The objective of this paper is:

1. To identify the importance of HACCP for the Food Industry
2. To identify the relationship between HACCP and transaction costs
3. To identify the impact of HACCP on the structure (vertical co-ordination) of the food industry.

There are a number of reasons why, especially in the food industry, implementation of quality assurance systems, such as HACCP, is an issue of importance:

• Agricultural products are often perishable and subject to rapid decay due to physiological processes and microbiological contamination.
• Most agricultural products are harvested seasonally.
• Products are often heterogeneous with respect to desired quality parameters such as content of important components (e.g. sugars), size and colour. This kind variation is dependent on cultivar differences and seasonal variables, which can not be controlled.
• Primary production of agricultural products is performed by a large number of farms operating on a small scale.
• Despite the progress in medicine, food science and the technology of food production, Illness caused by foodborne pathogens continues to present a major problem in terms of both health and economic significance
• HACCP as an management tool can contribute to increase competitiveness of the Food Industry.

• Transaction costs are the costs associated with the process of exchange itself and include transaction specific investments, such as the costs of information search, negotiation and monitoring and enforcement costs of undertaking an exchange. As one moves up the food chain these costs resulting from food safety technical requirements and quality assurance will increase.
• Specific transaction costs are supplier identification, contract negotiation, contract verification and enforcement.
• Transfer pricing systems can positively affect chain performance by creating trust by means of giving insight in the contribution of individual firms to costs and benefits at the supply chain level.
• Transaction cost analysis posits that one can reduce transaction costs by creating or adopting institutions. It implies that in the food sector, institutions such as HACCP or other (voluntary) quality assurance programs/standards can contribute to reduce transaction costs.

• The specific characteristics of raw materials, products and structure of this line of business as mentioned before advocate for an integrated approach of quality assurance: integrated quality assurance (IQA).
• The actual competitiveness of the food industry will be determined by its co-operating ability,(certificated) quality assurance systems or integrated quality assurance systems are only facilitating factors.
• Basically the key factors for successful partnerships are clear benefits for all participants, trust and openness, besides a good strategic fit of partners and (organisational) flexibility.
• The actual performance of the food industry might depend more on power and mutual interdependence of firms than on efficiency.

• HACCP and other (voluntary) schemes could serve as effective trade barriers to the extent that they become standard business practice .
• The need to produce to specification will increase and the ability to measure product characteristics also will be enhanced. Thus the cost of production demanded by customers likely will be lower in a more closely co-ordinated system.
• Developing partnerships in the perspective of co-operative action seems to be relevant for food supply chains. Motives for this are f.e. development of competitive power, need for quality, safety and sustainability of food produce and flexibility to react fast on changing markets

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