An economic analysis of institutions ensuring food safety and quality assurance in the Australian beef industry

Consumer demand for reliable product quality and safety is increasing. The expansion of international trade in food brings with it a need for quality assurance that can be widely recognized. One of the world's most efficient beef suppliers, Australia, intends to promote market access not only into domes-tic countries, but also into foreign ones. Australia has been developing farm-to-table food safety systems and quality assurance systems under an export-oriented strategy. Tremendous efforts for quality improvement are now being made by private meathandling companies, and many public agencies, including private/public partnerships, are striving to improve quality assurance. All companies are expected to soon comply completely with food safety and quality assurance standards. The aim of this paper is to examine how institutions work to overcome the problems of ""moral hazard"" and ""adverse selection"" in relation to food safety issues, which can distort the market mechanism as a result of imperfect information. First, the food safety and quality assurance system is overviewed. Second, the institution that encourages companies to pay greater attention to food safety, namely, the MSP (Meat Safety Program) is analyzed by using such paradigms as ""institutional structure-->the behavior of companies with regard to the HACCP (which includes basic standards of food safety) and the MSQA (international safety standards) -->company's utility with numerical examples at each level. And third, other plans designed to ensure food safety and quality assurance are mentioned in comparisons between the Australian and Japanese systems. This study shows how the designated monitoring and incentive systems may be incorporated in the most efficient manner to reward food safety improvements in the asymmetrical information world.