Exogenous vs. Endogenous Consumer Preferences and Knowledge about Nutrition

Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

European Information System for Organic Markets (EISFOM QLK5-2002-02400): WP 2: “Data collection and processing systems (DCPS) for the conventional markets” and WP 3: “Data collection and processing systems for organic markets” = Deliverable D2

European markets for organic products are developing fast. In Europe, as other parts of the world, more and more farm land is being converted to organic production. In order to adjust production and consumption levels, detailed market information is needed, especially where decisions with a long-term impact need to be taken, for example on converting specific land or livestock enterprises requiring high levels of investment in glasshouses, housing, processing facilities etc. Since public subsidies (regional / national / European) are heavily involved in these investments, valid, accurate and up-to-date information is essential not only for farmers and growers, but also for policy-makers, consultants, processing industry etc. EU-research projects such as OFCAP (FAIR3-CT96-1794) and OMIaRD (QLK5-2000-01124) have shown that regional or national data gathering takes place in many countries, but often only very basic data are reported, such as certified organic holdings, land areas and livestock numbers. Important market data, e.g. the amount of production, consumption, international trade or producer and consumer prices, do not exist in most European countries. In some European countries there are only rough estimates of the levels of production and consumption. There is no standardization and data are seldom comparable. Furthermore, detailed information on specific commodities is missing. Hence, investment decisions are taken under conditions of great uncertainty. Likewise, if politicians want to support organic agriculture, they do not know whether it would be better to support production or consumption or to address problems in the marketing channel. The EU concerted action EISfOM (QLK5-2002-02400) (European Information System for Organic Markets) is attempting to take the first steps in solving these problems. The aim of this concerted action is to build up a framework for reporting valid and reliable data for relevant production and market sectors of the European organic sector in order to meet the needs of policy-makers, farmers, processors, wholesalers and other actors involved in organic markets. In order to reach this aim, this action was split into several workpackages. This report describes the approach and results of workpackages 2 and 3. In this first chapter the objective and general approach of these work packages are described. Chapters 2 and 3 provide an overview of international statistics and data collection systems within the food supply chain at the public and the private level. Chapter 4 describes national statistics and data collection systems within the food supply chain. In Chapter 5, an analysis and appraisal is made of the results with regard to organic data collection and processing systems (DCPSs) and their integration into existing common DCPSs. Chapter 6 draws several general conclusions. Two substantial annexes complete the report, one with the country reports on the situation of data collection and processing in all investigated countries and the other with the first and the second stage questionnaires covering the different data collection levels

Strategic Implications of Retail Pricing in the U.S. Fluid Milk Market

We explore brand level strategic interactions between skim/low fat and whole milk brands by estimating detailed price elasticity matrix using quadratic almost ideal demand system for eight major U.S. cities. Results of our analysis suggest that the market and demand behavior of skim/low fat and whole milk brands are different. Demand for skim/low fat milk is more elastic than in the case of whole milk. Highly inelastic demand for large number of Private label whole milk brands suggests 'loss leader' pricing strategy by the retailers. Such pricing strategy does not seem to be the norm in skim/low fat milk market.Agribusiness,

ENDOGENOUS CONSUMER PREFERENCES AND KNOWLEDGE ABOUT NUTRITION

What are the important determinants of consumer demand and how have they been changing over the last decade? Understanding these factors is crucial for evaluating the benefits and costs of government regulations, such as labeling, intended to influence consumer food choice and, ultimately, public health; for assessing the competitiveness of U.S. agricultral producers and food processors as they choose product designs and marketing strategies; and for assessing the impact of changing consumer demand for food on the agricultural and food sectors of the U.S. economy. The objectives of this paper are to make a significant contribution to demand analysis by basing this understanding on the use of uniquely comprehensive data sets and theoretical/modeling techniques that evaluate demand on the brand level; and to build a comprehensive understanding of the relative importance of different determinants of consumer food choices in the decade from 1993-2002. The overall goal is to analyze what is driving consumer choices and the implications of these drivers for food and nutrition policy in the United States. A particular focus is the relative importance of advertising, other company marketing strategies, nutritional quality, privately and publicly provided nutritional information, and consumer dietary concerns and knowledge in determining consumer demand for food products.Agribusiness, Consumer/Household Economics, Demand and Price Analysis,

Some like it healthy: demand for functional products in the Italian yogurt market

Despite the significant interest shown by academics as to investigating the market of functional foods, little empirical research has used market data to infer on the characteristics of functional foods’ consumers via demand analysis. Using a discrete choice (nested-logit) model and scanner data of yogurt purchases in the Italian market, this paper analyzes the demand for both conventional and functional yogurts assessing also the role of health-related demographics as shifters. The empirical results show that, in the category analyzed, while higher prices are still a deterrent for the success of some functional products, drinkable functional yogurts appear successfully differentiated, benefitting from a relatively low own-price elasticity of demand. The results suggest also that health-related consumers’ characteristics play an important role in shifting the demand for yogurts (both conventional and functional), indicating that, consistently with previous findings, consumers aiming to improve (or maintain) their health status are more inclined to buy functional products than conventional ones.Functional foods, health-conscious consumers, nested-logit, yogurt., Food Consumption/Nutrition/Food Safety,

Public Perceptions of the Midwest’s Pavements: Policies and Thresholds

A 5-year, pooled fund study with the Iowa, Minnesota, and Wisconsin departments of transportation assessed the public\u27s perceptions of pavement improvement strategies and developed thresholds of satisfaction using the departments\u27 physical indices, such as pavement ride and condition on rural, two-lane highways in the states. Approximately 3,600 drivers in the three states were involved in the three phases of the project, which included 18 focus groups, 400 statewide surveys in each state, and 2,300 targeted surveys across the three states. A multidisciplinary team from Marquette University and a mass media survey lab conducted the studies. A summary of focus group methods and purposes and a three-state summary of policy and improvement issues are provided. More than 450 highway segments were surveyed in Phase III, with input from 2,300 drivers through a two-step recruitment and postdrive interview. Thresholds of International Roughness Index and condition indices are summarized for the three states. The study found a high degree of trust in the three departments of transportation and public support for building longer-lasting pavements and minimizing delay. A three-step methodology is recommended for other state studies. Physical data thresholds using both public satisfaction and the agreement to improve are presented for each state\u27s physical pavement indices (ride and condition)

Strategic Pricing Behavior under Asset Value Maximization

This paper investigates a comprehensive assessment of firm strategic behavior under financial market uncertainty. A general theoretical model of market value maximization (MVM) is constructed using a traditional capital asset pricing format. The model built on the nonlinear Almost Ideal Demand Systems (AIDS) and structural first-order conditions is developed. By full information maximum likelihood (FIML) estimation, the model evaluates pricing strategies in the U.S. margarine and butter retail markets using 4-week interval scanner data from 1998 to 2002. The model of profit maximization is rejected in favor of the MVM structure, and it indicates that financial market uncertainty plays an important role in the pricing behavior in this industry. We estimate the price elasticities of demand for leading brands and investigate the degree of market power in this industry.Market Value Maximization, AIDS, FIML, Model Selection, Risk and Uncertainty,

INTEGRATION OF A PRODUCT CHOICE MODEL AND A LATENT VARIABLE MODEL OF NUTRITION INFORMATION

We develop and estimate an integrated discrete choice model system of product choice and nutrition information for prepared frozen meals in the United States in the period from 1993 to 1998, when government regulation of nutrition labeling changed from voluntary to mandatory. The model links consumer characteristics (e.g., income, knowledge about nutrition, nutrition label use) to product characteristics (e.g., prices, nutritional attributes) and allows us to obtain consumer preference parameters and demand elasticities with regard to product characteristics. We find that prices, advertising, price reductions, and consumer preferences for taste have a significant effect on the demand for prepared frozen meals, whereas knowledge about nutrition and nutrition label use do not. Using the estimated demand parameters we then evaluate the impact of the new mandatory labeling policy. The results show that consumer preferences and purchasing patterns within the prepared frozen meals category did not change significantly after the implementation of mandatory nutrition labeling.Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

Health Claims Regulation and Welfare

Regulation (EC) No 1924/2006, 20 December 2006, requires functional foods manufacturers operating in Europe to provide evidence that the health claims reported on the packaging are truthful. However, most applications reviewed by the European Food Safety Authority (EFSA) have been rejected, leaving food manufacturers with the option of either selling products deprived of their claims or discontinuing their production. This paper analyzes changes in welfare (both producers’ and consumers’) that would occur if the implementation of Reg. (EC) No 1924/2006 resulted in a large-scale health-claim de-labeling of functional food products. To that end, we use one year (2007) of monthly scanner data of sales of conventional and functional yogurt in the Italian market and a discrete-choice random coefficient logit demand model which accounts for consumers’ heterogeneity using the MPEC algorithm developed by Dube et al. (2009) to improve numerical efficiency and accuracy, to assess the issue. Preliminary results show that both producers and consumers can be severely impacted if reporting health-claims on functional products is not allowed; as our results indicate that consumers’ welfare losses are twice as large than producers’ a loosening of EFSA’s requirements might be required to avoid such losses.Health claims regulation, EFSA, welfare, random coefficients, MPEC., Agricultural and Food Policy, Demand and Price Analysis, Industrial Organization, Marketing, Q18, L66, M38,