We are interested in the plant level solution for adopting a level of traceability which is
determined by the breadth, depth, and precision of the maintained information. Firms’
adoption of traceability system should be similar to typical investment decision. They
must be balancing benefits and costs for traceability. As benefits and costs for traceability
vary, they develop different traceability levels. Because the relative significance of
generic drivers (risk management, differentiation, productivity gains) will differ among
industries, individual firms, this will lead to the adoption of various solutions (New
Zealand Trade and Enterprise, 2006). Technologies with a clear and immediate benefit
are more readily adopted. Whether that is the case in adopting a traceability system is not
known. Nevertheless, an analogy to firms’ investments decisions on information
technology (IT) can be useful. Firms’ investment on IT and uncertainty over return in
terms of productivity is an ongoing discussion (Lucas, 1999). Even though previous
literature found no evidence on the positive impact of information system (IS) spending
on output at the aggregate level, Brynjolfsson and Hitt (1996) find firm level evidence on
the positive impact of IS spending on productivity with a more current and larger dataset.
In a later study, Brynjolfsson and Hitt (2003) find much larger contribution of
computerization in the long term compared to short term and explain this with a
combination of computerization and complementary organizational investment and
innovations which takes time to accrue. They argue that firm level data may be more
suitable in capturing intangible benefits associated with computerization to the extent that
it is due to firm specific investments, whereas these benefits may be missed at industry
level analyses due to aggregation error.
Background
In response to BSE crises in mid 1990s, E.U. mandated a highly stringent level of
traceability as defined earlier also known as “farm to fork” or “linear” traceability.
Compared to E.U., U.S. traceability system is less stringent and less sophisticated
(Souza-Monterio and Caswell, 2004; Jensen and Hayes, 2006). Firstly, there is no
uniform traceability regulation across food sector in U.S. FDA mandated Establishment
and Maintenance of Records under Bioterrorism Act of 2002 for industries under its
jurisdiction. This regulation requires traceability at the level of immediate previous
source and immediate subsequent recipient. These requirements do not apply to the
industries that are exclusively under U.S. Department of Agriculture’s (USDA)
jurisdiction which are meat, poultry and egg products.
Particularly, in cattle and beef industry a two-part-system has developed; live animal
traceability and meat traceability. Linking these two systems at the stage of slaughter and
processing is an ongoing challenge for the industry (Golan, et al. 2004). For live animal
tracking, National Animal Identification System (NAIS) is scheduled to be fully
implemented in 2009. Currently, only about 10% of the 2 million premises nationwide
was registered as of March 2006 as part of implementing NAIS (Brasher, 2006). In E.U.
all meat animals arrive to plants with individual animal identification through a passport
number with a scanner code. Nevertheless, Jensen and Hayes (2006) claim that farm to