This document contains the PowerPoint presentation given by the authors at the 2002 WCC-72 meetings, regarding food safety shocks and their effect on international competitiveness.Food Consumption/Nutrition/Food Safety, International Relations/Trade,

Estrada-Valle, Juan M.

English

Research Papers in Economics

Food Safety Shocks and Their  Food Safety Shocks and Their 
Effect on International  Effect on International 
Competitiveness Competitiveness
A Case Study from the Guatemalan 
Raspberry Industry
Presented at the 2002 WCC-72 Meeting in Las Vegas, NV
Juan M. Estrada-Valle
MICHIGAN STATE UNIVERSITYOutline
 Introduction
 Research questions
 Data and Methods
 Background
 Analysis
 ConclusionsIntroduction
 Globalization of the Agro-food Systems
 Increased risk
 Food safety crises
 Profitability
 Market share
 Crisis prevention vs. crisis managementResearch Questions
 What are the factors currently constraining 
the industry’s competitiveness?
 What actions need to be implemented  in 
order to effectively regain market share?
 What are the lessons learned for agribusiness 
management?Data and Methods
 Preliminary data from a set of case 
studies from Guatemalan horticulture
 Surveys and informal interviews with 
producers, exporters, Importers and retail 
firms (U.S and E.U)
 Porter’s Diamond of National Advantage
 SWOT analysisBackground
 Origin of the industry
 Seasonal complementarities
 Rate of growth
 Market shareThe Cyclospora Issue
 Cyclospora cayetanensis
 Outbreak
 1465 people infected
 20 U.S states and 2 Canadian provincesStrategic Responses
 Supply side
 Model Plan of Excellence
 GAPs, GMPs, SOPs, HACCP, traceability
 PIPAA
 Demand side
 U.S
 Cutback in orders
 Stricter contracts
 E.U
 Private standardsEffect on the Supply Chain
 Compliance costs
 Exit of 93 percent of firms
 Reduction of 79 percent of cultivated area
 Elimination of producer contractsImpact on Demand
U.S Raspberry Supply 1995-2000
(MT)
0
1000
2000
3000
4000
5000
6000
1995 1996 1997 1998 1999 2000
Domestic
Chile
Guatemala
OthersStrengths
 Seasonal complementarities
 Strong network of support industries
 Institutional representativeness
 PIPAA
 Governmental trade policy
 Shared commitment with food safetyWeaknesses
 Lack  of a business strategy at industry-
level
 Poor coordination among firms
 Unwillingness to invest in promotional 
activities
 Strong “internal” rivalry
 Liability insuranceOpportunities
 Increasing demand for food safety 
attributes
 Food safety differentiation
 Joint ventures with US and EU retailers
 Bilateral efforts, private / public sector
 Generic promotionThreats
 Consumer unwillingness to purchase 
Guatemalan raspberries
 Increase of Chilean exports
 Expansion of Mexican raspberry 
production
 Precautionary principle approach (U.S 
retailers) Conclusions
 Vulnerability of the food industry
 Increased consumer awareness
 Need for preventive measures
 Crisis prevention vs. Crisis management
 Rebuilding reputation
 Food safety differentiationConclusions
 Effectiveness of strategic response,
a function of:
 Effectiveness of food safety assurance 
mechanisms
 Aggressive communication strategies (in the 
case of highly publicized crises)
 Strong inter-firm coordination
 Close coordination Public-Private sector

FOOD SAFETY SHOCKS AND THEIR EFFECT ON INTERNATIONAL COMPETITIVENESS: A CASE STUDY FROM THE GUATEMALAN RASPBERRY INDUSTRY

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