We outlined in this paper the E. coli O157 outbreak in 1996 in Japan and how it has induced reactions in agriculture and related government agencies resulting in the implementation of the HACCP in the kaiware industry and the school lunch system. Preliminary cost-benefit analyses of implementing HACCP in these two fields are also attempted.

In October 1996, the MAFF set up a HACCP manual in collaboration with the MHW for kaiware production, which was pin-pointed as the causative food. Rough estimates of the costs of implementing the HACCP for a firm with the production size of 3,000 mt/year are about two million yens. For the typical firm, the cost per pack is estimated 0.065 yens. Since the price received by the producers is 25 yens per pack, the unit HACCP cost is mere 0.26% of the unit price. The HACCP cost can be said cheap. A small recovery in demand can compensate it. To recover the demand it may be necessary to make additional investments on advertising the safety of kaiware with the HACCP. In any case, our analysis suggests that the introduction of HACCP could be dealt with adequately by individual producers or their association. The role of the public sector or the government would be important in providing reasonable standards for food safety and in improving the HACCP manual.

Another field affected by the outbreak is school lunch system. Today the school lunch system is adopted in nearly all the elementary and junior high schools in Japan. After the outbreak, the MHW and the MESSC set out hygiene management manuals based on HACCP school lunch facilities. The annualized total costs of implementing the HACCP are estimated at least 113 thousands yens per school under the own kitchen system and 1.5 million yens per school lunch center (Case I). It is necessary for more perfect safety control in school lunch system to replace altogether the existing system by the modern dry kitchen system (CASE II). Because of high investment costs, the estimated total annualized costs are much higher than Case I. Relative to the willingness-to-pay (WTP) of the parents for improving the food safety in the school lunch system, the HACCP cost is only a small fraction if the cost of implementing the MESSC manual for the school lunch system is as cheap as in CASE I. If the cost is as high as in CASE II, the WTP would not be sufficient to finance the cost. However, the inclusion of the cost of illness due to the outbreak in the return side would make the HACCP investments socially desirable. Further investigation with more detailed information is definitely necessary in this respect, but our study suggests that, unlike the kaiware production, the implementation of HACCP in the school lunch system certainly requires some active involvement of the government sectors.

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