Spotlight on Economics: Who is driving food standards?

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Americans enjoy relatively low-cost food when measured as a percent of our income. For several decades, food expenditures in the U.S. have been between 10 and 11 percent of our disposable income. Canada, Europe and several Pacific Rim nations are other countries or regions of the world that enjoy relatively low- cost food. Nations with some of the highest food costs as a percent of income are Kenya, Cameroon and Pakistan.

An implication of relatively low-cost food is that consumers can be selective in the foods they purchase and consume. Consumers can choose among low-cost foods, organic food, ready-to-eat food, raw commodities, gluten-free food, allergen- free food and numerous other options. If a consumer does not care for a particular food, there are almost always plenty of alternatives, and many consumers have the income to pursue those alternatives. U.S. food consumers have the luxury of being picky.

One expectation that consumers likely agree on is that food needs be safe so that it does not cause the consumer to become ill. Fortunately, most food in the U.S. is safe. Even though there are instances of unsafe food, the overall safety of our food is quite impressive.

However, producing, processing and handling food safely requires a commitment and effort by all the people and businesses involved in the food industry.

Most people understand that government regulations require safe food practices for processors, retailers and food service businesses. Many of these people also recognize that regulations are increasingly addressing food safety at the production or farm level.

However, regulations are not the only force driving food safety considerations throughout the industry. Consumer expectations and perceptions are powerful forces. If consumers perceive that a food may be unsafe, it is easy to select an alternative or competing product. Thus, food businesses throughout the industry are imposing quality and safety considerations on their suppliers, such as farmers who produce agricultural commodities.

Producers and others have expressed their concerns about government directives, but the industry is probably driving itself more than the government is regulating the industry. Good agricultural practices and good handling practices audits and documented food safety plans are only some of the industry's emerging expectations. As government regulations emerge, they occasionally reference or cite existing industry standards as evidence that industry expectations often are ahead of government rules.

Society's regulations through the government sometimes lead food industry standards, while regulations follow industry standards at other times. America's wealth also impacts consumers' expectations.

The present and future food industry, from input suppliers through farmers and processors to retail outlets and food service businesses, is forced to respond to consumers and one another. Businesses in our food industry focus on one another as much as they focus on government.

Source: David Saxowsky, Associate Professor, NDSU Agribusiness and Applied Economics Department



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