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FOOD SAFETY REGULATION, PRODUCT PRICING, AND PROFITABILITY: THE CASE OF HACCP

William Nganje, Michael A. Mazzocco and Floyd K. McKeith

No 23077, AE Series from North Dakota State University, Department of Agribusiness and Applied Economics

Abstract: This paper assesses the impact of mandatory Hazard Analysis of Critical Control Points (HACCP) regulation on output price for small meat processors and packers and evaluates implications for firm-level profitability. The importance of HACCP regulation and pricing is an issue that deserves in-depth analysis because of its implications for the survival of small firms in the meat industry. To investigate this issue a survey was sent to meat processors and packers in the United States to collect data on HACCP expenses, output price before and after HACCP implementation, and inputs prices and quantities. Although output price did not increase significantly to compensate for HACCP expenses, analysis of the translog profit function revealed that small firms were more profitable after HACCP implementation. Other than price increase, these results suggest that HACCP provide incentives like reduced product rework to small firms.

Keywords: Food; Consumption/Nutrition/Food; Safety (search for similar items in EconPapers)
Pages: 14
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nddaes:23077

DOI: 10.22004/ag.econ.23077

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