Transaction costs are simply the costs of carrying out an exchange of goods or services. They arise whenever there is any form of economic organisation whether through spot market transactions, strategic alliances or vertical integration. If concerns over traceability, quality and animal welfare alter the transaction costs facing retailers when procuring livestock, then it is likely to affect the whole supply chain. Consumers now demand evidence of welfare assurance at all stages of production, marketing, transport and slaughter. In response, retailers have increasingly adopted preferred supply chain relationships which preclude sourcing animals via livestock auction markets. One of the criteria dictating this action is a perceived improvement in animal welfare resulting from direct transport from farm to abattoir. A survey of complete journey structure of over 18,000 slaughter weight lambs from farm to abattoir was conducted between April and July 1997. The results identified that journeys, in the livestock distribution system, are diverse and range in complexity and suggest that the perception of improved animal welfare may be invalid. As such animal welfare transaction costs may not be reduced with increasing supply chain control. This paper examines the factors affecting meat and livestock distribution within the UK and presents statistical analysis of the above mentioned survey and examines the relationship between journey type and animal welfare in relation to the impacts on transaction costs.

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