Economics of Traceability for Mitigation of Food Recall Costs

Abstract

We rely on case study interviews and on the literature to develop conceptual and process simulation models for investigating the value of traceability for food recall. Our models incorporate quality control in a vertical food supply chain and identify key factors that affect the value of traceability. Simulations for recalls caused by Escherichia coli O157:H7 contaminations in ground beef demonstrate the value of traceability for reducing recall costs. Our models enable firms and policy makers to simulate alternative costs/values for traceability as improved cost parameters and uses of information systems become more standardized.

Keywords: Food safety, quality control, recall, risk assessment, risk modeling, traceability

JEL Classification: C15, D81, L15, L66, M11