Non-compliance in organic farming: A cross-country comparison of Italy and Germany

This paper describes the Italian and German organic certification systems, including the institutions involved and the definitions of non-compliance and sanctions. Although they are both implementations of the same EU regulatory framework, these systems differ in many respects. Case study data from control bodies on non-compliance and sanctions are presented and analysed using binary choice models. This analysis shows that the occurrence of slight non-compliance and greater farm acreage are significant risk factors that explain severe non-compliance in both countries. However, to implement an efficient risk-based inspection system in the future, the data collection process must be improved and extended to examine personal attributes of farmers and operators.     

Willingness-to-pay for natural,organic, and conventional foods: The effects of information and meaningful labels

Vague food labels and distorted product claims have persisted in the “natural” food industry, while organic claims can be certified by the U.S. Department of Agriculture (USDA). Using experimental methods and a sample of randomly selected subjects, we test food label and information treatment effects on subjects' willingness-to-pay (WTP) for organic, “natural,” and conventional foods. Random nth-price auctions are used to elicit WTP after subjects received one of five randomly assigned information treatments. We find large information effects, including asymmetric cross-market effects for natural and organic foods. Perhaps surprising is that organic premiums increase in response to subjects seeing the “natural” foods industry's perspective on its products. Demographics effects are also important. The results have practical implications for natural and organic food marketing and valuing products where there are vague claims about their attributes.     

Consumer awareness of organic products in Spain: An application of multinominal logit models

Organically produced foods have shown remarkable industry growth. Even with strict adherence to the production practices and increasing availability, the majority of consumers are still not aware of organically produced alternatives. Awareness of organics does not necessarily translate into actual consumption. Achieving awareness and understanding the linkage between awareness and purchasing organics is fundamental to impacting the demand for organically grown products. This study focuses on the responses of Spanish consumers regarding their state of knowledge about organic foods products. Consumer demographic characteristics, knowledge of enriched foods, and price perceptions are shown to impact awareness and consumption. Multinomial logit models are used to predict probabilities of awareness. Then probit models are estimated to link awareness and the actual consumption of organic foods. Factors impacting both awareness and consumption are explored using simulation methods and the coefficients from the logit and probit models.     

The character of demand in mature organic food markets: Great Britain and Denmark compared

We investigate the organic food market in two selected European countries, Great Britain and Denmark, identifying main differences and similarities. We focus particularly on consumer perceptions and priorities, labelling schemes, and sales channels as a basis for assessing market stability and prospects for future growth. We employ a unique set of household panel data that includes information on stated values and concerns as well as registered purchasing behaviour. Most organic food on both markets is produced and processed by large-scale industrialised units and distributed through mainstream sales channels, consumer confidence being sustained at present by organic labelling schemes that appear to function well. However, a parallel market, based on the supply of goods through various direct sales channels to heavy users, prevails. We find that organic food purchase decisions are primarily motivated by ‘private good’ attributes such as freshness, taste and health benefits, attributes that may be perceived as being compatible with modern production and sales structure. Mature markets for organic foods nevertheless appear to be vulnerable to consumer dissatisfaction, particularly among heavy users of organic food products.     

The choice at the checkout: Quantifying demand across payment instruments

Dramatic changes have occurred in the U.S. payment system over the past two decades, most notably an explosion in electronic card-based payments. This shift has led to a series of policy debates driven in part by consumers' choice of payment instruments. Using a new nationally representative survey, we transform consumer responses to open-ended questions into product rankings and estimate a characteristics-based rank-order logit model in order to quantify consumer substitution among payment methods. Our estimates are then used to conduct supply-driven and demand-driven counterfactual experiments in order to estimate market share and cost effects. From a counterfactual experiment in which merchants stop accepting credit cards, we predict merchant costs to decline substantially. Because merchants accept credit cards nonetheless, we regard our finding as evidence either that the credit card networks hold market power, or that merchants experience unmeasured intangible benefits from credit card acceptance. We also predict that contactless debit will take market share from cash, checks, and credit, and that the age/cohort effect alone is unlikely to cause debit card use to increase substantially over a 10-year period.     

European consumer preferences for beef with nutrition and health claims: A multi-country investigation using discrete choice experiments

The European Union (EU) nutrition labelling policy aims to facilitate consumers’ food choice, stimulate innovation and facilitate the circulation of foods bearing claims across countries. However, the beef industry has not fully taken advantage of utilizing nutrition and health claims based on the EU nutrition labelling policy to differentiate beef products in the market. This study investigates consumer preferences for nutrition and health claims on lean beef steak. Two choice experiments were conducted among 2400 beef consumers in four EU countries (Belgium, France, the Netherlands, United and United Kingdom). Multinomial logit and error component models were estimated. Our results generally suggest that consumer valuation of nutritional and health claims varies across countries. In Belgium, the Netherlands and France, nutrition and health claims on saturated fat yielded higher utilities than claims on protein and/or iron, while the opposite was found among consumers in the UK. The results imply that marketing opportunities related to nutrition and health claims on beef are promising, but that different nutritional marketing strategies are necessary within different countries.     

Post-market surveillance model for potential human health effects of novel foods

This paper presents a post-market surveillance model for evaluating the potential human health effects of novel foods. It examines the characteristics of current protocols – substantial equivalence and precautionary principle – and argues that post-market surveillance complements the former and provides a sensible rationale for the latter. The paper posits that given the direct consumer claims associated with emerging novel foods, a post-market surveillance system may help policy makers maximize the net benefits of these products given desired health status objectives.     

Due diligence and the demand for electricity: A cautionary tale

In 1983, the Washington Public Power Supply System (WPPSS) defaulted on tax-free revenue bonds issued to construct two of its five nuclear power plants. In subsequent litigation, the plaintiffs alleged that the bonds had been fraudulently issued because WPPSS and the other defendants should reasonably have known and disclosed that there was substantial uncertainty about the ability to meet the financial obligations created by the bonds. A model using plausible values for demand elasticities, recognized probabilities of events that would increase costs and delay construction and data used by WPPSS to construct demand forecasts for prospective bondholders suggests that such uncertainty was present at the time the bonds were issued. The values for demand elasticities and other parameters of the model were selected after a thorough review of the econometric literature on demand for electricity, beginning with the work of Fisher and Kaysen in 1962.     

The development of and prospects for organic farming in the UK

The organic sector in the UK is booming with the largest ever wave of farm conversions underway. Consumer demand is currently growing faster than supply. The evidence regarding the factors that have been critical, now and in the past, in causing producers to establish organic systems is reviewed. This review draws on the authors’ own work as well as that of other researchers in Europe and the USA. In the second part of the paper we report on a recent study of the factors that prompt organic producers to abandon registered organic production. This analysis is based on a survey of producers, formerly registered with the Soil Association, who have left the scheme since 1990. Finally, the paper considers the current policy regime with respect to organic farming, the scope for the continued growth of the sector and the debate regarding the design of future policy.     

Traffic lights and food choice: A choice experiment examining the relationship between nutritional food labels and price

In this paper we investigate how consumers respond to the UK nutritional food label Traffic Light System (TLS). Employing a choice experiment (CE) we find that consumers appear to behave in a manner consistent with our expectations regarding the impact of the TLS. We identify a strong preference on the part of respondents to avoid a basket of goods containing a mix of foods with any “Red” lights. In addition, we find that consumers have a hierarchy of importance in terms of perception of the various nutrients examined and there are clear behavioural differences associated with particular socio-economic characteristics confirming early research on the use of nutrition labels. Overall our results indicate significant heterogeneity in the attitudes and responses of consumers to the TLS nutritional food labels within and across socio-economic strata.     

Consumers’ willingness-to-pay for organic conversion-grade food: Evidence from five EU countries

In recent years, in overall value, the EU has become a net importer of organic food to supply increasing demand. Financial support for farmers during the conversion period has been made to help expand organic production as this was seen as a barrier to conversion. Meanwhile, farmers have been marketing products produced in this conversion period and labelled as such, the extent to which is described here for the UK, Portugal, Denmark, Ireland and Italy. Consumers’ attitudes towards, and willingness-to-pay for, conversion-grade food in these countries is examined. It was found that consumers would be prepared to pay a premium for conversion-grade produce of around half the premium for organic produce with vegetables attracting a higher premium than meat. Finally, the potential of policies for marketing conversion-grade products to encourage more conversion is examined, together with barriers to achieving this. It is concluded that barriers to marketing such products, particularly from retailers, will be formidable. Thus, alternative policies are suggested.     

Consumer valuation of health attributes for soy-based food: A choice modeling approach

Given that soy foods possess health-promoting attributes that offer the promise of reducing heart-related chronic diseases, this article employs choice experiments to estimate marginal willingness to pay (WTP) for soy attributes including taste, contents of soy protein, and health claim. Random parameter logit (RPL) models were estimated in consideration of potential heterogeneity across individuals in their preferences for soy food. Standard deviation parameters in the RPL models are highly significant, indicating that individuals have widely varying preferences for soy-based food products. Results suggest that, while taste is the dominating attribute that drives consumers’ WTP for soy food products, consumers do respond to the information provided in the health claim. Yet, consumers do not seem to be recognizing soy protein as the link to health benefits of soy foods.     

The implementation of organic principles and values in the European Regulation for organic food

The paper is based on selected findings of the research project EEC 2092/91 (Organic) revision. It contributes to an improved understanding of the core ethical values associated with and principles of organic farming, analyses reference to such values in the European Regulation (EEC) 2092/91 and its ongoing revision, and contrasts them with current practice of organic agriculture. An analysis of differences in the implementation of the Regulation by national governments and private standards is presented. Ethical values are per se in need of interpretation, so the final section sets out procedural issues arguing for a deliberative model of decision-making, when aiming to achieve a coherent integration in the structure of a regulation.     

Standing out in the crowd: The effect of information clutter on consumer attention for front-of-pack nutrition labels

Whether and how information density on front-of-pack design affects consumers’ attention for nutrition labels is explored. The main manipulation concerned the number and type of nutrition labels (directive-, semi-, and non-directive), chromaticity (monochrome vs. traffic light color-coded scheme); number and type of additional design elements; and the distance between the label and additional design elements. Attention was measured by performance in visual search task. Performance was slower with increasing number of additional design elements, and when the label appeared in a dense rather than non-dense area. These effects were modulated by label type and chromaticity. The results show that information density is a key factor for consumer attention to (nutrition) information. Implications for policy makers and food producers who want to optimize package design layout and thus help consumers easily to find nutrition information displayed front of the pack are discussed.     

Using the Hicks formula to evaluate an estimate of the elasticity of derived demand for toll-free numbers

Duffy-Deno & Parsons D-D & P (2012) estimated the coefficient for the price elasticity of demand for toll-free numbers (TFNs) at between −0.04 and −0.05. Here, the Hicks formula for derived demand is used to check the range of likely demand elasticity for TFNs given the special characteristics of this market. This approach suggests that the demand for TFNs is likely not more elastic than estimated by D-D & P. Therefore, the premise is sound for D-D & P's discussion of the public policy implications of highly inelastic demand for TFNs. The use of industry information for all four parameters of the Hicks formula to check a derived demand elasticity is the first of its kind in the published literature.     

The Demand for International Message Telephone Services: A Two-Stage Budgeting Model

This paper examines demand for international telephone services. Using panel data covering 57 routes over 6 years, a model featuring a two-stage budgeting process and product differentiation is implemented for empirical estimation. A range of economic, social, cultural and technological variables are included in the aggregate-level model to study overall demand. The unique and rich data offers an opportunity to examine the impact of new technology innovations such as Internet on traditional telephone services. The company-level model incorporates product differentiation and uses the Almost Ideal Demand System to simultaneously estimate demands for and competition between carriers.     

A basic model for evaluating R&D performance: theory and application in Italy

Nowadays the public R&D laboratories have a fundamental role in countries' development, supporting businesses as they face the technological challenges in the turbulent world scenarios. Measuring the performance of R&D organisations is crucially important to decisions about the level and direction of public funding for research and development. This research considers the public laboratories like systems and develops a mathematical model based on the measurement of R&D activities with k‐indices. The score obtained from the research laboratories evaluation (relev) methodology synthesises in single value financial, scientific and technological aspects. It is an indicator, for R&D manager and policy maker, of performance in relation to other research organisations or in a time series. The method is an instrument of strategic planning and can be used for the improvement of individual activities and the overall performance of public R&D bodies.     

Scenarios of the organic food market in Europe

Scenario analysis is a qualitative tool for strategic policy analysis that enables researchers and policymakers to support decision making, and a systemic analysis of the main determinants of a business or sector. In this study, a scenario analysis is developed regarding the future development of the market of organic food products in Europe. The scenario follows a participatory approach, exploiting potential interactions among the relevant driving forces, as selected by experts. Network analysis is used to identify the roles of driving forces in the different scenarios, and the results are discussed in comparison with the main findings from existing scenarios on the future development of the organic sector.