A new study on the effects of the Food Safety Modernization Act concludes domestic producers and larger growers will enjoy economic advantages over foreign suppliers and regulated smaller growers in the U.S.
Published online at the Applied Economic Perspectives and Policy website, the “Economic Effects of the U.S. Food Safety Modernization Act” was written by John Bovay of the University of Connecticut and others.
Bovay used the fresh tomato industry as a case study into the FSMA. The research looks at the effect of regulations on large and small growers, and considered why some suppliers will benefit more than others.
Plus and minus
“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,” according to a summary of the research.
The Foreign Supplier Verification Program requires importers to verify that their suppliers are fully compliant with food safety rules, while the authors said intermediaries involved in distributing U.S.-grown or -processed food don’t need that verification.
The study said the likely effect will be to increase the cost and price of foreign-produced food, compared with U.S.-grown food — even if foreign growers have already adopted good agricultural practices.
The size of growing operation matters, according to the study.
“Among fully regulated growers, large growers will benefit relative to small growers,” the summary said, noting that larger firms generally adopted food safety standards sooner than small outfits.
“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.”
Exemptions from food safety regulations were also studied.
All farms that sell less than $25,000 in fresh produce will be fully exempt from the produce safety rule. Besides that, farms that have $500,000 or less in annual revenue from sales of produce and other food may qualify for a partial exemption.
The researchers estimated that among U.S. tomato growers, 73% have total produce sales less than $25,000, and that another 7% qualify for a partial exemption. according the to the study.
“When FSMA is implemented, the marginal cost of producing fresh tomatoes will increase, except on farms exempt from the Produce Safety Rule,” the authors said.
Cost pressure as a result of the food safety regulations may result in farms either expanding to gain cost efficiencies or contracting to qualify for an exemption, according to the study.
The authors questioned whether small operations will be motivated by buyers to implement food safety regulations.
“We anticipate that buyers will be indifferent about the implementation of the on-farm food-safety practices required by FSMA,” the study said.
The focus of new food safety regulations is to prevent contamination rather than merely respond to it, and Bovay said in the release that the results so far are mixed, calling the regulations more “Band-Aid than a cure-all.”
“FSMA will reduce the number of food-borne illness cases by some unknown amount,” he said. “Even if FSMA is effective, because it is similar to many private and state rules and regulations already in place, I don’t have a lot of confidence that this is going to drastically diminish the number of illnesses.”