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Agricultural commodities and processed food products are subject to various health and food-safety regulations, designed to guarantee product quality and safety. Consumer confidence, and perception of the quality and safety of a food product, are critical determinants of demand and, ultimately, industry health. Outbreaks of contaminated farm products, concerns over bio-security, and generally heightened awareness on the part of consumers has led to an increased focus in the production practices that govern agriculture. Yet, food safety has many aspects that are difficult to observe, and which are "non-market" in nature. A consumer cannot buy a specific quantity of "safety units" and must instead have confidence in the regulatory system. Since the regulatory system---from the establishment of standards to their enforcement through monitoring and inspections---is publicly funded and provided, in many cases, it is subject to the same pressures for austerity that other public spending has experienced. The goal of this project is to develop cost-benefit analyses of the public provision of information about food safety that will help inform policymakers confronted with decisions about whether to reduce or eliminate spending on such programs.
<p>NON-TECHNICAL SUMMARY:<br/> Publicly funded programs that provide information to producers and consumers, aimed at increasing food safety, are subject to budget pressures in a time of austerity. It is difficult for policymakers to set priorities for public spending, without an understanding of the public-good nature of information, including why a particular industry does not provide this function. Cost-benefit analyses of public spending on agricultural research and infrastructure investments are commonly provided, but the returns to the public provision of information are more elusive. Examples can be found for the value of weather information or market information, but numerous other programs exist. This project will apply techniques of cost-benefit analysis to examine programs that provide information concerning animal health---specifically concerning the use of animal
drugs in veterinary practice---to evaluate the appropriateness and effectiveness of public spending on such programs.<p>
APPROACH: <br/>The first step will be to expand on preliminary work that has been done on a program to provide information to veterinarians who either administer drugs to food animals or who advise on the use of such drugs. For instance, there is significant awareness and concern about residues from drugs given to beef and dairy cows---in beef and in milk. The Federal government funds a national program co-located at several universities, including UC Davis, known as FARAD---Food Animal Residue and Detection. On a relatively small funding base, FARAD provides information concerning extra-label use of various drugs, to veterinarians. For instance, a veterinarian who learns that a drug has been misused---perhaps given to a dairy cow for something other than what is approved on the drug label---can request advice concerning how long the milk from that animal should be
disposed of. Incidents where drug contamination leads to the disposal of an entire shipment of milk, following a positive test for the presence of drug residues, are expensive for producers. Perceptions that drug residues are present, and not detected, lead to decreased consumer demand, as alternatives that are perceived to be safer are adopted. Thus, a program like FARAD, to the extent that it prevents drug residues from entering the food system, has the potential to bring very positive economic benefits, not only to the industry and to consumers, but to society, to the extent that there are also health benefits from the avoidance of contamination. This project will focus on more readily measured consequences of contamination---short-term costs, as opposed to longer term health consequences, which are more speculative and difficult to measure---to estimate the effectiveness of FARAD.
Similar analyses for comparable programs will follow in the future.</p>