FOOD SAFETY STANDARDS AND CERTIFICATION: IMPLICATIONS FOR PRODUCERS AND CERTIFIERS

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: TERMINATED
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 1011683
• Project No.: KY004051
• Project Start Date: Dec 21, 2016
• Project End Date: Sep 30, 2021

Project Director
Zheng, YU.

Recipient Organization
UNIVERSITY OF KENTUCKY
500 S LIMESTONE 109 KINKEAD HALL
LEXINGTON,KY 40526-0001

Performing Department
Agriculture Economics

Non Technical Summary
Food safety certification has emerged as a prominent and influential regulatory mechanism in the agri-food system. While the popularity and prominence of food safety certification has grown substantially over time, little economic research has been conducted on these markets, and no empirical study has examined the determinants of producers' choices of certification bodies and standards, and how audit grades are determined. Little is known on how certification can help firms grow. For this project, we will empirically study the market for food safety certification focusing on the BRC program, a leading international food safety standard. We examine the structure of the market for BRC certifiers and identify key factors that affect producers' choices of third party certification bodies for a food safety standard.We also provide the first attempt to study the determinants of audit grades for food safety certification, and examine how certification can promote firms' growth. Our long-term goal is to improve understanding of how food safety certification markets operate so as to enhance U.S. food safety and consumer wellbeing and to improve the competitiveness of food producers, particularly small-scale producers. We will provide a rigorous analysis of newly collected data on the markets for food safety certification and on producers' choice of certification bodies. Our research is expected to spur further scholarly contributions on the under-studied markets for food safety certification, and may directly benefit U.S. policy makers, food producers (farmers and manufacturers) and consumers.

Animal Health Component

0%

Research Effort Categories

Basic

(N/A)

Applied

100%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
603	5010	3010	100%

Knowledge Area
603 - Market Economics;

Subject Of Investigation
5010 - Food;

Field Of Science
3010 - Economics;

Keywords

food safety

certification

standards

Goals / Objectives
The objectives of the proposed study includes:Objective 1: Identify key factors that affect producers' choice of third party certification bodies for a food safety standard. Based on our preliminary analysis of data we obtained from British Retail Consortium (BRC) Food Standard certification, we hypothesize that producers are attracted to leniently grading certification bodies, and prefer ones that are geographically close to their production facilities.Objective 2: Identify key factors that affect producers' choice of a food safety standard. We hypothesize the availability of certification bodies nearby will positively affect a producer's choice of the standard.Objective 3: Investigate what factors determine the auditing grades assigned to producers. We hypothesize that smaller producers and first-timer certified producers will have a lower auditing grade, holding other factors equal. Higher degree of competition at the certification body level likely will lead to pressure to raise grades. Objective 4: Quantify the benefits that food safety certification offers producers. We hypothesize that certification promotes firms' production growth.

Project Methods
We first will develop a theoretical framework on producer choosing certification body. Then we will empirically investigate 1) whether distance to certification body and certification body's grading leniency matter to producer's choice of certification body, 2) how the difference between various food safety standards affects producer's choice of which standard to certify to, 3) whether larger producers consistently have better audit grades than do smaller producers, and 4) whether certification promotes firm's growth. Empirical methods to be used accordingly include choice modeling (conditional logit models and mixed logit models) for (1) and (2), ordered probit modeling for (3), and panel data estimation for all. We will focus on the British Retail Consortium (BRC, a leading global standard) global standards program which contains information about manufacturing sites' location, audit grades, and choice of certification body, and extend the framework to other standards.

Progress 12/21/16 to 09/30/21

Outputs
Target Audience:Government agencies have also adopted food safety certification procedures, e.g., the Food and Drug Administration's (FDA) new requirement of a credible food safety certification on high-risk imported foods. Our research will inform private companies and policy makers which might lead to effective regulation of the certification industry, labeling of certification, and wider adoption of certification especially by small producers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Major activities include data collection by a Ph.D. student, my own research publications, and a student dissertation based on the objectives identified here. The Ph.D. student plays a significant instrumental role in helping achieve the objectives. How have the results been disseminated to communities of interest?In addition to the two journal publications, I have shared the research results with industry stakeholders, namely the British Retail Consortium who is the holder of the BRC Global Food Safety Standard (a top international food safety standard with over 2000 certified sites in the U.S. alone). They were happy to receive our results and I expect that I will continue to collaborate with them (they provided some excellent confindential data for me to use). What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? I finished objectives 1 and 3 during this period, resulting in two peer reviewed publications in the best journals in our profession. For objectives 2 and 4, I have been working with my Ph.D. student Lijiao Hu (funded under this project). All the data were collected and the statistical analyses were done. However, due to Covid, Lijiao returned to China for 1.5 years and progress has been delayed. Now she has returned back to the states and we should be able to finish (mainly writing) these two objectives in early 2022, and expect to generate another two journal articles.

Publications

• Type: Journal Articles Status: Published Year Published: 2021 Citation: Zheng, Y., and T. Bar. 2021. Certifier Competition and Audit Grades: An Empirical Examination using Food Safety Certification, Applied Economic Perspectives and Policy, forthcoming

Progress 10/01/19 to 09/30/20

Outputs
Target Audience:Food safety certification related stakeholders, including producers, standard holders, government, retailers, and consumers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Objectives 2 and3 leadto a Ph.D. student dissertation essay. How have the results been disseminated to communities of interest?Objective 1 results was published in a journal. What do you plan to do during the next reporting period to accomplish the goals?Keep working with a Ph.D. student to finish the objectives.

Impacts
What was accomplished under these goals? Objective 1 was acomplished during this period, with results published in 2019.

Publications

• Type: Journal Articles Status: Published Year Published: 2019 Citation: Bar, T., and Y. Zheng. 2019. Choosing Certifiers: Evidence from the British Retail Consortium Food Safety Standard, American Journal of Agricultural Economics 101(1): 7488.

Progress 10/01/18 to 09/30/19

Outputs
Target Audience:Food safety certification industry: standard holders, retailers, certification bodies, and consumers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Trained 1 graduate student working on objective 4. How have the results been disseminated to communities of interest?Presented a working paper out of objective 3 in several conferences. What do you plan to do during the next reporting period to accomplish the goals?Objective 4, which will lead to a PhD dissertation essay.

Impacts
What was accomplished under these goals? Objective 3 was achieved.

Publications

• Type: Other Status: Under Review Year Published: 2020 Citation: Audit Grades of Food Safety Certification, Working paper, under review of Applied Economics Perspectives and Policy

Progress 10/01/17 to 09/30/18

Outputs
Target Audience:Food safety certification industry: standard holders, retailers, certification bodies, and consumers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?We developed a database on food safety standards and are currently using them for several dissertation essays. How have the results been disseminated to communities of interest?Through journal publication (forthcoming). What do you plan to do during the next reporting period to accomplish the goals?I will continue to work on the remaining objectives.

Impacts
What was accomplished under these goals? We finished Objective 1 and published the results in our flagship journal, the American Journal of Agricultural Economics. We found that producers prefer certifiers that give out more A grades, prefer not to change certifiers, and prefer certifiers that are closer.

Publications

• Type: Journal Articles Status: Accepted Year Published: 2018 Citation: Bar, T., and Y. Zheng. 2018. Choosing Certifiers: Evidence from the British Retail Consortium Food Safety Standard, American Journal of Agricultural Economics, forthcoming.

Progress 12/21/16 to 09/30/17

Outputs
Target Audience: Nothing Reported Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Established a close relationship between us the the British Retail Consortium (BRC) Food Standard holder. How have the results been disseminated to communities of interest?Mainly will be through the eventual journal publication. What do you plan to do during the next reporting period to accomplish the goals?Close to finishing Objective 3.

Impacts
What was accomplished under these goals? During this reporting period, we accomplished the Objective 1. Based on the British Retail Consortium (BRC) Food Standard certification data, we found that producers prefer certifiers that give out more A grade, prefer not to change certifiers, and prefer certifiers that are closer. I generate a paper out of this objective and submitted to the American Journal of Agricultural Economics. It is currently under revision. A working paper version, entitled "Choosing Certifiers: Evidence from the British Retail Consortium Food Safety Standard" is posted on https://ageconsearch.umn.edu/bitstream/205570/2/BarZheng_Certification_May26.pdf.edw

Publications

• Type: Journal Articles Status: Under Review Year Published: 2018 Citation: Under revision and resubmission with the American Journal of Agricultural Economics