Consumption effects of genetic modification: what if consumers are right?⋆

This paper develops a model of differentiated consumers to examine the consumption effects of genetic modification (GM) under alternative labelling regimes and segregation enforcement scenarios. Analytical results show that if consumers perceive GM products as being different than their traditional counterparts, GM affects consumer welfare and, thus, consumption decisions. When the existence of market imperfections in one or more stages of the supply chain prevents the transmission of cost savings associated with the new technology to consumers, GM results in welfare losses for consumers. The analysis shows that the relative welfare ranking of the ‘no labelling’ and ‘mandatory labelling’ regimes depends on: (i) the level of consumer aversion to GM products; (ii) the size of marketing and segregation costs under mandatory labelling; (iii) the share of the GM product in total production; and (iv) the extent to which GM products are incorrectly labelled as non‐GM products.     

消费者对偏远地区特色农产品的购买行为及其影响因素研究——基于2 027个消费者样本数据的考察

目的 准确把握偏远地区特色农产品市场的需求特点和消费规律,对于偏远农村地区持续巩固脱贫攻坚成果、进一步实现乡村振兴意义深远。方法 文章基于2 027位消费者问卷调查数据,建立二元 Logistic模型分析偏远地区特色农产品消费的影响因素。结果 （1）家庭成员结构、职业、收入水平对偏远地区特色农产品购买行为具有显著影响;（2）购买动机、购买渠道、获取农产品供给信息的途径对偏远地区特色农产品购买行为具有显著影响;（3）农贸市场变量与溢价支付意愿呈正向显著关系,线下仍然是消费者选购农产品的主要渠道;（4）种植与营销供给质量对消费者农产品购买行为具有显著影响。结论 该文提出了偏远地区加大绿色和有机特色农产品种植,优化传统农产品市场批发流通网络,不断提升偏远地区特色农产品知名度和美誉度等政策建议。     

Are French consumers ready to pay a premium for eco‐labeled seafood products? A contingent valuation estimation with heterogeneous anchoring

Could the future French eco‐label for fresh seafood products find its place in the French market? This study employs a contingent valuation method to estimate French consumers’ willingness‐to‐pay (WTP) for eco‐labeled fresh seafood products. We exploit original data from a survey carried out in 2010, where 626 participants responded to a double‐bounded dichotomous choice model, through an ascending or descending bid system. Controlling for shift and anchoring effects in random effect probit models, we significantly improve estimation of WTP and its determinants for the three species studied (monkfish, lobster, sole), in particular when using heterogeneous anchoring. We show that WTP is positively correlated to respondents’ income, and also to their environmental concern, to living alone, to living far from the coast, and to trusting NGOs or public institutions more than producer organizations to implement an eco‐label. We also show that the mean price premiums do not differ between species. Finally, on average, the maximum premium consumers accepted to pay is approximately 10% of the product price.     

Product Labeling and Economic Value of Milk Market Segmentation

Abstract

This study explores the economic benefit from labeling milk and milk products and its impact on the supply and demand for fluid milk. The empirical estimate measures the economic value of milk market segmentation based on consumers' willingness to pay for hormonefree milk. The study uses survey data from Kansas households and applied a Probit model for willingness-to-pay and an ordinary least square model for demand analysis. The empirical results show that as long as consumers are willing to pay a higher price for bSTfree milk society would benefit from milk market segmentation.     

Consumers’ Appreciation of Regional Certification Labels: A Pan‐European Study

Successful regional products, such as Florida oranges, Idaho potatoes and Parma ham, often have to compete against products passing themselves off as the authentic product using the exact same name. This unfair competition misleads consumers, discourages small‐ and medium‐sized enterprises (SMEs) from marketing products based on their region of origin, and may end up hurting rural economies. To protect consumers, and support SMEs and rural economies, many countries around the world have introduced regulations enabling SMEs to legally protect the names of their regional products. The success of these regulations largely depends on consumers’ appreciation of regional certification labels that inform consumers that the name of the regional product is protected and that it denotes the authentic product. To gain an understanding about consumers’ appreciation of regional certification labels, this paper investigates consumers’ image of these labels and proposes a model that relates this image to consumers’ willingness to buy and pay for protected regional products. The model is tested based on Regulation No. 2081/92 that was introduced by the EEC allowing European SMEs to protect their regional products and market their products with a protected‐designation‐of‐origin (PDO) label. Structural equation modelling results suggest that consumers’ image of regional certification labels consists of a quality warranty dimension and an economic support dimension, which positively relate to consumers’ willingness to buy and pay for the protected regional product. Protecting regional products and marketing them with regional certification labels may be beneficial for SMEs producing and marketing regional products. Policy and managerial implications are discussed.     

An empirical framework to study food labelling fraud: an application to the Italian extra‐virgin olive oil market

The mislabelling of agricultural and food products is one of the most common types of food fraud. Despite the frequency with which labelling fraud occurs, there is no empirical framework to study its welfare implications, the probability that it may occur, and the measures that can limit its occurrence. We present an empirical framework to study the economic consequences of food labelling fraud in a differentiated products food market. Such framework requires the availability of sales data and the use of an ‘attribute‐space' demand model. The model is applied to the Italian extra‐virgin olive oil market to simulate the occurrence of fraudulent ‘100 per cent Italian' claims. Our results indicate that potential consumer losses due to overpayments for a false claim are higher than manufacturer gains, suggesting that labelling fraud results in welfare losses and not just in welfare transfers. Simulation results indicate that the level of the current administrative fines is not likely to be effective to discourage ‘100 per cent Italian' labelling fraud. Imposing larger fines or other measures negatively affecting a firm's image could be more effective in deterring labelling fraud.     

Measuring rural consumers’ willingness to pay for quality labels using experimental auctions: the case of aflatoxin‐free maize in Kenya

Aflatoxins are a common health hazard in tropical countries, especially in rural areas. New methods to reduce aflatoxin levels in food staples, as well as cheaper test methods, are being developed, but consumers’ willingness to pay (WTP) for these improvements is unknown. A survey was conducted with a representative sample of rural consumers (1,344 in total, 63% women) in all major maize‐production zones of Kenya. The survey included an experimental auction with maize products of different qualities. The results showed that many rural consumers were aware of aflatoxins, but few understood their health risks. Respondents were willing to pay a premium for maize tested for aflatoxins and labeled, but asked a high discount for maize that was visibly contaminated with moldy grain. The premium was higher for respondents with education and in regions with aflatoxicosis outbreaks. Knowledge of aflatoxins substantially reduced the overall WTP, but did not increase the WTP for tested maize. Welfare analysis indicates that mandatory testing would result in substantial benefits if the cost of testing can be lowered to below the premium.     

Product quality and value from consumer perspective—An application to wooden products

Product quality as perceived by consumers is studied with the use of empirical survey data on wooden flooring/panelling materials and on wooden furniture markets in Finland. The results indicate that consumers’ quality perceptions are consistent for the two product categories. Perceived product quality may be understood as a hierarchical structure, which consists of tangible and intangible dimensions, and is fairly consistent for different products. The most abstract dimensions are reflected in more specific sub-dimensions and product attributes. For consumers, the quality of the tangible product is more important than the quality of the product intangibles in the case of wooden products. Perceived product value is determined as customers’ judgement of the relationship between perceived product quality and price. It was also observed to be a two-dimensional structure with tangible and intangible dimensions. The observed dimensions of perceived product quality and value were logically linked.     

Consumers’ Trust in Food Quality and Willingness to Pay More for National Parks’ Brands: Preliminary Evidence From Italy

In Italy, national parks allow the use of their brand logo and name on the labels of food products produced by firms located within the national parks. However, no empirical research has yet investigated the impact of national park brands on consumers’ attitudes and behaviors. Hence, this empirical study explores the factors that influence consumer trust in food quality and their willingness to pay premium prices for the national park brands. Results from a survey involving a sample of 227 Italian consumers suggest that women and younger consumers trust more and are more willing to pay for national park brands. The origin of food products associated with national parks, naturalness of foods, food quality certifications and branding, and the environment in which the packaged foods originate influence consumer confidence and buying behavior. Implications for food marketers and policymakers are discussed.     

Assessing Consumer and Producer Preferences for Animal Welfare Using a Common Elicitation Format

We assess pig farmers’ willingness‐to‐accept (WTA) higher farm animal welfare (FAW) standards and consumers’ willingness‐to‐pay (WTP) for thus enhanced standards. The analysis is based on discrete choice experiments with nearly identical choice sets for both farmers (N=140) and consumers (N=554). Based on preference estimates from a random parameter logit (RPL) model, supply and demand curves for high‐welfare pork in Germany are estimated and market equilibria are derived for alternative levels of FAW. We find that estimates of consumer WTP are significantly positive for all FAW attributes: consumers value more surface space per pig, more bedding and manipulable material, less surgical interventions and shorter transportation times. In contrast, our model revealed significant producer WTA estimates only for surface area per pig and the amount of bedding material on offer, but not for the other FAW attributes. Farmers who expect to continue farming and engage in direct marketing are more likely to adopt higher FAW standards. Male consumers and those who find price more important than brand, origin or taste are less likely to buy high‐welfare pork, as are consumers who never purchase organic meat products. Market simulations for high‐welfare pork indicate increasing divergence between demand and supply with rising FAW standards. We estimate a market share of 44.6% for pork produced in compliance with an entry‐level FAW programme with standards only slightly above the legal minimum. Programmes with more demanding standards are estimated to gain much smaller market shares.     

基于消费者购买意愿的绿色农产品供应链模式创新研究

当下食品安全问题正成为危害消费者身心健康的重要因素,购买绿色健康的食品逐渐成为广大消费者的追求,基于南京市民绿色农产品购买意愿的问卷调查数据和实地走访数据,采用计划行为理论来探讨消费者绿色农产品购买意向的影响因素,从行为态度、主观规范和知觉行为控制这三个角度,通过实证分析甄别影响因素,得出影响消费者购买意愿的主要是行为态度和主观规范这两个因素的结论,针对影响因素从农产品供应链角度,提出了优化完善供应链模式的对策建议。     

Economic Effects of the Consumer‐oriented Genetically Modified Products in Markets with a Labelling Regime

This paper builds on the literature on the economic effects of the second‐generation, consumer‐oriented genetically modified products (GMPs). It analyses the market and welfare impacts of the introduction of these new products in markets, like the EU, that mandate the segregation and labelling of the first‐generation, producer‐oriented GMPs. Developing an empirically relevant model of heterogeneous consumers and producers, the study determines the effects of the consumer‐oriented GMPs on the markets of conventional, GM and organic products, and the welfare of consumers and agricultural producers. Analytical results indicate that the market effects of the new GMPs are case specific and depend on: (i) the consumer valuation of the quality‐enhancing attribute of the new GMP; (ii) the level of consumer aversion to GMOs; (iii) the strength of consumer preference for organic products; and (iv) the production costs and marketing margins in the different supply channels. The policy on the labelling of the first‐generation GMPs does not affect the impacts of the second‐generation GMPs on the quantities and market shares of the different products. However, it does affect their price effects and welfare implications. The introduction of consumer‐oriented GMPs under a mandatory labelling regime can result in losses for some GM consumers and all producers of the conventional product.     

Measuring the functional efficiency of agricultural futures markets

This article presents a method for measuring the functional efficiency of agricultural futures markets in terms of social welfare using a standard futures market structural model. Employing the concept of social surplus, it can be shown that, when futures prices are used to estimate future spot prices, the errors in prediction produce to some degree resource misallocation, which in turn results in welfare losses. Therefore, the social welfare associated with the presence of futures markets can be measured using a Social Loss index. The indicator was calculated for the period 1975–2015 and for several subperiods, which allow us to analyse functional efficiency before and after the 2007–2008 spikes in the prices of agricultural commodities. Futures contracts for 12 products are evaluated. The products are grouped in three different categories: ‘soft products’, ‘livestock’ and ‘grains and oilseeds’. The results indicate that livestock contracts tended to be more efficient than the rest of the contracts during the whole period, but in 2008–2015 their efficiency decreased vis‐á‐vis the rest of the products. Nevertheless, 2008–2015 proved to be the most efficient subperiod, confirming the remarkable development of agricultural futures markets over time.     

Producer–Consumer Misalignment as a Possible Cause for New Food Failure: Empirical Evidence From Chile

Literature on new food products development agrees on the importance of gaining knowledge about consumer tastes and preferences as a way to increase new product success. However, the failure rate of new food introductions continues to be high. In economies with a highly developed retail system, retailers and other market players create an information and communication barrier between the producer and the consumer. Consequently, the development of new products becomes difficult in such conditions, since misalignments between producers and consumers are more likely to occur. To investigate the issue, we interviewed producers of Chilean companies in the blueberry, plum, and wine industries and concluded that their product design was based on assumptions about consumers’ preferences and on the observed market response to competitors’ products. To test if these assumptions were correct, we compared them to consumer preferences. Results showed that producers’ assumptions about consumer preferences differ significantly from actual consumers’ preferences.     

Editorial

Organic food (OF) consumers are concerned with health, safety, and quality of food they eat. However, not all OF consumers are equally “organic.” This article aims to offer more insights into the organic consumers’ profile by clustering Canadian OF consumers into market segments based on their usage rate and psychographic characteristics. Results show 3 distinct segments of OF consumers varying significantly in their motivations to buy OF in their lifestyles but not in their demographics. The article also investigates these consumer segments’ willingness to pay (WTP) premium prices for OF products. WTP is thus not only determined by food category but also by type of consumer. Results also point out significant linkages between psychographic characteristics and WTP for OF.     

Brand Personalities of Global Wine Exporters: A Collective Reputation Theory Perspective

This study examines the perceptions of the personalities that wine drinkers attribute to the wines of the six top exporting countries. An exploratory study with an inductive approach was used, and data were collected from 757 wine consumers from 22 countries. Based on the collective reputation theory, we question the use of standardized versus localized strategy when approaching international markets by the top producers of the world. By means of correspondence analysis, our results indicate that each wine producer country tends to have a different positioning among consumers from different regions of the world. Besides, it is evident that a standardized approach to marketing and promotion of a specific country’s wines to global markets could be viewed as rather myopic, representing a gross oversimplification of reality, and contradicting what our findings reveal about differences in global consumers’ perceptions of wines from the big six producers.     

Combining Stated and Revealed Preferences on Typical Food Products: The Case of Dry‐Cured Ham in Spain

An extensive body of research concerns the valuation of EU certification schemes of quality based on the origin of food products. This literature focuses mainly on stated preferences (SPs) and reported behaviours by the consumers. We combine consumers’ SPs, obtained through a conjoint ranking experiment, with revealed preferences (RP), obtained through a retail scanner database. We evaluate SPs as predictors of RP, and investigate whether SPs and RPs are consistent. Dry‐cured ham in Spain is chosen as the anchor product, mainly because of its broad customer base and long history of origin certification. A ‘trick’ nested logit model with non‐identical and identical samples of consumers is estimated to answer each of the objectives. Results show that, irrespective of the analysed samples, SP can predict general market trends and choices but not accurately predict market shares, and that consumers’ actual behaviour is partly consistent with their SPs. We find that consumers prefer ham produced in Teruel, compared with unspecified Spanish origin. Quality Certification and a Distributor’s Brand are preferred over the alternatives of no quality label or identified with a brand owned by the producer. Interestingly, SPs for the Quality Certification and the distributor’s brand lead to an over‐ and under‐estimation, respectively, of the market share.     

Consumers’ Response to Genetically Modified Ingredients in Processed Food in an Emerging Economy

Genetically modified (GM) foods are available in many countries including post–Soviet Union countries. However, empirical evidence on consumer acceptance for this region is scarce. In this study, we investigate consumers’ willingness to purchase a processed food containing GM ingredients. For this purpose, a consumer survey was conducted in 2015 in Tajikistan. In many aspects, our results confirm previous empirical findings showing that women are more skeptical toward GM food and a higher level of respondents’ education and the presence of minors in households are negatively correlated with their willingness to purchase a processed food containing GM ingredients. Moreover, a higher risk perception of GM food is negatively associated with the probability to purchase and consume such foods. However, our results indicate that risk perceptions of GM food seem to be relatively low in comparison to other studies with 41.5% of Tajik respondents connecting no risks with GM food. This result is surprising given the existing knowledge about post–Soviet Union consumers who are usually assumed to reject GM food due to their strong focus on naturalness.     

Consumers’ Valuation of Rice‐Grade Labeling

The current Korean rice‐grading system has a “no test” option that allows rice to not be graded in the market. This study examines Korean consumers’ valuation of a rice‐grading system without the “no test” option. We apply a nonhypothetical experimental auction to elicit consumers’ willingness to pay for each rice grade and identify the impact of the provision of additional grading information on product valuation. We then use contingent and inferred valuations to obtain consumers’ valuation of a mandatory rice‐grading system without the “no test” option. We find that Korean consumers are willing to pay an additional premium for each rice grade and that rice‐grading information is the most important factor that differentiates the rice products. Rice consumers in Korea also strongly prefer a mandatory rice‐grading system without the “no test” option.     

A latent class approach to investigating demand for genetically modified banana in Uganda

This study explores consumer acceptance and valuation of a genetically modified (GM) staple food crop in a developing country prior to its commercialization. We focus on the hypothetical introduction of a disease‐resistant GM banana variety in Uganda, where bananas are among the most important staple crops. A choice experiment is used to investigate consumer preferences for various attributes related to the banana (such as bunch size, technology, producer benefit, and price) and examine their opinions on GM foodstuff. Choice data come from 421 banana‐consuming households randomly selected from three regions of Uganda. A latent class model is used to investigate the heterogeneity in consumers’ preferences for selected attributes related to the banana and to profile consumers who are more or less likely to accept GM bananas. Our results reveal that there is significant heterogeneity in consumer preferences across our sample. GM bananas are valued the most by poorer households located in the rural areas of the Eastern region. These food‐insecure households would experience the highest benefits (i.e., welfare gains) from the commercial release of GM bananas. In contrast, urban consumers are less accepting of GM bananas, and they would experience significant welfare losses if GM banana is released. According to our welfare estimates, both the total welfare benefits acquired by the gainers and the total welfare losses borne by the losers of this technology are significant and large. These results suggest the need for further investigation of the overall welfare effects of the introduction of GM bananas on the Ugandan society as a whole.