Reducing transaction costs associated with sanitary and phytosanitary requirements is important for facilitating agricultural trade. The SPS Agreement aims to reduce non-tariff barriers related to food safety standards. However, complex requirements for risk assessments and private standards add to transaction costs. Trade facilitation through streamlining procedures, infrastructure development, and coordination across agencies can help lower these costs. Actions are needed at the firm, industry association, national and regional levels to address sanitary barriers and better enable countries to trade to their full potential.

1. Reducing the Transaction cost of goods traded by dealing adequately with sanitary and phytosanitary requirements by Hesdie Grauwde, Policy officer, FAO Sub-Regional Office, Barbados Agricultural Trade Facilitation Workshop – July 27-31st, 2008 – Barbados, Organized by Ectad and Caribbeanfarmers.org

3. Understanding transaction costs Transaction costs: Costs of market intelligence ( buyers, suppliers, prices, product specifications, trade requirements) Costs of negotiation Costs of transport, delivery and inspection The Competitive Structure of the Firm

4. Transaction Costs to Agribusiness Food Supply Control Chain Market intelligence Costs : information search to reduce risks of reliability of potential suppliers or buyers and the product quality, to obtain information on costs and prices, volumes, product assortment and other product attributes, and other customer/market requirements. Administrative and Operational costs associated with managing and coordinating integrated production, processing, and marketing . Opportunity cost of time and alternate investment forgone used to communicate with farmers and coordinate them Legal Fees, Administrative and Operational Costs of establishing and monitoring long-term contracts Logistical and transfer costs associated with the legal or physical constraints on the movement and transfer of goods

16. Economic impact of sanitary requirements Standard-setting Dispute settlement Prepare compliance, certificates Negotiations Inspections -- Cost for government, industry organization Second-best business solutions Scan foreign regulations Compliance costs: products, labels, tests, certification Negotiation Detained shipment Markets restricted Volumes, prices drop Loss of market position Co st for firm “ Solution” “ Response” Transaction cost Trade loss