Price and Welfare Effects of the Food Safety Modernization Act Produce Safety Rule

Implementation of the U.S. Food Safety Modernization Act (FSMA) Produce Safety Rule is ex- pected to cost about 1.1 percent of revenue for covered farms producing raw and minimally pro- cessed fruits and vegetables in the United States. To simulate the price and welfare effects of the rule, we develop an equilibrium displacement model for 18 fruits and 20 vegetable commodities, drawing on recent estimates of the rule's commodity-level cost of compliance. We nd that con- sumer and farm prices increase by 0.49 and 1.46 percent respectively for fruits and 0.14 and 0.55 percent respectively for vegetables. Costs associated with the rule's implementation across these commodities are estimated to reduce producer welfare by 0.86 percent for fruits and 0.59 percent for vegetables and these estimates would not change substantially if only individual commodity groups were to enact the rule's measures unilaterally. We also compare our estimates of the cost to producers of implementing the rules with potential benets to producers from the avoidance of outbreak costs. Acknowledgement :