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Do Inspection and Traceability Provide Incentives for Food Safety?

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  • Starbird, S. Andrew
  • Amanor-Boadu, Vincent

Abstract

One of the goals of inspection and traceability is to motivate suppliers to deliver safer food. The ability of these policies to motivate suppliers depends on the accuracy of the inspection, the cost of failing inspection, the cost of causing a foodborne illness, and the proportion of these costs paid by the supplier. We develop a model of the supplier's expected cost as a function of inspection accuracy, the cost of failure, and the proportion of the failure cost that is allocated to suppliers. The model is used to identify the conditions under which the supplier is motivated to deliver uncontaminated lots. Surprisingly, our results show that when safety failure costs can be allocated to suppliers, minimum levels of inspection error are required to motivate a supplier to deliver uncontaminated lots. This result does not hold when costs cannot be allocated to suppliers. As a case study, we use our results to analyze the technical requirements for suppliers of frozen beef to the USDA's Agricultural Marketing Service.

Suggested Citation

  • Starbird, S. Andrew & Amanor-Boadu, Vincent, 2006. "Do Inspection and Traceability Provide Incentives for Food Safety?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(1), pages 1-13, April.
    • Handle: RePEc:ags:jlaare:10143
    DOI: 10.22004/ag.econ.10143
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    References listed on IDEAS

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    1. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-23, July.
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    Cited by:

    1. Zhou, Xiongyong & Zhu, Qinghua & Xu, Zhiduan, 2023. "The role of contractual and relational governance for the success of digital traceability: Evidence from Chinese food producers," International Journal of Production Economics, Elsevier, vol. 255(C).
    2. Jason A. Winfree, 2023. "Collective reputation and food," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 666-683, June.
    3. Bulut, Harun & Lawrence, John D., 2007. "Meat Slaughter and Processing Plants' Traceability Levels Evidence From Iowa," Staff General Research Papers Archive 12791, Iowa State University, Department of Economics.
    4. Rouviere, Elodie & Soubeyran, Raphael, 2012. "Small is Beautiful? Firm's Size, Prevention & Food Safety," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123410, Agricultural and Applied Economics Association.
    5. Yao, Shiqing & Zhu, Kaijie, 2020. "Combating product label misconduct: The role of traceability and market inspection," European Journal of Operational Research, Elsevier, vol. 282(2), pages 559-568.
    6. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 145-170.
    7. Grazia, Cristina & Hammoudi, Abdelkakim & Hamza, Oualid, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 93(2).
    8. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion? [Standards sanitaires et phytosanitaires : la protection de la santé des ," Post-Print hal-02642925, HAL.
    9. Linhai Wu & Xiaoru Gong & Shasha Qin & Xiujuan Chen & Dian Zhu & Wuyang Hu & Qingguang Li, 2017. "Consumer preferences for pork attributes related to traceability, information certification, and origin labeling: Based on China's Jiangsu Province," Agribusiness, John Wiley & Sons, Ltd., vol. 33(3), pages 424-442, June.
    10. Ollinger, Michael & Bovay, John & Guthrie, Joanne & Benicio, Casiano, 2015. "Economic Incentives to Supply Safe Chicken to the National School Lunch Program," Economic Research Report 212888, United States Department of Agriculture, Economic Research Service.
    11. Rouvière, Elodie, 2016. "Small is beautiful: firm size, prevention and food safety," Food Policy, Elsevier, vol. 63(C), pages 12-22.
    12. M.Z. Boutouis & A. Hammoudi & W. Benhassine & M.A. Perito, 2018. "Uncertainty of food contamination origin and liability rules: Implications for bargaining power," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 77-92, December.
    13. Beatty, Timothy & Shimshack, Jay P., 2018. "Monitoring and Enforcement in a Food Safety Context," 2018 Annual Meeting, August 5-7, Washington, D.C. 273913, Agricultural and Applied Economics Association.
    14. 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.
    15. Martino, Gaetano & Bavorovà, Miroslava, 2014. "An Analysis of Food Safety Private Investments Drivers in the Italian Meat Sector," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199366, International European Forum on System Dynamics and Innovation in Food Networks.
    16. Brofman Epelbaum, Freddy Moises & Garcia Martinez, Marian, 2014. "The technological evolution of food traceability systems and their impact on firm sustainable performance: A RBV approach," International Journal of Production Economics, Elsevier, vol. 150(C), pages 215-224.
    17. Stranieri, S. & Cavaliere, A. & Banterle, A., 2015. "Voluntary traceability standards: which is the role of economic incentives?," 2015 International European Forum (144th EAAE Seminar), February 9-13, 2015, Innsbruck-Igls, Austria 206213, International European Forum on System Dynamics and Innovation in Food Networks.
    18. Xiongyong Zhou & Madeleine Pullman & Zhiduan Xu, 2022. "The impact of food supply chain traceability on sustainability performance," Operations Management Research, Springer, vol. 15(1), pages 93-115, June.
    19. Ge, Houtian & Nolan, James & Gray, Richard & Goetz, Stephan & Han, Yicheol, 2016. "Supply chain complexity and risk mitigation – A hybrid optimization–simulation model," International Journal of Production Economics, Elsevier, vol. 179(C), pages 228-238.
    20. Ge, Houtian & Gray, Richard & Nolan, James, 2015. "Agricultural supply chain optimization and complexity: A comparison of analytic vs simulated solutions and policies," International Journal of Production Economics, Elsevier, vol. 159(C), pages 208-220.
    21. Ollinger, Michael & Guthrie, Joanne & Bovay, John, 2014. "The Food Safety Performance of Ground Beef Suppliers to the National School Lunch Program," Economic Research Report 262211, United States Department of Agriculture, Economic Research Service.

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