Peanut trade and aflatoxin standards in Europe: Economic effects on trading countries

The role of aflatoxin contamination in food safety is an important policy issue impacting food industries worldwide. This paper evaluates the economic implications of strict peanut aflatoxin regulation in Europe focusing on price and quantity effects of the policy. Equilibrium displacement modeling is applied on a source-differentiated market. Findings show that regulation tightening leads to price and quantity drop for the United States and other exporters, whereas China benefits owing to its price and quantity gains. Although both peanut exporters and importers share compliance costs from the aflatoxin policy, consumers in Europe pay a greater proportion of the costs.