Journal of Agricultural and Resource Economics
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Plant-Based vs. Animal-Based Proteins
Previous hedonic assessments have largely relied on the assumption that bull buyers have homogeneous demands for bull attributes. However, quality differentiations and heterogeneous demands support the existence of submarkets. This analysis investigates market segments using a finite mixture model and 13 years of bull auction data. Results indicate that valuations of bull attributes vary across implicit buyer segments. Differences in demand may be influenced by a variety of factors, including—but not limited to—farm goals, labor availability, and end-use marketing arrangements for calves. Results have important implications for signaling quality cues throughout the industry’s breeding sectors.
Despite many consumers’ intuitions to the contrary, improvements in farm animal welfare can conflict with environmental objectives, particularly regarding greater intensification of production systems. Using a discrete choice experiment, this study determines how consumers make trade-offs between increased animal welfare and lower levels of environmental impact. We assess the sensitivity of results by varying how attributes were presented and what information was available to respondents. Overall, results suggest consumers are willing to trade environment for animal welfare, but the extent of this trade-off strongly depends on how the information is conveyed to consumers.
U.S. consumers see retail beef products with “no added hormones” (NAH) labels. However, similar labels appear on pork and chicken products, even though hormone use in their production is prohibited. This study assesses consumer perceptions of hormone use in different livestock species. Using choice experiment data, we then examine the impact of these perceptions on preferences for unlabeled meat products and willingness to pay for NAH-labeled meat products. Results suggest that consumer perceptions of hormone use in production are incorrect. Further, perceptions influence consumer preferences and willingness to pay for unlabeled products versus those with NAH labels.
There has been substantial productivity growth in the broiler industry; however, high growth rates might adversely affect animal welfare, resulting in calls for slow-growth breeds. This research shows production costs are 11%’25% per pound higher for slower-growing breeds than for modern breeds, depending on the target endpoint. Breakeven wholesale price premiums needed equate net returns of slow- to fast-growth broilers range from $0.10/lb to $0.36/lb. Annual costs of an industry-wide conversion to slow growth are $450 million for consumers and $3.1 billion for producers. Consumer willingness-to-pay would need to increase 10.8% to offset the producer losses.
We investigate whether consumers purchase organic foods to demonstrate social status to others. Subjects were asked to choose among organic and nonorganic milk and apples in a control group and treatments in which: i) an image of another person’s eyes was displayed, ii) responses appeared to not be anonymous, or iii) a vignette placed the choice in the presence of an acquaintance. The vignette treatment increased the willingness-to-pay (WTP) premium for organic by about 90%. The other treatments did not have significant overall effects. When exposed to another person’s eyes, more educated respondents increased their WTP for organic.
This study uses an experimental auction and a discrete choice experiment to determine consumers’ willingness to pay (WTP) for rice with improved insect control and for rice stored using Integrated Pest Management and investigates potential reasons—anchoring and information—why some studies have found inconsistencies between the two methods. Results indicate that WTP estimates from the choice experiment are lower than consumers’ average auction bids. Anchoring in the choice experiment appears to be an explanation for the discrepancy. Providing consumers with additional information about the products improved choice experiment results, producing consistent preference ordering and increasing WTP estimates.
California legislation outlawed the use and sale of battery cages for egg-laying hens in 2015. While a number of ex ante studies projected the effects of the housing prohibitions, the ultimate ex post effects are unknown. Using a price series reported by the USDA, we study the movement of daily egg prices in California and the United States before and after the law’s implementation. Depending on the methods used, we find that Californians now pay between $0.48 and $1.08 more for a dozen eggs. The estimates suggest an annual reduction in California consumer surplus of between $400 million and $850 million.
We estimate the value of using genetic information to make fed cattle marketing decisions. Efficiency gains result from sorting cattle into marketing groups, including more accurate optimal days-on-feed and reduced variability of returns to cattle feeding. The value of using genetic information to selectively market cattle ranged from $1–$13/head depending on how a producer currently markets cattle and the grid structure. Although these values of genetic information were generally higher than those reported in previous research, they were still not enough to offset the current cost of genetic testing (about $40/head).
We estimate the value of using information from genetic marker panels for seven economically relevant feedlot cattle traits. The values of using genetic information to sort cattle by optimal days-on-feed are less than $1/head for each of the traits evaluated. However, the values associated with using genetic information to select cattle for placement are as much as $38/head. The most economically relevant genetic traits are average daily gain and marbling. It would not be profitable at the current testing cost of $38/head to sort cattle by optimal days-on-feed, but it could be profitable to use the genetic tests for breeding cattle selection.
Proposition 37 would have required genetically engineered food in California to be labeled. This paper reports the results of a survey designed to determine Californians’ voting intentions prior to the vote, perceptions about the prevalence of genetically engineered foods in the United States, willingness to pay for a mandatory label, and effectiveness of advocacy advertising. Overall, Californians had inaccurate knowledge about the prevalence of genetically engineered foods, and stated they were willing to pay up to 13.8% higher food costs on average for a mandatory label. Findings suggest that the effectiveness of opposition advertising was likely a formative factor in the defeat of Proposition 37.
Data on individuals’ private shopping choices are often used to draw conclusions about their desires for food policies. The purpose of this paper is to test this often-implicit assumption using data from a nationwide survey about animal cloning. We find that although individuals’ private choices indicate a strong desire to avoid meat and milk from cloned cattle, public choices predict that only 40.29% have a positive WTP for such a ban. The results suggest caution is necessary when inferring public preferences from private choices.
This paper analyzes price differentials among conventional, cage-free, organic, and Omega-3 eggs using retail scanner data from two regional markets and the United States as a whole. Results reveal significant premiums attributable to cage-free (a 57% premium on average) and organic (an 85% premium on average). However, significant variation exists among geographic locations; price premiums for organic over conventional eggs in Dallas are almost twice as high as those in San Francisco. Estimates indicate that about 42% of the typically observed premium for cage-free eggs over conventional eggs (and 36% of the premium for organic eggs) can be attributed to egg color rather than differences in hens’ living conditions. Despite the large implicit price premiums for cage-free and organic, our data reveal that most shoppers are not willing to pay such high prices for cage-free and organic attributes.
To identify the value consumers place on observable characteristics of fresh beef products, primary data were collected on over 1,350 packages of beef from 66 randomly selected grocery stores located in three metropolitan areas–Oklahoma City and Tulsa, Oklahoma, and Denver, Colorado. Estimated linear and log-linear hedonic models reveal ground beef prices were significantly influenced by store location (i.e., metropolitan area) and store type, fat content, package size and type, expiration date, brand category, and special labels. Factors influencing steak prices included store location, product type, quality grade, package size and type, brand category, and special labels.
When individuals have limited information and are uncertain about the quality of a good, government policy, or the lack thereof, can serve as a signal to consumers about the likelihood of realizing alternatives states of nature. In this paper, we focus on a controversial beliefs about government intervention: the market for genetically modified food. Data from a mail survey were used to estimate an econometric model where beliefs about labeling policy, beliefs about the safety of genetically modified food, and willingness to consume genetically modified food are endogenously determined. Results indicate that consumers who believe the government has a mandatory labeling policy for genetically modified food are more likely to believe genetically modified food is unsafe than consumers who believe no such policy is in place.
Recent research has identified genetic diversity in the ability of animals to manufacture and recognize leptin, a protein that regulated appetite and weight. This paper determines the economic value of using information on leptin genotype to select and manage beef cattle. Results reveal that the economic value of using genotypic information to sort cattle by optimal endpoint is only about $2/head for steers and $1/head for heifers; however, the value of using genotypic information to optimally select and feed only certain genotypes is $23/head for steers and $28/head for heifers. The difference in per head profit between the best and worst performing genotype is over $28 on the date the cattle were actually marketed and increases to $60 if each genotype is optimally marketed.
A plethora of research in recent years has been devoted to estimating consumer demand for genetically modified food, an important piece of information needed to create appropriate public policy. To examine this body of work, a meta-analysis was conducted of 25 studies that, in aggregate, report 57 valuations for GM food. Findings indicate as much as 89% of the variation in existing value estimates for genetically modified food can be explained by an econometric model that controls for (a) the characteristics of the sample of consumers studied, (b) the method for eliciting consumers’ valuation, and (c) characteristics of the food being valued. Each of these factors has a statistically significant effect on estimated premiums for non-GM food. Results of this study effectively summarize the extant literature on consumer demand for genetically modified food and permit the creation of some stylized facts that are not conditional on the results of one particular study. This paper also illustrates the effect of methodological choices on valuation estimates and reports a model which allows researchers and policy makers to quickly generate valuation measures for use in marketing or cost benefit analysis.
Little research has been conducted on evaluating out-of sample forecasts of discrete dependent variables. This study describes the large and small sample properties of two forecast evaluation techniques for discrete dependent variables: receiver-operator curves and out-of-sample log-likelihood functions. The methods are shown to provide identical model rankings in large samples and similar rankings in small samples. The likelihood function method is better at detecting forecast accuracy in small samples. By improving forecasts of fed cattle quality grades, the forecast evaluation methods are shown to increase cattle marketing revenues by $2.59/head.
Although several studies have estimated the costs of country-of-origin labeling (COOL), no previous study has documented how these costs will be distributed across the livestock sector or how producer and consumer welfare will be affected. This analysis presents an equilibrium displacement model of the farm, wholesale, and retail markets for beef, pork, and poultry that documents how producers and consumers will be affected by COOL. Findings reveal that as the costs of COOL are shifted from the producer to the processor and retailer, producers are made increasingly better off while consumers are made increasingly worse off. Further, an increase in aggregate consumer demand of 2% to 3% is likely sufficient to offset lost producer welfare due to COOL costs.
This study examines the strategic interaction between food companies and activists using a game theoretic model of sequential bargaining in the absence of complete information. In a rather confined set of circumstances, findings indicate it is always in the best interest of the food company to comply with activists’ demands. More frequently, however, there will be cases where compliance is not optimal, depending on the size of the expected effect of protest, cost of defending against protest, and the cost of protest to the activist.
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