Traceability, Assurance and Traceability, Assurance and Bio-Security in the Food Bio-Security in the Food

System: Livestock Sector System: Livestock Sector IssuesIssues

Presented at Farm Foundation Traceability and Quality Presented at Farm Foundation Traceability and Quality Assurance Panel MeetingAssurance Panel Meeting

Kansas City, MissouriKansas City, MissouriNovember 19, 2003November 19, 2003

DeeVon Bailey, Ph. D.DeeVon Bailey, Ph. D.Department of Economics andDepartment of Economics andCooperative Extension ServiceCooperative Extension Service

Utah State UniversityUtah State UniversityLogan, Utah USALogan, Utah USA

Reasons for Traceability – Reasons for Traceability – Inject Accountability at Each Inject Accountability at Each Level of the Marketing ChainLevel of the Marketing Chain• Lumber – protection of “old-growth” Lumber – protection of “old-growth”

forestsforests• Diamonds – reduce trade in “conflict” Diamonds – reduce trade in “conflict”

diamondsdiamonds• Food – food safety/food qualityFood – food safety/food quality

Tastes Good Variety

Nutritious, Safe, Affordable

Convenient

Promotes Health

Living Well

Status/Causes

Income

The Hierarchy of Consumers’ Food Preferences. Source: Jean Kinsey, University of Minnesota

US Livestock System Relative to US Livestock System Relative to TTATTA• Traceability not mandatory Traceability not mandatory • Viewed as a private (market) good rather than as Viewed as a private (market) good rather than as

a public health issue (public good)a public health issue (public good)• Willingness to pay has been a central question in Willingness to pay has been a central question in

the pastthe past• Canadian Canadian BSEBSE crisis has been a “wake-up” call crisis has been a “wake-up” call

– National Animal Identification Task ForceNational Animal Identification Task Force• 48-hour traceback goal48-hour traceback goal• Target for animal identification in US is 2006Target for animal identification in US is 2006

• Country-of-Origin labeling Country-of-Origin labeling – Processors and retailers demanding third-party Processors and retailers demanding third-party

certification of origincertification of origin

U. S. Red-Meat System Lagging U. S. Red-Meat System Lagging Competitors and Customers in Terms Competitors and Customers in Terms of Traceability and Assurance of Traceability and Assurance Systems?Systems?• Liddell and Bailey (2001) Liddell and Bailey (2001)

– Yes, U. S. pork marketing system in terms of Yes, U. S. pork marketing system in terms of traceability, transparency, and assurance (TTA)traceability, transparency, and assurance (TTA)

• Weakness was in “assurance” programsWeakness was in “assurance” programs– Food safety programs beginning at the farm Food safety programs beginning at the farm

levellevel– Credence quality assurances (other than food Credence quality assurances (other than food

safety, taste, grade, etc. but which are still safety, taste, grade, etc. but which are still valued by some consumers)valued by some consumers)

Areas of Concern about TA Identified Areas of Concern about TA Identified by the Panel During January Meetingby the Panel During January Meeting• How TA contributes to the value and cost of food How TA contributes to the value and cost of food

productsproducts• Responsibilities of the public and private sectors Responsibilities of the public and private sectors

regarding the implementation of TA food systemsregarding the implementation of TA food systems• How TA affects the risks and potential liability How TA affects the risks and potential liability

faced by participants in the food marketing chain.faced by participants in the food marketing chain.• Technical issues and emerging technologies that Technical issues and emerging technologies that

facilitate or are barriers to TAfacilitate or are barriers to TA• How TA might affect the structure of the US food How TA might affect the structure of the US food

industryindustry

Public vs. Private GoodsPublic vs. Private Goods• Traceability systems have been implemented Traceability systems have been implemented

for different reasons and at different speedsfor different reasons and at different speeds– EU – public health issue = public good = EU – public health issue = public good =

regulatory requirementregulatory requirement– US – market issue (willingness to pay) = private US – market issue (willingness to pay) = private

good = private marketing chain decisiongood = private marketing chain decision• Determining the role of the public and private Determining the role of the public and private

sectors depends on the different public goods sectors depends on the different public goods (public role) and private goods (private role) (public role) and private goods (private role) that can be generated with TAthat can be generated with TA

• Also depends on the credibility of each sectorAlso depends on the credibility of each sector

Possible Public GoodsPossible Public Goods• Animal disease control and Animal disease control and

eradicationeradication• Bio-security issuesBio-security issues

Private Goods – What Are Private Goods – What Are Consumers Willing to Pay for?Consumers Willing to Pay for?• Results from Dickinson and Bailey for auction Results from Dickinson and Bailey for auction

experiments held in the US, Canada, Japan, and the experiments held in the US, Canada, Japan, and the UK:UK:

• Traceability valued to some extent by itself but more Traceability valued to some extent by itself but more valued as a means of verifying other characteristics valued as a means of verifying other characteristics such as added food safetysuch as added food safety

• However, traceability is not merely an extra cost of However, traceability is not merely an extra cost of production – it can add value from a marketing production – it can add value from a marketing perspective, but likely can rely on WTP for traceability perspective, but likely can rely on WTP for traceability to be the driving force for its implementationto be the driving force for its implementation

• Market appears to be quite general and not driven by Market appears to be quite general and not driven by demographicsdemographics

What Technology Can DoWhat Technology Can Do• Data gathering and recordingData gathering and recording

– ID system (ear tag, micro chip, etc.)ID system (ear tag, micro chip, etc.)• Requires standards for premises and animal IDRequires standards for premises and animal ID

– Data entry and uploadingData entry and uploading• Electronic or manualElectronic or manual

• Data basingData basing• Data compilation and reportingData compilation and reporting• But, what data should be gathered and who But, what data should be gathered and who

should have access to the data and when?should have access to the data and when?

Technological Capability of Technological Capability of Traceability SystemsTraceability Systems

Food SafetyFood Safety

Food QualityFood QualityAnimal HealthAnimal Health

Who is Credible?Who is Credible?• Whom do consumers trust to make Whom do consumers trust to make

different certifications?different certifications?• Study conducted in the U. S. and the Study conducted in the U. S. and the

USUS

US and UK Certifying Agencies and US and UK Certifying Agencies and Brand Names Used in the StudyBrand Names Used in the Study• USUS• Certifying Agencies:Certifying Agencies:

– US Inspection (USDA)US Inspection (USDA)– USDA Process Verified (PV)USDA Process Verified (PV)– Certified Angus Beef (CAB)Certified Angus Beef (CAB)– Organic (OB)Organic (OB)– Natural Beef (NB)Natural Beef (NB)

• Brand NamesBrand Names– Farmland (FL)Farmland (FL)– Chairman’s Reserve (CR)Chairman’s Reserve (CR)– Tender Choice (TC)Tender Choice (TC)– E. A. Millers (EA)E. A. Millers (EA)– Smiths (SM)Smiths (SM)– Albertsons (AL)Albertsons (AL)– Macey’s (MA)Macey’s (MA)

• UKUK• Certifying Agencies:Certifying Agencies:

– British Farm Standard (FS)British Farm Standard (FS)– Freedom Foods/RSPCA Freedom Foods/RSPCA

(FF)(FF)– British Meat (BM)British Meat (BM)– Fair Trade Federation (FT)Fair Trade Federation (FT)– Soil Association Organic Soil Association Organic

Standard (SA)Standard (SA)• Brand NamesBrand Names

– Sainsbury’s (SB)Sainsbury’s (SB)– Tesco (TS)Tesco (TS)– ASDA (AD)ASDA (AD)– Somerfield (SF)Somerfield (SF)– Safeway (SW)Safeway (SW)

Certifying Agencies/Groups Considered Certifying Agencies/Groups Considered in the US and the UK as the Most or in the US and the UK as the Most or Least Trusted to Complete Least Trusted to Complete CertificationsCertifications•USUS• Federal government Federal government

inspectioninspection• State government State government

inspectioninspection• Private companiesPrivate companies• ProducersProducers• Food retailersFood retailers• Special interest Special interest

groupsgroups

•UKUK• National government National government

inspectioninspection• Local authoritiesLocal authorities• Private companiesPrivate companies• ProducersProducers• Food retailersFood retailers• Special interest Special interest

groupsgroups

Some Observations for the Some Observations for the USUS• CAB seen as a “quality” indicatorCAB seen as a “quality” indicator• USDA seen as a “safety” indicatorUSDA seen as a “safety” indicator• Brand names seen as signaling both safety Brand names seen as signaling both safety

and qualityand quality• CAB had higher quality scores with CAB had higher quality scores with

“initiated” groups than “uninitiated.” “initiated” groups than “uninitiated.” Store brands rated lower than Store brands rated lower than manufacturer brandsmanufacturer brands

Observations Relating to the Observations Relating to the UKUK• Certifying Agencies seen as signaling Certifying Agencies seen as signaling

quality, safety, and environmental quality, safety, and environmental responsibilityresponsibility

• A strong environmental component A strong environmental component exists in the Sainsbury’s “score” exists in the Sainsbury’s “score” (Sainsbury had the highest rating)(Sainsbury had the highest rating)

US Relative Frequencies for Most US Relative Frequencies for Most Trusted Agencies to Conduct Specific Trusted Agencies to Conduct Specific CertificationsCertifications

01020304050607080

Percent

Characteristic

Gov'tCompanyProducerRetailerSpecial Interest

US Relative Frequencies for Least US Relative Frequencies for Least Trusted Agencies to Conduct Specific Trusted Agencies to Conduct Specific CertificationsCertifications

05

101520253035404550

Percent

Characteristic

Gov'tCompanyProducerRetailerSpecial Interest

UK Relative Frequencies for Most UK Relative Frequencies for Most Trusted Agencies to Conduct Specific Trusted Agencies to Conduct Specific CertificationsCertifications

05

1015202530354045

Percent

Characteristic

Gov'tCompanyProducerRetailerSpecial Interest

UK Relative Frequencies for Least UK Relative Frequencies for Least Trusted Agencies to Conduct Specific Trusted Agencies to Conduct Specific CertificationsCertifications

010203040506070

Percent

Characteristic

Gov'tCompanyProducerRetailerSpecial Interest

ConclusionsConclusions• US participants perceived manufacturer brand US participants perceived manufacturer brand

names as superior to store brands in terms of names as superior to store brands in terms of quality and food safety attributes.quality and food safety attributes.

• UK consumers indicated that food retailers UK consumers indicated that food retailers provide the highest levels of quality and food provide the highest levels of quality and food safety for beef products of the groups safety for beef products of the groups considered in the study.considered in the study.

• Private sector in both the US and UK appears to Private sector in both the US and UK appears to be preferred over government to make be preferred over government to make certifications for animal welfare, social certifications for animal welfare, social responsibility, and environmental responsibility.responsibility, and environmental responsibility.

Focus of this MeetingFocus of this Meeting• Role of public and private sectors?Role of public and private sectors?• Role of technology – what it can and Role of technology – what it can and

cannot docannot do• Designing an efficient and credible Designing an efficient and credible

systemsystem– Credible to consumersCredible to consumers

• What should be communicated to policy What should be communicated to policy makers about the issue of traceability makers about the issue of traceability and quality assurance?and quality assurance?