Dynamics of EU food safety certification: a survival analysis of firm decisions

Ragasa, Catherine; Thornsbury, Suzanne; Joshi, Satish

doi:10.1186/s40100-017-0080-2

Agricultural and Food Economics

Table 1 Explanatory variables used in the logit and survival analyses

From: Dynamics of EU food safety certification: a survival analysis of firm decisions

^aThe adjustment to three-fourth of the minimum wage reflects the fact that minimum wages are not actually followed in the Philippines, as in most developing countries based on the personal communication with J. Price Gittinger on November 15, 2006 during the “Workshop on Cost-Benefit Analysis of Agricultural Projects,” World Bank, Washington, DC. The minimum wage rate is from Philippine Department of Labor and Employment (DOLE) and National Statistics Office (NSO)
^bRates of economic depreciation per asset class was adopted from Hulten and Wykoff (1981)

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Variable	Proxy	Definition	Hypothesis for LM	Hypothesis for SA
Incentives
Output price level (P _Y)	price	Average price of products sold. Price measured as value of exports divided by the volume (US$/kg)	The higher the price level, the higher the incentive to adopt and continue HACCP	The higher the price level, the higher the incentive for earlier initial adoption and decertification at a later period.
Output price differentials (P _S)	pdeuus	Difference in export price between EU and the USA as received by the processors. Price measured as value of exports divided by the volume (US$/kg)	The higher the price differential between EU and the US markets, the higher the incentive to adopt and continue HACCP.	The higher the price differential between EU and the USA, the higher the incentive for earlier initial adoption and decertification at a later period.
	pdeuoth	Difference in export price between EU and other markets as received by the processors. Other markets include the local Philippine markets and other importing countries (aside from EU and the USA). Price measured as value of exports divided by the volume (US$/kg)	The higher the price differentials between EU and other markets, the higher the incentive to adopt and continue HACCP.	The higher the price differentials between EU and other markets, the higher the incentive for earlier initial adoption and for decertification at a later period.
Input price (W)	P _L	Three-fourths of the minimum wage rate by region (US$/day). The adjusted minimum wage reflects the variability of costs of goods across regions. Location can reflect the differences in the cost of factors of production including labor and other inputs needed for HACCP.^a	The higher the wage, the higher will be the cost to hire more labor as usually needed for HACCP system adoption. Thus, higher wage rates faced by firms would translate to lower incentive to adopt and continue HACCP.	The higher the wage, the higher will be the cost to hire more labor as usually needed for HACCP system adoption. Thus, higher wage rates faced by firms would translate to lower incentive for earlier initial adoption and likely earlier decertification.
	P _M	Weighted average of the prices of fish/seafood raw materials (US$/kg)	Effect is ambiguous. The higher the price of materials implies higher costs, thus lower the incentive to initially adopt and continue HACCP. On the other hand, higher price implies higher product value, thus higher incentive to initially adopt and continue HACCP.	Effect is ambiguous. The higher the price of materials implies higher costs, thus lower the incentive for earlier initial adoption and likely earlier decertification. On the other hand, higher price implies higher product value, thus higher incentive for earlier initial adoption and decertification at a later period.
	P _K	Weighted average of the tax-adjusted interest and dividend (as a ratio of the long-term debt and equity) plus the weighted economic depreciation rate of fixed assets (US$/unit of capital)^b	The higher the price of interest and depreciation costs, the lower the incentive to adopt and continue HACCP.	The higher the price of interest and depreciation costs, the lower the incentive for earlier initial adoption and likely earlier decertification.
Market diversification	nmarket	Number of markets, in terms of country of product destination, the firm has	The greater the market diversification, the less the incentive to adopt and continue HACCP. Greater diversification in markets, in terms of country of destinations, will provide the firms with flexibility to continue business even without the HACCP system required by some markets.	The greater the market diversification, the less the incentive for earlier initial adoption and likely earlier decertification.
Product diversification	nform	Number of distinct product forms in the production line. For instance, frozen shrimp is distinct from frozen octopus or frozen deboned milkfish.	The more diversified the firms is in terms of products, the lower their incentive to adoption and continue HACCP because: (i) it is harder to control for cross contamination due to multiple product lines and (ii) greater diversification in products would allow the firms flexibility to continue business even without the HACCP system required by some markets.	The more diversified the firms is in terms of products, the lower their incentive for earlier initial adoption and likely earlier decertification because: (i) it is harder to control for cross contamination due to multiple product lines and (ii) greater diversification in products would allow the firms flexibility to continue business even without the HACCP system required by some markets.
Capacity
Access to capital	credit (=0, 1)	Dummies for reported difficulty in accessing credit by firms (1 = difficult; 0 = not difficult)	Firms that experience difficulty in accessing credit (higher value for credit) are less likely to adopt and continue HACCP.	Firms that experience difficulty in accessing credit (higher value for credit) are less likely for earlier initial adoption and likely earlier decertification
Years in business	yrbus	Number of years in business, which represents length of experience in terms of dealing with buyer and negotiating with input suppliers and it represents the period to develop trust and long-term relationship with buyers.	Effect is ambiguous. The longer the years in business, the higher the human and social capacity to adopt and continue HACCP. On the other hand, the longer years in business, the less need for HACCP.	Effect is ambiguous. The longer the years in business, the higher the human and social capacity for earlier initial adoption and decertification at a later period. On the other hand, the longer years in business, the less need for HACCP, and thus less likely for earlier initial adoption and likely earlier decertification.
Number of association memberships	member	Number of producer, processor or exporter associations of which the respondents are a member	The more associations in which a firm is a member, the more support it gets, and thus the more capacity it has to adopt and continue HACCP.	The more associations in which a firm is a member the more support it gets, and thus the more capacity it has for earlier initial adoption and decertification at a later period.
Involvement in association	active (0, 1)	Dummy representing active membership of respondents in associations. “Being active” means actively joining the activities of the associations and/or actively seeking advice, assistance, or support from these associations	It is not enough to be a member of association. In some cases, “being active” in these associations is what adds to the capacity of firms to adopt and continue HACCP. If a firm is active in the association, the more likely that it will adopt and continue HACCP.	It is not enough to be a member of association. In some cases, “being active” in these associations is what adds to the capacity of firms to adopt HACCP systems. If a firm is active in the association, the more likely for earlier initial adoption and decertification at a later period.
Physical capacity	age	Age of plant facility	The older the plant, the less physical capacity to adopt and continue HACCP considering the amount of money required for renovation or building a new facility needed for HACCP adoption.	The older the plant, the less physical capacity for earlier initial adoption and likely earlier decertification. This is considering the amount of money required for renovation or building a new facility needed for HACCP adoption.
Size of production (Y)	Y	Volume of production (in tons), average for past 3 years	The higher the volume of production, the greater the capacity to adopt and continue HACCP as firms will be able to distribute the potentially large capital investment across their products.	The higher the volume of production, the greater the capacity for earlier initial adoption and decertification at a later period. This is because firms will be able to distribute the potentially large capital investment across their products.