Benefit/Cost Analysis in Public and Private Decision-Making in the Meat and Poultry Supply Chain
Benefit/cost analysis (BCA) is a tool that can be used to examine either public or private decision-making. What differs is what variables are included in each BCA. Hazard Analysis and Critical Control Point/Pathogen Reduction (HACCP/PR) regulation was established in 1996 for US meat and poultry. From the US government’s perspective, the estimated benefits of HACCP were a reduction in foodborne illnesses of the American public citizens and their expenses (medical costs, productivity losses, and pain and suffering) vs. the costs to industry of implementing the HACCP regulations. The public health protection benefits were estimated to be in the billions of dollars, while the industry costs were in the millions of dollars.
A private firm’s decision whether to invest in poultry production in China, however, examines benefits and costs using variables to determine profitability. Some of the factors to be considered in this private BCA include (1) the increasing demand for poultry meat in China and other Asian countries with rising incomes; (2) the demand for the wide range of chicken parts in China; (3) the cost savings of raising chickens in China, including lax environmental regulations and enforcement; (4) the possibility of selling chicken breasts (and frozen chicken products) in the US market at a premium price that more than covers all costs, including transportation; and (5) competition with increasingly global food companies in Asian markets.
KeywordsBenefit/cost analysis Food safety Hazard Analysis at Critical Control Points (HACCP) Prevention Pathogens Chinese chicken Regulation
Critical Control Point
Center for Disease Control and Prevention/USA
Executive Order from the President of the USA
Economic Research Service/USDA
Food Safety and Inspection Service/USDA
Hazard Analysis and Critical Control Points
International Commission on Microbiological Specifications for Food
Long-term health outcomes
Office of Information and Regulatory Affairs/OMB
Office of Management and Budget/USA
Poultry Products Inspection Act/USDA
United States Department of Agriculture
Many thanks to review comments from Mary Ahearn, Walter Armbruster, and Diogo M. Souza Monteiro. All omissions and misstatements, of course, remain my errors.
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