Export of Horticultural Products from India: Economic Impact of Cost of Compliance for Food Safety Measures

Abstract

Food standards are expected to acquire greater importance with increasing concerns on food safety – on breakout of diseases on one hand, and growing consumer demand for products which are healthy, on the other. Compliance with international food standards is a pre-requisite to gain a higher share of world trade. The analysis was carried out on the impact of cost of compliance with food safety measures by exporters of fresh and processed fruits and vegetables in India with the help of net social indicators, by using Tsakok quantitative magnitude. The study revealed that the net social gain to the society is positive in case of fresh fruits (Rs 1593.62 crore) and vegetables (Rs 1476.94 crore). It is also interesting to note that net social loss was Rs 24 crore per year, which means that the export of processed products with cost compliance led to importing countries registering a social gain at India’s cost. It was found that the compliance to food safety measures is a costly proposition and the small processing and exporting units in India are particularly affected because of high cost of compliance per kg during pre-export processing. This has also impacted the export competitiveness of products adversely. The study concluded that the compliance to food safety measures is a costly proposition in India though it has to be complied with to promote exports.