural Economics, Sultan Qaboos University, Sultanate of OmanAbstractThe competitiveness of food companies in national and international markets depends upontheir 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 liesthe private incentive for adopting voluntary quality assurance systems. While quality assurancesystems have the potential to reduce transaction costs by serving as the sellers guarantee ofsafety or quality, they may also serve as trade barriers. 1999 Elsevier Science Ltd. Allrights reserved.Keywords: ISO 9000; Transaction costs; Trade barriers; Quality system; Food safetyIntroductionGovernments enact and administratively determine ex ante national-level foodlegislation and technical requirements for food processing, handling and productionprocesses, as well as ex post product liability law. These food safety technicalrequirements and liability laws are, of course, incentives for rms to adopt appropri-ate production processes and methods. In addition to the incentives driven by foodand liability law, private incentives drive rms to move beyond adopting approvedpractices that meet technical requirements towards adopting quality assurance prac-* Corresponding author. Tel.: +1-573-882-2299; fax: +1-573-882-3958.E-mail address: (E. Holleran)0306-9192/99/$ - see front matter 1999 Elsevier Science Ltd. All rights reserved.PII: S 0 3 0 6 - 9 1 9 2 ( 9 9 ) 0 0 0 7 1 - 8,670,E. Holleran et al. / Food Policy 24 (1999) 669683,tices and systems, such as Total Quality Management, ISO 9000, farm assurancesystems and proprietary product quality systems. These quality assurance pro-grammes are designed to assure customers that agreed-upon (contractual) productcharacteristics and/or production processes are consistently delivered. Between con-tracting parties, sellers and buyers, technical requirements and contractual arrange-ments dene ex ante expectations and the quality assurance system assures ex postthat agreed-upon characteristics and attributes are produced.,The philosophies underlying technical regulations and food law vary across coun-tries. In some countries the basis for technical regulations and food law is a negativelist; products are generally regarded as safe, unless proved harmful and placed ona negative list. In other countries, a product cannot be sold unless it rst appears onthe approved positive list. But, regardless of the variation in the conceptual frame-work for food safety law, food quality and safety assurance can be based on similarnorms and standards.,Transaction costs represent the framework to analyse the benets and costs offood quality standards. Transaction costs arise from uncertainty regarding food qual-ity attributes and the costs vary depending on factors such as product differentiationand rm size. Higher transaction costs imply greater incentive to implement qual-ity systems.,Food safety and food quality assurance are forms of guarantees. Safety is denedas the condition of being safe from undergoing or causing hurt, injury or loss(Websters Ninth New Collegiate Dictionary, 1990). The assurance of food safetyis a guarantee that the food is safe from causing harm. Quality, on the other hand,is not an absolute and is dened as meeting agreed-upon requirements. The assuranceof quality is a guarantee that agreed-upon specications have been met. If safety-related specications are included in the quality assurance system, then the assuranceof quality encompasses safety. Quality and safety attributes in foodstuffs can bedifcult to identify and observe. Akerloff argued that information asymmetrybetween buyers and sellers complicates the buyers problem of identifying quality,asserting that guarantees in an institutional form (e.g., quality assurance standards)were necessary to counteract the effects of quality identication and uncertainty(Akerloff, 1970). The papers rst section identies and discusses the characteristicsof several food quality assurance systems.,The contractual denition of quality focuses on the transaction between the buyerand the seller. Quality and food safety assurance affect the cost of carrying outtransactions, and therein lies the private incentive for adopting voluntary food qualityassurance programmes. Transaction costs are the costs of undertaking an exchangebetween buyers and sellers, including the monitoring and enforcement costs. Suchcosts are directly affected by, and may often be increased by, food safety regulations,product liability law and customer requirements. Quality assurance systems, such asthe ISO 9000 Quality Assurance Standards, can mitigate transaction costs in severalways that are discussed in the second section of this paper. Quality assurance systemscan directly affect the costs, prices and prots of rms, serving as a private incentivefor adopting a quality system. The second section discusses and illustrates transactioncosts within the context of quality and food safety assurance.,671,E. Holleran et al. / Food Policy 24 (1999) 669683,The third section analyses the private, internal and external incentives for qualityassurance system adoption. Internal incentives include the costs and benets directlyassociated with a rms operational processes affected by adoption. External incen-tives are related largely to the reduction of transaction costs. The paper concludesby drawing some implications for the economic performance of the food sector andfor the impacts of quality assurance systems on international food trade.,Quality assurance systems,Quality assurance systems are designed to assure customers that contracted productcharacteristics and/or production processes are consistently delivered. They play anessential role in an exchange because food safety and quality attributes may not bedirectly observable.,Food safety and quality assurance systems can take many forms: (1) private volun-tary international quality assurance standards, such as ISO 9000; (2) national farm-level assurance systems, such as Farm Assured British Pigs; and (3) proprietaryquality assurance systems, such as those maintained by the large retail food chainsin the United Kingdom (UK). Albeit with differing origins, quality assurance systemsshare two common features: (1) a reliance on documentation of production processesand practices and (2) third-party auditing and certication.,Private voluntary international standards,Voluntary quality assurance standards, such as ISO 9000, are internationallyaccepted procedures and guides initiated in order to maintain consistent quality(Zaibet, 1995). ISO 9000 certication ensures a consistent production process. “Theoutput of an ISO 9000 certied company reects the standards that have been setwithin that company ISO 9000 denes a quality framework within which a certi-ed company operates” (Stringer, 1994, p. 478). The ISO 9000 standards comprisethree basic standards. ISO 9001, the most comprehensive, encompasses design,development, production, installation and servicing. ISO 9002 guides the develop-ment of a quality management system when design control is not a requirement. ISO9003, the least comprehensive, addresses only nal inspection and testing. In allcases, ISO 9000 certication requires a third-party audit. The auditing agency evalu-ates the integrity of the documented production process by reviewing the qualitysystem in practice.,Attaining ISO 9000 certication can benet a rm internally because the docu-mentation of production processes can tighten production and management practices,thereby reducing cost and inefciency. Additionally, certication communicates toexternal parties that a rm has a documented quality management system in place,and in this way can affect transaction costs such as search costs. Mazzocco notes“the certication mechanism lowers search costs for purchasing materials and ser-vices as well as lowering marketing/sales costs in communicating the nature of thequality management system in place” (Mazzocco, 1996, p. 771). Certication miti-,672,E. Holleran et al. / Food Policy 24 (1999) 669683,gates some of the hazards of an exchange by guaranteeing the consistency of theproduction process and may play an important role in a due diligence legal defence.Legally, due diligence is a relative term which “means doing everything reasonable,but not everything possible” (Words and Phrases, 1965, p. 141).,National assurance systems,A host of national quality assurance systems have become increasingly popularin the European Union (EU) following the linkage of Mad Cow disease to the humanvariant of the disease. In contrast to ISO 9000 and other rm-specic quality andsafety assurance systems, national assurance systems assure consumers that the pro-ducts of a nations farms are produced in a prescribed manner. Often these systemsprescribe production practices from the farm level to the retail level, including trans-portation and storage. In common with other quality and food safety assurance sys-tems, these systems require a third-party audit for certication and continued com-pliance with the system.,At the margin, systems vary across countries, but most are intended to providetraceability of a raw input from the farm to processing and retail level. Informationabout the quality assurance system ows through to the nal consumer in the formof a label. All national, farm-level systems allow product packages to bear a nationallabel, thereby assuring consumers that the product was produced in that nation.Beyond that common element, the production and processing practices reectnational norms and cultures. For example, the strength of the concern for animalwelfare interests in the UK is reected in the production practices allowed at thefarm and processing level. The Farm Assured British Pigs system species practicesleading to the humane treatment of animals at all levels of the supply chain.Like voluntary international quality assurance systems, national farm assurancesystems communicate information about the consistency of production practices.Transaction costs are often reduced since buyers do not need to audit productionpractices of suppliers as often, if at all. In some instances, buyers restrict approvedsuppliers to those certicated to a national quality assurance system.,Proprietary systems,Proprietary quality assurance systems, such as the national retailer quality assur-ance systems in the UK, specify retailers unique safety and quality requirements.Five national retailers dominate the UK market, competing on the basis of productdifferentiation. UK retailers provide customers with branded products, as well asown label products that carry the retailers name or the retailers unique brand.Retailers promote customer loyalty through own-label products, which represent 30%to 100% of the UK retailers stock. “Sainsbury a UK retailer brands are trustedby consumers and generate signicant levels of brand loyalty” (Cotterill, 1997, p.125). Thus, proprietary systems, in common with the national farm-level assurancesystems, impart quality system information with the nal consumer in the form ofa product label. And, labels are a key source of information for consumers.,673,E. Holleran et al. / Food Policy 24 (1999) 669683,UK retailers work closely with their suppliers to monitor and ensure contract speci-cation compliance. Retailers only purchase from a list of approved suppliers thatadhere to their specic, supplier retailer quality assurance systems (RQAs). Not onlydoes the use of supplier lists reduce supplier search costs, but the approved supplierlists and requirements of the proprietary quality systems are important elements ofmeeting legal requirements of food safety law.,Sainsbury, Tesco and other UK retailers want to ensure that their supplies consist-ently meet product specications since the integrity of the supplies is a fundamentalpart of a due diligence defence in the UK. Under the UKs 1990 Food Safety Act(FSA), “buyers must now show that they have exercised due diligence been proac-tive in ensuring that not only the food they handle directly but also the food theyreceive from suppliers conforms to the provisions of the” FSA (Hobbs and Kerr,1992, p. 577). Given that retailers outsource many of their ingredients and products,they are vulnerable to opportunism inherent in rms that rely on outsourcing. TheRQAs establish a standard to facilitate buyerseller exchanges and to mitigate foodsafety concerns. The RQAs are a form of guarantee that agreed-upon requirementshave been met.,From a UK perspective, the RQAs are designed to ensure a consistent quality ofsupplies and to provide traceability. Many of the British RQAs, such as SainsburysProduct Management System, closely resemble the elements of ISO 9000. In prac-tice, the RQAs shift some of the food safety costs away from the retailers to thesuppliers. For example, Sainsburys RQA requires regular audits, self-audits, labora-tory testing, personal hygiene and foreign-body management, among others. All ofthese requirements have costs associated with them.,UK retailers have acquired signicant market power relative to retailers in otherEU countries and in the United States (US). Because of the UK retailers marketpower, RQAs become, in effect, standard business practice for suppliers. A qualitysystem, such as an RQA, becomes standard business practice when most rms in aconcentrated buying sector require the system.,Role in mitigating costs,Adoption of the various quality assurance systems can play a role in mitigatingcosts in the food chain. In the short run, rms incur sunk costs (e.g., start-up costs)related to adoption of the quality system. These sunk costs will, of course, varydepending on rm size, product type and existing quality system. There is also anapparent desire to shift the costs of quality control to others in the chain. For example,customers (e.g., UK retailers) shift some of the costs of quality assurance on to theirsuppliers by requiring them to have a particular quality system certication. By shift-ing their costs, the customers expect to experience a decline in costs.,When a supplier adopts a particular quality system because of a customer require-ment, the expectation is that the action will result in improved market access. Atthe same time, costs may also decrease for the supplier due to a decline in productioncosts and an increase in product quality, both of which may be a direct result ofquality system adoption. Bredahl and Zaibet (1995) noted that the suppliers they,674,E. Holleran et al. / Food Policy 24 (1999) 669683,interviewed “maintained that their costs fell when they adopted a quality system,in some cases signicantly, and that their costs had not increased” (Bredahl andZaibet, 1995, p. 31). Therefore, “the cost of monitoring quality declines for thepurchaser customer, while the cost of supplying the agreed level of quality hasdeclined for the seller supplier” (Bredahl and Zaibet, 1995, p. 31). Thus, qualitysystem adoption may lead to a shift in costs for customers, and may also lead toreduced costs for rms (suppliers) that adopt the quality system to satisfy customerrequirements, in addition to reduced costs for rms that adopt the quality system toimprove operational efciency. Some of the reduction in costs may be associatedwith a rms operational processes, while some of the reduction in costs may beassociated with the costs of the buyerseller transaction.,Transaction costs,Transaction costs are the costs of undertaking an exchange between a customer(buyer) and a supplier (seller). They consist of the informational search costs, thenegotiation costs and the monitoring/enforcement costs of undertaking an exchange.Transaction costs encompass all aspects of the contractual relationship between thecustomers and suppliers (Hobbs, 1996).,Originally an explanation for the scale and scope of the rm, the concept of trans-action costs has been used to analyse a variety of economic relationships includingcontractual relationships (Shelanski and Klein, 1995). Transaction cost analysis isuseful because it focuses on how buyers and sellers protect themselves from thehazards of an exchange. How does a customer ensure a product has been producedin the manner the supplier claims? Clearly, resources are required to dene andenforce exchange (contractual) agreements (North, 1991). There are costs attachedto operating in the market in addition to production costs which Coase posited weretransaction costs (Coase, 1960).,Transaction costs are difcult to measure (Hobbs, 1995). That said, one can con-ceptualize the costs associated with identifying and approving competent suppliersof foodstuffs. Once the potential suppliers are identied, their production systemsneed to be audited and their products and processes evaluated. These supplier searchcosts are transaction costs. Institutions such as ISO 9000 quality assurance systemsmitigate transaction costs by offering a guarantee of a rms production process,thereby mitigating some of the hazards of the exchange. Quality systems serve asa mechanism of communication between buyers and sellers, reducing the buyersuncertainty of a p