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

We estimate the cost of compliance with the US Food Safety Modernization Act (FSMA) Produce Safety Rule by commodity and own- and cross-prices elasticities of demand for 18 fruits and 20 vegetables. These are used as inputs in an equilibrium displacement model that simulates the price and welfare effects of the rule. We find that consumer and farm prices increase by 0.55% and 1.69% for fruits and 0.15% and 0.59% for vegetables. Costs associated with implementation are estimated to reduce producer welfare by 0.63% for fruits and 0.51% for vegetables (as a share of revenue). If the rule’s provisions were enacted unilaterally by growers of individual commodities, producer welfare losses would be 0.93% of total revenue for fruits and 0.31% for vegetables.