An Incentive System for Salmonella Control in the Pork Supply Chain

Abstract

This paper presents a dynamic principal-agent analysis of an incentive system for Salmonella control in
the pork supply chain. The incentive system determines quality premiums to the producer, testing
frequencies for hogs delivered, as well as charges tothe producer for testing and penalties. Using cost
estimates and technical parameters, we evaluate the cost effectiveness of plant and farm control
measures and trade-offs between prevalence reduction and related costs and gains. We also assess the
impact of ownership structure onincentive system parameters and performance for a wide range of
prevalence threshold levels. Differences in control actions, bacteriological prevalence and the overall
welfare gain for the chain are very small across ownership structures. Changes in the prevalence
threshold level lead to substantial changes in the use of farm and plant control packages and
performance measures.

Keywords: dynamic programming, food quality, principal-agent

1.      Introduction

Consumers in developed countries take an interest in the way their food is produced. Besides
ethical issues and convenience considerations, consumers are concerned about health risks from food
borne illnesses. By far the most frequently reported zoonotic diseases in humans are salmonellosis and
campylobacteriosis. In 2004, a total of 192,703 cases of salmonellosis were reported the EU Member
States. The incidence was 42.2 cases per 100,000 of population (European Food Safety Authority,
2006). A substantial share of the finishing pigs herds are infected with Salmonella (van der Wolf et al.,

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