Food Safety and International Competitiveness:

Food Safety and International Competitiveness: the Case of Beef JOHN SPRIGGS School of Agriculture Charles Sturt Unive...

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Food Safety and International Competitiveness: the Case of Beef

JOHN SPRIGGS School of Agriculture Charles Sturt University Wagga Wagga Australia and

GRANT ISAAC College of Commerce University of Saskatchewan Saskatoon Canada

CABI Publishing

CABI Publishing is a division of CAB International CABI Publishing CAB International Wallingford Oxon OX10 8DE UK Tel: +44 (0)1491 832111 Fax: +44 (0)1491 833508 Email: [email protected] Web site: http://www.cabi.org

CABI Publishing 10 E 40th Street Suite 3203 New York, NY 10016 USA Tel: +1 212 481 7018 Fax: +1 212 686 7993 Email: [email protected]

© CAB International 2001. All rights reserved. No part of this publication may be reproduced in any form or by any means, electronically, mechanically, by photocopying, recording or otherwise, without the prior permission of the copyright owners. A catalogue record for this book is available from the British Library, London, UK. Library of Congress Cataloging-in-Publication Data Spriggs, John. Food safety and international competitiveness : the case of beef / John Spriggs and Grant Isaac. p. cm. Includes bibliographical references and index. ISBN 0-85199-518-7 (alk. paper) 1. Food adulteration and inspection. 2. Food industry and trade--Safety measures. 3. Competition, International. 4. Beef industry--Safety measures. I. Isaac, Grant. II. Title.

TX531 .S67 2001 363.1926--dc21 2001018451 ISBN 0 85199 518 7 Typeset in 10/12pt Photina by Columns Design Ltd, Reading. Printed and bound in the UK by Cromwell Press, Trowbridge.

Contents

Preface

v

Acknowledgements

vii

List of Abbreviations

viii

1. Introduction Whose Role is it Anyway? Institutional Arrangements for Food Safety Objectives of the Study

1 1 4 12

2. International Institutional Arrangements International Drivers International Institutional Arrangements Analysis of International Institutional Arrangements

15 15 17 24

3. The United States of America Introduction Drivers for Change Institutional Arrangements Implications of these Developments

27 27 27 32 52

4. Canada Introduction Drivers for Change Institutional Arrangements Implications of these Developments

55 55 55 58 81

5. The United Kingdom Introduction Drivers for Change Institutional Arrangements Implications of these Developments

83 83 83 93 105

iii

iv

Contents

6. Australia Introduction Drivers for Change Institutional Arrangements Implications of these Developments

107 107 108 114 142

7. Towards an Optimal Food Safety System Introduction Strengthening the Drivers for Change Strengthening the Food Safety Meta-rules Improving the Institutional Arrangements for Food Safety Conclusions

145 145 145 151 158 166

8. How are they Doing? Introduction Harnessing the Drivers of Change Choosing the Right Meta-rules Developing the Institutional Arrangements Conclusion

167 167 167 171 174 178

9. Epilogue

179

Bibliography/References

183

Index

191

Preface

Bovine spongiform encephalopathy (BSE) is a fatal bovine disease thought to cause a similar fatal disease in humans. Recent headlines screamed ‘BSE Panic Spreads Across Europe’ (The Guardian, 27 November 2000). It is clear from such statements the acute concerns of BSE have spread well beyond the shores of the UK and have now engulfed most of Europe. But BSE is more than just a concern in Europe. It, along with Escherichia coli and a few other microbiological nasties, have helped generate a more broadly based concern about food safety that has now engulfed most of the developed world. Not only that, they have been a lightning conductor for change around the world in the attitudes of government, industry and consumers towards food safety. The initial impetus for this book was to explore the nature of this change. A food safety dynamic has been around for a long time. Upton Sinclair was one of the early influential writers on food safety. His most famous book, The Jungle (1906), detailed the unsanitary conditions of the Chicago meat plants and was a powerful driver for the implementation of the US Pure Food and Drug Act (1906). However, the onset of the BSE crisis in the late 1980s signalled a new era of change. What is particularly special about this new era is that, running alongside this food safety dynamic, has been an unprecedented interest in the globalization of trade. The advent of the computer age and the information age, along with the growth of new arrangements to facilitate international trade have led to a drive by countries to be internationally competitive. It is only natural that food safety would become an important dimension of this drive for international competitiveness. Thus, even countries that had no strong domestic reason to improve their food safety, had an international imperative to do so – if they wanted to gain and maintain access to international markets. It is drawing out the link between food safety and international competitiveness that underlies this book. Very early on, we decided to focus on beef. This was a natural because beef has been at the centre of a number of highly publicized food contamination crises, including of course BSE, and it has been at the centre of attempts v

vi

Preface

to improve food safety systems. We chose four countries for study that have been caught up in one way or another in the drive to improve beef food safety. They are the USA, Canada, the UK and Australia. Our approach was to examine the institutional arrangements for food safety in each of these four countries. Institutional arrangements are the rules (broadly defined) that constrain individual behaviour. We thought this approach would offer the best prospect of drawing out the link we wanted to explore between food safety and international competitiveness. We were particularly interested to see if there were significant differences between these countries in their institutional arrangements and to see if some institutional arrangements might be better than others. Our intended goal was to provide a framework for improving the institutional arrangements for food safety. Following an introductory chapter, Chapters 2–6 describe what we saw in our tour of the four countries under study. Then, in Chapter 7, we present our framework for improvement, which consists of three elements: 1. Harnessing the drivers for change; 2. Choosing the right public and private decision-making systems (or what we call the meta-rules); and 3. Developing good institutional arrangements. In Chapter 8 we examine how the four countries have fared with respect to these three elements. Our conclusion is that, overall Australia has probably progressed the furthest. However, the USA remains a very important anchor on progress, particularly in Canada and Australia. We do not expect you will agree with everything, or even most things, we have said in this book. But, we do hope you will find the material and ideas presented in this book stimulating and useful in your own thinking about food safety. To this end, we have tried to write it in a way that is as widely accessible as possible. John Spriggs Wagga Wagga, New South Wales Australia Grant Isaac Saskatoon, Saskatchewan Canada 14 December 2000

Acknowledgements

This study emerged from a research project, sponsored by the Donner Canadian Foundation, on The Role of Government in Food Inspection. We are grateful for the support and understanding of the Donner Canadian Foundation during this research. The country chapters benefited enormously from the insights of many individuals who gave very generously of their time. It is impossible to name all those who contributed to our understanding, but we would like to single out a few. They are: David Addis, Julie Caswell, Philip Corrigan, Les Fearn, Andrew Fearne, Bob Ford, Spencer Henson, Frank Herd, Jill Hobbs, Neil Hooker, Linda Horton, David Hughes, Dennis Laycraft, Christine Majewski, Steve McCutcheon, Neil Maxwell, Gardner Murray, James Northen, C.M. Palmer, David Palmer, Peter Pauker, Vic Prow, Paul Ryan, Richard Roth, Andrew Simpson and Mike Wildman. Accompanying this study was a conference held in April 1999 in Banff, Canada. We would like to acknowledge the financial and marketing support provided by the Alberta Value Added Corporation and in particular Dan Fullerton, as well as the invaluable administrative assistance provided by Iris Meck and Pauline Molder in organizing the conference. And, of course, we would like to acknowledge the significant contributions of all conference participants. We would also like to acknowledge the administrative assistance provided by the University of Saskatchewan – both the Department of Agricultural Economics and the College of Commerce – as well the School of Agriculture, Charles Sturt University during this research. Special mention also must go to Tim Hardwick and CABI Publishing for generously accommodating our need for ‘just a little more time’ to ensure this study is as up to date as it could be. We wish to dedicate this book to our wives, Barbara Chambers and Shannon Isaac. Their support, encouragement and patience during the writing of this book has been invaluable.

vii


AAFC ABM AFFA AIRS AMH AMI AMLC AMS ANZFA ANZFRMC AoA APHIS AQIS ARMCANZ BCMS BQAP BSE CAA CAC CBEF CCA CCPs CDC CFIA CFIS CFIS-IG CFSAN CJD COAG Codex

Agriculture and AgriFood Canada Assured British Meat Agriculture, Fisheries and Forestry – Australia Automated Import Reference System Australian Meat Holdings American Meat Institute Australian Meat and Livestock Corporation Agricultural Marketing Service Australia and New Zealand Food Authority Australia and New Zealand Food Regulation Ministerial Council WTO’s Agreement on Agriculture Animal and Plant Health Inspection Service Australian Quarantine Inspection Service Agriculture and Resource Management Council of Australia and New Zealand British Cattle Movement Service Beef Quality Assurance Program bovine spongiform encephalopathy Consumers Association of Australia Codex Alimentarius Commission Canada Beef Export Federation Canadian Cattlemen’s Association critical control points Centres for Disease Control and Prevention Canadian Food Inspection Agency Canadian Food Inspection System CFIS Implementing Group FDA’s Centre for Food Safety and Applied Nutrition Creutzfeldt–Jakob disease Council of Australian Governments Codex Alimentarius viii


CTS CVM DFO DoH EDI EED EFSIS EHOs EIO EIRP EIS EPA EU FABBL FAO FAS FASL FDA FDAT FERP FFDCA FID FMIA FORCG FPMIC FRCC FSA (UK) FSA (USA) FSANZ FSEP FSIS (Aust) FSIS (USA) GAPs GATT GMOs GMPs HACCP HAD HAS HC HGPs HHEs HHS HUS ICFR

Cattle Tracing System Centre for Veterinary Medicine Department of Fisheries and Oceans Department of Health Electronic Data Interchange USDA’s Evaluation and Enforcement Division European Food Safety Inspection Services Environmental Health Officers Enhanced Import Operation Enhanced Importers Responsibility Program Export Inspection Service Environmental Protection Agency European Union Farm Assured British Beef and Lamb Food and Agriculture Organization Foreign Agricultural Service Farm Assured Scotch Livestock Food and Drug Administration Food, Drink and Agriculture Taskforce Food Emergency Response Program Federal Food, Drugs and Cosmetic Act Food Inspection Division Federal Meat Inspection Act Federal Outbreak Response Coordination Group Federal/Provincial Meat Inspection Committee Food Regulation Consultative Committee Food Standards Agency Food Security Agency Food Standard Australia New Zealand Food Safety Enhancement Program Food Standards Implementation Sub-Committee Food Safety Inspection Service Good Agricultural Practices General Agreement on Tariffs and Trade Genetically Modified Organisms Good Manufacturing Practices Hazard Analysis Critical Control Points Health of Animals Division Hygiene Assessment System Health Canada hormone growth promoter Health Hazard Evaluations US Department of Health and Human Services haemolytic uraemia syndrome Interdepartmental Committee on Food Regulation

ix

x

IDS IIC IIS IPCs ISO ITS JASANZ JIFSAN LACOTS LATS LRC MAFF MFN MHS MISB MIU MKP MLA MLC MRAs MRC MSA MSEP MSQA NAP NCBA NCF NDS NFA NFHS NFSI NFU NLIS NRs NSFS NSFWG NTB OFIS OFS OMB OPHS OTM OVS PACCP


Import Decision System Inspector-in-Charge Integrated Inspection System Import Primary Contracts International Standards Organization Import Tracking System Joint Accreditation Services of Australia and New Zealand Joint Institute for Food Safety Local Authority Coordinating Body on Food and Trading Standards US Government’s Long-term Agricultural Trade Strategy long-run competitiveness Ministry of Agriculture, Fisheries and Food most favoured nation Meat Hygiene Service Market and Industry Services Branch Meat Inspectors Union Marketlink Key Program Meat and Livestock Australia Meat and Livestock Commission Mutual Recognition Agreements Meat Research Corporation Meat Standards Australia Meat Safety Enhancement Plan Meat Safety Quality Assurance National Audit Program National Cattlemen’s Beef Association National Classification Framework National Domestic Standard National Food Agency National Food Hygiene Standard National Food Safety Initiative National Farmers Union National Livestock Identification Scheme Non-Compliance Report National Safe Food System National Safe Food Working Group non-tariff barrier Office of Food Inspection Systems Office of Food Safety Office of Management and Budget Office of Public Health and Science over 30 months Official Veterinary Surgeon Palatability Assured Critical Control Points


PARS PBP PCS PEM PF PHSA PIP PPMs QA QFA QSA RAM RMG RSPCA SBM SCARM SCFR SEAC SMAs SOPS SPS SQBLA SRC STA SVS TBT UKAS UN USDA vCJD VCP VMA VSD WHO WTO WVQMS

Agricultural Pre-Arrival Review System Anglo-Beef Processors Preferred Calf Suppliers Political Equilibrium Model Preferred Feedlots Public Health Services Act Product Inspection Program production and processing methods Quality Assurance Quality Food Australia Quality Standards of Australia Rational Actor Model Residue Management Group Royal Society for the Prevention of Cruelty to Animals specified bovine material Standing Committee on Agriculture and Resource Management Standing Committee on Food Regulation Spongiform Encephalopathy Advisory Committee State Meat Authorities Standard Operating Procedures for Sanitation WTO’s Sanitary and Phytosanitary (Agreement) Scotch Quality Beef and Lamb Association short-run competitiveness Supermarket to Asia State Veterinary Service WTO’s Technical Barriers to Trade (Agreement) UK Accreditation Service United Nations US Department of Agriculture new variant CJD Voluntary Code of Practise Victorian Meat Authority Veterinary Services Division World Health Organization World Trade Organization Woolworths Vendor Quality Management Standard

xi

Chapter 1

Introduction

Food safety is an issue with which most of us can easily identify. Eating is one of the most basic aspects of everyday life and we value highly the peace of mind that comes from knowing that the food we, or our loved ones, eat is safe. When a food poisoning outbreak occurs it undermines our confidence in the food safety system and we are quick to react. So whose role is it to ensure that the foods we buy are safe?

Whose Role is it Anyway? Traditionally, we have relied on governments to ensure that the food we eat is safe. But, why? One commonly held perception is a belief that a benevolent government acts in the best interests of society as a whole. If we accept for a moment that the policy makers (politicians and bureaucrats) are benevolent, it does not necessarily follow that policy decisions will be made that are in the best interests of society as a whole. There is no magic formula saying this is the way to achieve food safety. The political process is typically messy with lots of information, much conflicting, on what really is in the best interests of society in general. Even if policy makers wanted to do the right thing, they do not have an easy job. They are bombarded with information and must struggle to disentangle fact from fiction. An even greater problem is that governments are likely not benevolent. We should remind ourselves that government is not a single anthropomorphic entity. Rather, it is made up of individuals, the politicians and bureaucrats, and it is they who make the policy decisions. Typically, policymakers have a more limited objective than maximizing overall social benefit and instead they pursue narrower objectives relevant to the particular department or ministry they serve. Lobbyists representing particular interests attempt to influence policy makers by appealing to the limited objectives. The result is decisions that often favour special interests over the general interest. 1

2

Chapter 1

The response of the British government’s Ministry of Agriculture, Fisheries and Food (MAFF) to the unfolding BSE crisis (‘mad cow disease’) is a case in point. Over a number of years in the late 1980s and early 1990s, MAFF consistently denied and covered up the known risks of BSE to the consuming public because it feared revealing such risks would devastate the beef sector and an objective of MAFF was to support the beef sector. If government will not or can not ensure food safety who will? Can the individual food firms be relied upon to do it? The short answer is no. Left to themselves, individual firms have a built-in incentive to underspend on food safety. For one thing, some firms in a food industry will be tempted to ‘free ride’ on the efforts of others to improve food safety. But, if this is true for some firms it is also true for all firms. And so, less would be spent on food safety than would be socially optimal. Another problem is individual firms may well undervalue the costs of not instituting an effective food safety system. These neglected costs include compensation for victims of a food poisoning outbreak. The firm may choose to neglect these, figuring it would be less costly to declare bankruptcy. One way around the problems of leaving it up to individual firms is to let the industry as a whole develop the food safety system. Perhaps an industry body could exert enough pressure on individual firms to prevent the ‘free rider’ problem and perhaps they could even set up an insurance fund to be used in the event of a food poisoning outbreak. Its job would be made simpler if the government gave it the necessary powers to get mandatory compliance of all food firms in the industry. Yet, even here there are problems. The industry’s representatives will face a dilemma not unlike that of the individuals in government. They will typically focus on the limited objective of maximizing industry competitiveness and this could affect their decision making and cause two important problems. The first is the industry’s representatives may be motivated more by short-run competitiveness than by long-run competitiveness. This raises the prospect of cutting corners on food safety, with possible dire long-run consequences. A short-run focus is more likely if the industry were under severe economic pressure and in survival mode. The second problem is that as representatives of all firms in the industry, they may believe they have a responsibility to develop a food safety system that is acceptable to all these firms. As a result, the industry-led food safety system may sink to the lowest common denominator, rather than establish high standards based on competitive market leadership. As a society we face a dilemma. Neither government alone, nor industry alone is likely to provide for an optimal food safety system. In the past, conventional wisdom has been to place more faith in (domestic) government than in industry to look after our food safety concerns. And when the government has been found wanting, as in the immediate aftermath of the BSE crisis, modifications have been made to increase the role of government in order to plug the holes and keep the public food safety system afloat.

Introduction

3

In recent times another phenomenon has come along which has exacerbated the social dilemma by forcing a complete overhaul of food safety systems around the world. The increasing internationalization of food production and consumption is a force that has led to intense international competition among alternative suppliers of food products. As a result, food safety has become a truly transnational issue because consumption bundles invariably contain imported products. And food safety is fast becoming an important element in the drive of food industries to be internationally competitive. Implementing and maintaining a food safety system is costly, so if one country’s approach to providing food safety is less costly than another’s this can create a source of competitive advantage. Alternatively, if one country can convince international buyers that its food safety system has more integrity than another’s, this can create another source of competitive advantage – product differentiation. The internationalization of the food safety issue can also create competitive advantage through encouraging greater vertical coordination. For example, food retailers may push for closer coordination of the supply chain as a way of ensuring food safety all along the chain. But as they do so they may also realize other benefits of closer coordination that add to international competitiveness. On a negative note, the food safety issue may be used as a kind of trade barrier. Some importing countries may be tempted to restrict imports to only those exporters able to offer what they consider to be ‘enhanced’ food safety systems. This suggests an important role for international institutional arrangements to combat this temptation. Food safety is a real social concern and must be addressed. But it must be addressed in the context of the pressures for international competitiveness. National food safety systems that fail to account adequately for the global context are a commercial threat to the competitiveness of domestic food industries and may also lead to the fragmentation of international food markets into divergent national food safety jurisdictions. In light of the imperative of international competitiveness, it is clear that industry must play some role in the development of the food safety system. After all, international competitiveness is the domain of business, not government. When it comes to achieving international competitiveness, industry should easily outperform government. But, for the reasons already mentioned, industry cannot be trusted to do it alone. Government must also have a role. The basic question then is: what roles should government and industry play in providing for an optimal food safety system? Answering this question is the basic purpose of the book. The way we approach this question is to take a look at how the roles are evolving in a number of important food producing and exporting countries. To keep the study manageable we have limited the scope of the study to just beef. Beef seems like a good choice because it has attracted so much attention in recent years. It has been a flashpoint for change in food safety systems in many parts of the world.

4

Chapter 1

The study involves a cross-country comparison where the countries chosen for study include the USA, Canada, the UK and Australia. The logic of including these countries is they are all significant producers of beef and they represent a group of countries that are evolving similar consumer preferences. There is a growing literature on the international convergence of consumer preferences. For example, Conner (1994) found that European consumption patterns for a range of processed foods correlate highly with North American consumption 5–10 years earlier. He suggested that as incomes, prices and demographic factors in Europe catch up with developments in North America, so food consumption patterns will converge. In another study, Traill (1996) found evidence for increasing convergence of food consumption patterns within groups of countries. One such group is the Anglo-American one. This consists of the four countries included in the present study (plus New Zealand, Ireland and South Africa). The emergence of the Anglo-American group of consumers could lead to increased competition between the producers in these countries to serve the needs of all consumers within this group. One of those needs is for food safety. One thing about such an examination; one soon realizes each country concerned is going through an intense process of discovery. Different countries are experimenting with different ideas. Some ideas appear to be working and others are not. We call these ideas institutional innovations in food safety. There are institutional innovations being implemented by governments, by industry, and by government and industry working together. In the next five chapters, we are going to outline the more important institutional innovations in beef food safety affecting the four countries concerned. Chapter 2 is concerned with recent developments in international institutional arrangements, while Chapters 3–6 are respectively concerned with the domestic institutional arrangements in the USA, Canada, the UK and Australia. Before we proceed to these chapters, let’s explain in more detail what we mean by institutional arrangements for food safety and discuss the process of their evolution.

Institutional Arrangements for Food Safety North (1990, 1991) defines institutional arrangements to be the set of formal and informal rules that constrain the behavioural relationship among individuals, groups of individuals or more formal organizations. And as Mahe (1996) points out: ‘The necessity to supplement free markets with … (institutional arrangements) … has been recognized to ensure efficiency in the presence of market failures’. Market failure is a term widely used in economics to cover situations in which the free interplay of market forces will not generate socially desirable outcomes (Antle, 1996). Monopoly is often

Introduction

5

thought of as one potential source of market failure. Externalities, like pollution, are another. For example, if I have a smokestack factory and can get away without having to pay the cost of pollution, then I have successfully ‘externalized’ the cost. But, as far as society is concerned, the cost is not external and hence the free market outcome will be less than desirable. Another reason for market failure is asymmetric information between buyers and sellers where, say the sellers know more about the characteristics of the product than the buyers. Think of the case of a used car where the buyer has less information about problems with the car than the used car dealer. Asymmetric information can lead to opportunistic behaviour by the dealer – perhaps withholding significant information about the car in order to make a sale. This type of market failure is particularly troublesome in the case of food safety since food safety is a credence good. Consumers do not know the real safety risks of the good either before or even immediately after purchase. They make purchase decisions on the basis of trust, which can take a long time to build up and yet which can be so easily knocked down. A set of institutional arrangements designed to ensure food safety in a particular jurisdiction is what we mean by a food safety system. More precisely: A food safety system is a set of (governmental and non-governmental) institutional arrangements or a ‘governance structure’ providing formal and informal rules to ensure food safety.

Institutional arrangements on food safety are important and it is crucial they evolve, as needed, in order to remain consistent with new technological innovations and changing consumer preferences. One problem here is that institutional arrangements are difficult to change. There is such a thing as institutional inertia. In some ways, this inertia is good. Imagine how difficult and costly life would be if the government decided to change the rules of the road. One day we would be driving on one side of the road and then the next day we would be asked to switch over to the opposite. The cost of informing us about this change in rules would be very costly, and then if some of us did not get the message, life could be pretty difficult too. So, institutional change is not something we as a society contemplate lightly because it is typically a costly and difficult exercise. In fact, institutional inertia is usually so strong, that institutional change often requires strong drivers for change. In the food safety area these are perhaps best exemplified by highly publicized food poisonings. Drivers for change are what provide the windows of opportunity for change in the institutional arrangements. Of course, having strong drivers for change is no guarantee we will get institutional innovation of the kind that will be consistent with social objectives. As North (1990) points out there is no ‘invisible hand’ at work to make this happen. For example, in their years of impoverishment following the First World War, the German people turned to a leader, Adolph Hitler, who promised to restore their country to greatness. He was a strong

6

Chapter 1

driver for change, but the resulting institutional arrangements were terrible: they resulted in the Second World War, the Holocaust and other crimes against humanity. In retrospect, it is hard to see how these outcomes would fit any reasonable person’s perception of a social objective. The extent to which an institutional innovation is consistent with a social objective depends in part on the nature of the drivers for change, but also it depends on the nature of the relevant government and non-government policy (decision-making) processes. The policy process can be thought of as higher-level institutional arrangements which we call meta-rules. Suppose there is a highly publicized food poisoning. This typically constitutes a very powerful driver for change. Government and industry of the particular food supply chain may respond by setting up a commission of inquiry. This is a meta-decision, which may, in turn, lead to decisions on how to respond to the crisis. Of course, one option is to do nothing, in which case there will be no change in the institutional arrangements. Another option is to do something positive (i.e. consistent with the social objective). A third option is to do something negative (i.e. inconsistent with the social objective). But what exactly do we mean by social objective in relation to food safety? For a start, we need to be clear that there are only individual perceptions of what is the social objective. Different people will have different views on what it should be. Some might argue the relevant social objective should be: maximization of food safety

or, recognizing the imperative of international competitiveness, some might argue it should be: maximization of food safety subject to meeting some minimum level of international competitiveness.

We argue (in Chapter 7) that the relevant social objective should be neither of these, but rather: maximization of the food industry’s long-run international competitiveness, subject to achieving some generally agreed, scientifically based minimum standards on food safety.

The key point of our argument is that maximizing long-run international competitiveness is compatible with food safety, not antagonistic towards it. However, maximizing food safety is not compatible with international competitiveness. Because the above social objective has an economic dimension to it, we refer to this as the socio-economic objective. Let’s now elaborate on the nature of the drivers for change and the institutional arrangements. These will be the two basic categorizations of information presented in Chapters 2–6.

Introduction

7

The nature of drivers for change Broadly, we can think of two categories of drivers: international and national. International drivers are common to the four countries under study. These are the market mega-trends that are working to encourage higher standards for food safety in most developed countries. They are discussed further in Chapter 2. National drivers are specific to particular countries. Each country faces specific and unique national drivers, and identifying the national drivers allows us to understand better why individual countries have moved differently with respect to their domestic food safety systems. The national drivers for change are discussed for each of the USA, Canada, the UK and Australia in Chapters 3–6, respectively. National drivers can be divided into external and internal drivers. External drivers are like international drivers in that they both involve the influence of non-internal drivers on the domestic food safety system. However, the distinction is that external national drivers impact mostly or totally on only one country while international drivers impact simultaneously on a number of countries. External drivers include the concerns or actions of ‘external’ actors such as foreign consumers, industries or governments focused on the particular country concerned. For instance, the high degree of integration of the US and the Canadian food markets means that a food contamination crisis in the USA would have a special impact on Canada. This crisis may impact the access of Canadian food exports to the USA and be an external driver for change in the Canadian food safety system. Internal drivers are the concerns or actions of ‘internal’ actors such as domestic consumers, industries and government to influence the restructuring of the domestic food safety system. These drivers are specific to particular countries and may reflect, for instance, concerns arising from domestic food contamination crises or government efforts to reduce public expenditures. Differences between countries in their internal drivers for change create differences in pressures for international competitiveness and food safety. For instance, if a country experiences a severe food contamination crisis, this is likely to generate a much stronger political focus on domestic food safety and consumer protection than on international competitiveness. On the other hand, another country, which has not experienced a severe food contamination crisis, is likely to focus much more on international competitiveness. These variations in foci mean that changes to the food safety system in different countries can be very diverse. Note that the international drivers for change have a harmonizing effect on the food safety system in different countries and cause their domestic rules to converge, while the national drivers tend to have a differentiating effect, causing domestic rules to diverge between countries.

8

Chapter 1

The nature of institutional arrangements There are two basic aspects of institutional arrangements: the food safety policy process; and the institutional arrangements for food safety. The food safety policy process The food safety policy (decision-making) process determines how a driver for change is transformed into an institutional innovation. It involves both government and non-government (supply chain) decision making. What is critical is the nature of the decision-making process employed by both the governmental and non-governmental actors involved. In the case of government policy decision making we can distinguish two basic models: the Rational Actor Model (RAM) and the Political Equilibrium Model (PEM). The RAM is the model commonly used in research organizations, businesses and commissions of inquiry. It will be quite familiar to professionals such as scientists, engineers, economists and lawyers. A RAM process focuses on a single substantive problem (e.g. that the local beef industry will not produce safe food) and the decision objective is to solve the substantive problem in the most efficient and effective way. The PEM is a common model used in government. A PEM process attempts to deal with multiple substantive problems at any one time (i.e. balance the competing interests of various policy actors). The decision objective is to achieve a workable and tolerable compromise between the various parties who have a stake in the identified issues. That is, to achieve a political equilibrium by reaching agreement between the players with divergent interests. The differences between the RAM and PEM processes of decision making manifest themselves most clearly in the nature of the institutional innovations that result. A policy process dominated by the RAM typically recommends change of a fundamental, perhaps revolutionary nature consistent with some underlying socio-economic objective. However, a policy process dominated by the PEM typically recommends small incremental changes consistent with a political (rather than socio-economic) objective. In any country, the food safety policy decision-making process will generally lie somewhere along a spectrum between the RAM and the PEM, where some will be closer to the RAM end of the spectrum than others. We will have more to say about this in Chapter 7 when we examine what a country needs to do if it is to move towards a socio-economically optimal food safety system. In the case of non-government (supply chain) decision making, the nature of the institutional arrangements that emerge depend on whether individual firms involved in the decision making have a long-term focus and on the extent to which the supply chain is well coordinated. At the individual firm level, a number of writers (e.g. Hooker and Caswell, 1996a; Roberts et al., 1996; Caswell and Henson, 1997; Caswell et al., 1998; Fearne, 1998a; Hobbs, 1998; Holloway, 1999; Segerson, 1999; Unnevehr et

Introduction

9

al., 1999; Westgren, 1999) have all argued firms are willing to adopt measures to ensure food safety because a contamination crisis could destroy the firm. The implication is that food safety is in the long-run competitive interest of firms (Heal, 1976). Long-term benefits include assured market access, expanded customer base, price premiums and more economically efficient production. Yet, there are important factors that limit the willingness of individual firms to ensure food safety. With no external regulation, the decision on whether or not to enhance a firm’s food safety system is ultimately an investment decision. While there may be long-term benefits to enhancing food safety, there are also significant costs. And most of these costs tend to occur early on. As such, different managers may well make different benefit–cost calculations depending on their individual assessments of the information they have on the benefits and costs, their attitudes to risk, the individual rate of time preference and so on. In the absence of a requirement to do so, they may come to different conclusions about whether or not to implement an enhanced food safety system (see also Holloway, 1999). One of the difficulties is that expected benefits are particularly difficult to measure. They are largely a function of what the entrepreneur thinks the consumer perceives as the benefits. But these perceived benefits are tied up with the publicly perceived risks of the food being unsafe which can be quite volatile. As we have already said, food safety is a credence good. Given these uncertainties about the expected benefits of enhanced food safety, it is little wonder that different food firms will have very different perceptions of the benefits of investing in food safety. Hence, left to themselves, some firms would choose to implement enhanced food safety programmes while others would not. Another factor limiting the willingness of firms to invest in food safety is the existence of the so-called free rider problem, a kind of opportunistic behaviour. Consider the hypothetical situation facing the chief executives (A and B) of two local meat plants. Suppose A installed an enhanced food safety system but B did not. Now when the meat from the two plants reaches the retail counter, the consumer doesn’t know whose product they are buying. That allows B to free-ride on A’s investment. B will benefit from the perception of safer meat created by A’s efforts, even though B has not incurred any of the costs. But, what is worse, B’s lack of investment in food safety could lead to a food poisoning outbreak which could damage sales of meat from both A and B. The upshot is B has an incentive to underinvest in food safety, but if this is true for B, it must also be true for A. The actions of B as a free rider adversely affects A’s expected benefits from enhancing food safety and so should cause A to scale back food safety investment too. In aggregate, the free rider problem may encourage companies to underinvest in food safety, unless they are required to do so, say by government, their industry body or their customers (e.g. the retailers). There are basically two ways to stop free riding: legal regulation and market regulation. Legal regulation may come directly from government or from an

10

Chapter 1

industry body that has been given the power to regulate by government. Market regulation involves the development of coordinating mechanisms (e.g. vertical and horizontal alliances) to supply differentiated products. For example, a supply chain leader may introduce measures to restrict its vertical alliances to include only those firms that agree to the disciplines imposed by an acceptable food safety system. Also, a horizontal alliance of firms operating at a particular level of the supply chain (e.g. a producer group or cooperative) may guard itself against free riders by establishing a code of conduct of its members. One other important influence on the food safety policy process is the difference between real risks and perceived risks. The food supply chain responds largely to its understanding of the publicly perceived risks, and to the extent that government is motivated by the PEM of policy decision making, it will also base decisions on its understanding of the publicly perceived risks. In the long run, public perception may be expected to converge to known reality. But in the short run, perception and reality can diverge substantially. In the short run, publicly perceived risks may exceed real risks as the result of media sensationalism or the activity of influential non-governmental lobby groups. On the other hand, the publicly perceived risks may also understate the real risks as the result of government cover-up or industrial secrecy. The best way to eliminate the potential divergence between perceived and real risks is to encourage transparency of the food safety policy process. Transparency means that the entire process is open to public scrutiny. Institutional arrangements for food safety Institutional arrangements are the outcome of the drivers for change and the meta-rules (the higher-level institutional arrangements of the policy process). In Chapters 3–6 (the specific-country chapters) we divide the various institutional arrangements into two categories: governmental arrangements and nongovernmental arrangements. This follows the classification of Caswell and Henson (1997).1 They noted that governmental arrangements are, in most cases, mandatory measures imposed on industry. But, there are also voluntary governmental measures whose influence upon the domestic food industries essentially make them de facto regulations. With regard to the non-governmental institutional arrangements, they are voluntary safety measures which Caswell and Henson saw as operating above the minimum mandatory government regulations and aimed at gaining or protecting consumer confidence and market share. This classification sees food safety as a shared responsibility between government and industry where ensuring food safety is not necessarily through the use of mandatory standards and regulations imposed by government. Instead, industry may play a role through market regulation where safer food production practices are mandated by customers rather than by government. We will have more to say about what is the appropriate role of government and industry in ensuring food safety in Chapter 7.

Introduction

11

Of all the institutional arrangements we will consider in the next few chapters, one that stands out is HACCP (Hazard Analysis Critical Control Points). It has been a focus of attention in each of the four countries under consideration. Hence, we will introduce it here as an industry-led programme to ensure both food safety and international competitiveness. The introduction of HACCP has been widespread, particularly in the beef industry (Hooker and Caswell, 1996c; Kaferstein et al., 1997; Majewski, 1997; Roberts et al., 1997; Caswell et al., 1998; Bundy, 2000; USDA/FSIS, 2000). It was perhaps the most revolutionary institutional innovation to ensure food safety of the 20th century. According to Majewski (1997) ‘the application of quality assurance systems, using the Hazard Analysis Critical Control Point (HACCP) approach as a tool, is seen as the best means of delivering safe food products to the consumer’. HACCP moves from the objective of ‘inspecting problems out of meat’ to the objective of ‘preventing problems from occurring in the first instance’. Essentially, HACCP makes willing firms better able to achieve enhanced food safety. The rise in prominence of HACCP has emerged from an underlying paradigm shift in food safety regulation from a prescriptive approach to a risk-based approach (see National Academy of Science, 1983). The risk-based approach integrates scientific analytical procedures into the regulatory development process in what is called a Risk Analysis Framework. The Framework consists of three components: risk assessment, risk management and risk communication. The purpose of risk assessment is to develop objective risk information according to a sound scientific basis using accepted scientific analytical methods. The purpose of risk management is to use the risk information to decide on an appropriate regulatory response in order to prevent or reduce risk. The purpose of risk communication is to ensure the two-way flow of information between both the risk assessment and risk management activities and between the Risk Analysis Framework and all the relevant stakeholders. HACCP, and its focus on preventing hazard, is very much a product of this underlying paradigm shift. The function of HACCP is based on seven principles: 1. Conduct a hazard analysis; 2. Identify critical control points; 3. Establish critical limits for each critical control point; 4. Establish critical control point monitoring requirements; 5. Establish corrective actions; 6. Establish record-keeping procedures; and 7. Establish procedures for verifying the HACCP system is working as intended. With a HACCP system hazards are identified before production and processing, and methods are employed to minimize the risk (Caswell and Hooker, 1996). This system requires industry involvement and increases the food industry’s responsibility and accountability for food safety (Caswell et al., 1998; McCutcheon, 1998; Unnevehr et al., 1999).

12

Chapter 1

Although acceptance of the HACCP approach to ensuring food safety is widespread, this does not mean the detail of HACCP implementation is without controversy. As we will see, the approach to HACCP implementation varies between countries and this has given rise to a number of issues for debate. We will discuss these issues in Chapter 7.

Objectives of the Study The basic premise of this study is that changes in food safety systems around the world are driven by the simultaneous interaction of domestic concerns over food safety, the desire to be internationally competitive, de-regulation and international market access issues. As countries upgrade their own food safety systems, this puts pressure on other supplying countries to ensure their food safety system does not lag behind. 1. The first major objective of this study is to describe the major drivers for change in a number of important beef producing countries. These drivers for change lead to institutional change. Some drivers are international and give rise to a change in international institutional arrangements. These, in turn, may impact on domestic institutional arrangements. Other drivers are national and give rise to changes in national institutional arrangements. 2. The second major objective of the study is to describe the institutional arrangements governing food safety internationally and in some important beef producing countries. Objectives one and two will be addressed in the next five chapters (Chapters 2–6). Chapter 2 deals with international institutional arrangements while Chapters 3–6 deal respectively with beef food safety in the USA, Canada, the UK and Australia. The purpose of describing the institutional arrangements in these various countries is to discover the ingredients of an optimal food safety system. According to our perspective, this is one that meets the socio-economic objective of maximizing international competitiveness subject to achieving some generally agreed, scientifically based minimum standards on food safety. There is no invisible hand to automatically guarantee that institutional arrangements will be consistent with this socio-economic objective. To a large extent it depends on the nature of the decision makers whose job it is to determine the institutional arrangements. 3. The third objective of the study is to discover the ingredients of an optimal food safety system and to evaluate the institutional arrangements in the various countries against this benchmark. In Chapter 7, we discuss the concept of an optimal food safety system and in Chapter 8 we evaluate the institutional arrangements of the various countries under review. In Chapter 9 is a summary and a discussion of the conclusions of this study.

Introduction

13

Note 1. Caswell and Henson further disaggregated the institutional arrangements as follows. Government arrangements were disaggregated into direct regulation (i.e. standards and regulations to address food safety preventatively by specifying how products may be produced) and product liability (i.e. regulations to deal with identified instances of non-compliance by industry firms). Non-government arrangements were disaggregated into self-regulation (efforts undertaken by firms to ensure enhanced food safety through management schemes) and certification (accreditation, by an independent third-party, of a firm’s effort to enhance food safety).

Chapter 2

International Institutional Arrangements

International institutional arrangements have had an important influence upon the development of food safety systems in the countries examined in this study. The most important of these arrangements include the World Trade Organization’s (WTO’s) Agreement on Sanitary and Phytosanitary Standards (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement) as well as the Codex Alimentarius (Codex). These arrangements attempt to standardize the rules for establishing domestic food safety regulations while simultaneously discouraging their use as an unwarranted barrier to trade. The purpose of this chapter is to discuss the main international institutional arrangements and explain their subsequent influence upon domestic food safety systems. While these international institutional arrangements are important drivers of change for domestic food safety systems, they themselves have their own drivers of change. The drivers of the international arrangements are discussed in the next section, followed by a description of the international institutional arrangements themselves. In the final section is an analysis of the institutional arrangements as well as a discussion of the prospects for the establishment of an international food safety system. As we shall see, the prospects are not that good. This suggests the future focus of attention should not be on the international harmonization of food safety regulations. Instead, it should be on the development of food safety systems within individual countries followed by the integration of these systems among divergent countries.

International Drivers The development of international institutional arrangements and rules governing food safety regulations has been prompted by international drivers common to the four countries under study. These drivers are market mega15

16

Chapter 2

trends originating on either the demand side or the supply side of food product markets. On the demand side, there are two important international drivers. First, consumer preferences are becoming more exacting as incomes continue to grow in many parts of the world. Consumers are showing an increased willingness to pay for an assurance of food safety. Second, the globalization of media information allows for the rapid dissemination of sensationalized news stories of cases of food-borne illness, which can adversely affect consumer confidence and consumer demand for food products across international borders. As a result, the perception of consumers that food products are unsafe may be affected on a much greater scale than ever before, even though the actual risk may be quite low. On the supply side, there are also two important international drivers. First, technological improvements in all phases of processing and production as well as in packaging and transportation have made enhanced food safety systems possible. For instance, the adoption of HACCP systems allow firms proactively to identify, verify and minimize the presence of food safety hazards. Also, newer packaging techniques allow for the possibility of endproducts being irradiated after packaging, so there is no other handling of the product. This can reduce the potential for contamination being introduced to the product during further handling at the packing firm, during transportation or at the retail level. The second important supply-side driver is the improved coordination among the various participants of the beef supply chain. These have encouraged enhanced food safety procedures to extend all along the chain to provide an integrated food safety system. Such a system involves food safety controls at every point in the supply chain and product traceability back to the primary producer. Increasingly, supply chain participants are viewing themselves as interdependent operators in a customer-responsive food supply chain. This is beginning to replace the traditional view they had of themselves as independent rancher, feedlot operator, abattoir or retailer. Together, the demand- and supply-side international drivers have made food safety an important international issue and have encouraged the establishment of international food safety rules. For instance, producers want international food safety rules that are consistent, stable and predictable in order to ensure access to foreign markets. Consumers want international food safety rules that ensure that all food products for sale in domestic markets achieve an acceptable level of food safety, because the internationalization of food production increases the potential range of ‘mass contamination’ to include many national markets. It will be argued below that these drivers have resulted in a discernible convergence in food safety rules across countries characterized by adoption of the Risk Analysis Framework and Quality Assurance schemes.


17

International Institutional Arrangements As mentioned above, the drivers have encouraged the establishment of internationally standardized food safety rules under the jurisdiction of international institutional arrangements. The most important set of international institutional arrangements is the Codex, a joint agency of the United Nation’s (UN’s) World Health Organization (WHO) and the Food and Agriculture Organization (FAO), whose mandate is to develop international standards, guidelines and codes of practice on issues of food safety and food quality. The creation of the WTO has led to two other important sets of international institutional arrangements: the Agreement on Sanitary and Phyto-Sanitary Standards (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). In the next section, the WTO and the relevant trade agreements will be discussed first followed by a discussion of the Codex. WTO As part of the conclusion of the Uruguay Round of multilateral negotiations on international trade, the WTO was created as a permanent institution administering several international trade agreements as well as dealing with cases of international trade dispute. The international trade agreements that are particularly relevant to the issue of meat safety are the SPS Agreement and to a lesser extent the TBT Agreement. By way of background, the international trade regime has been built on the traditional principle of non-discrimination. Essentially, there are three important aspects of this principle. First, is the ‘like product’ concept implying that products which serve the same end-use are considered like products and treated equivalently regardless of any differences in their process or production methods. Second, is the concept of National Treatment whereby foreign products must face the same regulatory standards as like domestic products. Third, is the concept of most favoured nation (MFN) whereby all like foreign products must face the same market access requirements as those foreign products from the MFN. The non-discrimination principle has been applied to ensure that government reactions to producer pressures for trade protectionism are constrained by trade rules and obligations. The traditional principle of non-discrimination has been used successively to reduce border-type trade barriers such as tariffs as well as non-tariff barriers (NTBs) such as quotas, variable levies and quantitative restrictions. Indeed, the WTO’s Agreement on Agriculture (AoA), which focused on these types of trade barriers, offers the prospect of real international discipline on agricultural trade. Such measures can no longer be established in a unilateral manner and must meet the principle of non-discrimination.

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Chapter 2

Yet, disciplining these types of trade barriers should not be interpreted to mean that the political pressures for protection have disappeared. In fact, a new type of NTB has been emerging, which is less transparent yet potentially as effective as the older more familiar NTBs. These new measures for protection include domestic regulatory standards and technical rules for consumer and environmental protection. Emerging simultaneously as the regulatory barriers to trade, are calls for protectionism not from producers but from civil society. In other words, two new challenges face the international trade regime. It must deal with new types of trade protectionism as well as new sources of trade protectionism. Food safety is at the vanguard of these two challenges. Domestic regulations that diverge from regulations in other countries have been enacted which delay and sometimes prohibit market access. Also, some segments of society call for public intervention to ensure not just safety, but also product quality and to ensure that new products have socio-economic benefits. Beyond regulatory standards applying to the product, there are also growing calls for governments to regulate the production and processing methods (PPMs) used to create products in order to ensure that they do not have adverse environmental or animal welfare impacts. From a trade perspective, divergent food safety rules among trading nations can create market access barriers for foreign products. This trade threat has encouraged the development of international agreements to provide standardized rules for establishing domestic regulations so that the various national standards and regulations do not provide fertile ground for NTBs (Hooker and Caswell, 1999). Therefore, while the AoA addresses traditional agricultural trade barriers, the SPS and the TBT Agreements both address the potential NTBs created through the use of domestic regulations. The SPS Agreement constitutes a considerable strengthening of rules governing the legitimate use of domestic health regulations to restrict food trade. At the heart of the SPS Agreement is the tenet: no member should be prevented from adopting or enforcing measures necessary to protect human, animal or plant life or health.1

Thus, the SPS Agreement specifically allows for the establishment of NTBs on food imports, but only where there is a proven, scientific risk to human, animal or plant life or health. The main contribution of the SPS Agreement was to standardize the procedures for determining a proven, scientific risk to human, animal or plant life or health (WTO, 1999a). In this way, it reduces the opportunity for using food safety measures for other (inappropriate) reasons. The SPS Agreement established the following principles to be applied by all WTO Members to any domestic regulations concerning human, animal and plant health. In order to be legitimate the regulations: ●

must be appropriate to the risk involved, based on scientific proof and the trade impacts should be minimal while achieving the desired level of SPS protection (the principle of proportionality);


● ●

●

19

must not involve arbitrary or unjustifiable discrimination between Members (they require a scientific justification for discrimination); should ideally be based on international standards, namely Codex for food safety, the International Plant Protection Convention for plant safety and the International Office of Epizootics for animal safety (countries are permitted to exercise more stringent standards than the ones set by these international institutions, but only if they can demonstrate a scientific justification for doing so); and should be transparent (members are obligated to provide notification during the development, implementation and alteration of relevant regulations).

These principles serve to strengthen the role of international standards. However, a country can still maintain or introduce SPS measures that exceed the international norms if there is scientific justification (Article 3), and provided that science-based reasons are given (Article 12). According to Article 12, the burden of proof in such cases lies with the exporter (Article 4). But even without sufficient scientific proof, Members are allowed to adopt temporary measures to deal with short-term safety concerns (Article 5(7)). Thus the SPS Agreement is one of the few WTO Agreements to observe the principle of precaution. In short, the SPS Agreement allows WTO Members to impose additional food safety regulations and to discriminate against imports on the condition there is an acceptable scientific justification to do so. Of course, this raises the important issue of what constitutes acceptable scientific justification. According to WTO case law (Salmon Case – WTO, 1998b), there are three important criteria. The country’s regulations restricting imports must: 1. Explicitly identify the diseases whose entry, establishment or spread the Member wants to prevent and must describe the potential biological and economic consequences of entry; 2. Evaluate both the likelihood of the entry, establishment or spread of the disease and the economic and food safety consequences according to a risk assessment procedure under the Risk Analysis Framework; and 3. Be those that minimize the trade impact. The objectives of the TBT Agreement as stated at the beginning of this chapter are: to ensure the quality of exported products, protect human and animal health, preserve plants, protect the environment, prevent practices which may mislead consumers (economic fraud) and ensure national security.

The TBT Agreement is thus broader in scope than the SPS Agreement. Whereas the SPS Agreement focuses explicitly on food safety issues, the TBT Agreement is concerned with all (mandatory and voluntary) technical standards that apply to internationally traded products including food. When a dispute arises, it is first necessary to verify whether the technical issue falls

20

Chapter 2

within the scope of the SPS Agreement. If it does not, it immediately goes to the TBT Agreement. The technical standards considered under the TBT Agreement include technical performance standards a product must meet to be imported or exported – for example, energy efficiency standards for washing machines. The performance standards include product quality attributes, packaging requirements, labelling rules, as well as advertising and marketing claims. They may also include environmental, health, labour or other standards a product must meet during its life cycle (e.g. that forest products must come from sustainably managed forests). The TBT Agreement dictates when such barriers may be allowed and what conditions must be met (notification, transparency in developing the rules, the use of international standards when appropriate, and so on). It applies fully to all government standards, including most levels of government. Non-governmental, non-mandatory standards are less strictly covered under what is called the Code of Good Practice. The principles underlying the TBT Agreement are: ● ● ● ● ● ●

avoidance of unnecessary obstacles to trade; non-discrimination and national treatment; harmonization; equivalence of technical regulations; mutual recognition of conformity assessment procedures (these are procedures which ensure imported products conform to domestic technical regulations and standards); and transparency.

Hooker and Caswell (1996b) point out there is a blurred distinction between food safety and food quality issues and hence, in the case of food, there is opportunity for jurisdictional overlap between the TBT and the SPS Agreements. This is problematic because while SPS Agreement attempts to distinguish legitimate from illegitimate trade barriers according to scientific justification, the TBT Agreement is not limited to a scientific justification. As a result, the TBT Agreement appears to be softer on allowing import trade barriers against specific products. For example, a country wishing to protect the domestic food industry may successfully appeal to the TBT Agreement on the grounds of environmental and ethical requirements on food PPMs where such grounds would not be available under the SPS Agreement. This is not to say the TBT Agreement allows open season on PPMs because a country cannot simply discriminate against imported products which serve the same end-market as domestic products based on differences in the manner in which they were produced.

Codex From the discussion above, it is clear that while the international trade regime is an important institutional arrangement impacting food safety, underlying


21

this regime is the Codex Alimentarius (Latin for Food Code, Codex for short), an equally important international arrangement. The need for a consistent and non-fragmented international approach to food regulation after the Second World War culminated in the creation, in 1962, of the Codex Alimentarius Commission (CAC). The objective of the CAC was to develop the Codex. The Codex was intended to provide universally applicable food safety guidelines that would facilitate international trade in food products and ensure international consumer protection. Although the initial intent of the Codex was to focus on food safety and consumer protection, its mandate has broadened to include food quality issues. Given its objective of facilitating international food trade, as well as the inclusion of Codex standards and standards-setting principles into the SPS and TBT Agreements, the CAC has found it difficult to ignore such issues. Administratively, the CAC is a joint agency of the UN’s FAO and the WHO created under the UN’s food standards programme. As a result, all member countries of the UN may be members of the CAC. Assisting the CAC is the Codex Secretariat and the Codex Executive Committee. The Codex Secretariat is located in Rome and is administered by the FAO. The purpose of the Secretariat is to provide day-to-day support for member countries as they attempt to interpret, develop and implement national food regulation congruent with the Codex Alimentarius. The Codex Executive Committee meets yearly and, unlike the CAC, is organized according to principal regions (Europe, Africa, Asia, the South Pacific, Latin America and North America) not according to subjects. Hence, the Codex Executive Committee is a regional coordinating committee providing a regional perspective on food safety. The CAC is composed of committees organized around commodities, general subjects, regions (which were indicated above), and around expert groups providing supporting advice and guidance. Committees are chaired by a member country and they may be active or dormant. The 14 worldwide commodity committees cover the following product categories: cereals, pulses and legumes; vegetable proteins; tropical fresh fruits and vegetables; processed fruits and vegetables; fats and oils; processed meat and meat products; meat hygiene; fish and fishery products; milk and milk products; sugars; cocoa products and chocolate; edible ices; soups and broths; and nutrition and foods for special dietary uses. The eight Codex General Subject Committees are: 1. 2. 3. 4. 5. 6. 7. 8.

Residues of veterinary drugs in food; Import/export inspection and certification; Food additives and contaminants; General principles; Pesticide residues; Food labelling; Analysis and sampling; and Food hygiene.

22

Chapter 2

Finally, the Codex group of expert committees includes the expert group on fruit juices and quick frozen foods. Other joint FAO/WHO agencies that provide expert advice and consultation to the CAC and the various committees are the Joint Expert Committee on Food Additives and the Joint Meeting on Pesticides. The process of introducing, developing and adopting food safety standards into the Codex Alimentarius can be cumbersome. A Codex food standard includes several elements: ● ● ● ● ●

a description of the product and the essential composition and quality factors which identify the product (from close substitutes); identification and analysis of any additives and potential contaminants; the Codex product hygiene requirements; the Codex labelling requirements; and a description of the scientific procedures used to sample and analyse the product during review.

Determination of the safety of the food product is based on scientific risk analysis and toxicological studies of pesticide residues, microbial contaminants, chemical additives and veterinary biologics. A Codex food standard is adopted only after eight stages or steps of consultation have been completed. These eight steps are as follows. 1. A food safety issue is identified by the CAC, the Codex Secretariat or the Codex Executive Committee and presented at a CAC plenary session (every 2 years), where, if it is determined that a Codex food standard ought to be elaborated, the CAC assigns the issue to either a commodity or a general subject committee. 2. The committee presents its elaboration, based on Codex food standard elements, to the Codex Secretariat who produces a Proposed Draft Standard. 3. The Proposed Draft Standard is sent to all member governments and relevant non-governmental international organizations for review and comments. 4. Comments from step 3 are returned to the Committee which initially elaborated the food standard. 5. The committee amends the Proposed Draft Standard subject to the review and comments and the amended Proposed Draft Standard is presented to the CAC by the Secretariat at a plenary session where it may be adopted as a Draft Standard. 6. The adopted Draft Standard is sent to all member governments and relevant non-governmental institutional organizations for further comment. 7. Comments are returned to the Committee through the Secretariat for amendments to the Draft Standard. 8. The amended Draft Standard is presented to the CAC for adoption as a Codex Standard to be sent to member governments for acceptance. Generally it takes about 6 months for each of steps (1)–(6) while steps (7) and (8) take 2 years each. However, it is possible for the Proposed Draft


23

Standard to be adopted at step 6 as a Codex Food standard, instead of being sent for further review, if consensus has been achieved. In this case, it can take 4 years for a Codex Food standard to be adopted. Decision making in the CAC can be by vote if consensus cannot be achieved as was done in the beef hormones case. Once a Codex food standard is adopted, member countries are encouraged to incorporate the standard into any relevant domestic standards and legislation. There is a dynamic aspect to this multinational institutional arrangement since the CAC may continuously develop food safety standards. In turn, member countries who wish to harmonize domestic measures with Codex standards also must continuously react to the new standards. Essentially, the Codex attempts to develop universally acceptable food standards through its elaboration and consultation procedure that may be aligned with domestic food safety standards. However, under the principles of Codex, each contracting party maintains the right to establish its own appropriate level of food safety and consumer protection and to act unilaterally to ensure this level of protection. It is anticipated that when countries do deviate from the Codex food standard, they do so in a scientifically justifiable manner. The Codex is perhaps the most influential institutional driver for change in beef food safety now that its principles are enshrined in the SPS and TBT Agreements of the WTO. Although the original intent of Codex was to develop international food standards, it has now taken on a very important trade function. The SPS Agreement requests that all parties harmonize their domestic standards with Codex standards, guidelines and other Codex recommendations. In the case of trade disputes, Codex standards, guidelines and recommendations are to be employed under the SPS for WTO dispute resolution procedures. Along with trade issues comes other domestic objectives and the danger is that these other objectives may obfuscate the initial objective of improving worldwide food safety. Further, new food safety issues, which are brought to the CAC for elaboration as possible Codex food standards, may be motivated by concerns other than food safety, such as political or special interests. The most divisive issue facing members of the CAC is the debate over scientific risk assessment in Codex standards-setting procedures. It has been the traditional stance of the Codex that risk should be assessed according to scientific evidence of risk to human health. However, recent efforts by the EU to include ‘risk to other legitimate factors’ such as political–economic–social factors have created controversy (Codex, 1999). In fact, at the 21st Session of the CAC (3–7 July 1995, Rome) four amendments to the Codex Procedural Manual were made pertaining to the role of science in the Codex decisionmaking process. They were: 1. The food standards, guidelines and other recommendations of the Codex shall be based on the principle of scientific analysis and evidence, involving a thorough review of all relevant information, in order that standards assure the quality and safety of the food supply.

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Chapter 2

2. When elaborating and deciding on food standards the CAC will have regard, where appropriate, to other legitimate factors relevant for the health protection of consumers and for the promotion of fair practices in food trade. 3. In this regard, it is noted that food plays an important role in furthering both of these objectives. 4. When the situation arises that members of the CAC agree on the necessary level of protection of public health but hold differing views about other considerations, members may abstain from acceptance of the relevant standards without necessarily preventing the decision by the CAC.2 While the first amendment clearly enforces the important role of science, the fourth principle creates an opt-out clause so a country may abstain from the Codex food standard decision, and the standard may still be adopted. This runs directly counter to the original intent of adopting standards by consensus and promoting the international harmonization of food standards. The fourth principle allows member countries legitimately to institute unilateral food standards different from Codex standards by opting out of a CAC decision. This appears to undermine the role of Codex standards and standards-setting principles in establishing the legitimacy or otherwise of trade barriers under the SPS Agreement.

Analysis of International Institutional Arrangements The various international institutional arrangements discussed above attempt to ‘de-politicize’ international trade (WTO, 1995). Rather than subjecting trade flows to the divergent normative preferences of various member countries, they attempt to subject trade flows to universal, scientific determinations of safety or hazard or to universal principles of non-discrimination. The SPS and TBT Agreements along with the Codex attempt to ensure consumer protection while disciplining the use of unilateral food safety regulations as non-tariff barriers to trade. In the case of a food safety issue, the basis for a legitimate SPS measure is the scientific evidence of a risk or hazard, proven through credible scientific methods congruent with either Codex standards (if they exist) or Codex standards-setting principles. In the case of a non-safety issue, the basis of a legitimate TBT measure is the traditional trade principle of non-discrimination. That is, the measure must not violate the MFN and the national treatment principles and must be the least trade distorting measure available. All other justifications for unilateral trade barriers are considered to be illegitimate and in contravention of international trade agreements. International institutional arrangements have significant implications for the restructuring of the domestic food safety systems under study. Hence they may be considered as a special class of drivers for change. The international institutional arrangements are broadly consistent with our socio-economic


25

objective. They have helped to standardize the international rules governing food safety, and in so doing have lowered the transaction costs involved in the international trade in food products. Of course, they have not eliminated differences in standards between countries, and neither should they. The Codex provides an acceptable minimum standard of food safety as stipulated in our socio-economic objective. However, allowing for differences between countries (subject to this minimum) allows different countries to explore changes to their food safety systems, which may enhance international competitiveness. This ability is enhanced by the concept of ‘mutual recognition’ which is enshrined in the SPS and TBT Agreements and in the Codex. Thus, for example, domestic food safety systems, when deviating from the Codex food standards, must show that their standards yield the equivalent effect on overall food safety. Allowing for differences between countries (subject to the minimum standards provided by Codex) raises the cost of difference between countries. However, a country may choose to do this for socio-economic reasons provided it can justify the differences on scientific grounds. As such, we believe this is consistent with our socio-economic objective. The international institutional arrangements have also helped to lower the enthusiasm of special interest groups (either from industry or civil society) to seek economic protection through the inappropriate use of food safety rules. The present international institutional arrangements are unable to completely solve this problem. However, they do raise the political costs to errant country governments, and for other governments these arrangements provide international support to resist this form of economic protectionism. It is important that the SPS Agreement remains based on scientific risk assessment and that it does not entertain social concerns as a basis for allowing a trade restriction. Allowing the consideration of social concerns would considerably enhance the prospects of special interest groups seeking economic protection from imports. These international institutional arrangements also contribute to the ability of countries to move towards an optimal food safety system because they attempt to move the process of dispute resolution from one of negotiation to one of adjudication. In a process of negotiation, might is right. Hence the most economically powerful countries will tend to achieve the most gains. This power imbalance tends to limit the ability of other countries to achieve what would be, for them, an optimal food safety system. By contrast, a process of adjudication reduces the impact of power imbalances on dispute outcomes. Of course, the present international arrangements do not completely remove the effect of power imbalances on dispute outcomes. A good case in point is the recent trade dispute between Canada and the USA on the one hand and the European Union (EU) on the other over the use of hormones in beef production. This practice has been a source of controversy in Europe for over 20 years; first arising because of misuse by French farmers. In 1988 an EU Directive banned the use of six hormones in beef production (oestradiol 17B, progesterone, testosterone, trenbolone acetate,

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Chapter 2

zeranol and melengestrol acetate or MGA) applying a zero-tolerance policy. This ban pertained to both domestically produced and imported beef products and effectively banned a vast quantity of North American beef products. When the WTO came into force on 1 January 1995, Canada and the USA were able to challenge the legitimacy of the EU’s safety ban under the scientific principles of the SPS Agreement. The dispute panel ruled against the EU ban, and the EU promptly appealed. The appellate body also ruled against the EU ban. It held the ban was not based on an appropriate scientific risk assessment and hence, was not scientifically justifiable. The EU was ordered to bring its domestic measures for meat safety into conformity with the SPS Agreement by 18 May 1999. Failure to comply would permit Canada and the USA to impose trade sanctions against any EU goods imported into North America in order to offset the economic costs created by the EU trade barrier. As of December 2000, the EU has not complied with the WTO ruling; in this instance it appears that a powerful actor in the international trading system can effectively remain in contravention of a WTO ruling. Let us now examine the important drivers and subsequent institutional arrangements in each of the countries under review and then return to this important issue in Chapter 7.

Notes 1. Agreement on the Application of Sanitary and Phyto-Sanitary Measures, Uruguay Round of Multilateral Trade Negotiations Legal Texts, pp. 69–84. Preamble. WTO Secretariat, Geneva, Switzerland. 2. Codex Alimentarius Commission (CAC) (1995) Report of the 21st Session; Rome, 3–7 July (ALINORM 95/37 Appendix 2). FAO, Rome.

Chapter 3

The United States of America

Introduction We begin our four-country world tour in North America; starting with the USA. From there we cross the 49th parallel into Canada, before heading across the Atlantic to the UK and finishing up in Australia. The USA is by far the largest producer and consumer of beef in the world, producing and consuming over 11 million tonnes in 2000. The nearest rival would be China, which produced and consumed less than half this amount. The USA is also the largest importer and exporter of beef, accounting for about 1 million tonnes going in each direction. The most important export destinations for US beef are Japan, Mexico, Korea and Canada. The USA is the logical place to start our tour not just because it is the largest player in the world beef market, but also because it plays a dominant role in the trade relationships involving Canada and Australia, two of the other countries under study. The USA is the largest destination of Canadian beef (and live cattle) and is the second-largest destination of Australian beef behind Japan. This means that the US approach to food safety is of critical importance to these other countries providing them with perhaps their most important external drivers for change. This chapter is divided into three sections: the drivers for change; developments in the institutional arrangements in the US food safety system; and the implications of these developments.

Drivers for Change While recent restructuring of the US food safety system has been motivated by both external and internal drivers, the internal drivers have been the more influential and include several severe and well publicized domestic food safety crises as well as pressures for deregulation. The pressures for deregulation 27

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have stemmed from both a government policy to reduce budgetary outlays and a desire to increase industry competitiveness.

External drivers for change The main external driver for change is competitiveness in foreign markets, where one of the more important issues for market access is perceived to be the US food safety system. Three recent governmental initiatives highlight this external driver. First, there was the US Government’s Long-term Agricultural Trade Strategy (LATS) announced in 1995 by the Foreign Agricultural Service (FAS), US Department of Agriculture (USDA). The objective of this strategy was to increase exports of foodstuffs to high-growth regions such as Latin America and South-East Asia. Explicit in this export strategy was a requirement that US exporters be more sensitive to demand-driven concerns in foreign food markets including demands for food safety. The second governmental initiative involved bilateral negotiations between the US and foreign governments to establish Mutual Recognition Agreements (MRAs). The objective of the MRAs is acceptance by each country of the other’s food safety system provided the outcomes are the same. MRAs establish the principle of equivalence rather than equality of the different food safety systems. Thus, even though the US food safety system may differ in form from that of a particular foreign country, if the level of food safety achieved in the two countries is the same, then the two systems are deemed to be equivalent. Third, there is the proactive involvement of several US government agencies in the development of international Codex principles, standards, regulations, codes of practice and guidelines of food safety. These include the USDA’s FAS and Food Safety Inspection Service (FSIS), and the FDA’s Center for Food Safety and Applied Nutrition (CFSAN) and Center for Veterinary Medicine (CVM). Currently, the US Codex Secretariat, in the FSIS Administrator’s Office, coordinates the involvement of these government agencies. In 1996, an FDA Report entitled Reinventing Food Regulations identified significant impediments to the US Government’s efforts to harmonize international food regulations (Horton, 1997). These impediments included differences in both economic and social factors leading to either honest differences of opinion on food safety regulation or to disguised protectionism. The international harmonization of food regulation aims to overcome these impediments. For example, as discussed in Chapter 2, the Codex provides an internationally consistent framework for addressing food safety concerns by encouraging the adoption of health and sanitary standards only when they can be scientifically justified and internationally accepted. The exports of US food products are affected by the standards, regulations, codes and guidelines in place in foreign markets to address foreign food safety concerns.


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The efforts of US government agencies to harmonize international food regulations is supported by non-governmental bodies including the National Cattlemen’s Beef Association (NCBA), the US Meat Export Federation (USMEF) and the American Meat Institute (AMI). They all have initiatives designed to ensure export market access for beef products including information and technical analysis on the market access requirements of foreign food safety systems as well as information for foreign consumers on the safety of US beef. Together, these governmental and non-governmental initiatives aim to ensure that the structure of the US food safety system enhances the export prospects for US foodstuffs.

Internal drivers for change Despite the influence of the external drivers, the internal drivers have been the most influential catalysts for structural change in the US food safety system. The internal drivers include both the recent food contamination crises affecting domestic consumer confidence and the broader government efforts at deregulation (in order to reduce costs, eliminate overlap and duplication and to increase the competitiveness of the food industry). While the deregulation driver was important in the early to mid-1990s, this impetus for change appears to have evaporated in more recent times as the trend has been an increase in government spending on food safety. The major internal driver for change has been a series of well publicized food contamination crises. These have combined to rock consumer confidence in the safety of the US food supply, but more importantly, they have led to a political motivation to restructure the food safety system. Indeed, the Under Secretary for Food Safety, USDA, indicated in a public address that the real driver for the restructuring change of the US food safety system was the domestic outbreak of E. coli (O157:H7) in 1993 (Wotecki, 1998a). Some of the most recent and well publicized crises include: ● ● ● ● ● ●

In 1985, a Salmonella contamination of milk in Chicago affected between 169,000 and 198,000 people. In 1991, an outbreak of Salmonella in 23 states was linked to the consumption of cantaloupes, affecting approximately 400 people. In 1993, an outbreak of ground-beef- (minced-beef)-related E. coli (O157:H7) attributed to a fast-food franchise affected more than 500 people and killed four children in Washington and Nevada. In 1994, another outbreak of Salmonella affecting 600 people in 41 states was attributed to ice cream transported in an inappropriately cleaned truck. In 1995, lucerne sprouts were blamed for a Salmonella outbreak that affected 242 people in 17 states. In 1996, imported raspberries infected with Cyclospora affected 1000 people in 20 states.

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● ● ● ●

● ●

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In 1996, an outbreak of Salmonella traced back to eggs, contaminated a batch of homemade mayonnaise, which affected 242 patrons of a restaurant in Greenville, South Carolina. In 1996, an unpasteurized apple-juice related outbreak of E. coli (O157:H7) affected 70 schoolchildren in Washington and Colorado. In 1997, oysters were responsible for the illness of more than 400 people in Louisiana who were infected with the Norwalk virus. In 1997, imported Mexican strawberries, served through the federal government sponsored school lunch programme, were responsible for an outbreak of hepatitis A that affected 100 schoolchildren and 130 other people. In 1997, another ground-beef- (minced-beef)-related outbreak of E. coli (O157:H7) in Colorado affected approximately 55 people but resulted in no deaths. In August 1997 an outbreak of E. coli (O157:H7) at the Hudson’s Meat Packing plant in Columbus, Nebraska, caused 17 cases of illness in the US north-west.

The above instances of food contamination indicate three things. First, many crises have a domestic origin and are not simply caused by imports from countries with ‘less-effective’ food safety systems. Second, meat is not the only source of food contamination although meat products are often identified as particularly unsafe foods. Finally, the general public and the public media are particularly sensitive to the adverse effects of food contamination problems because they most affect the vulnerable in society; young children and the elderly. These food contamination crises have led to an increased focus by both governmental and non-governmental agencies to improve the institutional arrangements for food safety in order to regain consumer confidence. Restructuring of the US food safety system has included efforts by government to protect consumers from unsafe food, both domestic and foreign, through increased emphasis on inspection and monitoring activities for the presence of pathogenic microorganisms. It also included efforts by meat industry firms, particularly at the slaughterhouse/processing stage, to voluntarily adopt safety assurance programmes, such as HACCP, before it became mandatory to do so. In addition, leaders of the beef supply chains (e.g. processors and retailers) began to develop their own food safety codes for their suppliers. This is a form of market regulation, in which suppliers adhere to the food safety codes voluntarily as a way to achieve and maintain market access. Such measures were taken before governments insisted any action be taken. Restructuring of the US food safety system has also been driven by the broader internal goal of government budget restraint. When President Clinton came to power, he pledged to operate government in a more costeffective manner and to eliminate areas of federal overlap and duplication. His catchphrase was: ‘the era of big-government is over’. And, in fact during his


31

first administration (1993–1996), government spending went down for the first time (in real dollars) since 1973. Government food safety programmes were not immune from this spending squeeze. Hence the budget squeeze became an important driver for change during these years, resulting in fewer government food safety inspections. During President Clinton’s second term in office, government spending (in real dollars) resumed its upward path. This was reflected in new budget allocations for food safety based on the President’s National Food Safety Initiative which was announced in January of 1997. This initiative will be discussed further below. Together, the internal drivers have influenced the restructuring of the US food safety system including: the reorganization of the USDA to include an Under Secretary for Food Safety in 1994; the 1996 release of the MEGAREG by the Under Secretary for Food Safety; the 1996 Food Quality Protection Act; and the President’s 1997 National Food Safety Initiative. While all four initiatives will be discussed in the next section three common themes may be noted. 1. An increased focus on domestic consumer protection through government monitoring of industry practices. 2. An increased governmental role in inspection and monitoring at domestic food processing plants and at import inspection points. 3. An increased emphasis and focus upon science, such as the detection of microbial contamination through science-based sampling techniques during processing. In short, these developments essentially increased the role of government in the activities of inspection and monitoring. This suggests that since a major issue in the US is depressed consumer confidence, the institutional remedy has been to provide more direct governmental involvement in order to regain consumer confidence.

Relationship between external and internal drivers The internal drivers have been more influential than the external drivers in generating structural change of both the governmental and the non-governmental institutional arrangements of the US food safety system. Although export market access remains an important part of the meat industry’s strategy, domestic markets are a major destination for output. These domestic markets have experienced food safety crises negatively affecting consumer confidence. As concern over the safety of the US food supply increased, both the industry and the federal government sought to restore consumer confidence. The industry voluntarily adopted market regulations while the government sought to crack down on the meat industry through mandatory food safety legislation that led to an increase in government involvement in the food safety system.

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Institutional Arrangements Governmental arrangements The main federal government agencies in the USA responsible for food safety are the Department of Health and Human Services (HHS) and the USDA, while the Environmental Protection Agency (EPA) plays a supporting role. Under HHS are the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC). Generally, the FDA is responsible for risk assessment and the subsequent development of risk-based food safety policies concerning both domestic and foreign foodstuffs. Risk management activities, designed to achieve the food safety policies, are allocated according to the type of food product. For example, the FDA is responsible for risk management in the fruits and vegetables sectors and the USDA is responsible for risk management in the meats, eggs and dairy sectors. This section will begin with a description of the evolution of the governmental arrangements followed by a more detailed description of the current risk analysis activities of various federal government agencies as well as state and municipal government agencies. Evolution of the governmental arrangements in the USA While internal drivers have been the major force behind the recent restructuring of the US food safety system, internal drivers have not always been the most influential. Towards the end of the nineteenth century, the USA was driven by export interests to introduce food safety regulation. (See Horton, 1997, for an excellent account of this and other aspects of the historical evolution of US food regulation.) At the time, European laws and consumer doubts about the safety of US meat products were a threat to US meat exports and led to the proclamation of the 1890 Food and Drug Importation and Exportation Act. This Act established stringent requirements for animal quarantine and meat hygiene on export products. The same requirements also applied to products for domestic consumption, although budget appropriations were not provided in the 1890 Act to pay for this. As a result, the most stringent US food safety regulations were targeted at US meat exporters. According to Horton (1997), the US regulations began to converge on European regulations with the 1906 Food and Drugs Act and then exceeded those found in Europe during the inter-war period with the 1938 Federal Food, Drugs and Cosmetic Act (FFDCA). These regulations enhanced the access of US meat products to the European market. The Second World War presented an opportunity for US meat producers to increase exports because of the devastation to the domestic European meat industries. At the same time, imports from Europe decreased and substitutes from Latin America and Africa had difficulty meeting the new, more stringent regulations of the 1938 FFDCA. Hence the US industry was allowed to grow with decreased competi-


33

tion. By the end of the war, US food safety regulations were the most stringent in the world and became the de facto world standards. At about the same time, the regulatory focus in the US food industry shifted from a concern about export market access to the protection of domestic consumers from imported products. European food products, produced within a seriously damaged agri-food infrastructure faced difficulties meeting US regulations for such things as sanitation, insect infestation and bacteriological contamination. In 1965 the US focus on domestic consumer protection was reinforced with the US Pure Food Act. Among other things, the Act introduced measures to regulate animal slaughter and processing. For instance, it specified there must be veterinary control over the inspection of meat products and specified construction standards for the slaughtering facilities including the use of potable water. An important aspect of the 1965 Pure Food Act was the requirement of ‘equivalent’ food safety regulations in the home countries of meat exporters to the USA. In the years following 1965, the spotlight of US food safety regulation has remained on domestic consumer protection. However, in recent years a new concern has arisen, namely microbial contamination. This new concern has arisen in response to the many domestic food contamination crises identified earlier. Before these crises, all players in the beef supply chain (government regulators, industry and consumers) accepted the notion that microbial contamination was an inherent part of food consumption (Kramer, 1989). However, the severity of these internal drivers and the ensuing media attention made this view unacceptable. As a result, government food safety policies have targeted the reduction of microbial pathogens in the food supply through a science-based risk analysis framework. In the early 1990s, the increasing attention being given to microbial contamination together with increasing government budgetary pressures led to the 1994 Department of Agriculture Reorganization Act. Food safety was considered to be an increasingly important political issue, as evidenced by the creation of a new appointment, the Under Secretary for Food Safety. According to Wotecki (1998b), the broad mandate of this Under Secretary was: 1. To protect domestic consumers by directing the various USDA food safety agencies under its control towards the reduction of the instance of food-borne illness; 2. To base food regulation policy upon appropriate science-based risk assessment procedures; 3. To promote risk management through safe production, processing and preparation techniques among the meats, eggs and dairy sectors; and 4. To coordinate food safety among both other government agencies and non-governmental agencies.

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With the 1994 USDA reorganization, the Under Secretary for Food Safety became responsible for the USDA’s food safety agencies including the FSIS, the Office of Public Health and Science (OPHS), the Animal and Plant Health Inspection Service (APHIS) and the Agricultural Marketing Service (AMS). In July 1996, the FSIS was reorganized in an attempt to direct government food safety resources at the most prevalent food safety and consumer protection challenges, especially microbial contamination of meats, eggs and dairy products. According to the reorganization strategy, the activities of the FSIS were to be focused on science-based risk assessments while the risk management roles and responsibilities were streamlined to improve administrative efficiency and effectiveness. For instance, between July 1996 and October 1998 the FSIS sought to centralize policy development and programme delivery by reducing the number of FSIS divisions from 13 down to seven, reducing nonline personnel by 20% and reorganizing the field operations. On 25 July 1996 the FSIS of the USDA released the ‘Final Rule on Pathogen Reduction and Hazard Analysis Critical Control Points’, a risk analysis-based regulatory framework for ensuring food safety, also known as the MEGAREG. This legislation was designed to achieve the mandate of the Under Secretary for Food Safety with particular reference to the meat and poultry sectors. The four broad objectives of the MEGAREG covered two risk assessment and two risk management functions. The two objectives concerned with risk assessment were: 1. To develop performance standards and tolerance limits for pathogenic microorganisms, especially Salmonella and E. coli. 2. To develop effective yet expeditious detection techniques for microbial contamination. The remaining two objectives concerned with risk management were: 3. The mandatory adoption of HACCP by meat industry processing plants and slaughterhouses. The time frame for adoption of HACCP was made contingent on the firm’s size. Under HACCP, firms are extended greater responsibility and accountability for: ● the reduction and prevention of microbial contamination through science-based self-monitored control processes; ● achieving performance standards for contamination; ● improving traceability; and ● adding to the base of knowledge about food contamination hazards through detailed documentation and record-keeping. 4. To target the entire meat and poultry supply-chain through the ‘Farm-toTable’ strategy. The approach involved promoting the voluntary adoption of HACCP-type procedures at both pre- and post-processing stages. The MEGAREG legislation mandates the FSIS to perform both risk assessment and risk management functions to ensure food safety in the meat and poultry sectors. Hence, there is no institutional separation between the two risk analysis functions.


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In the same year as the unveiling of MEGAREG (1996), the Food Quality Protection Act was passed. This Act, aimed to streamline federal regulations on the use of pesticides in food production, including special provisions for the protection of children from pesticide use. The Act applied to all foodstuffs whether domestic or foreign. Under the Act, the federal government has enhanced powers to control domestic food production as well as to oversee imports of food products that may be contaminated with non-acceptable pesticide levels. On 25 January 1997 the President’s National Food Safety Initiative (NFSI) was announced. This initiative emerged from the increasing public concern generated by seemingly more frequent and more complex instances of food-borne illness from microbial contamination. The NFSI, co-chaired by the USDA’s Under Secretary for Food Safety, the Assistant Secretary of HHS and by the Administrator of the EPA, is a multi-departmental federal government initiative to develop risk assessment procedures for the entire supply chain of each food sector including food production, processing, packaging, transportation, storage, distribution and preparation stages. The NFSI emphasized the need for government regulators and private industry to work towards the reduction of microbial pathogens by improving the ability to identify when and where the risks are greatest. On 12 May 1997 the Vice President announced (in a report entitled Food Safety from Farmto-Table: a National Food Safety Initiative) a number of objectives of the NFSI relating to both short- and long-term risk analysis activities. The short-term food safety objectives were: 1. To increase government inspections in domestic processing plants and for imported food products because the report identified staffing and budget constraints and increased imports as a major reason for the decrease in government inspections of food products (risk management). 2. To develop the FoodNet active surveillance early warning system (formerly the 1995 Sentinel Site Study) to monitor the incidence of foodborne illness through the use of ‘cutting-edge detection technology’ (risk communication). 3. To develop the Federal Outbreak Response Coordination Group (FORCG) increasing surveillance sites, personnel in sites and electronic linkages between these sites and other federal, state and local health agencies in order to provide for rapid, efficient management of outbreaks and minimize their spread (risk management). 4. To develop a coordinated public/private national education campaign, known as the ‘Partnership for Food Safety Education’ to improve food handling in homes and in retail outlets. This was to build upon the earlier work of the Fight BAC Education programme (announced in October 1994) designed to teach consumers about in-home microbial food safety and risk reduction (risk communication).

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The longer-term food safety objectives were: 5. To increase government research into developing and improving sciencebased tests to detect food-borne pathogens (more invasive than traditional organoleptic techniques) and to assess the risks of food-borne illness (risk assessment). 6. To encourage the voluntary adoption of safety assurance programmes by firms at all stages of the food supply chain other than those required under the MEGAREG (risk management). The NFSI was designed to be an ongoing, dynamic initiative encouraging increased coordination and efficiency of the federal government’s risk analysis activities. On 4 March 1998, the President built on the NFSI through a food policy statement entitled ‘Safe Food, Healthy Families’. This statement had two primary focuses. The first promoted the development and voluntary adoption of Good Agricultural Practices/Good Manufacturing Practices (GAPs/GMPs) by domestic food industry firms. The second focus was on improving import inspections by the FDA and the FSIS. The statement called for new food safety legislation to be developed requiring that foreign foods be produced under food safety systems at least equivalent to the US system. The policy built upon earlier (June 1997) FDA regulations prohibiting the use of mammalian protein in the manufacture of animal feed driven by the external BSE crisis in the UK (see Chapter 5). Under these regulations, the FDA effectively denied access to imports from foreign countries which did not have at least the same prohibition. According to the ‘Safe Food, Healthy Families’ policy, those foreign foods unable to meet the equivalency criterion, were to be denied access to US markets. Thanks largely to some highly publicized domestic food contamination problems the US Government was highly motivated to refocus US food safety policies on the scientific risk analysis framework and to reorganize the institutional arrangements around the risk analysis activities of risk assessment, risk management and risk communication. The major changes included the reorganization of the USDA to include a high profile role for a new Under Secretary for Food Safety, the subsequent development of the MEGAREG Legislation and the broader President’s NFSI. Four underlying themes are discernible in the US restructuring. First, food safety policies have supported science-based risk assessment procedures to target and identify the risks of microbial contamination in the food supply-chain. Second, the risk assessment-based food safety policies have set performance standards for both raw and processed products at the processing stage. Third, food safety policies have developed risk management rules that make industry more responsible and accountable for the prevention or reduction of microbial contamination through science-based techniques beyond the traditional organoleptic inspection activities. Fourth, the restructuring has also promoted governmental risk management through partnerships at all levels of government and with other stakeholders such as industry and consumer associations.


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FDA The FDA is a government agency located within HHS and is responsible for administering the 1938 FFDCA and the Public Health Service Act (PHSA). Together these two Acts comprise the legislation governing US consumer protection and public health policy. Under the FFDCA, the FDA establishes safety policies for all food, drug and cosmetic products in terms of their impact, both in the short term and the long term, upon human health, safety and nutrition. Through the PHSA, the FDA also has legislative authority over the prevention of the spread of communicable diseases. The genesis of the FDA lay in the old Bureau of Chemistry, which had responsibility for administering the FFDCA. The Bureau of Chemistry resided in the USDA until the 1939 Reorganization Act, whereupon it changed its name to the Food, Drug and Insecticide Administration and moved over to the Food Security Agency (FSA). The FSA was responsible for consumer protection and public health and later became the HHS. The basic role of the FDA in the food safety area is to develop food safety policies for all food products based on objective risk information within a risk analysis framework. The various steps in the process are as follows (Williams, 1998). The first step is the risk assessment, which the FDA performs through the CFSAN. The objective is to develop risk assessment procedures that can be consistently applied across all the food industries in order to set risk management regulatory responses proportional to the actual risk. The FDA’s risk assessment procedures are based on assessing the scientific risk to human safety. In this sense, the scientific evidence is limited to natural sciences such as toxicology, biochemistry, food microbiology and nutrition. Further, safety refers to both the absence of contaminants causing immediate, short-term illness and the absence of any long-term adverse nutritional influences. The second step is to use the risk information from step one’s risk assessment to identify performance standards for acceptable risk tolerance levels. The third step is to identify possible risk management regulatory options and to evaluate each option according to a benefit–cost analysis. The performance standards developed in step two are then applied to the identified options as a way of testing the potential risk reduction and prevention. Combining the first three steps creates a set of risk reduction policy options for the decision makers. The fourth step is to engage all stakeholders in the evaluation of the risk management options in order to identify an acceptable policy option. Once an option is chosen, the fifth step is to ‘operationalize’ this option through legislation establishing the necessary regulations, standards, guidelines or codes of practice. The sixth and final step of the FDA’s risk analysis framework is the validation step where the regulatory response is evaluated according to: 1. The efficacy of the performance standards established in the second step; 2. The effectiveness of the option chosen in the fourth step in terms of achieving the performance standards; and

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3. The effectiveness of the risk management activities of both government and industry personnel in terms of implementing the chosen option and in the reduction and prevention of risk. Risk analysis generally refers to the triad of risk assessment, risk management and risk communication. As mentioned above, the FDA performs risk assessment through CFSAN on all food products. However, the FDA performs risk management for some food products but not others. Thus, the FDA is responsible for inspection and monitoring of fruits and vegetables, seafood, pharmaceuticals, neutraceuticals and cosmetics. However, with respect to the meat and poultry, eggs and dairy industries, the USDA has responsibility for risk management. For these products, the FDA’s legislative jurisdiction is restricted to the scientific risk assessments and the development of the food safety policies. For those products that are subject to FDA risk management, there are seven areas of interest: personnel; plants and grounds; raw materials; equipment and utensils; manufacturing process; sanitation; and product distribution. Under each area are mandatory inspection duties. For instance, in the manufacturing process area, inspectors must examine the ingredient handling, product formulations, food additives, colour additives, packaging and labelling and the overall safety control. The overall food safety control scheme must be demonstrably effective at reducing the incidence of contamination through the proper monitoring of critical points of production, proper personnel training and through accurate laboratory sampling based on scientific principles. Except in the case of seafood, the FDA does not require the adoption of HACCP. Instead, the FDA encourages the development and implementation of risk management practices through GAPs/GMPs and through assistance with information on the evaluation, application and availability of new safety enhancing technologies. The FDA also provides information on appropriate risk management controls to reduce the incidence of chemical and pesticide contamination of foodstuffs. The FDA provides risk communication through consumer-oriented informational and educational campaigns. For example, it has developed a national Food Code to be applied to every food, drug and cosmetic product in the USA. The Food Code is intended to present consistent, clear and concise information to the consumer on a range of health related issues including the use of ingredients (i.e. additives, preservatives, process aids or reworks), potential contamination hazards, processing techniques, nutritional composition and safe preparation or consumption procedures. CDC The CDC, like the FDA, is an agency of the HHS. The CDC has approximately 6900 employees in 170 occupations. It is involved with the US food safety system through surveillance for food-related diseases or illness. It is not


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concerned with long-term nutrition issues, which are the responsibility of the FDA. At the earliest indication of illness, the CDC’s role is to identify the illness, determine its source and control any further outbreak. Thus it plays an important role in risk management of food-related illnesses. The CDC notifies the FDA as well as the USDA when a food product is the source of illness. The CDC’s approach to risk management is firmly rooted in scientific procedure. All public health decisions are based on scientific data, generated through open and objective risk assessment procedures. In doing this, it aims to prevent the development of ad hoc and non-science-based health regulations in the food safety system. USDA The USDA has had a long history of involvement with the US food safety system. Its original mandate came from the 1906 Federal Meat Inspection Act (FMIA) when it was given responsibility for the inspection, monitoring and enforcement of food safety regulations on US meat. According to Horton (1997), promulgation of this Act was driven by export market access concerns and was designed to reassure European regulators and consumers that US animal quarantine and meat hygiene activities met the prevailing European standards. After the 1939 Reorganization Act, which saw the FDA move into the FSA, the USDA retained legislative authority over meat (as well as eggs and dairy products). At the time, it was felt the USDA had a proven record of maintaining foreign consumer confidence and market access and, in the face of increased demand for these products from the Allied countries, the USA did not want to jeopardize its market position by handing the regulation, inspection and monitoring of these products over to a new agency. The USDA’s role in meat inspection was reaffirmed in the 1967 Wholesome Meat Act. This Act required individual States to harmonize their inspection protocols with federal inspection standards if they wanted their meat businesses to be allowed to engage in either interstate or international trade. Within the USDA, responsibility for food safety and consumer protection is vested with the Under Secretary for Food Safety who administers the OPHS, the APHIS, the FSIS and the AMS. These agencies are discussed below. OPHS. The OPHS is focused on public health and safety where food safety refers to the short-term effects of consuming meat, egg and dairy products, not the long-term consequences of poor dietary choices. The OPHS, along with the FDA, conducts scientific risk assessments of microbial contamination in meats, eggs and dairy products. These scientific risk assessment procedures are viewed as crucial in facilitating the end-point performance testing performed by the USDA inspection personnel. The OPHS also assists with risk

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management by providing technical advice and recommendations to both the FSIS and to firms in the relevant sectors on how to reduce or prevent contamination. Finally, the OPHS provides risk communication through public information and education campaigns regarding the prevention of microbial contamination. APHIS. The mission of APHIS is to protect the food supply by protecting the inputs to the food supply. It contributes to public health and safety by ensuring the health and welfare of the livestock used in the food supply and the health of the plants composing the livestock feed. With respect to the beef industry, APHIS is concerned with live animal health and welfare through the Veterinary Services Division (VSD). VSD veterinary surgeons and animal health officers are responsible for risk assessment and risk management of breeding/genetics firms, feed industry firms, ranches and feedlots. The risk assessment activities include:

1. Ensuring veterinary biologics (medicines) are safe, pure, potent and effective, and that their impact on both animals and humans is understood; 2. Providing science-based research on SPS measures designed to protect domestic animals; 3. Ensuring the safety of genetically modified organisms (GMOs) and other products of agricultural biotechnology which may affect livestock through the feed supply. Risk management activities include the inspection and monitoring of both domestic and foreign animals for disease and pests as well as providing industry assistance for the voluntary adoption of on-farm quality assurance schemes. VSD veterinary surgeons and animal health officers generally operate under state authorities for the inspection and quarantine of livestock as well as monitoring for new threats and responding to emergencies which may affect animal health, and consequently the food supply. FSIS.

The FSIS takes over responsibility for food safety from APHIS once the animal is ready for slaughter and where it enters a slaughterhouse/packing plant involved in interstate or international commerce. Its legislative authority comes from the 1906 FMIA, the 1967 Wholesome Meat Act and the 1996 MEGAREG legislation. Together, this legislative authority guides the FSIS in performing its mandate of ensuring safe, wholesome and correctly labelled and packaged meats, egg and dairy products. To achieve this mandate, the FSIS is involved in all three types of risk analysis: risk assessment, risk management and risk communication. However, its role in risk communication is not large and is limited to the conduct of seminars and information campaigns designed to build consumer confidence in the safety of the US meat supply and the effectiveness of the US food safety system. The major part of its work lies in risk assessment and risk management and it is to those activities we now turn.


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FSIS risk assessment activities are based on scientific evidence and include the development of quantitative risk assessment models to identify risks and their correlation with certain foods. These risk models aim to enhance the detection, isolation and eradication of microbial contaminants such as Salmonella and E. coli. Given these risk models and the risk information generated from them, the FSIS assists the FDA in developing acceptable food safety standards. The FSIS also evaluates the risk assessment procedures adopted in foreign food safety systems used to restrict the trade of US meats, eggs and dairy products. As noted in Chapter 2, the WTO requires member countries to implement only science-based SPS measures. As a result, the FSIS is involved in the development of scientific research procedures necessary to prove compliance with this rule and to promote the international harmonization of the principles, standards, regulations, codes and guidelines of food safety through involvement in the CAC. The US Codex Secretariat is established in the Office of the Administrator, FSIS. With respect to risk management activities, there are approximately 7500 FSIS inspectors in domestic slaughtering and processing plants. Risk management activities include: 1. Setting industry standards and monitoring for industry compliance with limits on food ingredients, additives and compounds, controls on plant facilities and equipment, label regulations and controls on sanitation and thermal processing; 2. Encouraging and monitoring the industry’s implementation of the relevant food safety policies; 3. Ante- and post-mortem inspection, monitoring and scientific sampling of production in domestic plants; 4. Inspection, monitoring and scientific sampling of foreign/imported food products at the retail level; 5. Inspecting the label and packaging techniques of both domestic and foreign products at the retail stage; 6. Providing industry information, technical advice and education; and 7. Enforcement, such as pursuing prosecution, for violation or noncompliance. The FSIS also has some involvement in risk management activities to improve food safety downstream from the slaughtering and processing plants. Here, it has a mandate to develop voluntary guidelines of ‘best practice’ for personnel training, hygiene, and proper handling of food products and their inputs. The nature of FSIS inspection at the slaughterhouse or processing plant is still essentially visual-based. Under the 1906 FMIA, the FSIS is responsible for:

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1. Inspection of all meat sold in interstate and foreign commerce, including imported products; 2. Visually examining over 125 million (1996) livestock carcasses per year; 3. Examining/inspecting the slaughtering, processing, handling and packaging of meat products; 4. Testing for the presence of pathogenic microorganisms, violative drug and chemical residues; 5. Grading of the carcasses and beef cuts; 6. Evaluating the effectiveness of its own programmes through systematic and special reviews; and 7. Enforcing industry contravention and non-compliance with food safety policies pertaining to the meats, eggs and dairy industries. FSIS inspectors perform both ante- and post-mortem inspections for abnormality or any evidence of disease that may indicate that the animal is in poor health. With respect to ante-mortem inspections, those animals determined to be unsuitable for the food supply are segregated and then more thoroughly inspected by a government veterinary surgeon in order to determine the reason for the animal’s apparent poor health. The veterinary surgeon must decide whether the animal can be allowed into the food supply straight away, removed and medicated for introduction at a later date or whether the animal will be completely excluded from the food supply. Postmortem inspections involve visual inspection of the carcasses after the primary slaughter cuts (post-evisceration) have been made but before the removal of specialized meat cuts. Any carcasses appearing unhealthy or abnormal are removed from the food supply and at the inspector’s discretion may be tested for contamination. Apart from its role in the risk management of domestically produced beef, the FSIS is involved in two risk management activities associated with foreignproduced beef to ensure that imported products meet the US safety standards. The first is the Oversight Initiative involving on-site inspections of the production processes in foreign plants. The purpose of this initiative is to develop risk assessments of imported products before their arrival in US markets. The foreign inspection controls are reviewed and assessed according to their congruency with those of the USA. Unlike the inspection of domestic processing plants, foreign plant inspections are periodic rather than continuous. The second initiative is the re-inspection of the foreign food products when they enter the US market. Currently this inspection is a combination of both organoleptic and scientific sampling procedures administered either at the point of entry into the USA or at the retail stage. The inspection and monitoring activities of the FSIS in the meat and poultry sectors were restructured as part of the July 1996 USDA Pathogen Reduction Rule, also known as the MEGAREG. The MEGAREG led to more industry responsibility for the management of food safety risks through the mandatory adoption of a HACCP-based risk management system. Yet, at the


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same time, it also increased government review, monitoring and inspection of industry efforts to ensure food safety. The MEGAREG represents a highly significant development in the US food safety system and because of this country’s importance in the world of beef, it has had a significant influence on the other countries under study, particularly Canada and Australia. The MEGAREG imposed three mandatory risk management activities on domestic meat and poultry establishments. They are: 1. To implement Standard Operating Procedures for Sanitation (SOPs). This was to be completed by 1 January 1997. The SOPs involve risk management activities including sanitation procedures before, during and after processing, pest and contamination control procedures as well as procedures for daily record keeping, for corrective actions if necessary and for the identification of responsible personnel at all control points. The SOPs developed and implemented by the firm are subject to review and verification by FSIS inspectors and once implemented are subject to FSIS monitoring for compliance. The SOPs form the basis for the firm’s mandatory HACCP system. An interesting development is that despite the USDA’s efforts to harmonize the international standards around Codex, the SOPs mandated under the MEGAREG are not required to be consistent with the Codex SOPs; the internationally standardized prerequisites for a HACCP system. 2. To develop and implement a HACCP system, where the SOPs serve as prerequisites. Large meat processing firms (500 or more employees) were required to have a fully implemented HACCP system by 26 January 1998; while for medium firms (10–500 employees) the deadline was 25 January 1999; and for small firms (fewer than 10 employees) it was 25 January 2000. Each firm’s HACCP plan is subject to review and verification by FSIS through in-plant inspection and monitoring. For those firms that develop acceptable SOPs and HACCP system, the FSIS awards a ‘Grant of Inspection’. Essentially, this grant acknowledges that the plant has achieved a particular level of facility sanitation and pest control, operational standards and appropriate management of the hazards and critical control points. Meat products from those plants achieving Grant of Inspection are eligible for the USDA’s Mark of Inspection necessary for interstate and international trade. Together, the mandatory SOPs and HACCP system are intended to make the firm more responsible and accountable for the risk management of its output. Actual inspection activities are performed by the firms while government FSIS inspectors ‘check the checkers’. The role of the FSIS inspectors is to monitor and verify the efficacy of the inspections performed by the firms to ensure compliance. 3. To test for the presence of generic E. coli and Salmonella. The MEGAREG required firms to begin testing for generic E. coli by January 1997 while the FSIS began monitoring and verifying these tests in July 1997. Samples were to be collected from the flank, brisket and rump of at least one in every 300 beef carcasses. Firms failing to administer the test faced withdrawal of FSIS

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inspection services (i.e. loss of the Grant of Inspection) while firms failing to meet performance criteria on the tests faced intensified FSIS inspection, testing, review and verification. Repeated failure to meet the performance criteria would lead to a loss of the Grant of Inspection. Testing for the presence of Salmonella was required to be done by FSIS rather than the firm and testing was to begin on the date of the firm’s HACCP implementation. A first time failure of the sample lot to meet the performance criteria requires immediate corrective action by the firm. A failure of a second sample lot requires a reassessment of the firm’s HACCP plan and corrective action. Finally, a failure of a third sample lot incurs a withdrawal of the Grant of Inspection. The MEGAREG also imposed conditions on foreign meat and poultry slaughtering establishments exporting to the US market. They were required to: 1. Develop and implement a HACCP system equivalent to the US-endorsed HACCP system; and 2. Establish equivalent performance standards for microbial contaminants. AMS.

The AMS performs a food quality or producer promotion role in the grading of US beef. AMS grading is performed according to the 1995 Beef Grading Standards. This service is based on user fees, which are set to a costrecovery level. The grade used to identify particular cuts of meat is determined during post-mortem organoleptic inspections of the whole carcass or after one or two primary cuts. The purpose of the grading is to differentiate the quality of the meat yield. While this is primarily a quality role (by the time a carcass is ready to be graded, it should have already achieved a minimum level of safety) meat grading can have an indirect effect upon meat safety because the AMS grading personnel are also empowered to remove suspect carcasses from the food supply for the FSIS inspector to take a closer look. The USDA’S Evaluation and Enforcement Division (EED) is responsible for enforcing all cases of industry non-compliance with the 1906 FMIA, the 1967 Wholesome Meat Act, the 1996 MEGAREG, the broader food policies established by the FDA under the 1938 FFDCA and with other Acts pertaining to food safety such as the 1996 Food Quality Protection Act. The EED may use administrative, civil or criminal sanctions against non-compliant firms. Administrative sanctions include the withdrawal of inspection services; civil sanctions include monetary penalties; and criminal sanctions include prosecution for negligent or unsafe actions. The EED is responsible for investigating any cases of non-compliance and the EED’s ruling is then referred to the USDAs Office of General Counsel which undertakes any necessary litigation. Under the original 1906 FMIA USDA enforcement action was warranted in violations such as unsanitary plant conditions, the inhumane treatment or slaughtering of livestock, failure to destroy any USDA condemned products, or the interference with inspection personnel. The 1996 MEGAREG built on this foundation and added violations such as failure to develop and implement


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SOPs, failure to collect and analyse samples for E. coli and Salmonella, and meet Salmonella performance standard requirements, failure to collect and record testing results as well as failure to develop and implement a preventive HACCP risk management system. USDA enforcement has traditionally focused on catching firms that commit offences. With the MEGAREG the enforcement focus has been broadened somewhat. Non-compliance no longer just includes instances where firms are caught producing contaminated food. Now firms may be in non-compliance for improperly developing preventive control measures even if there is no evidence that this has resulted in contamination. In the event of any non-compliance at the slaughterhouse or packing plant, the plant’s Inspector-In-Charge (IIC) files a Non-Compliance Report (NR) notifying non-compliance. The IIC can also retain any products as is deemed necessary. The firm in question must immediately take corrective action considered appropriate by the IIC. The NR is filed with the plant’s HACCP documentation and is reviewed weekly by the IIC and the plant management. If the firm fails to take immediate and appropriate action to correct its procedures, the IIC must notify the plant (and the FSIS Compliance Officer) and withhold the FSIS’s Mark of Inspection. Withholding the Mark of Inspection temporarily affects the marketing of products since the Mark is required for commerce. The Mark may be withheld from specific products or, depending upon the violation, all products produced by the firm. The Compliance Officer then investigates the case and may recommend either to expand the withholding writ to include all products or, based upon a satisfactory Corrective Action Proposal by the plant, release the Mark of Inspection. The former case may hold if there are serious food safety violations, repeated NRs or failure of the plant to produce a satisfactory Corrective Action Proposal. The FSIS may file a Complaint to withdraw the Grant of Inspection which suspends inspection activities at the plant and hence, suspends all production since processing cannot continue without inspector supervision. The Administrator of the FSIS must sign-off on such action, which ensures that the food safety situation will be brought to the attention of the highest level of the FSIS. In the case of serious violations of food safety, the FSIS may refer the case to the appropriate US Attorney’s Office to pursue criminal prosecution which can involve both monetary penalties and perhaps imprisonment. If the latter case holds, the Compliance Officer issues a Consent Decision so the plant may resume operations. Once this happens, a third-party independent auditor periodically monitors for proper implementation of the firm’s Corrective Action Proposal and reports to the IIC and the Compliance Officer for a period of 60 days. The Consent Decision is considered valid for a period of 10 years so that if another violation occurs within this period the FSIS can withdraw inspection without an NR or an investigation by a Compliance Officer.

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The USDA is pursuing a number of new initiatives to expand or enhance its role in the food safety area. Prominent among these are the following. 1. It is seeking authority from Congress to recall product from the retail market. Currently the USDA’s authority to act in the face of a food contamination outbreak is limited to withdrawal of inspection and monitoring services in meat plants. But this does little to stop contaminated food, which has already found its way into the retail sector. It can and does use persuasion at the retail level, but is seeking enforcement powers at this level which will provide for civil penalties. 2. It is seeking to expand the adoption of HACCP to every stage of the food supply-chain. This is in line with the ‘Farm-to-Table’ strategy of the MEGAREG, which promotes the adoption of risk management plans based on HACCP among all food industry participants. USDA involvement in this initiative includes the training of both government staff and industry personnel on the correct development, implementation and monitoring of a HACCP-type risk management system. 3. An important issue for the FSIS is that of user-fees for government services such as in-plant inspections. Currently, the FSIS can only charge user-fees for inspectors who perform overtime duties, and these fees make up about 15% of the FSIS budget. However, pressures to move to a complete user-pay system of government inspections have emerged from both domestic and foreign sources. The public good rationale for not charging the industry for inspection services is being seriously questioned. For example, why should vegetarians be required to pay for such services through their tax dollars? Domestically, other areas of government, in the face of the government budget reductions in the early to mid-1990s, have moved to a user-pay system. And, other countries, such as Canada, have adopted a user-pay, cost-recovery programme for government inspection services. 4. The FSIS recognizes that small plants face constraints of economic scale in developing the mandatory HACCP plans. To assist these plants the FSIS has established the ‘Small Plant Demonstration Project’ which includes 13 generic HACCP risk management plans to serve as guides to developing low-cost plans that address the concerns of the small operators while simultaneously meeting the mandatory MEGAREG requirements. 5. The USDA is seeking to become more involved in consumer-oriented risk communication. Improper risk communication is seen to lead to two undesirable situations. First, the consumer’s perception of risk may exceed the actual risk of a particular food product, which can distort the market for US beef products. Second, the consumer’s perception of risk may be less than actual risk so that the consumer does not take appropriate care while preparing the food product. With regard to the latter, the USDA favours increased consumer education on the dangers and risks associated with food storage and preparation and on how these dangers and risks can be reduced.


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EPA This federal agency is generally concerned with the broader issues of environmental protection, but it does also play a role in ensuring food safety. The EPA is an independent agency of the federal government whose authority is derived from the EPA. It is responsible for protecting both the environment from significant biodiversity risks (usually those caused by human intervention) and protecting the US public from significant ‘environmental’ health risks (which, indeed, may have been caused by human intervention in the first instance, such as toxic waste pollution). Its role intersects with the US food safety system in two basic ways. First, it aims to ensure that the inputs, processes and by-products of food production do not contaminate the environment. For instance, with respect to intensive livestock operations, any wastes such as waters or solids are monitored to ensure they do not contaminate groundwater used for other growing processes or for animal and human consumption. Second, the EPA aims to ensure that environmental contaminants do not contaminate the food supply. Thus, the EPA conducts risk assessment research to establish tolerances and maximum residue limits for pesticides, veterinary biologics, GMOs and other inputs used in food production. The EPA assesses the risk to both public health and the environment from the use of these inputs. Once the EPA has established the acceptable tolerances and limits for these inputs, it is the responsibility of the FDA and the USDA to enforce the established limits with respect to the particular food products under their jurisdiction. Joint institute for food safety (JIFSAN) JIFSAN is a federal governmental initiative established in 1997 at the University of Maryland to advance the science of microbial risk assessments in the food supply. JIFSAN’s Risk Assessment Consortium provides a forum for coordinated scientific research and the sharing of risk assessment and risk management information and expertise with federal and state government agencies. The federal agencies involved in this initiative include the FDA, USDA and the EPA. State and municipal governmental arrangements As mentioned earlier, the USDA’s FSIS is responsible for inspection and monitoring of firms producing meat, eggs or dairy products for interstate or international commerce. Firms producing only for intrastate commerce are under the jurisdiction of state inspection authorities. Under the MEGAREG legislation, state and municipal authorities are responsible for ensuring that all meat plants producing only for intrastate commerce meet the MEGAREG risk management requirements for the adoption of SOPs, HACCP and microbial testing. To carry out this mandate, the state authorities may receive risk management

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assistance from the FSIS such as training of state inspectors on the federal standards (MEGAREG), sharing of equipment and technology and sharing of information and inspection results. Office of Management and Budget (OMB) OMB is the federal governmental agency responsible for assessing and analysing proposed new federal government regulations and legislation. One of the areas included in the OMB’s mandate is the assessment of food safety regulations. Through this mandate, the OMB can help shape the regulatory development process for food. The OMB assesses proposed regulatory action to ensure that it will generate desired outcomes and is not the product of political objectives. A guiding principle is to ask whether the proposed regulatory action is proportional to the risk. According to the OMB, any proposed regulatory action must be based on a credible cost–benefit analysis that is independently verifiable, and it must clearly and concisely identify regulatory options. The broad assessment framework utilized by OMB when analysing regulatory action involves four steps. The first is to identify ‘market failure’ to justify regulatory intervention. The second step is to analyse the impact of market failure to determine if it exists and whether it is significant enough to warrant intervention (e.g. competition, equity, employment, diversification impacts). The third step is to analyse existing laws and regulations to determine if the market failure may be addressed without new legislation. Finally, the fourth step is to analyse all regulatory alternatives presented in an attempt to identify an optimal regulatory intervention policy. With regard to the MEGAREG legislation, there is some question of whether it was effectively scrutinized by the OMB before it became law. According to Belzer (1998), the OMB claims the FSIS improperly identified market failures and did not adequately address why market failure, if present, would be a concern. Also, the FSIS did not analyse the existing laws or regulations such as the two Executive Orders for Generic HACCP Models (1982 and 1991) that are supposed to be used as the basis for any mandatory HACCP legislation. Further, the FSIS analysis failed to provide any regulatory alternatives to the MEGAREG Final Rule. As a result of these deficiencies, the OMB was unable to validate the FSIS analysis used to support the MEGAREG and was unable to determine if the regulatory action was indeed proportional to the food safety risk. Unlike the policy development strategies of the FDA and the USDA, the OMB believes that engaging the stakeholders at every stage may actually adversely affect the policy development since stakeholders will influence the policy development to include their desired outcomes. Instead, the OMB suggests that food policies and regulations should be developed according to the principles of establishing regulatory action proportional to the risk, basing it on credible cost–benefit analysis, which is independently verifiable, and providing clear and concise regulatory alternatives. Developing food regulation


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according to these principles will probably result in regulatory action capable of achieving socially desirable outcomes while avoiding excessive political influence. Non-governmental arrangements NCBA The NCBA claims to be a producer-led, consumer-focused industry association whose objective is to create ‘a dynamic and profitable beef industry, which concentrates resources around a unified plan, consistently meets consumer needs and increases market share’. The NCBA, created from the merger of the National Cattlemen’s Association and the National Livestock and Meat Board, is the marketing organization and trade association for over one million US cattle farmers and ranchers. Its focus on food safety is a function of the fact that after several domestic food-safety crises, US consumers have demanded an assurance that domestic meat products are safe. Hence, the marketing activities of the NCBA recognize the importance of consumer safety concerns both at home and in foreign markets. Activities of the NCBA include policy making and lobbying, support for science-based risk assessment research and development as well as the administration of both industry and consumer risk management and risk communication education programmes. Members must adopt the two principles of humane treatment of livestock and the responsible handling of meat products laid out by the NCBA’s Statement of Principles. One particular risk management and risk communication initiative of the NCBA is a coalition with the USDA, HHS and the US Education Department. The purpose of this coalition, known as the ‘Partnership for Food Safety’, is to develop consistent and memorable food safety messages and a comprehensive education campaign to teach both industry and consumers about the dangers of food-borne illnesses and the importance of good risk management production and preparation practices. One initiative, led by the coalition’s Coordinating Committee on Animal Production Food Safety aims to encourage the adoption of HACCP by ranches and feedlots where it is currently not mandatory. Another initiative under this banner is led by the NCBA’s National Food Safety Education Alliance. This Alliance promotes adoption of the FDA’s Food Code definitions by industry as a method for achieving consistency in the provision of consumer information. The NCBA has established a Regulatory Affairs Committee comprised of a Beef Safety Sub-Committee and a Beef Quality Assurance Program (BQAP) steering committee. The purpose of the Beef Safety Sub-Committee is to develop national policies for food safety and nutrition based on scientific risk assessment procedures, which are then presented to legislative authorities. For instance, a current policy of the NCBA is to support beef irradiation (also called cold pasteurization) for enhancing the safety of US beef products by

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reducing the incidence of microbial contamination. The BQAP steering committee seeks to promote the voluntary adoption by industry of quality assurance schemes consistent with the principles of HACCP and to facilitate the adoption of new technologies reducing the risk of microbial contamination. BQAP seeks to exceed the direct public regulations of the FDA and the USDA. USMEF USMEF is an industry trade association concerned with the export market access of US meat products, especially market barriers created by foreign food safety concerns. The USMEF represents livestock producers, meat packers, processors, purveyors, export companies and secondary supply-chain companies such as grain promotion groups, farmer organizations and agribusiness companies. It promotes US beef as both safe and high quality through risk communication activities such as foreign market promotions, trade seminars and foreign consumer education programmes. National Meat Association (NMA) The NMA is an industry association with a mandate to advocate the interests of the meat industry in the development of federal legislation and regulations impacting the meat industry. With the recent restructuring of the governmental regulatory framework in the US food safety system, the NMA also provides member firms with assistance in understanding and complying with the new standards and regulations. The NMA plays a useful role as liaison between industry participants and USDA inspection personnel. Despite recent efforts by government inspectors to communicate their issues better with meat plants, some conflicts still arise. The NMA intervenes to help resolve such conflicts by facilitating changes in plant operations and procedures to bring them into line with inspection standards and regulations. Other services and activities of the NMA include: providing information and assessment of the potential effects that government policy or regulatory developments might have on the industry as well as distributing weekly newsletters and publications discussing relevant and recent issues in the industry, providing technical resources and support for scientific risk assessment research, hosting seminars and workshops, and administering scholarship and internship programmes for educational research activities. AMI The AMI is an industry association dedicated to research, education and information on current issues relevant to the US meat industry. It provides regulatory and legislative advice, offers public relations services, conducts


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scientific and economic research, offers marketing and technical assistance, and sponsors education programmes. You may recall we talked earlier of the USDA’s desire to obtain legislative authority to recall food products from the retail sector. One recent initiative of AMI has been to oppose such a move. Its slogan is: ‘food safety starts in the lab, not the legislature’. Through an industry consortium (which also included the Grocery Manufacturers of America, National Broiler Council, National Food Processors Association and the National Turkey Federation), the AMI argued that research, education and continuous improvement in industry practices would do a better job of ensuring food safety than widespread recall authority of the USDA. AMI further argued that more punitive product liability measures would not make food any safer and that the federal government’s effort should focus on enhancing proactive measures not reactive measures. Rather than granting the USDA widespread recall authority, the consortium offered the following suggestions to reduce risk: ● ● ● ● ●

a comprehensive, coordinated and prioritized approach to food safety research (to assist risk assessment); sound animal health commitments on the farm (risk management); careful management of initial slaughter practices verified by scientific monitoring (risk management); commitment to the approval and subsequent adoption of the latest food safety innovations such as irradiation (risk management); and educational activities for consumers focused on food preparation techniques (risk communication).

Another food safety issue being considered by the AMI is foreign equivalency agreements or MRAs. These agreements are part of the FSIS ‘Farm-toTable’ initiative whereby FSIS officials are required to inspect the standards and regulations of foreign countries trading beef with the USA to ensure they are equivalent to US standards and regulations. The AMI supports the ability of the federal government to aggressively pursue MRAs through whatever means necessary (either bilaterally or multilaterally) to guarantee rapid market access for US products. The AMI argues this has a positive effect on the overall level of food safety because as market barriers are eliminated and as free trade is enhanced, all players will have to rise to the highest level of food safety. There will be a regulatory race to the top not a regulatory race to the bottom. International Meat and Poultry HACCP Alliance The Alliance was formed in March 1994 to promote and support the adoption of a uniform, consistent quality assurance programme to ensure a safer meat supply. The HAACP regime was chosen as the quality assurance programme best suited to meet the objective of the Alliance. The Alliance was formed under the auspices of the Center for Food Safety at Texas A&M University and

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provides a forum for interdisciplinary, intercollegiate study involving research, graduate education, extension and outreach. Working with industry, academics and government, the Alliance is developing a systematic and internationally standardized method for firms to implement a HACCP system. The target of the alliance is the entire supply chain; from ‘Farm-to-Table’. Some of the food safety issues being studied by the Center include the effects of microorganisms, nutrients, natural chemicals, industrial pollutants, residues and derivatives of biotechnology.

Implications of these Developments The dominance of the domestic food-safety crises appears to have set the restructuring of the US beef safety system on the following trajectory: To react to decreased consumer confidence through an explicit focus on consumer protection and an increased emphasis on direct governmental involvement in the food safety system.

Let us explain. The major driver for change in US institutional arrangements for food safety has been a number of highly publicized domestic foodcontamination crises. As a result, the major restructuring of domestic arrangements has been designed to regain lost confidence in the US food safety system. These crises appear to have been interpreted by the public as a failure of industry rather than a failure of government. As a result, governmental arrangements have been careful to be seen as ‘governing’ the industry in a diligent manner in order to ensure consumer protection. This has resulted in a governmental role that dominates, rather than partners with industry. Yet, it is important to note that while the USDA is championing food safety and consumer protection, it is also promoting producers, as there is no institutional separation between these two roles. The primary focus of US restructuring has been on the slaughter stage of the meat production process rather than on the pre-slaughter or the postslaughter stages. Thus, there is differential regulatory supervision along the entire food chain; the bulk of intervention coming at the slaughter stage. But interestingly, while there has been a shift towards more industry responsibility and accountability at the slaughter stage, the creation of the Under Secretary for Food Safety and the introduction of the MEGAREG legislation, has resulted in more direct government involvement, not less. Another important focus of the restructuring of the US food safety system is upon meat products intended for trade, either interstate or international. The highest safety standards are faced by those firms wishing to trade their products, not those firms who produce for the local (intrastate) market. Increasing government involvement in meat safety has been associated with an increased emphasis on a scientific risk analysis framework as a basis for food policies. This development is strongly supported by the US beef industry.


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Indeed, the beef industry has been very proactive in encouraging higher quality through the adoption of science-based quality assurance programmes and, hence, indirectly enhancing safety. Two important challenges lie ahead for those involved in restructuring the US meat safety system. First, the unions of government inspectors have resisted any change in the traditional role of government on the slaughter floor, especially the shift from government to industry inspections under the HACCP system, because such a move is seen as a direct threat to jobs. Second, while the political momentum generated by the domestic food contamination crises provided the impetus for significant restructuring, this momentum has decreased and it appears the impetus for restructuring has slowed and become simply a bureaucratic project rather than a national initiative to overhaul the entire system. Finally, there is the question of whether the US system is moving towards (converging) or away from (diverging) an international integration of food safety standards. It is too early to say decisively what direction the USA will take. However, one can say that the restructuring of the US system is certainly not bounded by international trends in the way the other countries under study are. The USA is by far the largest producer and consumer of beef in the world – and while international trade in beef is not insignificant, it pales in comparison to the domestic market. In 2000, beef imports amounted to 10% of consumption and beef exports amounted to 9% of production. This is not so with the other countries under study. In 2000, beef exports from Canada amounted to 45% of production, beef imports to the UK amounted to 29% of consumption and beef exports from Australia amounted to a whopping 62% of production! Restructuring of the institutional arrangements for food safety in the USA has been primarily focused on domestic issues and the subsequent changes have been made in order to deal with these domestic issues.

Chapter 4

Canada

Introduction Our second stop on the tour is Canada. Canada’s beef industry is about onetenth the size of that in the USA. Beef production in 2000 was pegged at about 1.1 million tonnes and nearly half of that was destined for export. Historically, Canada has had a close trading relationship with the USA, some would say, too close. Traditionally, Canada exports to the USA from the west (Alberta and Saskatchewan) and imports from the USA to the east (Ontario and Quebec). Trade between the two countries is in both beef and live cattle. The USA accounts for about 80% of Canadian beef exports and supplies about half of Canadian beef imports. Canada’s live cattle trade is virtually all with the USA. Canada exports over one million head of cattle to the USA with fed cattle for immediate slaughter representing about 80% of the total. It is clear that the Canadian beef industry is highly dependent on the USA as an export destination and moreover, is more dependent on the USA than the USA is dependent on it. This unique trading relationship colours the nature of the beef food safety system being developed in Canada. The layout of this chapter follows that of the previous one. There are three sections: the drivers for change; developments in the institutional arrangements in the Canadian food safety system; and the implications of these developments.

Drivers for Change The Canadian food safety system has undergone significant restructuring since 1996, motivated by both external and internal drivers. However, the main drivers are external. It should come as no surprise the main driver for change in Canada is the restructuring going on in the food safety system south of its border. With the Canadian beef industry so dependent on the US 55

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market, Canada is very sensitive to developments taking place in the US beef food safety system. This is not to say that there are no internal drivers for change. On the contrary, the government-wide focus on deregulation launched in the early 1990s also played a significant role. The external drivers will be discussed first, followed by the internal drivers.

External drivers for change The main external drivers for change in the Canadian food-safety system are the food safety crises and issues arising in other countries. Thanks to widespread media coverage, such crises and issues, especially those in the USA and in Europe, do not go unnoticed by the Canadian public. Indeed, this contagion effect could lead to a broadening of domestic consumer concerns to include, say, British concerns about animal welfare issues (discussed in Chapter 5). With a significant reliance upon export markets, the Canadian beef industry and the food safety system are well aware of the structural changes occurring in important export markets. These include both the legislated and market regulations adopted as part of the foreign food supply chain. For instance, recent domestic crises in the USA have motivated structural change in the US food safety system, which, in turn, has altered the market access rules for Canadian beef products. In order to ensure market access and industry competitiveness, the Canadian food safety system has had to restructure in a manner at least equivalent to the restructured US system. Further, while Canada is not the only country exporting beef products to the USA, its high level of dependence on this market means it will be highly sensitive to any restructuring of the US food safety system. Indeed, as will be shown later in this chapter, the restructuring of the Canadian food safety system is very much predicated on the restructuring going on in the USA.

Internal drivers for change An important internal driver for structural change in the Canadian food safety system was the federal government’s focus on deregulation in the early 1990s. This had two objectives; to reduce government costs and increase industry competitiveness. The first and perhaps more important objective was budget restraint among all levels of government. The desire of the government to reduce costs was captured in a Canadian Treasury Board requirement that government services be scrutinized according to whether they were legitimately essential ‘public goods’ or, instead, they were really ‘private goods’. Taxpayers would still pay for public goods, but private goods were required to be delivered on a cost-recovery basis. This produced a reallocation of resources, cuts in government services and/or shifts to a cost-recovery basis for some government services and activities. Of particular interest to us

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was the establishment of the Canadian Food Inspection Agency (CFIA) in April 1997. We will discuss this important federal agency in detail later, but for now let us note that one of its stated objectives was to streamline the delivery of federal inspection services to make them efficient and cost effective. This had previously been a problem area for the government. Budget restraint impacts the overall restructuring of the food safety system by limiting or reducing the resources available for government agencies to perform food safety activities and services. The second objective of deregulation was to increase industry competitiveness. The aim here was to assess the efficiency and effectiveness of regulations, which for food safety regulations tended to encourage a shift towards the risk analysis-based regulatory framework. The most significant non-driver for change is sensationalized domestic food contamination crises. There have not been any. This is not to say there have not been any reported instances of food contamination, there have. But they have not been sensationalized by the local media in the way they might have been in other countries. It is not clear why. Perhaps the Canadian media believe their public is less hungry for such stories. This raises a potential problem for Canada – and that is complacency. Media sensationalization has been such a powerful driver for change in some other countries (e.g. the USA) that to not experience it could lead to vulnerability if and when Canada was to ever experience a major food contamination crisis. Complacency could also adversely affect Canada’s international competitiveness if its food safety system is not judged to be as advanced as its competitors’ food safety systems, which have been restructured in response to such domestic crises.

Relationship between external and internal drivers The absence of a domestic food safety crisis in Canada means that domestic consumer concerns cannot drive (or shape) any restructuring of the domestic food safety system. Instead, the most influential drivers in Canada include an external one (the restructuring going on in the US food safety system) followed by an internal one (pressures to reduce government expenditures). It is these drivers that will provide most of any impetus for change in the domestic food safety system. Not only will they dictate the pace of change but also the shape of any change. Whereas the prime motivation for change in the USA was the restoration of consumer confidence, in Canada it is international competitiveness. In the next section, we will discuss the sort of institutional arrangements that characterize Canada’s food safety system. The most significant of the institutional arrangements to follow directly from these drivers for change are the development of a national, harmonized Canadian Food Inspection System (CFIS) and the establishment of the CFIA. Proposals to establish a single

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autonomous food agency stretch back as far as 1970. However, it was not until 1996 that the idea was acted upon along with the CFIS. The timing was no accident, and coincided with the major restructuring going on in the USA food safety system. In the USA, the 1993 E. coli outbreak at a fast-food franchise in the Pacific-Northwest led directly to enactment of the US MEGAREG legislation in 1996. The Canadian government could not ignore these changes to the US food safety system and the challenge that this posed for Canadian exports. But the federal government was not only concerned that the Canadian beef industry be responsive to restructuring taking place in the US food safety system, but also that the whole process of meat inspection in Canada be streamlined with the financial burden of meat inspection being shifted from government to industry. The CFIS and the CFIA were institutional arrangements sympathetic to both these needs. They are discussed further in the next section.

Institutional Arrangements The Canadian food safety system is composed of both governmental and nongovernmental institutional arrangements. These are discussed in the next two subsections. The arrangements will be identified according to the type of risk analysis activities they perform; risk assessment, risk management or risk communication.

Governmental arrangements What is interesting about the Canadian food safety system is that the application of standards and regulations on meat and meat products depends upon the destination of the product. Meat and meat products intended for interprovincial or international markets are subject to federal standards and must be processed in establishments that are federally licensed and registered. Federal standards for export to the US market require that plant facilities meet the USDA regulations, detailed in the MEGAREG, including: ante- and postmortem inspection of slaughter animals managed by veterinary surgeons; monitoring for microbial contaminants, veterinary residues, toxins and chemical contaminants; inspection and monitoring of processing techniques and storage and transportation facilities; and perhaps most importantly, the adoption of a HACCP food safety system. Meat products intended only for intraprovincial markets are subject to standards and regulations that are specific to the particular province or region where the products are marketed. Common to all of the firms producing only for intraprovincial trade, is that they are not required to be federally registered. However, across Canada, these establishments may be inspected, monitored or audited by:

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the federal government through a federal–provincial agreement; the provincial government through Agriculture and AgriFood Canada (AAFC) or Health Canada (HC); or the municipal government through public health offices.

With respect to the federal government, inspection services may be provided by the CFIA as a result of ministerial agreements, on a cost-recovery basis. Provinces with such agreements include Saskatchewan, Manitoba and British Columbia. Therefore, firms in these provinces can voluntarily have federal inspection services. Not all firms choose to meet the federal standards voluntarily and instead are subject to provincial standards. Provincial inspection services are generally focused on slaughtering plants and processing facilities and may involve standards or regulations on the construction, processing techniques and methods as well as the type, frequency and cost of inspection. The provincial Departments of Agriculture or Health may have jurisdiction over provincial inspection services. There are differences in the provincial regulation and inspection of plants because the standards and regulations are not required to be nationally consistent and provincial inspection services are not mandatory in all jurisdictions. For instance, licensing of slaughtering plants is mandatory in all Canadian provinces, while licensing of processing plants is mandatory in all provinces except Saskatchewan and British Columbia. Inspection of slaughtering plants is mandatory in all provinces except Newfoundland, New Brunswick, Saskatchewan and British Columbia. Inspection of processing plants is also mandatory in all provinces except Newfoundland, New Brunswick, Saskatchewan and British Columbia. Finally, provincial inspection of meat products at the retail level is mandatory for all provinces except Newfoundland, New Brunswick, Saskatchewan and British Columbia. There are no mandatory provincial inspection service standards and regulations for Newfoundland, New Brunswick, Saskatchewan and British Columbia. Therefore, firms in Saskatchewan or British Columbia that opt out of federal inspection (which is voluntary for firms engaged only in intraprovincial trade) do not face any mandatory provincial standards and regulations. In both Saskatchewan and British Columbia some municipalities have by-laws requiring mandatory inspection services, either federal or provincial, in order to access some urban markets. In Saskatchewan, these centres include Saskatoon, Regina, Prince Albert and Moose Jaw. All firms which do not fall under any mandatory inspection services are subject to only one regulation; a sanitation inspection by a local health official. In Saskatchewan, the frequency of inspection by a local health official is once every 2 years. The result is that consumers in Saskatchewan, outside of Saskatoon, Regina, Prince Albert and Moose Jaw, may buy meat that is federally inspected, provincially inspected or not inspected at all. Therefore, as a result of the multi-jurisdictional nature of provincial, territorial and municipal governmental arrangements, the Canadian food

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safety system can be very inconsistent across the country. In fact, the only thing that is certain is that only exports from Canada have to meet the highest available standard (federal standard). The domestic meat supply does not have to meet the federal standard and may not be subject to the same level of food safety assurance as export products. Instead, domestic consumers choose from meat products produced under sometimes quite different meat safety systems, and these systems vary from province to province. Further, if the ‘National Treatment Provision’ is internationally interpreted to literally mean ‘the only standards that can be applied to imports within a province or territory would be those that govern trade within that particular province or territory’ then, with respect to Saskatchewan, consumers may purchase foreign meat products whose only mandatory standard was a sanitary inspection up to 2 years earlier. Over the last 30 years, there have been four separate government studies proposing that government involvement in food safety be through a single food safety agency. These include the Chapman–Osbaldeston Report (1970), the Cabinet Evaluation Study of Food Inspection (1975), the Single Food Inspection Agency Task Force (1979) and the Task Force on Program Review a.k.a. the Nielson Task Force (1985). The proposals were not adopted because it would have required too much regulatory reform and departmental re-alignment and coordination in order to work, and until there were strong external and internal drivers there was not the political motivation within Canada to make the necessary changes. After the Nielson Task Force Report in 1985 the Interdepartmental Committee on Food Regulation (ICFR) was established to: 1. Identify the roles of each department in the food safety system; 2. Examine the efficiency of the system; 3. Promote the coordination of food safety efforts; and 4. Promote the adoption of food safety enhancing innovations, including self-regulation, where appropriate. Thus, it is clear the inconsistency of food safety regulations across different jurisdictions was a major concern. The ICFR established a number of sub-committees to help carry out its mandate. According to a later review by the Office of the Auditor-General of Canada (1994) only one of these sub-committees was active. That was the Sub-Committee on Food Inspection, which attempted to coordinate inspection services across the federal departments and between the provinces and the municipalities. In 1987, concurrent with the work of the ICFR, HC established the Federal–Provincial–Territorial Committee on Food Safety. This was a coordinating committee with the objective of streamlining food safety initiatives and programmes among the federal health department and the provincial and territorial health departments. In 1990, AAFC also established a national coordinating committee, the Federal–Provincial–Territorial Committee on

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Food Safety independent of HC’s Committee with the same name. The mandate was to promote uniform food standards and streamline the food safety initiatives among departments of agriculture. It has been suggested by an HC official that AAFC formed its own national coordination committee to prevent ‘empire-building’ by HC in the area of food safety. In 1992, under its broader national coordinating initiative, AAFC established the Federal/Provincial Meat Inspection Committee (FPMIC) to examine the government role in meat inspection in the Canadian food safety system with respect to the promotion of interprovincial meat trade. The focus of this committee was on the inspection of meat slaughtering and processing across the various provincial, territorial and municipal regions in Canada. The FPMIC developed the National Domestic Standard (NDS) for meat plant facilities, processing techniques and inspection methods. Yet, the NDS was not adopted due to a lack of provincial consensus on issues such as plant facilities and inspection frequency and uncertainty about the economic costs of adoption. One of the main issues for the provinces was how the NDS would play out with the many small volume operators that dotted the landscape. Their argument was that the proposed stringent nationally harmonized standards would pose significant economic costs for these operators without providing equally significant economic benefits. In 1993, the AAFC Federal–Provincial–Territorial Committee on Food Safety presented the FPMIC recommendations on coordinating and harmonizing meat hygiene and inspection standards to the Canadian Ministers of Agriculture. It was this committee that first proposed the development and implementation of the CFIS and in 1994, proposed the creation of a CFIS Implementing Group (CFIS-IG). The proposal would link together the activities of ICFR with the activities of the national coordinating committees for HC and AAFC to create a nationally coordinated food inspection system. This idea for the creation of a CFIS-IG shocked HC, which was already undertaking its own coordinating work. However, the CFIS-IG was finally born 2 years later in 1996. Following the 1993 proposal for a CFIS and a CFIS-IG, the independent initiatives of HC and AAFC were combined, along with the Department of Fisheries and Oceans (DFO), in a joint steering committee that sought ways to streamline standards and regulations not just across traditional departmental lines (i.e. Health and Agriculture) but also across local, provincial and federal jurisdictions. Closely following this amalgamation were two separate reviews of the government role in the Canadian food safety system. The first review, by the Office of the Auditor General of Canada, was published in the 1994 Report of the Auditor General of Canada, Volume 8, Chapter 13 on the ‘Federal management of the food safety system’. The report concluded that a single department or agency should provide food inspection. It also concluded that the single food safety agency should focus on consumer protection by emphasizing human health/food safety issues, not producer promotion. This would require a

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separation between the government department that promoted food safety and the government department that promoted the agrifood industry. Further, the report concluded that the proposed food safety system should be implemented in a cost-effective/cost-recovery way, since the Treasury Board required government departments and agencies to provide cost-recovery services to ease budgetary burdens. Therefore, the food safety services were encouraged to adopt the risk analysis framework (risk assessment, risk management and risk communication) provided as ‘private goods’ on a costrecovery basis. The second review of the role of government in the Canadian food inspection system was the Program Review II of AAFC. This review was driven by the objective of identifying areas of substantial cost reduction within AAFC’s operations through institutional clarification and organization. There were two major conclusions of the review pertaining to food inspection services. First, inspection services should be performed in a cost-recovery fashion, consistent with the requirements of the Treasury Board to reduce government expenditures. Second, federal–provincial–territorial coordination and partnerships were considered necessary to improve inspection efficiency and effectiveness and to remove differential regulatory requirements across Canada. Some of the recommendations of the Auditor General’s Report and AAFC’s Program Review II were included in the 1995 Federal Budget. In this budget, the federal government called for the creation of the Office of Food Inspection Systems (OFIS) to examine the federal food inspection bureaucracy and identify areas of overlap and duplication. Out of OFIS came two initiatives: the CFIS and the CFIA. The CFIS was to be an integrated, national food inspection system responsive to the safety concerns of consumers and the competitiveness concerns of industry. This system was intended to improve inspection efficiency and effectiveness and harmonize regulatory requirements across Canada. To assist the development of CFIS, the CFIS-IG was established in 1996 with a mandate to harmonize federal–provincial inspection systems in order to achieve a national inspection system. It consists of federal, provincial, territorial and municipal government representatives from agencies such as Health, Agriculture, Fisheries and Oceans. In 1998, the CFIS-IG noted the goals of the CFIS to be: high quality, safe food supply, harmonized standards, cost-effective inspection system, enhanced access to markets for Canadian food producers, scientific risk assessment-based inspection and protection from economic fraud (CFIS-IG, 1998)

Functionally, CFIS-IG facilitates the development of sector-specific nationally harmonized food safety codes. National codes were developed for such sectors as dairy, meat, and poultry. With respect to meat, the CFIS-IG picked up on the work began by AAFC’s FPMIC to develop an NDS. This code,

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now known as the National Meat Code, is being designed to apply consistently across all provinces, territories and municipalities. The stated goal of the National Meat Code is to develop ‘one set of requirements for meat inspection which are reasonable and scientifically-based and will protect the public health, eliminate provincial trade barriers and protect Canada’s economic standing in the international marketplace’ (CFIS-IG, 1998). Although progress has been made on the development of the National Meat Code, at the time of writing the code had not been finished. The second initiative of OFIS was to propose an arrangement by which the CFIS could be administered. In the same year that the CFIS-IG was established (1996), the OFIS presented four options to the federal government and to national stakeholder meetings across Canada for an administrative arrangement. They were: 1. Maintain the status quo; 2. Strengthen the role of ICFR and retain its past responsibilities; 3. Create a new autonomous food inspection agency to focus on risk management while HC focused on risk assessment; and 4. Create a new autonomous food safety agency combining all current risk analysis food safety activities of HC, AAFC and DFO; risk assessment, risk management and risk communication. In the 1996 Federal Budget, the federal government announced it had decided on the third option; the creation of an autonomous food inspection agency to focus on risk management. On 16 September 1996 Bill C-60 announced the creation of the CFIA to be established on 1 April 1997. Essentially, the CFIA is a federal governmental Special Operating Agency administering and enforcing all federal food inspection legislation and providing all risk management activities and services. It consolidates all those federally mandated food inspection and animal and plant quarantine services previously performed by HC, AAFC and DFO. As a Special Operating Agency, the CFIA is administratively distinct from the traditional government departments such as HC and AAFC (although it reports to Parliament through the minister of AAFC). The agency is required to be open and transparent. And, with a projected initial budget of C$300 million for 1998/99, the CFIA is required to move towards cost recovery and to be managed in an increasingly commercial manner. In fact, the projected revenues for 1998/99 fiscal year were C$60 million for the inspection services alone. The current government involvement in the Canadian food safety system will be discussed in four sections below according to the governmental arrangement involved: (i) HC; (ii) CFIA; (iii) AAFC; and (iv) provincial, territorial and municipal governments. HC and the CFIA assume the major roles. HC establishes the food policies associated with human health, safety and nutrition where these policies are required to be based on scientific procedures for risk assessment and may result in food industry standards, guidelines, codes of

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practice or regulations. The CFIA provides the subsequent risk management activities of inspection, monitoring and auditing of the food industry for compliance with the food policies developed by HC. In the case of industry non-compliance, the CFIA is also responsible for the enforcement of the food policy. AAFC plays an indirect role promoting the domestic food industry through various programmes and initiatives while at the provincial, territorial and municipal level, there is a diverse range of government involvement. HC HC’s role in the Canadian food safety system is to ensure both short- and long-term consumer protection through the provision of both safe and nutritious foods. The specifics of its role are set out in its Food Program and deal with areas of food safety covered in the Food and Drugs Act. Principally, the role is to develop food policies based on scientific risk assessment procedures. However, HC’s mandate extends beyond risk assessment to include some aspects of risk management (e.g. the development and promotion of GMPs) and risk communication (e.g. consumer education and nutrition labelling). Let us take a closer look at the various components of its role, grouped under food policies and risk assessment, risk management and risk communication. FOOD POLICIES AND RISK ASSESSMENT. HC’s development of food policies is based on a six-step process involving: issue identification; issue prioritization; sciencebased risk assessment; policy option development; policy decision making; and, finally, policy implementation. One priority objective of HC in carrying out this process is transparency. The process is open to broad consultation at all stages where the consultation network includes all levels of government, food industry participants, consumers and health-care industry participants. To date, the consultations have yielded a number of important policy positions, namely:

1. All food policies must be determined using a risk analysis framework, which is based on scientific evidence where human health and safety impacts (not broader socio-economic considerations) are the element of concern. 2. The scientific evidence must be credibly obtained from peer-reviewed and internationally accepted research sources. 3. Other impacts must also be considered after establishing the health and safety impacts; where other impacts include economic, trade, social and environmental impacts. (In this sense, Canadian food safety policies must have a firm scientific foundation, but based on such a foundation they can then deal with broader non-safety issues.) 4. Ongoing, transparent stakeholder consultation must be an integral part of food policy development. Thus, the foundation of HC’s food policies is science-based risk assessment procedures where risk is associated with human health and safety risks

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only. Socio-economic risks are not a factor. The risk assessment procedures begin with the identification and characterization of hazards associated with a given food product. Hazards include pesticide residues, veterinary biologics, microbial pathogens, food additives as well as the nutritive fortification of food products. This leads to the development of a risk profile for that food product. A risk profile ranks the risk of the product to human health. It includes the probability of the occurrence of the risk and the establishment of maximum tolerance targets for the presence of microbial contaminants. An important objective of the Food Program is the establishment of consistent risk profiles across all products so the allocation of HC’s resources may be optimized. It devotes more resources to the more risky products. The risk assessment procedures and the risk profiles form the scientific foundation of HC’s services and activities. These include pre-market product reviews that focus on the human health and safety impact of the food product. Pre-market reviews are mandatory for both domestic and foreign products destined for Canadian markets. Product attributes, which are unrelated to food safety, are not considered during the pre-market review. These reviews involve a multi-disciplinary approach to determining the product’s safety according to its risk profile. HC’s interest in food policies and risk assessment extend beyond the borders of Canada. HC provides assistance in the development of international food policies. In particular, HC participates in the development of Codex standards, guidelines, codes of practice and recommendations to ensure that Canadian safety standards are reflected in international standards. Such participation also influences domestic standard setting. Finally, in the risk assessment area, HC is exploring the possibility that third parties may perform some of the scientific risk assessment activities in the future. HC would continue to be responsible for food policy setting and risk assessment decision making for the food safety system. However, non-governmental parties may be involved with the technical risk assessment activities. RISK MANAGEMENT.

Once a food safety policy has been developed and adopted, HC sets food safety standards, guidelines, codes of practice and, when necessary, regulations for the food industry. Thus, regulations are viewed as only one of several tools available to HC to implement the policy. They tend to involve specific rules with little flexibility in interpretation. And, they can be the most effective tool for ensuring minimum essential standards are met. Codes of practice, on the other hand, tend to be much broader and more open to interpretation. As a result they may be more effective at providing latitude and flexibility of response in the food safety system. In 1989, HC developed a programme for food manufacturers on GMPs. These are risk management strategies designed to identify those food-processing methods and techniques that minimize the risks to human health. GMPs are based on HC’s Voluntary Code of Practice (VCP) – General Principles of Food

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Hygiene for the Food Industry in Canada released in 1983. The VCP was based on the Codex codes of hygienic practice and, consequently, was designed to be internationally consistent. For a particular manufacturing operation, the degree of stringency of the GMPs is based on the risk profile of the food product being produced. According to the GMP guidelines, food manufacturers must keep detailed records commensurate with the product’s risk profile so they possess documented evidence that the products are safe and nutritious and that appropriate risk management efforts are being undertaken. The information generated in this way is assembled to create a public health intelligence network to monitor the incidence of human health risks associated with food products. Eventually, the goal is to link domestic and international government health agencies with domestic and international industry participants. This is intended to provide a comprehensive, accurate and timely set of information on the incidence of food-borne illness and thereby, to improve the accuracy of the risk profiles. The adoption and implementation of GMPs by food manufacturers is voluntary, although HC does encourage their adoption at all stages in the food supply chain. Currently, firms that process food products with a higher risk profile are targeted by HC. Further, HC has recognized that small firms face higher costs during the development, adoption and implementation of GMPs and so have instituted a staggered phase-in period for the establishment of GMPs depending on the risk profile of the firm’s product and the firm’s size. This initiative has not been without problems for HC. In particular, it has been the subject of a turf dispute with the CFIA. GMPs are a risk management tool, but CFIA views risk management as its area of responsibility. The jurisdictional dispute between the two federal agencies concerned has been a hindrance to the implementation of GMPs. HC has one other responsibility in the risk management area and that is to audit the risk management activities of the CFIA. The objective of the audit is to assess the effectiveness of the CFIA’s programmes and activities related to the inspection, monitoring, surveillance and enforcement of food safety and nutrition policies. RISK COMMUNICATION. HC is involved in several risk communication activities. One such activity is the National Partnership for Consumer Food Safety Education Program involving the CFIA and 20 other organizations including industry and consumer groups. This programme recognizes that consumers have an opportunity to limit food-borne illness. The objective is to provide accurate and timely information on those food handling and preparation techniques that minimize the risk of contamination. For instance, most microbial contaminants may be eradicated simply through cooking the food product at adequate temperatures. Consumers who are educated about health and safety risks play an important role in ensuring their own health and safety.

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Nutrition labelling is another risk communication activity of HC. HC believes that current label requirements do not provide enough information about inputs, production and processing methods and product attributes for consumers to make good nutrition decisions. Thus, HC is pursuing a strategy to encourage consistent labelling of food products that adequately signals standards of nutrition. There are four benefits of a consistent and widely used labelling system. First, it enables consumers to make informed consumption choices, aiding in consumer sovereignty. Second, it encourages producers to supply foods incorporating sound production and nutrition principles. Third, it prevents mislabelling that improperly identifies possible human health and safety hazards. Fourth, it prevents economic fraud where processors claim production techniques or nutritive contents that are not accurate. One additional dimension to the nutrition labelling issue is the development of US labelling regulations. US labelling requirements require the provision of more and different information from what is accepted in Canada. This has implications for Canadian food exports to the USA, which would need to abide by the US regulations. CFIA The CFIA is an autonomous Special Operating Agency of the federal government created in September 1996 and established on 1 April 1997. Its primary responsibility is to undertake risk management activities including the inspection and monitoring of domestic food establishments and enforcement of the food safety policies developed by HC. It has extensive jurisdiction over all the food industries in Canada as well as jurisdiction over imports into the Canadian food supply. Like HC, the CFIA may, if it chooses, permit other, non-governmental parties to provide these risk management activities. The CFIA pursues four general objectives. They are: 1. To ensure consumer protection from risks to human health. Apart from the inspection, monitoring, and enforcement activities, this includes promoting the adoption of safety assurance risk management schemes by food industry firms such as a HACCP system. 2. To ensure consumer protection from economic fraud arising from the mislabelling or misrepresentation of food products. 3. To promote market access for Canadian food products. Unlike the first two objectives, this role is a producer promotion role that involves the CFIA promoting the safety and quality of Canadian food products and the effectiveness of the Canadian food safety system both domestically and internationally. 4. To ensure the CFIA is operated in a cost-effective manner. This includes streamlining food safety rules through a coordinated national food inspection system built on a user-pay principle. It is interesting that the CFIA objectives include both consumer protection and producer promotion activities despite the Auditor General’s report specifying that these two objectives should be institutionally separated.

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The legislation governing its operation is the 1997 Canada Food Inspection Agency Act. This Act confers on the CFIA extensive jurisdiction over 13 acts of parliament as they pertain to food safety and inspection activities. These Acts include the Canada Agricultural Products Act; the Consumer Packaging and Labelling Act; the Feeds Act; the Fertilizers Act; the Fish Inspection Act; the Health of Animals Act; the Canadian Meat Inspection Act; the Seeds Act; the Food and Drugs Act; the Plant Breeders’ Rights Act; the Plant Protection Act; the Canadian Health Act; and the Agriculture and Agri-Food Monetary Penalties Act. This last act was created to establish monetary penalties for non-compliance of firms with the various food safety rules subject to enforcement by the CFIA. Administratively, the operational divisions of CFIA, which carry out the inspections and so on, are organized according to four regional areas; the Atlantic, Quebec, Ontario and the West. Of most concern to us is the Food Inspection Division (FID). In April 1998, the FID was re-organized into four new food directorates: (i) Animal Products (meat, poultry, dairy, fruit and vegetable divisions); (ii) Plant Products; (iii) Program Laboratories; and (iv) Policy Planning and Coordination. The first of these directorates is responsible for ensuring the safety of meat products. The FID focuses on two types of risks: 1. Contamination risks from pesticide residues, heavy metals, veterinary residues, microbiological pathogens or natural toxins; and 2. Misinformation risks from the mislabelling of allergens, additives, reworks, processing aids or preservatives which may have adverse health effects on sensitive consumers. To manage these risks in the Canadian beef supply chain, the FID, and in particular the Animal Products Directorate, undertake a number of activities in accordance with the 1985 Meat Inspection Act. They are: 1. Registration and approval of meat plants (slaughterhouses, meat processing plants, meat import and meat storage facilities) involved in interprovincial and international trade; 2. Inspection of the registered meat plants; 3. Administration of scientific tests at the meat plant; 4. Assistance with the voluntary adoption by registered meat plants of a CFIA-approved HACCP system – this initiative is known as Food Safety Enhancement Program (FSEP); 5. Enforcement of food safety regulations at the meat plants; 6. Inspection and monitoring of imported meat and meat products; and 7. Administration of scientific testing programmes and enforcement of labelling regulations at the retail level. Let us consider these activities in a little more detail.

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REGISTRATION AND APPROVAL OF MEAT PLANTS. The FID is responsible for the registration and approval of plants that produce for either interprovincial or international markets. According to the Meat Inspection Act, no firms may operate a registered establishment without a federal licence. And meat plants, which possess a licence, must apply for registration with the CFIA if they are involved in interprovincial or international trade. The application for registration must include a detailed account of the establishment’s processes, procedures and specifications, including a description of the plant’s structure, the grounds and the equipment used. Upon approval, the plant is issued with a verification number. INSPECTION OF REGISTERED MEAT PLANTS. Approximately 1500 FID inspectors perform mandatory inspections in registered meat and poultry plants across Canada. Federal inspection is not required in plants involved only in intraprovincial shipments of meat. But, in fact about 98% of the domestic industry’s output is federally inspected. Of the carcasses, which are federally inspected, about 0.5% are rejected from the human food supply. The inspection of domestic meat plants focus on slaughtering and processing facilities and involve both ante- and post-mortem inspection. There are two different approaches taken to the inspection of such meat plants in Canada. The choice of approach depends on whether or not the meat plant in question has adopted a CFIA-approved HACCP system. The inspection procedure used for firms, which have not adopted HACCP, is discussed immediately below, while the procedure for firms, which have adopted HACCP, is discussed in the section ‘Assistance with the voluntary adoption of HACCP’ on page 70. For those domestic meat plants without HACCP, inspection is visualbased, where veterinary surgeons or animal health officers use organoleptic techniques to identify potential health hazards and the possible presence of contaminants. At the slaughterhouse, ante-mortem inspection is carried out to ensure: (i) there is no evidence of abnormal behaviour or appearance among the live animals; (ii) that diseased or injured animals are segregated; (iii) that animals are not handled in a manner causing avoidable pain or avoidable distress; and (iv) that animals have not died before the controlled killing. All animals destined for slaughter must be inspected a maximum of 24 h before slaughter using a two-step process. The first step is to segregate the animals based on appearance of health, disease or abnormality. The second step is to provide a mandatory veterinary examination and diagnosis of all the segregated animals deemed unhealthy or abnormal. Following the veterinary examination, affected cattle may be either released for slaughter or further segregated. In the latter case, the veterinary inspector assesses whether the animal must be destroyed or may be returned to the feedlot and medicated to improve its health for slaughter at a later date. Post-mortem inspection of the carcass focuses on the muscle tissue, the lymph nodes and the internal organs, to ensure that all carcasses appear

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normal and free from disease (i.e. such as lesions that generally appear on the organs of a tuberculosis-infected bovine) and that all materials used from carcasses (e.g. blood, organs, etc.) are clearly identified. The federal inspectors also perform invasive chemical residue testing activities on products pulled from the supply chain in the processing plant or at the retail level. At the discretion of the inspector, samples taken randomly along the processing stages or samples that appear to be diseased or abnormal may be sent to the Program Laboratories Directorate of the FID for chemical residue testing. This can include samples from those animals that have been segregated and destroyed in order to determine the reason for the animal’s unacceptable health. It should be noted that all of the CFIA activities and services are provided on a cost-recovery basis and their frequency is a function of the firm’s history of compliance. Since each inspection and audit described above will cost the firm money, the CFIA has created an incentive for compliance among industry. For instance, if non-compliance is found, the frequency of inspection and audit will go up and the costs to the firm for ensuring food safety will also go up. ADMINISTRATION OF SCIENTIFIC TESTS AT THE MEAT PLANT. The FID’s Program Laboratories Directorate administers four scientific testing programmes for microbiological, chemical residue or natural toxin contamination. They are:

1. The Core Monitoring Program where samples are tested to determine the level of known residues such as sulphonamides, antibiotics, pesticides, hormonal substances and microbial pathogens, that is, substances on the critical list of contaminants; 2. The Exploratory Monitoring Program where samples are tested for the presence of any new residues currently not on the FID’s critical list of contaminants; 3. The Surveillance Program which is a traceback programme designed to match any samples that have been identified as contaminated with the herd of origin and the slaughterhouse; and 4. The Bacterial Monitoring Program, where programme inspectors monitor the meat processing at critical stages of production to verify that the plant’s processing methods and its safety control measures are adequate in preventing contamination of the food supply. The Program Laboratories Directorate of FID also provides an accreditation service to independent auditing firms and food testing companies. Accredited firms may then conduct laboratory tests for the federal inspectors. ASSISTANCE WITH THE VOLUNTARY ADOPTION OF HACCP.

Apart from the mandatory inspection activities, the FID also encourages and assists in the voluntary adoption of HACCP systems. If the slaughterhouse or processing plant has voluntarily adopted a CFIA-approved HACCP system, federal inspectors

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do not perform the front-line type of inspection services outlined above. Instead, the firm’s personnel are responsible for such activities while the federal inspectors monitor and audit activities at ‘critical control points’ in the food production chain to ensure the company-based inspection techniques are adequate to control the risk of contamination. The CFIA promotes the voluntary adoption of HACCP through the FSEP. This was designed by AAFC in 1996 and taken over by CFIA when it was formed in 1997. The FSEP programme is based on five steps. They are: 1. The firm develops a proposed HACCP system including details of critical control points, product flows and prerequisite programmes (e.g. Standard Operating Procedures) specifically tailored to the firm’s products and processes. The prerequisite programmes are required to be consistent with the international principles and standards of the Codex. Through the FSEP, the firm can receive a HACCP Curriculum Guideline as well as the four-part HACCP system manuals. 2. The CFIA assesses the proposed HACCP plan. If the proposed plan requires some refinement then the firm is assisted in achieving the FSEP requirements for a HACCP scheme. 3. Once the HACCP system is approved, the firm’s personnel are responsible for controlling, monitoring and keeping accurate records for each critical control point. Firm managers must review the documentation to identify deviations, discrepancies or problems requiring corrective actions. 4. The CFIA then reviews all plant records, assesses corrective actions where necessary, observes on-line processing at critical control points, takes samples as appropriate and verifies that the overall HACCP plan is being followed. 5. The CFIA inspectors monitor the company inspections and audit the HACCP documentation to ensure the firm is complying with the HACCP principles. One of the implications of the introduction of HACCP has been the need for training and upgrading of inspectors’ skills. All CFIA personnel involved with monitoring firm-based HACCP systems must complete a HACCP Certification Protocol Program. This programme provides information and training on how properly to verify prerequisite and HACCP plans. The CFIA personnel are also trained on how to monitor and audit the firm’s HACCP system effectively. However, this has provided a significant internal administrative challenge to the CFIA as it attempts to deal with the resistance of CFIA inspection personnel to change. It should be noted that, unlike the USA, the adoption of an HACCP system in Canadian meat plants is not mandatory. Rather, the firm chooses whether or not to adopt a HACCP system. Both small- and medium-sized firms may be eligible for funding to assist in the adoption of a HACCP system. The maximum amount for 1 year is C$5000 with funding renewal possible for a maximum of 3 years.

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ENFORCEMENT OF FOOD SAFETY REGULATIONS AT MEAT PLANTS. With respect to the issue of enforcement in the event of a company’s non-compliance, the CFIA has broad enforcement powers as outlined in the 1997 Canada Food Inspection Agency Act. This includes jurisdiction over the 1995 Agriculture and Agri-Food Administrative Monetary Penalties Act. This Act was created in order to establish monetary penalties for non-compliance of firms with several federal Acts related to the agricultural food industries. This enforcement legislation applies to: the Canada Agricultural Products Act; the Feeds Act; the Fertilizers Act; the Health of Animals Act; the Meat Inspection Act; the Plant Protection Act; and the Seeds Act. If a violation of any of the Acts under the Agriculture and Agri-Food Monetary Penalties Act is identified or suspected, the violation must be ranked as a minor violation, a serious violation or a very serious violation. The CFIA may take one of four actions. It may require the recall of an unsafe food product, diseased animal or plant that poses a risk to the public, animal or plant health. It may apply to a court for an interim injunction to prevent further production or distribution of the unsafe food product; it may levy and collect enforcement fees for non-compliance; and it can withdraw or withhold services should a client fail to pay a prescribed fee. The severity of the enforcement is associated with the risk profile of the particular food product and the degree of contravention. Before a monetary fee is fixed, consideration is given to several factors such as the degree of negligence, the actual or potential harm inflicted, whether or not the violation was committed for commercial gain or benefit, as well as the individual firm’s history of compliance with the food legislation. The maximum monetary penalty for a minor violation is C$2000, for a serious violation is C$10,000 and for a very serious violation is C$15,000. In the event that the violation is found not to be for commercial gain then the assessed penalty is C$2000. At the time of writing, the CFIA had prosecuted or was currently prosecuting for non-compliance in 94 separate cases of violation. As a result, 65 firms have been assessed monetary penalties ranging from C$2500 to C$15,000. A firm found guilty of a violation may enter into a voluntary Compliance Agreement with the CFIA committing itself to ensuring future compliance. A commitment such as this by the firm may reduce the original monetary penalty levied. CFIA personnel would then monitor and audit the firm to ensure that the firm is complying with the usual standards and regulations as well as the Compliance Agreement. Another option open to the CFIA to assist enforcement is cancellation of a firm’s registration licence. Such an action would effectively prevent the firm from producing for interprovincial or international trade. This process involves first a written notice of cancellation summarizing the reason for cancellation, including a copy of the original inspection report that identifies all areas of non-compliance. The firm is offered a time frame to prove compliance and prevent the cancellation of the registration. But, failure to do so would

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result in a hearing involving the CFIA and the violating firm. If the firm is unable to show adequate commitment to compliance, then a Notice of Cancellation of Registration is delivered to the firm. INSPECTION OF IMPORTED MEAT AND MEAT PRODUCTS. The aim of import inspection programmes is to protect domestic consumers from foreign meat where the source country has an inferior domestic food safety system or has recently experienced a food safety crisis. The CFIA must coordinate with the Canada Customs and Revenue and clarify roles and responsibilities to ensure: that all import products comply with domestic health, safety and quality standards; that there is consistency across all products and all regions in Canada; and to ensure the expeditious processing of imports. The CFIA and Canada Customs Agency have undertaken a Joint Service Initiative providing opportunity for CFIA personnel to inform, educate and train Customs officials on what are the CFIA import requirements. For some imported food products, the pre-retail stage (i.e. when products are finished or market ready) may be the only opportunity FID inspectors have to carry out inspections. This is not the most effective way to ensure that imported products are safe. In fact, the current rationale is imports need to be controlled in a manner consistent with the way domestic production is controlled and monitored. For imports, this must occur before they are shipped rather than when they enter Canada. The CFIA applies three basic rules to imported food products:

1. They must originate from countries having product standards and regulations, and a system for inspecting processing facilities, at least equivalent to the Canadian system. Equivalency is determined by CFIA auditors who examine the food safety legislation and the industrial practices of the foreign producers. 2. They must meet the domestic grade requirement for similar products produced in Canada. 3. They must bear a product origin label and label information must be congruent with the Canadian Consumer Packaging and Labeling Regulations. The CFIA work with the administration of foreign governments to ensure these rules are met. One example is the Canada/United States Border Management Accord. The goal of this accord is to establish the framework allowing for the harmonization of import inspection activities, the sharing of facilities and resources and the exchange of information. The CFIA has introduced four initiatives to make the import inspection process efficient and effective. They are as follows. 1. The Product Inspection Program (PIP), which is the traditional, visualbased inspection service provided at the border on imported products that have not been pre-approved for import. 2. The Enhanced Import Operation (EIO), which is designed to facilitate thorough yet expeditious import inspection as it is too time- and resource-

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consuming to handle all imports under the PIP. Two initiatives have been implemented under the EIO to speed up the import inspection process. They are Import Primary Contacts (IPCs) and the Agricultural Pre-Arrival Review System (Agri-PARS). The IPCs handle approximately 94% of all food products imported into Canada. Agri-PARS is a special expedited import procedure for importers who have proven to be compliant, reliable and trustworthy. Through the Agri-PARS the importer is encouraged to secure pre-arrival clearance by sending the Import Declaration forms ahead of the shipment. Such importers are eligible for a Frequent Importers Release status implying that the history of compliance is exceptional and the import products are considered to meet or exceed Canadian standards and regulations. 3. The Enhanced Importers Responsibility Program (EIRP), through which products are ranked according to their risk profile as established by HC. Thus, PIP would be carried out with a high level of inspection frequency for products of identified high risk and from importers who do not have a history of compliance with Canadian standards and regulations. Products with lower levels of risk would be subject to lower levels of inspection frequency. 4. The National Audit Program (NAP), which is designed to ensure that inspectors across the country are inspecting and monitoring imports in a manner consistent with other imports and domestic products. Import declarations and the judgment of inspectors may be reviewed to determine consistency in the inspection results. Ultimately, the NAP attempts to harmonize the programme delivery of the CFIA inspectors. This programme is a way for the FID inspectors themselves to be monitored for both effectiveness and compliance with their duties; a case of checking the checkers. In addition, the CFIA has a number of other initiatives under development to streamline the import inspection process. These include: 1. The Electronic Data Interchange (EDI) System for electronic import inspection and import clearance programmes to ensure rapid decision making. 2. The Automated Import Reference System (AIRS) for timely and accurate information on Canadian import requirements for potential importers. 3. The Import Tracking System (ITS) for improved tracking of an imported shipment after import inspection. This is intended to enhance the CFIA’s ability to respond to any problems with an import product (e.g. through a product recall) before it reaches the Canadian consumer. 4. The Import Decision System (IDS) for consistent decision advice to the CFIA or Customs Canada personnel on the proper inspection action to be taken. This System would contain information on such variables as country of origin, particular foreign brand, seasonal factors and packaging types. ACTIVITIES AT THE RETAIL LEVEL.

At the retail level, the FID verifies that food advertising complies with requirements and it performs retail inspection to enforce labelling standards in order to prevent economic fraud. Retail

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inspection is designed as a reactive ‘spot-check’ test for safety and to ensure that the label accurately reflects the contents of the package. CFIA inspectors may collect samples to perform residual testing or to be weighed to ensure price accuracy (although this is also performed by Industry Canada product inspectors). As part of the Food Emergency Response Program (FERP), it is also responsible for instituting and monitoring the recall of unsafe beef when necessary. FERP is an interdepartmental initiative involving both the CFIA and HC and is responsible for conducting science-based Health Hazard Evaluations (HHE) following identified outbreaks of food contamination. It deals with any extraordinary food product emergencies such as product recall, sabotage, product-related illness, serious allergies as well as man-made or natural disasters threatening the safety of the food supply. The HHE of a food-related emergency are based on a three stage categorization (I, II, III) with I posing risk that the product will cause serious health consequences or death. In this case, the course of action may be to implement a widespread product recall. The CFIA also provides Emergency Response Manuals to industry designed to inform a firm of the procedures for when a mandatory food recall may be necessary and how the food recall will be administered. For example, between April 1997 and August 1998 there were 164 food recalls under the FERP where 46 recalls were stage I, 104 stage II and 14 food recall cases were stage III. As a new Special Operating Agency, the activities of the CFIA in the Canadian food safety system have been subject to an internal review of the CFIA legislation. This was undertaken by the Task Force on Legislation. Specifically with respect to the beef industry, the Task Force has identified several important areas where further consultation on the appropriate role of the CFIA is warranted. One issue was whether legislative renewal should consider more the role of voluntary codes of practice (i.e. market regulation) as opposed to the mandatory legal regulation. Codes of practice were seen to allow the industry more flexibility of interpretation. Another issue is the possibility of allowing third parties to perform accreditation, certification and verification activities, which include monitoring and auditing. The Task Force also argued that any legislative changes should ensure safe and nutritious food while not contravening industry competitiveness. However, with increased industry responsibility for food safety, the legislative framework must also be capable of dealing with industry non-compliance. The Task Force’s consultations on these issues resulted in some general objectives of new food legislation. The first and most inclusive is a consensus on the need to develop a Single Food Act harmonizing the legislation of the 13 Acts under the current jurisdiction of the CFIA. It was argued such an Act should: 1. Consider both food safety and industry competitiveness issues; 2. Be focused at every stage of the processing supply chain, rather than the current emphasis only on the processing stages; and

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3. Base all food policy under this Act on a scientific risk analysis framework applied in a uniform and consistent manner to all domestic and foreign products sold in the Canadian market. The CFIA Management Council meeting from 15 to 17 April, 1998 identified three key future issues facing the CFIA: 1. To improve risk management services and activities; 2. To implement an Integrated Inspection System (IIS); and 3. To update and streamline the CFIA’s organizational structures. The IIS is a proposal to extend CFIA’s risk management activities (inspection, monitoring and auditing) beyond meat plants to include the entire meat supply chain in an integrated risk management system. Its development would be based on a number of principles including: 1. An emphasis on a whole-of-chain, science-based risk analysis framework where HC performs the risk assessment and the CFIA performs the risk management; 2. Reliance upon government and industry partnering to ensure the IIS is congruent with both food safety and industry competitiveness concerns; 3. An extension of the focus of intervention beyond the processing stage of the food supply chain to encompass primary producers, processors, distributors, retailers and food preparers; 4. The identification of hazards along the supply chain through consultations with the various stakeholders including; food industries, government, consumers, the health-care industry and environmental groups; and 5. The harmonization of food safety systems across Canada so the IIS may be applied by governments at the federal, provincial and municipal levels as well as by private sector parties such as independent auditors and food production firms. The benefits of a harmonized IIS include an enhanced level of risk management efficiency and effectiveness in the Canadian food safety system and a consistent and equitable science-based method for determining a product’s risk level. These benefits result in a reduction of overlap and duplication, a more efficient allocation of resources and a uniform national approach ensuring market access for Canadian products. There are three challenges to the development of the Canadian IIS. First, the IIS should be flexible enough to deal with future risks to human health. To achieve this flexibility, it may be more beneficial to develop IIS codes or guidelines rather than legislation. Second, a nationally harmonized IIS may have to be mandatory, which requires some form of legislation to ensure adoption by the entire food supply chain across all product lines. Third, the harmonization of risk management activities across all levels of governments and across all provinces is viewed as especially difficult to achieve because of the differential levels of regulatory oversight that exist among these jurisdictions and the need to achieve consensus across these different jurisdictions. The CFIS-IG experienced similar difficulties in its work on the National Meat Code.

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AAFC When the CFIA was created in 1997 it took over many of the risk management activities previously performed by AAFC. But, despite the creation of the CFIA, AAFC will continue to impact the overall beef safety system in Canada in two main ways: first through the Health of Animals Division (HAD) and then through the Red Meat Section of the Market and Industry Services Branch (MISB). HAD veterinary surgeons and animal health officials continue to monitor the health and welfare of livestock animals on the ranch or in the feedlot. Their focus is on the eradication of bovine diseases such as tuberculosis, foot and mouth disease, anthrax and brucellosis as well as the prevention of the introduction of any foreign animal diseases such as BSE to Canadian herds. With its goal of prevention and eradication of livestock diseases, HAD performs several key functions including; laboratory research in identifying and diagnosing diseases; domestic herd monitoring and treatment for disease and abnormality; monitoring for the humane treatment of livestock; and import controls such as animal health tests before the import clearance of live animals. MISB performs an exclusive producer promotion role of assisting the industry to compete in domestic and international markets. Assistance to industry from the Red Meat Section includes; meat industry analysis, domestic and international market information and analysis on livestock and beef, updated information on the import standards from over 100 foreign destinations, red meat commodity strategies and meat technology development and adoption. The Red Meat Section also works as a liaison between foreign regulators and the Canadian food safety system to ensure that the domestic system continually meets import requirements. Provincial, territorial and municipal governmental arrangements As previously mentioned, the CFIS-IG is currently working on harmonizing the standards and regulations for the meat industry across all levels of government – federal, provincial, territorial and municipal. This initiative has emerged because of the differences between jurisdictions in the regulatory requirements for meat processing; especially the requirements for inspection frequency, inspection cost and physical plant facilities such as equipment, buildings and grounds. The differences result in two broad industry concerns. First, meat plants are concerned that these differential requirements provide competitive advantages to particular producers (i.e. those that face few food safety costs) or that these differences fragment the Canadian market and hinder equitable market access because of interprovincial limitations to trade. Second, there are industry concerns that differing federal, provincial and municipal standards and regulations might force the Canadian food safety system down to the lowest

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regulatory levels prevailing within Canada because of the ‘National Treatment Provision’ included in various international trade agreements. Some observers believe that Canadian markets may be exposed to imports that meet only the lowest standards prevailing in Canada. These would be the standards maintained by some small meat plants, serving only local (intraprovincial) markets, which are only subject to site inspections by a local public health officer, perhaps once every couple of years. The current Canadian government position would dispute this interpretation of national treatment. In the government’s view national treatment requires import standards to be the same as the federal standards (i.e. as required for the interprovincial and international movement of meat and meat products).

Non-governmental arrangements Along with the changes in the role of government in the Canadian food safety system, the beef industry has been undergoing developments of its own. Through a process of cooperation and coordination many industry associations are developing programmes designed to enhance, and in some cases replace current government activities in the area of producer promotion. In some cases, consumer protection issues are also addressed. Foremost among the industry developments is the new Canadian Beef Grading Agency, but other national industry associations include the Canada Beef Export Federation (CBEF) and the Canadian Cattlemen’s Association (CCA) where most provinces have at least one regional industry association for the cattle/beef industry. Some of the initiatives of these industry associations will be examined below. Canadian Beef Grading Agency The Canadian Beef Grading Agency was created when the government privatized its beef grading activities on 1 April 1996. This agency performs a producer promotion role in its attempt to develop and deliver a grading system based on objective/scientific standards of meat quality and retail yield to facilitate the marketing of domestically produced meat products. The early response from the industry is one of acceptance of the cost recovery nature of the service. Although the Canadian Beef Grading Agency is primarily focused on quality aspects of the meat supply, it does have an impact on food safety. Firms who wish to have their products graded must be federally registered and must achieve some base level of standards and regulations for food safety. Meat graders have the authority to refuse to grade carcasses or meat cuts which appear to be abnormal, diseased or contaminated even though they may have made it through the mandatory government inspection system.

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A current initiative of the Agency is the development and implementation of a new grade of beef. This new grade, ‘Canada Prime’ is to be conferred on those carcasses which achieve at least an AAA grade and show marbling equivalent to the ‘USDA Prime’ grade. This development represents an attempt to develop equivalency with the USA on quality standards as well as safety standards. CCA The CCA is an industry association with a mandate to enhance the competitiveness of the Canadian beef industry. It aims to carry out this mandate by: (i) providing a safe supply of beef products; (ii) providing consistent, highquality products; (iii) providing customer service; and (iv) promoting innovation in the industry. To assist in carrying out this mandate it has adopted the principle of attempting to improve the relationship between industry and consumers with minimum governmental intervention. It sees food safety as basic to achieving its objective of enhancing competitiveness. It has identified food contamination as a major challenge to the competitiveness of the Canadian beef industry because a real, or perceived, contamination crisis can adversely affect the entire industry. As a result, one objective of the CCA is to manage and reduce the risk of a contamination crisis upon the industry. To achieve this it has developed a strategy called the Integrated Food Safety Program. According to this strategy, the focus of the CCA should be on: ● ● ● ● ● ● ● ●

establishing minimum food safety requirements for market access; assessing the environmental impacts of the beef industry; establishing standards for animal welfare; developing consistent and science-based labelling and nutrition information rules; assessing the application of modern agricultural biotechnologies in the beef industry; developing a traceback system; encouraging the development and implementation of ‘pasture to plate’ food safety and quality assurance programmes and initiatives; and establishing product handling procedures for maximum safety and quality at all points in the food chain.

Under the auspices of the Integrated Food Safety Program, the CCA is involved with several producer promotion initiatives that have implications for the goal of consumer protection. For instance, the CCA released a manual outlining ‘good production practices’ for ranch operators. This manual follows the release of a similar manual for feedlot operators. Together, these manuals, promoted under the CCA’s ‘Quality Starts Here’ programme, are designed to disseminate information to producers on how to maximize the value of their livestock proactively through control of those particular hazards that reduce

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the value of their livestock. These hazards may include the existence of tags on the animal’s hide (dirt and faeces), improperly administered veterinary biologics as well as undue stress to the animals brought on by the inhumane treatment. The principles on which these manuals are based are consistent with HACCP principles. In short, through the ‘Quality Starts Here’ programme, the CCA is introducing HACCP to a part of the supply chain where there is no mandatory federal governmental involvement. The CCA has also released a proposal for a mandatory National Beef Identification System; an industry-led traceback system designed to ensure consumer confidence in beef products. By tying good upstream practices with downstream products through traceability, the safety of the food supply is improved. The initial system calls for traceback from the processing plant/ carcass stage to the herd of origin. The long-term goal is to develop traceback abilities from the finished meat products to the herd of origin. The benefits from such a system include the ability to react rapidly to any identified contamination by identifying the herd, isolating the spread and finally eradicating the problem. Consumers may be confident that the meat they consume is produced in a supply chain concerned with ensuring the safety and quality of its product. As an industry association, the CCA suggests that strategies such as the National Beef Identification System are vital because they limit the need for government intervention and regulation of on-farm and processing firm practices. One initiative intended to improve international competitiveness while at the same time lowering food safety costs is the so-called North West Project. The CCA began this project in October 1997 in partnership with its US counterpart, the National Cattlemen’s Beef Association. The Project created an open trade corridor, which allows shipments of feeder cattle to be sent from Montana and Washington State to Alberta feedlots without having to go through the costly herd health tests normally required of such international shipments. These cattle are fed out and slaughtered in Alberta and the meat exported back to the USA. Only specifically registered feedlots can take the US cattle, which must continue to be segregated both before and after the controlled killing to ensure there is no introduction of any bovine disease to the Canadian herds. This Project has had a number of advantages. It provided the Alberta cattle feeding industry with access to more feeder cattle, it lowered transportation costs and it caused less stress and hardships to the livestock thus adding to the humane treatment of the animals. Finally, the CCA runs an informational network for beef industry participants called CANFAX. This system provides access to market information, intelligence and analysis and is a link to current issues facing the beef industry. The safety of beef products has been a common current issue. This has resulted in the availability of information on research dealing with the prevention of microbial contamination and with improvements in the systems for ensuring food safety. As well, information is available on the safety requirements of importing nations.

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Canada Beef Export Federation (CanadaBEEF) The Canada Beef Export Federation supports the export activities of the Canadian industry by providing it with information, intelligence and analysis on foreign market conditions including trade restrictions based on health or sanitary standards. It also provides information for foreign importers on the Canadian food safety system including the level of inspection and the various safety and quality assurance programmes to which the export products are subject. Indeed, while the primary objective is to increase the competitiveness of the Canadian beef industry, a consequence is the provision of information to increase foreign consumer confidence in the safety of Canadian beef products. Cargill Beef Alliance: BEEFWorks This was an industry attempt to integrate quality assurance programmes through the development of a brand-specific supply chain. Cargill operates feedlots, slaughterhouses, processing plants and distribution channels in both Canada and the USA. The objective of this programme is to achieve higher returns for all supply-chain participants by adopting production performance standards exceeding the required levels as well as those of other industry competitors. To do this, ranches that can prove their ability to adopt a highlevel of quality assurance earn the designation of Preferred Calf Suppliers (PCS) and can sell their livestock to Preferred Feedlots (PF). This programme attempts to utilize innovative, scientific methods to ensure a high-quality supply of cattle to PF. Although the BEEFWorks programme is focused on quality, safety is implicitly considered since quality products are necessarily safe products.

Implications of these Developments From this review, it is clear the restructuring of the Canadian food safety system is on a very different trajectory from that of the USA. The Canadian trajectory has been: To ensure international market access – especially to the US – by encouraging industry competitiveness in all areas including food safety. However, its ability to be internationally competitive may be constrained by the direction and pace of restructuring in the US food safety system.

The differences between the US and Canadian trajectories show up in subtle ways. For example, whereas the US MEGAREG made HACCP mandatory in all meat plants, in Canada it is voluntary. A mandatory programme is consistent with the need to restore consumer confidence, while this is not so important if the driving force is greater international competitiveness.

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Given the importance of the external driver to Canada, the restructuring of the Canadian meat safety system is bounded by the restructuring in the dominant export market, namely the USA. It is not surprising the main focus of governmental intervention in Canada is the slaughter stage, rather than the pre-slaughter or the post-slaughter stages. This mirrors the situation in the USA. The challenge for those attempting to restructure the Canadian beef food safety system is to move beyond the limits posed by US restructuring. In particular, other issues for Canada such as a harmonized, integrated food safety system and the development of a co-regulatory system of meat inspection (see Australia) are moving slowly. On the question of harmonization, this is not an issue for the USA. What is an issue for the USA is that Canadian meat export standards are equivalent to US standards. Hence, the Canadian system persists in having differential standards where the highest safety standards are required of firms producing for the export market and the lowest standards are faced by firms producing solely for the local market. Co-regulation is the partnering of industry and government to regulate the beef industry. Under co-regulation, responsibility for ensuring food safety is moved away from just the shoulders of government, and participants in the beef supply chain assume some of this responsibility. While the Canadian system is shifting in this direction, the speed of this shift is bounded to a large extent by how fast this is going on in the USA. Australia is moving much faster down this road. Looking to the future, there appears to be a loss of political momentum in the USA for restructuring the food safety system. For Canada, this translates into the loss of an important external driver for change. Given also, the lack of strong internal drivers for change, there is a danger of rising complacency about institutional change in Canada. This could pose problems for Canada to the extent that the quality of a food safety system is an important contributor to international competitiveness. This completes the North American leg of our tour. We now ‘cross the pond’ to take a look at the food safety system in the UK. This promises to be quite different from either Canada or the USA.

Chapter 5

The United Kingdom1

Introduction The British beef sector is not large by world standards or even by EU standards. Annual beef production in the UK is only 6% of that in the USA and less than 50% of that in France. What makes the UK so interesting to us in this study is its devastatingly bad experience with food contamination problems. If we wanted to study the experience of a country that had this driver for change in the extreme then Britain is it. The layout of this chapter follows the same format as the previous two. We begin with a detailed discussion of the drivers for change, followed by developments in the institutional arrangements in the British beef sector, finishing up with the implications of these developments.

Drivers for Change As was done for the USA and Canada, we divide drivers for change in the UK into two types determined by their source: external and internal. The main external drivers for change that are not common with the other countries under review (i.e. not international institutional arrangements) are the EU directives and regulations. At the beginning of 2000, the European Commission (EU) released a White Paper on Food Safety, which has generated considerable attention in the EU generally and also in the UK. This could turn out to be yet another important external driver for change in the UK. The internal drivers for change are the health crises arising from contaminated food, legal innovations associated with the so-called ‘due diligence’ defence for criminal liability, and the strong trend towards own-branded products by the major retailers. The ‘due diligence’ defence together with the rise in ownbranded products has led a drive by the major retailers to develop their own quality assurance programmes with heavy emphasis on traceability of product back to the farm. 83

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External drivers for change The EU Directives are legislation proposed by the EC and enacted by the EU Council of Ministers in cooperation with the European Parliament. Individual Member States are responsible for transposing or implementing the directives. There is no single central general Directive on food law. Rather, there has been a proliferation of (five) Directives covering different aspects of food law, some of which impinge on beef. These five Directives are discussed below. The Product Liability Directive This was adopted in 1985 with the principal aim of providing the ground rules for consumers in civil actions against producers of defective merchandise. It applied the rule of strict liability on all those involved in the production process. Thus consumers were able to sue for damages caused by defective products without the need to prove negligence. It was implemented in the UK by the 1987 Consumer Protection Act. Interestingly, Member States could choose to exempt primary producers from the Directive, and most (including the UK) did just that. The Directive only applied to those businesses involved in the production and sale of processed products (e.g. the manufacturers, wholesalers, retailers and distributors). However, in 1999, the Directive was extended to specifically include primary producers. Producers affected include farmers, fruit and vegetable growers and fisheries. Importers of such products from non-EU countries are also liable as producers. Others such as wholesalers and retailers are only liable if they fail to identify the producer to an injured person. The Official Control of Foodstuffs Directive This Directive was adopted in 1989 with the aim of achieving a consistent approach to enforcement of food law across all Member States in the lead-up to the Single Market, which occurred in 1992. Its main principles were that: ● ● ● ●

food should be inspected regularly at the point of production to avoid the need for border controls between Member States; inspection procedures should be harmonized between Member States; there should be mutual recognition of standards within the EU; and details of Members’ States food law enforcement programmes should be submitted annually to the EC.

This Directive was implemented in the UK through the Food Safety Act 1990. This has become a key Act in UK food law, in part because it gave rise to the ‘due diligence’ defence against product liability in criminal proceedings. It will be discussed further in the section on internal drivers in the UK.

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The Fresh Meat Directive This Directive was adopted in 1991 with the intention of laying down hygiene conditions for all red meat slaughterhouses, cutting premises and cold stores in the Single EU Market. The general principles of this Directive were to: ● ● ● ● ● ●

permit the functioning of all operations under hygienic conditions; provide a working environment that protects meat and offal from any risk of contamination during handling, processing or storage; permit clean operations to be carried out separately from those operations liable to give rise to contamination or pollution; produce a flow of products, waste material and personnel such that meat and offal intended for human consumption are protected from any risk of contamination; provide adequate space and facilities for the efficient performance of ante-mortem and post-mortem inspections; and protect the welfare of animals at, and during, slaughter.

The main implication of this directive for UK legislation was the requirement that all meat produced in the UK had to be fit to move anywhere in the EU. Premises were prohibited from trading unless they were licensed as complying with EU requirements. The implementing regulations in the UK were The Fresh Meat (Hygiene and Inspection) Regulations 1995. Under these regulations, the Meat Hygiene Service (MHS) was established in the UK. While the Directive was a step in the right direction, there was still a lot of dissatisfaction with meat inspection in the EU. This was highlighted in the EC’s White Paper on Food Safety (January 2000) mentioned previously. The White Paper called the existing EU meat inspection regime outdated and in need of replacement by a more risk-based system. There is considerable consensus within the EU that this should happen. However, for now, the UK must operate within the existing legislation. One area of contention is the requirement of 100% veterinary cover in all but the smallest slaughterhouses. Opponents feel this is a damaging imposition on the smaller slaughterhouses at a time when many are struggling to survive. The Directive on the Registration and Identification of Livestock This Directive was adopted in 1992. It required Member States to register and identify all commercial livestock, including cattle. The idea of cattle identification (via ear tags) had been around for a long time, to control tuberculosis and to record breeding herds. However, the idea of cattle identification for food safety was new. Under Article 4 of the Directive, legal holders of beef animals were required to keep a register stating the number of animals present in the holding and to keep an up-to-date record of all births, deaths and movements. In addition, they were required to supply their national

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government, upon request, with all information concerning the origin, identification and destination of animals owned, kept, transported, marketed or slaughtered in the EU. Under Article 5 of the Directive, all beef cattle were required to be identified with ear tags bearing an alphanumeric code (not exceeding 14 characters) making it possible to identify each animal individually along with the holding on which it was born. The response of the various EU countries to this directive has been generally slow. The UK was actually one of the first to respond, although this had more to do with the BSE crisis, which reached a peak when the EU instituted a worldwide ban on the export of British meat. One of the conditions for removing that ban was the implementation of a cattle identification system. The UK introduced its cattle passport system in July 1996. And 2 years later, it launched a computerized Cattle Tracing System for recording all cattle and their movements. These UK initiatives will be discussed in detail in the section on institutional arrangements. In other Member States, movement on this Directive has been much slower. In fact in April 1997, the EU Council lamented ‘experience has shown the implementation of the above Directive for bovine animals has not been entirely satisfactory’. The slow pace of reform prompted the introduction of EU Council Regulation 820/97 in April 1997 requiring Member States (with some exceptions) to institute a system of identification of individual beef animals (ear tags and animal passports) by 1 January 1998, and to have a computerized system in place by 1 January 2000. The Hygiene of Foodstuffs Directive The Directive on the hygiene of foodstuffs was introduced in 1993. It laid down general rules of hygiene covering the preparation, processing, manufacture, packaging, storing, transportation, distribution, handling and offering for sale or supply of foodstuffs not covered elsewhere by product-specific (also called ‘vertical’) hygiene directives. This directive required food businesses to take a structured approach to hygiene based on the principles of HACCP, but stopped short of actually requiring the introduction of HACCP. This directive allowed for and indeed encouraged the development of industry guidelines. As such, it was one of the first tangible indications by the EU of a desire to move towards industry self-regulation. In the UK, this Directive was implemented by way of the General Hygiene Act 1995, which required all food businesses to adopt a risk management tool, such as HACCP. According to Bredahl and Holleran (1997): The risk management tool requirement was significant because it marked a shift away from an end-product food safety inspection focus in Britain to a preventative, scientific food safety focus … the 1995 Act assigns ultimate risk management responsibility to the food business proprietor.

This Act applied to all premises that manufacture, distribute or sell (processed) meat products but not to primary production (including fresh

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meat production) that is covered by the ‘vertical’ Fresh Meat Directive discussed above. While these five Directives made useful advances in food safety, the EC had long harboured the view that much more could be done. In a 1997 Green Paper, it argued for the bringing together of all these directives into a single central general Directive on food law. This was followed by the January 2000 White Paper, which went much further. It argued for a new legal framework that would cover the whole of the food chain from ‘farm to table’ with the ability to trace products through the whole supply chain a key issue. Other features of this new legal framework were to include: (i) the use of scientific advice to underpin food safety policy; (ii) the ability to take rapid and effective measures in response to health emergencies; and (iii) to clean up the animal feed sector. The centrepiece of the White Paper was the establishment of an independent European Food Authority. According to the White Paper (page 3): This Authority would be entrusted with a number of key tasks embracing independent scientific advice on all aspects relating to food safety, operation of rapid alert systems, dialogue with consumers on food safety and health issues as well as networking with national agencies and scientific bodies.

Other elements of the White Paper include: (i) developing a comprehensive food safety monitoring system; and (ii) strengthening legislation in labelling and advertising so as to ensure consumers receive accurate information. Since its release, the White Paper has received considerable, and generally favourable, public comment by EU stakeholders. The generally positive reception was no doubt helped by the fact the White Paper was released on the heels of yet another food poisoning scare in the EU. This time it was the Belgian dioxin scandal. Dioxin is a cancer-causing chemical that had found its way into animal feed and biomagnified in the fat. Media reports alleged that an animal feed company near Ghent had deliberately or accidentally mixed in industrial oil with the feed.

Internal drivers for change It is not always easy to separate out the internal drivers for change from the external ones. Most food legislation in the UK originates from EU Directives or is bounded by the EU legislation. However, EU legislation may, in turn, be driven by events in the UK (as in the case of the BSE crisis). Further, while an EU Directive may provide the basis for implementing legislation in the UK, this legislation will often have its own particular characteristics that lead to its own drivers for change (as in the case of the Food Safety Act 1990). Notwithstanding this difficulty, the following is a list of what appear to be the more significant internal drivers for change in the UK. They include: (i) British legal tradition; (ii) the Food Safety Act 1990; (iii) the concentration of

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the retail sector; (iv) the strength of the environmental and animal welfare lobbies; (v) public health crises arising from contaminated meat (BSE and E. coli); and (vi) the (Tory) government deregulation initiative. British legal tradition British legal tradition emphasizes the ‘letter of the law’. This tends to distinguish Britain from other Member States that tend to follow the Napoleonic legal tradition that emphasizes the ‘intent of the law’. This can have a significant impact on the way food safety law is interpreted and enforced in the UK. The Food Safety Act 1990 This Act came into force on 1 January 1991. It was the implementing legislation for EU Council Directive 89/397 (The Official Control of Foodstuffs Directive), but it also reflected public health concerns following some highly publicized food poisoning outbreaks like the Salmonella outbreaks in eggs, which occurred in the late 1980s. The Act was intended to induce those involved in the UK food industry to improve their food handling practices by strengthening the powers of enforcement, introducing tougher penalties and increasing the legal responsibility for ensuring that food conforms to the provisions of the Act. In this sense it was a driver for change. However, it also forms an important part of the fabric of institutional arrangements covering the British food sector. Hence, it will be discussed in more detail in the section detailing the institutional arrangements. Concentration of the retail sector in the UK In the UK, five national retailers dominate the market (Tesco, Sainsbury’s, Argyll (Safeway), ASDA Wal-Mart and Isosceles (Gateway, Somerfield)). The concentration of retailer power in Britain is very strong and increasing over time. In 1975 the market share of the top five retailers was around 30%. By 1985 it had risen to around 50% and by 1995 it was 70% (Source: NatWest Securities, ACNielson, AGB). In 1994/95, 65% of all consumer purchases of fresh meat were made in UK supermarkets. Part of the phenomenon of retailer concentration has been the growth in own-label products. According to Bredahl and Holleran (1997), by 1996, own-label products accounted for over 30% of all supermarket stock. And for the largest retailers, this figure is much higher. For example, for Sainsbury’s and Tesco it is over 50%. It is important to emphasize that the own-label products in the UK are not aimed at the price-sensitive, quality-insensitive market. Generally, the products are seen as competing head-to-head with the major manufacturers’ brands in the same quality market. Again, according to Bredahl and Holleran (1997), ‘one consequence of the growth in own label is the emphasis it puts

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on the supplier/retailer relationships in the food industry’. The growth of own-label brands and the institution of the ‘due diligence’ defence have together created a strong driver for supermarkets to develop their own meat quality and safety schemes. As one example, consider Sainsbury’s beef partnership involving around 4000 beef producers who agree to supply cattle under a recognized farm assurance scheme (like the Farm Assured British Beef and Lamb (FABBL) scheme) on a pre-arranged schedule to a specified abattoir according to Sainsbury’s specifications (which cover hygiene, quality, animal welfare and environment standards). The specified abattoir will be one of nine belonging to ABP (Anglo-Beef Processors), the largest processor of livestock in the UK and an integral part of the partnership. The animal welfare lobby Animal welfare has been described as a ‘latent concern’ of consumers to which the major retailers have shown considerable sensitivity. It does appear to be the case that the UK has a long tradition of being an animal-loving nation. A recent survey of consumer attitudes found that British concerns for animal welfare issues were much stronger than in other EU countries (Bansback, 1995). In addition, there is a well organized and effective animal welfare lobby in this country. R. Harrison first elevated public concern in a significant way in the mid-1960s with publication of the book Animal Machines: the New Factory Farming Industry. Public reaction to this book led to the establishment of a UK Government committee to inquire into the welfare of farm animals (the 1965 Brambell Committee) and ultimately to the so-called ‘Five Freedoms’ that dominate discussions about animal welfare to this day. These freedoms are: (i) freedom from hunger and thirst; (ii) freedom from discomfort; (iii) freedom from pain, injury and disease; (iv) freedom to express normal behaviour; and (v) freedom from fear and distress. In more recent years, the main lobby promoting the welfare of farm animals in the UK has been the RSPCA (Royal Society for the Prevention of Cruelty to Animals). Beginning in the 1990s, it has undertaken a fairly aggressive advertising campaign targeted at the British educated middle class. One aspect of its programme was the Freedom Food programme which calls for farm animals to be treated in a way as close as possible to the ideal Five Freedoms. The animal welfare lobby in Britain has caused livestock production and transportation methods to be modified to take into account animal welfare concerns. Many of the farm assurance schemes being developed in the UK include codes of conduct for animal welfare. The effect of all this lobbying on consumers is difficult to gauge. An unpublished consumer survey by the Meat and Livestock Commission suggested that when consumers are asked what are the most important concerns they have when they purchase food, animal welfare did not register. However, when they are specifically asked whether animal welfare is an important concern, they will answer yes. This is why animal welfare can be

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described as a ‘latent concern’. Consumers may not, as a rule, worry about animal welfare when they are in the shop making their meat purchase decisions. However, they may decide to seriously adjust their meat purchases in response to highly publicized allegations of mistreatment of farm animals. It is similar to the effect that the highly publicized allegations of exploitation of workers in Indonesia, who were making Nike running shoes, had upon consumer purchase decisions. What has given added weight to this phenomenon of the ‘latent concern’ in Britain is the highly concentrated retail sector. They face high potential costs if these latent concerns become activated. In addition, through their beef partnerships, they have the wherewithal to protect themselves against such concerns. They have instituted stringent animal welfare codes on the livestock producers in the partnership agreements. Public health crises arising from BSE and E. coli O157:H7 BSE was discovered to affect UK cattle in the mid-1980s. The number of confirmed cases rose to a peak in 1993 of over 1000 new cases confirmed per week. The BSE crisis has been an important food safety issue because it was shown to be transmissible to humans and because of the potentially long incubation period (up to 20 years). However, the BSE crisis was also important because of what it did for the public credibility of the main participants in the crisis. In this section we will focus on four major participants in the crisis (the UK Government, the supermarkets, the abattoirs and the livestock producers). Of these four participants only the supermarkets appear to have largely retained the confidence of the consuming public. They reacted swiftly and decisively to the crisis as it unfolded. The UK Government was widely criticized for dragging its feet on the issue before 1996. In fact, in the early years of the emerging crisis, the UK Government attempted to downplay the risks to humans, a miscalculation that came back to haunt it. The government set up the Working Party on Bovine Spongiform Encephalopathy in 1987 to advise on the risk to humans of the disease. It found that meat-and-bone meal used as a protein supplement in cattle feed was the likely means for transmitting the disease to cattle and so recommended a ban on such feed (which was implemented in 1988). However, it also downplayed the risk of transmission of the disease from cattle to humans, arguing that cattle were probably a ‘dead-end’ host for the BSE prion so that humans could still eat cattle brains without risk. In 1990, a scientific surveillance unit was set up to see if there was a connection between BSE and CJD (Creutzfeldt–Jakob disease), a human disease similar in appearance to BSE. This stimulated the first major food scare associated with BSE. The then Minister of Agriculture (John Gummer) downplayed the potential threat telling the National Consumer Council that UK beef was safe and there was no risk to human health. But, in 1992 as the German government banned UK beef and various schools banned beef in school

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lunches, beef consumption in the UK dropped to its lowest level since 1962. The UK Government dispatched experts to assure potential consumers that BSE was not a risk. In 1994, calves (born well after the 1988 feed ban) were found to be infected with BSE. This suggested BSE was transmissible through a second means (apart from feed) – to the calf through either the mother’s milk or via the placenta. This risk was initially denied by the UK Government, but then later accepted. As late as early 1996, the Health Secretary was claiming there was no conceivable link between BSE and CJD. But again, this position was soon reversed in light of scientific evidence. The BSE crisis reached a turning point on 20 March 1996. The UK Ministers of Agriculture and Health made statements to the House of Commons based on scientific advice from the government’s Spongiform Encephalopathy Advisory Committee (SEAC) and its Surveillance Unit in Edinburgh. They reported on a new variant of CJD (vCJD) for which the most likely explanation was a link to BSE. SEAC recommended a series of measures including: (i) the disposal of carcasses of all cattle aged 30 months or more; (ii) a ban on the use of mammalian meat-and-bone meal in feed for all farm animals; and (iii) more rigorous enforcement of existing controls in slaughterhouses and other meat plants. The Ministers’ statements were a bombshell which immediately led a number of EU countries to ban imports of British beef and which led, a week later, to an EU announcement of a worldwide ban on British exports of beef animals, meat and meat products. A framework for lifting the ban was agreed by EU Ministers at the Florence Summit in June 1996. The requirements were: ● ● ● ● ●

implementation of a selective cull of all bovine animals (born between 1989 and 1993) in the same birth cohort as BSE cases; legislation for the removal of feed containing meat-and-bone meal from farms and feed mills; implementation of the over 30 months (OTM) rule in which bovine animals over 30 months at the time of slaughter must not enter the food or animal feed chains; improved methods of removing specified bovine material (SBM) from carcasses; and an effective animal identification and movement recording system with office registration.

The UK Government had already moved to introduce an OTM scheme (regulation 716/96) on 12 April with the reluctant backing of the farm lobby. By the end of 1996, over one million animals had been killed under the scheme. However, the UK Government balked at the idea of the selective cull, doubting its scientific merit. It only agreed to go ahead with the cull in December 1996. The remaining major requirement was the animal identification and movement recording system. Action to develop this began in April 1997 and the cattle passport system was up and running by July of the same year.

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The credibility of the beef industry also did not fare too well in the wake of the BSE crisis as the industry was seen to be dragging its heels. In many ways this is understandable as there were some large potential costs involved. However, media stories highlighted some abuses. For example, in 1988 the UK Government announced a compensation scheme, which offered 50% of market value to any producer for BSE-affected cattle that would be kept out of the food chain. Allegedly, some producers still put BSE-affected animals through for slaughter in the early years so as not to lose 50% of market value. And in the early 1990s some abattoirs allegedly still sold beef for export knowing it to come from BSEaffected herds. The UK Government responded much more quickly to the outbreak of E. coli O157:H7 infection that occurred in November 1996 in central Scotland. A total of 18 people died in the outbreak and around 500 people were made sick. Not only was there prompt investigation of the outbreak by representatives of the local Health Board, but the UK Government moved quickly to establish an Expert Group (headed by Professor Hugh Pennington) to advise on whether the existing meat safety systems were adequate. The Pennington Group was convened on 28 November 1996. It issued an Interim Report on 31 December 1996 and its Final Report was published in April 1997. One of the main recommendations of the Pennington Report was to introduce mandatory HACCP systems throughout the meat chain (slaughterhouses, cutting plants, meat transportation, food businesses). While it recognized HACCP was currently being negotiated into EU and UK legislation, the Pennington Group thought the UK should accelerate the process. Although the government responded quickly when the outbreak occurred, there were still accusations of a government cover-up. A 1995 report by the MHS entitled Red Meat had warned of the danger of dirty animals being presented for slaughter. According to the report as quoted in The Daily Telegraph (Thursday, 6 March 1997): Dirty animals arriving at the abattoir are a case of further contamination: organisms such as Escherichia O157 and salmonella can be introduced into the plant on the skins of dirty livestock. Most plants have no formal procedures to clean up dirty stock.

However, according to the same newspaper story, the government suppressed publication of the report. The upshot of the story, together with the E. coli outbreak in Scotland was the introduction of the MHS’s ‘Clean Livestock Policy’ discussed in the section on institutional arrangements. Government deregulation initiative In October 1992, the then Tory Government launched its deregulation initiative. This included the establishment of a number of taskforces includ-

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ing the Food, Drink and Agriculture Taskforce (FDAT). The FDAT issued its report the following year in which a central concern was the sheer quantity of detailed specifications relating to food law (FDAT, 1993, unpublished report). In 1994, the Cabinet Office Deregulation Unit was established with a view to sweeping away outdated rules and regulations, simplifying paperwork, encouraging consistent enforcement and according to Neville-Rolfe (1997) ‘striking the right balance between cost and benefit when making new regulations, whether domestic or European’. Furthermore, according to the same author, ‘Where new regulation is identified as the best option, (the aim is to) make the regulations goal-based to avoid unnecessary prescription.’ This was supported by Angela Browning MP (Parliamentary Secretary, MAFF) who said (1997, p. 14): The Government recognizes hazard analysis to be a fundamentally important tool in this area. It places clear responsibility on food businesses to manage their operations in a ‘hands on’, systematic and safe way. Hazard analysis provides a far greater assurance that safe food will be delivered than does reliance on prescriptive legislation which can serve to lull food business operators into a false sense of security.

Institutional Arrangements The main institutional arrangements impacting on the UK beef safety system can be divided into governmental arrangements and non-governmental arrangements. These are discussed in the next two sub-sections.

Governmental arrangements The Consumer Protection Act 1987 The 1987 Consumer Protection Act provides the ground rules for civil liability. It implements the 1985 EU Product Liability Directive (85/374/EEC), providing strict liability for those involved in the production and sale of food. This means consumers are able to sue for damages caused by defective products without the need to prove negligence. And, while due diligence may provide protection from criminal liability it will not provide protection from civil liability. At time of writing, the Consumer Protection Act does not cover primary farm products. Thus British farmers are exempt from the ‘strict liability’ rule and can only be sued if negligence is proved. However, this will soon change in line with a recent extension of the EU Directive. Under the extended directive, all those involved in the production process, including farmers, would be jointly liable for any defective food products.

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The Food Safety Act 1990 While the 1987 Consumer Protection Act provides the ground rules for civil liability, the 1990 Food Safety Act provides the ground rules for criminal liability. According to Hobbs and Kerr (1992), the 1990 Food Safety Act was introduced in response to: ● ● ●

increasing consumer concern with food safety; the need for harmonization of British law and European Community Law in preparation for 1992 (i.e. the Single Market Initiative); and existing laws that were ill-designed to deal with new and rapidly evolving technologies in the food industry.

The Act required all those handling food (or supervising those handling food) to undergo training in food safety procedures and practices. And vehicles carrying food would need to meet new standards of temperature control. The major legal change was the introduction of the due diligence defence in cases of criminal liability for ensuring the safety of food. According to Henson and Northen (1997, p. 89) due diligence is: a defence for the person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence by himself or by a person under his control.

This means those engaged in food handling must be proactive in their efforts to ensure that food in their possession conforms to the provisions of the Act. Previous legislation allowed buyers in the supply chain to use the so-called warranty defence. According to Hobbs and Kerr (1992, p. 577): The warranty defence required all those downstream in the food chain to prove only that the food did not enter into a state that contravened the provisions of the food safety legislation while it was under their control. Food purchased from others was deemed warranted, meaning that the seller assumed legal responsibility.

This means buyers only had to prove that the food was not compromised while it was under their control. This allowed a buyer to be passive about the food received in a transaction from an upstream supplier. Moreover, an invoice was deemed to be a warranty. Thus, after satisfying the court that the food was handled properly on the premises the firm simply had to supply an ordinary purchase invoice to fulfil its legal responsibility. In order for buyers to use the due diligence defence successfully they have to take all ‘reasonable’ steps to ensure that the food they receive from upstream suppliers is safe. The word ‘reasonable’ is of considerable significance here. It is sufficiently vague that according to Caswell and Henson (1997, p. 222) it creates an air of uncertainty in the minds of the buyer as to what is required:

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This uncertainty is a key facet of the ‘due diligence’ approach to food product liability which means that, in practice, suppliers implement standards well in excess of legal requirements in an attempt to ensure compliance.

Thus, the ‘due diligence’ defence has led to the development of private quality control systems for the major buyers (large processors and major supermarket chains) which far exceed the requirements of the publicly regulated food safety system (associated with the activities of the Meat Hygiene Service). These systems typically require upstream suppliers to participate in very stringent safety and quality programmes (typically involving the principles of HACCP and ISO 9000) and which involve third-party (independent) certification. As Caswell and Henson (1997, p. 223) point out: ‘Whilst these schemes are voluntary in a legal sense, they are fast becoming de facto standards.’ The word ‘reasonable’ also has dynamic content. What may be considered reasonable today may not be considered reasonable tomorrow. Hence, there is a built-in tendency for continual upgrading of the quality control system. In other words, this legislative restructuring has created a regulatory race to the top in the UK. The UK food sector is dominated by large retailers who make extensive use of own-branded products (see pp. 101–105). For such retailers, the ‘due diligence’ defence has a special significance. In the case of ‘own-branded’ products, the retailer is liable rather than the manufacturer. The due diligence defence in criminal liability cases can be distinguished from the US approach, which generally involves strict liability. For further details on this distinction, see Caswell and Henson (1997). The Food Safety (General Food Hygiene) Regulations 1995 The Department of Health (DoH) has responsibility for the implementation of these regulations. They are pursuant to the 1990 Food Safety Act and implement the ‘horizontal’ EU Directive discussed earlier. They concern food hygiene requirements not covered by the EU product-specific (‘vertical’) Directives. Hence, they apply to processed meat products and the retail and catering establishments, and do not apply to the livestock sector or to the fresh meat sector (which includes abattoirs, cutting plants and cold stores). The regulations require food businesses to adopt a risk management tool based on HACCP principles. However, they fall short of requiring a full HACCP system since there is no need for documentation. This is considered too onerous for small corner stores, which may only be selling frozen products. Enforcement of these regulations is at the district (town) council level through the environmental health department with inspections carried out by Environmental Health Officers (EHOs) and assistance being provided by the Public Health Laboratory Service in monitoring the microbiological safety of food. Overseeing and coordinating the enforcement of regulations is LACOTS

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(the Local Authority Coordinating Body on Food and Trading Standards). LACOTS provides guidance to the local enforcement authorities and advice to the central government on enforcement issues. As may be seen, this is a complicated, multilayered system and it has problems. According to Hobbs et al. (2000): Regulations under the FSA 1990 are enforced to varying standards between Authorities. This can cause problems for nationwide food businesses, despite the existence of the Home Authority Principle which means that the Local Authority within which a major food company has its headquarters is responsible for leading on issues of food law relating to that company wherever it operates in the UK. Food law enforcement competes for funding with other Local Authority responsibilities – such as education and social services. Priority differs across the country and in some areas enforcement suffers.

Not only are there problems with enforcement, but as mentioned already, this system is far from comprehensive in providing whole-of-chain food safety. It does not apply to the fresh meat sector, which is regulated at the government level through the MHS. MHS The MHS was created as an executive agency of MAFF in 1995. It came into being through the Fresh Meat (Hygiene and Inspection) Regulations 1995. These regulations implemented earlier EU directives, which lay down health conditions for the production and retailing of fresh meat, and which was part of the EU initiative to implement a single EU market in 1992. The MHS was also introduced, for domestic reasons, to standardize meat inspections across the UK, which, like the food businesses discussed in the previous section, were under the control of Local Authorities. Being subject to Local Authorities, some abattoirs were inspected to EU standards while others were not. Thus the inspection protocols and inspection charges could vary dramatically between abattoirs that were close to each other but in different districts (boroughs). Partly, the differences in charges could reflect differences in the thoroughness of the inspections. But also there was a strong sense that the rates charged in a particular plant varied with the fiscal health of the local council, thus giving rise to unfair competition. The MHS is responsible for the inspection of slaughterhouses, cutting plants and cold stores to ensure they meet the government’s fresh meat hygiene regulations. In addition there are mandatory ante-mortem and postmortem inspections of each animal/carcass by an MHS inspector (either a veterinary surgeon directly employed by the government or under contract as a private veterinary surgeon registered by the state) who is paid by the taxpayer. The ante-mortem inspection is to ensure there is nothing obviously wrong with the animal and to ensure animal welfare. The post-mortem inspection involves an examination of the whole carcass and internal organs

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(to check for disease). At this point the inspector stamps the carcass to say that it is fit for human consumption. The MHS also inspects the treatment of the SBM to ensure it is disposed of properly (and hence to safeguard against BSE entering the food chain). Once the carcass passes inspection it is split and further processed. However, there are no further MHS inspections further downstream. According to one observer: ‘the weakness of the MHS inspection is it is quite possible to take a whole carcass which has been declared fit for human consumption and turn it into something that is unfit for human consumption’. Inspection of the meat further down the supply chain is the responsibility of the private sector. Apart from meat inspections, the MHS was given a mandate to raise standards in licensed slaughterhouses and cutting plants. In its first year of operation it established the baseline Hygiene Assessment System (HAS) scores for all licensed premises. The HAS score is a number between 0 and 100, with higher scores indicating better performance. The system was developed as an objective, risk-based method of assessing hygiene standards. Premises are assessed against performance criteria covering all significant aspects of production each weighted according to their relative risk. Assessments are carried out by an Official Veterinary Surgeon (OVS). These occur at least once a month at full-throughput premises and quarterly in low-throughput premises. Since September 1997, the HAS scores for all plants in the country have been published ‘so that the food industry and consumers can easily see the best and worst in the business’ (Meat Hygiene Enforcement Report, No. 5, September 1997). HAS scores are also used to allow the MHS to identify premises where additional supervision and enforcement action might be necessary. The MHS itself is audited by the State Veterinary Service (SVS). Any significant differences between the HAS scores obtained by the SVS and those produced by the MHS are investigated. In addition, MHS inspection staff are subject to disciplinary action if they approve contaminated carcasses or if they don’t enforce the hygiene regulations. Food Standards Agency (FSA) The proposal for a FSA arose from the British Labour Party in March 1997 as a part of its election platform. The idea was to introduce a major institutional cure for the catalogue of food scares that had faced the British public in the preceding 10 years and which had eroded confidence in the existing system. A request was made to Professor Philip James to produce a report on the function and structure of the proposed agency. The James Report was presented to Mr Tony Blair (leader of the Labour Party) on 30 April 1997. According to the James Report, the problem of ‘eroded confidence’ was not just one of public perception. Rather there were three institutional failings with the existing system. The first institutional failing was that MAFF appeared to have a conflict of interest. It had an important role to

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play in promoting the economic interests of the agriculture, fishing and food industries, but it was also responsible for protecting public health throughout the food chain (e.g. responsibility for many expert committees in the food safety area, veterinary monitoring and the MHS). Inevitably, there would be conflicts between concerns for food safety and the short-term economic needs of some industry sectors. According to James: What is needed, is a new body, which separates the role of protecting the public health and safety from that of promoting business. Such an Agency must operate openly so that decision-making becomes more transparent and the true balance of interests is subject to public scrutiny.

The second institutional failing was that there existed overlaps and gaps between MAFF, DoH and the other departments leading to fragmentation and lack of coordination in the monitoring and control of food safety. There is therefore a need for a single agency to act as a one-stop shop. The third failing was that the enforcement of food law was uneven throughout the UK. Regulations under the Food Safety Act 1990 are enforced to varying standards from authority to authority. In April 2000, the FSA was established as an open, independent organization with functions to: ● ● ●

provide advice and information to the public and to the government on food safety from farm to fork, nutrition and diet; protect consumers through effective enforcement and monitoring; and support consumer choice through promoting accurate and meaningful labelling.

The FSA is responsible to parliament through the Health Ministers. However, to safeguard its independence it has the unique legal power to publish the advice it gives to the government. With the creation of FSA, responsibility for food safety issues was transferred from MAFF. The MHS, which was previously accountable to the MAFF, was now made accountable to the FSA. Cattle Passports Scheme and computerized database The idea of cattle identification (via ear tags) has been around for a long time to control tuberculosis and to record breeding herds. However, the idea of cattle identification for food safety is relatively new. It began with EU Council Directive 92/102 of 27 November 1992 on the registration and identification of beef (and other) animals. However, the Cattle Passports Scheme was actually initiated as a precondition for lifting the EU beef export ban imposed in March 1996 following the UK Government’s admission of a possible link between vCJD and BSE. It was initiated under the Cattle Passports Order 1996 and came into force in July 1996.

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In September 1998, the cattle tracing system was modified following a new EC regulation (820/97) which required: 1. Animals born after 1 January 1998 were to be identified by an approved ear tag in each ear (double tagging). Double tagging involves a tag in each ear with the same unique identification code which makes it possible to identify each animal individually together with the holding on which it was born. Double tagging provides insurance in case one of the tags falls out. 2. Cattle passports would be compulsory in all Member States from 1 January 1998. 3. A computerized database was to be fully operational by 31 December 1999. 4. An up-to-date on-farm register was to be set up. In the UK, this new regulation was implemented through the Cattle Identification Regulations and managed by the British Cattle Movement Service (BCMS). BCMS was a new public sector organization, and a part of MAFF. It is envisaged that in due course it will move into the private sector or become an executive agency of MAFF. The BCMS maintains a register of births, deaths and imports of cattle, it issues cattle passports and it processes cattle movement information. It is expected to handle over 20 million cattle movements each year. With regard to the specific EU requirements: 1. All beef cattle in the UK are required to be double-tagged within 20 days of birth. There is currently no requirement for electronic tagging. 2. Britain’s cattle passport scheme was already in place in 1996. Farmers must apply for a passport from BCMS within 7 days of tagging. The passports contain information on the animal’s identity, origin and movement. 3. Information about the animal’s movements will be recorded on the Cattle Tracing System (CTS) and the keeper of the animal must report movements to BCMS. The CTS contains information on each animal’s: ● identification code; ● date of birth; ● sex; ● breed or colour of coat; ● identification code of the mother; ● identification number of the holding where born; ● identification numbers of all holdings where the animal has been kept and the dates of each change of holding; and ● date of death or slaughter. 4. Farmers are required to keep a register (either paper- or computer-based) that records the details of births, deaths and movements on to and off the holding.

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Beef Labelling Scheme The same EC Regulation (820/97) that introduced new requirements on cattle tracing also introduced the idea of a compulsory Beef Labelling System. All Member States of the EU were required to implement this regulation by 1 January 2000. The underlying principle of an efficient labelling system was held to be the possibility of tracing back any labelled beef to the animal or animals of origin. The compulsory Beef Labelling System was intended to require every label to contain: ● ●

a reference code ensuring ‘a link between, on the one hand, the identification of the carcass, quarter or pieces of meat, and on the other hand, the individual animal’; and the Member State or third country where the animal from which the beef derived was: (i) born; (ii) raised; and (iii) slaughtered.

The UK implemented the Regulation early (in 1998) through the Beef Labelling Scheme. Under this scheme, detailed labels on fresh and frozen beef must be approved by MAFF and verified by an independent body. The regulation applies to any label other than the basic information, which can be easily checked at point of sale or is already required by law (e.g. weight, cut, ‘best before’ date, storage conditions, cooking instructions, name of manufacturer). The regulation is designed to prevent giving consumers misinformation about the beef product. The following are examples of information for which approval is needed: ●

● ● ● ● ● ● ● ●

where the beef comes from (i.e. where the animal was born, raised or slaughtered) – if it is desired to label the beef after a particular region, say ‘Scottish’, it is necessary that the animal be born, raised and slaughtered in that region; breed (e.g. Angus); age or sex; identification number of animal; method of production (e.g. organic, extensively reared, grass-fed); method of slaughter (e.g. Kosher); date of slaughter; method or length of maturation; and where a name is given to a product range (e.g. a quality assurance scheme).

The basic intent of the rules is to put the onus on the food business to prove that the information being applied is true and to employ an independent third party to verify the system for ensuring this. The scheme is administered by MAFF and approval will only be given once the required guarantees are given. MAFF personnel (Trading Standards Officers or EHOs) will carry out checks on retailers to ensure compliance.

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Non-governmental arrangements Farm Assurance Schemes Farm Assurance Schemes were developed in the early 1990s, partly in response to the BSE crisis and partly in response to pressure by retailers who saw this as a way of helping to satisfy the due diligence requirement of the 1990 Food Safety Act. The major farm assurance schemes covering beef production were Farm Assured Scotch Livestock (FASL), which began in 1991 and evolved into Scotch Quality Beef and Lamb Association (SQBLA) in 1995, and FABBL that began in 1992. In the beginning, these schemes were more popular among the processors and retailers than among the livestock producers. Many farmers did not see the value of them and resented having to pay the levies and the on-farm inspections. However, once the BSE crisis really started to bite, farmers became much more interested. In the early years, farmers were given financial incentives to join (by premiums and/or forgiveness of the levy). Once a critical number of farmers joined, these inducements disappeared. Membership of one of these schemes has virtually become a de facto requirement for gaining access to the market. For example, the major retailers buy their beef only through partnerships, and if a livestock producer wants to supply this market, membership in one of the recognized farm assurance schemes is essential. One example of a farm assurance scheme is SQBLA that sets standards covering: ● ● ● ● ● ● ● ●

origin of stock; stockmanship and animal welfare; feed composition and storage; housing and handling facilities; medicines and veterinary treatment; movement and record books; (animal) traceability; and livestock loading and transport.

Supermarket partnerships overlay these farm assurance schemes with their own requirements. For example, they might include additional quality criteria such as fat class, conformation, particular breed specification, and weight. Meat and Livestock Commission (MLC) The MLC was established under the Agriculture Act of 1967 to assist the development of the pig, beef cattle and sheep industries. It is independent of the government and (unlike the MHS) cannot operate on behalf of the government to determine whether a particular animal is fit or is not fit for human consumption. The MLC receives its funding from two levies plus fees

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for service. The general levy is payable in equal shares by livestock producers and abattoirs, while the species promotion levy is payable only by farmers. These funds are targeted at marketing, industry promotion, industry development, commissioned research, technology transfer and industry services. Most of the funding for the MLC comes from fees for service. The MLC carries out a number of industry services that are paid for on a full-cost recovery basis. These services include: livestock farm business consulting; independent carcass authentication service; quality assurance at all levels of the supply chain; and market information. The MLC has played a significant role in encouraging meat safety and quality in the UK. In 1991, it introduced blueprint programmes for British beef, pork and lamb. These blueprints contained a set of recommendations on the best way to handle animals, operate slaughterhouses, meat processors, etc. in order to get a quality commercial product. For example, the beef blueprint contained recommendations in seven areas: ● ● ● ● ● ● ●

standards for cattle procurement; standards for the loading and transport of live cattle; standards for abattoirs and cutting plants; specifications for carcasses and sides/quarters; specifications for primal and retail cuts; recommendations for cutting methods; and recommendations for labelling.

The major retailers were receptive to the MLC blueprints, which they used as a basis for determining the characteristics of their premium products. Building upon the blueprint initiative, and in response to reports of shoddy practices at some abattoirs, the MLC undertook two new initiatives to further enhance UK meat quality and safety. They were: (i) to develop the Assured British Meat (ABM) initiative, which is discussed in detail in the next section; and (ii) to provide independent safety and quality audits of meat plants. Let’s take a closer look at (ii) here. You may recall from earlier discussion, we said the MHS provided ante-mortem and post-mortem inspections at abattoirs to ensure some minimum level of food safety was attained. However, we also said it was quite possible to take a whole carcass, which the MHS had declared fit for human consumption, and turn it into something that was unfit for human consumption by substandard hygiene practices further downstream. The major retailers were particularly concerned about this because of the recently introduced Food Safety Act. They were looking for a way to audit their suppliers and hence show due diligence (as this could be used in a court of law as a defence against criminal liability for selling unhygienic food). After 1990, retailers began to hire their own food safety technicians to audit suppliers to ensure they (their suppliers) met their food safety and quality criteria. Each retailer developed its own set of standards of safety and quality. Then a few independent companies emerged to provide independent audits of the suppliers’ premises, procedures and practices against an approved standard.

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In 1994, MLC formed a joint venture with Campden & Chorleywood Food Research Association, which they called EFSIS (European Food Safety Inspection Service). EFSIS was one of the few independent auditing companies, which rose to prominence at this time. Apart from EFSIS, the main auditing firms include Law Laboratories, Total Legal Compliance and National Britannia. EFSIS became the largest of such auditing services in the UK with 65% of the UK market. EFSIS provides two levels of acceptance for food supply firms: ● ●

food supply status – where there is a guarantee of safe food; and accredited standard – where the firm complies with every element of the standard.

The ‘accredited standard’ takes into account other factors in addition to food safety, such as animal welfare, environmental impact and traceability. Actual requests for audits may come from manufacturers or from retailers. However, the manufacturer generally pays for the audit. Recently, EFSIS separated its association with the MLC becoming a completely self-financed company. This was to ensure no possibility of a conflict of interests between the activities of MLC and EFSIS and to meet the requirements of the United Kingdom Accreditation Service (UKAS). ABM and the British Farm Standard Mark The UK beef supply chain includes many vertically related participants. They include feed producers, feed compounders, livestock producers, livestock transporters, livestock markets, abattoirs and cutting plants, processors, wholesalers, caterers, and retailers. In some sectors there are a number of programmes. For example, in the case of beef cattle production there are regional programmes such as FABBL and FASL, and in the case of independent butchers there are programmes like Q Guild, Shop With Assurance (in England) and Shop With Confidence (in Scotland). In addition to these different horizontal programmes there are also different vertical programmes run by the large supermarket chains. The large supermarket chains operate their own quality assurance schemes which require participants to adhere to their particular safety and quality standards and inspection protocols. One example of a supermarket scheme is Sainsbury’s Beef Partnership with ABP and about 4000 beef producers. The beef producer members must not only belong to a farm assurance programme (like FABBL) but also agree to meet other more stringent specifications (e.g. on production methods) and agree to deliver their cattle to a specially selected abattoir (which is also part of the programme) on a pre-arranged schedule. In response to the proliferation of standards and the low consumer confidence, the MLC launched an initiative in 1995 to develop single national core standards for each component of the beef supply chain and to provide traceability of product throughout the supply chain. This initiative evolved

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into ABM, which was incorporated as a company (limited by guarantee) in May 1997. The stated mandate of ABM was to establish ‘an integrated assurance scheme to restore and maintain confidence in the safety and wholesomeness of British meat’. The emphasis was on developing ‘core assurance’ standards rather than ‘quality’ standards. These core standards were based on food safety and related welfare and environmental issues. The thinking was that the various participants in the supply chain could agree to treat these as non-competitive issues and hence reach a consensus. This contrasts with quality standards, which are viewed as competitive issues. The idea was to develop a set of national sectoral assurance schemes (i.e. at different levels of the supply chain) all linked together so as to provide whole-of-chain food safety. It would not replace existing sectoral schemes like FABBL, but rather would work to modify them where necessary to meet the core standards, inspection protocols and linkage requirements. The linkage requirements would be met by having each sector require, as part of its specification, that the preceding sector be certificated (i.e. have its own standards and inspection protocol approved by an independent body). This process has now been completed, so there are now standards set for all components of the supply chain including feed manufacturers, farmers, livestock markets, livestock transporters, abattoirs, secondary wholesalers, catering butchers, specialist and traditional butchers, and multiple retailers. Initially, ABM was involved in certification and inspection of members of the scheme. To this end, it achieved UKAS accreditation to European Standard EN 45011.2 Enrolment in the scheme was voluntary, but members were required to adhere to the safety and allied standards. Non-compliance would lead to suspension and ultimately exclusion from the scheme (subject to an appeal system). ABM is a very ambitious initiative as there are a large number of players involved with different, and sometimes conflicting, interests. In the UK, there are about 100,000 farms, 350 livestock markets, 350 abattoirs, 3000 outlets of the major retailers and 8000 independent retailers. An example of conflicting interests is between the major retailers and the National Farmers Union (NFU). The interests of supermarkets would be best served by a quick application of stringent standards, which would exclude a large number of low-performing producers. However, the interests of the NFU would be best served through a slow increase in standards so as to protect its members from exclusion. There was consensus that ABM has done a good job both in developing an integrated set of (core) safety and allied standards right along the supply chain. However, there was also criticism that ABM was not being sufficiently aggressive in establishing a presence in the British meat market. Membership in the ABM scheme had not met expectations. Hence, in early 2000, the NFU launched a new initiative (in consultation with the MLC) called the British

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Farm Standard Mark. The idea of this initiative was to boost farmer membership in the ABM’s farm quality assurance scheme and boost the sale of British farm produce (including beef) by giving consumers proof of quality in the form of a trade mark, a red, white and blue sticker representing a tractor. According to an ABM press release (30 March 2000): ABM’s new role will be to independently underpin food standards and associated product marks across all food production chains. An immediate priority will be to assure the standards for the new British Farm Standard Mark.

The press release went on to say: The new role for ABM will involve stepping back from providing frontline commercial operations, which will provide greater choice in the future provision of independent certification and inspection services.

Implications of these Developments The restructuring of the UK food safety system has been driven by internal crises, yet unlike the US, it has been bounded by an important external force: EU legislation in the form of directives and regulations. As a result, the UK trajectory has been: to react to decreased consumer confidence through an explicit focus on consumer protection in a manner that is both acceptable to the British consumer and congruent with EU legislation.

The objective of this section is to discuss this proposition in more detail. The restructuring in the UK, similar to the USA, is focused on regaining lost consumer confidence. However, in the UK, the government was viewed as having failed the public, while this was not the case in the USA. In the UK, the one group to retain consumer confidence in the dark, early days of the BSE crisis was the major supermarket chains. The implications of the lost consumer confidence for the role of government were thus quite different in the two countries. In the USA, we saw a move to more government intervention and more stringent regulations, while in the UK we saw a move towards reorganized and refocused government intervention. In the USA, responsibility for meat food safety remains in the hands of the USDA, an agency that has both a consumer protection and a producer promotion mandate. By contrast, in the UK, responsibility for consumer protection has been shifted from MAFF to the new FSA. The major supermarket chains in the UK have also become a more important influence in recent years in leading whole-of-chain initiatives to ensure food safety. In part, this is to be expected because the retail sector is becoming increasingly concentrated and the due diligence defence has been an important spur to such developments. But perhaps their focus on building and maintaining trust

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with the consumer has also been a factor. The major supermarket chains have moved vigorously to introduce their own form of market regulation (i.e. the retail partnerships with independent audits of suppliers) which has been superimposed on top of the government’s legal regulation. While the UK Government struggles to regain consumer confidence by focusing on improving food safety per se, the supermarkets have vigorously moved to link enhanced food safety with enhanced industry competitiveness. The UK supermarkets have done this by focusing on whole-of-chain restructuring of the food safety system. This does not appear to be happening to the same degree in the USA and Canada. In the USA, the emphasis on improving food safety is still predominantly focused at the slaughter/processing stage of the supply chain. And since Canada is primarily driven by developments in the US market, the same story applies there. There are two important challenges facing the restructuring of the UK beef safety system. First, there is the increasingly concentrated nature of British beef retailing and the beef partnerships. On the plus side, the vertical partnerships (i.e. retailers with processors and through them with livestock producers) can lead to a safer, more responsive and more competitive beef supply chain. On the negative side, the increasingly concentrated nature of the retail sector can lead to increasingly large market power imbalances. The retailers can use their power for market regulation to impose their own safety and quality enhancements on upstream producers with very little cost to themselves. Second, UK food law is bounded by EU legislation. Thus, the UK does not have the same flexibility as the other countries under study to restructure its food safety system in a way it considers optimal. Moreover, free trade between the various countries of the EU means the UK cannot prevent beef from other EU countries being imported provided they meet the EU standards. This completes the UK leg of our journey. It is now off to Australia where economic rationalism is not just a theory, but also a political ideology for a number of successive governments. Economic rationalism has carved a wide swathe across Australia’s socio-economic landscape, including that part called food safety.

Notes 1. The authors wish to acknowledge the help provided by Susan Hornibrook, Wye College, Kent, UK, who provided some background research for this chapter. 2. This standard was adopted by the EU in 1989 and has three main principles: independence; third party checks on standards; and normative documentation against which standards can be measured.

Chapter 6

Australia

Introduction Australia is an important player in the international beef market. Beef production is about one and a half times that of Canada, while exports are about double. The main destination of Australia’s beef exports is Japan followed by the USA. In recent years the gap between these two markets has narrowed because of increasing exports to the USA. Most (about 80%) of Australia’s beef is range-fed and much of it is exported as manufacturing beef. Australia has been included in this study because, of all the countries considered, it is the one with the greatest export orientation. Exports account for about 60% of total production. This degree of export orientation is exceeded only by New Zealand (nearly 80%), but Australia is a significantly larger player than New Zealand in absolute terms. Of the other three countries under study, Canada would come closest in export orientation at 45%, but Canada’s situation is coloured by its huge dependence on the US market. But Australia not only has an extraordinarily high export orientation in beef, there has also been a sustained (since the mid 1980s) government policy tilt towards economic rationalism not matched by the other countries under study (see, for example, Pusey, 1991). This is not surprising given that the Australian population is less than 20 million. The domestic market would be hard-pressed to absorb more than a fraction of production across a wide range of Australian products. This combination of high export orientation and economic rationalism suggests Australia might be the most likely of our four countries under study to embrace the objective of international competitiveness as laid out in Chapter 1. The chapter follows the same basic layout as the previous three chapters.

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Drivers for Change The more important drivers for change are external though there are some significant internal drivers. As one observer from the (then) Australian Meat and Livestock Corporation remarked: The main driver was international rather than domestic origin. This doesn’t mean we treat our domestic customers as second-class citizens but the case is Australia ships to about 110 markets around the world. We are the world’s largest trader of meat products and we are open to scrutiny in every one of them and the slightest problem in any one market reverberates around the rest.

External drivers for change Beef for export is produced in export plants. However, while exports account for about 60% of total production, such plants push through about 80% of total production. This means a sizable share of their output ends up on the domestic market. External drivers directly impact on the export plants, but since these also supply the domestic market, the external drivers also have a substantial impact on domestically consumed product. The most important international markets for Australia are Japan which accounts for about 300,000 tonnes, the USA (about 200,000 tonnes) and Korea (about 60,000 tonnes). The Japanese market tends to be a quality market while the USA market tends to be manufacturing. But with the Asian financial crisis, Australia has been looking more to the USA as a quality market. The most important external drivers for change have been: (i) the food safety standards of export markets; (ii) past problems with Australian meat; and (iii) SPS Agreement of the WTO. Food safety standards of export markets ‘If the US says jump, we jump’. This was a commonly held view among both industry and government representatives in Australia. The Australian beef food safety system has benefited from the scrutiny of US abattoir reviews over the years. This began in 1965 with the passage of the US Pure Food Act which mandated a meat safety system involving veterinary control of abattoirs, construction standards, use of potable water and so on. It also required international reviews of meat processing carried out by USDA officers. At one time, there were two US reviewers resident in Australia who carried out the audits of all the export plants. Nowadays, the US reviewers are Washington based. Under the US-led meat food safety system, any country exporting to the USA had to meet standards (on construction, handling, animal welfare and so on) ‘equal to’ those of the USA. These US standards were prescriptive and restrictive. You could have a piece of flaking paint that posed no public health

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risk. Yet, if it was contrary to the standards, it had to be removed. According to one observer: ‘These US reviewers were ruthless – they came out here and if you weren’t up to standard you were knocked off.’ Still, during the 1960s and 1970s, the export of manufacturing beef to the USA was quite profitable and Australia bent over backwards to comply with these standards. This helped to significantly improve hygiene standards in Australian export abattoirs and may help explain why Australian abattoirs are generally of significantly higher standard than abattoirs in other countries, such as the UK, which did not export to the USA. Because of the dominance of the US market and the lack of standards in other countries, the US standards became the de facto international standards. Thus, if exports met US standards, these were also sufficient for exports to other countries. In the late 1970s, the EU came on the scene and included some add-on requirements. These included technical requirements that animals should never be treated with hormone growth promoters. Australia received a jolt in early 1996 when the US annual review of Australian export abattoirs found six of the 30 export abattoirs to be ‘unacceptable’ and a further eight to be only ‘marginally acceptable’ to US standards. In addition, significant deficiencies were found in the residue testing laboratories used by the Australian meat inspection system. This stimulated the Australian Quarantine Inspection Service (AQIS) to investigate and correct what seemed to be a serious lack of control by AQIS officials. It also helped foster reforms in the meat industry including the move to HACCP Quality Assurance (QA) systems and the development of the so-called Project 2 (Meat Safety Enhancement Programme) (see page 125). Past problems with Australian meat In 1981 and 1982, there occurred the celebrated ‘species substitution scandal’ in Australia. This involved the substitution of horse meat, donkey meat, buffalo meat and kangaroo meat for beef, which was then exported to the USA. This involved only three or four small companies who sought to take advantage of the very high prices of beef at the time. But, it led to a Royal Commission into the Meat Industry in 1982 and ultimately to the 1982 Export Control Act. This Act regulates the production and shipment of export meat from Australia. Under this Act are export meat orders, which lay out requirements for such things as structures, auditing, processing and operations (including hygiene, time and temperature control, product standards, microbiological standards and other standards). The Act makes clear that if the importing country requirements are higher than the Australian standard or Codex then it is necessary to comply with those importing country requirements. Beginning in the late 1980s, Australia faced new threats to its international market from a couple of instances in which chemical residues were found in meat exported to the USA. In 1987, USDA authorities at a west coast

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port of entry detected a cluster of organochlorine residues (DDT and Dieldrin) in Australian beef. Then again, in 1994, they detected chlorfluazuron in a few shipments. Chlorfluazuron is a chemical used to combat a particular caterpillar in the Australian cotton industry. At the time, there was a massive drought and beef producers were using cotton trash as cattle feed (this was unprecedented because cotton trash has very little feed value). Trace amounts of the chemical were picked up in the diet and biomagnified in the fat tissue and observed in shipments overseas. The real problem was a lack of international thresholds established for it. It was a chemical designed only for use in Australia. Hence there was a zero tolerance for it in export trade. These chemical residue problems on-farm helped to spawn on-farm QA programmes and the national Vendor Declaration, which was trialled in May 1996 and launched in January 1997. One other institutional innovation to result from the concern over chemical residues was the establishment of the high level (strategic) Residue Management Group (RMG). This group in turn has recently evolved into another high level strategic group known as Safemeat. Both the RMG and Safemeat are discussed later in this chapter. While international concerns about the presence of chemical residues was a major driver for on-farm programmes, international concern about the presence of potentially harmful microorganisms was a major driver for off-farm programmes (especially at the abattoirs). Attention became focused on microbiological problems (such as E. coli and Salmonella) at the processing level. With regard to microbiological problems as a driver for change, there is no question that the most significant would be highly publicized food poisonings which are domestic in origin. These are discussed below in the section dealing with domestic drivers for change. However, food contaminations in other countries have also been a driver for change. According to one observer: ‘We convert tragedy in the rest of the world to assist our communications. The Hudson Meat problem is a classic and so too is that of the Barr butcher in Scotland … we use each of them to help drive the message back here.’ However, it is possible for problems in other countries to have a negative spillover effect. For example, the BSE crisis in the UK had some negative spillover effects in Australia. The main concern was that consumers would stop eating beef altogether. This problem showed up particularly in Australia’s export markets (especially in Japan and Europe) where meat of all origins was to some extent tainted with the same brush. SPS Agreement Australia’s focus on developing standards ‘equal to’ the US standards was prescriptive and restrictive. But this all changed with the SPS Agreement that flowed out of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) Round. This new Agreement allowed Australia to seek ‘equivalency’ rather than ‘equality’ with US standards. Under the ‘equivalency’ rule, countries are permitted to achieve the same food safety outcomes using differ-

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ent approaches. The Australian Government has used this as a lever for the development of new approaches to ensuring food safety, which offer the potential for greater competitiveness. Thus, Australia has negotiated an agreement with the EU Commission to do a side-by-side comparison of the Australian export standards on foods with EU requirements to ensure they are equivalent. Perhaps the biggest innovation has been the promotion in Australia of the concept of co-regulation. This involves the replacement of government inspectors in meat plants with company inspectors who are overseen by thirdparty, independent auditors. Promotion of the idea of co-regulation in export meat plants came in the form of the so-called Project 2 and more recently the Meat Safety Enhancement Plan (MSEP). This allowed for independent auditors, but the whole process would be overseen by a government veterinary surgeon who would also provide export certification. MSEP was recently accepted by the US authorities as being equivalent to US standards. However, no export plant has yet implemented it because of the unease of other export markets such as the EU and Asian markets.

Domestic drivers for change The most important domestic drivers for change have been: (i) food poisoning outbreaks; (ii) the growing pressures from major retailers; and (iii) the government drive for deregulation. Food poisoning outbreaks The most significant domestic food poisoning outbreak was the so-called Garibaldi incident in January 1995. This involved the contamination of mettwurst (a manufactured meat product) with E. coli bacteria, which is naturally present on the outside surfaces of live animals and in the intestinal tract. In this instance, unhygienic manufacturing practices enabled the bacteria to manifest in the mettwurst. As a result, a number of people wore diagnosed as suffering from haemolytic uraemic syndrome (HUS). Around 150 people experienced sickness, 22 people were hospitalized (20 children and two adults), some of whom required long-term medical assistance, including dialysis and possible kidney replacements. One 4-year-old girl died. While the Garibaldi incident was a tragedy, it has also been credited with kickstarting the Australian meat industry into action. It generated considerable pressure to put in place mandatory regulations for domestic meat plants. All establishments producing for the domestic market – and there were only very few who would produce only for export – were targeted for upgrading in their food safety systems. In particular, the Council of Federal and State Agriculture Ministers, called ARMCANZ (Agriculture and Resource Management Council of

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Australia and New Zealand), decided to upgrade fresh meat (inspection and hygiene) standards across the country. ARMCANZ drew up harmonized domestic standards – called the Australian standards, which have since been passed into law in the states and territories. One element of the Australian Standard for Hygienic Production of Meat for Human Consumption has been the mandatory introduction of HACCP in domestic meat establishments. And since export plants generally also supply the domestic market, HACCP was also being widely introduced into export plants. This initiative predated the US MEGAREG. Thus, when the MEGAREG was introduced, requiring export plants to have HACCP, the process was already well along in Australian plants. The Garibaldi incident has also been credited with a change in culture among smallgoods manufacturers in Australia. Manufacturers have taken the initiative to implement stringent food safety procedures of their own, ahead of mandatory regulations being imposed by Federal and State regulatory bodies. The Garibaldi incident and others which followed were a clear catalyst for change. They provided the political environment in which such changes were not only possible, but demanded. Other domestic food poisoning outbreaks included: ● ● ● ● ● ● ● ● ● ● ●

June 1996 – Streets ice-cream company withdrew vanilla ice-cream when liquid mercury was found in a tub. June 1996 – 54 people contracted Salmonella infection after eating Kraft peanut butter. The contamination was traced back to a peanut roasting plant in Queensland. November 1996 – The Myer retail store closed one of its restaurants after 24 people suffered Salmonella poisoning suspected to come from mayonnaise and chicken sandwich fillings. November 1996 – Salmonella outbreak occurred on a Qantas flight between Queensland and Japan which led to 56 people being hospitalized. February 1997 – an elderly man and at least 420 people were infected with hepatitis A after eating oysters from Wallis Lake, New South Wales. February 1997 – Lago Smallgoods withdrew three processed meat products when two people died and 24 fell ill with gastroenteritis and Salmonella muenchen virus. March 1997 – The World Hot Bread shop in Springvale served pork rolls that gave 700 people Salmonella (typhimurium 1) food poisoning. April 1997 – Fabbris Smallgoods in Melbourne recalled ham products and silverside in Victoria, Tasmania and Queensland after 19 people fell ill from Salmonella (anatum) food poisoning. April 1997 – 30 people fell ill after eating chicken curry at an Indonesian food festival in Malvern with 13 hospitalized. April 1997 – five people fell ill after contracting Salmonella chester infection from Safeway products (of unknown origin). November 1997 – 60 people fell ill after eating pork rolls from the Phnom Penh bakery at Springvale.

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The role of the media in exposing food poisoning outbreaks is somewhat ambivalent. It is clear that reports on such incidents as the Garibaldi food poisoning outbreak helped to foster change. However, there have also been incidents where the media have helped the opponents of change. A case in point is Victoria, where then-Premier Kennett was leading the charge in Australia to replace government meat inspection with a co-regulated system of meat inspection. This generated a political backlash from government meat inspectors who saw this initiative as threatening their jobs. As the co-regulated system was being implemented, the media published a number of stories of shoddy practices in Victorian abattoirs, allegedly fed to them by individuals sympathetic to the cause of the government meat inspectors. For example, the (Melbourne) Herald-Sun of 20 April 1997 had a dramatic picture of a driver of an unrefrigerated truck delivering fresh chicken fillets in his bare hands to a Melbourne butcher’s shop. The newspaper also reported: at least two well-known supermarket chains selling meat delivered in trucks without refrigeration units … The investigation reveals that illegal practices in the food transport industry are widespread.

In another story from the Melbourne Sunday Age (4 May 1997), the reporters claimed: Victorians are eating meat produced by several shoddy, unhygienic and poorly supervised abattoirs, processors and smallgoods manufacturers … One of the larger processors in the State is taking expired and returned meat from retailers then reprocessing, repackaging and reselling it in a major breach of health regulations.

Such stories were later reproduced in a submission to the US Government opposing co-regulation of Australian meat export plants. Growing pressures of major retailers The two largest supermarket retailers of beef in Australia are Woolworths and Coles. They appear to be taking lessons from the five major supermarket chains in the UK. As we discussed in Chapter 5, UK supermarkets have developed strong vertical partnerships with their suppliers. This allows the supermarkets to push accountability back upstream by only dealing with certain suppliers who can meet their criteria for food safety and quality. This is starting to happen with the major supermarket chains in Australia. The major Australian supermarkets currently have formed alliances with a number of feedlots, particularly in Queensland, to feed out cattle bought from livestock producers. The retailers show a preference for suppliers who are members of Cattlecare, the main on-farm QA scheme for beef. However, unlike the situation in the UK, the Australian supermarket chains are not in a position to source all their supplies from such producers who currently account for only 20% of all beef cattle sold.

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Government deregulation A major concern in Australia has been the cost of food regulation. This includes both the visible costs (such as the cost of audits) and the hidden costs of dealing with all the ‘red tape’. This is exacerbated by ‘regulatory duplication’ whereby different rules are imposed by different levels of government (municipality, State government departments of agriculture, State health departments and the national AQIS) and different customers. This led to the establishment of a national taskforce to look at ways by which the cost of regulation could be minimized. It was called the Blair Review (after its chairman) and is discussed in detail on pages 130–132. Beyond this, there has been a major shift in government thinking on government–industry relationships. It came out of the paradigm shift to economic rationalism that began in the mid 1980s and accelerated in the 1990s with the worldwide shift to smaller government as a way of reducing government deficits. One of the manifestations of this phenomenon was government no longer willing to underwrite assistance programmes for industry as they had in the past. Thus, in Australia, the cost of meat inspection was gradually shifted to industry. This created a demand in the meat industry to improve the cost efficiency of meat inspection. At the same time, governments were keen to develop new government–industry partnerships. This was partly driven by the paradigm shift to smaller government. But it was also driven by the government desire to foster international competitiveness at a time when globalization of markets was fast becoming a reality. In the Australian meat inspection system, these provided a major boost to the idea of co-regulation.

Institutional Arrangements As in the other countries under review, institutional arrangements in the Australian beef food safety system can be divided into governmental arrangements and non-governmental arrangements. Many of the institutional arrangements involve both government and industry in a partnership arrangement. These have been included in governmental arrangements.

Governmental arrangements Governmental arrangements for beef food safety can be divided into four areas: (i) domestic meat plants; (ii) export meat plants; (iii) Safemeat; and (iv) general food safety.

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Domestic meat plants The arrangements for domestic meat plants include: the Australian Standard and Co-regulation. THE AUSTRALIAN STANDARD. The Garibaldi food poisoning outbreak of 1994 was a watershed event as far as the Australian meat industry was concerned. It graphically demonstrated the impact that a food poisoning outbreak can have on human health and led to pressure for reform of Australian food safety standards. One of the difficulties in reforming the standards was the differences between States. Each State has jurisdiction over the development of standards in that State, and there is mutual recognition of the other jurisdictions. Thus, if a business produced food in accordance with the laws of one State (and produced a label to that effect), it could sell that food in another State even though it may not meet the standards in that other State. Mutual recognition can lead to a race to minimize standards, as States would have an incentive to decrease standards to attract new industry. To avoid this outcome, an attempt was made to harmonize food safety standards through the Standing Committee on Agriculture and Resource Management (SCARM) and ARMCANZ. SCARM consists of the permanent heads of the State and Federal departments of agriculture and ARMCANZ consists of State and Federal ministers of agriculture. Within the SCARM/ARMCANZ process, any proposed harmonized standards agreed by a simple majority of the States, will be binding on all States. ARMCANZ established the Meat Standards Group, involving all the State Meat Authorities (SMAs), AQIS, and industry representatives, to draw up the Australian standard for meat hygiene and meat safety.1 The resulting Australian Standard for Hygienic Production of Meat for Human Consumption (SCARM Report No. 54) covers meat inspection protocols in Australian domestic plants. Under this Standard, all abattoirs producing for the domestic market (which included both export and domestic plants) were required to introduce a HACCP-based food risk management system. At the same time, they were required to change from government meat inspection to company inspection in a ‘co-regulated’ system that included government oversight. The SMA administers the Australian standard in each State. The SMA’s responsibility lies only with fresh meat and ends at the door of the retail butcher shop. Responsibility for retail food safety rests with the State departments of health and local government. An important part of the Australian standard for meat is microbiological testing. This was introduced on a voluntary basis in March 1998 and made mandatory in all meat plants 12 months later. The objective of microbiological testing is to test the hygiene procedures (to monitor the system) rather than the meat per se. It becomes part of the HACCP system audit. In addition

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to using microbiological testing for compliance of existing HACCP systems, it can also be used to improve an existing HACCP system. Through a process of verification, a company can use microbiological testing to help improve the specification of microbiological CCPs (critical control points). CO-REGULATION AND HACCP IMPLEMENTATION. The genesis of co-regulation occurred in 1987 when the Meat Research Corporation (MRC) was asked to examine the efficiency of meat inspection in Australia. It found that the existing (organoleptic) meat inspection system could not pick up modern diseases like E. coli. Their 1988 report recommended a move into a self-regulating HACCP system. Around the same time the meat industry was becoming increasingly frustrated with the government system of meat inspection, which it saw as substantially lacking accountability. It was also becoming increasingly costly as the cost of inspections was being increasingly passed on to the meat plants. In 1989, AQIS formed a taskforce, which further examined what could be done to modernize meat inspection in Australia. The taskforce committee consisted of AQIS, the SMAs and some industry representatives. One of the recommendations of that taskforce was to introduce company-run meat inspections, which would be overseen by government auditors (i.e. co-regulation). In 1992, the recommendation was trialled in three meat plants (two in Victoria and one in Tasmania), which would adopt a co-regulated meat inspection system and three other plants with traditional government meat inspection. The co-regulated companies would take over all the meat inspection with the government carrying out the audits. The outcome of the trial was very successful. Meat produced under the co-regulated system was found to be at least equivalent in health and hygiene to meat produced under the traditional government meat inspection system. As a result, co-regulation progressively became the system used in all domestic abattoirs. There was initial opposition to co-regulation from the Consumers Association of Australia (CAA) and the Meat Inspectors Union (MIU). The promoters of co-regulation managed to convince the CAA that co-regulation was actually an improvement over the existing meat safety system. The problem for the MIU was more about a loss of members (to another union) than it was a concern about workers’ rights or food safety. The new system would see a shift of members from the MIU to the Meat Union (which represents all meat processing workers). Thus, while one union opposed the change, another union supported it. Apart from the prospect of attracting new members, the Meat Union liked the prospect of its members being able to improve their qualifications (i.e. quality monitoring) so they could be given more responsibility and do more interesting tasks. The one group of workers which stood to lose were those AQIS (government) inspectors who did not obtain jobs as company inspectors. However, they were given generous redundancy compensation. Hence the clash and head-on struggle dissipated and there emerged a sense of negotiating within the framework of co-regulation.

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By 1 January 1997, all domestic meat plants were required to have in place a co-regulated HACCP food safety system. This is the date when the Australian Standard took effect. Under this system, company meat inspectors must first be accredited by the SMA. The inspectors perform both the organoleptic inspections and monitor the company’s HACCP system. Their effectiveness is assessed during external HACCP audits. So their role in meat inspection is part of a total HACCP programme. The companies are subject to unannounced audits by the SMA (or third party in some States). If a company fails an audit there is a clearly understood course of action. It has a ‘correct a defect’ notice put on it. This requires the company to show evidence of corrective action it is taking within a given period of time. Failure to comply within the given period of time leads to other penalties, with the ultimate penalty being de-registration. One of the penalties is to increase the frequency of audits. Since the companies are charged the full cost of audits, this results in a financial penalty as well as an inconvenience penalty. Companies, which are non-performers, could go to monthly and even weekly audits. On the other hand, the good performers benefit from a reduced number of audits and decreased costs. This not only involves less financial cost, but it also means management spends less time worrying about the audits and more time focusing on the business. Many domestic plants have gone one step further than the basic implementation of HACCP. They have introduced Meat Safety Quality Assurance (MSQA). This involves a greater level of sophistication and commitment from the management of the company. MSQA was developed for export plants and is discussed in detail under Export Meat Plants. Before being eligible to move to this status, companies are required to have clean audits for an extended period of time. One advantage of moving to MSQA is that a company can reduce the number of audits down to two per year. Under co-regulation, company inspectors perform the same visual (i.e. organoleptic) inspections, as did government inspectors previously. However, company inspectors also monitor the company’s HACCP programme and they can be assigned additional tasks, such as trimming, which can be undertaken at the time of inspection. The company inspectors can be integrated with the rest of the staff – they have the same changing rooms – they are actually part of the staff. There is also movement between the processing and inspection staff. One day an individual may be doing the inspections and next day processing. According to one plant manager: One of the benefits of this is that the slaughterers and the processors learn what to look for so they are better at doing their job. There is more ‘quality’ thinking in most of the staff now.

With a different SMA operating in each State, one of the challenges has been to gain consistency in the implementation of the Australian Standard across Australia. One initiative has been to introduce cross-auditing. Cross-auditing means that an auditor from another State (usually the adjoining State) is brought in to collaborate in the audit of a meat plant.

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On the costs and benefits of introducing a co-regulated HACCP programme, one company spokesperson said: The cost of QA starts high and then falls off while the benefits from QA start at zero and grow incrementally. Eventually the two curves cross and QA becomes profitable. In our case this was about 3 years. The problem is how do you get businesses to make the necessary investments when they operate on such thin margins. However, at the end of the day I don’t believe you can you afford not to do it.

The most important benefit of co-regulated HACCP appears to be the change in culture of the workplace. An observer from one of the SMAs said: the training and the development of HACCP really flattens out the hierarchical situation. Everyone on the line is aware of what the risks are, aware of what the consequences are, aware of what they should be looking at. They are given a sense of ownership in what they are doing and that makes them feel more responsible for what they are doing. And that gets reflected back into the product. But you need management commitment to make that happen, because if the managers are not committed they won’t provide the training that’s needed, or it will be the wrong type of training.

Small meat plants faced a particular challenge in the introduction of HACCP. Under the Australian Standard even small plants (without permanent on-site meat inspection) were required to adopt HACCP. They are visited by SMA staff who check on their HACCP programme. Before HACCP implementation, such plants existed in four States: Queensland, South Australia, New South Wales and Victoria. The trend has been for such plants to close in New South Wales and Victoria, while in Queensland and South Australia, the authorities have attempted to work with the small plants to achieve HACCP implementation. Special consideration was given in these two States to smaller plants (especially in more remote locations) because of the difficulty in shipping meat into the outback from larger urban-based plants. Now that co-regulation is a fact of life in Australia, there is considerable enthusiasm for it. The co-regulated HACCP approach stands in stark contrast to the government-regulated HACCP approach adopted in the USA. According to one industry observer: The USDA has misinterpreted HACCP. The USDA think they own HACCP. They are using HACCP as a fancy quality control tool, but it is not. They think they can have a HACCP chart and walk around the plant, ticking off HACCP to see if it is working. That is ownership of HACCP in the USDA. HACCP was invented in the US, but HACCP can only work if it is owned by those on the shop floor and not by some government guy walking around with a clipboard. (The latter) would be a case of some guy peering over (the production worker’s) shoulder checking that things are done right. Then he turns his back and the worker does it wrong again … When the reviewer leaves, production goes up by 30 percent and the standards go down by 30 percent. Under the American-style QC (quality control) system, you are viewing a snapshot of a company but under the Australian-style

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QA (quality assurance) system you are looking at what has been done for the past 6 months. QA is about checking whether there is integrity in the system and whether there is commitment to it.

Another observer, this time from the federal government, remarked: The philosophy in the meat industry globally has been government policemen or what the Americans call ‘command and control’. Now this is not the philosophy for the next millennium. You don’t produce world class products by having workers being sloppy and saying what the hell, the government police are not here to stop us, you do it by having a plan which is world-class and you have all the critical points identified … the workers must be trained, someone checking everything, and you must have corrective action loops. That is the philosophy we are trying to get into the Australian meat industry.

Following the switch to co-regulation, the manager of one domestic meat plant commented: the inspectors are far more diligent working for us than working for the government. If they work for the government they do the least possible – they didn’t have an obligation – if they could sit over in the washroom playing cards they would be happy to do it. There was no discipline on them. Now, with the disciplines in place – they have to be at their station, they have responsibilities and get audited the same as everyone else to make sure they know their job. Some people complain we might try to influence them to go easy on us. But, that is not true. I have had experience where the temperature has not been right and the government inspector has let it go. But when our neck is on the line we make sure the inspector says you don’t produce until you get the temperature right. It is our responsibility and if we fail, it only hurts us.

Under co-regulation, companies are audited either by the SMA personnel in some States or by third parties, called certification bodies, in others.2 The development of third-party auditing began in Victoria in 1993 with the election of a new State government that placed a high priority on improving regulation in the meat industry and which very strongly espoused the economic rationalist ideology. In the early days of co-regulation, the auditing process was one of checking for gaps in food safety. However, since the introduction of the Australian Standard, in 1997, the process has revolved around checking the HACCP-based food safety system. Under the Victorian model, new entrants first develop a QA document, which meets all the construction and equipment requirements of the Australian standard. It sends this in to the Victorian Meat Authority (VMA) for review. VMA personnel ensure the construction/equipment requirements are met. The plant may then engage in a contract with a certification body, and develop a HACCP QA programme, which meets the requirements of that certification body. The company’s HACCP QA programme is sent on to the VMA and if it meets all the requirements for a HACCP programme then the VMA recommends the company be given a licence. The licence requires the company to implement its HACCP/QA manual within 30 days and have an audit within a further 30 days. The audit is to ensure the

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company is doing what it said it was going to do and that it has the documentation.After this, the company receives at least four scheduled audits per year. Non-conformances are categorized as minor, major and critical. Minor non-conformances do not pose a threat to public health and safety but they need to be fixed within a certain period of time (say by the next audit). Major non-conformances are a risk to public health and safety and need to be fixed quickly and the auditor returns usually within 7 days. Critical nonconformances are definitely public health and safety issues and they must be fixed immediately. When the auditor identifies a critical non-conformity the VMA is notified immediately with a recommendation on what needs to be done. The certification body and its auditors are, in turn, checked by VMA personnel through their own spot audits of the meat plants. VMA personnel conduct random, unannounced check-up audits twice a year on all abattoirs. The check-up audit is used to check on the auditor. All auditors are registered by the VMA, which has a separate contract with each one of them. If auditors do not live up to their contract standards, they are liable for prosecution and withdrawal of their licence. The certification body is also responsible for the work of its auditors. Serious discrepancies are reported to Joint Accreditation Services of Australia and New Zealand (JASANZ), which accredits the certification bodies. This all serves to keep the pressure on the third-party auditors to ensure they report back to the VMA correctly. In the beginning, the VMA contracted with only one certification body, SGS. But beginning July 1997 it moved to contestable third-party audits. Any approved certification body, which has received JASANZ accreditation and meets VMA requirements, is able to provide auditing services to the meat industry. Under contestable third-party audits, the meat plant must establish a contract with one of the accredited auditing firms and any change is subject to the approval of the VMA (to prevent the plant switching auditors if it receives a negative audit). A typical audit contract might be 1–3 years in length. From the VMA perspective the move to contestability has resulted in auditing being more diligent. There is competitive pressure to provide a good service. It also allows meat plants to negotiate between certification bodies to get the best price for obtaining the auditing service. The cost of third-party auditing is paid entirely by the meat companies. Each company pays their audit fees directly to the auditing company with which they have the contract. The company also has a contract with the VMA to deliver their surveillance services. In addition, the companies cover the overhead costs of the VMA by licence fees. A Victorian government observer summed up the main argument used in favour of the third-party audits as follows: We believe you can’t be judge, jury and policeman all in one – and effectively that is what the US and Canada have. They make the rules, police the rules and also stand in judgement on the rules. It doesn’t work. If you talk about the legal system in our country, imagine how it would be if the policemen make the rules, enforce their own rules and have courts to sit in judgment on their rules, it would

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be chaotic. But that is what we had in our regulated (meat) food safety system. But, now in Victoria we have the independent third-party auditors as our policemen. Then the VMA is the court system, and at the top we have our legal system. Every other food industry has gone that way. They have seen that independent auditing is the way to go. It is just that they have come from a nonregulated environment.

According to another observer: Under the Victorian model, the auditors are totally independent of the decisionmaking process. All they do is present the facts to the VMA and the VMA make the decision on what action to take. The idea is that the collection of the facts on performance is totally independent and hence cannot be tainted. In the past, regulatory bodies have been tainted in the collection of information – they want to go easy on them because they are primary industry.

One advantage of third-party audits over government audits is the potential elimination of multiple audits. Multiple audits occur when different agencies run different audits. In the meat industry, it is not unusual for a meat plant to be scrutinized, in the same week, by a local government health inspector, a State government auditor and an AQIS auditor. In addition, a major customer for quality (e.g. a retailer) may also audit the meat plant. A third-party auditor is potentially able to do a combined audit, whereas government auditors would be focused only on their particular safety issues and the customer’s auditors would only be focused on the customer’s quality issues. A combined audit would provide savings in time and money for the business by reducing the frequency of audits. The Victorian model received a serious challenge in the summer of 1996/97. It was an unusually hot summer and there was a string of outbreaks of Salmonella contamination in the secondary processing sector. For example, one celebrated case was in a Vietnamese bread shop where one of the ingredients was diced ham. A number of people were made ill. There was also an anthrax outbreak on a farm in Victoria and 50 cattle died. Such events were blamed on co-regulation with third-party audits. The charge was the industry was moving too quickly. However, the problem was more one of perception than reality. Neither secondary processing nor on-farm food safety were covered by the Victorian model which applied only to meat plants. One argument in favour of the use of government auditors rather than third-party auditors is the special powers granted to the former. For example, it has been argued only government auditors have the power to stop the operation in the case of a critical non-compliance until the problem is corrected. Thirdparty auditors can’t stop the process. All they can do is give a third-party auditor’s report. This raises the question of a potential time delay, which could pose a serious health risk. It is also argued that government auditors have the power to investigate other problems. For example, the government auditor may be inspecting the beef chain in a meat plant, but may observe non-compliances in the sheep chain. The auditor has the power to take action on these. As

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another example, the government auditor may take action when illegal practices are taking place (e.g. the illegal branding of carcasses). A VMA spokesperson downplayed this concern arguing: if a third-party auditor identifies a critical non-compliance, he must notify the VMA immediately. This can be done by phone. The VMA may, on the basis of that verbal report, immediately notify the facility it cannot operate until the problem is fixed. That can all happen by phone. If the auditor fails to report a critical noncompliance he can be de-registered on the spot.

There has been no study completed yet to determine which approach is better. The Victorian model of third-party auditors was copied in South Australia. South Australia introduced this innovation in 1994, about 6 months after Victoria.3 The Australian Standard, introduced in 1997, expressly permits any State to use third-party audits if it so chooses. Export meat plants The governmental institutional arrangements for export meat plants include: Export Meat Standards, MSQA and MSEP. EXPORT MEAT STANDARDS. Meat inspection for export purposes is governed by the 1983 Export Control Act. This Act ensures exports comply with both Australian Government requirements and restrictions as well as the requirements of other countries, which buy Australian produce. The Act was introduced following a Royal Commission into meat inspection which had been prompted by the so-called ‘species substitution’ mentioned on page 109. The Act gradually transferred responsibility for all meat inspection from State departments of agriculture to a single national body, the Export Inspection Service (EIS). Then in the late 1980s, the EIS was merged with the animal and plant quarantine section of the Department of Health to form AQIS. AQIS is a federal regulatory authority within AFFA (Agriculture, Fisheries and Forestry – Australia). Its meat programme employs about 1000 people (800 meat inspectors and 200 veterinary surgeons). A triangle of legislation governs meat exports. At the top is the Export Control Act. This gives the portfolio Minister the power to make Export Meat Orders. Within these Orders are the Export Meat Schedules which cover structural requirements, auditing requirements, processing requirements, operational requirements, including hygiene, time and temperature control, product standards, microbiological standards and other standards, and general requirements for residues that occur in the Meat Standards Code or Codex or in importing country requirements. The Act stipulates that if the importing country requirements are higher than the Australian Standard or Codex then meat plants must comply with those importing country requirements. Finally, there is a schedule on the inspection system (including ante- and post-mortem inspections) that ensures compliance with the requirements.

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In 1987, the Australian Government adopted the user-pay principle on the provision of services for whom the beneficiaries could be identified. This included the costs of meat inspection. The principle was implemented in stages starting at 10% cost recovery. Now, export meat inspection and certification is conducted on the basis of 100% cost recovery. However, the cost of quarantine operations is still borne by the government on the grounds that such operations benefit the country as a whole. Export certification is provided where the government of a foreign country requires it. Applications for export certification from foreign countries are normally made through a government-to-government arrangement. The government of the other country would request a provision to comply with their requirements. This would be implemented by AQIS in its export certification programme. A notable example is the requirement of the EU that export declarations (e.g. on residues), export certificates and health certificates be in the two official languages. If, for some reason, the foreign country requirements are deemed unreasonable (e.g. in excess of Codex requirements), AQIS might also attempt to negotiate it away during SPS talks. AQIS has been championing a HACCP/QA system for export meat plants called MSQA. This is discussed in the next section. When all the requirements are met for MSQA, the export plant receives an export permit (to allow product out of the country), and export and health certificates where needed (to allow product into a foreign country). The Export Standards do not coincide with the Australian Standards and that has the potential to create problems in plants that produce for both domestic and export markets. Almost all plants, which produce for the export market, also sell in the domestic market. In fact, about half of all the meat produced in these export plants ends up in the domestic market. Hence, these export plants must deal with the SMA on production for the domestic market and must deal with AQIS on production for the export market. In most, but not all, cases the Australian Standard provides the minimum standard for both export and domestic markets.4 The Export Meat Orders then reflect additional export requirements imposed by particular countries. For example, a plant wanting to sell to the USA must have certain technical requirements on water quality and must be subject to microbiological testing. Equally, meat being sold to the EU must be from animals assured to be hormone- and growth promoter-free. In 1999, the Export Control Act was reviewed (the Frawley Report) by the National Competition Policy Review. For further details see http://www.aqis.gov.au/docs/cleb/exportassurance.htm. Most notably, the Review recommended that the domestic and export systems of regulation for red meat be merged into one, and a single standard be created for the production of meat on the global market. Generally, this means bringing the Australian Standard into line with export meat standards.

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Beginning in the early 1990s, a number of export meat plants started moving to International Organization for Standardization (ISO) quality assurance systems. Such systems are enshrined in the ISO standards. The plants were being propelled in this direction by supermarkets, which only wanted to deal with companies that had full-blown ISO systems. Meanwhile, AQIS was attempting to get the export plants to introduce HACCP food safety systems. To avoid unnecessary duplication and complication, AQIS decided the best approach would be a blend of the two systems. The resulting system was called MSQA. It was developed in consultation with the meat processing industry, the meat retail industry and some consultancies and was the export meat industry’s own compilation of what was best for Australia. MSQA comprises a Codex-compatible HACCP system, and an ISOcompatible QA system. It starts with HACCP, which in turn requires the company to use GMPs as a prerequisite. GMPs mean the adoption of ‘best practices’ in the industry. Once a plant has adopted GMPs then it may introduce HACCP as a system of process control and a QA system (based on ISO 9002). The specifications in the MSQA must meet the Australian Standard, and if a plant is exporting to a particular country with extra requirements these must also be met. AQIS has written A Guide for the Preparation of the MSQA System, which is available electronically at http://www.aqis.gov.au/docs/mid/msqapart1.pdf. Although MSQA is not officially recognized internationally, the Guide has de facto received wide international acceptance. MSQA does not set quality standards for the industry. It is a tool to allow industry to adopt and embrace all of the requirements under the Australian Export Control Act; the parent legislation under which AQIS operates. This Act is primarily geared towards the production of safe meat, but it also covers SOPs for maintenance, hygiene and sanitation. These might include keeping the work environment clean and tidy and providing protective clothing for workers. These are all included in MSQA. But, in addition, the company can also include quality issues in its MSQA manual. For example, the company may include AUSMEAT descriptions (see MSA, pp. 138–142) of meat (e.g. what constitutes a rump steak), colour and chiller assessment. Rather than have a large number of different manuals around the plant, the company can include everything in the one MSQA manual, making quality management more cohesive and allowing the quality team to focus on the whole food safety–quality system. MSQA is compulsory in all export plants and aims to provide a system that meets the requirements of importing countries and provides a basis for satisfying emerging requirements in relation to meat safety and quality parameters. While it is not compulsory in domestic plants, many such plants have moved to MSQA. It involves more sophistication than HACCP, requires more commitment from management and requires the company to have clean audits. A company can’t progress to MSQA unless it has a clean record on monthly audits. However, companies, which move to MSQA, can move from monthly audits to two audits per year. Since companies are fully charged for audits, there is a financial incentive for them to move up to MSQA.

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CO-REGULATION OF EXPORT PLANTS: MSEP. In 1996, an attempt was made to extend the idea of co-regulation to export plants. It was clear that such an idea might face opposition in export markets. But the timing coincided with the creation of the SPS Agreement following the Uruguay GATT Round negotiations. This agreement allowed the possibility of setting food safety standards for export goods, which were only ‘equivalent to’ rather than ‘equal to’ the foreign standards. In particular, Australia wanted to get away from blind adherence to the US approach to meat inspection. The idea was to demonstrate objectively that the product was safer and cleaner under the Australian system of co-regulation than under the US system of government meat inspection. The Meat Research Council and the Meat Industry Council (both now-defunct) set up a trial of HACCP implementation involving co-regulation in export plants. It was simply called ‘Project 2’ and was intended to extend to export plants the co-regulation already practised at domestic plants (see page 116).5 By 1997, all export plants had implemented a US-style HACCP system using government inspectors. However, the Australian authorities saw the US-style HACCP implementation as being flawed. They saw that it left responsibility for food safety ultimately with the government inspector rather than with the company. The idea of co-regulation was seen as a remedy for this perceived problem. Under Project 2, a number of export abattoirs were selected to trial the idea in which government meat inspectors would be replaced with company QA personnel. There would still be a government (AQIS) veterinary surgeon at each plant to act as an auditor of the HACCP system, oversee the work of the QA personnel and certify the product as fit for export. A government observer said of Project 2:

the same tasks are done by people with the same qualifications but they are not on (the government) payroll. They are able to realize efficiencies through being able to do other jobs which are purely related to production and quality while they carry out the mandatory examinations laid down in the orders and laws of foreign countries.

Australian officials presented Project 2 to the USA as well as other major beef producing and consuming countries. While some export customers (e.g. Japan) were reportedly satisfied with the trial, the USA was not and the EU was ambivalent at best. The US problem with Australia’s Project 2 had less to do with science than it had to do with domestic politics. The US Government meat inspectors’ union together with some strong consumer lobby groups formed a powerful opposition to the concept of co-regulation. In June 1997, the Australian proposal appeared in the US Federal Register and comments were invited. The opposition from US Government inspectors, their unions and US consumer groups is clearly represented there. But, in the same document, there was significant support from such entities as Agriculture Canada, the US Meat Associations, the US-based HACCP Alliance, a number of US academics, the government import authorities of Denmark and Sweden, and the governments of The Netherlands, New Zealand, Mexico and Argentina.

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In the EU, the main opposition came from the veterinary surgeons who, according to one Australian observer, tend to be ‘very prescriptive and antiinnovation’. Asian markets (Taiwan, Singapore, Japan, Indonesia and Malaysia) did not have a problem with Project 2 and were willing to accept pork from Australian pig plants that operated under the Project 2 food safety regime. The process of seeking US approval for co-regulation in Australian export plants was protracted. During this time, Project 2 evolved into the MSEP, which was a trial comparing plants before co-regulation with those same plants after co-regulation. The US Government finally gave its approval of the Australian approach in June 1999 agreeing that MSEP was equivalent to the US inspection system. However, a year later there are still no beef export plants in Australia to have adopted MSEP. Ironically, it is now opposition from other buyers in the EU and Asia, which has discouraged Australian export plants from making the switch. Since MSEP is still not a reality in export plants, it is perhaps premature to be thinking about adding third-party audits to MSEP. However, such a model has already been developed for Australia’s export dairy industry and export fish industry. Furthermore, contestable third-party auditing was recently proposed by the Frawley Report (see http://www.aqis.gov.au/docs/cleb/ recommendation6.htm). The main reason for not moving to such a modified system for beef would be political rather than scientific. With political will, third-party audits could be used to ensure the systems are operating within compliance and could also be used as a basis for export certification, which would still be provided by AQIS. Safemeat (formerly Residue Management Group) Safemeat emerged out of the earlier RMG. The RMG was established following the detection of pesticide residues (DDT and dieldrin) in Australian meat which landed at US ports in the late 1980s and again (chlorfluazuron) in 1993. The idea was to devise a joint industry–government taskforce approach to improve the insulation of Australia and its meat industries from chemical residue problems. It was a cooperative strategy developed with joint government–industry funding to keep such residues out of the food chain as best possible. The RMG was responsible for introducing the (voluntary) vendor declarations. Vendors would need to complete a declaration accompanying the sale of livestock for slaughter stating whether or not they had followed the correct withholding periods for chemicals before the sale. The model for the RMG was a top-level strategic policy group comprising the secretary of AFFA, the secretary of New South Wales Department of Agriculture (representing all the State governments, the President of the Australian Meat Council, the chairman of the Australian Meat and Livestock Corporation (AMLC), the President of the Cattle Council of Australia, and the President of the Sheepmeats Council of Australia).

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The aim was to take a whole-of-chain approach (bearing in mind the importance of exports) to ‘make sure we’ve got our house in order and to prevent any future commercial hiccups’. The group had no statutory powers but its members had considerable power of influence and association within government and industry. Hence, within a few years it developed a successful joint industry–government strategy for handling residue management issues. That model proved to be a very productive one. But, by the mid 1990s, the major concerns shifted from residues to pathogens. There was no particular incident in Australia that caused the evolution of the RMG into Safemeat. However, there was the Jack-in-the-Box food contamination outbreak in the northwestern states of the USA, and the E. coli detections in Japan. These painted a picture that residues were under control, but that the next issue to address was pathogens. The RMG and its strategic planning processes were expanded to form a new group called Safemeat in April 1998. The RMG was officially disbanded at that time and its activities subsumed in Safemeat. Safemeat is a government–industry arrangement for the red meat industry. Its charter is to provide an advisory role on meat hygiene and safety issues. It comprises the same six members who were on the RMG plus four others (the chief veterinary officer, the president of the National Meat Association, president of the Australian Lotfeeders Association and the chairman of the New South Wales Meat Industry Authority (representing all SMAs)). Because the group comprises top-level industry and government leaders it is able to make decisions on the spot as required by the situation. It is funded jointly by industry and government and its mandate is to provide strategic direction and policy advice to government and to manage and overview the development of food safety. The mandate is much broader than that of the RMG. It considers a whole-of-chain approach to various issues related to residue management, food safety issues, research and development, emergency management, and meat inspection methods. Safemeat is expected to have an important role in the development of the National Safe Food System discussed below. This initiative involves making sure each sector is working towards food safety and quality. Safemeat is the appropriate body to do this for the red meat industry, and moreover it sees itself as being the driver of change. Safemeat is viewed by some in Australia as a preferred alternative model to the idea of a single food agency. These observers see the main disadvantage of a single food agency as being essentially overly bureaucratic. By contrast, they argue Safemeat is able to move quickly and decisively to make the necessary strategic decisions to ensure safe meat. General food safety The Australian Government has undertaken a number of food safety initiatives that extend beyond just beef to include all food. These initiatives include: (i) Australia and New Zealand Food Authority (ANZFA) and the Food Standards Code; (ii) the National Safe Food System; (iii) the Food Regulation

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(Blair) Review; and (iv) the Office of Food Safety and Emergency Response Plans. These are discussed below. ANZFA AND THE FOOD STANDARDS CODE. Under the Australian constitution, State governments are responsible for the development and enforcement of food standards. Each State has a Food Act administered by the State Health Department. The State Food Acts take supremacy over all other particular food acts like the Meat Acts. In fact, animals are considered food when they are put on the truck to go to the abattoir. So theoretically, State health departments have jurisdictional responsibility right back to the farm producing products with food attributes. But this can cause jurisdictional problems since Primary Industry Departments have jurisdiction for animal health and SMAs have jurisdiction for slaughter and primary processing establishments (and some transportation). Historically, such jurisdictional questions have been settled by Memorandums of Understanding between Agencies which give the Primary Industry Departments and/or SMAs responsibility for those parts of the supply chain up to slaughter or boning and then give the Health Department responsibility when the product starts to be turned into a meat pie or salami. Because responsibility for food standards lies with the individual States, different States developed different standards. Thus, the National Food Agency (NFA) was introduced in 1991 in an attempt to provide uniform food standards across the country. In June 1996, a process started for harmonizing product standards with New Zealand and so the NFA became the ANZFA. Under the harmonized arrangement, New Zealand becomes a State of Australia in terms of food production and trade. The aim was to allow food to move freely without any inspection between Australia and New Zealand because it is all produced under a single standard. The ultimate hope was that a Model Food Act would be developed which would achieve uniform interpretation, application and enforcement of food laws across all states and territories. Under ANZFA, the process of developing new food standards was streamlined, reducing the time taken from start to finish to no more than 12 months, including two rounds of public comment. This compares favourably with the previous process in Australia and those that still exist in many other countries, where the same process can take 3 years or more. The Prime Minister and the various State Premiers agreed to adhere to the Food Standards Code without variation. This Code was written into each State’s Food Act with the requirement that food businesses be required to comply. However, the Food Standards Code is not the same thing as a Model Food Act. It does not provide a comprehensive approach to food laws across all states and territories. For one thing, it does not cover standards for the upstream parts of the supply chain (e.g. in meat plants and on farms). In theory, ANZFA could develop the Food Standards Code to apply right back to the farm. However, it has chosen not to since the ARMCANZ process has

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already developed Australian Standards for the upstream parts of the supply chain (e.g. in meat plants). (See page 129 below for details.) Agreement on the Australian Standards has been a case-by-case basis between the various State agriculture ministers and so are much more open to interpretation and variation than is the Food Standards Code. It is also not comprehensive because consistent standards do not ensure consistent enforcement. The Food Standards Code is still open to interpretation and different implementation in the different States. Furthermore, the Food Standards Code only defines uniform product standards (i.e. related to microbiological, chemical and physical composition) and not uniform food hygiene standards. Having said that, ANZFA has attempted to make the Food Standards Code more comprehensive by incorporating national food hygiene standards. For details on ANZFA’s progress here, the interested reader is referred to the ANZFA website at http://www.anzfa.gov.au/. Briefly, ANZFA’s approach would require all food establishments to have food safety programmes based on HACCP and the standards would describe outcomes required for building-premises design, equipment and food handling. ANZFA saw their proposal as being complementary to the Australian Standard in that their proposal would be mandatory and put in place a regulatory driver for compliance. Businesses that comply with the Australian Standard would be deemed to comply with ANZFA’s National Food Hygiene Standard (NFHS). ANZFA’s initiative here has created some debate. In particular, there is the question whether the mandatory NFHS should be applied to the primary industry sector. On one side of the argument is the Health Department, which, according to one observer, ‘wants HACCP principles to be applied absolutely throughout the food chain’. On the other side is AFFA, which favours less regulatory models that do not require complex record keeping or registration of the farm as a food business. AFFA’s fear is that fully fledged, mandatory and audited HACCP programmes on farm will involve huge regulatory costs while the benefits (from reduced health risk) will be relatively small. It argues that retailers and food processors are bringing about the desired changes anyway in a form of market regulation as an alternative to the government regulation. AFFA argued that imposing a due diligence requirement on retailers and processors would have a trickle down effect on primary producers (as it had in the UK), and hence imposing mandatory HACCP programmes on primary producers is unnecessary. By 1999 it became clear to the Council of Australian Governments (COAG) that a Model Food Act would not be achieved through the ANZFA process. Hence, the task of finalizing the Model Food Act was passed on to the COAG Senior Officials Working Group. (NSFS). In 1996, ARMCANZ established the National Safe Food Working Group (NSFWG) to take a ‘systems approach to food safety’. Its objective was to link together all the separate efforts going on in Australia, which have safe food as their outcome and hence create a NSFS. It ran parallel to the ANZFA initiative, but took a different stance with respect to

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primary producers. The NSFWG suggested an alternative approach at the farm level whereby safe food would be ensured through voluntary chain linkages and coordination. Instead of mandatory HACCP, primary producers would face market driven codes of practice and QA schemes. (See pp. 108–114 for more details on these.) The NSFWG also suggested the idea of a Single Food Agency, which would oversee food safety policy development. FOOD REGULATION (BLAIR) REVIEW. Both ANZFA and the NSFWG helped push forward the process of change in developing more uniform food laws. However, there was still a sense within industry that the regulation of food safety in Australia was not working well enough. The Australian Constitution is not clear on where Federal jurisdiction ends and State legislation begins on this issue. Moreover, the states and territories had their own Food Acts and passed some responsibilities for inspection and enforcement on to local governments, which were not recognized at all in the Constitution. There were also State Meat Authorities, State Dairy Authorities and other statutory authorities with food safety responsibilities (e.g. for eggs, dried fruits). In addition, as we have seen, there were inconsistencies between States that made interstate trade difficult. As a result, food businesses were experiencing significant costs in time and money dealing with the proliferation of regulations. They complained at having to spend too much time filling out forms. A particular concern was the duplication of auditing requirements. This was all leading to frustration, confusion and a system that was thought to involve unnecessarily high transaction costs. As a result, the Federal Government, in 1997, called for a Food Regulation Review (The Blair Review). The Blair Review incorporated, to some extent, the preceding initiatives which included: (i) the NSFS; (ii) ANZFA’s Food Standards Code (plus the initiative to develop the NFHS and the Model Food Act); and (iii) the ARMCANZ Australian Standards. The Blair Commission of Inquiry issued its final report in 1999. It may be viewed at http://www.anzfa.gov.au/documents/gen18_99.asp. The final report made a number of recommendations including:

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that the various levels of government act together and with industry and consumers to develop a ‘well-integrated, streamlined and cost-effective co-regulatory system to effectively protect public health and safety, across the whole food supply chain’; that the governments of Australia agree: (i) all domestic food laws should be developed nationally and enacted uniformly; (ii) responsibility for developing all domestic food regulations and standards should be centralized within a national agency; and (iii) the resulting regulations and standards should be enforced and administered by the relevant agency; and that the Australian Government should take steps to integrate domestic and export food regulations through the amalgamation of the food regulatory functions of AQIS (which deals with export regulations) and ANZFA (which deals with domestic regulations).

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Following the Blair Report, the COAG established a Working Group to develop a model for an improved, nationally coordinated approach to food regulation. The proposed new food regulatory model incorporates a Model Food Act and a number of supporting institutional bodies. The Model Food Act is to be organized into core and non-core provisions. The core provisions contain the legal obligation for the production of safe and suitable food and will apply to producers at all parts of the food supply chain, including primary producers. The non-core provisions largely provide the administrative mechanisms, which support the application of the Food Safety Standards. As such, they will only apply to food businesses, which undertake food manufacturing, food retail or food service and will not apply to primary producers. Notwithstanding this, if some states/territories want to apply non-core provisions to primary producers, this will be allowed where significant food safety hazards have been identified at the primary level and which are not being managed through some appropriate industry-driven, market-driven or regulatory arrangement. The supporting institutional bodies include: ●

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The Australia and New Zealand Food Regulation Ministerial Council (ANZFRMC). The ANZFRMC will develop domestic food regulation policy as well as policy guidelines for setting domestic food standards. It will comprise Health Ministers as well as ministers from other food-related portfolios such as primary industry and trade. The ANZFRMC will have the power to request a review of new or revised standards. This is supported by a Standing Committee on Food Regulation (SCFR), which provides advice to the ANZFRMC. Food Standards Australia New Zealand (FSANZ). FSANZ will develop all domestic food standards. Its Board will have responsibility for setting the standards, in accordance with policy guidelines laid down by the ANZFRMC. The Food Standards Implementation Sub-Committee (FSIS). The FSIS will develop guidelines on food regulations and standards enforcement activities to achieve a consistent, more integrated approach across jurisdictions. The Food Regulation Consultative Committee (FRCC). The FRCC will provide advice to all of the above institutional bodies. It will comprise high-level representatives of stakeholders including industry (primary, processing, retail and food service), consumers, public health professionals and small business.

Thus, the proposal does not include a single NFA but rather a set of institutional bodies at the national level. At the sub-national level, some States have moved to streamline the delivery of food safety services in State Food Agencies. In early 2000, Victoria formed Food Safety Victoria, which has a role in both policy and operations and covers the whole supply chain (primary industries, food processing and retail). See http://hna.ffh.vic.gov.au/ phb/fsv/safevic.htm for further details. And in July 2000, New South Wales created Safe Food NSW to cover the main primary products: meat, dairy and

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fisheries. At the time of writing this had not extended down to the retail end of the supply chain. The idea is for the agency to reside outside the Departments of Health and Primary Industries, much like the Canadian Food Inspection Agency model, but operating in a single State. Queensland is also looking at the possibility of a State Food Authority. But the other states do not seem to be going down this track. One question concerning the introduction of State Food Agencies is whether they would be purely operational or whether they would also have a role in policy formulation. EMERGENCY RESPONSE PLANS – OFFICE OF FOOD SAFETY (OFS). Emergency response to food safety problems in Australia is coordinated by the OFS in AFFA. Emergencies coordinated by the OFS could include animal disease outbreaks, plant disease or fish disease outbreaks, food safety scares or residue violations. The emergency response entails two aspects: policy and implementation. The policy aspect involves setting up an emergency response system so that, if there is an emergency, there is a process that would swing into action right away. The process involves developing a basic plan (standard procedures) in consultation with industry groups on how to handle an emergency. The plan would detail who is responsible for what in the case of any emergency. As soon as there is an outbreak, the emergency response plan is activated by a consultative committee. That committee meets and examines the particular issue and manages the immediate emergency response, in conjunction with the Department of Health. The committee scopes out the extent of the emergency, identifies the source, takes immediate action to isolate the problem (e.g. quarantine place where problem arose) and arranges for tests to be done to determine a more measured response.

Non-governmental arrangements for beef food safety The early stimulus for on-farm food safety programmes was the detection of significant amounts of chemical residues (DDT and dieldrin) in Australian meat exports in the late 1980s. With encouragement from the AMLC, the livestock industry started to realize it was in the food industry and not in the cattle industry. The chemical residue problems led to the development of the voluntary (i) Cattlecare and (ii) the National Vendor Declaration Program. One of the growing issues these days is traceability of product back to the farm of origin. Australia has had a (iii) traceback system since 1972. However, it did not identify the individual animal, only the consignment. In response to increasing market pressure particularly from the EU, Australia has been moving in the direction of traceability of product back to the individual animal. This will come through the (iv) National Livestock Identification Scheme (NLIS). Let us look at these various institutional arrangements in turn.

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Cattlecare Cattlecare is a farm-based QA scheme established by the Cattle Council of Australia. The main food safety concern of Cattlecare is the hazards of chemical residues. Cattlecare is concerned to identify critical control points in the livestock production process and to develop risk management procedures to prevent residues from occurring and to make arrangements to deal with them when they do arise. The central element of Cattlecare is staff training in the handling of on-farm chemicals. Cattlecare is independently audited by accredited auditors who are registered by Quality Standards of Australasia (QSA). At the time of writing there were about 3200 cattle producers across Australia who were fully accredited members of the Cattlecare programme. They account for about 4.2 million cattle or 20% of the national herd. In the early days of the programme, producers did not receive premiums for belonging to Cattlecare. However, that is starting to change. Some processors, including the larger ones, have started to offer premiums (around AU$3 per head) for cattle enrolled in Cattlecare. There are similar programmes to Cattlecare for feedlots and saleyards. The saleyard QA programme is designed not just around chemical residues but also around animal welfare considerations. These include concerns about shade and animal behaviour, yard densities, temperature, effluent control, yard size and bunk space. National Vendor Declaration Program The National Vendor Declaration Program was introduced on a trial basis in 1996 and was intended to assist documentation of the residue status and history of cattle consigned for sale or slaughter. Although the programme was introduced on a voluntary basis, no meat company would bid on cattle unless accompanied by the vendor declaration. Hence, they were de facto mandatory. The programme was eventually underpinned by legislation in all the states and territories, so that from July 2000, vendor declarations have been legally required. This was to provide traceback assurance to export markets. On the Vendor Declaration form, the vendor declares his/her name, the number of cattle (male and female), and the transaction (tail) tag number (which is unique to the vendor’s herd). Then the vendor must answer questions that establish whether this lot of cattle is fit for sale. These questions are concerned with chemical residues, and whether the farmer has complied with the withholding periods. In deference to EU requirements, the vendor is also asked to declare whether the cattle have been treated with hormone growth promoters (HGPs). HGPs have been used by the Australian beef industry since 1979 as a means to increase weight gains and feed conversion efficiency. However, they have been banned from use in the EU since 1988. The vendor declaration differs from the UK passport system in that it is a consignment note and not an animal note. According to one observer:

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Australian production systems are pretty much under mob conditions and we run livestock populations on farm under homogeneous conditions. It (the Vendor Declaration program) will be more cost-effective (than the British passport system) and provide us with the information we need.

However, this seems likely to change with the advent of the NLIS, which is being linked to the National Vendor Declarations. The NLIS involves identification of individual cattle. Traceback In 1972, Australia introduced a cattle traceback system (using tail tags) to determine the animals’ farm of origin. Every animal going to sale or slaughter must have a tail tag, which denotes the property from which it came. The tag stays with the animal through to slaughter. Following slaughter it is cut off the tail, put into a plastic bag and pinned to the carcass until the carcass goes over the scales and receives a carcass number stamped on the carcass (or on bar coded tags attached to the carcass). The tail tag number is correlated with the carcass number and then the tail tag is removed. In some larger plants, when the carcasses are split and boned, the cuts may be correlated with the carcass number using time and date stamp information or barcodes. This allows the traceback of muscle cuts to the farm from where the animal came. One such initiative is called Primal ID which has been implemented in the Australian Meat Holdings (AMH) plant in Aberdeen, New South Wales. The present system of traceback does not identify the individual animal. The tail tags only identify each animal’s property of origin. This is unlike the system introduced into the UK and which is now being implemented in the EU as a whole. However, the NLIS (discussed above) will enable the traceback system to identify the individual animal. One of the major implications of traceback systems is that it raises the potential of legal liability for primary producers. One meat plant manager recounted the following story. In the north, cattle are rounded up with a shotgun. A potential problem with this is cattle suffering buckshot wounds. On the vendor declarations, farmers have to declare things such as chemical residues and buckshot. We had a pie manufacturer who picked up a piece of buckshot in their metal detector. Using the carcass number (which the pie manufacturer had) we were able to trace the animal back to the farm. The farmer almost died when I rang him and told him that his animal was sold at auction and the vendor declaration didn’t specify the animal had received buckshot. He said it happened a long time ago and didn’t think it mattered. I said it did matter and it was an offence and we were going to hand it over to the Department of Agriculture. He said, ‘I suppose that means I am not going to get paid for the animal now’. I said, ‘we just had a claim on a supply which had a metal fragment in it. They had to throw the batch out and fined us $70,000. You won’t lose the $300 for your cow. Our claim against you will be more like $70,000 to $100,000 to cover the claims against us.’

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With improved traceback mechanisms, primary producers may face claims for damages, which can be huge. If primary producers create problems for the processor, as in the above story, the costs and claims can be massive. Farms are going to have to be accountable. This seems likely to lead to the development of liability insurance for such situations and the development of partnerships as a way of reducing the likelihood of such events occurring and hence a way of reducing the cost of such insurance. NLIS The NLIS was introduced in late 1999 as a voluntary scheme (though mandatory in Victoria). It aims to improve market access through improving traceback and traceforward capability. (See previous section for details on Australia’s experience with traceback.) Funding for the NLIS is provided through industry levies on all participants in the beef industry plus state and federal governments. Accreditation with the NLIS is mandatory for producers, feedlots and abattoirs that want to export to the EU market. They become part of a ‘closed system’ of beef production to satisfy EU requirements on the non-use of HGPs. As of July 2000, there were 2761 EU accredited producers and 747,000 accredited devices (e.g. button eartags or rumen pellets) being used to identify cattle eligible for the EU market. However, the NLIS also attracts many producers who do not market to the EU because it offers long-term management benefits as well as providing insurance against the risk of similar restrictions in other HGP-free markets in the future.

Other non-governmental arrangements We have already discussed non-governmental arrangements that directly impinged on beef food safety. In this section we discuss other nongovernmental arrangements, which indirectly impinge on beef food safety. They include arrangements that encourage the formation of strategic alliances (partnerships) through: (i) Marketlink and BeefNet and (ii) Supermarket to Asia and (iii) Meat Standards Australia (MSA). MSA is a revolutionary new approach to beef grading and trading. Marketlink and BeefNet Strategic partnerships are starting to happen in the Australian beef industry and they are being led by the major retailers (Woolworths and Coles).6 They are happening in part because of the government’s changing stance towards regulation of the industry. According to one meat industry observer:

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The moves towards vertical partnerships reflect the belief that industry can no longer look towards regulators to give total prescriptive guidelines to ensure safe food. In the past, the supermarkets have employed food safety people, but they never went into a meat works. They saw the government as taking care of meat so they didn’t see a need to. This is in contrast to fish where the government was not too involved. Hence, they went in and checked their suppliers. Now with the changes in meat regulation, the supermarkets are starting to take a new interest.

But it is not just the supermarkets pushing for change. Meat and Livestock Australia (MLA) and before it the MRC have played an active role in promoting partnerships through Marketlink and later BeefNet. Marketlink began in 1994 in response to what was seen as an overly fragmented beef supply chain that was contributing to the country’s declining export market performance. In 1996, the Marketlink Key Program (MKP) aimed to develop and implement competitive marketing strategies for Australian beef (as well as sheep-meat, hides and skins) by facilitating consumer-driven partnerships between market participants. The basic principle was to encourage all sectors to work cooperatively, in an integrated process, to deliver the right product for the consumer. Research and marketing activities were collectively planned and all parties involved in the supply chain were expected to share information. Under this programme, basic information and training packages were made available to all interested parties. Some of the early alliances were: ● ● ● ●

supply of portion-control primal beef cuts to Sizzler restaurants and Your Kitchen catering centre in Brisbane, by wholesalers Tenderplus and Kudos, South Burnett Meat Works and their cooperative producers; supply of portion-control and primal beef cuts to the Cairns Hilton, Radisson Plazza, Cairns Base Hospital and Manning Pies, by Byrnes Wholesale Meats, Byrnes Tolga abattoir and Northern Tableland Beef Producers; supply of retail beef cuts to Woolworths supermarkets in Geelong, in an alliance between Woolworths and M.C. Herd; and supply of retail beef cuts to Bush’s Fresh Meat Stores in Sydney, in a vertically integrated A.J. Bush alliance involving their wholesale distribution centre at Rockdale and abattoir at Yanco.

The vertical beef alliances in Australia have tended to be retailer-led. The nature and extent of these alliances vary depending on the State. In Australia, there is a northern beef industry (operated by the tropical major pastoral companies) and a southern beef industry. Traditionally it has been very difficult to get consistent product out of the north. Thus, the major retailers have formed alliances with a number of feedlots in the north (Queensland) to feed out cattle bought from producers. The producers put the cattle through these feedlots and then a meat works on contract to the retailer processes the cattle. The retailer is in control of the whole system. By contrast, in the south (Victoria), the animals are grass-fed, production is highly seasonal, and the animals are typically marketed in small lots through saleyards. In Victoria well over 50% of the cattle go through saleyards. There is less scope here for vertical partnerships with producers.

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From the viewpoint of the processors, wholesalers and retailers, Marketlink was a positive step in improving the coordination of beef supply. However, livestock producers were not so enthusiastic. The development of vertical alliances was seen to provide most benefits for those further downstream. Thus, in 1997 the MRC developed a revised programme (Marketlink 2), which was to place greater emphasis on ensuring commercial benefits for producers, by developing the role of the producer group in the relationships with processors, marketers and others in the chain. A meeting of existing producer groups was held in June 1997 to encourage horizontal alliances. At the meeting, it was decided to form an umbrella organization called the Beef Marketing Support Network (later, BeefNet). BeefNet’s mission is: To provide a self-help support network for beef marketing groups to improve viability by fostering their commercial development through consistent delivery of quality assured product.

Its objectives are: ● ● ● ● ● ●

to improve the continuity of supply of specified product delivered to existing and potential customers of group members; to assist the co-ordination of beef cattle supply to future MRC-assisted alliances; to be representative of at least 500,000 cattle turned off each year from member alliances; to identify and prioritize research needs common to alliance members; to monitor and analyse the performance of the individual alliances in delivering product according to their customer specifications, as appropriate; and to encourage alliances to establish a market reputation for their members as reliable and predictable suppliers of product to all customers.

One of the main initiatives of BeefNet is to provide financial assistance for producer groups with training and feasibility studies relating to the establishment of vertical alliances. Australia’s experience with Marketlink/BeefNet has been mixed. In the encouragement of horizontal alliances, it is having a very positive impact. BeefNet now comprises over 90 producer alliances, including over 6000 producers and accounting for over 6 million cattle. It appears to be a very active programme and has its own website which is updated frequently (http://www/beefnet.com.au). On the other hand, the vertical alliance programme did not appear to be overly successful and was discontinued in 1999. Part of the reason for discontinuing Marketlink was opposition by some producers (particularly spot traders) who felt threatened by vertical alliances. Their argument was vertical alliances lead to less transparency. Those outside the alliances would not know what those inside the alliances were doing. For example, there would not be any price signals passed back to the spot market. Moreover, the attraction of pursuing the horizontal alliance initiative is that it

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is empowering of producers. This is not so much because of the strength of numbers. Indeed, the size of horizontal beef alliances in Australia is still not large relative to the size of throughput of the larger abattoirs, and their gains are likely to come more from niche markets than the major markets. But what is really important is the learning that takes place in these horizontal alliances, where producers are exposed to new approaches to marketing and contracting. Having said that, it also makes sense strategically, to build up the horizontal alliances before building up the vertical alliances. After all, one of the main advantages for processors in forming a vertical alliance is to be able to deal with one or two suppliers, which could well be one or two horizontal alliances of producers. It may well be that once the initiative for building horizontal alliances has achieved a good measure of success, MLA can usefully turn its attention again to assisting the development of vertical alliances. As an institutional innovation for improving the responsiveness of beef producers to consumer tastes and preferences, Marketlink/BeefNet is an exclusive approach. It fosters the development of exclusive supply chains in which groups of producers participate to produce a product according to pre-specified buyer specifications. Those producers who are not part of the group are excluded from the system. This approach is centred on the premise that the development of relationships (vertical and horizontal) is important in achieving the desired objective. However, there is another institutional innovation under way in Australia, which is inclusive. It does not depend on the development of relationships and hence is much closer to the idea of a grading system. This is MSA and is discussed in the next section. MSA MSA was introduced as a pilot project in Brisbane, Australia in November 1997. Although MSA is known as a meat grading system, it is both a grading and a trading system. MSA was initiated by the MRC as a way of responding to Australia’s declining export market share. The theory was that Australia was losing out to the USA, which could provide greater consistency in product than Australia. The focus of MSA was, and is, to improve the consistency of eating quality of beef. It aims to differentiate cuts of beef at retail by identifying the eating quality that can be expected from cuts of beef cooked in a particular fashion. The scheme has three components, which apply on a ‘cut of beef ’ basis: ● ● ●

the MSA logo as a guarantee of quality; the quality grade (tenderness guaranteed (or EQS3), premium tenderness (or EQS4), and supreme tenderness (or EQS5)); and recommended cooking method.

Eating quality is guaranteed provided the consumer follows the recommended method for cooking. The MSA approach stands in contrast to the

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pre-existing grading system in Australia, which relies on the measurement of carcass traits using chiller assessment criteria. Researchers, such as Thompson (1998), had already shown that chiller assessment criteria were a poor measure of eating quality. The pilot study received a very favourable review, and so MSA was rolled out to other domestic markets beginning with Sydney in October 1999, Perth in March 2000, Melbourne in June 2000 and Adelaide in August/September 2000. Eating quality standards under MSA are determined by consumer perceptions obtained through a comprehensive set of consumer taste tests. Over 320,000 such taste tests have been completed in an attempt to determine which are the significant production and processing factors affecting the eating quality of beef. Consumer taste testers rate meat served to them for tenderness, juiciness, flavour, and overall acceptability using a 100 point scale. Then a Meat Quality Score (CMQ4) is determined using the formula: CMQ4 = 0.4(Tenderness) + 0.1(Juiciness) + 0.2(Flavour) + 0.3(Overall Liking)

The average CMQ4 scores are used categorize beef into the different grades as shown in Table 6.1. These consumer assessments are correlated with all the factors thought to be possibly relevant at all levels of the supply chain (including genetics, pre- and post-weaning treatments, pre-slaughter handling, post-slaughter treatment, processing of the carcass, retailing and food service) to determine those which are significant. These factors then become the basis for determining the grade of any cut of meat. The resulting system is HACCP-like in that critical control points are determined at the various stages of the supply chain. However, while HACCP focuses on food safety, MSA focuses on achieving eating quality characteristics based on palatability. In fact, the proponents of MSA like to refer to the programme as PACCP-based, where PACCP stands for Palatability Assured Critical Control Points. The most important critical points in the meat supply chain include genetics, nutrition/environment, pre-slaughter factors, postslaughter factors, chilling, processing/value adding, and cooking. Of these, pre-slaughter, post-slaughter and chilling are identified as having the greatest impact on eating quality. It has been found possible to predict CMQ4 scores from these factors not just on a carcass basis but also on a cuts basis. Participation in MSA by producers, abattoirs, wholesalers, retailers and the food service industry is voluntary. However, to participate in the programme, Table 6.1. CMQ4 scores and beef grades. CMQ4 score (0 to 100)

Eating Quality Grade

48–64 65–80 Above 80

EQS3 (tenderness guaranteed) EQS4 (premium tenderness) EQS5 (supreme tenderness)

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individuals are subject to licensing and are required to comply with the MSAspecific requirements (which includes being audited). The system is monitored, information is delivered up the supply chain, and there are financial rewards (higher prices) provided to the participants who achieve the specifications for a quality grade. DNA samples are taken of each carcass by the MSA grader (in the abattoir) and these may be used in traceback from the consumer level to check the integrity of the system. This DNA traceback system is able to identify any cut of meat at the retail level (including sausage meat) back to the carcass or carcasses from which it came. Australia is currently introducing a live cattle identification system and plans are to extend the traceback potential of the deoxyribonucleic acid (DNA)-based system to the live animal. The total cost of the DNA traceback mechanism is about 7 cents per carcass. In the future, this whole-of-chain quality grading scheme may be integrated with safety factors to provide an inclusive quality and safety beef supply chain based on PACCP-HACCP. This would be fundamentally different from the more usual exclusive quality and safety beef supply chains being developed by the major retailers. Supermarket to Asia (STA) STA was an initiative started by the Prime Minister (John Howard) in 1996. The aim is to improve the international competitiveness of the Australian food industry with a particular focus on Asia. Before STA, there was a body called the Agrifood Council, which comprised the captains of the food industry and some government ministers. It was a forum for trying to improve the international competitiveness of the Australian food industry. But, with the change in government in 1996, the initiative was given a higher profile and a new name. The basic idea of STA was to bring together producers, food unions, processors and government to determine what could be done to improve the way the agrifood supply chain is managed. This is a wide-ranging initiative that could involve market promotion, logistics (e.g. loading on ships) and a whole range of support activities from government ministers. These support activities may include measures to better manage the macro economy, measures to better promote Australian products overseas, measures to better inform Australian businesses to be consumer-driven, encourage AQIS to do more to improve market access, and encourage the use by Customs and AQIS of electronic documents to facilitate trade. The organizational structure of STA is summarized as follows. At the top is the STA Council, which is chaired by the Prime Minister and includes four senior government ministers (the Minister for Trade, the Minister for Agriculture, Fisheries and Forestry, the Minister for Industry, Science and Resources, and the Minister for Transport and Regional Services). There are also senior industry representatives including the chair of the Australian Supermarket Institute, the head of the National Farmers Federation, and the head of the Australian Food

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Council. Under the STA Council is the STA Board composed of 11 industry leaders which feeds issues and information to the Council and the STA secretariat which implements the Council initiatives.7 STA Ltd administers Agri-Chain Solutions Ltd and a number of STA Working Groups.8 One of the working groups was the Food Quality and Safety Working Group that aimed to identify what strategies and actions need to be taken in the food safety and quality area. The group has tended to have a strong safety (as opposed to quality) focus but this is not surprising given the safety scare that was on at the time it was set up. Out of that group has come the recommendation and endorsement by the STA Council of the Emergency Response Plans. A number of the industries have developed emergency response plans including one for the red-meat industry. There was also endorsement coming out of that group for a number of other initiatives including the NSFS and NFHS that were discussed earlier. This group also endorsed the National Classification Framework (discussed below) and there was also recognition that more needed to be done in the education and training area. National Classification Framework One of the implications of different supply chains developing their own farmto-retail HACCP/QA programmes for food safety and quality is that there will probably be different standards and audit requirements. There are QF2000, ISO 9000, Cattlecare and a number of other specialist industry systems. The most cited case is that of a chicken processor who had 19 different QA audits for food safety requirements. Three of them were government audits and the other 16 were imposed by clients who all had different requirements. The clients included the supermarkets and the fast-food restaurant trade. The same auditors were going in almost every week on behalf of a different client and basically doing the same audit. The National Classification Framework (NCF) was developed in 1996 by the Australian Quality Council as an attempt to rationalize the situation. The NCF had a number of steps and tiers in it. Depending on the company’s QA system, it would be classified into one of six levels. The higher the level, the more stringent the criteria on a company’s QA system. The minister responsible for AFFA established an NCF development group. On this group was the national purchasing manager for McDonalds, a representative of the Supermarket Institute, a representative of SGS International, and two meat industry representatives. The aim of the development group was to reach a degree of mutual recognition from the various players in the food chain. Thus, for example, they would agree to recognize that if a supplier had a level four system this would be treated as equivalent to any other level four system. The goal was to look for consensus on the basic requirements and allow the purchasers (the supermarkets and food service industry) to bolt on their own requirements. For example, McDonalds might have very tight specifications for their chickens (e.g. the number of blemishes

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and size), while Kingsley might have slightly different requirements (e.g. the packet size). The NCF was picked up by one state (Tasmania) that promoted the adoption of the NCF to its food industry. However, some believe the six levels established by the NCF are more than needed to address the confusion arising from the range of QA systems. There has been an attempt to simplify the NCF to what is called a quality basics approach, where the six levels are replaced by only three.9 The NCF was also picked up by another STA initiative called Quality Food Australia (QFA). The QFA is a an export promotion programme and food suppliers that wish to participate are required to be at least at level four of the NCF.

Implications of these Developments Institutional innovation in Australia’s beef food safety system has been driven by the need for export market access, coupled with strong political motivation for change. This motivation is driven partly by a strong economic rationalist ideology of successive governments and partly by a number of highlypublicized domestic food contamination crises. These have set the restructuring of the Australian meat safety system on the following trajectory: To seek approaches to food safety that contribute to long-run international competitiveness.

As in the case of the Canadian food safety system, the restructuring in the Australian system has been bounded by the requirements of important export markets. However, Australia has been proactive in attempting to modify the international institutional arrangements as well as the institutional arrangements in important export markets to allow it to follow its trajectory. For instance, it actively sought change in the WTO arrangements on food safety to allow recognition of the principle of equivalence and has worked hard to demonstrate the equivalence of Australia’s co-regulatory system of food safety inspections to the US authorities. The introduction of HACCP in the Australia beef industry coupled with co-regulation has perhaps been Australia’s most important contribution to the world of beef food safety. Through co-regulation and the proper application of HACCP, Australia has shown how responsibility for food safety can be effectively shifted back to industry where it belongs while at the same time keeping in place the necessary safeguards to protect consumers. There is some evidence to suggest this approach to ensuring beef food safety not only is more effective than the traditional approach to meat inspections, but it is also more economical. This completes our four-country tour of beef food safety arrangements. We now want to take stock of what we have learned during this tour. We will

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begin in Chapter 7 by returning to the themes introduced in Chapter 1 and ask: what does a country need to do if it is to move in the direction of an optimal food safety system? In Chapter 8, we put our four countries to the test and ask how they stack up against the requirements for such a system.

Notes 1. The SMA is a statutory body responsible to the State Minister of Agriculture. It functions under the authority of the State’s Meat Industry Act and is responsible for such things as: (i) ensuring the adoption of the Australian Standards for meat hygiene; (ii) annual licensing of all saleyards, abattoirs, meat processing plants, wholesalers, knackeries, small goods manufactures and meat vans; (iii) auditing associated quality assurance programmes for the various components of the meat supply chain; and (iv) administering the cattle vendor declaration programme. From July 2000, the SMA for New South Wales, called the Meat Industry Authority, was merged into a new agency called Safe Food. 2. In Australia there are around 15 certification bodies (e.g. SGS, Lloyds and Veritas). They are all major international companies and accredited by JASANZ, a federally sanctioned body which registers and accredits certification bodies. 3. In the South Australian approach, oversight of the third-party audits was provided by the State Ministry of Primary Industries rather than the SMA. 4. An example where the Australian Standard does not provide the minimum is in temperature control. Under the Australian Standard, meat cannot be transported at temperatures above 7°C. However, under the Export Meat Orders meat can leave an export plant at 10°C. 5. It followed an earlier trial (i.e. Project 1), which examined the feasibility of introducing co-regulation into domestic meat plants. 6. For example, Woolworths have developed the Woolworths Vendor Quality Management Standard (WVQMS) for their suppliers. This is a HACCP-based programme and incorporates nine additional support elements that are consistent with other food quality and safety programmes. The WVQMS is based on the SQF2000 approach developed by Agwest Trade and Development WA Department of Agriculture. Under the WVQMS, Woolworths would first compile a list of those food products that are potentially hazardous (say beef). For each product on the list, the following process occurs: (i) Woolworths contacts the suppliers of these products and requests they allow representatives onto their sites, at Woolworths expense, to explain the standard, conduct a preliminary inspection of the premises and current quality systems that may be in place; (ii) once the supplier has had the preliminary inspection and satisfactory report tabled, they are then asked to work towards achieving the WVQMS; (iii) when the implementation of the system is complete the HACCP plan will be subject to a verification audit by Woolworths appointed food safety auditors; (iv) in addition, Woolworths asks that a third-party independent audit takes place against the WVQMS to ensure that the system elements are in place and being adhered to. The system audit of the standard is an audit of the systems put in place to support the HACCP plan. The third-party auditor would need to be a JASANZ accredited certifying body or a statutory authority, which has suitably qualified food safety auditors.

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7. The Secretariat is called STA Ltd and is a company specially formed for this purpose. It was a conscious decision to keep the Secretariat out of the government framework. Partly, this was to avoid bureaucratic turf wars. However, it was also to make the point that this initiative was to be driven by industry. The company is owned by the supermarket institute of Australia, the National Farmers Federation and the Australian Food Council. STA Ltd employs an executive director (who comes from the private sector) and a small staff. The Australian Government, through AFFA and Department of Industry, Sciences and Resources, has a contract with STA Ltd to provide it with the funding to operate. 8. Agri-Chain Solutions Ltd is a company set up to administer the federal government’s funding programme to encourage the development of innovative food and fibre supply chains with an export focus. 9. This simplified approach has been suggested by P. Tomlinson (national purchasing manager for McDonalds).

Chapter 7

Towards an Optimal Food Safety System

Introduction In Chapter 1 we suggested that the socio-economic objective for a country’s food safety system should be: maximization of the food industry’s international competitiveness, subject to achieving some generally agreed, scientifically-based minimum standards on food safety.

To move in the direction of this objective, a country needs to put in place a set of institutional arrangements for food safety that efficiently and effectively assesses, manages and communicates the risk of food safety problems. But, changes in such institutional arrangements are themselves governed by the drivers for change and the food safety meta-rules, which govern both government and industry decision making. Thus a society wanting to improve its food safety system can work on three distinct areas: ● ● ●

strengthening the drivers for change; strengthening the food safety meta-rules; and improving the institutional arrangements for food safety. Let us now consider each of these three areas in turn.

Strengthening the Drivers for Change In Chapter 1, we identified the drivers for change as being either multinational or national in nature. Multinational drivers are the market megatrends and international institutional arrangements influencing all trading countries that produce or consume beef. 145

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Multinational drivers The first type of multinational driver is the market megatrends operating on a multinational basis to stimulate a change in the nature of the market for agricultural products. The basic change we are talking about has been characterized as a shift from a supply-driven industry to a demand-driven one. Writers like van Duren and Sparling (1998), Barkema et al. (1993) and Royer and Rogers (1998) have referred to the change as the New Agriculture or the Industrialization of Agriculture. And when we talk about a demanddriven industry, one of the features of this demand is enhanced food safety. In many parts of agriculture, you can see evidence that this change has been ongoing for a number of years now. However, there are still large segments of agriculture that have yet to embrace this change. Australia’s Senator Bob McMullen was exhorting the agricultural industry to become more demand-driven when he said1 ‘Agriculture has to focus on what the consumer wishes to buy rather than on what the producer wants to produce.’ There are at least three major market megatrends underlying this change to a demand-driven industry. By strengthening these, the development of the New Agriculture will itself be strengthened and so too may the country’s food safety system. The question is: how does one do it? How does one strengthen the underlying market megatrends? In our view, the first step is to educate all participants of the agriproduct supply chain about these market megatrends and about the implications of them for the future of the food industry. So what are these market megatrends? We identify them as: ● ● ●

increasing sophistication of consumer demands; changing attitude of governments to the agricultural sector; and a technological revolution (especially in computer-based information technology).

The increasing sophistication of consumers creates a demand for enhanced food safety, the changing attitude of government encourages the industry to be more focused on the consumer (i.e. more demand driven) and the technological revolution makes this all possible. Let us elaborate. Increasing sophistication of consumer demands Fundamental changes are underway in the food and fibre system of many countries. The consumer, who demands an ever-widening variety of healthful, conveniently prepared products, is driving these changes. They are becoming more specific about the food and fibre products they purchase. Four factors are key to this shift: rising incomes, changing demographics, lifestyle shifts and a greater emphasis on nutrition.


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1. Rising (real) incomes during the 1970s and 1980s in many economies of the trading world stimulated long-term growth in many of the largest economies. They also boosted discretionary spending so that more food and fibre purchases began to be driven by tastes and preferences rather than by the basic needs for food and clothing. Rising incomes also tended to broaden the mix of products. In the case of food this was manifested in a greater purchase of convenience foods and more meals away from home. This has led to a phenomenal increase in interest in international trade – but not just in the basic commodities – right across the whole spectrum of agriproducts. The trade in processed food products has grown particularly strongly in the last few years. World trade in processed foods is expanding at an average rate of 7% a year, but for some countries it is much higher. In Australia, for example, exports of processed foods have been expanding at around 15% a year. 2. Demographic shifts are also encouraging the purchase of a wider variety of agriproducts. They include an aging population, faster growth in the number of households and greater ethnic diversity. The populations of Western countries are living longer and the segment that may have the most influence on agriproduct marketing – the baby boomers – has reached middle age. The aging baby boomers are becoming more health conscious and adjusting their diet accordingly. Western households are also becoming more heterogeneous than in the past. Single-person households, singleparent households and non-family households are growing in importance. The net result is the demand for agriproducts is much more diverse as consumers express preferences for taste and convenience that match their lifestyles (see Senauer et al., 1991). Western populations are also becoming more ethnically diverse, supporting the move to a broader array of food products (e.g. Greek, Italian, Thai, Chinese). 3. Lifestyle shifts include the increased role of women in the workforce. This has supported the trend to microwavable foods and other consumer-ready foods as well as meals away from home. 4. Greater emphasis on nutrition and food safety is another element of this megatrend. Consumers are eating more fresh fruits and vegetables in response to concern about their health. At the same time they are cutting back on fatrich foods like whole milk and beef. Consumers are also concerned about food safety. They expect their food will be safe and if they are disappointed for any reason the result for the food industry can be disastrous as the British beef industry discovered in response to the BSE crisis. This has stimulated revolutionary developments in the way food is prepared all the way from the farm to the plate. Consumers are also expressing an increased demand for information about the foods they buy. Thus, consumers are not only becoming more specific about their tastes and preferences, they also want to be assured their preferences are being met.

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Changing attitudes of governments to the agriproduct sector In the days when agriculture was characterized as a supply-driven industry, agricultural producers tended to produce what they were good at, and if the markets did not provide, governments did. McMullen (1996) criticized the old paternalistic attitude of governments to agriculture, saying: Protectionist mechanisms have been put in place based on the assumption that the producer should have the right to produce that which they have in their mind to produce regardless of whether there is an adequate market for the product.

However, governments have started to modify their stance on agriculture, away from the heavily interventionist subsidization of agriculture and towards a less-interventionist, facilitative role with industry. In this regard, the Uruguay Round GATT negotiations was a watershed of sorts. These negotiations began in 1986 and went on for 7 years. For the first time in the history of GATT, agricultural protection came under the spotlight and an agreement was reached among member country governments on how to bring down the extensive levels of protection. The aftermath of this was a search by governments for a new role in supporting agriculture, which did not include the heavy use of subsidies. The new approach was less costly (for government), was more facilitative than interventionist and the idea of a ‘partnership with industry’ began to evolve. One area where governments have started to seek a partnership role has been food safety. A good example is the Australian Government’s support for co-regulation. Technological revolution During the 1980s and up to the present day, the computer revolution has found all kinds of applications in increasing the efficiency of production, processing and marketing of agriproducts. This includes the enhanced technology for quality and food safety control. According to Barkema et al. (1993) (p. 5): … a new generation of farm and food technology is emerging to enable food producers to target myriad market niches. The promise lies in the nature of the technology, particularly its ability to control food characteristics, thus enabling food companies to hit the smaller target offered by the consumer. Technology, therefore is the happy companion of a more demanding food consumer.

In the food safety area, the development of HACCP and the biophysical technologies surrounding this have been critical to the ability of the agriproducts sector to respond to the increasing demands of consumers for food safety. These megatrends are sweeping across many countries and their effects will be felt sooner or later on all participants in the agriproducts sector. From the perspective of strengthening the drivers of change for food safety within any given country, the following approaches seem warranted by government and industry:


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1. To encourage the reflection of evolving consumer demands back up the supply chain through better management of the chain. This may be through improved vertical and horizontal coordination (e.g. via alliances) and through improved decision support systems. 2. To accelerate the change in attitude of government towards the way it supports the agricultural sector. Governments need to see that the best way to support the long-term viability of the agricultural sector is to make it less dependent on government for handouts and more interdependent with other participants in the supply chain to produce what the consumer wants. 3. To encourage the development and application of technology that can assist the supply chain to serve the customers better, whether they be local or international. The international institutional arrangements represented by the Codex and the SPS and TBT Agreements of the WTO are a second type of multinational drivers for change. In our view, these may be best strengthened by countries agreeing to respect and support these agreements, and by seeking ways to strengthen them. In our view, attempts by some countries or regions to undermine these initiatives will ultimately end up weakening the food safety systems for all. Our argument is based on an international version of the prisoners’ dilemma. In the original version of this dilemma, two prisoners (criminals) had a choice to confess and give evidence against their colleague in crime or not confess. Not confessing was the more advantageous option for both of them since there was insufficient evidence to convict the prisoners without a confession. The dilemma was their inability to communicate for the purposes of agreeing to a code of silence. Hence, both confessed and both went to jail. The moral of the story is that cooperation is often the best policy. In our international version of this dilemma, cooperative behaviour by the various countries involved to establish and support trading rules on food safety will make all countries concerned better off, while attempts by individual countries to maximize their narrow self-interest will be self-defeating.

National drivers for change National drivers for change include both external and internal drivers. The external drivers differ from the multinational drivers in that they originate only in particular foreign countries whereas the multinational drivers originate in an international forum (e.g. WTO) or exist across a broad spectrum of countries (e.g. the increasing sophistication of consumer preferences). One example of an external driver for Canada would be a food poisoning outbreak in the USA, Canada’s largest export market for beef. Another example, this time from the UK would be EU directives and regulations, which can have a profound effect on the British beef industry. The 1996 world export ban imposed by the EU on British beef is a case in point. One way to strengthen

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external drivers (and compensate for a lack of such drivers) is to ensure the domestic industry is fully informed of how external factors have an impact. One example of ‘informing the domestic industry’ came from a beef industry strategist in Australia. His quote has already been presented in Chapter 6, but it bears repeating. He said: We convert tragedy in the rest of the world to assist our communications. The Hudson Meat problem is a classic, the Barr butcher in Scotland – these messages come all the time across the wire and we use each one of them to help drive the message home.

Internal drivers arise from domestic concerns or actions such as (domestic) food safety crises, consumer concerns over environmental and animal welfare issues, increased vertical and horizontal coordination (which leads to increased pressure by supply chain leaders) and budget restraint by all levels of government. The internal drivers may be strengthened in several ways: 1. Consumers can be encouraged to express their concerns and methods can be put in place to ensure that these concerns are reflected back to the industry. Clearly, the strongest internal driver would be domestic food poisoning outbreaks. But, it would be absurd to suggest countries manufacture such problems as a way of creating an internal driver. Instead, it is possible to compensate for a lack of such problems by doing what the above beef industry strategist did: ‘convert tragedy in the rest of the world to assist our communications’. 2. Encouragement could be given to the development of industry structures that enhance vertical and horizontal coordination (but without leading to the growth of monopoly power which can cause other problems). 3. A change in attitude of government, in the way it supports agriculture, could be encouraged. We have already discussed this. Playing a facilitative role rather than a direct income support role is consistent with greater budget restraint in government. Having strong drivers for change is a necessary but not sufficient condition for a country to move towards a socio-economically optimal food safety system. Strong drivers do stimulate institutional change. The problem is the changes may not always be for the good. The cure may be worse than the disease. It depends on the nature of the policy decision-making process and the presence or absence of political externalities. Consider the decision of the British government in December 1997 to ban sales of all ‘beef on the bone’. Such beef had been shown scientifically to pose an exceedingly small but measurable threat of BSE contamination. Statistically, the threat was somewhere in the neighbourhood of one in a billion. The government announced the ban on 6 December and indicated it would take effect from 16 December. Between the time of the announcement and when the ban actually came into effect, the media weighed in with its own risk assessment. One intoned that the risk was about 10 times less than


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being struck by an asteroid. Thus, we witnessed the curious sight of consumers lining up at butchers’ shops to buy their T-bone steaks for Christmas before the ban was to take effect. And following implementation, there was defiance of the ban by both consumers and producers. Even Prince Charles dined in public on beef on the bone, apparently unaware that it was banned. This government action posed a significant cost to the UK beef industry, while adding very little in the way of consumer protection. The decision appears to have more to do with helping politicians (regain voter trust on food safety issues) than with helping to protect the consumer. This is an example of what we regard as a negative political externality. A group of politicians is able to take action, which is intended to lead to political gains where the costs fall on someone else. In the beef-on-the-bone case, the cost fell heavily on the British beef industry. British consumers also bore a cost since they were denied access to British beef on the bone, when an objective risk assessment would suggest the risks were very slight and that providing information about the risk along with consumer choice would have been more appropriate.

Strengthening the Food Safety Meta-rules As pointed out in Chapter 1, there are good reasons for not relying totally on the government to oversee a country’s food safety system. Rather, it is sensible to include both public (government) and private (commercial) actors. The commercial actors may include the individual food businesses, groups of food businesses (e.g. farmers, processors or retailers) and supply chain leaders. Food safety regulation by commercial actors (private regulation) and by government actors (public regulation) may lead to a food safety system that meets our socio-economic objective. Private regulation may encourage excellent behaviour (i.e. international competitiveness in the long run) but may not prevent unacceptable behaviour (i.e. lack of food safety). If there were only private regulation, producers who were not willing to adhere to a socially responsible private food safety code (developed by a commercial actor) could still find a way to sell potentially unsafe product onto a residual market (e.g. independent butchers). Public regulation may discourage unacceptable behaviour (through the government power of coercion) but may not encourage excellent behaviour. If there were only public regulation, governments could be tempted to over-regulate relative to the risks involved and so render the industry non-competitive. A combination of private and public regulation, may provide the best chance of both preventing unacceptable behaviour and encouraging excellence. But the operative word is may. Whether it does or not depends, in part, on having appropriate meta-rules in place. With regard to the metarules of public decision making, what is important is that governments adopt the RAM framework of decision making rather than the PEM framework. With regard to the meta-rules of private decision making, what is important

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is that decisions be based on long-run competitiveness (LRC) rather than short-run competitiveness (SRC) and that ways be found to overcome the temptation for opportunistic behaviour on the part of individual businesses. In the next two sections we focus respectively on the meta-rules governing public and private policy decision making with respect to food safety and hence which condition the nature of the food safety rules (institutional arrangements) ultimately put in place.

Meta-rules of public policy decision making As stated briefly in Chapter 1, there are two fundamentally different frameworks or meta-rules which govern public policy decision making: the RAM and the PEM. The RAM framework focuses on a single substantive problem (e.g. that the local beef industry will not produce safe food) where the decision objective is to optimize with respect to this issue, where the optimizing criterion is some social welfare criterion. By contrast, the PEM framework focuses on issues as thrown up at any one time by a variety of competing interest groups. The decision objective is to achieve a workable and tolerable compromise between the various parties who have a stake in the identified issues. That is, to achieve a political equilibrium by reaching agreement between the players with divergent interests. Differences between the RAM and PEM frameworks manifest themselves in a number of ways. One way is in the analytical approach taken. The RAM framework involves determining the substantive problem, collecting data on the various alternative solutions to the problem, conducting a social benefit–cost analysis on these alternatives and then selecting the alternative that yields the highest perceived social benefits relative to social costs. The PEM framework involves stating the political problem (in terms of a political disequilibrium caused by one or more special interest groups), collecting data on the relative political power of the various competing interest groups, conducting a political benefit–cost analysis on the various possible ways of re-establishing a political equilibrium and selecting that way which yields the highest perceived political benefits relative to political costs. Usually, this involves a tolerable compromise between the various special interest groups concerned. The difference in analytical approach will probably be reflected in differences in the nature of the institutional changes that result. A policy process dominated by the RAM framework may recommend change of a fundamental, perhaps revolutionary nature consistent with the underlying objective. However, a policy process dominated by the PEM framework typically recommends small incremental changes consistent with a political objective: whatever changes are deemed necessary to re-establish the political equilibrium. By way of example, consider the case of public policy decision making with regard to meat inspection in Australia and the USA. The Australian


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Government has for a number of years now had a strong ideological attachment to the RAM framework. Since the mid-1980s, Australia’s successive Federal Governments have been strong supporters of economic rationalism, a particular flavour of the RAM framework. By contrast, the US Government operates closer to the other end of the RAM–PEM spectrum. In the US system of government, lobbying is extensive, expensive and effective in modifying political decisions. Given these basic differences in policy decision frameworks between the US and Australian Governments, it is not surprising that the institutional arrangements in these two countries differ markedly with respect to the governance of meat inspection. The Australian Government has recently adopted a fundamentally new approach to meat inspection called co-regulation, which is consistent with an underlying RAM model of decision making. It brought in this new system over the objections of the government meat inspectors union and with consumers groups agreeing to sit on the sidelines. However, in the USA there has been strong opposition from the meat inspectors unions to bringing in any such new system even though the US Government recognizes its advantages. Significant, fundamental change in the US institutional arrangements for beef food safety appears to be more reliant on strong underlying drivers of change (e.g. domestic food contamination crises) than on the nature of the public decision-making framework. In our view, positive and fundamental institutional change is best assisted by a country’s government adopting a decision framework closer to the RAM than to the PEM. One way to move in this direction is to impose constraints on government policy makers to discourage them from adopting the PEM. A more transparent policy process is one type of constraint that would be very useful. This has been advocated elsewhere (Spriggs, 1991, 1995) as a means of encouraging the RAM framework. The professional public service may provide an important source of advice to politicians based on the RAM framework. However, as Spriggs (1994) points out, this cannot happen if the public service becomes politicized. For countries where the public service has become politicized it will become a captive of the PEM framework. As such the advice it provides to government will focus more on how to re-establish the political equilibrium rather than on how to solve the substantive problems facing society. The public service is in particular danger of becoming politicized with regard to food safety when its mandate is to both promote the economic interests of producers and look after the food safety interests of consumers. This is precisely what happened in the UK during the BSE debacle. The British MAFF had responsibility for formulating and recommending food safety policy. However, it also worked closely with people and businesses involved in the agrifood industry and apparently became ‘captured’ by the industry. By all accounts it failed to adequately ensure a minimum standard on food safety, and ultimately contributed to the demise of the UK as an international supplier of beef. In our view, the professional public service can be a useful source of information based on the RAM framework. However, to prevent

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politicization and regulatory capture, it is important the relevant public service be institutionally distant from both politicians and the special interest groups who may be affected by its analysis and recommendations.

Meta-rules of private policy decision making A number of writers have argued there is significant interest at the level of the individual food business in playing a role in ensuring food safety. According to these writers, food businesses are both willing and able to adopt measures to ensure food safety. For example, McDonald and Roberts (1998), Caswell and Henson (1997), Roberts et al. (1997), and Hooker and Caswell (1996) have all argued businesses are willing to ensure food safety since a contamination crisis could destroy them. And Heal (1976) has argued firms are willing to ensure food safety because it pays off in the long run. The longrun benefits of ensuring food safety may include assured market access, expanded customer base, price premiums and more economically efficient production. Beyond this, Hobbs (1999a) has argued firms are now better able to ensure food safety through recent technological innovations (e.g. HACCP and traceability) in the production and processing of food. However, there are also significant factors, which will limit both the willingness and ability of individual firms to ensure food safety. With no external regulation, the decision on whether or not to enhance a firm’s food safety system is ultimately an investment decision. The costs of providing such a food safety system are immediate and can be substantial while the benefits are typically longer term and cumulative. Consider the case of a business introducing a HACCP system. The up-front costs can include the cost of construction and equipment upgrading to meet the HACCP prerequisites, the cost of developing the HACCP manual and possibly substantial training costs, which may be needed early on. In addition to these up-front costs, there are also the on-going costs of monitoring, documentation and auditing. While a large part of the costs of enhanced food safety occur early on, the benefits typically do not arrive until later. In addition to the possible benefits already mentioned (assured market access, expanded customer base, price premiums and more economically efficient production), one of the major benefits of adopting HACCP is a change in business culture. In this new business culture, managers talk about how management and employees begin to take ownership of food safety. But the process of cultural change is a slow, cumulative process and hence the benefits that accrue only start to show up in the longer run. One Australian chief executive estimated the break-even point for his firm came after about 3 years. Before this point, he said, the costs of enhanced food safety in his plant exceeded the benefits. But, after this time, the benefits started to outweigh the costs.


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Thus, business decisions on whether or not to implement an enhanced food safety system are very much an investment decision. As such, different managers may well make different benefit–cost calculations depending on their individual assessments of the information they have on the benefits and costs, their attitudes to risk, the individual rate of time preference and so on. In the absence of a requirement to do so, they may come to different conclusions about whether or not to implement an enhanced food safety system. One particular area of uncertainty with regard to the expected benefits concerns the publicly perceived risks of the food being unsafe. The perceived risks can be quite volatile. What may be perceived as safe one day, may be perceived as unsafe the next. The perceptions may be grounded in knowable reality but often they are not. For example, when the UK was having so much trouble with BSE, the markets for Australian beef also suffered even though BSE is known to not exist in Australian cattle. Food safety is an example of a credence good. Consumers do not know the real safety risks of food either before or even immediately after consumption (Bureau et al., 1997a, b). They do not know because either the information is not available or it is too costly (in time or money) to obtain. In the latter case, consumers are said to be rationally ignorant. Consumers thus make their purchase decisions on the basis of trust. They trust that the food they buy and feed their families is safe. This trust is a fragile thing which can be dissipated quickly by a food poisoning outbreak, even one halfway round the world, involving food quite distinct from that which they are buying. The uncertainties surrounding this credence good (food safety), give rise to a particular reason why different food businesses will have different perceptions of the benefits of investing in food safety. Hence, left to themselves, some businesses would choose to implement an enhanced food safety programme while others would not. A further complication is the absence of an ‘invisible hand’ to guide individual businesses in doing what is best for society. In fact, if left to themselves, businesses would tend to underinvest in food safety, because of the temptation to act opportunistically. Suppose you and I each manage a local meat plant and we each supply unbranded (or store branded) product to the same local supermarket. Now, suppose you decide to install an enhanced food safety system, which raises the average level of food safety of the supermarket’s meat. It may pay for me to not copy your example and free-ride on your investment. I gain some of the benefit created by your investment (the perception of safer meat) without incurring any of the cost. But what is worse, suppose my lack of investment in an enhanced food safety system results in a food poisoning outbreak. Total demand for meat from the supermarket would likely fall, adversely affecting you as well as me. Thus I have an incentive to underinvest in food safety and skim the benefits provided by you. But, if I have an incentive to underinvest, so do you. My actions or potential actions as a free rider adversely affect your expected benefits from enhancing food safety and so should cause you to scale back your food safety investment too.

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For these reasons, we can not afford to leave food safety policy decision making up to individual businesses. One solution is to opt for RAM-inspired public regulation by government (or perhaps by an industry body that has been given the power to regulate by government). Another possible solution is to opt for vertical and/or horizontal private regulation. Under vertical private regulation, the supply chain leader, say a retailer, may regulate its suppliers through contractual arrangements. Only those suppliers that agree to adhere to the retailer’s food safety requirements will have access to that marketing channel. Under horizontal private regulation, a producer group may protect its market access against opportunistic behaviour by any of its members by requiring them to adhere to a food safety code of conduct. But what is the likelihood the vertical and horizontal alliance leaders will be motivated and able to provide private regulation consistent with our socio-economic objective? These alliance leaders are themselves individual business decision makers and may well have different views on the merits of investing in food safety. We would expect all of them to be concerned with competitiveness, but there may be some who focus more on SRC rather than LRC. Perhaps some are in financial trouble and this has forced them to adopt a SRC perspective in order to survive. A SRC perspective could cause an alliance leader to cut corners in the food safety area since typically costs of an enhanced food safety system exceed benefits in the short run. Thus, while the meta-rules would be strengthened by encouraging the development of alliance leaders, it is also important to back this up with government oversight. The nature of competition in marketing channels may be a further factor affecting the ability of an alliance leader to introduce private regulation consistent with our socio-economic objective (Fearne, 1998b; Westgren, 1998, 1999). The more alternative marketing channels available to suppliers, the more difficult would be the task of an alliance leader to impose food safety regulations. Suppose, for example, a retailer did want to introduce a food safety code for its suppliers. This would result in additional costs on suppliers, making it less attractive to suppliers relative to alternative marketing channels that did not require the food safety code. Suppliers would need to be compensated in some way to induce them to stay with the first retailer and introduce the food safety code. Compensation could take the form of premiums or assured market access. One way then to strengthen the meta-rules for private regulation would be for governments to facilitate and encourage the development of highly coordinated supply chains (but not the development of monopolies). Ways to do this include the provision of development grants and expertise to help the establishment of supply chains. This allows room for the alliance leader to compensate the suppliers in some way for providing their specialized product (i.e. with an enhanced food safety component) and makes alternative marketing channels less attractive to suppliers. An added bonus is that it may set in train a virtuous cycle. As a food supply chain becomes more highly coordinated so it becomes easier to imple-


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ment food safety disciplines. But, these increased food safety disciplines are themselves a channel for greater supply chain coordination. One additional and quite different way to strengthen the incentives for alliance leaders to introduce private regulation would be the introduction of a due diligence defence. This was introduced very successfully in the UK in its Food Safety Act (1990). Due diligence provided retailers with a legal defence against criminal liability in food contamination cases where the contamination occurred upstream in the supply chain. Provided the retailer has taken due diligence to ensure its suppliers have an adequate food safety system in place, the retailer will be absolved of criminal responsibility. We see three possible objections to the development of meta-rules to encourage private regulation for food safety. They are: 1. Private regulation could lead to ‘wasteful’ food safety regulations because the private regulators respond to their understanding of perceived rather than actual risks. But, in the marketing world, ‘perception is reality’, and the ability of private regulators to respond quickly and efficiently to what the customer wants will determine the international competitiveness of their products. 2. Private regulation could lead to asset fixity problems. This could be a problem if suppliers were required to invest heavily in food safety equipment and training for which there are few alternative uses. In general, the demand for enhanced food safety is on the increase and so this is not likely to be a big problem. However, as private regulators attempt to respond to customer risk perceptions, there will undoubtedly be mistakes; instances where alliance leaders require their suppliers to make food safety investments that the customer is not willing to pay for. 3. Private regulation could lead to social objections of a multi-tier food safety system. Some may argue (as they already have for health systems), that food safety is a basic human right and that all members of society regardless of their economic status should have access to the same quality of food safety. In economic jargon, food safety may be regarded as a nonexcludable service. That is, all consumers should have access to the same level of safe food regardless of their ability to pay. In our view, there should be minimum food safety standards determined on the basis of actual as opposed to perceived risks and these should be determined by public regulation and be available to everyone. However, private regulators should be free to offer enhancements to this basic level of food safety if the market demands them. In summary, there is room for both public and private regulation. The nature of the public and private regulation is determined in part by the drivers for change and in part by the meta-rules governing both government and commercial decision making. In our view these meta-rules for government decision making may be strengthened by:

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the government adopting a RAM decision-making framework rather than a PEM decision-making framework – one way to move in this direction is to encourage greater transparency in government decision making; and creating institutional distance between the politicians and the professional public service that supports them.

The meta-rules for private decision making on food safety would be strengthened by: ● ● ●

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encouraging the development of more highly coordinated supply chains (but not the development of monopolies) by providing development grants and expertise to help the establishment of supply chains; assisting (vertical and/or horizontal) alliance leaders to impose private regulation to meet the food safety needs of customers and to guard against opportunistic behaviour by any of their members; backing up the encouragement of private regulation with government oversight – this is to offset the potential problem that some alliance leaders will be tempted to cut corners in the food safety area by focusing on SRC rather than LRC; and introducing the due diligence defence.

Thus far, we have talked about the different types of drivers for change and how the national drivers can create differences between countries in the speed and shape of change in a country’s food safety system. But then, as these national drivers feed into the ‘mill’ of public and private decision making there is another source of challenge. The nature of the ‘mill’ can be very different in different countries, and this in itself could be a factor helping to shape the type of institutional arrangements that emerge. We now turn to describe the nature of institutional arrangements for food safety themselves and examine how to strengthen them.

Improving the Institutional Arrangements for Food Safety As stated at the start of this chapter, for a country to move in the direction of our objective, it needs to put in place a set of institutional arrangements for food safety that efficiently and effectively assesses, manages and communicates the risk of food safety problems. In this section, we discuss the main institutional questions that arise in the context of the risk analysis framework (risk assessment, risk management and risk communication) and suggest how the institutional arrangements dealing with these areas may be improved. Since risk assessment and risk management are often embodied in the same institutional arrangement (e.g. HACCP), let us discuss those together first. This will be followed by a discussion of the institutional issues for risk communication.


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Risk assessment and risk management The main institutional questions arising in the risk assessment and management of food safety are: ● ● ● ●

What risks are relevant? How much risk is relevant? How should the risks be assessed and managed? Who should pay? Let us consider each of these in turn. What risks are relevant?

These may include food safety risks in two dimensions, which for want of a better description, we might call: ● ●

latitudinal risks – physical, economic, social and political risks; and longitudinal risks – short-term food safety and long-term human health (e.g. nutrition) risks.

With respect to the latitudinal risks, the physical (microbiological, chemical and mechanical) and social (e.g. environmental and animal welfare) risks are primary risks while the economic and political risks are derivative risks. The economic and political risks depend on the levels of the primary risks and on what institutional arrangements are put in place to moderate these primary risks. For example, when the British Government introduced the ban on sale of beef-on-the-bone it was responding to a very slight physical risk in a way that introduced significant economic risk for producers but which minimized significant political risk. In another example, US meat inspection still involves the use of significant resources to identify physical problems, which do not pose a significant food safety risk (i.e. the traditional, organoleptic inspection of carcasses). This creates economic risk for producers who must pay for these inspections. Thus the relevant latitudinal risks to be considered during risk assessment are the primary (physical and social) risks as well as the derivative economic risk. In our view, the political risk should be dealt with at a different level: the level of the meta-rules. With respect to the longitudinal risks, the short-term (safety) risks are sufficiently different in nature from the long-term (health) risks that we can usefully consider them as quite distinct issues. For example, in the short run, the physical risks have been categorized as microbiological, chemical and mechanical, and an important institutional innovation, HACCP, has been developed to analyse and manage such risks. However, in the long run, the physical risks are related to diet and very different institutional arrangements are appropriate for dealing with such risks (e.g. education). In this study, we restrict our attention to only the short-term (safety) category of longitudinal risks.

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How much risk is relevant? There are two aspects to this question: ● ●

What is the appropriate level of risk? Should the risk analysis be concerned with perceived risk or actual risk?

The appropriate level of risk is easy to determine conceptually, but difficult to determine empirically. Conceptually it is where the marginal social cost of reducing risk is equal to the marginal social benefit. Although we may have a difficult time determining what this point is in practice, it is at least important to acknowledge that this indeed is the objective. Hence, for example, it rules out the notion of achieving zero risk. The closer a society’s food safety system comes to achieving zero risk, the more costly it is to achieve further risk reductions. At the same time, the benefits of doing this become less and less. Eventually, the marginal cost exceeds the marginal benefit and it does not pay to go further. Whether the risk assessment should be concerned with perceived or actual risks depends on who is doing the risk assessment. Where the risk assessment is performed through public regulation to achieve the minimum sciencebased standards, the appropriate risk measure to use is actual risk. However, where the risk assessment is performed through private regulation to achieve international competitiveness, the appropriate risk measure to use is perceived risk. The provision of public education about the real food safety risks will help the perceived risk and the actual risk to converge in time. However, if there is a divergence between the two, alliance leaders will ignore customer perceptions at their peril. How should the risks be assessed and managed? In HACCP-based risk management, the original idea was for company QA personnel to assess and manage risk (i.e. in line with the HACCP programme). However, in the case of meat processing, responsibility for risk assessment and management still generally resides with government personnel performing meat inspection and monitoring based on visual (organoleptic) inspection. This, despite numerous food poisoning outbreaks in which government inspectors were present. The problem at Hudson Meats in the USA is just the most recent, widely publicized example. It is tempting to argue that all that is needed is for government inspection personnel to be retrained as HACCP monitors and the problems would be solved. But, it is not so simple. For one thing, there is the question of incentives. Government personnel may be given the incentive to focus on ensuring minimum standards and actual risk, but what is needed is also a focus on maximizing competitiveness and perceived risk. For this to happen, company actors first need to be given responsibility for food safety. When meat inspection is performed by government employees, then psychologi-


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cally, company employees need not assume responsibility for food safety. According to one manager of a meat plant, the government inspector is thought of as a policeman. When the inspector is around, you behave, but otherwise you see what you can get away with. Clearly there is a role for both public and private actors in risk assessment and management. There is a role for public actors to ensure the minimum requirements are met on the physical and social risks. However, there is also a role for private actors, working on behalf of the food company and assisting its quest for international competitiveness. For example, a company QA person cannot only ensure the minimum food safety standards based on the actual risks, but that person may also: (i) assess and manage perceived risks (i.e. as perceived by customers); (ii) assess and manage quality factors in addition to safety factors; and (iii) perform other tasks (e.g. trimming), which are complementary but distinct from risk assessment and management. But, how can we be sure company employees will do the job properly? How can we be confident they will at least meet the minimum standards on food safety? The answer is a rigorous auditing of the HACCP programme. Unlike traditional meat inspection, one of the features of HACCP is a requirement to document everything that is done. This makes auditing a HACCP programme relatively effective. If the audits reveal lapses in the programme, corrective action can be prescribed and/or penalties assessed. The question that needs to be addressed here is: who should audit what these company QA personnel are doing? This auditing function could be performed by agents of the firm itself (through internal audits), by agents of the downstream customer, by government personnel or by independent commercial auditors. We can rule out internal audits since some firms may be motivated by short-run competitiveness resulting in the firm taking shortcuts on food safety. Downstream auditors would be more acceptable than internal ones provided they were subject to outside (independent) scrutiny themselves, to ensure their performance is not compromising food safety. But there are two potential problems with such audits. First, since the auditing firm is, in fact, an agent of the firm’s customer, it may be tempted to use its position to advance the commercial interests of the customer at the expense of the firm being audited. Second, if the firm supplies to a number of customers, the firm could become inundated with audits, as each customer required its own audits. Government auditors would be more acceptable than downstream auditors, but even here there are problems. As was the case for downstream auditors, this can lead to a proliferation of audits involving much duplication. There are different levels of government (local, regional and national) all of which may require audits. In fact, this source of proliferation of audits has been cited by a number of participants in the beef supply chain in a number

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of the countries we reviewed. This problem is not fatal in the sense that different government agencies could work together to ameliorate this problem with a single government audit. However, even if this problem is solved there is another. Governments are legitimately concerned only with ensuring minimum standards related to the physical and social risks. However, customers may have additional requirements such as meeting higher than minimum food safety standards or meeting certain quality standards or following certain specified production practices. Thus, we are back to the problem of multiple audits. In our view, the most efficient and effective approach would be to have each firm’s HACCP programme audited by an independent commercial auditor who is licensed by the government to audit HACCP programmes. The independent auditor would in turn be scrutinized by government overseers to ensure they are performing their job satisfactorily. Each meat establishment would need to hire an accredited independent auditing firm on a multi-year contract to establish and monitor its HACCP programme. Such a system is called co-regulation and has been operating successfully in Australia for a few years now. The independent auditing firms pay large sums to the government for accreditation and the risk of losing accreditation ensures their diligence in ensuring their auditors do their job properly. In addition, individual auditors are licensed by the government to undertake the auditing activity. The risk of losing their licence is a further incentive for good performance. Government personnel regularly audit the auditors to check on their performance. In sum, co-regulation allows the physical and social risks to be analysed and managed in an economically efficient way, and allows attention to be paid to economically relevant perceived risks in addition to ensuring the minimum safety standards are met based on actual risks. While co-regulation of a food safety system based on HACCP principles is at the heart of a preferred system, there are other issues to be addressed. These include: ● ● ● ●

Where in the supply chain should the risks be managed? Should HACCP risk management be performance-based or processbased? Should HACCP risk management be specific or generic? Should HACCP risk management be mandatory or voluntary? Let us consider each of these in turn.

WHERE IN THE SUPPLY CHAIN SHOULD THE RISKS BE MANAGED? Clearly, it is desirable that a whole-of-chain approach be used to determine the CCPs. Then the CCPs can be determined in such a way that the whole-of-chain food safety system is optimized. It may be that a particular hazard may be monitored and corrected at more than one point along a supply chain. If a whole-of-chain approach is used, this allows a decision to be made on which is the optimal


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point to establish the CCP and prevents unnecessary duplication of CCPs. Whole-of-chain HACCP can best be achieved in a system where there is strong vertical coordination of the supply chain. If whole-of-chain HACCP is not feasible, the next best option is backward-linked HACCP programmes. Under a backward-linked HACCP, one of the conditions of the HACCP programme is that input supplies are sourced only from suppliers which themselves have an accredited HACCP programme in place. SHOULD HACCP RISK MANAGEMENT BE PERFORMANCE-BASED OR PROCESS-BASED? A performance-based risk management system essentially holds that regardless of the process used to ensure safety, the emphasis should be on end-point testing for the presence of target contaminants. Caswell and Hooker (1996) argue, correctly we believe, that a performance-based system is inappropriate because the risk of contamination of a food product is not distributed evenly, and without adequate information on the frequency of contamination sampling end-products to determine system performance may actually miss a serious contamination. The alternative is a process-based risk management system which essentially holds that there are best practices to employ at CCPs and the focus of risk management should be on prevention of contamination in the first place, not detection of contamination. Of these two types, we believe that a process-based system is more effective and should be the focus of risk management. SHOULD HACCP RISK MANAGEMENT BE SPECIFIC OR GENERIC? Closely associated with the performance versus process discussion above, is the question whether a HACCP system should be specific or generic. A generic HACCP system is based on the model that HACCP principles are not specific because firms vary widely in personnel skill level, geographical and climatic conditions, as well as in potential contaminations or hazards. In order to address this variety among firms, the precise definition of HACCP is generic allowing firms much flexibility in adopting principles and practices that may be accepted as HACCP. A specific HACCP model assumes that despite the diversity, there are CCPs relevant to all firms who wish to minimize contamination. As a result a specific HACCP identifies best practices that must be employed in order to have the risk management system accepted as a HACCP system. We suggest that a process-based, specific HACCP system of risk management is more congruent with the objective of preventing contamination. SHOULD HACCP RISK MANAGEMENT BE MANDATORY OR VOLUNTARY? A particularly challenging issue is the whether HACCP should be mandatory or voluntary (Segerson, 1999). All countries under review have vigorously moved to make HACCP one of the basic planks of their food safety system, especially in meat plants. But whereas the USA introduced HACCP into meat plants on a mandatory basis, Canada and the UK introduced HACCP on a voluntary basis. In Australia, HACCP was made mandatory for domestic

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plants but not for purely export plants. Mandatory HACCP depends on the use of legislated regulation, while voluntary HACCP depends on the use of market regulation. The main potential disadvantage with mandatory HACCP is that the government, rather than the company itself, may end up effectively owning responsibility for a company’s food safety programme. This negates one of the main potential benefits of HACCP. The USA appears to have fallen into this trap, though Australia appears to have escaped it. With voluntary HACCP (made effective by market regulation), responsibility for ensuring food safety is placed squarely on the shoulders of the food production company concerned. In the UK, the source of market regulation of HACCP has been the supermarket chains (which in turn have been encouraged by the due diligence law). If beef processors want to supply to one of the major supermarket chains, a fully documented HACCP programme is a necessity. In Canada, the main driver for HACCP has been the market imperative of accessing the USA. Who should pay? The basic question is whether the cost of risk assessment and management should be paid by taxpayers (i.e. out of government revenues) or by the beef industry (through a charge for service). There are at least three grounds for arguing that the beef industry should foot the bill. First, on social justice grounds it is appropriate that the producers and consumers of beef (through a charge for service and through higher prices) be required to pay. Vegetarians should not be required to pay the cost of analysing and managing the risks of a food they do not consume. Furthermore, the beef industry should be held accountable for the social costs (environmental and animal welfare) it incurs. From an institutional perspective, there is another reason for making the beef industry pay. If meat inspection is paid for out of government revenues, the managers of the meat plants will have no ownership of it. Thus inefficiencies in the food safety system could well be ignored by the very organizations that could give it useful direction. However, if the cost of meat inspections shows up on the balance sheet of the meat plant, this is a very different story. Now, as a way of reducing costs, the plant has a strong incentive to ensure the inspections and the inspection system are efficient. Under a co-regulated food safety system, the QA personnel are already company employees, so the question largely revolves around who pays for the auditing system. If the audits are charged against the company, this provides a way of encouraging good performance. If the company is fully complying with its approved HACCP programme, the frequency of audits can be reduced, thereby reducing the cost to the company. On the other hand, if the company is in non-compliance, the frequency of audits can be


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increased, thereby increasing the cost. Eventually, if the non-compliances are not corrected, the audits may be so frequent as to make the audit cost on the company prohibitive.

Risk communication Risk communication is the third component of a scientific risk analysis framework. It is about making the food safety system transparent to all participants of the beef supply chain (including actual and potential consumers). It is difficult to overstate the importance of transparency. Transparency acts as a positive institutional constraint on the behaviour of food safety policy decision makers. Much like a free press, it encourages adherence to the RAM of decision making rather than the PEM. It also encourages firm managers to focus on LRC rather than on SRC. In part, this is because it obstructs managers from misrepresenting their objectives. But, in part, it is also because it helps to bring food safety risks as perceived by consumers closer to actual risks (Hooker et al., 1999). The food supply chain responds largely to its understanding of the publicly perceived risks, and to the extent that government is motivated by the PEM of policy decision making, it will also base decisions on its understanding of the publicly perceived risks. In the long run, public perception may be expected to converge to known reality. But in the short run, perception and reality can diverge substantially (see Bocker and Hanf, 2000). In the short run, publicly perceived risks may exceed actual risks as the result of media sensationalism or the activity of powerful consumer lobby groups. On the other hand, the publicly perceived risks may also understate the real risks as the result of government cover-up or industrial secrecy. The best way to eliminate the potential divergence between perceived and actual risks is to encourage transparency of the food safety system. Transparency means that all components of the food safety system at all points in the supply chain are open to public scrutiny. This means, for example, free access to HACCP documentation and free access to food establishments (from farm through to seller of the final product) subject to the need not to invade aspects of the firm that are commercially sensitive. Finally, since food safety is a credence good, transparency can help to build trust with the consuming public. By way of example, consider a recent referendum in Switzerland on the proposition to allow biotechnology research in the country. Biotechnology, like food safety, is very much a credence good. In the lead up to the referendum there was considerable opposition to the proposition. But, the biotechnology industry responded by opening up its laboratories and activities to public observation. The result was an impressive swing of support in favour of the proposition and ultimately the required two-thirds majority was attained.

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Conclusions This chapter has dealt with the basic question of how to encourage a country’s food safety system to be internationally competitive while at the same time meeting some generally agreed scientifically based minimum standards. Our thesis is that a country can work on three fronts to achieve this. It may: ● ● ●

strengthen the drivers for change; strengthen the food safety meta-rules; and improve the institutional arrangements for food safety.

The drivers for change provide the windows of opportunity for change in the relevant rules that govern behaviour of individuals and groups in society. By relevant rules we mean the food safety meta-rules and the institutional arrangements for food safety. Strong drivers are often an essential precondition for change in these social rules as most societies have a penchant for institutional inertia, which protects the status quo. The food safety meta-rules are concerned with public and private frameworks for decision making. This is the second area where countries could usefully devote resources to encourage an improved food safety system. Fundamental change in the food safety system in the direction of our socio-economic objective would be helped by a government motivated by the RAM of decision making and by a beef industry motivated by LRC and an inclination to deter opportunistic behaviour among its members. The institutional arrangements for food safety are the third area where a country may usefully devote resources to improve its food safety system. In this regard, we would recommend countries to move towards a co-regulated food safety system based on HACCP principles. Having looked at what might be done by a country to improve its food safety system, let us now turn to examine our four countries to see how they compare with respect to the various ingredients we have identified in this chapter as contributing to the development of a socio-economically optimal food safety system.

Notes 1. Invited presentation to the Fifth World Congress of the International Agribusiness Management Association, Paris, France, May 1996.

Chapter 8

How are they Doing?

Introduction We want to conclude our study by taking a look back at the four countries under study to see how well they are doing in harnessing the drivers for change, food safety meta-rules and the institutional arrangements to help create a better food safety system. In doing this, we see ourselves more like film critics than scientists. The data we have to work with is incomplete, and often anecdotal and subjective. Hopefully, there will be others to come along who are able to assemble a better information set than we have and hence offer a more fully-informed assessment. For us though, we see our job here as fairly modest; to try and provide a useful discussion opener. When we talk about ‘the four countries’ what we really mean is the government and industry bodies in the countries. These are the bodies that have the power to strengthen the drivers for change, the food safety meta-rules and the institutional arrangements for food safety. And when we talk about ‘how well they are doing’ what we really mean is how well the various countries are doing with respect to achieving an optimal food safety system. Having said all this, the layout of this chapter is as follows. In the next section, we look at how the four countries have harnessed the various drivers for change. This is followed by a section that looks at how well they have chosen the meta-rules and a section on how well they have developed the institutional arrangements.

Harnessing the Drivers of Change We have discussed two basic types of drivers of change: international drivers and national drivers. Let us begin with the international drivers.

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International drivers of change The main international drivers of change for national food safety systems are the international institutional arrangements for food safety. We would expect these to be important to all four countries under study, but especially to Australia and Canada where exports account for 60% and 45% of production, respectively. For the USA, exports account for only 10%, but because of its sheer size, the USA is still the second largest beef exporter in the world behind Australia. And, with regard to the UK, exports have historically been fairly significant (at 30% of domestic production) and they may well be so in the future. The problem for the UK is the BSE-related export ban that has temporarily cut it out of this market. The international institutional arrangements include the WTO’s SPS and TBT Agreements and the Codex (see Chapter 2 for further details). These international institutional arrangements provide the international rules of the game within which individual countries’ food safety systems operate. Hence these international arrangements are important drivers for change in domestic food safety systems. Other important international drivers include those factors that drive the international institutional arrangements themselves. The factors that drive the international institutional arrangements will, indirectly, drive domestic food safety systems. These include the market megatrends (also discussed in Chapter 2) and the international meta-rules under which the international arrangements operate. We want to just focus here on the meta-rules of the international institutional arrangements. As we mentioned in Chapter 2, international institutional arrangements contribute to the ability of countries to move towards an optimal food safety system because they attempt to move the process of dispute resolution from one of negotiation to one of adjudication. Individual countries can assist the evolution of this process by accepting the decisions of the WTO, even when the outcome doesn’t go the way they would like. A case in point is the beef hormone dispute involving the EU on one side and Canada and the USA on the other. The WTO’s Appellate Body ruled against the EU and ordered it to bring its domestic measures into conformity with the SPS Agreement by 18 May 1999. At time of writing, in mid-2000, the EU had failed to do so. This is an example of how the international institutional arrangements can be undermined, and if they are undermined, their ability to provide a positive influence on domestic food safety systems will also be undermined. Thus, the EU gets a mark of displeasure from us on this count. It should be added however, that the UK has played an exemplary role in this saga by consistently opposing the EU’s position on banning beef hormones. For this, we give the British Government a gold star.

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National drivers for change There are two types of national drivers for change: external and internal. The external drivers are like the international drivers in that both involve the influence of non-internal drivers on the domestic food safety system. However, while the international drivers impact simultaneously on a number of countries, the external drivers impact mostly or totally on only one country. The external drivers do not appear to be as significant for the USA as they are for the other three countries. This is somewhat understandable since the USA is the world leader in beef production and consumption and when the USA talks, other countries listen. This is particularly the case for Canada and Australia for which the USA represents the largest and secondlargest export market respectively. To their credit, when the Canadian and Australian governments and industry responded to the USA requirement to introduce HACCP in beef export plants, they did not simply replicate the US approach to HACCP. They used the MEGAREG to drive change at home, but the HACCP process they developed was superior: it was voluntary, process based and specific. One beef industry observer in Australia gets a special pat on the back for saying ‘We convert tragedy in the rest of the world to assist our communications. The Hudson Meat problem is a classic and so too is that of the Barr butcher in Scotland … we use each of them to help drive the message back here.’ What he was saying was external drivers (in particular food contamination problems overseas) are an important way to lever change at home. The main external driver for the UK has been the EU directives and regulations. The UK showed itself to be proactive when it took the EU’s Official Control of Foodstuffs Directive and implemented it by way of the 1990 Food Safety Act. The Food Safety Act went beyond simple implementation and introduced the very important concept of ‘due diligence’. The single most significant external driver for the UK was probably the Florence Agreement. This was the agreement reached in June 1996 for lifting the worldwide export ban imposed on the UK resulting from the BSE crisis. The UK responded immediately with the cattle cull and the development of the Cattle Passports Scheme. But then, the UK had little choice. Internal drivers for change are the result of domestic concerns or circumstances. Three important internal drivers have been domestic food safety crises, increased market regulation and reduced government spending. Domestic food safety crises represent a very powerful internal driver for change especially if the people most affected are also the most vulnerable in society (the young and the elderly). While they are a very powerful driver for

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change, there is a challenge here for the country to direct the change in the direction that will lead to long-term international competitiveness. The danger with this driver is it can be so powerful as to cause government to become locked on food safety and forget about international competitiveness. The other two important internal drivers (increased market regulation and reduced government spending) tend to lead directly in the direction of enhancing international competitiveness. Domestic food safety crises have been an important driver in three of the four countries under review: the USA, the UK and Australia. They have not been an important factor in Canada. The crises in these three countries have led to different trajectories of change. Of the three, Australia appears to have best harnessed the power of this driver to create an internationally competitive food safety system through such institutional arrangements as co-regulation and the process-based HACCP. In the USA, the crises appear to have been harnessed to create more of a focus on food safety than on international competitiveness. The UK has had the toughest ride as far as food safety crises go. But what has made things worse have been the apparent mistakes and cover-ups of the government and the beef industry in the early years of the BSE crisis. These, together with the worldwide export ban on British beef have left the government and industry with little room to manoeuvre. They have had to focus very heavily on stabilizing the situation as far as food safety is concerned and have not had much opportunity to worry about international competitiveness. However, the UK has been assisted in giving some focus to competitiveness by the actions of the major supermarket chains. The supermarket chains have been largely responsible for increased coordination of the beef supply chain that has contributed to long-run competitiveness while at the same time providing an assurance of safe food. Canada has been spared from the problems of having to deal with highly publicized food safety crises. On the one hand, this may be an advantage, if the alternative was something like the UK experience. On the other hand, the lack of such a driver for change can engender complacency. Canada does not seem to have strong internal drivers for change. The main driver for change in Canada is external (developments in the US food safety system), while the strongest internal driver appears to be government deregulation in the early 1990s and the streamlining going on now in the CFIA. Both these external and internal drivers for change are concerned with the imperative of achieving international competitiveness. Hence, while the drivers for change in Canada may not be as strong as in the other countries under review, they at least seem to be pushing in the right direction (i.e. towards an internationally competitive food safety system which meets acceptable minimum food safety standards). Our critics’ award for the country that has best harnessed the national drivers of change goes to Australia. The Canadian Government gets a special mention for the way it introduced HACCP in response to the external pressures from the USA, and the UK supermarket chains get a special mention for the way they have helped drive change in the British food safety system.

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Choosing the Right Meta-rules It is one thing to have strong drivers for change. It is another to translate those into institutional arrangements that contribute to an optimal food safety system. The public and private meta-rules are the conduit for transforming the drivers for change into institutional arrangements. We argued in Chapter 7 that public meta-rules involving the RAM of decision making are more likely to lead to good institutional arrangements than those involving the PEM. We also argued that private meta-rules where the decision making is based on LRC are more likely to lead to good institutional arrangements than those based on SRC. Let us now see how our four countries fared on their public and private meta-rules.

Public meta-rules The USA and Australia appear to be towards the two ends of the spectrum when it comes to the public meta-rules. In the US system of public policy decision making, the PEM approach appears to dominate as lobbying plays such a central role in the decision-making process. An example was the decision-making process to determine whether or not to accept Australia’s coregulatory system of export meat inspection. Opposition to the Australian proposal had less to do with science than domestic politics. The US Government’s MIU teamed with strong consumer lobby groups to block the proposal. Another example was inter-agency turf wars within government where bureaucratic lobbying plays an important role. For example, the USDA appears to have used food safety crises as an opportunity to expand its jurisdiction in the food safety area. Although the USDA has always had some mandate for consumer protection, its traditional role has been producer promotion while the FDA has traditionally had responsibility for consumer protection. At a time when governments in other countries are divesting their departments of agriculture of their responsibilities for consumer protection (because it is inconsistent with the role of producer promotion), the US Government is going in the other direction. By contrast, Australia’s system of public policy decision making appears to be dominated by the RAM approach. Successive governments in Australia since the mid-1980s have adopted an ideology of economic rationalism. This has been more conducive to the development of substantive changes to the food safety system such as co-regulation. The UK and Canada appear to be somewhere in between Australia and the USA, with the UK being closer than Canada to the US position. The UK Government has had little choice but to adopt the PEM approach as a form of damage control in light of the severe food safety crises. These crises were so powerful that they sent destabilizing shockwaves through the British Government. The main problem for the government was not so much

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the beef export ban, though this was severe enough, rather it was the loss of consumer (and voter) confidence in the government’s willingness to look after their interests. Canada appears to be somewhere in the middle of the RAM–PEM spectrum. Unlike the UK, it has not had to contend with severe domestic food crises (with their ability to create a major political disequilibrium), and unlike the USA, government policy decision making does not appear to be circumfused with lobbying activity. But, at the same time, Canada does not appear as driven as Australian Governments to adopt the ideology of economic rationalism. Thus, for example, in Canada we see evidence of the RAM approach in how the government implemented HACCP in export plants and in how it divested Agriculture and AgriFood Canada (AAFC) from a role in consumer protection through establishment of the CFIA. We can also see evidence of the PEM in action in the way government inspection personnel have successfully resisted efforts of policy makers to transfer ownership of inspection and auditing to the private sector.

Private meta-rules For beef industry bodies to play a useful role in developing an optimal food safety system it is necessary that they focus on LRC rather than SRC. It is important that they do not try to cut corners, defend members of their industry who have behaved opportunistically or otherwise attempt to cover up food safety problems. In the long run, such behaviour will be self-defeating. Having said that, we did not see much evidence of beef industry bodies going after the quick fix. By and large they appeared to be playing a responsible role in all the countries we surveyed. They have encouraged such developments as HACCP-based quality assurance schemes, the development of international standards, greater coordination in the supply chain and traceback programmes. It seems the beef industry bodies are aware that what is ultimately important for the survival of the industry is LRC. The notable exception appears to be in the early years of the BSE crisis in the UK when beef industry representatives allegedly covered up the known risks of BSE to human health and dragged their feet on the selective cull required as part of the Florence Agreement. This stance was not conducive to the development of an optimal food safety system. In retrospect it is easy to see how it happened. When a beef industry’s very survival appears to be under threat, representatives may move into survival mode where decisions are made on the basis of what appears to offer short-run survival rather than long-run competitiveness. However, there is another way. When a crisis hits, one can look at it as a unique window of opportunity to bring about substantive change that at other times might not be available. Consider the case of the Jack-in-the-Box restaurant chain. In 1993, an E. coli outbreak occurred in its Pacific

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Northwest restaurants resulting in the deaths of four children and the illnesses of hundreds more. Such a catastrophe could have ended many fastfood businesses. However, Jack-in-the-Box and its parent company Foodmaster Inc. used the crisis to bring about fundamental change. Following are the major changes as reported by Salvage (1996). 1. In January 1993, in the wake of the outbreak, the company worked with public health departments and initiated the removal of its supply of hamburger meat. The following month, Jack-in-the-Box initiated a new HACCPbased, food safety programme. The company also moved to new meat suppliers/partners and initiated an E. coli O157:H7 control programme – the first of its kind in the fast-food industry. 2. In March 1993, David Theno joined Jack-in-the-Box as vice president of quality assurance, product safety and research and development after consulting with the company during the outbreak. In June 1993, Jack-in-the-Box partnered with the National Restaurant Association to train all management personnel in ServSafe, a food-safety training programme for restaurant workers. That September, the company formally rolled out a hamburger HACCP system to all of its restaurants. 3. In February 1994, Jack-in-the-Box initiated a full restaurant HACCP programme introduction and shared this programme with industry and regulatory agencies. In September 1994, Jack-in-the-Box became the first large operator to have all restaurant managers certified with the NRA ServSafe programme, and it became the first corporate member of the Industry Council on Food Safety. 4. In December 1994, Jack-in-the-Box partnered with consumer activist organization Safe Tables Our Priority to make E. coli O157:H7 reporting mandatory in all 50 states; raise internal hamburger cooking temperature regulations to a minimum 155°F; and improve meat and food safety. 5. In February 1995, Jack-in-the-Box launched a public-safety campaign aimed at educating consumers about food safety in the home since most E. coli and other food-borne illnesses stem from the home. Information covers guidelines on proper food storage and defrosting of meats, cooking temperatures, visual checks for thorough cooking, cleaning of cooking utensils and proper hygiene. 6. In April 1995, the California State Assembly Health Committee unanimously passed Assembly Bill 465, which required mandatory reporting of E. coli cases in the state. Jack-in-the-Box worked with Republican Assemblyman Howard Kaloogian to educate Health Committee members before the vote. The bill later passed unanimously in the assembly. 7. In May 1995, Jack-in-the-Box received commendation from the San Diego Board of Supervisors for its role in the Food Safety Educational Committee in educating the public and influencing laws that better regulate food safety. Jack-in-the-Box supported fast-track efforts and rejected slow-down tactics regarding new food inspection regulations.

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Developing the Institutional Arrangements The final aspect of moving towards an optimal food safety system is developing an appropriate set of institutional arrangements. In Chapter 7, we discussed such institutional arrangements in the context of the risk analysis framework. They are institutional arrangements that efficiently and effectively assess, manage and communicate food safety risks. The objective of this section is to look at how the four countries under study are doing on this score. We begin with institutional arrangements for risk assessment, followed by those for risk management and finally those for risk communication.

Risk assessment Each of the countries under study has indicated that the basis for food safety should be scientific risk assessment under the risk analysis framework. In Chapter 7, we argued the focus of risk assessment should be restricted to the primary risks; the short-term physical risks to human health (i.e. through illness not nutrition) as well as the social risks (to the environment and animal welfare). This is so, even if the risks are not easily quantifiable. The primary risks need to be subjected to some social benefit–cost analysis to determine what are the significant risks. The focus of risk assessment should not consider political risks. In the countries under study, there seems to be general agreement on this. However, at times, governments have shown concern about political risks, as in the case of the UK Government during the BSE crisis. A secondary question about risk assessment is: should risk assessment deal with actual or perceived risks? We have said these can diverge (especially in the short run). Public risk assessment should deal with actual risks and hence provide an acceptable minimum standard of food safety. However, private risk assessment should deal with risks as perceived by the consumer and hence provide a source of competitiveness. Again, there is not a lot of disagreement here between the countries concerned. Supply chain leaders (e.g. the supermarket chains) will do a better job of this, the better their market research and the better the feedback of the information up the supply chain to the suppliers. For us, the UK supermarket chains stand out in this regard.

Risk management There are a number of areas in risk management where significant choices in approach are available to a particular country. Some choices are more conducive to achieving our socio-economic objective than others. In this section we want to examine a number of such areas where the countries under study have chosen differently. They are:

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Whole-of-chain versus individual sector risk management. Public versus private risk management. User-pay versus taxpayer-pay risk management. Mandatory versus voluntary HACCP risk management. Performance-based versus process-based HACCP risk management. Specific versus generic HACCP risk management. Level of traceback. Let us consider these various areas in turn. Whole-of-chain versus individual sector risk management

All countries under study acknowledge the benefits of whole-of-chain risk management. However, some countries are more advanced in their implementation of this than others. The UK meat safety system appears to be the closest to achieving this, largely because of the demands of the large supermarket chains. Canada and the USA still seem to be more focused on risk management at the meat plant (slaughterhouse and packing plant) stage of meat production. Perhaps, this focus in the USA stems from its experience with food contamination crises, where meat plants were viewed as the most likely sources of contamination. And perhaps this focus has spilled over into Canada, which is heavily dependent on the US market. Public versus private risk management Risk management activities in meat plants, broadly categorized as inspectionrelated activities and monitoring-related activities, may be performed by either public or private personnel. In our view, the approach that most closely approaches our socio-economic objective is the Australian State of Victoria’s model of co-regulation. In a nutshell, this model involves monitoring of a company’s HACCP system by trained company personnel, auditing of the HACCP system by a contestable third party audit company, and auditing of the audit company by government personnel. This layered approach to risk management involving food production company, audit firm and government appears to offer the best approach to minimizing food inspection costs while ensuring minimum standards of food safety. Australia wins a gold star for pioneering this approach. The other three countries appear to be well behind, as risk management is still very much the role of government meat inspectors. User-pay versus taxpayer-pay risk management An issue closely related to the one of public versus private risk management is that of who pays for the risk management. Should it be the industry (the producers and consumers) or should it be the taxpayer? In our view, it should be the industry through user fees. This is the approach that most closely

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approaches our socio-economic objective. Australia, Canada and the UK are moving, in some cases rapidly, towards a cost-recovery basis for risk management activities. However in the USA, the public risk management activities continue to be funded by the taxpayer (i.e. from government revenue). Mandatory versus voluntary HACCP risk management While there is general agreement among the four countries that food safety may be enhanced through HACCP, there is debate about whether its adoption should be mandatory or voluntary for individual firms. Of the four countries under study, the USA is the only one to have introduced mandatory HACCP in all meat plants. The UK and Canada have introduced it on a voluntary basis. And Australia has introduced mandatory HACCP in domestic plants and voluntary HACCP in export plants. In our view, the main potential disadvantage with mandatory HACCP is that the government may end up effectively owning responsibility for a company’s food safety programme rather than the company itself. This negates one of the main potential benefits of HACCP. The USA appears to have fallen into this trap, though Australia (in its domestic firms) appears to have escaped it. Where HACCP is voluntary, firms are encouraged to adopt the HACCP approach by market regulation and government encouragement and support. In the UK, the major supermarket chains, which account for 70% of all beef sales, require their suppliers to adopt HACCP in a strong form of market regulation. In Canada, the voluntary adoption of HACCP by Canadian slaughter firms is seen as a means to differentiate firms’ products. Performance-based versus process-based HACCP risk management The mandatory HACCP programme in the USA is performance based in the sense that under the MEGAREG, the programme must be capable of meeting ex post tests for the presence of E. coli and Salmonella microbial contaminants (see USDA/FSIS, 2000 for a ‘self-assessment’ of this HACCP regime). Hence, the FSIS approval of a firm’s HACCP system is based upon the ability of the system to achieve performance standards. Departing from this view, the Canadian approach holds that microbial risks are heterogeneously distributed and poorly understood so that a simple random sample of carcasses and end-products is not an accurate way to approve a system. Instead, the approval of a system is associated with the adoption of those preventive practices that most effectively reduce contamination, rather than approving any system that can achieve the performance standards. In our view, the approach that most closely approaches our socioeconomic objective, is the process-based approach. This is the approach followed in Canada, the UK and Australia, but not in the USA.

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Specific versus generic HACCP risk management This issue is really a flow-on from the debate about performance-based versus process-based HACCP. A generic HACCP system allows firms considerable flexibility in adopting principles and practices that may be accepted as HACCP, allowing for diversity among firms in skills, geography, and climatic conditions. A specific HACCP system assumes that despite the diversity, there are critical control points relevant to all firms. As a result the specific approach identifies best practices that must be employed in the HACCP system, while the generic approach does not. In our view a specific HACCP system is more likely to approach our socio-economic objective than a generic HACCP system. This characterizes the approach taken in Canada, the UK and Australia, but not the USA. Level of traceback Traceback is the risk management activity employed to identify, isolate and eradicate the crisis before too many consumers are affected. An optimal meat safety system supports traceback along the entire supply chain. The UK appears to be the most advanced in terms of achieving traceback, followed by Australia, Canada and the USA. The UK has already gone a considerable way down the track of developing a whole-of-chain traceback system through its compulsory Cattle Passports Scheme (1996) and compulsory Beef Labelling Scheme (1998). The Cattle Passport Scheme allows the tracking of each individual animal from birth to slaughter and the Beef Labelling Scheme allows the traceback of any labelled beef back to the animal of origin. These Schemes were stimulated by EU directives brought in largely as a result of the BSE crisis. Australia introduced a cattle traceback system in 1972, but unlike the UK scheme it could only trace a carcass back to the animal’s property of origin. However, spurred on by the EU directives, Australia has started to develop new traceback initiatives. These include the NLIS, which was introduced in 1999, as well as private initiatives such as Primal ID. The NLIS is voluntary (except in Victoria where it is mandatory) and allows the tracking of individual animals from birth to slaughter. Primal ID is a private initiative to trace back muscle cuts to an animal’s property of origin. MSA is also developing the capability to trace back muscle cuts to the animal. In Canada, the CCA has proposed a mandatory National Beef Identification System; an industry-led cattle traceback system. This is proposed for introduction in 2001. The long-term goal is to be able to trace beef products back to the herd of origin, but at the moment, this goal appears to be a long way from being realized. There appears to be little push for traceback initiatives in the USA. The government seems more concerned with managing food safety risks at the meat plant rather than ensuring traceback along the supply chain. There is also little pressure from the private sector for such initiatives.

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Risk communication The objective of optimal risk communication is to increase transparency to align consumer risk perception better with actual risk and to improve information to all participants in the beef supply chain about the actual food safety risks so they can respond appropriately. We don’t have a lot of information to judge the various countries on their attempts at risk communication. However, one particular initiative from the UK stands out. That is the publication by the MHS of the Hygiene Assessment Scores (HAS) for all meat plants in the country ‘so that the food industry and consumers can easily see the best and worst in the business’. HAS scores are also used to allow the MHS to identify premises where additional supervision and enforcement action might be necessary.

Conclusion We are approaching the end of our journey into the realm of food safety and international competitiveness. Food safety is an issue that affects all of us, and it is an issue where the best surprise is no surprise. It is a tribute to the efforts of the many thousands of people employed in ensuring food safety that most of the time, most of us do not even think about it. We just take it for granted. However, potential food contamination problems are lurking around and our best chance of protecting ourselves or our loved ones is to develop institutional arrangements that will prevent these problems from arising. Institutional arrangements are the set of rules (explicit or implicit) that constrain individual behaviour. Good institutional arrangements are those that may be expected to lead to better socio-economic outcomes. In this book we have examined beef food safety institutional arrangements put in place in a number of prominent beef producing, consuming and trading nations. The objective was to see how these may be improved over time. We began by describing the main institutional arrangements influencing the four countries under study together with the main drivers of change in these institutional arrangements. After that, we developed a conceptual framework in which we examined what could be done to improve these institutional arrangements. We focused on the drivers of change, the public and private meta-rules of change and the institutional arrangements themselves. Our study concluded with a look back at our four countries to see how they were doing in regard to these three area of potential improvement. We saw many similarities between countries, but also areas where one country had taken the lead. This book will have served its purpose if it stimulates further discussion on ways to improve food safety. We see it more as a discussion opener than a complete analysis. In the next and final chapter, we want to take a brief look at beef food safety developments that have occurred since the main body of the text was written. We want to see how relevant are the messages of this book to the food safety story that is continuing to unfold.

Chapter 9

Epilogue

As we conclude this study in January 2001, the issue of food safety is boiling over again in Europe, BSE has spread beyond the shores of Britain and has spilled into continental Europe. BSE has been reported in 13 European countries now, including the three largest EU herds; France, Germany and Britain. In the last quarter of 2000, beef sales in Europe have plummeted by 27%. Especially hard hit have been beef sales in France, Germany, Spain and Italy. Interestingly, while continental Europe is in turmoil, consumers in the UK seem less concerned. A public opinion poll conducted by The Guardian/ICM (and reported in The Guardian, 15 January 2001) suggests that in Germany and Greece, the disease worries 86% of the public, with anxiety levels not far behind in The Netherlands and Italy. By contrast, only 54% of the British public was found to be in any way concerned. Newspapers proclaim headlines such as ‘BSE panic spreads across Europe’ (The Guardian, 25 November 2000) and ‘French farmers under siege as BSE fear grips continent’ (The Guardian, 26 November 2000). All this with relatively few cattle actually being stricken by BSE on the continent. At last count, the number was just over 1000 as against nearly 180,000 for the UK. In Germany, where anxiety levels appear to be the greatest and where two government ministers have resigned, the total number of animals affected are, at last count, seven in number of which six were known to have been imported. Of course, the fear is that this might just be the tip of the iceberg. The spillover of BSE into continental Europe provides a useful test case of the extent to which one part of the world is in tune with the ideas presented in this book. To begin, it is clear the BSE crisis has been a very significant driver for change. When the crisis erupted in mid- to late-2000, it galvanized the countries of Europe into action. EU agriculture ministers agreed to ban the use of meat-and-bone meal in all animal feed (including that for pigs and poultry). In addition, cattle carcasses over 30 months of age, which have not been tested for BSE, were banned from entering the food chain. Momentum for such change had been building in the preceding few months as the BSE crisis grew. 179

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But, why did it take policy makers of continental Europe so long to respond? Why did they not use the British tragedy much sooner to lever significant change in their own countries? The fact that significant quantities of meat-andbone meal had been imported to the continent from the UK over a number of years should have provided a powerful lever for change in continental Europe. If BSE on the continent provided a strong driver for change, what can we say about the meta-rules? As we said earlier in the book, public policy decision-making processes are important to getting the right institutional arrangements for food safety. We argued that useful, substantive change is more likely to evolve from a decision-making process based on the RAM rather than on the PEM. However, the current climate in Europe is one of significant political disequilibrium due to the BSE crisis. It is more conducive to attempts to re-establish political equilibrium than to attempts to pursue rational action (in the sense discussed earlier in the book). When the PEM predominates, we might expect to see the introduction of policies, which are over-precautionary and hence over-costly to the industry. One example of such a policy may be the recently announced EU ban on the use of animal feeds (including fish meal), which the UK Government has recently labelled ‘ultra precautionary’. Of course, such policies may be necessary in the short run. It is difficult to argue the merits of putting in a fire alarm when your house is burning down. However, once the fire is out and the political equilibrium is re-established, it is time to move to decision making based more on the RAM and consistent with long-run social objectives. One way to encourage the transition from the PEM to the RAM of public food safety policy decision making is to increase its transparency. Promising greater transparency helps to put out the political fire. Actually implementing greater transparency leads to decision making based on the RAM. This recommendation was also made by the EC in its White Paper on Food Safety (January 2000). The White Paper concludes: Greater transparency at all levels of Food Safety policy is the thread running through the whole White Paper and will contribute fundamentally to enhancing consumer confidence in EU Food Safety policy.

The EC’s White Paper on Food Safety has been the strongest voice for the RAM approach to food safety policy making in the EU. It proposes ‘a radical new approach’ to food safety in the EU involving the establishment of a European Food Authority. But, it is interesting to contrast the social objective adopted by the EC in its White Paper with that adopted by this book. The White Paper’s social objective is: ‘assuring that the EU has the highest standards of food safety’. By contrast, this book adopts as its social objective: ‘maximizing the food industry’s international competitiveness, subject to achieving some generally agreed, scientifically-based minimum standards on food safety’. The problem with the former objective is it could lead to an unnecessarily high-cost food safety system that adds little or nothing in terms of food safety. Both social objectives include the production of safe food, but only the latter is directly concerned to

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ensure the industry’s competitiveness. Right now, the outlook for the European beef industry is anything but competitive. Not only has beef consumption within the EU plummeted in recent months, but also other countries, Australia and New Zealand, have recently (5 January 2001) moved to ban imports of beef from across Europe. The EC’s White Paper has a number of useful things to say about developing the institutional arrangements for food safety in the EU. However, its particular choice of social objective leads to a heavily control-oriented approach to food safety. It focuses heavily on the development of control mechanisms for the food industry to prevent unacceptably poor performance on food safety. It devotes almost no attention to the encouragement of excellent performance by the food industry in the joint achievement of food safety and maximum international competitiveness. The White Paper correctly argues that public risk assessment should deal with actual risks and it proposes the establishment of a European Food Authority to achieve this. However, it is silent on the question of risk assessment by the private sector. We argue that private risk assessment by supply chain leaders (e.g. retailers) should deal with risks based on consumer perception and hence provide a source of competitiveness. We need to encourage systems, which allow supply chain leaders to develop food safety codes that can be bolted on to the public food safety requirements. In the area of risk management, the White Paper correctly advocates a whole-of-chain approach. However, it proposes to achieve this by the guiding principle ‘that food operators bear full responsibility for the safety of the food they produce’. This proposal implies strict liability under criminal law as opposed to due diligence. Strict liability would not provide as good an incentive for firms to achieve whole-of-chain food safety since, under this provision, firms could be successfully prosecuted whether or not they had acted with due diligence. Almost a year after the publication of the White Paper, it appears the official EC view on due diligence has not changed. David Byrne, European Commissioner for Health and Consumer Affairs said as much in a recent Internet interview (http://europa.eu.int/comm/food/fs/intro/chat_transcript_en.pdf 8 November 2000, p. 6). As discussed earlier in the book, due diligence is already the law in the UK, and it has been widely credited with encouraging retailers there to vertically coordinate to achieve whole-of-chain food safety. The retailers developed vertical alliances with processors, livestock producers and feed suppliers requiring them to adhere to strong food safety codes of practice based on HACCP principles. Those suppliers not willing to adhere to these conditions were thus forced into the lower-priced residual market. While the introduction of the due diligence defence is a useful institutional arrangement for encouraging vertical alliances and whole-of-chain food safety, so too would be the introduction of grants to assist the development of vertical alliances and expert advice on alliance formation.

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On risk management, the White Paper is emphatic that this is not the role for the proposed European Food Authority, but rather is the role of the EC, council and parliament. The argument is that risk management involves judgments ‘not only based on science but on a wider appreciation of the wishes and needs of society’. While true, the White Paper does not consider the possibility of co-regulation in risk management. The co-regulation model of risk management has been widely and successfully adopted in Australia. In the State of Victoria, co-regulation involves monitoring of a company’s HACCP system by trained company personnel, auditing of the HACCP system by a contestable third-party audit company, and auditing of the audit company by government personnel. This tiered approach to risk management offers both control and economic efficiency. As we enter the 21st century, food safety is the most challenging food issue of the developed world. It is particularly challenging when feelings are running high, as is currently the case in the EU. There is enormous political pressure to do something and to be seen to be doing something to re-establish political equilibrium. The danger is we put in place arrangements that disregard the need to be internationally competitive. Our research reveals that with the right institutional arrangements in place internationally competitive firms are both willing and able to ensure food safety.


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Index

Agreement on Agriculture (AoA) see WTO (World Trade Organization) Agricultural Marketing Service (AMS), US 34, 39, 44 Agricultural Pre-Arrival Review System (Agri-PARS), Canada 74 Agriculture and Agrifood Canada (AAFC) Health of Animals Division (HAD) 77 Market and Industry Services Branch (MISB) 77 Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ) 111, 112, 115, 128, 129, 130 Alliances, horizontal and vertical 10, 113, 135–138, 149, 156–160, 181 American Meat Institute (AMI) 50–51 Animal and Plant Health Inspection Service (APHIS), US 40 Animal welfare 18, 56, 79, 88–90, 96, 101, 103, 108, 133, 150, 159, 164, 174 Ante-mortem see Meat inspection Antle, J. 4 Assured British Beef (ABM) 102–105 Asymmetric information 5 Auditing 45, 64, 66, 70–72, 75, 76, 102, 103, 106–109, 114–117, 119–126, 130, 141–144, 154, 161–164, 172, 175 Australia and New Zealand Food Regulation Ministerial Council (ANZFRMC) 131 Australian and New Zealand Food Authority (ANZFA) 127–130 Australian Quarantine Inspection Service (AQIS) 109, 114–116, 121–126, 130, 140 Australian Standard 111, 117, 125, 132

Bansback, B. 89 Barkema, A. 146, 148 Beef Labelling Scheme, UK 100 BeefNet, Australia 135–138 Blair Review see Food Regulation (Blair) Review Bovine Spongiform Encephalopathy (BSE) 2, 36, 77, 86–92, 97, 98, 101, 105, 110, 147, 150, 153, 155, 168–174, 177, 179 Bredahl, M. 86, 88 British Cattle Movement Service (BCMS) 99 British Farm Standard Mark 105 Browning, A. 93 Bundy, L. 11

Canada Beef Export Federation (CanadaBEEF) 81 Canada/United States Border Management Accord 73 Canadian Beef Grading Agency 78–79 Canadian Cattlemen’s Association (CCA) 79–80 Canadian Food Inspection Agency (CFIA) 57–58, 63–64, 67–76 CFIA Act of 1997 68 Canadian Food Inspection System (CFIS) 57–58, 61 CFIS Implementing Group (CFIS-IG) 61–63 Food Industry Division (FID) 68–70 CANFAX Canada 80 Cargill Beef Alliance (BEEFWorks) 81 Caswell, J. 9, 11, 18, 20, 94, 95, 154, 163 Cattle passports 86, 91, 98–99, 133–134, 169 see also Traceback and traceability

191

192

Index

Cattle Tracing System (CTS), UK 99 Cattlecare 113, 132, 133, 141 Center for Disease Control and Prevention (CDC), US 38–39 Check the checkers 43 Chemical residues 47, 70, 109, 110, 126, 127, 132, 133 CJD (Creutzfeldt–Jakob disease) 90, 91 Clean Livestock Policy, UK 92 Code of Good Practice (of TBT Agreement) 20 Codex Alimentarius 15, 17, 19, 20–24, 25, 28, 41, 43, 65, 66, 71, 109, 124, 149, 168 Competitive advantage 3, 77 Competitiveness 2, 3, 6–7, 11, 12, 25, 28, 29, 56, 57, 62, 75, 76, 79–82, 106, 107, 111, 114, 140, 142, 145, 151, 156–161, 170, 174, 178 long-run (LRC) 152, 156, 158, 165, 166, 170–172 short-run (SRC) 152, 156, 158, 161, 165, 171–172 Conner, J. 4 Consumer Protection Act of 1987, UK 93 Convergence of food consumption patterns 4 Coordination, horizontal and vertical 3, 16, 36, 60–62, 78, 98, 130, 137, 149, 150, 157, 163, 170, 172, 181 Co-regulation, Australia 82, 113, 115, 116–118, 125, 164, 166, 182 Council of Australian Governments (COAG) 129, 131 Credence good 5, 9, 155, 165 Cross-auditing 117

Decision-making, government policy 2, 6, 8, 10, 23, 64, 65, 74, 98, 121, 145, 150–153, 157, 158, 165, 166, 171, 172, 180 Deregulation 27, 29, 88, 92, 111, 170 Drivers for change 6–7, 145–151, 167–170 Australia 108–114 external 108–111 internal 112–114 Canada 55–58 external 56 internal 56–57 external 7 internal 7 international 7, 15–16, 146–149, 168 national 7, 149–151, 169–170 United Kingdom 83–93 external 84–87

internal 87–93 United States 27–31 external 28–29, 31 internal 29–31 Due diligence 83–84, 89, 93–95, 101–102, 105, 129, 157–158, 164, 169

Economic rationalism 106, 107, 114, 153, 171, 172 Education, of food safety for industry and consumers 35, 38, 40, 41, 46, 49–52, 64, 66, 96, 141, 159, 160, 173 Emergency Response planning Australia 127, 132, 141 Canada 75 Enforcement of food safety regulations 178 Australia 128, 129, 130, 131 Canada 64, 66, 67, 68, 72–73 United Kingdom 84, 88, 91, 93, 95, 96, 97, 98 United States 39, 41, 44, 45, 46 Enhanced Import Operation (EIO) Canada 73–74 Enhanced Importers Responsibility Program (EIRP) Canada 74 Environmental Protection Agency (EPA), US 47 Equivalence, principle of 20, 25, 28, 33, 36, 44, 51, 56, 73, 79, 82, 111, 116, 125, 126, 141, 142 Escherichia coli 29, 30, 34, 41, 43, 45, 58, 88, 90, 92, 110, 111, 116, 127, 172, 173, 176, 181 EU Directives Fresh Meat 85 Hygiene of Foodstuffs 86–87 Official Control of Foodstuffs 84, 169 Product Liability 84 Registration and Identification of Livestock 85–86 European Food Safety Inspection Services (EFSIS) 103 Export Control Act of 1982, Australia 109, 122–124 Export Meat Standards, Australia 122–123 Externalities 5, 150, 151

Farm Assured British Beef and Lamb (FABBL), UK 89, 101, 103, 104 Farm Assured Scotch Livestock (FASL), UK 101

Index ‘Farm-to-Table’ food safety 34, 46, 51, 52, 141 Fearne, A. 9, 96, 156 Federal Food Drugs and Cosmetic Act of 1938, US 32 Federal Meat Inspection Act of 1906 (FMIA), US 39, 41, 44 Federal Outbreak Response Coordination Group (FORCG), US 35 Federal/Provincial Meat Inspection Committee (FPMIC), Canada 61 Fees, inspection and audit 44, 46, 67, 72, 101, 102, 120, 123, 175 Florence agreement 91, 169 Food, Drink and Agriculture Taskforce (FDAT), UK 93 Food and Drug Administration (FDA), US 37–38 Food and Drugs Act of 1906, US 32 Food Emergency Response Program (FERP), Canada 75 Food Quality Protection Act of 1996, US 31, 35, 44 Food Regulation (Blair) Review, Australia 114, 128, 130–132 Food Regulation Consultative Committee (FRCC), Australia 131 Food Safety Act of 1990, UK 84, 87–88, 94–95, 98, 102, 157, 169 Food Safety Enhancement Program (FSEP) Canada 68, 71 Food Safety from Farm-to-Table: a National Food Safety Initiative, US 35 Food Safety (General Food Hygiene) Regulations of 1995, UK 95–96 Food Safety and Inspection Service (FSIS), US 34, 40–46 Food safety policy (decision-making) process see Rational Actor Model (RAM) and Political Equilibrium Model (PEM) Food safety system 1–3, 5, 7, 9, 10, 12, 15, 16, 25, 27–32, 38, 39, 43, 47, 50, 52, 55–67, 73–78, 81, 82, 95, 105, 106, 108, 114, 118, 120, 122, 143, 147, 148, 153, 156–173, 182 Food Safety Victoria 131 Food Security Agency, US 38 Food Standards Agency (FSA), UK 97–98 Food Standards Australia and New Zealand (FSANZ) 131 Food Standards Code, Australia 128–130 Food Standards Implementation SubCommittee (FSIS) Australia 131 FoodNet, US 35

193

for Hygienic Production of Meat for Human Consumption 115 Free rider 2, 9, 10, 155 Freedom Food Programme, UK 89 Fresh Meat Directive see EU Directives

Garibaldi incident, Australia 111, 112, 113, 115 General Hygiene Act of 1995, UK 86–87 Good Manufacturing Practices (GMPs) 36, 38, 65, 66, 124 Grant of Inspection (USDA) 39, 43, 44, 45

HACCP (Hazard Analysis Critical Control Points) 11–12, 16, 30, 34, 38, 42–53, 58, 67–71, 80, 81, 86, 92, 95, 109, 112, 115–119, 123–125, 129, 130, 139–143, 148, 154, 158–166, 169–177 Mandatory vs. voluntary HACCP 81, 92, 112, 125, 163, 176 Performance-based vs. process-based HACCP 163, 176 Specific vs. generic HACCP 163, 177 see also Meat Safety Quality Assurance (MSQA) HACCP Alliance see International Meat and Poultry HACCP Alliance Harmonization of food safety measures 17, 27, 32, 47, 83, 86, 92, 104 Health Canada (HC) 64–67 Voluntary Code of Practice (VCP) 65–66 Henson, S. 9, 10, 13, 94, 95, 154 Hobbs, J. 9, 94, 96, 154 Hooker, N. 9, 11, 18, 20, 154, 163, 165 Hudson Meats incident 30, 110, 150, 160, 169 Hygiene Assessment System, UK 97, 179 Hygiene of Foodstuffs Directive see EU Directives

Identification, cattle 80, 85–86, 91, 98–100, 134 Import Primary Contacts (IPC), Canada 74 Industrialization of agriculture 146 Institutional arrangements 10–12, 158–165, 174–178 Australia 114–142 governmental 114–132 non-governmental 132–142

194

Index

Institutional arrangements continued Canada 58–81 governmental 58–77 non-governmental 78–81 international 17–26 analysis of 24–26 United Kingdom 93–105 governmental 93–100 non-governmental 101–105 United States 32–52 governmental 32–49 non-governmental 49–52 Institutional inertia 5, 166 Integrated Food Safety Program (IFSP), Canada 79 Integrated Inspection System, Canada 76 Interdepartmental Committee on Food Regulation (ICFR) 60 International Meat and Poultry HACCP Alliance 51–52 International Office of Epizootics 19 International Plant Protection Convention 19 Irradiation of beef products 16, 49, 51 ISO 95, 124

Jack-in-the-Box incident 127, 172–173 James, P. 97, 98 Joint Accreditation Services of Australia and New Zealand (JASANZ), Australia 120, 140, 143 Joint Institute for Food Safety (JIFSAN), US 47

Kerr, W. 94 Kramer, C. 33

Labelling, beef 20, 21, 22, 38, 64, 67, 68, 73, 74, 79, 87, 98, 100, 102, 177 Latent concern 89–90

Mahe, L. 4 Majewski, C. 11 Mark of inspection (USDA) see Grant of Inspection Market failure 4, 5, 48 Marketlink, Australia 135–138 McCutcheon, J. 11 McMullen, J. 146, 148 Meat and Livestock Australia (MLA) 136, 138 Meat and Livestock Commission, UK 89, 101–103

Meat Hygiene Service (MHS), UK 85, 92, 96–97, 98, 101, 102, 178 Meat inspection ante-mortem 42, 69, 85, 96, 102 in Canada 59, 69–73 enforcement of regulations 72–73 of imports 73–74 post-mortem 41, 42, 44, 58, 69–71, 85, 96, 102, 122 Meat inspector unions 53, 116, 125, 153, 171 Meat Safety Enhancement Programme (MSEP), Australia 109, 111, 122, 125, 126 Meat Safety Quality Assurance (MSQA), Australia 117, 122–124 Meat Standards Australia (MSA) 138–140 Media, food safety and the 10, 16, 30, 33, 56, 57, 87, 92, 113, 150, 165 MEGAREG, US 31, 34–36, 40, 42–48, 52, 58, 81, 112, 169, 176 Megatrends, market 145, 146, 148, 168 Meta-rules 6, 10, 145, 151–158, 166–168, 171–173, 178 Microbial contamination 22, 31, 33, 34, 35, 36, 39, 40, 50, 80 Microbiological testing 115, 116, 123 Ministry of Agriculture, Fisheries and Food (MAFF), UK 2, 93, 96–100, 105, 153 Model Food Act, Australia 128–131 Mutual recognition 20, 25, 28, 51, 84, 115, 141 see also Equivalence Mutual Recognition Agreement (MRA) 20, 84, 141

National Audit Program (NAP), Canada 74 National Beef Identification System (NBIS), Canada 80 National Cattlemen’s Beef Association (NCBA), US 49–50 National Classification Framework (NCF), Australia 141–142 National Domestic Standard (NDS), Canada 61 National Food Hygiene Standard (NFHS), Australia 129, 130, 141 National Food Safety Initiative (NFSI), US 35–36 National Livestock Identification Scheme, Australia 132, 134, 135, 177 National Meat Association (NMA), US 50

Index National Meat Code, Canada 63 National Safe Food System, Australia 127, 129–130, 141 National Vendor Declaration Program, Australia 110, 132–134 see also Cattle passports Neville-Rolfe, L. 93 New Agriculture, The 146 Nielson Task Force (on Program Review) Report (1985), Canada 60 Non-tariff barriers (NTBs) to trade 17, 18 North, D. 4, 5 Northen, J. 94 North-West Project, Canada 80 Nutrition labelling 67

Office of Food Inspection Systems (OFIS), Canada 62, 63 Office of Food Safety, Australia 132 Office of Management and Budget (OMB), US 48–49 Office of Public Health and Safety (OPHS), US 39–40 Official Control of Foodstuffs see EU Directives Optimal food safety system 2, 3, 8, 12, 25, 143, 150, 166–168, 171, 172, 174 Organoleptic inspection 36, 42, 44, 69, 116, 117, 159, 160 Over 30 months (OTM) scheme, UK 91 Own-label (own-branded) products 83, 88–89, 95

PACCP (Palatability Assured Critical Control Points) 139, 140 Partnership for Food Safety Education, US 35, 49 Pathogen Reduction Rule of 1996, US 42 Pennington, H. 92 Political Equilibrium Model (PEM) 8, 10, 151–153, 158, 165, 171, 172, 180 Post-mortem see Meat inspection Prisoners’ dilemma 149 Product Inspection Program (PIP), Canada 73, 74 Product Liability Directive see EU Directives Production and processing methods (PPMs) 11, 18, 20, 139, 154 Project 2 see Meat Safety Enhancement Programme Pure Food Act of 1965, US 33

195

Quality assurance schemes 16, 40, 50, 100, 105 Quality Food Australia (QFA) 142 Quality Starts Here, Canadian Cattlemen’s Association (CCA) 79–80

Rational Actor Model (RAM) 8, 151–153, 156, 158, 171, 172, 180 Registration and Identification of Livestock Directive see EU Directives Regulation public (legal) 10, 75, 106, 151, 156–157, 160, 164 private (market) 10, 30, 75, 106, 129, 151, 156–158, 160, 164, 169, 170, 176 Residue Management Group, Australia 110, 126, 127 see also Safemeat Risk analysis (framework) 11, 16, 19, 32–38, 52, 57, 62–67, 76, 158–165, 174 assessment 11, 19, 23, 25, 26, 33, 34, 35, 36, 37, 38, 39, 40, 41, 47, 49, 50, 51, 58, 62–65, 76, 150, 151, 158–161, 164, 174, 181 communication 11, 35, 36, 37, 38, 40, 46, 49–51, 58, 62–67, 158, 165, 174, 178 management 11, 32–43, 45–47, 49, 51, 58, 62–67, 76, 77, 86, 95, 115, 133, 158, 160, 162, 163, 174–177, 182 Risk profile 65, 66, 72, 74 Risks, real (actual) and perceived 5, 10, 16, 37, 46, 155, 157, 160–162, 165, 174, 178, 181 Role of government 1, 2, 11, 31, 53, 62, 78, 105, 175

Safe Food Healthy Families program, US 36 Safe Food New South Wales 131 Safemeat 110, 114, 126, 127 Salmonella 29, 30, 41, 43, 44, 88, 92, 110, 112 Scotch Quality Beef and Lamb Association (SQBLA), UK 101 see also Equivalence Single Food Act, Canada 75–76 Socio-economic objective 6, 8, 12, 25, 145, 151, 156, 166, 174–177 Special interest groups 1, 18, 25, 152, 154

196 Species substitution scandal 109 Specified Bovine Material (SBM) 91, 97 Spriggs, J. 96, 153 SPS (Sanitary and Phytosanitary) Agreement see WTO (World Trade Organization) Standard Operating Procedures for Sanitation (SOPs) 43 Standing Committee on Agriculture and Resource Management (SCARM) Australia 115 Supermarket to Asia (STA), Australia 140–141 Supermarkets and food safety 88–89, 90, 104, 106, 113, 136, 141, 170

TBT (Technical Barriers to Trade) Agreement see WTO (World Trade Organization) Third-party audits 119–122, 126 Traceback and traceability 16, 34, 70, 79, 80, 83, 101, 103, 132–135, 140, 154, 172, 177 Traill, B. 4 Transparency 10, 20, 64, 137, 158, 165, 178, 180

Unnevehr, L. 8, 11

Index US Department of Agriculture (USDA) 39 Evaluation and Enforcement Division (EED) 44 US Department of Agriculture Reorganization Act (1994) 33 US Meat Exporters Federation (USMEF) 50 User pay see Fees, inspection and audit

Victorian Meat Authority (VMA) 119–122

Westgren, R. 9, 156 White Paper on Food Safety, EU 83, 85, 87, 180–181 Wholesome Meat Act (1967), US 38 Wotecki, C. 29, 33 WTO (World Trade Organization) 15, 17–20, 23, 24, 26, 41, 108, 142, 149, 168 Agreement on Agriculture (AoA) 17, 18 SPS (Sanitary and Phytosanitary) Agreement 15, 17–21, 23, 24–26, 40, 41, 108, 110–112, 123, 125, 149, 168 TBT (Technical Barriers to Trade) Agreement 15, 17–21, 23, 24–25, 149, 168

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