IFC Advisory Services in Europe and Central Asia

IFC Ukraine Food Safety Project

Implementing Food Safety

Management Systems
in Ukrainian Food Processing
Enterprises

A COST-BENEFIT ANALYSIS

IFC Ukraine Food Safety Project contacts:

Ukraine, 04070, Kyiv, 30A Spaska Street,
Podil Plaza, Block 2, 6th floor
Telephone: +38 044 490 6400;
Fax: +38 044 490 6420
ifc.org/Ukraine/FS

In partnership with

Kyiv, 2011
 Implementing Food Safety
Management Systems
in Ukrainian Food Processing
Enterprises

A COST-BENEFIT ANALYSIS

Kyiv, 2011

In partnership with
 Contents
Executive Summary ..........................................................................................................................4

Main Findings .................................................................................................................................... 5

Categories of costs....................................................................................................... 5
Categories of benefits .................................................................................................. 5
Summary.......................................................................................................................7

Lessons learned from international experience ........................................................................8

Implementation of HACCP in Ukrainian enterprises .............................................................. 10

Selected sectors ..........................................................................................................10
Categories of benefits and costs ..................................................................................11
Cost at the enterprise level .......................................................................................... 12
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We Benefits for enterprises ...............................................................................................13
foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private
capital, and providing advisory and risk mitigation services to businesses and governments.
Conclusions ...................................................................................................................................... 14
A cost-benefit analysis “Implementing Food Safety Management Systems in Ukrainian Food Processing Enterprises” has been
produced by IFC through its IFC Ukraine Food Safety Project.
Recommendations for Policymakers ...........................................................................15

The conclusions and judgments contained in this publication should not be attributed to, and do not necessarily represent
the views of, IFC or its Board of Directors or the World Bank or its Executive Directors, the Austrian Ministry of Finance or the Annex I: Cost estimates for Ukrainian enterprises ................................................................. 16
countries they represent. IFC and the World Bank do not guarantee the accuracy of the data in this publication and accept
no responsibility for any consequences of their use. This brochure does not claim to serve as an exhaustive presentation of
the issues it discusses and should not be used as a basis for making commercial decisions. Please approach independent legal
Annex II: References ...................................................................................................................... 19
counsel for expert advice on all legal issues.

The material in this work is protected by copyright. Copying and/or transmitting portions or all of this work may be a violation
of applicable law. IFC encourages dissemination of this publication and hereby grants permission to the user of this work to
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Copyright © 2010 International Finance Corporation

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A Member of the World Bank Group
This brochure is available online at: http://www.ifc.org/Ukraine/FS

In partnership with the Austrian Ministry of Finance (MOF)

External Economic Program
MOF’s external economic program supports the development and transition process in Southeast and East Europe. The
program aims at promoting sustainable investments to support economic growth, create jobs and improve the business
environment. Supporting local and foreign investments helps to improve the livelihood of people and the progress towards
a stable and prospering region. Our goal is to contribute to private sector growth through capacity building, SME support,
facilitation of investments, and building business partnerships between Austrian and local investors.
4 IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 5

Executive Summary Main Findings

Introducing international food safety systems is often considered a necessary step in developing
the agricultural sector and food processing industries. Food safety management systems based on
Hazard Analysis & Critical Control Points (HACCP)1 open up new international markets for high
Categories of costs
value-added food products and increase efficiency of domestic markets.
The costs associated with the implementation of food safety management systems (traditionally
Recognizing the positive impact of food safety enhancements in other developing markets, IFC based on HACCP principles) and operation include the following three categories:
launched the Ukraine Food Safety Project to implement HACCP principles at several pilot 1) Cost of prerequisite programs (e.g. start up and recurring costs of new equipment, building
enterprises in Ukraine and facilitate implementation of HACCP in Ukrainian food processing renovation);
industries overall.
2) HACCP design and implementation (e.g. costs of development of HACCP plan, training
The goal of the project is to increase competitiveness of Ukrainian food producers by improving of personnel, HACCP plan validation);
their food safety management systems. One of the necessary steps in this direction is the provision 3) HACCP recurring/operational costs (e.g. cost of record keeping and verification of
of key decision-makers with hard evidence of cost efficiency of the standard implementation. This HACCP plan, corrective actions).
cost and benefit analysis of HACCP implementation serves this purpose.
An average first year HACCP implementation cost typically depends on the country, industry
The study of costs and benefits associated with the HACCP implementation in food processing and the size of the food producer. In some cases the implementation of HACCP may not always
companies was commissioned to Kyiv School of Economics.2 This report presents results of this be cost-efficient in a short-term perspective. However long-term benefits almost always outweigh
preliminary study in three priority industries - dairy, meat and bakery. installation, operational, and maintenance costs of the system.
This study was initiated with the aim to address the critical lack of knowledge of economic aspects
of food safety among owners and directors in food industry in Ukraine. Moreover, because of
insufficient understanding of cost and benefits there are many myths around systems, based on
HACCP. In particular, in Ukraine there is a widely shared misperception of HACCP as a expensive Categories of benefits
and complicated instrument, even though the Ukrainian Food Safety Law mandates that each food
enterprise must have HACCP system and/or any other food safety management systems in place 1. The HACCP related benefits include the following categories:
(though without specifying enforcement mechanisms for their implementation). • Increase in revenue (due to access to new markets);
This is the first attempt to analyze economic aspects of HACCP in Ukraine; there is practically no • Decrease in overall cost (due to better management, lower product wastage);
specific data available on the company level, as well as no reliable statistics on the aggregated national • Increase in investment attractiveness (due to the above plus better risk management);
level that would help to identify and assess food safety—related expenses and subsequent gains for • Other intangible benefits (increased personnel motivation, better communication).
businesses.
The most important benefit associated with HACCP implementation is access to new retail chains
and supermarkets. Experts state that adoption of the HACCP may double the sales to this segment
of the market.

The benefits for meat industry are expected to be higher due to a better access to international
markets and lower for bakery since this industry is not associated with unsafe food.

1
HACCP (Hazard Analysis and Critical Control Points) – globally recognized food safety management system
build on risk-based approach and potential hazards analysis and prevention along the production process.
2
Principal authors of the report are Denys Nizalov, Academic Director, Kyiv School of Economics, and Vladimir
Dubrovskyi Senior Economist and the Member of Supervisory Board, CASE Ukraine.
6 MAIN FINDINGS IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 7

2. Implementation of modern food safety management systems requires that an enterprise

complies with basic sanitary and hygiene norms and practices – those are called ‘prerequisite Summary
programs’.
• The total cost of development and implementation of the food safety management system
They cover equipment, infrastructure in facilities, personal hygiene rules, water and waste
largely depends on prerequisite conditions. The stronger the food safety culture at the
management etc.3
enterprise, the easier, cheaper and faster it will take to build a full-fledged HACCP system.
Prior to implementing the HACCP food safety management systems, it is key to ensure that a
• Costs associated with development and implementation of the HACCP action plan (incl.
company has all prerequisites in place.
consultancy services, staff training, evaluation of HACCP plan) as well as maintaining
The total costs of prerequisite programs may vary significantly: in some cases the need for investments the HACCP system (costs of record keeping and verification of HACCP plan, corrective
in infrastructure may be rather small – especially if production facilities are newly constructed actions) generally do not represent a significant share in the cost structure of an enterprise.
and appropriately designed. This cost could be minimal if an enterprise already complies with the
national standards and norms (existing sanitary and veterinary regulations). • Ukrainian enterprises are likely to pay less for development and pre-implementation of
food safety management systems as compared to companies in such countries as the United
However, this cost may be much higher if major construction or building remodeling, creation of States.
stationary raw material collecting points, or advanced lab equipment acquisition is necessary.
• Investments in food safety systems usually have a short pay-back period: for instance one to
However, in practice, for companies it is cheaper to pay fines or use unofficial ways of solving two years in the dairy industry, as evidenced by both Ukrainian and international practices.
problems with controlling agencies than to comply with the existing regulations.

3. Based on expert opinion, the expected cost of HACCP development and implementation is
around 50,000 - 70,000 Ukrainian hryvnyas ($6,000 - $8,000).

This cost may be larger if foreign consultants are involved. The expected first year operational cost
is around 50,000 Ukrainian hryvnyas ($6,250). The total cost is expected to be higher for meat
processing industry and lower for bakery, as the latter usually involves less food-related risks and
hazards.

The operational costs tend to decrease over time by approximately ten percent after the first year and,
in some cases, by another five percent after the second year. This decrease is associated with a decline
in the number of the Critical Control Points and the learning effect.

4. Pay-back period may usually takes from one to two years, as evidenced by international practices
of implementing the systems in the dairy industry.

In Ukraine there are cases of companies that experienced even shorter pay-back periods, of about
six months.4

Another important aspect of benefits associated with robust food safety management system in
place is the proven increase in revenues: anecdotal evidence was found in Ukrainian processing
companies that overall growth of sales can range from 15 percent to 25 percent over a two-three
years period.5 As expert discussions revealed, adoption of HACCP in the dairy industry in Ukraine
may double the sales to this segment of the market. Such improvement of business results is possible
due to enhanced cooperation with large retail chains domestically as well as because of expansion to
new international markets.

And of course, potential losses of products that a company may face (be it a recalled batch/lot of
products or termination of lucrative contract with a retailer) because of food safety problems may
be higher than the money the producer would have to pay for implementation of the food safety
management system in total.

3
See, for example, the Recommended International Code of Practice-General Principles of Food Hygiene. Codex
Alimentarius Commission http://www.codexalimentarius.net/web/more_info.jsp?id_sta=23
4
Galfrost case, see IFC brochure “Upgrading food safety in your business: a Win-Win for your bottom line and
your customers” November 2010.
5
Zhitomir Sweets company, Drygalo.
8 IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 9

In contrast, the HACCP implementation and operations come at a relatively low cost. The average
design and implementation cost ranges from $5,500 to about $23,500. The annual operational costs
range from $6,000 to $30,000, which include monitoring, record keeping, and review of records

Lessons learned from

and the HACCP plan. The average total first year cost of HACCP implementation ranges from
about $50,000 to more than $270,000.

However, direct reported cost items severely underestimate the true cost of the HACCP

international experience implementation. It was shown that each dollar of the reported costs is associated with the additional
increase by $1,1 in total production cost for the Philippine seafood producers. Such unaccounted
costs might be due to a loss in overall productivity, stops in production, etc (Ragasa, 2008).

The benefits may be divided into two main groups: quantitative (monetary) and qualitative.

The firms which have adopted the HACCP usually demonstrate better technical efficiency (Nganje
and Mazzocco, 2000). However, this advantage could have existed before (so the firms with better
Issue of costs and benefits of implementation the HACCP-based food safety management systems management appeared to be more prone to implement the HACCP).
at the company level became topical in 1990s-earlier 2000s6 in anticipation of or shortly after the
system became mandatory in most developed countries. The data on the Philippine seafood industry shows that the HACCP-certified firms were able to
access high-end markets (including the European Union) with higher prices (by $1.4 per kilo) and
The primary reason to implement HACCP by business was the legal requirement of the US and to increase exports to different markets by more than four percent.
EU markets.
At the same time, HACCP is credited with reducing product wastage by about 0.2 percent on
In US in 1995, the Food and Drug Administration (FDA) issued regulations (Procedures for the average. There is also found a variation in the level of the benefits across firms of different sizes in the
Safe and Sanitary Processing and Importing of Fish and Fishery Products) that made HACCP Philippine seafood industry.
mandatory for fish and seafood products.

In 2001 FDA issued regulations for mandatory HACCP in juice processing and packaging plants
(HACCP Procedures for the Safe and Sanitary Processing and Importing of Juice: Final Rule).

In 1998, the U.S. Department of Agriculture established HACCP for meat and poultry
processing plants. Most of these establishments were required to start using HACCP by January
1999; very small plants had until January 25, 2000 (The Final Rule on Pathogen Reduction and
Hazard Analysis and Critical Control Point (HACCP) Systems).

HACCP entered to regulations of Europe Community Countries with Council Directive 93/43/
EEC on the Hygiene of Foodstuff in 1993, but implementation of self-control systems based on
HACCP principles in all industries has become mandatory in EU since 2004 after adoption of EU
Regulation 852/2004 on the Hygiene of Foodstuffs.

The largest cost item is related to the implementation of prerequisite programs (renovation and
redesign of production facilities, upgrade in management, sanitation and hygiene practices).

There is a large variation in the cost of prerequisite programs (from $7,300 to more than $250,000).
This variation is related to initial levels of hygiene and sanitation conditions. It is expected that
stricter state controls are associated with lower additional costs for prerequisite programs.

6
Please refer to References to find the list of sources used.
10 IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 11

Categories of benefits and costs

Implementation The costs in general can be put into three main categories:
1. Introduction of pre-requisite programs (start-up costs, variable costs for new equipment,

of HACCP in renovation of premises)

2. Development and implementation of HACCP action plan (costs of developing HACCP
action plan, staff training, evaluation of HACCP plan)

Ukrainian enterprises 3. Maintaining HACCP system (costs of record keeping and verification of HACCP plan,
corrective actions).

Together these categories include 26 most common cost items. More details on the cost items
together with their expert valuation are presented in the Annex.

Selected sectors 1. HACCP related benefits include the following categories: Increase in revenues (access to
new markets, expansion in retail chains)

There were three priority industries identified for the cost-benefit analysis: dairy, meat and bakery 2. Decrease in overall cost (better management, staff motivation and responsibility,
industries. Due to differences in the production process the meat industry is further divided into streamlined production process)
meat production (primarily slaughter houses), meat processing, and poultry. 3. Increased product stability, shelf-life and product characteristics (lower wastage and spoilage
processing)
While considering all five sub-industries, primary attention was paid to the dairy industry at the
stage of model validation and expert assessment. Peculiarities (if any) of HACCP implementation Some of these benefits can be described as non-tangible, i.e. items that do not have clear values or
in meat processing and other sub-industries were considered in comparison with the dairy industry. cannot be easily assessed in monetary terms. In most cases, however, the tangible benefits would
The focus on dairy is driven by the fact that the structure of costs and benefits of the HACCP capture an overall firm-level effect of the HACCP implementation including the effect of non-
implementation is similar among all the sub-industries. This conclusion is based on the reviewed tangible benefits.
literature for different industries and expert discussion.
For example, an increase in product shelf-life and increase in stability of product characteristics
However, the level of vulnerability to safety-related hazards is very different among the sub- would be reflected in an increase in sales. For that reason, non-tangible benefits are not considered
industries. Bakery is considered as low-risk industry because there are less food-born diseases widely separately in the model.
associated with bread than, for example, with milk. Slaughtering is normally not a source of risk in
The assessment of individual cost items was conducted for a representative average size (70-150
Ukraine (unlike the US and some other countries).
employees) dairy plant producing pasteurized milk. All comparisons between dairy and meat
Traditionally, dishes made of raw or semi-raw meat are not popular, and all meat is subject to a processing industries were performed for plants of the same size.7
thermal treatment. Instead, dairy products are especially risky in Ukraine due to the poor quality and
very complicated traceability of the raw materials, which, when coupled with the lack of cold chain
logistics and storage, leads to an extremely low shelf life compared with European dairy products.

Identification of cost and benefit items associated with HACCP implementation in the priority
industries (construction of analytical model) is the first and one of the most important steps in the
cost-benefit analysis. This section of report presents the analytical model that has been constructed
based on the lessons learned from international experience. The model was then validated during a
workshop with experts (as described in the following section of this report).

7
To verify the structure of costs and benefits and to assess their monetary values, an expert workshop was
organized in April 2010. Results of the experts’ assessments are summarized in Annex.
12 IMPLEMENTATION OF HACCP IN UKRAINIAN ENTERPRISES IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 13

Cost at the enterprise level Benefits for enterprises

Assessment of Prerequisite Program Costs The most important benefit associated with HACCP implementation is access to new retail chains
Old Soviet and contemporary Ukrainian sanitary norms are quite stringent. Potentially, it could be and supermarkets. An expert from the dairy industry states that the widespread adoption of HACCP
relatively simple and inexpensive to adopt the HACCP for a plant that already complies with all the could double sales in this market segment. This benefit is stated as a primary reason for adopting
national norms. In particular, if production facilities were designed in a way that minimizes cross- HACCP by domestic enterprises.
contamination. In that case, no major reconstruction is usually needed. Also, experts have mentioned that there is an increasing pressure from the supermarkets regarding
In addition, if a plant complies with General Manufacturing Principles (GMP’s) and/or General adoption of HACCP by their suppliers. The chains of Metro and Fozzy have already started
Hygiene Principles (GHP’s), the costs of prerequisite programs may be relatively small. In practice, demanding HACCP from their suppliers of dairy and meat products. Others are likely to follow
most of the production facilities do not comply with existing norms. It is more economical to pay a soon.
fine (or bribe) than to invest in proper quality control and management. Increases in prices and profitability are often considered as another important motivation for
Similar to other countries, expenses for prerequisite programs is the largest cost item associated with implementing HACCP. Regarding other benefits, they are less important for the dairy industry in
HACCP implementation. The expected total cost for these programs is around 250,000 Ukrainian Ukraine. Access to international markets is thought to be not feasible for domestic dairy industry
hryvnyas ($31,250) for an average dairy processing company. due to a lack of quality raw milk. While for other industries the pull of export markets is among the
most important benefits.
However, this cost may be much higher if major construction or building remodeling, creation of
stationary collecting points, or advanced lab equipment acquisition is necessary. Thus, the costs of Other benefits include decreased frequency of certification, lower insurance cost8, improvement
prerequisite programs in Ukraine are typically closer to those in developed countries (e.g. the US) in control and overall management of production process. Liability for the damage caused by
than in developing countries (e.g. Bangladesh, Philippines). food-borne diseases is not thought to be an important cost/benefit factor in Ukraine. However,
cost savings due to the early detection of unsafe (e.g. contaminated) products can be substantial if
When comparing dairy and meat processing industries, local experts noted that most of the cost compared to the late detection or reclaiming and re-processing.
items are similar in size and frequency between the two industries. Differences were mentioned in the
costs of construction, lab equipment, and cleaning/sanitation equipment, which are more expensive
for the meat processing enterprises. In other industries these costs are expected to be lower.

Costs associated with HACCP development and implementation

Overall, HACCP development and implementation includes a set of low cost activities including,
for example, developing documentation, setting up the HACCP team and conducting regular
meetings, training staff. The expected cost of these activities is around 45-50,000 Ukrainian hryvnyas
($5,600-6,350). This cost may be larger if foreign consultants are involved. The development cost is
not expected to be different among other industries.

Recurring (operational) HACCP costs

Similar to development costs, operational costs are also low. The expected first year operational cost
is around 50,000 Ukrainian hryvnyas ($6,250) and is related primarily to the number of Critical
Control Points (CCPs) that are established according to the HACCP plan.

The operational costs tend to decrease over time by approximately ten percent after the first year and,
in some cases, by another five percent after the second year. This decrease is associated with a decline
in the number of the CCPs and the learning effect. Operational costs are expected to be higher in
the meat processing industry due to a larger number of people that have to be trained.

The overall expected cost of HACCP implementation in Ukraine is similar to other developing
countries and usually is less than in more developed economies like the United States. The largest
component is the cost of prerequisite programs.

8
Food safety standards that significantly exceed government requirements (e.g., IFS, BRC, ISO 22000) can
be a major discount factor when determining the premium price, terms and conditions for product liability
insurance.
14 IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 15

Recommendations
for Policymakers
Conclusions 1. The Government of Ukraine should develop a clear policy to encourage and support the
implementation of internationally recognized food safety management systems at all
Ukrainian food enterprises through various incentives, such as decreasing the frequency
of inspection visits to facilities with HACCP-based system and building consultation
capacities of control authorities to help to introduce best food safety solutions and practices.

2. Structural reform of the inspection system should be based on results of a public-private

dialogue with the food processing industry, consumers, and exporting countries, especially
The study showed that the structure of costs and benefits of the HACCP implementation in the EU.
Ukrainian food processing industries is similar to the structure in other countries. The expected cost
of HACCP implementation in an average milk processing enterprise in Ukraine is around 350,000 3. On the national level health statistics need more detailed breakdown of food-borne diseases
Ukrainian hryvnyas ($ 43,750) during the first year, which is close to the lower part of the range and more efforts to ensure better reporting and monitoring system of food safety issues.
typically spent elsewhere in the world. That will help official control authorities to identify causes of food outbreaks and prevent
them through support and proactive implementation of food safety management systems in
The relatively low cost of HACCP implementation in Ukraine is explained by more stringent
food business operators. .
sanitary norms imposed by the government. As a result, it would be relatively simple and inexpensive
to adopt the HACCP for a plant that already complies with national norms. Unfortunately in
practice, most of the production facilities do not comply with existing norms. It is perceived to be
more economical to pay a fine (or bribe) than to invest in proper quality control and management.

The most important benefit associated with HACCP implementation for the dairy industry is
the access to new retail chains and supermarkets. Other industries may also expect better access to
international markets, although much depends on reform of the food safety control system at the
national level.

A comparison of costs and benefits across dairy, meat and bakery shows that the structure of costs is
similar while the total cost may be higher for meat and lower for bakery. This difference is related to
the number of people to be trained and the scale of prerequisite programs. The benefits are expected
to be higher for the meat and lower for the bakery industry compared to the dairy industry.

A reliable assessment of cost effectiveness of the HACCP implementation in Ukrainian food

processing industries would help managers to justify an adoption of this standard. However, other
stimuli for the HACCP adoption are also available.

Among them is dissemination of the information and an educational campaign among the managers
and owners of food retail companies. Higher awareness of retailers about the benefits of HACCP
would put pressure on food processing industries to implement this system. Over time, the pressure
will come to the level of food producers, which would lead to an overall improvement of food safety
in Ukraine and a better access for Ukrainian food products to international markets.
16 IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 17

Dairy Meat
Annex 1 Cost items Processing Comments
Frequency Size (Specifics)

Cost estimates for 1.6. Additional Cleaning cost per

year (excluding equipment)
100 % S
May be outsourced

Ukrainian enterprises 1.7. Cost of expelling or

extinction of animals and pests
100 % M

1.8. Changes to the Personnel Medical checkups,

70 % S-M
Hygiene Plan uniform
Experts were asked to provide an estimate of frequency and size of each cost item. Frequency was
Collecting points – B
measured using a percentage scale from one to 100. The size of cost items was assessed using the 1.9. Additional control of
90 % M-B Transportation – B
following three-point scale: suppliers
Other – M
(S) small – for items that would cost below 10,000 Ukrainian hryvnias ($1,250) per year;
(M) medium – for items that would cost from 10,000 to 50,000 Ukrainian hryvnias 1% - for domestic
(from ($1,250 to $6,250) per year; 1.10. Additional Control of markets;
M
(B) big – for items that would cost more than 50,000 Ukrainian hryvnias allergens and GMO costs 100% - for
($6,250) per year. exporters

The expected cost is computed as a product of frequency and size of the cost items. 15%
1.11. Additional control cost for
M
pesticides and other residuals (for export 100%)

Table 1. Main cost articles and their quantitative estimates for a mid-size Ukrainian 1.12. Costs for inputs quality
S; (B – if systems are
enterprise improvement: steam, ice, water, 60 %
redesigned)
air
Dairy Meat
Cost items Processing Comments 1.13. Training for use of new
100 % S
Frequency Size (Specifics) equipment and procedures

1. Cost of prerequisite programs 1.14. Quality lab certification 10 % M

1.1. Analysis of gaps in quality Expected prerequisite costs (if no major equipment and remodeling, no collecting
90 % S 250,000 UAH ($31,250)
management and control points and new transportation, no export)

85 %
1.2. Construction and remodeling B (for e.g. walls, ceilings, floor
0 % for new B
cost equipment) drains
facilities

1.3. Additional actions to

90 % M
improve GMP

1.4. Purchase and installation of 0 – for new Lab testing may be

foreign owned; B (for
additional lab and monitoring S-M outsourced. In such case
equipment)
equipment 90% – for the rest no additional cost is paid

10% - for M and B

cost items;
1.5. Purchase and installation
100% - for small B (for
of additional cleaning and S-M
changes, e.g. equipment)
sanitation equipment
hand washing
equipment
18 COST ESTIMATES FOR UKRAINIAN ENTERPRISE IMPLEMENTING FOOD SAFETY MANAGEMENT SYSTEMS IN UKRAINIAN FOOD PROCESSING ENTERPRISES 19

Dairy Meat
Cost items Processing Comments Annex II
Frequency Size (Specifics)

2. HACCP Development And Implementation

2.1. HACCP plan design 100 % S 1-2 employee References

2.2. External consultants,
90 % S
excluding certification (cost)

5-10 persons (operators,

supervisors), cost:
2.3. Initial training 100 % S
10,000-20,000 UAH Alberini, Anna, Erik Lichtenberg and Gregmar I. Galinato. (2005). Deodhar, Satish Y. (2003). Motivation for and Cost of HACCP in
($1,250-$2,500) Was It Something I Ate? Implementation of the FDA Seafood Indian Food Processing Industry, Indian Journal of Economics and
HACCP Program. The Fondazione Eni Enrico Mattei Note di Business, 2(2), p. 32.
E.g. hiring of new Lavoro Series Index: http://www.feem.it/Feem/Pub/Publications/ DeWaal, Caroline Smith. (1997). A consumer view on improving
personnel, management WPapers/default.htm cost/benefit analysis: the case of HACCP and microbial food safety.
2.4. Managerial changes 75 % S
of the HACCP related Antle, John M. (2000a). No such thing as a free safe lunch: the cost Proceedings of NE-165 Conference. June 20–21, Washington, D. C.
activities of food safety regulation in the meat industry. American Journal of Donato, Romano, Alessio Cavicchi, Benedetto Rocchi, Stefani
Agricultural Economics, Vol. 82, № 2 (May, 2000), pp. 310–322. Gianluca. (2004). Costs and Benefits of Compliance for HACCP
2.5. Validation cost 70 % S 1 person
Antle, John M. (2000b). «The Cost of Quality in the Meat Industry: Regulation in the Italian Meat and Dairy Sector. prepared for
Implications for HACCP Regulation». In: Unnevehr, L. (Ed.), The presentation at the 84th EAAE Seminar «Food Safety in a Dynamic
2.6. Test process and product World» Zeist, The Netherlands, February 8–11.
10 % M Economics of HACCP: Costs and Benefits. St. Paul, Minnesota: Eagan Press.
testing
Antle, John M. (1999). Benefits and costs of food safety. Food Policy Golan, Elise H., Katherine L. Ralston, Paul D. Frenzen and Stephen J.
24, pp. 605–623. Vogel. (2000). The Costs, Benefits and Distributional Consequences
45-50,000 UAH of Improvements in Food Safety: The Case of HACCP. In: Unnevehr,
Expected HACCP development and implementation costs
($5,630-$6,250) Antle, John M. (1996). Efficient food safety regulation in the food L. (Ed.), The Economics of HACCP: Costs and Benefits. St. Paul,
manufacturing sector. American Journal of Agricultural Economics, Minnesota: Eagan Press.
3. Recurring (operational) HACCP costs: Vol. 78, № 5, Proceedings Issue, pp. 1242–1247.
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 IFC Advisory Services in Europe and Central Asia
IFC Ukraine Food Safety Project

Implementing Food Safety

Management Systems
in Ukrainian Food Processing
Enterprises

A COST-BENEFIT ANALYSIS

IFC Ukraine Food Safety Project contacts:

Ukraine, 04070, Kyiv, 30A Spaska Street,
Podil Plaza, Block 2, 6th floor
Telephone: +38 044 490 6400;
Fax: +38 044 490 6420
ifc.org/Ukraine/FS

In partnership with

Kyiv, 2011