Estimating The Cost Of Food Safety Regulations To The New Zealand Seafood Industry

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.