An Economic Appraisal of the EEC Fruit and Vegetable Grading Legislation

Abstract

The economic impact of the EC fruit and vegetable grading legislation is analysed in relation to market segmentation, price stabilization, new product development, control of imports, transmission of information etc. The purchasing decision at each stage of the main channels in the EC is analysed. It is found that the legislation harms producers, consumers and distributors and that, partly because the legislation has no defined purpose and attempts to achieve vague and conflicting aims, there are few compensating benefits. It prevents aggressive marketing and the development of grades appropriate to the different segments of the market. The grades carry no useful information. If the legislation were enforced, the marketing system would collapse; instead, incomplete enforcement reduces the harm. An exhaustive review of the literature also shows that economists are almost unanimously opposed to this type of grading system. An alternative system which retains any of the benefits of the present system and avoids most of its weaknesses is suggested. This was published in 1981. The EC passed legislation putting this into action in 2009.