Sustainable traceability in the food supply chain: The impact of consumer willingness to pay

Abstract

This article addresses the sustainable traceability issue in the food supply chain from the sourcing perspective in which consumer willingness to pay for traceability is considered. There are two supplier types: traceable suppliers, which are costly but can carry a precise recall in food safety events, and non-traceable suppliers, which are less expensive but may suffer a higher cost in food safety events. A portion of consumers display traceability consciousness, and are willing to pay a premium for traceable food products. Four possible strategies in a transparent food supply chain and three sourcing strategies in a nontransparent food supply chain are identified and we determine when each strategy is optimal. We show that efforts to improve traceability that focus on consumers, by increasing their willingness to pay for traceability or expanding the portion of traceability consciousness consumers, may lead to an unintended consequence, such as a decrease in the provision of traceable food products. However, efforts that focus on revealing and penalizing the buyer always lead to a higher provision of traceable food products. We further find that efforts focusing on eliminating the information asymmetry may not be helpful for sustainable traceability in the food supply chain.