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A Principal-Agent Model for Evaluating the Economic Value of a Traceability System: A Case Study with Injection-site Lesion Control in Fed Cattle

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  • Moises A. Resende-Filho
  • Brian L. Buhr

Abstract

Traceability can link the identity of cattle feeders with retail beef cuts. The economic problem for the packer implementing traceability is to choose the level of investment in traceability and the level of incentive payments to cattle feeders so that cattle feeders will avoid production actions that can damage retail beef cuts. A case study of injection-site lesions in cattle is the basis for technical parameters to numerically solve this principal-agent problem. Results show that cattle feeders will give injections in sites preferred by the packer even with low rates of successful tracking and minimal incentives. Copyright 2008, Oxford University Press.

Suggested Citation

  • Moises A. Resende-Filho & Brian L. Buhr, 2008. "A Principal-Agent Model for Evaluating the Economic Value of a Traceability System: A Case Study with Injection-site Lesion Control in Fed Cattle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 1091-1102.
    • Handle: RePEc:oup:ajagec:v:90:y:2008:i:4:p:1091-1102
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01150.x
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    Citations

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    Cited by:

    1. Xiaoying Li & Qinghua Zhu, 2020. "Contract Design for Enhancing Green Food Material Production Effort with Asymmetric Supply Cost Information," Sustainability, MDPI, vol. 12(5), pages 1-18, March.
    2. Resende-Filho, Moises & Buhr, Brian, 2007. "Economics of traceability for mitigation of food recall costs," MPRA Paper 3650, University Library of Munich, Germany.
    3. Saak, Alexander E., 2016. "Traceability and reputation in supply chains," International Journal of Production Economics, Elsevier, vol. 177(C), pages 149-162.
    4. Ge, Candi & Adam, Brian, 2017. "Value-added Traceability: Using a Whole-Chain Traceability System to Transfer Information about Multiple Attributes along a Multi-Stage Beef Supply Chain," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258278, Agricultural and Applied Economics Association.
    5. Ng, Desmond W. & Salin, Victoria, 2012. "An Institutional Approach to the Examination of Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(2), pages 1-26, May.
    6. Kopp, Thomas & Salecker, Jan, 2020. "How traders influence their neighbours: Modelling social evolutionary processes and peer effects in agricultural trade networks," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    7. Russo, Carlo & Perito, Maria Angela & Di Fonzo, Antonella, 2014. "Using Private Food Safety Standards to Manage Complexity: A Moral Hazard Perspective," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 15(2), pages 1-15.
    8. Thomas Kopp & Jan Salecker, 2018. "Modelling Social Evolutionary Processes and Peer Effects in Agricultural Trade Networks: the Rubber Value Chain in Indonesia," Papers 1811.11476, arXiv.org.
    9. Weixia Xue & Zhiduan Xu, 2022. "The Impacts of Government Subsidies and Consumer Preferences on Food Supply Chain Traceability under Different Power Structures," Sustainability, MDPI, vol. 15(1), pages 1-20, December.
    10. Diogo M. Souza-Monteiro & Julie A. Caswell, 2010. "The Economics of Voluntary Traceability in Multi-Ingredient Food Chains," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 122-142.
    11. Pendell, Dustin L. & Tonsor, Glynn T. & Dhuyvetter, Kevin C. & Brester, Gary W. & Schroeder, Ted C., 2013. "Evolving beef export market access requirements for age and source verification," Food Policy, Elsevier, vol. 43(C), pages 332-340.
    12. Souza Monteiro, Diogo M. & Caswell, Julie A., 2008. "Optimal choice of Voluntary traceability as a food risk management tool," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44394, European Association of Agricultural Economists.
    13. Fritz, Melanie & Schiefer, Gerhard, 2009. "Tracking, tracing, and business process interests in food commodities: A multi-level decision complexity," International Journal of Production Economics, Elsevier, vol. 117(2), pages 317-329, February.
    14. Gachukia, Martin Kang’ethe, 2015. "Moderating effect of traceability on value chain governance of credence goods: a perspective of the New Institutional Economics framework," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 117(2), pages 1-9, August.
    15. Biswas, Debajyoti & Jalali, Hamed & Ansaripoor, Amir H. & De Giovanni, Pietro, 2023. "Traceability vs. sustainability in supply chains: The implications of blockchain," European Journal of Operational Research, Elsevier, vol. 305(1), pages 128-147.
    16. Seyoum, Bruk Tefera & Adam, Brian D. & Ge, Candi, 2013. "The Value of Genetic Information in a Whole-Chain Traceability System for Beef," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150458, Agricultural and Applied Economics Association.
    17. Kopp, T. & Salecker, J., 2018. "Identifying Influential Traders by Agent Based Modelling," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277130, International Association of Agricultural Economists.
    18. Olynk, Nicole J. & Wolf, Christopher A., 2010. "Aligning Incentives for Contract Dairy Heifer Growth," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-14, December.

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