In understanding decreases in demand after exposure to media-induced food scares, aggregate data are almost exclusively presented without taking into consideration potential confounding variables. However, a better approach may be to use an experimental design coupled with targeting homogeneous willingness-to-pay (WTP) subgroups based on similarities in behavioral, psychological, and demographic characteristics of those who are most vulnerable to food scare information. This is accomplished through experimental economics and an analysis strategy called a classification and regression tree (CART). A stigma framework—which guides conceptual understanding of effects of media-induced food scares—suggests controlling contextual variables to better approximate ceteris paribus. To this end, we conducted an experiment that exposed people to information about mad cow disease and then asked them to bid their willingness-to-pay for an actual hamburger. The CART found distinct homogeneous WTP subgroups of individuals that could be used by government and industry professionals to create interventions to reduce potential consumer concern and producer losses.

In response to increasing customer attention to food attributes, agribusinesses are employing novel product differentiation strategies. As an example, we investigate the use of food safety claims on new packaged food products from the food manufacturers’ perspective. First, using two product innovation databases, we investigate claim use on labels in seven English-speaking countries over the period from 1980 to 2008. Then, based on manufacturer recommended selling prices and using U.S. data (from 2002 to 2008), we apply parametric and nonparametric hedonic methods to identify supply-side (agribusiness) valuations of chemical and microbiological claims in two food categories. We identify a significant 5 cent premium per ounce for a “preservative free” claim in spoonable yogurts. We do not find a statistically significant impact for “E. coli free” messages on meat and poultry products but find a significant price premium (19.3 cents and 25.7 cents per ounce in the two models) for “antibiotic free” claims in this category.

There is often a need to respond quickly to assess the likely implications of policy changes. Here, an equilibrium displacement model is adapted to study international bans on U.S. beef. An equilibrium displacement model offers a convenient way of quickly predicting the effects of supply and demand shocks. The equilibrium displacement model used here has an international sector, which allows the study of issues that past models with only a domestic sector could not. The estimated welfare loss of U.S. beef producers, due to both Japanese and South Korean bans after the discovery of bovine spongiform encephalopathy (BSE) in the United States, is $565.31 million.

We utilize the outbreak surveillance data from the Centers for Disease Control and Prevention (CDC) to examine whether consumer demand is impacted by the outbreak of food-borne disease. An additional person sickened due to the ingestion of tainted cheese products at home is found to decrease per capita milk demand in New York State by 0.13 percent (or 0.07 pound), while milk-and ice cream-borne disease outbreaks, occurring at home or in public places, are found to have no impact on fluid milk demand. Our results imply the existence of word-of-mouth effects, which cannot be tested by the popular information/media index approach used to measure food-borne disease outbreaks. We also find that a 7 percent increase in generic advertising expenditures or a 10 percent increase in expenditures on non-advertising marketing activities can offset the negative influence of one ill person in cheese-borne disease outbreaks at home, while holding other demand factors constant.

In this study, we examine the impacts of retail promotions and flu/cold incidences on the demand for orange juice using weekly Nielsen grocery orange juice sales statistics and the flu/cold incidences reported by Surveillance Data Inc. The cross-section time-series pooling technique proposed by Parks was used to estimate the demand parameters. Results show that flu/cold incidences increased the effectiveness of retail promotions on the demand for orange juice.

This study examines consumer preferences for three socially responsible products: minimal-pesticide strawberries, fair-trade bananas, and milk from pasture-fed cows. In-person survey data were collected in four states. Understanding preferences for these characteristics is difficult because they may appeal to different individuals depending on their personal attitudes and values. To address this issue, health, environmental and other attitudes are measured based on survey questions. Responses to these questions are used to produce explanatory factor scores. Stated preference models, both with and without factor scores, are estimated to evaluate the relative strengths of consumer preferences and motivations to purchase these products.

Recently, there has been much interest among horticultural producers concerning the marketing of organic and locally produced food. A consumer survey was administered that asked respondents to choose an applesauce product from a list of products differentiated by price, and by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. Our analysis indicates that consumers were willing to pay more for locally grown applesauce compared to applesauce that was labeled USDA Organic, Low Fat, or No Sugar Added. Furthermore, we find evidence that increased knowledge of agriculture decreases the willingness to pay for organic and locally grown applesauce.

This study evaluates consumer perceptions of what “sustainably produced” food labels imply and estimates corresponding demand for products carrying these labels. Results suggest that the typical U.S. consumer is not willing to pay a positive premium for beef, tomatoes, or apple products labeled as “sustainably produced.” Demand is particularly sensitive to inferences consumers make regarding what a “sustainably produced” food label implies. Suggestions for future work and implications of standardizing the definition of sustainability are provided.

Recent agricultural economics literature has largely analyzed consumers’ willingness to pay (WTP) for many credence attributes, including place of origin, organic, locally grown, environment-friendly, fair trade, and animal welfare. In this study, we instead attempt to analyze why consumers value “locally grown,” which is a credence attribute receiving increasing attention in the market. Specifically, we propose a distinction between the direct effect and the indirect effect of “locally grown” on consumers’ attitudes towards agri-food products to explain consumers’ preferences for locally grown products. We collect data from an experiment with university students and analyze the data with a structural equation modeling methodology.

A provision of the Food, Conservation, and Energy Act of 2008 requires country of origin labeling (COOL) for certain agricultural commodities. To comply with the law, producers, processors, and retailers face additional production costs associated with labeling, separating, and tracking commodities. Using estimated costs provided by the U.S. Department of Agriculture's Agricultural Marketing Service (AMS), we simulate the impacts of mandatory COOL on U.S. and global agricultural markets using a global static general equilibrium model (STAGEM). The results show resource adjustments that lead to decreases in production, consumption, and trade flows. The results assume no demand premium for labeled commodities relative to unlabeled commodities.

The study examines the impacts of implementing mandatory country of origin labeling (COOL) on producer and consumer welfare in the U.S. meat industry. The equilibrium displacement model developed in this study includes twenty-nine equations representing retail-, processing-, and farm-level equilibrium conditions for the beef, pork, and chicken industries. Unlike previous studies, the model allows trade between domestic- and foreign-origin products and considers the imperfectly competitive market structure of meat processers. Empirical results show that without a significant increase in domestic meat demand, producers are not expected to benefit from the mandatory COOL implementation. Results of a sensitivity analysis indicate that consumers tend to bear more COOL costs than producers, as the own-price elasticity becomes more inelastic, and that producers’ benefits increase as the elasticity of domestic demand becomes more elastic with respect to the price of imported products. The existence of market power in upstream and downstream markets of processors negatively affects both consumer and producer surplus. One implication of our findings is that U.S. beef and pork producers’ promotion and advertising programs would be successful in expanding domestic demand when the programs make the own-price elasticity of domestic demand more inelastic and the cross-price elasticity of domestic demand more elastic with respect to import price.

An equilibrium displacement model of the U.S. meat markets is used to measure the potential impacts of promotion investment, differentiating meats by types and by supply source, taking into account the U.S. participation in global meat markets, and considering imperfect competition in the meat industry. The increase in U.S. producer welfare resulting from a 10 percent increase in promotion ranges from -$1.29 million to $2.60 million for U.S. beef producers and from -$0.96 million to $1.67 million for U.S. pork producers, depending primarily on the advertising elasticity used.

The benefits to Florida orange growers of generic orange juice advertising are assessed using additive, nonlinear, regional econometric models, measuring the impact of category and brand marketing efforts on category demand while controlling for pricing and various other factors. The study shows that generic marketing efforts increased orange juice category demand by 8.3 percent, resulting in increased orange prices and a benefit-to-cost ratio to Florida growers of 3.5 to 1. Branded promotional activity was found to primarily fuel brand switching and pantry-loading, with only modest impacts on overall category demand.