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 – – – – 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 • • • 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) • • – 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 • • 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.