Consumer Welfare and the Loss Induced by Withholding Information: The Case of BSE in Italy

The paper develops a measure of consumer welfare losses associated with withholding information about a possible link between BSE and vCJD. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed choice, under conditions of improved information. Unlike previous work that is largely based on a single equation demand model, the measure is obtained retrieving a cost function from a dynamic Almost Ideal Demand System. The estimated perceived loss for Italian consumers due to delayed information ranges from 12 percent to 54 percent of total meat expenditure, depending on the month assumed to embody correct beliefs about the safety level of beef.     

Household behavior with respect to meat consumption in the presence of BSE and CWD

In this study, Canadian household meat consumption behavior in exotic (deer and elk meat) and traditional meats (beef, pork, chicken, turkey, bison, and seafood) is examined. This research introduces some differences in public response to transmissible spongiform encephalopathies (TSE) risks across consumer segments from different sources of meat supply, including hunted meat. The analysis uses a combination of survey and household meat purchase data that include a balanced household panel of 2,393 households per year across time. A two-step estimation procedure is used with a probit model in the first step (consume or not) and a doublelog–translog two-stage demand system in the second step (level of consumption). It is assumed and tested that household sociodemographics, consumers’ risk perceptions/attitudes, and media coverage of bovine spongiform encephalopathy (BSE) and chronic wasting disease (CWD) are underlying demand shifters in consumers’ daily meat purchase decision. The results suggest that households who obtain venison from hunting show the highest confidence in venison safety. Exotic meat preferences negatively affect traditional meat consumption in the daily diets of households who purchase traditional meats from stores and obtain venison from hunting. In response to the media coverage of BSE and CWD, exotic meat eaters are less sensitive to animal disease media information than the general population.     

The impact of the 2008 financial crisis on dynamic productivity growth of the Spanish food manufacturing industry. An impulse response analysis

The emergence of a financial crisis is an event that can impact the fortunes of nearly all economic agents. The focus here is on the 2008 financial crisis and how firms’ productivity growth was impacted by this crisis in the years that followed. This article focuses on dynamic productivity growth and its components using a firm‐level data set of Spanish meat processing, dairy processing, and oils and fats firms. The impulse response analysis shows that the impact of the crisis on dynamic productivity growth is negative and persistent in the oils and fats industry, initially positive but then negative in the meat processing industry, and positive in the dairy processing industry. The observed magnitudes of change in indicator are between 2% and 5% for oils and fats industries, and of 1% in both dairy and meat industries. Our analysis further confirms that firms’ size is an important factor in explaining how crisis impacts dynamic productivity growth and its components, while we find only slight evidence regarding the firms’ experience in the market.     

A MODEL OF THE DISAGGREGATED DEMAND FOR MEAT IN AUSTRALIA

The focus of this study is the estimation of the Australian demand for meat between 1967 and 1990, employing a demand systems approach which uses the linear approximate, almost ideal demand system (LA/AIDS) model. Two demand systems are estimated by maximum likelihood methods, one for aggregate types of meat and one for disaggregated meat products. After correcting for serial correlation in the two demand systems, restrictions from utility theory are imposed and tested for their appropriateness. By using a new data set on the Australian retail price and consumption offresh pork, ham and bacon, the results from the disaggregated model provide the first estimates of the own-price, cross-price and expenditure elasticities for these commodities.     

Optimum Replacement Policies for the Control of Subclinical Mastitis due to S.aureus in Dairy Cows

A dynamic program was used to establish the optimum replacement policy for dairy herds, taking into account subclinical mastitis caused by the bacteria Staphylococcus aureus. This particular pathogen is resistant to normal drug therapies and therefore culling is the major method of control. Methods are described to account for output losses due to yield loss and a reduction in milk price caused by extra somatic cells secreted into the milk by infected cows. Extra culling was justified in both infected and control herds in order to reduce the level of infection in the herd. The method described allows replacement policy to be treated as control expenditure rather than an output loss in the economic analysis of farm animal disease. This approach will become even more important as consumers demand an alternative to the prophylactic use of antibiotics in agriculture without compromising food quality and safety.     

TESTING FOR CHANGES IN THE STRUCTURE OF THE DEMAND FOR MEAT IN AUSTRALIA

Quarterly data from 1962 to 1983 for beef, lamb, mutton, pig meat and poultry were used to test for constancy in the structure of meat demand in Australia. The cumulative sum, cumulative sum of squares and Farley-Hinich tests were applied to a range of models to ensure that any rejection of stability was not due to an inappropriate functional form or omitted dynamics. Little evidence was found of a marked swing away from consumption of any meat, with the exception of mutton. The results suggest that changes in prices and in total consumer expenditure are far more important than changes in tastes as determinants of meat consumption.     

Incorporating nutrients into meat demand analysis using household budgets data

The objective of this article is to analyze the Spanish demand for meat, taking into account the consumer's concern about the relationship between food diet and health. This concern is forcing food demand analysts to assume that consumer utility is a function of nutrients instead of simply the food products themselves. Nevertheless, these utility function arguments are not produced in the marketplace but rather at home. As a consequence, in this article household production theory is followed in order to analyze Spanish demand for meat using the Quarterly National Expenditure Survey for 1999. Demands for several meat products (the input in the model) are derived from the translog cost function. Censored regression models are used in the estimation process, since many zero responses are reported. Five broad categories, eight nutrients, and the most relevant socioeconomic variables are considered. Finally, a set of elasticities is calculated with respect to all the variables included in the analysis.     

Ultrasound technology for better beef price

Sluggish growth in per capita consumption and a downward pressure on beef price at the farm level has required producers to raise cattle that precisely target the meat attributes desired by consumers. Coupled with the consumers' preference for beef with lean tissue and less external fat, the beef packing plants have used the dualistic grading system that emphasizes leanness and palatability; both important to carcass prices. Ultrasound technology can help farmers to produce a carcass with an optimal mix of attributes such as marbling and muscling, and external fat. The results of this study show a high level of accuracy of ultrasound technology in predicting carcass attributes. An estimated hedonic regression model shows that the carcass attributes are reflected on the implicit beef price. Ultrasound technology helps producers to produce carcass with the desired attributes and thus obtain a higher price.     

The wealth of nature: economics as if survival mattered

Livestock play a key role in the lives of poor, rural people in developing countries, providing a major proportion of their cash income, capital assets, draught power, fuel and fertilizer. Rapid growth in demand for meat and dairy products in Asia presents both opportunities and challenges for livestock development and poverty alleviation. This paper explores the potential of livestock intensification to benefit the livelihoods of upland households and meet market demand in the Lao Peoples' Democratic Republic (Lao PDR), a South East Asian country undergoing significant economic change.

A review of the livestock sector in Asia shows increasing demand for live animals and meat in neighbouring Vietnam, Thailand and China. Lao PDR is well positioned to capitalize on the growing Asian livestock sector, however the extent livestock production in Lao PDR can reduce poverty, meet growing domestic meat demand and lift livestock exports is problematic. Findings from research in two upland northern provinces demonstrate how the introduction of forages for livestock has revolutionized the lives of some farmers and villages, but concludes that strategies are still needed to engage poorer households. The impacts of changing domestic and export markets are less certain, and are discussed within the context of environmental and public health, cultural traditions, economic development and sustainable livelihoods.     

Comparing heterogeneous consumption in U.S. and Japanese meat and fish demand

This article uses national, quarterly data to conduct an empirical analysis of pre‐committed meat and fish demand by U.S. and Japanese households using the generalized almost ideal demand system (GAIDS). Pre‐committed demand represents the component of demand that is insensitive to both income and price adjustments. U.S. consumers are found to hold significant positive pre‐committed demand for beef and pork, while Japanese consumers appear to possess significant, positive pre‐committed demand for beef and fish. This provides evidence to partially explain observed differences in Japanese and U.S. consumer reactions to nonprice and nonincome effects in beef, pork, poultry, and fish. In addition, based on in‐ and out‐of‐sample performance, the more general GAIDS is preferred to the almost ideal demand system (AIDS) for both the U.S. and Japanese demand systems. Results lend to improved demand modeling efforts and more complete understanding of true market forces at hand in meat and fish markets for these culturally diverse consumer groups.     

Decomposing Preference Shifts for Meat and Fish in the Netherlands

The changing preferences of Dutch consumers for meat and fish are investigated using a switching almost ideal demand system. Structural change in demand between January 1994 and May 1998 is decomposed into underlying trends, temporarily irreversible preference shifts triggered by the BSE crisis of March 1996, and a “panic” reaction against beef in the month of the crisis itself. Preference shifts due to the BSE scare reduced expenditure shares for beef, minced meat and meat products by 2.5, 3.3 and 7.9 percentage points respectively. There were offsetting gains in the shares of pork, prepared meat and fish. Taking underlying trends also into account, changing preferences over the whole period reduced beefs share by 4.9 percentage points and increased those of poultry, prepared meat and fish by 4.1, 4.9 and 5.2 percentage points respectively.     

Measuring Market Power for Food Retail Activities: French Evidence

In this paper we develop and estimate an empirical model of pricing behaviour for food retail firms in both a quantity‐setting oligopoly engaged in the joint production of demand‐related final goods and a quantity‐setting oligopsony for supply‐unrelated wholesale goods. The procedure consists of estimating an inverse demand system for the final goods, single supply functions for the wholesale goods and the retail industry first‐order profit‐maximisation conditions, from which an estimate of the degree of imperfect competition and of oligopoly‐oligopsony power for the different commodities can be retrieved. The model is applied to the French food retail industry and three commodities are distinguished: dairy products, meat products and other food products. We strongly reject the hypothesis that French food retail firms behave competitively, and more than 20 and 17 per cent of the wholesale‐to‐retail price margins for dairy products and meat products, respectively, can be attributed to oligopoly‐oligopsony distortions.     

THE WILLINGNESS OF CONSUMERS TO PAY FOR ATTRIBUTES OF LAMB

A contingent valuation approach has been used to estimate the willingness to pay by consumers for changes in leanness and portion size in lamb loin chops. Over 800 consumers were interviewed at four major shopping centres in Sydney. Consumers were prepared to buy loin chops with more fat cover at a discounted price but were unwilling to offer a premium for chops with a larger area of red meat.     

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.     

The Impact of Sustainability Aspects in the Meat Sector: A Cluster Analysis Based on Consumer Attitudes and Store Format Choice

Several consumer studies have shown considerable market potential for sustainable meat products, however, their markets shares are still marginal. In Germany, the sustainable aspects “organic,” “local origin,” and “animal welfare” are of special interest. To obtain a precise overview of potential target groups for these meat categories and their choice of store format, 620 German consumers were surveyed on their attitudes toward sustainable meat production and their shopping behavior. First, target groups based on consumers’ attitudes were identified by cluster analysis, taking into account possible overlaps. Consumers were also clustered by their store format choice and their preferred type of meat packaging. A cross tabulation of the results then provided insights into which store format and type of meat packaging is preferred by the target groups for sustainable meat products. Due to overlaps found in the target groups, the existence of important subgroups was shown. Amongst the target groups, only a slight preference for unpackaged meat products was found. Basically, the offer of sustainable meat products appears of interest for all store formats, with particular emphasis on supermarkets. The results of this study can support producers and retailers developing new and tailored marketing strategies for sustainable meat products.     

DEMAND FOR FOOD IN GREECE: AN ALMOST IDEAL DEMAND SYSTEM ANALYSIS

This paper provides an analysis of food demand in Greece using the Almost Ideal Demand System and annual food expenditure data for the period 1950–1986. The focus is on the estimation of a complete matrix of price and income elasticities for the various food commodity groups for Greece. The empirical analysis points to the dominant position that meat and other livestock products have acquired in the diet of Greek consumers during a period of high income growth and rising living standards. Further increase in meat and milk demand is expected to take place as long as incomes keep rising.     

One Man's Meat … 2050? Ruminations on Future Meat Demand in the Context of Global Warming

This Address considers a range of issues relating to the contribution of meat consumption and livestock production to global warming, given the need highlighted by the Committee on Climate Change (CCC) to reduce global GHG emissions by over 50% by 2050. The IPCC Climate Change 2014 report recognised that demand oriented measures may also contribute to GHG mitigation. The paper reviews a number of studies which examine demand‐led mitigation potentials, and concludes that such estimates ignore the market effects of changes in meat consumption habits or demand oriented policies. A simple partial equilibrium model of beef, poultry, pig and ovine meats is developed for the major regions of the world to explore the impact of a range of scenarios which might reduce meat consumption and GHG emissions. These include emissions taxation, long‐term trends in reduction of red meat consumption in developed economy regions, and supply side improvements in livestock emissions intensities. The paper discusses problems associated with many published demand elasticities suitable for incorporation into a market model, problems of selection from widely varying published estimates and their appropriateness for longer‐run projections. The dearth of published supply elasticity estimates is also highlighted. The modelling concludes that economic and population growth to 2050 without any mitigation measures will lead to a 21% increase in per capita meat consumption and a 63% increase in total consumption and GHG emissions by 2050. However, the mitigation projections from the scenarios explored only generate a 14% reduction in cumulative emissions from the baseline 2050 projections, insufficient to meet the CCC target.     

Supply and demand for commodity components: implications of free trade versus the AUSFTA for the US dairy industry*

During the negotiations on the Australia–US free trade agreement (AUSFTA), the US dairy industry vigorously opposed opening the US market to imports of Australian dairy products on the grounds that the US industry would be devastated. Subsequently, the agreement signed in February 2004 made an exception for dairy, providing for only limited quota expansion and no free trade, even at the end of the long implementation period. This paper presents a simulation model of world dairy markets, represented by supply and demand equations for fat and non‐fat components of milk and manufactured dairy products. We use the model to analyse the effects on US milk markets of both a hypothetical agreement, allowing free bilateral trade in dairy products, and the actual AUSFTA. An important contribution to the literature is the derivation of explicit supply and demand relationships for milk components. The components model allows an analysis of long‐term production, consumption, and trade patterns that is not tied to specific, fungible products. Simulations indicate that increased imports from Australia resulting from bilateral trade liberalisation would have resulted in small reductions in US milk prices and production. The much smaller increases in Australian access to the US market under the actual AUSFTA will have even smaller, almost negligible, impacts.     

Is Dry Aging for Pork Relevant to Consumers?

Introducing a new product is tricky because of potential problems with consumer acceptance. Dry aging is a technique that could make meat more tender, but at the expense of the color that would become darker. This technique is widely used for beef, but it could be useful in the pork industry since the increasing offer of lean meat has reduced its natural tenderness. We investigate Italian consumer preferences for dry aging applied to pork loin and the effect of information on consumer acceptance. A sample of 264 consumers was surveyed in June 2014 in Bologna, Italy, using a hypothetical rank-based conjoint analysis. Data were analyzed using a rank-ordered logit (ROL) approach. Results suggest that consumers preferred dry-aged pork loin to fresh pork loin. They also preferred products labeled with Italian origin and having low fat content. Factors affecting the intention to purchase dry-aged pork loin are age and information on dry aging.     

全面建成小康社会对农村居民肉类消费的影响——基于中国农村微观经济数据的实证研究

[目的]基于中国农村微观经济数据,分析全面建成小康社会对农村居民肉类消费的影响。[方法]文章运用恩格尔模型和考虑"零消费"问题的近乎理想需求系统模型(AIDS)的两阶段模型,对全国8个省份的农户数据进行实证分析。[结果]首先,肉类食品的需求收入弹性均为正值,农村居民肉类需求随着收入增长而增加。其次,肉类食品需求收入弹性存在差异,其中,禽肉收入弹性最大,牛羊肉收入弹性最小。再次,不考虑"零消费"问题时,牛羊肉的需求弹性被高估0.12～0.29,猪肉的需求弹性被高估0～0.02。最后,到达全面建成小康社会的标准时,目前低于收入标准的农村居民人均猪肉、禽肉和牛羊肉消费量将分别增加3.42kg、1.86kg和0.57kg,消费结构将进一步优化。[结论]全面建成小康社会将促进农村居民人均收入增长,进而扩大人均肉类消费量、优化肉类消费结构;农村家庭户主受教育程度与肉类消费具有正向相关关系。