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Abstract
The goal of this paper is to assess the effect of regulatory burdens in the European dairy
industry on its competitiveness. A theoretical foundation is provided by transaction cost
economics and total quality management insights. The effects of legislation on administrative
requirements and competitiveness are supposed to be mediated by impacts on innovativeness,
company strategy, food safety system availability, as well as the available information &
communication capabilities. We will connect to previous research (Wijnands et al., 2007)
and the findings therein. Four sub-questions are addressed:
• what is the relationship between administrative burdens, innovation and competitiveness?
• what is the relationship between administrative burdens, food safety & quality system
deployment and competitiveness?
• what is the relationship between administrative burdens, food labelling requirements and
competitiveness?
• what is the relationship between administrative burdens, supply chain transparency and
competitiveness?
In addition to the theoretical framework presented earlier in Bremmers et al., 2008, this paper
contains the first results of a survey in the European dairy industry. They are combined with
the proceeds from a literature search. The results show that (Q1) especially product
innovation is negatively impacted by administrative burdens. Food safety and quality systems
(Q2) serve to provide a level playing field in Europe. They would be installed also if no legal
requirements would enforce them, because clients ask for it, so that administrative burdens
could easily be attributed to business strategy rather than legal obligations. To reduce
administrative burdens, we advice to integrate food safety and quality requirements is
necessary. It would reduce monitoring and reporting costs, both for private as well as public
parties. Food labeling (Q3) (a ‘made in Europe’ origin marking) could work contraproductive
with respect to the competitive position of dairy firms and will have an increase
of administrative burdens as a net-effect. And last but not least (Q4), increased chain
transparency (mentioning the name of intermediary producers on the end-product package)
will accelerate administrative burdens, but will only be beneficial for SMEs with a
differentiated product. Commodity-producers in the dairy industry which only follow a cost
strategy will gradually merge and/or disappear.