Academic journal article Journal of Agricultural and Applied Economics

Experimental Evidence on Willingness to Pay for Red Meat Traceability in the United States, Canada, the United Kingdom, and Japan

Academic journal article Journal of Agricultural and Applied Economics

Experimental Evidence on Willingness to Pay for Red Meat Traceability in the United States, Canada, the United Kingdom, and Japan

Article excerpt

We employed Vickrey auctions to generate willingness-to-pay (WTP) data for red meat traceability and related product characteristics with comparable experimental auctions in the United States, Canada, the U.K., and Japan. The results show that subjects are willing to pay a nontrivial premium for traceability, but the same subjects show even higher WTP for traceability-provided characteristics like additional meat safety and humane animal treatment guarantees. The implication is that producers might be able to implement traceable meat systems profitably by tailoring the verifiable characteristics of the product to consumer preferences.

Key Words: auction experiments, information, red meat, traceability

JEL Classifications: C90, D44, D80

Although traceable food systems in U.S. competitor and customer markets are becoming the standard (Farm Foundation; Liddell and Bailey), and although the United States is actively working toward implementing a farm-toslaughter traceability system for livestock called the National Animal Identification System (NAIS), some producers and others have been resistant to this movement. Currently, implementation of the NAIS is voluntary and is well behind the initial schedule outlined in the forerunner of the NAIS, the U.S. Animal Identification Plan (USAIP). A few notable single supply chain efforts in the United States have made great strides toward developing traceability systems for meat, including Harris Beef Ranches, Premium Standard Farms, and Creekstone Farms. According to Smith, these systems are being developed to address customer demands and to capture higher anticipated prices for traceable meat products.

This paper is an extension of research completed by Dickinson and Bailey but provides a unique case study in consumer willingness to pay (WTP) for "farm-to-fork" traceable meat products in four industrialized countries. At the time of the experiments (fall 2001 in the United States and United Kingdom and spring 2002 in Japan and Canada), these countries varied in their experiences with bovine spongiform encephalopathy (BSE or "mad cow" disease)1 and other industry setbacks that might have affected consumer WTP for traceability and other characteristics that can be certified with traceability. The objective of this paper is to determine the WTP for traceability and traceability-provided characteristics for ham and beef in the United States and major competitor markets.

Past studies have focused on the value of characteristic information that could either be placed on labels or communicated to consumers in other ways. For example, a substantial body of research has recently focused on consumer acceptance of and government policy toward genetically modified (GM) food products (e.g., Caswell; Huffman et al. 2003a,b; Lusk and Fox; Lusk, Roosen, and Fox; Lusk et al.; Rousu et al.). Other research has examined the value to consumers of providing information on a myriad of different single or bundled characteristics, including certifying enhanced food safety, the processes used to produce food, the location in which food was produced, or the certifying agency (e.g., Dickinson and Bailey; Loureiro; Loureiro and Umberger). A few studies have addressed the issue of traceability directly and have found traceability to be a valuable characteristic in food products (e.g., Buhr; Dickinson and Bailey; Hobbs 1996a,b). The contribution of this paper is its examination of consumer attitudes about traceability and the characteristics it can verify, not only in the United States, but also in major U.S. red meat competitor and customer nations. Results show that U.S., Canadian, and overseas consumers alike are willing to pay nontrivial amounts for meat traceability and other meat characteristics that can be verified through traceable systems. There are, however, notable differences across countries. Although the final U.S. direction on traceability in meat systems could be a government mandate, our results show that profitable market opportunities likely exist both domestically and abroad for U. …

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