threshold value from 1.5% to 1.0%, the producer quality premium is partly shifted to the slaughter
company to allow for paying the expected slaughter penalty under COOP ownership.
The optimal serological threshold value for the producers is 30 under IOF and COOP
ownership when the plant threshold ranges from 2.5% to 1.0% or less. It increases to 40 when the
plant threshold decreases from 2.5% or 2.0% to 1.5% or 1.0% under CHAIN ownership. This seems
counterintuitive, but more frequent use of farm level control package 2 is not induced by the
serological farm threshold value but by the producer penalty parameter and the probability of being
tested.
Because there is some uncertainty over testing costs under this incentive system, shifting this
uncertainty to the risk neutral slaughter company lessens the risk borne by the risk averse producer. In
turn, this reduces the risk premium in the system and so increases efficiency. The slaughter company
does not bear testing costs under IOF ownership, however, because shifting risk to the producer makes
it easier to induce the use of less risky, more effective control packages.
Differences in the main performance measures, bacteriological prevalence and the welfare gain
for the chain, are very small across ownership structures. Values of the expected monetary and welfare
gains for the chain under IOF and COOP ownership are very close to those gains under CHAIN
ownership. Expected testing costs increase with a decreasing plant threshold but always remain under
€0.036 per hog, except for a plant threshold level of 1.0% with testing costs of €0.10 per hog. The
expected slaughter penalty increases to €0.944 when the plant threshold value fall to 1.0% under all
ownership structures. A further decrease of the plant threshold value to 0.5% induces more stringent
plant and farm control measures, with associated high expected control cost and the expected slaughter
penalty falls accordingly.
20
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