Are Local and Organic Claims Complements or Substitutes? A Consumer Preferences Study for Eggs

This paper provides an analysis of consumer preferences for product claims, specifically about origin and production methods. In particular, it addresses two important questions: i) whether consumers are willing to pay a premium for food products carrying these claims; and ii) whether local and organic claims are complements or substitutes. A choice experiment designed to estimate two‐way interactions was undertaken in Spain for eggs. The findings show first, that consumers are willing to pay a positive premium price for an enhanced method of production (that of barn, free‐range and/or organic instead of cage produced eggs) as well as for the proximity of production (local, regional and national over imported). Second, the findings show that consumer preferences for the claims are heterogeneous with two consumer segments being identified: “origin preference”, the larger segment, and the “production method preference”. Results show that organic and local claims were complements for the larger first segment but that free‐range and local/regional claims were substitutes for the second smaller segment. These results provide the marketing chains with insights applicable for pricing strategies.     

Consumer valuation of safety‐labeled free‐range chicken: results of a field experiment in Hanoi

This article presents results of a field experiment designed to assess willingness to pay for safely produced free‐range chicken in Hanoi, the capital of Vietnam. Improved safety of chicken production and trading is suggested as an important component of avian influenza control strategy, which aims to address the direct costs of avian influenza as well as the global public health externality. However, consumer demand for safely produced free‐range chicken is unknown. Products that have credible food labeling are not common in traditional markets where the majority of free‐range chicken is purchased. Valuing characteristics of products sold in informal markets is a major challenge that our experiment overcomes. As part of the experiment, we provided several vendors from these markets with safety‐labeled free‐range chicken. Consumer valuation of safety labeling was elicited through having experiment participants, who were representative of potential consumers, select between discount coupons for either safety‐labeled chicken or regular chicken. Results indicate that consumers will pay at least $0.50, or a 10–15% premium, per chicken purchase for safety labeling, which emphasizes safe production, processing, and transport conditions. This premium is smaller than the premium currently paid for traditional chicken varieties that are considered to be tastier. Consumers with more education have higher valuation of safety labeling. Hence, safety labeling for high‐quality free‐range chicken can play a role in controlling livestock disease and improving public health.     

Detecting origin fraud with trade data: the case of U.S. honey imports*

Following the 2001 U.S. imposition of antidumping tariffs on imported honey from China and Argentina, industry press noted patterns of trade suggesting that honey was being transshipped to circumvent tariffs, origin fraud that was later uncovered in criminal cases. This article presents three approaches that use trade and production data to flag countries for possible instances of origin fraud and then compares these countries with those implicated in criminal cases and media reports. In our preferred empirical method, we also find that countries with higher corruption scores are more likely to show increases in suspicious trade patterns following the tariffs.     

Valuing traceability of imported beef in Korea: an experimental auction approach*

The major objective of this study is to estimate Korean food shoppers’ willingness to pay (WTP) for imported beef with traceability. We use an experimental elicitation method, the random nth price auction, to identify consumers’ valuation for traceable imported beef. We also analyse the effect of different types of information on these valuations. Results indicate that consumers are generally willing to pay a 39 per cent premium for the traceable imported beef over similar beef without traceability. Results also suggest that in contrast to the insignificant effect of positive information, negative and two‐sided information about traceability significantly reduces WTP.     

Eliciting Consumer WTP for Food Characteristics in a Developing Context: Application of Four Valuation Methods in an African Market

We elicit willingness to pay for conventional, organic and/or food‐safety‐inspected tomatoes in a traditional African food market. We identify four elicitation methods that can be conducted with one respondent at a time, and use them in a field setting: the Becker–DeGroot–Marschak mechanism, multiple price lists, multiple price lists with stated quantities, and real‐choice experiments. All four methods give similar results; showing that consumers are willing to pay a premium for organic and food‐safety‐inspected tomatoes. However, the size of the premium is significantly larger when consumers choose between alternatives than when they indicate their reservation price. The new multiple price lists with stated quantities were easy to explain in the busy market setting, gave the respondents the opportunity to determine the amount they wanted to buy, and had valuations in line with the other non‐comparative valuation methods.     

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.     

Information and consumer willingness to pay for biofortified yellow cassava: evidence from experimental auctions in Nigeria

In this article, we use the Becker‐DeGroot‐Marschak mechanism to estimate consumer demand for biofortified yellow cassava varieties in two states of Nigeria: Imo in the southeast and Oyo in the southwest. These two states exhibit distinct habitual product color preferences for staple food made with cassava. We estimate the effect of nutrition information campaigns and nature of planting material delivery institutions on consumer demand. Willingness to pay estimations account for the effect of product endowment, censoring in bids and nonpayment. In Oyo, consumers are willing to pay a premium for light yellow cassava variety even in the absence of nutrition information. The article finds that nutrition information results in a large and significant price premium for biofortified cassava in both states, and the nature of delivery institution has no significant effect.     

Do Japanese consumers care about sustainable fisheries? Evidence from an auction of ecolabelled seafood

This paper investigates Japanese consumers' willingness to pay for Marine Stewardship Council (MSC) ecolabelled seafood using a sealed bid, second price auction. Participants in an experiment in Tokyo were provided varying degrees of information about the status of world and Japanese fisheries and the MSC program in sequential rounds of bidding on ecolabelled and nonlabelled salmon products. A random‐effects tobit regression shows that there is a statistically significant premium of about 20 per cent for MSC‐ecolabelled salmon over nonlabelled salmon when consumers are provided information on both the status of global fish stocks and the purpose of the MSC program. This premium arises from a combination of an increased willingness to pay for labelled products and a decreased willingness to pay for unlabelled products. However, in the absence of experimenter‐provided information, or when provided information about the purpose of the MSC program alone without concurrent information about the need for the MSC program, there is no statistically significant premium.     

Consumers' Preferences for Nanotechnology in Food Packaging: A Discrete Choice Experiment

We examine consumers' preferences for chickens under different levels of foodborne health risk, animal welfare and pric attributes. We analyse how their preferences vary according to the risk reduction method. Our comparison is between risk reductions achieved by conventional improvements in the meat supply chain system (e.g. more stringent regulations and inspection regimes), and risk reductions achieved by food packaging nanosensors. Our comparison uses a two‐treatment discrete choice experiment in which each treatment sample is only presented with one of the risk reductions: either nanotechnology or conventional methods. We also investigate heterogeneity in preferences for two consumer groups: (i) consumers who usually buy conventional raw, whole chickens, and (ii) consumers who usually buy niche, welfare‐improved chickens, such as free‐range and organic. Our results show evidence of heterogeneity in preferences and willingness‐ to‐pay values of the both consumer groups. We find that consumers, on average, prefer raw, whole chicken with a lower risk of food poisoning, better animal welfare, and lower costs, regardless of the presence of nanosensors. Although consumers in general showed no strong preferences towards or resistance to nanotechnology, those who buy chickens with better animal welfare, on average, showed higher WTP for food risk reduction and animal welfare relative to conventional chicken consumers.     

Organic‐ and Animal Welfare‐labelled Eggs: Competing for the Same Consumers?

To understand the market for sustainable foods, it is important to allow for heterogeneous preferences. However, most studies of consumer preferences for sustainable foods only investigate average consumer preferences. They do not take into account that some consumer segments attempt to purchase as much sustainable food as possible, others are almost indifferent to the notion of sustainable food, and still others consider sustainable food a complete hoax. The aim of this study is to explore the preferences for various types of premium eggs across three consumer segments. We conduct a choice experiment including 900 Norwegian consumers and perform a behavioural segmentation based on the frequency of organic food purchase. We find that the segment purchasing the most organic food is, as expected, willing to pay a significant premium for organic eggs over eggs displaying only enhanced animal welfare. However, most consumers, who only occasionally purchase organic products, are unwilling to pay more for organic eggs than for enhanced animal welfare eggs, suggesting diminishing marginal utility for additional attributes. We find that a third consumer segment attempts to avoid organic eggs, even when they cost the same as other eggs. Our findings suggest that organic products will be unsuccessful in acquiring a larger share of the market as long as most consumers are unwilling to pay a premium for organic products with all their cost increasing sustainable attributes over products that have only a single sustainable attribute, in our case enhanced animal welfare.     

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.     

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.     

Willingness to pay for brands: a cross‐region,cross‐category analysis

Using survey data collected in multiple locations (California and Texas in the United States and Revohot in Israel), we quantify category‐ and location‐specific variations of consumers’ willingness to pay (WTP) for brand products after controlling for consumer characteristics. We find that consumers have a similar qualitative assessment of brand value in different product categories across different locations. That is, consumers have a stronger preference and higher WTP for brands in consumer electronics, followed by clothing and then processed food, and the lowest in fresh produce. Furthermore, we simulate price premiums and market shares of brands relative to generic products in different categories. Simulation results suggest that brands in fresh produce have the highest price premium but lowest market share. Despite the similarities, the magnitude of WTP for brands as well as the simulated price premium and the corresponding market share in the same product category are location variant. The similarities and dissimilarities suggest validity of having global brand strategies adapted to local conditions, that is, the so‐called “thinking globally and acting locally” strategy.     

Markets and welfare effects of food fraud

This study develops a theoretical framework of heterogeneous consumers and producers and imperfectly competitive food companies to analyse the system‐wide market and welfare effects of food fraud in the form of food adulteration and mislabelling. The results show that, while the price impacts of food fraud are product‐specific with the equilibrium prices of high‐quality and low‐quality products moving in different directions, the equilibrium quantities depend on the relative magnitude of the demand and supply effects of food fraud. Regarding the welfare effects of food fraud, they are shown to be highly asymmetric across different consumers and producers. In addition to enabling the disaggregation of the welfare effects of food fraud, the explicit consideration of agent heterogeneity, asymmetries in the probability of fraud detection and the endogeneity of the producer quality choices also enables the derivation of a key result of this study; contrary to what is traditionally believed, both low‐quality and high‐quality producers can have economic incentives to commit fraud. The group that is more likely to cheat is determined by the social attitudes towards fraudulent behaviour, the enforcement policy parameters and the relative magnitude of the demand and supply effects of food fraud. A comparison of the market effects of mislabelling and food adulteration reveals that, while the equilibrium quantity of the high‐quality product is higher in the presence of mislabelling, producers are more likely to mislabel than adulterate their products.     

Factors Affecting Consumer Willingness to Pay for Certified Traceable Food in Jiangsu Province of China

Using data collected from a survey conducted in Jiangsu Province, China, we study consumer perceptions of and attitudes toward food traceability systems (FTS). Through econometric analysis, we examine the main factors that influence the willingness of consumers to pay a price premium for certified traceable food, as well as the actual premium these consumers are willing to bear. Our results indicate that an overwhelming majority of consumers in China are concerned about food safety, but consumers’ willingness to pay (WTP) a price premium for certified traceable food is limited. Income, education, perception of and attitudes toward FTS, as well as the degree of concern over food safety, have significant effects on the consumer's WTP a price premium for certified traceable food. However, the effects of these factors on the actual premium a consumer is willing to pay are quite different. Conditioned on the consumer being willing to pay a positive price premium, income level and the degree of concern over food safety are the only two factors that have significant effects on the actual premium consumers are willing to pay. À partir de données tirées d’un sondage mené dans la province du Jiangsu, en Chine, nous avons étudié la perception et l’attitude des consommateurs envers les systèmes de traçabilité des aliments. À l’aide d’analyses économétriques, nous avons examiné les principaux facteurs qui influencent le consentement des consommateurs à payer un prix supérieur pour des aliments dont la traçabilité est certifiée ainsi que le prix réel qu’ils sont prêts à payer. Les résultats de notre étude indiquent qu’une très grande majorité de consommateurs en Chine sont préoccupés par la sécurité alimentaire, mais que leur consentement à payer un prix supérieur pour des aliments dont la traçabilité est certifiée est limité. Le revenu, le niveau de scolarité, la perception et l’attitude envers les systèmes de traçabilité, de même que le degré de préoccupation concernant la sécurité alimentaire, ont des effets considérables sur le consentement des consommateurs à payer un prix supérieur pour des aliments dont la traçabilité est certifiée. Toutefois, les effets de ces facteurs sur le prix réel qu’un consommateur est prêt à payer sont très différents. Lorsque des consommateurs consentent à payer un prix supérieur, le niveau de revenu et le degré de préoccupation concernant la sécurité alimentaire sont les deux seuls facteurs qui influencent fortement le prix réel qu’ils sont prêts à payer.     

Valuing an EU Animal Welfare Label using Experimental Auctions

The aim of this article is to determine consumers’ valuation for an EU Animal Welfare (EU‐CAW) Label for products providing higher animal welfare standards than the current legal requirements. Using revealed preference data from random nth price auction mechanism and two auction procedures, our results generally suggest that consumers are willing to pay a premium for an EU Animal Welfare (EU‐CAW) Label for cured ham. This finding is consistent in both the endowment and full‐bidding auction approaches we employed in our experiments conducted in Spain. The average premium that consumers are willing to pay for a cured ham with the EU‐CAW Label ranges between 19% and 23% of the average price of the regular cured ham that is currently available in supermarkets.     

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.     

Knowledge and willingness to pay for organic food in Spain: Evidence from experimental auctions

The aim of this paper is to analyse the main determinants of consumers' knowledge and their willingness to pay for organic food products. Moreover, the relationship between knowledge and buying behaviour is explored. Virgin olive oil is taken as an example. Data was generated by way of an experimental auction carried out in two cities in northeast Spain. A three-equation model is estimated: (1) Consumer knowledge; (2) the decision to pay a premium for organic olive oil; and (3) how much premium consumers are willing to pay. Results indicate that socio-economic variables are main determinants of consumer knowledge, and that consumer attitude, lifestyle and knowledge all influence the decision to pay a premium for organic olive oil.     

Vietnamese Consumers’ Willingness to Pay for Safe Pork in Hanoi

Abstract

Food safety is one of the main concerns and the biggest challenge for consumers due to its direct influence on human health. In order to deal with unsafe food situation, the demand for food hygiene has increased in recent years as well as the consequent increase in price accepted by consumers. This study aimed to estimate consumers’ willingness to pay (WTP) and to examine the determining factors influencing their WTP for safe pork using double-bounded dichotomous choice contingent valuation method (DBDC CVM). The data were collected from a survey with a sample size of 134 respondents in Hanoi, Vietnam using two sets of questionnaires on the consumption of rib and shoulder of pork. The results revealed that the percentages of the consumers willing to pay a premium for more hygiene shoulder and rib of pork were 81.75% and 73.01%, respectively. The mean WTP was 129,000 VND (US$6.07) for both safe shoulder and rib, 48.7% and 37.8% higher than the regular market price, respectively. The results showed that consumers’ awareness of the risk of unhealthy pork, household income and expenditure were the positive determinants to WTP; meanwhile, the amount of pork consumption per month negatively affected the willingness to pay more for shoulder and rib of pork.     

Consumer Response to Information about a Functional Food Product: Apples Enriched with Antioxidants

Interest in functional foods has been growing as consumers become increasingly concerned with diet and nutrition. This article measures consumers' responses to apples enriched with an antioxidant coating. Antioxidant‐enriched apples are believed to provide additional health benefits reducing the risk of cancer and heart diseases. We discuss the consumer's benefit‐risk trade‐offs. Although functional food products provide health benefits beyond basic nutrition, some consumers may reject them because they utilize new technology. Face‐to‐face consumer surveys with contingent valuation questions were conducted in Seattle and Spokane, Washington in 2006. Consumers who choose where to shop based on organic availability are less likely to pay a premium for apples enriched with antioxidants. Also, there is evidence that consumers in Spokane are more likely to pay a premium for the product than consumers in supermarkets in Seattle. Information regarding the potential health benefits of antioxidants has a positive significant effect on consumers' willingness to pay (WTP). The estimated mean WTP suggests that there is a small premium associated with this product in the mind of an average consumer. L'intérêt pour les aliments fonctionnels ne cesse de croître étant donné que les consommateurs s'intéressent de plus en plus au régime alimentaire et à la nutrition. Le présent article évalue la réaction des consommateurs à la vente de pommes enrobées d'antioxydants. On croit que les pommes enrichies d'antioxydants procureraient des bienfaits supplémentaires pour la santé en diminuant le risque de cancer et de cardiopathies. Nous avons examiné les avantages et les risques pour le consommateur. Bien que les aliments fonctionnels apportent des bienfaits pour la santé en plus d'une nutrition de base, certains consommateurs peuvent les refuser parce qu'ils ont nécessité l'utilisation de nouvelles technologies. En 2006, nous avons effectué, à Seattle et à Spokane dans l'État de Washington, des sondages en personne à l'aide de l'approche des préférences exprimées. Les consommateurs qui choisissaient un magasin d'alimentation en fonction de la disponibilité de produits biologiques étaient moins enclins à payer une prime pour obtenir des pommes enrichies d'antioxydants. Les consommateurs de Spokane ont semblé plus enclins à payer une prime pour ce produit que les consommateurs qui fréquentaient les supermarchés de Seattle. L'information sur les bienfaits potentiels des antioxydants sur la santé a des répercussions positives considérables sur la volonté de payer des consommateurs. La volonté de payer moyenne estimative laisse supposer que, dans l'esprit du consommateur moyen, ce produit procure un certain avantage.