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Food quality control
Food quality control
FAO/19805/R.Faidutti

The quality and safety of fish is of major concern to producers, processors, quality control authorities and consumers. In addition to the economic losses incurred because of fish spoilage, fish -borne illnesses cost billions of dollars to the community because of their costly adverse health effects, the loss of productivity, medical expenses and adverse publicity for the companies. Additional costs in international trade include the cost of rejections, detention of products, recalls and the resulting adverse publicity for the industry and even for the country.

Research in quality and safety economics has been limited and the data are scarce. Economists have only recently ventured into this area and the methodologies and research tools are still being developed.

Macro-economic level

At the macro-economic level, research focuses mostly on food safety valuation, by attempting to measure the effectiveness levels of a food safety public programme and the extent to which this programme achieved its goals. An example would be to measure the effectiveness of a programme designed to educate consumers on the safety of seafood or of nutritional attributes of seafood or the cost and benefits of a seafood HACCP programme. In this respect, two estimation methods have been used: Cost of illness (COI) and the willingness to pay method (WTP).

The COI approach estimates the resources society will save by avoiding the food-borne illness. Social costs include costs to individuals, industry costs and public health surveillance costs. Costs to individuals can be measured through documenting medical costs, income or productivity loss, pain and suffering, leisure time costs, child care costs, risk aversion costs, travel costs, and vocational and physical rehabilitation costs, among others. Industry costs include product recalls, plant closings and cleanups, product liability costs, reduced product demand and insurance administration. Public health surveillance costs include disease surveillance costs, costs of investigating outbreaks and costs of cleanup. The WTP method actually measures peoples' willingness-to-pay for the reduced risk of death or illness from consuming food in a specified population.

Extension workers learn about food safety methods
Extension workers learn about food safety methods
FAO/19018/R.Faidutti

Micro-economic level

At the micro-economic level, the most used approach is known as the PAF (Prevention-Appraisal-Failure) model of quality costs, which divides production costs relevant to quality and safety into three categories:

  1. Prevention costs are the costs of any action taken to investigate, prevent or reduce defects and failures. They include the costs of planning and documentation, training, maintenance, personnel incentives;
  2. Appraisal costs are the costs of assessing and recording the quality achieved. These are generally the easiest to measure and include: costs of inspection and control of raw materials, ingredients and packaging, costs of in-plant process inspection, laboratory costs and recording costs;
  3. Failure costs are the costs arising from failure to achieve the quality specified. They can be divided into internal and external costs, depending on whether they are produced within the plant or after the transfer of product ownership to the customer. Internal failure costs include scraps, reprocessing, additional laboratory analysis, extended cold storage, low yield. External failure costs include product rejection, detention, recall, liability, and bad publicity.

The PAF model demonstrates clearly that the failure costs decrease significantly with an increase in prevention and appraisal expenditure. But, for each process and situation, there is a point at which total quality costs will be at their lowest and any extra expenditure in prevention and/or appraisal will not bring additional quality improvement.

 
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