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.     

Citizens,consumers and farm animal welfare: A meta-analysis of willingness-to-pay studies

The sustainable intensification of animal production systems is increasing as a consequence of increased demand for foods originating from animals. Production diseases are particularly endemic in intensive production systems, and can negatively impact upon farm animal welfare. There is an increasing need to develop policies regarding animal production diseases, sustainable intensification, and animal welfare which incorporate consumer priorities as well as technical assessments of farm animal welfare. Consumers and/or citizens may have concerns about intensive production systems, and whether animal production disease represent a barrier to consumer acceptance of their increased use. There is a considerable body of research focused on consumer willingness-to-pay (WTP) for improved animal welfare. It is not clear how this relates specifically to a preference for reduced animal production disease incidence in animal production systems. A systematic review and meta-analysis were conducted to establish the publics’ WTP for farm animal welfare, with a focus on production diseases which arise in intensive systems. Systematic review methodology combined with data synthesis was applied to integrate existing knowledge regarding consumer WTP for animal welfare, and reduced incidence of animal production diseases. Multiple databases were searched to identify relevant studies. A screening process, using a set of pre-determined inclusion criteria, identified 54 studies, with the strength of evidence and uncertainty for each study being assessed. A random effects meta-analysis was used to explore heterogeneity in relation to a number of factors, with a cumulative meta-analysis conducted to establish changes in WTP over time. The results indicated a small, positive WTP (0.63 standard deviations) for farm animal welfare varying in relation to a number of factors including animal type and region. Socio-demographic characteristics explained the most variation in the data. An evidence gap was highlighted in relation to reduced WTP for specific production diseases associated with the intensification of production, with only 4 of the 54 studies identified being related to this. A combination of market and government based policy solutions appears to be the best solution for improving farm animal welfare standards in the future, enabling the diverse public preferences to be taken into consideration.     

Consumer information,labelling and international trade in agri-food products

The focus of the World Trade Organization is establishing limits on governments’ ability to impose trade barriers in response to producers’ requests for protection. In recent years, however, requests for protection from imports has increasingly come from consumers over issues ranging from animal welfare concerns, employment of child labour, the use of growth hormones, differing environmental standards and GM foods. The current international trade regime is ill-suited to deal with consumer-based protectionism. This paper develops a model that explicitly incorporates consumer concerns into an international trade model and compares the result with the standard treatment. Further, using the model incorporating consumer concerns, a labelling policy for imports is compared to an import embargo. The labelling policy is found to be superior to an embargo. Implications are drawn for future trade negotiations pertaining to sanitary and phytosanitary measures and technical barriers to trade.     

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.     

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.     

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.     

High animal welfare standards in the EU and international trade – How to prevent potential ‘low animal welfare havens’?

Future costs of compliance with obligatory animal welfare standards in the EU for poultry and egg production are significant and may lead to relocation of production to third countries. After an overview of different rationales for complementary policies to prevent relocation, this article systematically compares such policies. Some policies, like multilateral agreements and labelling, may be supporting, but may not be able to prevent relocation comprehensively. Compensatory payments to domestic producers, in contrast, are effective but disadvantage third country producers that comply with equivalent standards. Therefore, tariff discrimination may be a better alternative. A major drawback of tariff discrimination, however, is its severe institutional requirements. Future research questions include quantification of potential relocation as well as transaction costs of various complementary policies.     

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.     

Consumer preferences and the international harmonization of organic standards

Harmonization of technical standards is often advocated as a means to remove technical barriers that reduce the welfare gains available from international trade. Organic standards are not currently harmonized internationally. If domestic organic standards reflect consumer tastes, and consumers have strong preferences for those standards, then harmonization to a common standard may reduce the benefits consumers receive from organic products. Through a consumer survey, conjoint analysis was used to explore the preferences of consumers in the US, the UK and Canada for organic food. The results suggest that consumers in the three countries do not have a strong attachment to the current national organic standards and that international harmonization may be a legitimate food policy goal.     

On mandatory labeling of animal welfare attributes

This paper assesses US resident support for mandatory labeling of animal welfare information on pork and egg products and outlines policy considerations for assessment prior to implementing any mandatory labeling policies regarding animal welfare practices. Results suggest consumers support mandatory labeling indicating use of gestation crates (stalls) and laying hen cages. Estimates suggest consumers would be willing to pay about 20% higher pork and egg prices to obtain this production practice information. Demographic and latent perception drivers of this support are highlighted. Multiple issues that warrant consideration prior to imposing mandatory labeling are discussed revealing lines of corresponding future research.     

Keeping it fresh: Strategic product redesigns and welfare

Product redesigns happen across virtually all types of products, yet there is little evidence on the market and welfare effects of redesigns. We develop a model of redesign decisions in a dynamic oligopoly model and use it to analyze redesign activity in the U.S. automobile market. We find automobile model redesigns are frequent despite an estimated average cost around $1 billion. Our estimates also suggest that redesigns lead to large increases in profits and welfare due to the strong preferences consumers have for redesigns. We show that welfare would be improved if redesign competition were reduced, allowing redesign activity to be more responsive to the planned obsolescence channel. The net effect of these changes would reduce total redesigns by roughly 10%, increasing total welfare by roughly 3%. The high valuation that consumers put on newly-designed models drives frequent redesigns and gives automobile manufacturers fairly substantial market power, with a 2-to-1 ratio of firm profits to consumer surplus.     

Consumers’ willingness-to-pay for food safety labels in an emerging market: The case of fresh produce in Thailand

Food safety systems in emerging markets are currently facing a transformation period, becoming more stringent because of an increasing demand for safer food. Consequently, policy makers need to find strategies to increase food safety while giving the industry time to improve their performance. In Thailand, policy makers have adopted the strategy of upgrading food safety standards gradually. Government and private food safety brands and labels were introduced onto the market but little is known whether Thai consumers have preferences for them or not. This study is aimed at evaluating Thai consumers’ preferences for food safety labels and brands on fresh produce, using a surveyed based on discrete-choice experiments. A sample of 350 Thai consumers was surveyed in Bangkok and Nonthaburi in 2013. Quota sampling according to the shopping outlets and convenience sampling methods were adopted. Two hundred respondents were recruited at fresh-food markets and 150 respondents were recruited at supermarkets. We found that consumers are willing-to-pay more for both government led food safety label and private brands, but that there is high heterogeneity in their preferences. The high degree of social desirability for food safety labels confirms that food safety labelling policy should be supported. However, the provision of information and credibility are vital in order to mitigate the risk of consumer deception by self-claimed labels.     

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.     

Modeling heterogeneity in consumer preferences for select food safety attributes in China

Food safety issues often arise from asymmetric information between consumers and suppliers with regards to product-specific attributes. Severe food safety scandals were observed recently in China. These events not only caused direct economic and life losses, but also created distrust in the Chinese food system domestically, as well as internationally. While much attention has focused on the problems plaguing the Chinese government’s food inspection system, little research has been dedicated to analyzing Chinese consumers’ concerns surrounding food safety. In this paper, we measure consumer preferences for select food safety attributes in pork and take food safety risk perceptions into account. Several choice experiment models, including latent class and random parameters logit, are constructed to capture heterogeneity in consumer preferences. Our results suggest that Chinese consumers have the highest willingness-to-pay for a government certification program, followed by third-party certification, a traceability system, and a product-specific information label. The results of this study call for the direct involvement of the Chinese government in the food safety system. A stricter monitoring system will not only improve consumer well-being in the short-run, but also restore consumers’ trust leading to a social welfare increase in the long run.     

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.     

Consumer perceptions and the effects of country of origin labeling on purchasing decisions and welfare

The study develops a general analytical framework of heterogeneous consumer preferences to examine the effects of country of origin labeling (COOL) regulation on consumer purchasing decisions and welfare. We show that while differences in consumer perceptions about COOL information, namely, whether it is viewed as an attribute that differentiates products vertically or horizontally, do not alter the nature of the market and consumer welfare effects of mandatory COOL, the relative strength of consumer preferences for COOL are shown to be important in determining the magnitude of these effects. In addition, our results show that the benchmark used (a no COOL versus a voluntary COOL regime) is critical in evaluating the effects of the policy. We show that, under both horizontal and vertical product differentiation, a change from a no COOL to a mandatory COOL regime decreases (increases) the welfare of consumers with weak (strong) preference for COOL while a change from a voluntary to a mandatory COOL regime leads to an unambiguous loss in consumer welfare.     

When prohibiting wholesale price-parity agreements may harm consumers

We study the competitive and welfare effects of wholesale price-parity agreements. These contracts prevent a monopolist, who sells its product to final consumers both directly and indirectly through alternative distribution channels, to charge different input (wholesale) prices to competing intermediaries (e.g., platforms). In a multi-channel and multi-layered industry, organized as an agency business model, we find that the monopolist and the intermediaries do not necessarily have aligned incentives concerning the introduction of wholesale price-parity. While these agreements always hurt the monopolist, they may benefit the intermediaries when competition between the direct and the indirect distribution channels is sufficiently intense. Moreover, when this is the case, in contrast to retail price-parity agreements that typically reduce consumer welfare, wholesale price-parity may also benefit consumers.     

Consumers’ valuation for food traceability in China: Does trust matter?

Food safety is a very important topic in China. We investigate Chinese consumers’ preferences and willingness to pay (WTP) for food traceability using a choice experiment. Given that consumers’ trust in the food system may affect their preferences and WTP, we also assess the interaction between consumers’ trust in government’s supervision of food safety and food labels and consumers’ preferences for traceable food products. Using data collected from a choice experiment on Fuji apples in a face-to-face survey in six Chinese cities, the results show that (i) consumers are willing to pay for traceable food but their valuations can differ upon the degree of their trust in government’s supervision of food safety and food labels; (ii) consumers are willing to pay for traceability with strong evidence of preference heterogeneity; (iii) government is not the most trusted safety inspection and certificate authority as found in prior studies using animal food products in China.     

Minimum Quality Standards and Collusion

We model the introduction of a minimum quality standard in a vertically differentiated duopoly. We extend the literature by determining the standard endogenously, showing that the maximisation of social welfare entails an increase in the surplus accruing to consumers served by the low quality firm and a decrease in the surplus of the remaining consumers. Then, we consider the effects of the standard on the stability of price collusion, proving that the standard makes it more difficult for firms to collude if consumers are sufficiently rich.