Demand for farm animal welfare and producer implications: Results from a field experiment in Michigan

This study utilizes a Becker-DeGroot-Marschak (BDM) mechanism to assess Michigan consumer demand for animal welfare practices. Results are examined in the context of changing farm production costs and producer marketing margins. We find that while consumers are willing to pay significant premiums for animal welfare standards, failing to account for the costs associated with producing the entire animal under the new system could lead to suboptimal policy that negatively affects producer welfare. Our results suggest that consumer premiums for animal welfare are product specific and that WTP estimates should not be generalized to the entire animal. We discuss policy implications of our findings and highlight the importance of considering producer costs when evaluating consumer demand for farm animal welfare practices.     

Reconsidering the political economy of farm animal welfare: An anatomy of market failure

Animal welfare is often cited as a classic public good, which implies market failure and, thus, that government intervention is required. However, the current literature does not provide an accessible account of how governed markets are supposed to cope with the issues of animal welfare. This paper seeks to fill this gap by re-considering the political economy of animal welfare. Conceptual analysis shows that the major cause of market failure in the case of farm animal welfare is a problem of consumption externalities. It is the specific regulation of animal welfare conditions which is a public good (or bad). Two important conclusions follow from this analysis, which are largely unexplored in the literature on animal welfare. First, measurement of potential market failure, through identifying actual willingness to pay (WTP) for animal welfare friendly products, is potentially misleading. The difference between citizen votes and consumer WTP for animal welfare is not prima facie evidence for either market failure or a gap in the market. Second, conventional arguments in favour of subsidies and assistance to producers for better animal welfare are misconceived and potentially counterproductive. A more rational policy is to subsidise the consumption of animal welfare friendly products.     

Measuring the consumer benefits of improving farm animal welfare to inform welfare labelling

Policy makers in the European Union are envisioning the introduction of a community farm animal welfare label which would allow consumers to align their consumption habits with their farm animal welfare preferences. For welfare labelling to be viable the market for livestock products produced to higher welfare standards has to be sufficiently segmented with consumers having sufficiently distinct and behaviourally consistent preferences. The present study investigates consumers’ preferences for meat produced to different welfare standards using a hypothetical welfare score. Data is obtained from a contingent valuation study carried out in Britain. The ordered probit model was estimated using Bayesian inference to obtain mean willingness to pay. We find decreasing marginal WTP as animal welfare levels increase and that people’s preferences for different levels of farm animal welfare are sufficiently differentiated making the introduction of a labelling scheme in the form of a certified rating system appear feasible.     

Are consumers concerned about palm oil? Evidence from a lab experiment

A lab experiment evaluates the consumers’ willingness to pay (WTP) for food products made with and without palm oil. Palm oil production induces environmental damages, and its consumption presents a health risk. However, the production of alternative oils raises land use issues. In the experiment, successive messages emphasizing the characteristics of palm oil and palm oil-free products are delivered to participants. Information has a significant influence on WTP when it underlines the negative impact of the related product. This effect is stronger for the palm oil product than for the palm oil-free product. The experiment also compares the welfare effects of two regulatory instruments, namely a consumer information campaign versus a per-unit tax. Because of the respective attributes of both palm oil and palm oil-free products, the information campaign improves welfare with a much larger impact than the tax.     

The welfare impact of food pathogen vaccines

Vaccines against several common foodborne pathogens are being developed and could substantially alter the policy tools available to address foodborne illness. However, little analysis is available to suggest how social welfare would be affected by consumer and industry responses to these new vaccines. To address this void, we use stated-preference data to estimate consumer willingness to pay (WTP) for food safety vaccines and then simulate the welfare impacts of subsidizing consumer purchases of the vaccine given two different industry responses: maintaining current levels of food safety vigilance and reducing food safety vigilance due to a moral hazard response that undermines consumer confidence in food safety. To obtain consumer preferences for the vaccine, we simultaneously estimate a three-equation model that recognizes the recursive nature of responses to questions probing respondents’ willingness to purchase vaccines and perceptions of the probability and severity of possible foodborne illness incidents and the joint distribution of unobservable components. Our simulations show large consumer WTP if vaccines are relatively inexpensive while the presence of moral hazard increases respondents’ willingness to pay and voluntary uptake of vaccine.     

Hen housing system information effects on U.S. egg demand

The U.S. egg industry has been moving rapidly towards “cage-free” aviary housing as an alternative to conventional cages for hens. A choice experiment was used to evaluate the U.S. public’s willingness to pay (WTP) for egg attributes including housing system, color, size, and certifying agency. A significant difference in WTP for hen housing systems was found using video information treatments describing hen housing systems. When respondents were shown videos of egg production systems, they were indifferent between cage-free aviary and the alternative enriched colony hen housing system whereas with no video information the respondents clearly preferred the cage-free system. Results point towards potential public misunderstanding of the costs and benefits associated with the “cage-free” egg label designation and highlight potential discrepancies between industry commitments and informed consumer preferences.     

Consumer preferences before and after a food safety scare: An experimental analysis of the 2010 egg recall

In August 2010, more than half a billion eggs were recalled in the U.S. because of a Salmonella outbreak. This study examines the effect of the recall with a unique pair of auction experiments investigating willingness to pay (WTP) for conventional and organic eggs, one conducted shortly before and one right after the recall with the same participants. In addition to the before and after bids, participants bid again after a negative information or balanced information treatment about the event. Accompanying surveys showed consumers had a high level of awareness of the recall but less knowledge of specific details, and viewed information on egg farm conditions as very important in their WTP. While there were no significant before and after differences, WTP for organic eggs significantly increased in the negative information treatment, and balanced information had a positive effect on consumer WTP for conventional eggs.     

Identifying use and non-use values of animal welfare: Evidence from Swedish dairy agriculture

In this study, we sought to identify the use and non-use values that underlie farmers’ decision making with respect to animal welfare, based on in-depth interviews with 50 dairy farmers in Sweden. We identified use values related to: being able to continue the business, earning a living from the business, not being tied to the farm (i.e. having time available for other things), product quality, and work environment. We also identified non-use values related to avoidance of suffering, being able to further improve the welfare of dairy cows, the dairy farmer feeling good him/herself, ethical considerations, a feeling of doing the right thing, and animals eating properly (i.e. functioning as dairy cows should). Understanding the values underlying dairy farmers’ decision making with respect to animal welfare is an important step in understanding why these farmers work with animal welfare. The results are useful in improving communications from authorities and farm advisors to farmers, as a strategy to gain better acceptance for improved animal welfare standards; in designing product certification schemes in the food industry; and in communicating to the public the values influencing production of dairy products.     

Worker welfare on Kenyan export vegetable farms

The paper analyses farm worker welfare on three different types of farms in Kenya producing vegetables for export. The three types of farms differ by certification to international production standards as well as by size. A multidimensional approach measures welfare using human capital, income, physical and mental health, and life satisfaction. The findings suggest that GlobalGAP certification has a positive impact on worker welfare as farm workers are given more training. Workers on large certified farms earn more than those on small farms but also show more health problems. Certification on small farms is associated with higher satisfaction of workers with their life compared to workers on non-certified small farms. From a development policy perspective this paper does not support a clear cut policy on which types of farm to support as overall benefits of a support strategy will depend of the number of beneficiaries reached through the different farm types.     

Land constraints and agricultural intensification in Ethiopia: A village-level analysis of high-potential areas

Highland Ethiopia is one of the most densely populated regions of Africa and has long been associated with both Malthusian disasters and Boserupian agricultural intensification. This paper explores the race between these two countervailing forces, with the goal of inform two important policy questions. First, how do rural Ethiopians adapt to land constraints? And second, do land constraints significantly influence welfare outcomes in rural Ethiopia? To answer these questions we use a recent household survey of high-potential areas. We first show that farm sizes are generally very small in the Ethiopian highlands and declining over time, with young rural households facing particularly severe land constraints. We then ask whether smaller and declining farm sizes are inducing agricultural intensification, and if so, how. We find strong evidence in favor of the Boserupian hypothesis that land-constrained villages typically use significantly more purchased input costs per hectare and more family labor, and achieve higher maize and teff yields and higher gross income per hectare. However, although these higher inputs raise gross revenue, we find no substantial impact of greater land constraints on net farm income per hectare once family labor costs are accounted for. Moreover, farm sizes are strongly positively correlated with net farm income, suggesting that land constraints are an important cause of rural poverty. We conclude with some broad policy implications of our results.     

Consumer willingness to pay for traditional food products

Reflecting the growing interest from both consumers and policymakers, and building on recent developments in Willingness to Pay (WTP) methodologies, we evaluate consumer preferences for an archetypal traditional food product. Specifically we draw on stated preference data from a discrete choice experiment, considering the traditional Hungarian mangalitza salami. A WTP space specification of the generalized multinomial logit model is employed, which accounts for not only heterogeneity in preferences but also differences in the scale of the idiosyncratic error term. Results indicate that traditional food products can command a substantial premium, albeit contingent on effective quality certification, authentic product composition and effective choice of retail outlet. Promising consumer segments and policy implications are identified.     

How can new ventures command a price premium with innovations in emerging markets?

Successful financing is critical for new ventures' survival and future sustainable growth. With the unique institutional characteristics, it is especially difficult for new ventures in emerging economies to transform innovation capital into favorable investor responses (such as willingness-to-pay, WTP) during the process of initial public offerings (IPOs). Based on the patent records from a unique sample of Chinese firms, we demonstrate that new ventures can successfully leverage innovation for higher WTP in IPOs contingent on the existence of venture capital ownership and reputable underwriter endorsements. These financial intermediates can send inside-out and outside-in signals to market investors to reduce information asymmetry. Our study contributes to research on the valuation of innovations in IPOs. We also provide practical implications to managers and investors of new ventures. We provide implication to managers and investors of new ventures on how to increase the benefits from innovations, which fosters national economic growth and social welfare.     

Animal health inputs,endogenous risk,general infrastructure,technology adoption and industrialized animal agriculture

This paper develops a microeconomic model of concentrated animal feeding operations that admits roles for all of animal health inputs, genetic profile choices and the pertaining economic infrastructure. The basic model emphasizes how time on feed, feed density and biosecurity choices interact, as well as how these choices respond to (i) input prices, and (ii) attributes regarding animal productivity parameters that might be influenced by policy choices such as animal welfare strictures and restraints on use of medication. We show that ostensibly substituting inputs in protecting against animal health risks may in fact be complements, and that the model’s production choices come as a complementary package. We then extend the model to endogenize the choice of animal genetics. A finding is that innovations in general infrastructure encourage herd owners to choose more feed efficient, but less hardy, animals. Higher feed conversion efficiency then induces the use of denser feed rations, accelerated finishing and greater levels of biosecurity actions at farm perimeters. Our theory provides a coherent framework for explaining associations among inputs and outcomes that are linked with confined animal agriculture. It also explains how animal protein supply chain technology adoption and performance can differ according to a region’s state of infrastructure, why responses to a change in infrastructure may be large, and why public sector efforts to reduce production risk may beget private sector effort to do so.     

Awareness of ag-gag laws erodes trust in farmers and increases support for animal welfare regulations

Hidden-camera investigations are becoming an increasingly popular means of raising public awareness about farm animal welfare. However, livestock industries claim they are deceptive. One strategy to curtail these investigations has been the introduction of so-called ag-gag legislation, which aims to restrict the flow of information coming out of farm facilities. Psychological research suggests that this approach may be counter-productive as reducing information flow often reduces feelings of trust. We sought to extend these findings by applying them to a real-world, timely example and to determine whether the perceived intention to obstruct access to information erodes feelings of trust. Accordingly, this study tested whether simply being made aware of ag-gag laws might have a negative impact on trust in farmers. Participants (n = 716) were randomly assigned to either receive information about ag-gag laws or to a Control condition. We found that most people were unaware of ag-gag laws and that learning about them lead to a decrease in trust in farmers and an increase in support for animal welfare regulations. Interestingly, we also found evidence that awareness of ag-gag laws negatively impacted perceptions of the current status of farm animal welfare as well as the perception that farmers do a good job of protecting the environment. Through this topical example, this study demonstrates that even the intention to restrict access to information can undermine trust.     

Big data׳s impact on privacy,security and consumer welfare

The purpose of this paper is to highlight the costs, benefits, and externalities associated with organizations׳ use of big data. Specifically, it investigates how various inherent characteristics of big data are related to privacy, security and consumer welfare. The relation between characteristics of big data and privacy, security and consumer welfare issues are examined from the standpoints of data collection, storing, sharing and accessibility. The paper also discusses how privacy, security and welfare effects of big data are likely to vary across consumers of different levels of sophistication, vulnerability and technological savviness.     

Virtual Word of Mouth and Willingness to Pay for Consumer Electronic Innovations

The authors examine the impact of virtual word‐of‐mouth (vWOM) communication on willingness to pay (WTP) for an innovation. A series of hypotheses are developed that link vWOM to the credibility of innovation information, perceived utilitarian value, and the perceived hedonic value of an innovation, which are in turn hypothesized to influence WTP. The authors test these hypotheses using data collected in Japan from 658 potential adopters of e‐readers and from 565 potential adopters of smartphones. Findings indicate that, in both samples, vWOM is positively correlated with the perceived credibility of innovation information, which in turn is positively correlated with both perceived utilitarian value and perceived hedonic value. WTP is also positively correlated with an innovation's perceived utilitarian and perceived hedonic value. In addition, the path between vWOM and perceived hedonic value is positive and significant in both samples. However, the path between vWOM and perceived utilitarian value is positive and significant in the smartphone sample, but not in the e‐reader sample. The empirical findings provide support for theoretical arguments that link WTP for complex consumer electronic products to consumer perceptions of utilitarian and hedonic value. The results also have important implications for the creation of vWOM strategies designed to reduce the price sensitivity of potential adopters.     

Viewpoint: Regulating meat consumption to improve health,the environment and animal welfare

Meat consumption has increased significantly in the last 50 years. This trend raises various health and environmental issues, as well as moral concerns regarding farm animal welfare. In this paper, we discuss the regulation of meat consumption in developed countries. Specifically, we discuss possible justifications for this regulation in terms of environmental, health and animal welfare considerations, as well as the effect of fiscal, informational and behavioral regulatory instruments. Finally, we present a list of challenges that policy makers and food scholars may need to confront in the future.     

Adaptation to land constraints: Is Africa different?

Since the seminal works of Malthus and Boserup, scientists have long debated the impact of population growth and land constraints on the wellbeing of rural people. Today these concerns are particularly relevant to Africa, with its rapid population growth, very small farms, and chronic food insecurity. In this paper we examine adaptation to falling land-labor ratios using a comprehensive theoretical framework in which households faced with binding land constraints can respond in three ways: intensifying agricultural production, diversifying out of agriculture, and reducing fertility rates. Using cross-country data and drawing upon the existing literature, we reach three conclusions. First, population density is associated with reduced fallows and more intensive use of land but not fertilizer use or irrigation, indicating major challenges in achieving sustainable intensification or agricultural productivity growth. Second, there is little evidence of successful non-farm diversification in response to land pressures in Africa from domestic or international income sources. Third, rural Africans in land constrained countries desire smaller families, but have thus far benefited little from family planning policies. These findings underscore the need for a coordinated multi-sectoral approach to sustainably reduce poverty in the region.     

Policies to promote cereal intensification in Ethiopia: The search for appropriate public and private roles

Over the past decade, policymakers have been searching for an appropriate blend of public and private sector roles to accelerate the intensification of food staple production, smallholder commercialization, and sustainable market development in sub-Saharan Africa. In Ethiopia, steps taken to liberalize markets in the 1990s and promote fertilizer and seed packages have yet to generate payoffs in terms of higher cereal yields, lower food prices, or reduced dependency on food aid. This raises concern about the performance of the agricultural sector, specifically in terms of the systems for providing improved seed, fertilizer, credit, and extension services. This paper examines the evolving roles of the public and private sectors in intensifying cereal production in Ethiopia. Findings suggest that while Ethiopia has an admirable record of supporting agriculture, its state-led policies has now outlived their usefulness. These findings for Ethiopia offer lessons that are potentially applicable to other sub-Saharan African countries facing similar challenges.     

Economic benefits from promoting linseed in the diet of dairy cows for reducing methane emissions and improving milk quality

Linseed for feeding dairy cows reduces methane emissions and increases the omega-3 content of milk. In a lab experiment, milk bottles from cows fed a diet with or without linseed were offered to French participants for eliciting their willingness to pay (WTP). Successive messages highlighting the different effects of linseed were revealed to participants. We find that messages including the ones on methane emissions and omega-3 in milk significantly impact the participants’ WTP. These WTP estimates are used for welfare simulations that underline the positive impact of a public advertising campaign informing about linseed. When informing participants via a campaign becomes difficult, some regulatory tools like a quality standard may complement this advertising campaign.