2005, Volume 13, Paper 10

ISSN:1883-5675

Estimating the Cost of Food Safety Regulation to the New Zealand Seafood Industry

Kay Cao – Department of Economics, Waikato University Management School, New Zealand
Oswin Maurer – School of Economics and Management, Free University of Bozen – Bolzano, Italy
Frank Scrimgeour –  Department of Economics, Waikato Univeristy Management School, New Zealand
Chris Dake –  Systmes Modelling, AgResearch Ltd, Ruakura Research Centre, New Zealand

Abstract

In New Zealand, the Animal Products Act (1999) required all animal product processing businesses to have a Hazard Analysis and Critical Control Points (HACCP) based
Risk Management Program (RMP) by the end of 2002. The purpose of the Act is to manage food safety risks and to facilitate overseas market access. However the new
regulation will potentially bring costs to businesses. This paper attempts to measure the effects of RMP requirements on the variable cost of production of the New Zealand
seafood industry. Using the framework developed by Antle (2000), a cost function is estimated using census of production data from 1929 to 1998. Results show that variable
costs could increase from 2 percent to 22 percent or from 2 cents to 19 cents per kilogram.

Key words: HACCP/RMP, compliance costs, seafood

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