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Exploring alternative approaches to traditional modes of regulation

Project Code: D03004

31/07/2006

Centre for Food Chain Research, Imperial College London
Fearne, A ; Garcia, M;
Department of Agricultural Economics and Business, University of Guelph
Henson, S;
School of Natural and Rural Systems Management, University of Queensland
Khatri, Y;
Department of Resource Economics, University of Massachusetts
Caswell, J

Public concern about food safety is placing increasing pressure on government agencies to be more prescriptive and proactive in their regulation of the food industry. However, given the scarcity of public sector resources, concerns about the impact of regulation on competitiveness and the scale of the task at hand, there is growing interest in alternative approaches to traditional modes of regulation of food safety.

The need for more efficient and more effective regulation and the use of alternative mechanisms to direct public intervention to protect consumers is of particular relevance to the FSA in order to achieve the targets set in its strategic plan for 2005-2010. How the FSA can best protect consumers in a changing world is the subject of a current review of the objectives and principles of regulatory decision-making in the FSA. The review aims to address the factors that the FSA should take into account in deciding whether to intervene, what sort of intervention is appropriate in what circumstances, and how the FSA might ensure an equitable solution while ensuring that the interest of all consumers are protected (Food Standards Agency, 2004a).

To assist the FSA in this process, the present study was commissioned by the FSA in January 2005 to explore collaborative approaches to food safety in the UK in order to improve the efficiency and effectiveness of food safety programmes. The study aims to contribute to the current debate on the role that government and industry might have in providing for an effective food safety control system, while ensuring that actors along the food supply chain benefit from the potential efficiency gains when the responsibility for protecting consumers from food-borne illnesses is shared between the public and private sectors.

The potential benefits of co-regulation of food safety are self-evident; coercion can breed minimalist approaches to compliance resulting in sub-optimal improvements to public health alongside significant expenditure of resources on enforcement and monitoring. Indeed, regulatory action often demonstrates rather high rates of non-compliance. However, co-regulation remains a relatively new concept in most parts of the world. A lack of trust among actors in the food chain and perceived risks associated with allowing market forces to play a role in the regulation of food safety are factors that limit a closer coordination of private and public resources in the control of food safety. Moreover, there are significant challenges in formulating food safety policies that reflect private and social benefits and costs; private and social interests are often distinct and an efficient food safety control system from a private business perspective may not yield socially-efficient outcomes. However, the need for more efficient and effective regulation is of particular relevance to food safety regulators at a time of increased demand alongside acute resource constraints.

This study presents a diagnostic framework for food safety governance by identifying the contexts where private regulations and standards could be the most efficient and effective mechanism to manage and enhance food safety either in combination with, or as an alternative to, public intervention. The framework has been developed based on a selection of case studies of different approaches to food safety regulation (i.e., public, private and co-regulation) in North America (USA and Canada), Europe (UK) and Australia, where there are distinct differences in the established regulatory processes and industry contexts. Analysis of best practice points to the incentive structures and (regulatory) contexts where co-regulation is most likely to succeed in ensuring safer food at lower economic cost. It rests with the government agencies and industry organisations to decide what, if anything, needs to be changed to the regulatory decision-making process and incentive structures to facilitate the more widespread consideration of co-regulation in the UK food industry.

The international perspectives on food safety regulation are extremely valuable given the increasingly global reach of food safety and the regulation thereof and the impact of food safety issues on international trade. The countries analysed in this study make an interesting comparison because the of the differing approaches that respective governments and the food industries in these countries have adopted to enhancing prevailing food safety controls and increasing the coordination of public and private resources.

The study shows that opportunities for public-private partnerships in the regulation and control of food safety clearly exist, to varying degrees in the different countries analysed, but that considerable obstacles remain to the widespread adoption of co-regulatory practices. Above all, the formulation of negotiated food safety policies that pursue both private and social benefits is a significant challenge. There are very real concerns about the potential for regulatory capture and a situation where regulators place too much emphasis on the costs of regulation and not enough on regulatory benefits for both consumers and food businesses. Another concern is that co-regulation would further enhance existing inequities in the regulatory process. Consumer organisations may have concerns about a potential weakening of food safety regulations. This is particularly an issue in the UK where there are prominent concerns about the ‘power’ of the major food manufacturers and retailers. Restricting such power was an important rationale for the establishment of the FSA.

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