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Contract Selectivity, Food Safety, and Traceability

Author

Listed:
  • Starbird S. Andrew

    (Santa Clara University)

  • Amanor-Boadu Vincent

    (Kansas State University)

Abstract

Contracts are an increasingly common method for coordinating exchange in the food industry. Contracts often include specifications for product attributes including food safety. One of the goals of explicit safety specifications is to discourage or deter suppliers who would deliver unsafe food. In this article, we use a principal-agent model in the context of adverse selection to examine how contracts that include traceability can be used to select against producers who cannot meet a processor's safety specifications. We find that the motivation to select against unsafe producers depends on the magnitude of the failure costs and the proportion of the failure costs allocated to producers. We also identify the conditions under which the processor selects against unsafe producers regardless of traceability. Our results are important to regulators and negotiators who want to support safe producers and deter unsafe producers.

Suggested Citation

  • Starbird S. Andrew & Amanor-Boadu Vincent, 2007. "Contract Selectivity, Food Safety, and Traceability," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-22, February.
    • Handle: RePEc:bpj:bjafio:v:5:y:2007:i:1:n:2
    DOI: 10.2202/1542-0485.1141
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    Citations

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    Cited by:

    1. 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).
    2. Michał Pietrzak & Aleksandra Chlebicka & Paweł Kraciński & Agata Malak-Rawlikowska, 2020. "Information Asymmetry as a Barrier in Upgrading the Position of Local Producers in the Global Value Chain—Evidence from the Apple Sector in Poland," Sustainability, MDPI, vol. 12(19), pages 1-21, September.
    3. 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.
    4. Eric Giraud‐Héraud & Abdelhakim Hammoudi & Ruben Hoffmann & Louis‐Georges Soler, 2012. "Joint Private Safety Standards and Vertical Relationships in Food Retailing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(1), pages 179-212, March.
    5. 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.
    6. Hussein, Mohamud & Martinez, Marian Garcia & Fearne, Andrew, 2013. "On The Efficiency of Management-Based Regulation: A Case Study of the UK Poultry Inspection Regime," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158856, Agricultural Economics Society.
    7. Ashkan Pakseresht & Sina Ahmadi Kaliji & Vilma Xhakollari, 2022. "How Blockchain Facilitates the Transition toward Circular Economy in the Food Chain?," Sustainability, MDPI, vol. 14(18), pages 1-22, September.
    8. Charlier, Christophe & Valceschini, Egizio, 2010. "Food Safety, Market Power and Private Standards: An Analysis of the Emerging Strategies of Food Operators," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 1(2), pages 1-8.
    9. Farreras, Verónica & Salvador, Pablo F., 2022. "Why do some Participatory Guarantee Systems emerge, become effective, and are sustained over time, while others fail? An application of the Ostrom social-ecological system framework," Land Use Policy, Elsevier, vol. 118(C).
    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. Jorge Mejia & Shawn Mankad & Anandasivam Gopal, 2019. "A for Effort? Using the Crowd to Identify Moral Hazard in New York City Restaurant Hygiene Inspections," Information Systems Research, INFORMS, vol. 30(4), pages 1363-1386, December.
    12. Brofman, Freddy & Garcia Martinez, Marian & Souza Monteiro, Diogo M., 2008. "Economic Evaluation of Food Traceability Systems through Reference Models," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria 49772, European Association of Agricultural Economists.
    13. 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.
    14. Giraud-Heraud, Eric & Grazia, Cristina & Hammoudi, Abdelhakim, 2007. "Agrifood safety standards, market power and consumer misperceptions," 105th Seminar, March 8-10, 2007, Bologna, Italy 7849, European Association of Agricultural Economists.
    15. Minarelli, Francesca & Galioto, Francesco & Raggi, Meri & Viaggi, Davide, 2016. "Modelling asymmetric information in a food supply chain within Emilia Romagna Region," 149th Seminar, October 27-28, 2016, Rennes, France 245071, European Association of Agricultural Economists.
    16. 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.

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