COMPARATIVE PRODUCER COSTS OF GAP AND GHP STANDARDS: CAN THE PLAYING FIELD BE MADE LEVEL?

A number of microbial contamination incidents have continued to raise questions regarding the safety of the U.S. food supply with calls for improved food safety control initiatives and standards by both the private and public sectors. As a reaction to these incidents, there have been increased efforts to enhance food safety by the government and industry groups. Increasingly, process standards are being specified that recommend or prescribe Good Agricultural Practices (GAP) standards for production, Good Handling Practices (GHP) standards for handling products, and Good Management Practices (GMP) for responsibilities in overseeing production and handling operations. A primary concern is the potential that the costs associated with implementing food safety related standards will prohibit small producers and handlers from taking part in certain market segments, such as supplying the supermarkets that sell most of the production in developed and more advanced developing countries. Previous study results are presented that suggest economies of scale effects for larger farm size operations leading to lower per-unit compliance cost. This analysis utilized specialty crop representative farm stochastic simulation models that were designed to analyze the impacts of current and changing market conditions and government policies on a number of key operating variables (KOV). The results of the analysis provide an initial indication that the cost associated with compliance to regulatory standards does have an effect on the profitability of individual enterprises