Theoretical and empirical analysis of the economics of traceability adoption in food supply chains
Traceability systems are increasingly implemented in food supply chains to mitigate food safety hazards and to improve information management and logistics. While traceability systems are largely voluntary and driven by consumer demand in the United States (US), in the European Union (EU) they are enforced by regulations and were implemented to restore consumer trust in the food supply. Traceability systems establish the path of information on food origins, attributes, and production and processing technologies from farm to fork, thus increasing transparency in the food chain.
As the consumption of pre-prepared foods increases around the world, new types of food safety hazards may arise. Previously independent food supply chains may now come together in facilities producing multi-ingredient, pre-prepared food products. Implementing traceability in multi-ingredient food chains may mitigate food safety risks.
This research presents three essays, two theoretical and one empirical, analyzing the economics of traceability adoption in food supply chains and at the farm. The first essay investigates under what conditions voluntary or mandatory traceability systems are preferred in single ingredient supply chains. The second addresses the conditions for full, partial or no traceability in multi-ingredient food chains. Finally, the third essay analyzes what has influenced traceability adoption at the farm level in the Portuguese pear industry. An overall aim of this research is to examine how network effects impact the levels of traceability flowing along single- and multi-ingredient food supply chains.
This dissertation contributes to the economics of traceability in food supply chains showing that mandatory traceability may be inevitable if there are large public benefits from traceability, liability rules are not perfectly imposed, and monitoring and enforcement is effective. Full traceability is feasible in multi-ingredient supply chains. However partial traceability is perhaps a more realistic scenario as it may result in considerable savings for firms along the food chain. Producer organization, retailer, and farm characteristics clearly influence the decision to adopt traceability. Finally, network effects have a positive impact on the levels of traceability but a negative impact on the value of premiums.