THE POTENTIAL FOR MARKETING PORK PRODUCTS WITH EMBEDDED ENVIRONMENTAL ATTRIBUTES: RESULTS FROM AN EXPERIMENTAL STUDY

Environmental issues such as air and water quality related to livestock production currently receive much attention. Potential methods for environmental improvement range from regulation to market solutions. This study looks at consumer willingness to pay for pork products with embedded environmental attributes. Experimental auctions showed that over one-half of the participants (62%) paid a premium, that did not vary significantly between differing regions of the United States.Environmental Economics and Policy, Livestock Production/Industries, Marketing, Q13, Q25,

An Examination of Additively Separable Willingness-To-Pay for Environmental Attributes: Evidence from a Pork Experiment

This paper examines what is the best method for pork producers to market pork products with environmental attributes. The objective is to examine evidence of whether it is beneficial for pork producers to incorporate multiple environmental attributes into a single product or sell multiple products with a single environmental attribute.Environmental Economics and Policy,

INTERPRETING BIDS FROM A VICKREY AUCTION WHEN THERE ARE PUBLIC GOOD ATTRIBUTES

This paper provides a model that allows for interpreting bids in a Vickrey auction when the good has public good attributes. It also examines information obtained from a Vickrey auction, which collected consumer's willingness-to-pay for pork products that had embedded environmental attributes, and applies the new interpretation to the bids.Consumer/Household Economics,

A TALE OF TWO PREMIUMS- EXAMINING BIDS FROM A MULTIPLE ROUND VICKREY AUCTION WITH DIFFERING INFORMATION SETS

Two definitions of willingness-to-pay derived from a Vickrey auction with multi-product and multiple rounds with different information sets are examined. These definitions are examined in the context of valuing pork products with embedded environmental attributes and we show how information can have adverse effects on a base product of comparison.Consumer/Household Economics,

ESTIMATING WILLINGNESS-TO-PAY USING A POLYCHOTOMOUS CHOICE FUNCTION: AN APPLICATION TO PORK PRODUCTS WITH ENVIRONMENTAL ATTRIBUTES

This paper utilizes a polychotomous choice function to investigate the relationship between socioeconomic characteristics and willingness-to-pay for embedded environmental attributes. Specifically, a two-stage estimation procedure with an ordered probit selection rule is used to predict the premium payers and the magnitude of the premium they are willing to pay.Research Methods/ Statistical Methods,

CHANGES IN THE STRUCTURE OF WAGES IN THE U.S. PORK INDUSTRY

Consolidation in the U.S. pork industry continues to reduce the number of operations, while increasing the demand for hired labor. This paper explores how wages have evolved over time by decomposing the increase in wages into a change in the level of wages, human capital, and returns to human capital.Labor and Human Capital, Livestock Production/Industries,

Estimating Willingness to Pay Using a Polychotomous Choice Function: An Application to Pork Products with Environmental Attributes

Bid data from a Vickrey auction for pork chops with embedded environmental attributes were analyzed. It was found that approximately 62% of the participants had a positive WTP for the most "environmentally friendly" package of pork. Thirty percent of the participants had no WTP, and 8% had a negative WTP. A polychotomous choice model was used to accommodate data having an anchoring point within the distribution of the data. Standard variables found in the WTP literature coupled with this model were used to predict participants who were premium payers and non-premium payers using an estimated ordered probit equation.anchoring points, environmental attributes, ordered probit, polychotomous choice functions, pork, Vickrey auction, willingness to pay, Consumer/Household Economics, Demand and Price Analysis,

COST OF ORGANIC PORK PRODUCTION: A SEASONAL ANALYSIS AND NEEDED PRICE PREMIUM FOR CONTINUOUS PRODUCTION

Niche markets of agricultural products are experiencing rapid growth. One such market is organic pork. Organic production typically demands specific production conditions that can be cost increasing. This study evaluates the cost of organic pork production, seasonal differences in costs, and premiums necessary to induce continuous organic pork production. In the past few years, niche marketing has been a rapidly growing phenomenon in agriculture. One area that has experienced dramatic growth is the production of organic products. Organic production typically brings with it specific conditions on how the product is produced. These can impact the cost structure of the business and in turn, needed premiums for economic production. One of these niche markets that are growing rapidly is the market for organic pork. A major issue in organic pork production is the differing cost structures across the seasons of the year which relates, in part, to the types of production systems allowed or disallowed. Studies have shown that consumers are very conscientious of product price, freshness, and availability. In the production of organic pork, we are able to demonstrate that there are cost savings to the producer by producing a seasonal product over a continuous product. While this allows for a lower cost for the producer, it causes an uneven pig flow problem throughout the vertical chain which affects packers, marketers, and consumers. The packers are affected by having their plants at full capacity only part of the year. For the consumer, there are certain times of the year when the product is in surplus and other times when it is in shortage causing prices to fluctuate greatly. This implies that both the consumer and the packer may have an incentive to induce the producer to provide a continuous supply of organic pork to the market. This study has two objectives. The first is to provide a detailed analysis of the producer's cost of producing organic pork in a seasonal and continuous production system. The second objective is to develop a premium structure that could induce a producer to adopt a continuous production system. The study addresses the issue by examining the increase of costs involved in expanding a seasonal (summer only farrowing) organic pork production system to continuous production of organic hogs. Production costs differ by production system and season of the year. Organic pork production cost per hundred pounds is projected to be $59.45 for the seasonal system. The seasonal system consists of farrowing in the summer time only. This cost can be compared to a continuous system of organic pork production with a cost of$63.88 per hundred pounds. The continuous system has farrowing occurring in both the winter and summer seasons. With the current premium structures for organic pork, there are more hogs being produced using summer farrowing than by winter farrowing. Consumers prefer a more uniform supply of fresh pork. To foster a more uniform supply of fresh organic pork throughout the year, premiums received by producers need to reflect the seasonal production costs differences. Our results show that if the producer is paid the continuous system's cost of production of $63.88, the producer would have an incentive to produce only seasonal hogs. To induce the producer to provide a continuous flow of hogs, a minimum premium of$7.47 beyond the seasonal price must be paid to the producer for producing hogs in the winter, and a premium of $1.66 must be paid in the summer. An alternative is that the producer would receive no premium for summer production and a premium of$9.13 per hundred pounds over the seasonal production costs to induce the producer to produce a continuous supply of hogs.Marketing,

Determining the benefits of environmental improvements in pork production and their sustainability: a community-based study of Iowa\u27s pork industry

What is a sustainable environment worth to pork producers, neighbors, rural community residents, and pork consumers? Surveys and experimental auctions were used to gauge participants\u27 willingness to pay for pork products produced in systems with differing environmental improvements and/ or impact