Effect of Food Regulation on the Spanish Food Processing Industry: A Dynamic Productivity Analysis.

Magdalena Kapelko,Alfons Oude Lansink,Spiro E Stefanou,George-John Nychas

doi:10.1371/journal.pone.0128217

Magdalena Kapelko, Alfons Oude Lansink + Show 2 more

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https://doi.org/10.1371/journal.pone.0128217

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Abstract

This article develops the decomposition of the dynamic Luenberger productivity growth indicator into dynamic technical change, dynamic technical inefficiency change and dynamic scale inefficiency change in the dynamic directional distance function context using Data Envelopment Analysis. These results are used to investigate for the Spanish food processing industry the extent to which dynamic productivity growth and its components are affected by the introduction of the General Food Law in 2002 (Regulation (EC) No 178/2002). The empirical application uses panel data of Spanish meat, dairy, and oils and fats industries over the period 1996-2011. The results suggest that in the oils and fats industry the impact of food regulation on dynamic productivity growth is negative initially and then positive over the long run. In contrast, the opposite pattern is observed for the meat and dairy processing industries. The results further imply that firms in the meat processing and oils and fats industries face similar impacts of food safety regulation on dynamic technical change, dynamic inefficiency change and dynamic scale inefficiency change.

Highlights

In the past decade a series of food crises such as Bovine spongiform encephalopathy, Dioxin and foot-and-mouth disease challenged the suitability of current food industry safety schemes
The infeasibilities we encounter in our computations account for 2% of meat processing industry observations, 5.6% for dairy processing industry observations and 10% for oils and fats industry observations
Size does matter in the meat processing industry and the results suggest that dynamic productivity growth, technical change and technical inefficiency change decrease with size

Summary

Introduction

In the past decade a series of food crises such as Bovine spongiform encephalopathy, Dioxin and foot-and-mouth disease challenged the suitability of current food industry safety schemes. The European Union (EU) regulation coined the General Food Law (Regulation (EC) No 178/2002) was announced in January 2002, whose overall intent was to ensure food quality and safety for food stuff intended for human and animal consumption with the aims to protect a) consumers against fraudulent or deceptive commercial practices and b) the health and well-being of animals, plants and the environment [1]. The responsibility for implementing the General Food Law falls on the food operators and activities at the Member State level. Food operators bear responsibility for ensuring traceability of products at all stages of food production, processing and distribution and are required to remove harmful food stuffs.

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