Mitigating Production Practices and Antibiotics Use in Meat Industries Prone to Economies of Scale by Institutional Novelties, Marketing and Voluntary Actions

Ernst-August Nuppenau

Abstract


Achieving improved standards in animal husbandry (including less use of antibiotics) through appropriate interventions has become a matter of public concern. It is currently both, hot­ly debated and a challenge for food economics. The question is: how can one achi­eve change in a given environment of property rights and interests? This paper offers a novel appro­ach inten­ded for conflict solving in meat industries which are prone to economies of scale, which are under interna­tional and com­petitive pricing and which experience structural change. In parti­cu­lar, in case of: (i) economies of scale favouring large-scale production and high stocking den­sities (sup­ported by increased antibiotic use), (ii) political power about resistance to regu­late (avoiding strong interference), but also in contrast to (iii) consumers' wishes and willing­ness to pay (WTP for a change in production modes), there is a problem of coordination and institutions. In this article, the issue is delineated as a problem of political bargaining and cre­ating marketing channels (bro­ker and ag­ency) which shall actively pursue promotion of reduc­ed antibiotics use (specifically through redu­ced stocking density) as well as negotiations on compen­sations (for cost increase). Produ­cers are outlined with regards to scheme participation along willingness to ac­ce­pt (WTA). Stocking density reduction is used as proxi for more healthy an­i­­mal rearing met­hods. We establish interest functions and show how a bargain can be modelled in the tradition of Zusman’s political economy. Barga­in­ing involves power coef­fi­ci­ents for brokerage (premium sharing) as well as an agency (called FSA); the ag­ency is modelled as a bureaucracy op­timizing modified costs and benefits. In fact, the agency maxi­mi­zes its budget and ensures participation of willing producers to join programs. Finally we refer to ways how to solve the issue in modes of political economy models. The assumption is that asym­metric information prevails and consumers are willing to pay (WTP) for healthy food.


Keywords


food safety, market segmentation, contracting for antibiotic reduction, political economy model, bargaining model

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DOI: http://dx.doi.org/10.5539/jfr.v4n3p162

Journal of Food Research   ISSN 1927-0887(Print)   ISSN 1927-0895(Online)

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