Traceability in theory is a magic bullet for the beef industry. It connects producers and consumers, prevents disease outbreaks, supplements value and increases efficiency.
In practice, traceability is an issue with limitless facets, plentiful potential players and an uncertain future. In fall 2018, researchers at Kansas State University surveyed feeder cattle sellers and buyers to discover channels for future traceability implementation.
“We want a traceability program that is effective but also incentivizes producers to use it,” said K-State graduate student James Mitchell. “From a government standpoint — the people who are designing these programs — they are thinking how to trace animals back to isolate diseases and improve our response time.”
While most producers can agree with healthier cattle, the costs for implementing electronic or visual traceability systems outweighs their direct benefits.
“Producers want to make money,” Mitchell said, “and so you have this balancing act between wanting a program that is effective and wanting a program that people use.”
Researchers wanted to build off traceability standards already in place for breeding cattle, show cattle and rodeo stock to investigate traceability potential for feeder cattle. In this survey, sellers are producers who sold 50 or more head of feeder cattle and buyers are individuals or companies who bought 50 or more head of feeder cattle.
“We’ve seen that 44 percent of sellers are choosing electronic traceability while 39 percent of buyers are choosing also that option,” Mitchell said. “We see that we have more buyers that are choosing a visual option.”
Mitchell said small shifts in hypothetical questions allowed the research team to estimate traceability participation over a wide variety of scenarios.
For example when the survey offered sellers a hypothetical premium for electronic versus visual identification options, they saw a 13 percent increase in the probability of producers selecting electronic over visual or no identification. In this scenario there was a bigger response in the switch from people using visual traceability to electronic than from people who were previously utilizing no traceability methods at all.
“If you think about it, it would be a lot harder for someone who is doing nothing to switch all the way to an electronic system,” Mitchell said. “You might have to change how you manage animals, how you process them and maybe even your record-keeping system.”
In an additional hypothetical situation, researchers offered sellers a premium for cattle with any form of traceability. In this premium scenario, the only cost for buyers is the premium given to sellers and the only premium the buyer would receive would come through marketing animals with traceability.
“At a $5 per head premium, you get 41 percent of buyers and sellers using this,” Mitchell said. “Of course, as you increase that premium, you get more and more sellers adopting electronic traceability, but from a buyer’s perspective you get fewer buyers procuring animals with electronic traceability.”
Researchers also investigated the possibility for discounts on sellers who do not implement traceability protocols, but in this option there appeared to be a higher instance of sellers gaining a discount on cattle and then implementing their own traceability protocols later in the system.
“As the discount for no traceability increases, you get more and more sellers using electronic or visual traceability and you get fewer buyers procuring animals,” Mitchell said. “The direct incentive is more direct at increasing participation than an indirect discount on people who are not using traceability.”
One of the most common debates surrounding traceability is who controls the incentives and how strictly the guidelines are enforced. In this research, the team investigated government subsidies, as well as government-regulated systems and private partnerships.
“If the government covers the cost at a zero premium, you get 50 percent participation by sellers,” Mitchell said. “That’s a way to shift participation by program design to a system where producers potentially don’t have to pay the full cost.”
While subsidized costs are a quick way to escalate traceability adoption, leaving government involvement out of traceability systems entirely appeared to have similar effects.
“Using a privately managed system, you can get to 50 percent adoption without any added value from the market,” Mitchell said, “as compared to a system managed by the government, where you get 27 percent adoption.”
In general, traceability adoption in this research rarely reaches above 50 percent adoption. Some producers were reluctant to implement in any scenario at any premium or discount.
“Sellers are more sensitive to cost reduction relative to changes in premium,” Mitchell said. “Buyers are more sensitive to the cost of procuring animals with traceability relative to the premium a feedlot might get for selling an animal with traceability.”
Overall, Mitchell said programs need to be attractive to producers and there needs to be value in the market for traceability to be attractive to all parties.
“When market incentives and program design work together, you get higher participation rates in a traceability program,” Mitchell said.