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The Political Economy of Agricultural and Food Policies pp 169–187Cite as

Palgrave Macmillan

Food Standards

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Abstract

Standards to prevent adulterations and frauds have existed as long as products have been exchanged and traded. Recently, standards have spread rapidly, both geographically and in addressing new concerns. This has triggered vigorous debates on the impacts on international trade and development. An important critique is that standards are (non-tariff) trade barriers. Political economy analyses yield nuanced results on the protectionist impact of standards. Standards may stimulate or hamper trade. Lobbying of farmers, firms, and consumers may lead to standards being set “too low” or “too high”. Dynamic effects may lead to persistence of suboptimal standards.

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Notes

  1. 1.

    The growth of foreign direct investment (FDI) has been triggered by several factors, including a wave of investment liberalizations in the past 20 years and strong economic growth in emerging and developing countries. A well-documented form of FDI is the so-called ‘supermarket revolution ’ as large retail chains increasingly invested in emerging and developing countries (Dries et al. 2004; Reardon et al. 2003).

  2. 2.

    For a discussion on the development and poverty effe cts, see Beghin et al. (2015), Maertens and Swinnen (2009) a n d Swinnen et al. (2015).

  3. 3.

    Many studies argue that standards are non-tariff barriers to trade that protect domestic producers (Barrett 1994; Sykes 1995; Thilmany and Barrett 1997; Schleich 1999; Barrett and Yang 2001; Anderson et al. 2004; Fisher and Serra 2000; Sturm 2006; Sheldon 2012). Other authors have argued that standards are not necessarily protectionist (Tian 2003; Maertens and Swinnen 2007; Marette and Beghin 2010; Swinnen and Vandemoortele 2011).

  4. 4.

    The literature has adopted different modeling assumptions depending on which product or production process characteristic (safety, quality, social and environmental effects, etc.) is regulated by the standard. Safety standards, which guarantee safety characteristics, for example, by prohibiting dangerous substances in a product, are analyzed by incorporating risk in (expected) utility and/or profit functions (Cook and Fraser 2008; Swinnen and Vandemoortele 2009), based on the literature on product warranties (Cooper and Ross 1985; Emons 1988). Quality standards ensure characteristics concerning consumer preferences about aspects of nutritional value, taste, size, life span, performance, and so on. The literature on minimum quality standards (Ronnen 1991; Boom 1995; Crampes and Hollander 1995; Jeanneret and Verdier 1996; Valletti 2000) uses a vertical differentiation framework (Spence 1976; Mussa and Rosen 1978; Tirole 1988) in which consumers are heterogeneous in their willingness to pay for quality/standards. Standards that aim at regulating social and environmental issues such as the prohibition of child labor and the limitation of carbon dioxide emissions, are usually modeled as having an impact on externalities (Copeland and Taylor 1995; Anderson et al. 2004; Fisher and Serra 2000; Swinnen and Vandemoortele 2008, 2009).

  5. 5.

    In general, a standard can be interpreted as a prohibition to use a cheaper technology (Swinnen and Vandemoortele 2011). Examples are the prohibition of an existing technology (e.g. child labor) or of a technology that has not yet been used but that could potentially lower costs (e.g. genetic modification (GM) technology). Most studies therefore assume that standards raise domestic production costs (Leland 1979; Ronnen 1991; Valletti 2000). In an open economy, the production costs of foreign producers (interested in) exporting to the standard-imposing country may also rise if the standard is also imposed and enforced on imported goods (Fisher and Serra 2000). The effect on prices depends on various factors such as demand and supply elasticities and trade.

  6. 6.

    The figure can also be interpreted as from a lower to a higher standard.

  7. 7.

    These issues are related to harmonization and mutual recognition of standards which—due to space limitations—we do not discuss in this review. We refer the reader to, among o thers, Baldwin (2000), Bagwell and Staiger (2001), Hensen and Wilson (2005), Costinot (2008), and Chen and Mattoo (2008) f or analyses of these issues.

  8. 8.

    There are some differences in specific assumptions. For example, Swinnen and Vandemoortele (2011) assume that both consumers and producers are politically organized and that they lobby simultaneously. This assumption differs from Anderson et al. (2004) who assume that consumers are not organized—or do not effectively lobby. Foreign producers and consumers are typically assumed to be politically unorganized.

  9. 9.

    This is consistent with international survey evidence on consumer preferences for GM standards. Rich country consumers are generally more opposed to GM than poor country consumers. Consumers in rich countries have less to gain from biotech-induced farm productivity improvements compared to developing country consumers who have much to gain from cheaper food (McCluskey et al. 2016). This argument is also consistent with empirical observations that consumers from developed countries have generally higher preferences for other applications of biotechnology, such as medical applications (Costa-Font et al. 2008; Hossain et al. 2003) which have more (potential) benefits for richer consumers.

  10. 10.

    Beghin et al. (2015) provide an overview of empirical studies and approaches to analyze the impact of standards on trade and welfare. An earlier review is by Maskus and Wilson (2001). Both reviews conclude that that stronger standards in developed countries may either diminish trade opportunities or expand market access for developing countries. Recent empirical studies also provide conflicting evidence. For example, Anders and Caswell (2009) f ind that US seafood safety standards had a negative impact on developing countries’ exports to the USA, whi le Maertens and Swinnen (2009) document that horticultural exports from Africa to the EU increased strongly despite tightening standards over the past decade.

  11. 11.

    I refer to Swinnen and Vandemoortele (2008, 2011); Swinnen et al. (2015) and Swinnen (2017) for more technical analysis and more details.

  12. 12.

    These arguments are related to studies on hysteresis in socio-economic behavior and policy. For example, Dixit (1989) shows that output price uncertainty leads to investment hysteresis for certain ranges of entry and exit costs. Path dependence in technical standards and technical lock-in by historical events can also be driven by network externalities, increasing returns to adoption, or learning by doing (Arthur 1989).

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  1. LICOS Centre for Institutions and Economic Performance, University of Leuven, Leuven, Belgium

    Johan Swinnen

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Swinnen, J. (2018). Food Standards. In: The Political Economy of Agricultural and Food Policies. Palgrave Studies in Agricultural Economics and Food Policy. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-50102-8_10

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  • DOI: https://doi.org/10.1057/978-1-137-50102-8_10

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