Decision Maker's Summary

Governments across the world are increasingly mandating the use of Hazard Analysis and Critical Control Points (HACCP) approaches to assuring food safety. In the United States, HACCP was first mandated in 1995 for the seafood industry, with full implementation to take place by December 1997. The adoption of HACCP as a regulatory approach in the United States is based in part on an estimation of the approach's benefits and costs. However, accurately estimating benefits and costs prior to implementation is difficult. As implementation occurs, better estimates are possible based on actual experience.

Cost estimates should distinguish between several different measures of the costs of HACCP adoption:

1. Total Cost of HACCP Adoption: cost of HACCP plans as adopted by the companies (e.g., they may include more critical control points (CCPs) than required by the FDA regulation). The cost is counted regardless of whether the plan was adopted in response to the FDA regulation. It therefore includes voluntary and mandatory adoption.
   
   
2. Cost of Implementing the Minimum FDA Requirements: cost for the companies of adopting a HACCP plan that met FDA minimum requirements (i.e., had the minimum number of CCPs to meet mandated requirements). The cost is counted regardless of whether the plan was adopted in response to the FDA regulation and, therefore, includes voluntary and mandatory adoption.
   
   
3. Incremental Cost of HACCP Adoption Attributable to the FDA Regulation: cost for the companies of adopting HACCP plans that meet the minimum FDA requirements net of voluntary HACCP adoption that did or would have occurred without the regulation.

In this study, a sample of eight companies processing breaded fish in Massachusetts was interviewed on their costs of implementing a HACCP plan, costs of complying with the FDA's requirements, and views of the HACCP regulation itself. The cost data were collected in personal interviews with quality control personnel using detailed interview protocols and survey instruments. The results show that cost estimates vary greatly depending on how the cost of HACCP is defined.

For the surveyed firms, the average first-year total cost of implementing HACCP was $113,505. This expenditure varied very much within the sample. The average first-year cost for sample companies of implementing only the FDA minimum requirements was $34,323. This shows that companies generally implemented much tougher and more expensive HACCP plans than required and often included non-safety related CCPs within their plans. The cost of implementing only the minimum FDA requirements was 30% of the actual costs companies incurred. Though implementing HACCP can be expensive, the results show that the incremental cost attributable to the FDA regulation, at $23,993, represents only about 20% of total costs. Only a minority of the interviewed companies implemented HACCP because of the FDA regulation. The survey results show that FDA generally underestimated the first-year costs of HACCP adoption, such as the costs of writing a HACCP plan and taking corrective actions, but accurately estimated the costs of monitoring and record keeping.

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* Send paper requests to caswell@resecon.umass.edu.

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