Aligning Incentives for Contract Dairy Heifer Growth

As dairy farms grow and specialize in milking cows, raising replacement heifers is increasingly outsourced. Perhaps the largest challenge of outsourcing the heifer enterprise involves quality, measured as milk production potential, and the possibility for moral hazard due to hidden action on the part of the custom heifer grower. A principal-agent framework was used to elicit contract terms to provide incentives for the heifer grower to achieve desired growth rates, and enable the return of the heifer to the dairy farm on an accelerated time frame, without sacrificing quality. To mitigate incentive asymmetries, bonuses and deductions are proposed.contracts, heifer growth, moral hazard, principal agent, Livestock Production/Industries,

Pork Managers' Perception of Labor Management Practices and Their Risks

Although managing labor has become important for farm operations success, training and education for farm managers focuses on agricultural production management and few studies provide an empirical basis on how agricultural labor management differs from labor management in other industries. With the exception of Hurley et al., little is known about labor management practices in pork production, specifically. This study used the focus group discussion method with four focus group meetings in Michigan and two in Kansas in 2006. The average group size was four participants. All group discussions were tape-recorded and transcribed. The ATLAS-TI software was used to support the data analysis. Labor management topics discussed were as follows (order based on the amount of discussion dedicated to each topic): (1) performance management, (2) compensation, (3) recruitment, (4) training, (5) working conditions and organizational structure of farms, (6) selection, (7) hiring immigrant employees, (8) discipline, (9) performance evaluation, (10) social environment, and (11) labor law. Labor management practices, labor attributes, and work characteristics were analyzed within each category and characterized as risk reducing or risk increasing, according to managers perceptions. An educational pilot workshop was developed based on the focus group discussions and delivered in both Michigan and Kansas. Topics covered in the workshops included recruitment and selection, training, employee evaluation, compensation, conflict management, discipline and termination, communication, and motivation. Workshops were evaluated both immediately afterwards, through written anonymous workshop evaluations and through phone interviews. While most participants were able to point to specific content learned and had started to implement changes, hoping to increase productivity and/or reduce costs, few were able to quantify the monetary value of those changes.Labor and Human Capital, Livestock Production/Industries,

A Survey of Reproductive Management Strategies on US Commercial Dairy Farms

Reproductive performance on the dairy farm affects the dairy’s profit because it directly affects milk production, the availability of replacements, the amounts of voluntary and involuntary culling, breeding costs, and costs associated with veterinary care (Britt, 1985). Reproductive management programs selected for implementation differ across farms due to varying on-farm costs, such as labor costs, opportunity costs of management and labor, as well as facilities, farm goals and values, and management styles. The objective of this paper is to summarize survey data in order to aid in providing economic insight into why varying types of farms utilize different methods of reproductive management and differing reproductive technologies.

Verifying Credence Attributes in Livestock Production

Livestock producers can respond to increasing consumer demand for certain production process attributes by providing verifiable information on the practices used. Consumer willingness to pay data were used to inform producer decision-making regarding selection of verification entities for four key production process attributes in the production of pork chops and milk. The potential for informing farm-level decision-making with information about consumer demand for product and production process attributes exists beyond the two products assessed as example cases in this analysis.Key Words: animal welfare, certification, credence attribute, producer decision support, response to consumer demand, verification, willingness to pay, Consumer/Household Economics, Demand and Price Analysis, Livestock Production/Industries, Production Economics, Q11, Q12, Q19,

Media Coverage of Animal Handling and Welfare: Influence on Meat Demand

Replaced with revised version of paper 7/21/09.animal welfare, consumer demand, meat quality, media information, Rotterdam model, source of information, information indices, Agricultural and Food Policy, Demand and Price Analysis,

Consumer Preferences for Animal Welfare Attributes: The Case of Gestation Crates

Animal welfare concerns are having dramatic impacts on food and livestock markets. Here we examine consumer preferences for pork products with a focus on use of gestation crates. We examine underlying consumer valuations of pork attributes while considering preference heterogeneity as well as voluntary and legislative alternatives in producing gestation crate-free pork. Our results suggest that prohibiting swine producers from using gestation crates fails to improve consumer welfare in the presence of a labeling scheme documenting voluntary disadoption of gestation crates. Consumers are found to implicitly associate animal welfare attributes with smaller farms. Preference heterogeneity drives notably diverse consumer welfare impacts when pork produced with use of gestation crates is no longer available for consumption.animal welfare, consumer welfare, economics of legislation, gestation crates, pork, swine, voluntary labeling, willingness to pay, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Industrial Organization, Livestock Production/Industries, Q11, Q13, Q18,

Producer Technology Use and the Value of Autonomy: The Case of rbST

Farm Management, Production Economics, Productivity Analysis,

Understanding U.S. Consumer Demand for Milk Production Attributes

A choice experiment was used to examine the value of various fluid milk attributes. Respondents were surveyed regarding half or whole gallon milk purchases. A split-sample design was used to examine consumer inferences regarding food safety. Willingness to pay for verification of production process attributes varied across attributes and verifying entity. Consumers were generally willing to pay substantial premiums for milk produced without the use of rbST, on local family farms, with assured food safety enhancement, and for these claims to be verified by the U.S. Department of Agriculture.milk, food safety, grazing, rbST, family farm, local, willingness to pay, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Consumer Willingness to Pay for Livestock Credence Attribute Claim Verification

A choice experiment was used to determine consumer value for verification of livestock production process attributes. Willingness to pay for verification of production process attributes varied for both milk and pork chops across attributes and verifying entity. Statistically significant evidence of social desirability bias was found by comparing estimates of consumer preferences solicited using direct and indirect questioning. Indirect questioning may yield more accurate representations of consumer value than direct questioning, and therefore more accurate estimates for agribusiness decision making.animal welfare, certification, consumer demand, credence attribute, social desirability bias, verification, willingness to pay, Food Consumption/Nutrition/Food Safety, Livestock Production/Industries,

Got (Safe) Milk? Chinese Consumers’ Valuation for Select Food Safety Attributes

Food safety issues often arise from problems of asymmetric information between consumers and suppliers of food with regards to product-specific attributes or characteristics. Food safety concerns in China are having a drastic impact on consumer behavior, commodity markets, international trade and food security. An additional challenge to the problem of asymmetric information lies in the inherent structure of the governing bodies which oversee food safety and quality. Unlike the United States and other developed countries, China’s food safety is regulated by several government entities with different and sometimes overlapping responsibilities. As a result consumers don’t have a comprehensive food safety and quality system on which to base their economic decisions. In an effort to maintain the food supply of the world’s largest economy safe, China’s government has approved a series of tougher food safety laws and regulations. Although publicized as a tough approach to food safety, it is unclear whether this latest effort will make China’s food safer to eat and improve the country’s image to its agricultural trading partners. While much attention has focused on the problems plaguing China’s food inspection system, little research has been dedicated to analyze consumers’ concerns over food safety. In this paper we measure consumer preferences for select food safety attributes in milk. More specifically we estimate consumer’s willingness to pay for government certification, an independent (third party) certification program, national brand, and a product’s shelf-life using a choice experiment approach. We compare and contrast several modeling strategies to capture heterogeneity of consumer preferences. The data used in this study was collected from a choice experiment administered in seven major metropolitan cities in China, yielding a statistical sample of 6,720 observations. Our results suggest that Chinese consumers have the highest willingness-to-pay for a government certification program, followed by national brand, private certification, and longer shelf-life products. We find that Chinese consumers are very concerned about the safety of the milk they purchase and are willing to pay a high premium to assure that their food is safe. The high level of concern regarding milk safety is linked to recent food safety incidents involving dairy products, most notably the Melamine-adulterated milk products. Heterogeneity of consumer preferences and willingness to pay for the select food safety attributes was found by implementing a latent class logit model based on attitudinal responses as well as a mixed logit model. Although it might appear that Chinese consumers’ confidence on the government is eroding, as reported in the wake of recent food safety scandals, our research found that consumers were less confident on non-government food safety control measures. This result indicates that there is a strong need for the Chinese government to provide adequate food safety and quality control. Our findings call upon the direct involvement of the Chinese government in the food safety system. A more strict monitoring system via certification is necessary. If realized, such government efforts will provide higher welfare to consumers in the short-run and will restore consumers’ trust increasing social welfare in the long run. Policy implications of our results are discussed with particular attention given to food safety and security issues.China, Choice experiment, Mixed logit, Latent class logit, Food safety, Preference heterogeneity, Willingness-to-pay, Food Consumption/Nutrition/Food Safety, International Relations/Trade, Marketing, Q11, Q18,