Transcript Meat Traceability and Consumer Willingness to Pay

Traceability, Assurance and BioSecurity in the Food System:
Livestock Sector Issues
Presented at the National Public Policy Conference
Salt Lake City, Utah
September 23, 2003
DeeVon Bailey, Ph. D.
Department of Economics and
Cooperative Extension Service
Utah State University
Logan, Utah USA
Reasons for Traceability
• Potential exists to compromise the integrity of
•
the system by “invisible” participants
Injects accountability at each level of the
marketing chain
– Lumber – protection of “old-growth” forests
– Diamonds – reduce trade in “conflict”
diamonds
– Food – food safety/food quality/animal health
Traceability: Food Safety
• BSE
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Problem originates with farm-level inputs
Traditional systems geared to identify pathogens not BSE
Collapse of consumer confidence in EU during 1990s BSE crisis
Led to the development of new food monitoring systems
• Traceability as a foundation
• Accountability at each level of the food marketing chain beginning a
farm level
– Traceability can hasten identification of the source of problems
and product recall
• Biosecurity
Traceability: Food “Quality”
• Intrinsic vs. Extrinsic characteristics
– Intrinsic – perceived by senses
• Grading
• Tastes
– Extrinsic – extra sensory characteristics that are
“invisible” but still valued by some consumers
(credence characteristics)
• Animal welfare
• Environmental responsibility
• Social responsibility
The Hierarchy of Consumers’ Food Preferences. Source:
Jean Kinsey, University of Minnesota
Traceability: Animal Health
• Disease eradication
– Effectively trace disease and exposed animals
• Facilitate disease control
• Foreign animal disease outbreaks
• Bio-security
Public vs. Private Goods
• Traceability systems have been
implemented for different reasons and at
different speeds
– EU – public health issue = public good =
justification for regulatory requirement
– US – market issue (willingness to pay) =
private good = private marketing chain
decision
Present US Livestock System Relative to TTA
• Traceability not yet mandatory
• Has been viewed as a private (market) good rather than
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as a public health issue (public good)
Willingness to pay has been a central question in the
past
Canadian BSE crisis was a “wake-up” call that provided
support and accelerated the effort relative to animal ID.
– National Animal Identification Task Force
• 48-hour traceback goal
• Target for animal identification in US is 2006 (?)
Country-of-Origin labeling
– Processors and retailers demanding third-party
certification of origin
Are U. S. Red-Meat Systems Lagging Competitors
and Customers in Terms of Traceability and
Assurance Systems? What are the Risks?
• Liddell and Bailey (2001)
•
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– Yes, U. S. pork marketing system in terms of
traceability, transparency, and assurance
(TTA)
Weakness was in “assurance” programs
– Food safety programs beginning at the farm
level
– Extrinsic quality assurances
Should U. S. producers and handlers care?
Possible Risks Associated with Not
Implementing TTA Systems
• Animal Disease control
• Bio-security considerations
• Market preservation
– Consumers are becoming more concerned about the
inputs and processes used to produce food
– Competitors may be able to successfully differentiate
food products based on TTA
– Domestic and foreign consumers may be willing to
pay for TTA and a market opportunity may be lost if
U. S. systems aren’t developed
Are Consumers Willing to Pay for TTA?
• Results from Dickinson and Bailey for auction
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experiments held in the US, Canada, Japan, and the UK
Traceability valued to some extent by itself but more
valued as a means of verifying other characteristics such
as added food safety
However, traceability is not merely an extra cost of
production – it can add value from a marketing
perspective, but likely cannot rely on WTP for traceability
to be the driving force for its implementation
– Other public health considerations must be incentive
for implementation in the US red-meat system
• Bio-security, food safety (BSE), animal disease,
etc.
What Technology Can Do to
Facilitate TTA?
• Technology isn’t a tremendous “bottleneck”
• Technology providers:
– Data gathering and recording
• ID system (ear tag, micro chip, etc.)
– Standards for premises and animal ID
• Data entry and uploading
– Electronic or manual
– Data basing
– Data compilation and reporting
– But, what data should be gathered and who should have access
to the data and when?
• National Task Force
– Standards need to be developed at each level
– Must be a national database all technology providers can
communicate with and from which state and federal regulators
can draw information
Technological Capability of Traceability
Systems vs. Goals of National ID System
Food Safety
Animal Health
Food Quality
National ID system will provide information on public goods, but the
capabilities of the system will allow for a much “richer” set of information
about meat products that will be incorporated into marketing and production
strategies and tactics.