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  3. 2021
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  5. Food Quality Inspection, Certification, and Disclosure
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Food Quality Inspection, Certification, and Disclosure

Paper Session

Monday, Jan. 4, 2021 3:45 PM - 5:45 PM (EST)

Hosted By: Agricultural and Applied Economics Association
  • Chair: John Bovay, Virginia Tech

The Producer Response to Eco-Certification: Evidence from the Quality, Quantity, and Consistency of Brazilian Coffee Production

Elinor Benami
,
Virginia Tech
Robert Heilmayr
,
University of California-Santa Barbara

Abstract

Voluntary sustainability standards (VSS) aim to support more socially and environmentally
responsible practices without the need for command-and-control regulations. However, due to
their voluntary nature, VSS must yield clear benefits for producers to encourage their continued
participation. These benefits could include direct incentives in the form of preferential pricing or
more indirect benefits that improve production quality and efficiency. Here we use a detailed
panel of coffee sales between over 500 farms and a major Brazilian coffee cooperative to
estimate responses to Rainforest Alliance certification. We separate the revenue impacts of price
premia from the financial benefits that result from induced changes in production quality,
quantity, and consistency. While previous literature has discussed changes in quality and income
stability as a potential benefit, we examine how VSS measurably alter the primary economic
activity behind the certification: agricultural production.

Moral Hazard under Discrete Information Disclosure: Evidence from Food-Safety Inspections

John Bovay
,
Virginia Tech

Abstract

In various contexts, governments have regulated product quality to alleviate problems of moral
hazard caused by information asymmetry. Here, I provide evidence on the responses of
producers to mandatory disclosure of discrete quality ratings, a type of policy sometimes referred
to as "naming and shaming". I document the effects of mandatory disclosure of discrete quality
ratings on Salmonella test results for the U.S. chicken-slaughter industry in a series of policy
changes over 2006-2015. Overall, the likelihood of carcasses sampling positive for Salmonella
decreased by about half when mandatory disclosure was implemented. But the details of the
program--especially the discrete categorization system and the discrete sampling windows used
throughout all regulatory periods--led to some shirking or moral hazard. The empirical findings
are especially striking when considering the role of private contracts that require food-safety
standards and private incentives to provide safe food.

Monitoring and Enforcement in a Food Safety Context: Evidence from Facility Level Data

Jay Shimshack
,
University of Virginia
Timothy Beatty
,
University of California-Davis

Abstract

TBD

How Big Is the ‘Lemons’ Problem? Historical Evidence from French Wines

Pierre Merel
,
University of California-Davis
Ariel Ortiz Bobea
,
Cornell University
Emmanuel Paroissien
,
French National Institute for Agricultural Research

Abstract

This paper provides empirical evidence on the welfare losses associated with asymmetric
information about product quality in a competitive market. When consumers cannot observe
product characteristics at the time of purchase, atomistic producers have no incentive to supply
costly quality. We compare wine prices across administrative districts around the enactment of
historic regulations aimed at certifying the quality of more than 250 French appellation wines to
identify welfare losses from asymmetric information. We estimate that these losses amount to
more than 7% of total market value, suggesting an important role for credible certification
schemes.
JEL Classifications
  • A1 - General Economics