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Economics of traceability for mitigation of food recall costs

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Author Info
Resende-Filho, Moises
Buhr, Brian

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Abstract

Traceability of food products and particularly meats is increasingly advocated as a means to provide consumer confidence in credence attributes (e.g., range fed, organic, country of origin) as well as for improved quality control. In the case of food safety, where there are failures in testing and there is not likely to be zero failure rates, traceability may also improve the overall process efficiency and cost effectiveness of recalls. This study relies on case observations to develop a general conceptual model of traceability for food product recall. This conceptual model incorporates quality control in a vertical food supply chain and identifies key factors (e.g. the nature of contamination event and shelf-life of the product) that affect the cost-benefit of traceability in a risk context. Our conceptual model is adapted and parameterized for the context of a simulated recall due to E. coli in ground beef. The results of our simulations indicate that traceability might be valuable in terms of its return in saved recall costs. In addition, the effect of improved quality control measures on the traceability value is simulated and discussed. The simulated results indicate that improved quality controls and traceability seem to be substitutes. Despite this, we argue that traceability might improve information as to the source of quality control failure and therefore might play a complimentary role in achieving quality control improvements.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3650.

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Date of creation: 19 Jun 2007
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Handle: RePEc:pra:mprapa:3650

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Related research
Keywords: Food safety quality control recall risk assessment risk modeling traceability

Find related papers by JEL classification:
L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management

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  1. David Dickinson & DeeVon Bailey, 2002. "Meat Traceability: Are U.S. Consumers Willing To Pay For It?," Working Papers 2002-07, Utah State University, Department of Economics. [Downloadable!]
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  2. Jensen, Helen H. & Unnevehr, Laurian J. & Gomez, Miguel I., 1998. "Costs of Improving Food Safety in the Meat Sector (The)," Staff General Research Papers 1156, Iowa State University, Department of Economics. [Downloadable!]
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  3. Jarrell, Gregg & Peltzman, Sam, 1985. "The Impact of Product Recalls on the Wealth of Sellers," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 512-36, June. [Downloadable!] (restricted)
    Other versions:
  4. Jensen, Helen H & Unnevehr, Laurian J & Gomez, Miguel I, 1998. "Costs of Improving Food Safety in the Meat Sector," Journal of Agricultural & Applied Economics, Southern Agricultural Economics Association, vol. 30(1), pages 83-94, July.
  5. Thomsen, Michael R & McKenzie, Andrew M, 2001. " Market Incentives for Safe Foods: An Examination of Shareholder Losses from Meat and Poultry Recalls," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(3), pages 526-38, August. [Downloadable!] (restricted)
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