Essays on economics of cattle and beef traceability

The first essay inquires into the economic value and the optimal expected traceback rate of success for a traceability system from the cattle slaughter room through the fabrication floor with a case study of injection-site lesions in fed cattle in the US. The method developed by Grossman and Hart (1983) is adapted to model and solve a Principal-Agent model with beef traceability. By maintaining the identity of the fed cattle suppliers (Agents) and animal ID attached to retail beef cuts with certain probability, a traceability system makes incentive mechanisms feasible. First-best action may be induced by meat packers (Principal) with incentive mechanisms created with a traceability system with a low expected traceback rate of success. This result was not sensitive to changes in the way traceability systems' costs were estimated. Further, a traceability system may have no value when risk averse feedlot owners can do little to affect the frequency of injection-site lesions in fed cattle. Finally, the Principal-Agent model developed in the present study presents potential to be employed in studying other problems in which identity preservation is a concern.; The second essay investigates the economic value of the National Animal Identification System (NAIS) in the US. It is assumed that benefits may come from how the NAIS will affect the final consumer's food safety concerns about eating meat. Generalized almost ideal and quadratic almost ideal demand systems are estimated incorporating food safety indices for beef, pork and poultry. It is found that food safety impacts upon the final demand for meat are small and do not present lagged effects. Three scenarios are constructed on the basis of hypothesized impacts of the NAIS on consumers' food safety concerns about meat. Differences in predicted total revenue for beef, pork and poultry between scenarios are used as gross measures of the benefits of the NAIS. If most benefits with the NAIS are expected to come from demand shifts up, the US government will need to subsidize its implementation and maintenance to make the NAIS economically feasible.