John Bovay and Dan Sumner Show Long-Run Market Effects of the Food Safety Modernization Act in the journal Applied Economics Perspectives and Policy
Oct. 17, 2018
Published in the September 2018 issued of Applied Economic Perspectives and Policy is "Economic Effects of the U.S. Food Safety Modernization Act," by John Bovay, University of Connecticut assistant professor and UC Davis ARE Ph.D. alumnus, and Daniel A. Sumner, ARE Frank H. Buck, Jr., distinguished professor and director of the UC Agricultural Issues Center.
The Food Safety Modernization Act (FSMA) substantially expands the authority of the U.S. Food and Drug Administration to regulate fresh produce marketed in the United States. This article uses an equilibrium-displacement framework incorporating stochastic food-borne illness outbreaks to simulate long-run market effects of FSMA using the North American fresh-tomato industry as a case study. We demonstrate how, under FSMA, certain categories of suppliers will gain advantage over others. Growers and suppliers within the United States, and their buyers, are likely to gain relative to foreign producers and importers because FSMA imposes specific requirements for importers. Among fully regulated growers, large growers will benefit relative to small growers. Many producers have already adopted food-safety standards that closely resemble the FSMA rules, and the cost of implementing the FSMA requirements for these producers will be much lower than for other producers.
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