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Economics of Traceability for Mitigation of Food Recall Costs

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  • Resende Filho, Moises de Andrade
  • Buhr, Brian L.

Abstract

We develop conceptual and process simulation models to determine the probability of a recall and predict its size. We compare the costs of recalls with and without traceability for a ten year planning horizon by simulating the expected recalls caused by Escherichia coli O157:H7 contamination for ground beef produced at one plant. As the costs of implementing a traceability system are not available, we calculate only the direct costs savings by the use of traceability. Results suggest that for a ten year period the value of traceability is about $263 million, and that the cost saving increase with the shelf life of the product. Additionally, improved quality control measures at each stage of production appear to be substitutes for traceability, but under some circumstances may serve as complements. As improved cost parameters and uses of information systems become more standardized, our models can be adapted so to simulate alternative costs/values for traceability and, therefore, support firms and policy makers´ decisions.

Suggested Citation

  • Resende Filho, Moises de Andrade & Buhr, Brian L., 2012. "Economics of Traceability for Mitigation of Food Recall Costs," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126193, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae12:126193
    DOI: 10.22004/ag.econ.126193
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    Cited by:

    1. Roth, Michael & Doluschitz, Reiner, 2007. "KOSTEN-NUTZEN-ANALYSE FUR QUALITATSSICHERUNGS UND RUCKVERFOLGBARKEITSSYSTEME IN WERTSCHOPFUNGSKETTEN TIERISCHER PRODUKTE (German)," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 7589, German Association of Agricultural Economists (GEWISOLA).
    2. Roth, M. & Doluschitz, R., 2008. "Kosten-Nutzen-Analyse für Qualitätssicherungs- und Rückverfolgbarkeitssysteme in Wertschöpfungsketten tierischer Produkte," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.
    3. Heyder, Matthias & Theuvsen, Ludwig & Hollmann-Hespos, Thorsten, 2012. "Investments in tracking and tracing systems in the food industry: A PLS analysis," Food Policy, Elsevier, vol. 37(1), pages 102-113.
    4. Bendaoud, Mhamed & Lecomte, Catherine & Yannou, Bernard, 2012. "A Methodological Framework to Design and Assess Food Traceability Systems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(1), pages 1-24, February.

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    More about this item

    Keywords

    Agribusiness; Livestock Production/Industries; Production Economics; Risk and Uncertainty;
    All these keywords.

    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; Personnel Economics - - Business Administration - - - Production Management

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