A transaction cost analysis of quality, traceability and animal welfare issues in UK beef retailing

Abstract

Presents a study of the procurement of beef by UK supermarkets. Investigates the hypothesis that a retailer’s choice of beef supplier is influenced by the transaction costs incurred in different supply relationships. Measures the relative importance of the transaction costs incurred by retailers as a result of concerns over quality consistency, traceability and farm animal welfare using conjoint analysis. Data for the conjoint analysis were collected through a postal survey of UK supermarket retailers. From the results, suggests that the information and monitoring costs arising from the need to ensure that beef supplies are of a consistent quality are relatively important influences on the choice of supplier, followed by the traceability of cattle, whether the beef originates from a farm assurance scheme and the price paid by the retailer. Also analyses procurement preferences of individual respondents, revealing some interesting differences between the retailers. Concludes that strategic alliance partnerships between retailers, processors and marketing groups composed of farmers may emerge as the method of vertical co‐ordination which minimizes transaction costs.