For hypothesis 7); the larger and the more complicated the operations are, the
costlier traceability is to satisfy a given safety or quality assurance standard as the total
variable cost of traceability increases with the size. On the other hand, average fixed cost
of implementing traceability decreases with the number of head processed. Mora and
Menozzi (2005) finds that unit cost of the mandatory traceability is higher for medium
size firms in Italy. Bailey, Robb, and Checketts (2005) argue that “farm to fork”
traceability as in E.U., as opposed to traditional two-part traceability system in U.S., may
require plant and line redesigns, new types of line equipment, or fewer people and
locations within the plant for disassembling carcasses. At least, under the current batch
system, the groups of animals from the same origin can be collected into the same batch
and processed at the same time. This gives the small and mid-size firms in advantage
over large firms in implementing the traceability in their plants because the individual
farms and feedlots can not fill the big scale operations. This necessitates the mixing of
cattle from different origins to form batches in large plants, which increases the cost of
tracking. Furthermore, Ollinger, Moore and Chandran (2004) speculate that additional
compliance costs with HACCP rule could be lower for large firms compared to small
firms as large firms would have been more likely to have had to comply with
buyer/custommer requirements prior to HACCP rule. Finally, Ollinger, Moore and
Chandran (2004) also indicate that small firms tend to produce more specialty products,
whereas big firms tend to produce more commodity products. Including both brand and
size factors in the regression equation will help distinguish the each factor’s impact.
For hypothesis 8); this is an implication of Hennessy (2005), where he hypothesized that
more informed control over inputs may lead to automation and capital intensive
production. Capital is known to be less flexible compared to labor to deal with
heterogeneity of inputs. Therefore, with better control over input heterogeneity, plants
may substitute more capital. However, at least in the short-run, capital can be assumed to
be fixed but plant may have flexibility over traceability. Traceability as it increases
information flow in inputs, and therefore, the control over inputs, it decreases costly slow
downs at the production of more capital intensive plants due to heterogeneity in input,
therefore it should be desirable.
Conclusion
This paper outlines our research proposal on the traceability levels of meat slaughter and
processing plants in Iowa. It includes the motivation, objective, background, relevant
literature, data source, econometric modeling and hypotheses sections. As this paper is
written, the surveys have been recently sent. The analysis has to wait until the data
becomes available. A final report with the findings will be written in the near future.
This study focuses on the weakest link in the meat supply chain in terms of traceability;
meat slaughter and processing plants. The information obtained from this study is
expected to shed light on plant level solutions to adopt traceability activities as response
to economic incentives and environment. This study is also very much in line with
ongoing regulatory proposals. If NAIS is implemented in the near future, the traceability
13