Food Policy and The Food Standards Agency

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Political Economy and The Food Standards Agency:  Stages in Development (fro1997-1998)

 

Firstly, reasons were put forward to justify the formation of The Agency (Lacey 1991).  The economic argument for a food standards department is that it would save money elsewhere. It seems self-evident that "prevention is cheap" (Lang 1997) yet there are difficulties with this concept. For example, the level of savings made by A Food Standards Agency is difficult to measure. To what extent could the current, food poisoning, bill be reduced?  Would the reduction in this cost be sufficient to justify extra investment in food standards? However, commentators (Daily Express 1998) suggest that official predictions of food poisoning tend to under-estimate the level of exposure implying that investment in prevention may offer a greater return than first thought. 

 

Secondly, debate now centres on the funding of The Agency (Sunday Times 18/10/98). This study will focus mainly on this second issue of funding.  The debate has largely moved on from whether A Food Standards Agency needs to be established to who pays and how much? If or when The Agency is set up; the debate will progress to a discussion of the efficiency in the deployment of resources. It is not always the case that food standards need more resources. Resources could be used more efficiently; for example in the improved training of enforcement officers. Long term improvements might be made by thinking in terms of effectiveness rather than efficiency. In other words, to consider animal welfare as well as simple payment schemes.  Effectiveness could be improved by changing the way farmers are paid.  Farmers are paid by weight. Therefore, cattle are presented for slaughter with a full gut so that they are heavier. This increases the risk of contamination from E-Coli.  For resources to be used more effectively farmers could be paid using a combination of weight and quality. Quality could involve the, cleanliness of the animal (SuperMarketing 14/3/97).

 

The Political Economy of The Food Standards Agency

 

Perhaps, it is not possible to take party politics out the debate on food policy. This is because on issues, such as BSE, scientific evidence is inconclusive and expert opinion is in disagreement (Lang et. at. 1996:5). Political decisions have to be made; science does not necessarily direct what action should be taken.  There is an intermediate stage between science and resource allocation - this is political decision-making. 

 

Party politics can be seen in a narrow sense as "manoeuvering between political parties" (Singleton and Hoyden 1987:217). But politics should not be taken out of food policy. The term 'politics' is used in the more general sense as the distribution of costs and benefits within a community (Singleton and Hoyden 1987:217).

 

Problems in politics or policy may be desire to make cheap produce; and so achieve savings for the consumer.  The drawback is that we have not become aware, until recently, of the negative side effects following in the wake of these benefits.  BSE, again provides an example.  It is easy to overlook the negative side of the activity.  Costs must be distributed as well as benefits (Singleton and Hovden 1987:162).  To stop the negative effects you need to introduce costs i.e.   preventative measures, throughout the process.  Consequently, hard choices have to be made over the distribution of resources. "There is really only one important question in political economy. If elected, whose incomes do you and your party plan to cut in the process of solving the economic problems facing us?" (Thurow 1980:214). 

 

This is a question which has yet to be answered by the present government; in the context of the Food Standards Agency.  Thurow suggests that the economy has "a substantial zero sum element"; that some groups will have to pay a cost. However, the political process seems unable to deal with loss allocation. "When there are large economic losses to be allocated our political process is paralysed" (Thurow 1980:12).  Politicians seem to be too concerned about their opponents scare tactics to offer their own bold ideas.  Consequently, commitments will be postponed, diluted or dropped.  Radical policies which could be used to fund the Food Standards Agency will invariably be overlooked.  "If you know that your opponents are now so desperate they are willing to resort to almost any scare tactic, no matter how extreme, you inevitably risk becoming paralysed" (Harris 1996); and with political stasis comes economic stasis (Thurow 1980:12). Not surprisingly, the contribution of economics, to the establishment of A Food Standards Agency, has been weak!  However, if this economic paralysis continues, if loss allocations are not made then "we are simply going to fail" (Thurow 1980:214).  

 

This failure is apparent given the apparent increase in food poisoning (Lacey 1998). "The cost to the economy (of the estimated food poisoning) is put at £743 million a year in lost working hours and medical treatment" (Daily Mail 1998). Nevertheless, there are solutions to our economic problems. We do not live in a world of unsolvable problems (Thurow 1980:10). However, food policy has a common characteristic with other areas of public policy.  Many solutions, in public policy, require that some large group is willing to tolerate a reduction in their welfare. "When the economic pluses and minuses are added up, the pluses usually exceed the minuses, but there are large economic losses (Thurow 1980:10). The example of A Food Standards Agency is indicative.  It could reduce the food poisoning bill significantly outweighing the cost of the agency. Yet the cost of the agency still needs to be funded; and those who fund the agency will suffer economic losses.  Society may be better off, but if you are among these who are worse off (say business or consumers) then the fact that someone else is better off (e.g. The NHS) is of little comfort (Thurow 1980:12). The anticipation of benefits is also relevant to the issue of funding. If consumers or the business community could see an overall net benefit from their losses then they may be willing to incur them. However, it is difficult to identify advantages.

 

"Domestic problems often involve long periods where costs accrue, with the benefits following much later" (Thurow 1980:15).  Consequently, the reality is that decision-making follows a continuous process of satisficing rather than the unequivocal choice of direction (Singleton and Hoyden 1987:217). The notion of satisficing, as a food and health decision, is producing a satisfactory rather than an optimal solution.  For example, "firefighting" in the NHS whereby adequate resources are provided for dealing with health problems rather than investing in prevention in the first instance. The history of the National Health Service can be seen in this context; as a conflict between those who have wanted to clean up the environment, a preventative measure, and those who believe in high technology cures (Radio 4). Under the NHS the cure approach has predominated. This has implications for the funding of A Food Standards Agency. Guidelines in public policy are largely based on of decision-making (Singleton  and Hoyden 1987:163).  So if the previous emphasis was on cures then there is unlikely to be a large shift in favour of prevention. It would be difficult for the FSA to be funded by cutting resources from the health care budget.

 

The Food Standards Agency could, though, make a contribution to the perceived efficiency of The National Health service. Arguably, the F.S.A. could help reduce serious illness such as C D or E-Coli; consequently reducing NHS costs. This would help the NHS co pare more favourably with private sector healthcare which tends to "cherrypick" and will not pick up the bill for terminal illness.

 

The Funding of The Food Standards Agency

 

Business has criticised the white paper as they would prefer not to fund it (V. Saint p.8). This has some sense; the agency must be seen to be independent of producers and retailers. Second, it is alleged that business funding would be wasteful with license fees being used to fund the bureaucracy (Financial Times -1511/98). Another alternative would be to fund the Food Standards Agency through taxation as stated by Edwina Currie (Channel 4 News 18/11/98). However, increasing income tax would be difficult given the experience of The General Election of 1992. Labour's proposed tax increase was "rejected not merely by the better off but also by those on middle and lower incomes who saw it as a cap on their aspirations" (Lansley 1994). The F.S.A. could be funded through VAT on food but this would not be politically feasible. The Labour Government limited its options by campaigning on tax; arguing that a future Conservative Government would put VAT on food.  It helped create public opposition to the plan thus making it more difficult for the proposed FSA from being funded by VAT on food. More appropriate might be for the FSA to extract money indirectly; like the NHS plans to do with motor insurers having to pay for the health cost of car accidents (Observer 22/11/98).

 

The proposed scope of The Agency has implications for funding.  The business lobby argues consumer education is needed to reduce food poisoning (The Grocer 31/1 0/98).  However, consumer critics suggest that "it is no good blaming whoever cooks the food. The problem is at source on the farm".  Also, it is implied that "the consumer has been looked at as the last line of defence (often) the only fine of defence" (Independent 16/8/97). The Consumer's Association perceives food safety as a problem, across the whole of the system of provision. If this proposition is accepted then the level of funding will need to be greater than if the problem is mainly left to consumer education.       Jeff Rooker implies that there is a consumer willingness to pay for improvements in food safety. He suggests that "people want safe food above all else" (Independent 16/8/1997). The difficulty is that consumers may already be paying for food standards through supermarket prices.  Perhaps, supermarket standards are already sufficient and that The Food Safety Agency should concentrate on overseeing the independent sector of the grocery trade (Independent 17/10/97). This would imply less funding for The Agency.  It would also be viable given a lower willingness to pay.

 

However, perhaps the problem of funding the agency is better understood in the context of a broader problem or contradiction.  Swinbank suggested that food safety is likely to be an income-elastic good, in other words, as incomes increase the demand for food safety is likely to rise (Swinbank 1993:86). However, in affluent societies there is suggested to be a movement away physiological survival needs such as food to material desires and wants e.g. designer clothing (Lansley 1994:21). Thus, the demand for food safety may be being offset by the demand for frivolous consumption. The problem is that this country tends to concentrate too much on esteem needs at the expense of physiological ones. Consequently, reducing consumer's willingness to pay for increases in food safety.

 

The apparent delay in the FSA is explained by "a dispute between the Treasury and The Ministry of Agriculture over the funding of the agency. The Treasury is pressing for £100m annual running costs of the agency to be met by a £100 levy on shops and restaurants, but the ministry has argued for it to paid out of general taxation" (Independent 25/11/98). Yet this dispute may be resolved through an indirect source of funding which would need to be given consideration.  Since the funding issue has not been clarified then it would appear wise to delay the introduction of The FSA; with the possibility of learning more by deferring decisions (Johansson 1991:145). However, problems such as CJD and E-Coli could emerge again in the public's perceptions making calls for The F.S.A-more vigorous.

 

The original intention, for the FSA, was to go beyond safety issues and to include dietary education aswell (Financial Times 11/9/97).  Although this idea seems to have been dropped it does have implications for resource allocation. James suggested that "the economic cost of diet based diseases is three to four times that of all food scares, including BSE" (Financial Times 11/9/97). Therefore, it may be better to spend money on the Department of Health to encourage healthier lifestyles rather than food standards. Alternatively, if an investment is going to be made in food safety then an equivalent amount of money could go into preventative health.

 

It is argued that safety and hygiene requirements must be given consideration which is proportionate to their need" (V. Saint p.2).  However, it should be recognised that it is difficult to match resources to needs. It is difficult to handle "risk problems where the probability for the relevant event approaches zero while the consequences approach infinity" (Singleton and Hoyden 1987:5).  One of the lessons of the BSE affair is that there is a need for greater emphasis on prevention. It was thought that the risk to human health, from BSE, ended in 1989. However, this view looks increasingly difficult to justify (Observer 22/11/98). Consequently, increasing the relevance of prevention and investing more than what is 'proportionate to need'.

 

References

 

Daily Mail, 19/11/98

Financial Times 11/1/1997

Financial Times 15/1/98

Grocer 31/10/98

Harris, R. , Sunday Times 24/11/96

Independent, 16/8/97

Independent, 25/11/98

Johansson,P.O.,(1991), An Introduction to modern welfare economics, Cambridge, Cambridge University Press

Lacey R, (1991), Unfit for Human Consumption, Food in Crisis - The consequences of putting profit before safety

Lacey R., Radio Five Live, 12.30pm, 19/11/98

Lang T, 26/9/97, QMW Public Policy Seminars, New government policy on a healthy society - Tackling challenges of 

health, food and nutrition

Lang T., Millstone E, Raven, H., Rayner, M. (1996), Modernising UK food

policy: The case of reforming the Ministry of Agriculture, Fisheries and Food,

Centre for Food Policy: Thames Valley University, Discussion Paper 1

Lansley S., (1994), After The Gold Rush: The Trouble with Affluence:"Consumer Capitalism" and the Way Forward, London, Century Business Books

Singleton W. and Hoyden J. Eds, (1987), Risk and Decisions, Chichester, John Wiley and Sons

SuperMarketing, 14/3/97

Radio 4, 2/7/98, 20-00, Discussion on the 50th Anniversary of the NHS.

Sunday Times 18/10/98

Swinbank A. (1993) The Economics of Food Safety, Food Policy

Thurow L., (1980), The Zero-Sum Society, United States, Basic Books


Economics and its Relevance to the Debate on Food Standards: A Discussion from 1998


The Food Standards Agency White Paper (1998) tends to overlook economics and perhaps the funding problems can be traced back to this neglect. In particular, The White Paper does not seem to address the issue of paying for public goods. It is difficult to value public goods, such as food standards, since they have to be offered for free. Public goods are nonexclusive; everyone is entitled to them; they cannot be withheld from anyone once they have been supplied. To elaborate, they are provided across the whole population so that one person's consumption does not stop another person's usage. If a public good is available for one it is offered to all and everyone can benefit without reducing its value to others. There is a strong incentive for consumers to undervalue their demand for the good as this will indicate that they want to pay less. Consequently, voters underestimate their willingness to pay. As people can benefit without paying directly then they are getting a free ride because the benefits are socialised white the costs are privatised. That is, society receives the benefits while the taxpayer pays.

 

Taxation is seen as the only method for paying for public goods. However, it is unclear how much taxation should be paid for food standards. Yet, this creates problems since it is unclear what value individuals place on food standards. Since policy makers cannot estimate this value then they are unable to construct a valid demand curve. Policymakers do not have market signals so it is difficult for efficient choices to be made. In a market for private goods you can find out how much people want something from their willingness to pay for it. However, elections which determine the provision of public goods do not give clear signals to policymakers. You can only learn how many people want something; not the strength of their feeling.  Consequently, some assessment is needed of strength of feeling, that is, how much people are willing to pay for food standards. This is the objective of the Contingent Valuation Method.  Apart from the "free riders" mentioned earlier there is also what might be called "forced riders". An individual paying a standard rate of tax might feel overcharged. This is because public goods are provided in single quantities and at constant tax rates. Therefore some people receive higher standards than they want. The electorate's dislike of "forced riding", as well as "free riding", makes public goods difficult to fund. Perhaps, this explains why politically simpler alternatives have been chosen such as the greater use of private provision.

 

Why politics is needed in a study on food standards

 

It is difficult to apply principles of market pricing to public goods. It is suggested that people could be charged according to the marginal value that they place on varying levels of provision. But for this governments would have to know the demand curve of every individual. However, individuals demand curves are not observable. Theories which attempt to apply market pricing to the provision of public goods are fraught with difficulty. The complexity remains in determining how to pay for public goods without reducing social welfare (Beyond Politics p.11)

 

The discussion on food standard provision also needs to consider value judgments which are made about economic issues.  Whether, a particular tax is just, e.g. the extent of the levy on supermarkets or independent stores depends on the criteria we employ in making such judgments. There is no widespread agreement on the appropriate criteria. It should be recognised that economics needs political decision-making to resolve conflicts over values.

 

It should be recognised that economics cannot be value free. For example, as John Kenneth Galbraith puts it "monetary policy is not socially neutral". For example, higher interest rates suit those who have money to lend" (p.63 Douthwaite 1992). The specialisation that has separated the study of politics and economics disguises the linkage between the two disciplines. It should be remembered that 100 years ago the two subjects were studied together as political economy.

 

It has to be recognised that there is a conflict in policy-making. There is a demand for more information and analysis in an attempt to produce rational decisions. However, voters want to be able to tell their representatives their opinions on various issues even if as ordinary citizens they do not qualify as experts on the issues. The right policies are those which are not decided by experts but those which emerge from right processes and right processes are those where citizens choose for themselves, no matter how foolishly.  People want decisions to be well analysed. However, they also want decisions to be made in a democratic way which means that it will be political. Thus, there is a contradiction on the one hand people want policy making to be scientific yet on the other hand they want it to be political. To resolve this contradiction; policy makers should use the advice of experts but should not "abdicate their political functions to them" (Llindblom 1980).

 

Also, it is not possible to leave political decision-making to experts.  Experts could determine decisions; that is how to distribute gains and losses only if there existed some accepted criteria for doing so. Such criteria they lack. Expert analysis cannot find policies which are unequivocally good for all. Philosophical enquiry has failed to produce universally agreed answers to such questions such as - how much should one generation sacrifice for the benefit of another? Therefore experts can only propose their own criteria for solving problems.  Only the political process can resolve the dispute between various experts.  Therefore, expert analysis is not an alternative to politics but it operates as an element of politics. Various participants in political interaction use analysis to improve the way they play their interactive roles. Politicians can use analysis to justify their particular policy line. There is a competition of ideas whereby there is an exchange between partisan policy makers who use partisan analyses. Analysis, in large part, is transformed from an evaluative technique into a method of exerting influence, control and power which we call partisan analysis (Lindblom 1980).

 

Perhaps it is not possible to take party politics out of the debate on food policy. This is because on issues, such as BSE, scientific evidence is inconclusive and expert opinion is in disagreement (Lang et. al. 1996:5). Political decisions have to be made; science does not necessarily direct what action should be taken. There is an intermediate stage between science and resource allocation - this is political decision-making.  Politics cannot be taken out of food policy.


FOOD POLICY AND A FOOD STANDARDS AGENCY

 

This writing summarises a 1997 report by Tim Lang of the Centre for Food Policy, City University  The report was written before the formation of the UK Food Standards Agency in 2001.

 

AIMS

 

To look at the problems facing food policy.

To examine the background to a Food Standards Agency.

 

ISSUES

 

1)         PROBLEMS IN FOOD AND HEALTH

2)         WHAT GUIDES PUBLIC POLICY - IS IT RISK OR TRUST?

3)         GOVERNMENT ACTION: - THE LAW IS STRONG BUT ENFORCEMENT HAS BEEN WEAKER.

4)         PREVENTION IS CHEAP

5)         THERE IS A TENSION BETWEEN PRODUCTION AND CONSUMER INTERESTS

6)         IT WILL TAKE TIME TO GET FOOD POLICY RIGHT.

7)         THE REFORM OF MAFF NEEDS TO BE WIDE RANGING.

8)         REFORM NEEDS TO BE INTERNATIONAL.

9)         WE DON'T JUST NEED TO REFORM THE STATE.  

            WE NEED TO END SO-CALLED  "CHEAP FOOD POLICY"

10)       PROBLEMS IN FOOD AND HEALTH

 

BSE, GM food and The E-coli outbreak, at Wishaw, in Scotland brought food policy to the forefront of media attention.  But battles over food and health have been running since the 1980's. 

The following are RELEVANT:-


1.1)     Food is implicated in the major causes of premature death in the UK e.g. heart disease and cancer.

1.2)     Food poisoning has increased dramatically e.g. salmonella and listeria.

1.3)     Since the early 1980's there has been public concern  about "new" food adulterations like unnecessary food additives and pesticide residues.

1.4)     Trading standards issues give rise to consumer concern - labelling is a problem.

1.5)     The distribution of food raises environmental concern.  Rising food miles (the distance food travels) could have hidden effects e.g. air pollution.

2)         WHAT GUIDES PUBLIC POLICY - IS IT RISK OR TRUST?

2.1)     A conflict looms between a "risk" approach and a "trust" approach. 

 

ISSUE                                 RISK MODEL           TRUST MODEL

 

DECISION MAKING          is top down                2-way

KNOWLEDGE                   quantitative                qualitative

                                           experts                      lay

INFORMATION                  technical                    multi-sourced           

           

2.2)     Science favours the former.  Public opinion tends to fit the latter.  Public policy should be guided by both 

4)        PREVENTION IS CHEAP 

4.1)   Health promotion is poorly funded.  Only £10m is spent on preventing Coronary Heart Disease.  This is equivalent to less than 1% of total NHS spending on CHD.

4.3)     The cost of food poisoning has been estimated at nearly £1bn per year.  The cost of a Food Standards Agency is estimated to be £100m a year.

5)         THERE IS A TENSION BETWEEN PRODUCTION AND CONSUMER INTERESTS 

5.1)     The Ministry of Agriculture has put production interests before other concerns.

5.2)     The food crises of recent years result from post war intensification and production led policies.

5.4)   Consumers want openness from a Food Standards Agency but this could be hindered by food companies arguing for "commercial confidentiality"

5.5)    Compositional standards (e.g. meat in sausages) have been removed in favour of more information to consumers (through labels).  With The Single European Act 1987.

5.6)     There is a conflict between marketing and food education.  At school, children may be taught how to design food wrapping rather than how to cook and handle food.

6)         IT WILL TAKE TIME TO GET FOOD POLICY RIGHT.

6.1)     Food Policy is currently industry driven - research has been privatised, self regulation has been accepted and responsibility, for food safety, has been put on individuals to protect themselves.

7)         THE REFORM OF MAFF NEEDS TO BE WIDE RANGING.

7.1)       To meet the public's concern - more is needed than a management style damage limitation exercise.

7.2)      An agency should discuss nutrition as it is a key factor in premature death.  The separation of nutrition from food standards riskd conflict between the agency and the Department of Health

8)         REFORM NEEDS TO BE INTERNATIONAL.

8.1)      A UK Food Standards Agency would only be effective if there were also changes at an international level.

8.2)     There is a problem of international food standards.  For example, large companies participate at meetings where standards are being set for their products.

8.3)     Public health thinking needs to be put into the CAP (Common Agricultural Policy) reform process.  Current thinking is based on fiscal thinking.

9)        WE DON'T JUST NEED TO REFORM THE STATE.  WE NEED TO END SO-CALLED “CHEAP FOOD POLICY"

10.1)   The food scandals have put food safety on the public policy agenda for the first time since the mid 19th century.  The logic for having one voice for public and environmental health is once more apparent.


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