Introduction
I recall a meeting in 1989 just after the then
Minister of Agriculture, John Gummer, had
announced an £11 million research programme
to tackle the BSE problem. I asked him for a
small amount, say £50k, to examine the
economic aspects of the disease. His response
was quite emphatic: “It’s not an economic
problem”! (McInerney, 1996).
In 1998, everyone will accept that BSE did
rather grow into being an economic problem,
with the loss of an export market worth £520
million, a fall in the value of domestic sales,
and major shifts in consumption patterns,
substantial UK and EU public expenditure
bills, radically different procedures over the
slaughtering and rendering sector, and so on
(Palmer, 1996). In addition, the “cost” of the
Food Standard’s Agency has become an issue,
with the Minister for Public Health providing
an estimate of £100 million per annum (Euro-
food, 1998). Nevertheless, economic issues do
not feature strongly (at least explicitly) within
the current debate over improving food safety,
and there is probably considerable disagree-
ment, and uncertainty, over what is meant by
“the economics of food safety” – the issue
tackled by this paper.
How much safety do we want in our food?
This is a dangerous question to ask – the
instinctive answer is 100 per cent, or at least
“as much as we can get”. But if food safety is
viewed as a consumption attribute, then much
the same reaction will apply to other aspects
of consumer behaviour. If we take a broad
interpretation of food safety, as in the Food
Standards Agency proposal, to include nutri-
tional quality of the diet and concerns about
novel foods, as well as chemical and microbio-
logical safety, then what binds these charac-
teristics together from an economics perspec-
tive is that they all reflect a potentially adverse
impact on an individual as a consequence of
the consumption of food. That “potential
adverse impact” has two components; hazard
– the severity of the adverse impact; and risk,
the probability of the hazard occurring.
We normally see the forces leading to the
decision to purchase as a trade-off between a
set of positive characteristics subject to finan-
cial (price and income) constraints. Thus,
Henson and Traill (1993) define food safety
as:
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Nutrition & Food Science
Number 5 · September/October 1998 · pp. 253–259
© MCB University Press · ISSN 0034-6659
The economics of food
safety
Christopher Ritson and
Li Wei Mai
The authors
Christopher Ritsonis Professor of Agricultural Marketing
and Dean of the Faculty of Agriculture and Biological
Sciences, University of Newcastle upon Tyne, Newcastle
upon Tyne, UK.
Li Wei Mai is a Research Officer in the Department of
Agricultural Economics and Food Marketing, University of
Newcastle upon Tyne, Newcastle upon Tyne, UK.
Abstract
Discusses the financial implications of maintaining
acceptable levels of food safety. The case of BSE is used as
an example – loss of export market, fall in domestic sales,
changes in consumption, large expenditure, cost of
practice changes in rearing and slaughtering animals.
There is a trade-off between safety and costs. How much
safety can be expected? There must be an optimum level
of safety. There are few ways in which a market economy
can “fail” in providing the optimum – asymmetry in
knowledge of risks; aspects of food safety which are public
goods; social costs of food safety and the divergence
between objective scientific evidence and consumer
perception.