A Principal‐Agent Model for Evaluating the Economic Value of a Traceability System: A Case Study with Injection‐site Lesion Control in Fed Cattle

Abstract

AbstractTraceability can link the identity of cattle feeders with retail beef cuts. The economic problem for the packer implementing traceability is to choose the level of investment in traceability and the level of incentive payments to cattle feeders so that cattle feeders will avoid production actions that can damage retail beef cuts. A case study of injection‐site lesions in cattle is the basis for technical parameters to numerically solve this principal‐agent problem. Results show that cattle feeders will give injections in sites preferred by the packer even with low rates of successful tracking and minimal incentives.