PRODUCT AND PROCESS CERTIFICATION IN IMPERFECTLY COMPETITIVE MARKETS

Consumers, policy makers, and business decision makers are increasingly concerned about food safety and security. In the U.S. meat industry, certification programs could address some of these problems. This study builds a three-sector partial equilibrium model to analyze the distributional effects of implementing a certification program for meat product.Food Consumption/Nutrition/Food Safety,

THE CAPSTONE EXPERIENCE COURSE IN AGRICULTURAL CURRICULUM

Capstone courses are being developed in colleges of agriculture in response to demands from agribusiness firms, students, and other university stakeholders. With data from a faculty survey, the factors affecting the success of capstone courses in agricultural economics as well as other agricultural disciplines are identified.Teaching/Communication/Extension/Profession,

Certification of Pork Products

The objective of this paper is to provide insights on the welfare distributional impact on consumer and producer welfare resulting from the development and implementation of a credence certification program in the U.S. pork sector. The certification program can provide various levels of tracking and tracing in the marketing chain. The modeling framework follows that of Nilsson (2005), which encompasses product differentiation and substitution across meat products at the consumer level and across live animal types at the farm level. Processors and retailers have potentially bilateral market power and can supply either or both certified and conventional meat products. One of the key findings is that while as the conventional market contracts and the certified market expands as expected, the magnitude depends on whether suppliers are single-or multiproduct providers. On aggregate, total welfare increases by 15 to 24 percent depending on industry structure.Marketing,

Traceability -- A Literature Review

In light of recent food safety crises and international trade concerns associated with food or animal associated diseases, traceability has once again become important in the minds of public policymakers, business decision makers, consumers and special interest groups. This study reviews studies on traceability, government regulation and consumer behaviour, provide case studies of current traceability systems and a rough breakdown of various costs and benefits of traceability. This report aims to identify gaps that may currently exist in the literature on traceability in the domestic beef supply chain, as well as provide possible directions for future research into said issue. Three main conclusions can be drawn from this study. First, there is a lack of a common definition of traceability. Hence identifying similarities and differences across studies becomes difficult if not impossible. To this end, this study adopts CFIA’s definition of traceability. This definition has been adopted by numerous other agencies including the EU’s official definition of traceability however it may or may not be acceptable from the perspective of major Canadian beef and cattle trade partners. Second, the studies reviewed in this report address one or more of five key objectives; the impact of changing consumer behaviour on market participants, suppliers incentive to adopt or participate in traceability, impact of regulatory changes, supplier response to crisis and technical description of traceability systems. Drawing from the insights from the consumer studies, it seems as if consumers do not value traceability per se, traceability is a means for consumers to receive validation of another production or process attribute that they are interested in. Moreover, supply chain improvement, food safety control and accessing foreign market segments are strong incentives for primary producers and processors to participate in programs with traceability features. However the objectives addressed by the studies reviewed in this paper are not necessarily the objectives that are of most immediate relevance to decision makers about appropriate traceability standards to recommend, require, subsidize etc. In many cases the research objectives of previous work have been extremely narrow creating a body of literature that is incomplete in certain key areas. Third, case studies of existing traceability systems in Australia, the UK, Scotland, Brazil and Uruguay indicate that the pattern of development varies widely across sectors and regions. In summary, a traceability system by itself cannot provide value-added for all participants in the industry; it is merely a protocol for documenting and sharing information. Value is added to participants in the marketing chain through traceability in the form of reduced transactions costs in the case of a food safety incident and through the ability to shift liability. To ensure consumer benefit and have premiums returned to primary producers the type of information that consumers value is an important issue for future research. A successful program that peaks consumer interest and can enhance their eating experience can generate economic benefits to all sectors in the beef industry. International market access will increasingly require traceability in the marketing system in order to satisfy trade restrictions in the case of animal diseases and country of origin labelling, to name only a few examples. Designing appropriate traceability protocols industry wide is therefore becoming very important.traceability, institutions, Canada, consumer behaviour, producer behaviour, supply chain, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, International Relations/Trade, Livestock Production/Industries, Marketing, Production Economics, D020, D100, D200, Q100,

Price Pooling and the Gains from Hedging: Application to a Swedish Grain Cooperative

Optimal hedging strategies are analyzed for a cooperative operating a price pooling system in the presence of price and quantity risk. A three-period model, accounting for default risk and storage, is developed. Hedging allows the cooperative to increase the pool price offered to farmers by 2.8 - 4% for moderate risk parameters.Agribusiness, Marketing,

DIFFERENCES IN U.S. CONSUMER PREFERENCES FOR CERTIFIED PORK CHOPS WHEN FACING BRANDED VS. NON-BRANDED CHOICES

Consumers' preferences for credence attributes of a product may differ from each other, when facing the choices between branded and/or non-branded products. We test this hypothesis with conditional and mixed logit regression using data obtained by choice experiment surveys. The results suggest that, on average, consumers are willing to pay more for a certification attribute when the product is branded. Additionally, greater variation in consumer willingness-to-pay is observed in the non-branded case. This latter characteristic of the results may represent the increased uncertainty some consumers internalize concerning quality consistency when brand information is not provided. These results have interesting implications for producers, processors, retailers, and policy makers.Consumer/Household Economics,

Canadian Consumers’ Purchasing Behavior of Omega-3 Products

The development of innovative functional food products is a major trend in today’s food industry. The growth of this industry is driven by increased consumer awareness of their own health deficiencies, increased understanding of the possible health benefits of functional foods, development in formulation technologies, a positive regulatory environment, and changing consumer demographics and lifestyles. While there has been a proliferation of omega-3 products such as milk, eggs, yogurt, and margarine in the Canadian food market, very little is known about consumers of these products. We use ACNielsen Homescanâ„¢ data combined with survey data to develop profiles of omega-3 consumers in Canada. The focus of the study is on consumers of four products: omega-3 milk, omega-3 yogurt, omega-3 margarine, and omega-3 eggs. We investigate whether there are significant differences between consumers and non-consumers of omega-3 products based on their age, income, education, and household composition. We also investigate whether a household’s use of Canada’s Food Guide and the Nutrition Facts table and consideration of the health benefits of food influences the decision to purchase omega-3 products. The results from the ordered probit model estimation show that the aging Canadian population is a major driver of omega-3 purchases. Also, the presence of children in the home increases the purchasing frequency of omega-3 yogurt and omega-3 margarine, and reading the Nutrition Facts table and considering the health benefits of food are important factors that affect omega-3 product purchases.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising

The Canadian chicken industry has operated under supply management since the mid-1970s. Canadian consumer preferences for chicken have grown dramatically since then possibly in response to concerns about health and the levels of fat and cholesterol in red meats. However Canadian consumers are also looking for convenience with their food purchases. Canadians are buying their chicken in frozen further processed forms, fresh by cut without skin and bone and in a variety of other different ways reflecting their unique willingness to pay for various attributes. There is also an increasing trend for retailers and processors to brand the fresh chicken product sold through grocery stores (for example, Maple Leaf Prime). The preferences Canadian consumer have for various chicken products, the prices they are comfortable paying and the strategies followed by processors/retailers can directly affect the outcomes of industry wide strategies such as investment in generic advertising and research or the impact of international market changes such as border closures. This research is an initial attempt to quantify Canadian consumer preferences – for fresh product by type – for product by level of processing – for chicken product by cut - for fresh chicken by brand - to examine the impact of substitutability on a variety of market shocks. The various different disaggregations of Canadian chicken consumption are used in a number of simulation models to illustrate how important preferences are to producer returns when there are market shocks. If Canadians found all chicken products available in the grocery store to be perfectly substitutable then previous policy analysis assuming chicken is one homogeneous product would be sufficient for industry policy analysis purposes. If Canadians view all the different chicken products as imperfectly substitutable and given that various chicken products are produced in relatively fixed proportions (white and dark meat, for example) further understanding of how consumers make their purchase decisions could enhance the industries ability to predict outcomes. For example, border closing to Canadian exports ( as a result of an Avian influenza outbreak, for example) would result in a significant increase in the dark meat products available for sale through Canadian grocery stores. The results presented in this research could provide a clue as to how much dark meat prices might decline while white meat prices might remain unaffected. The results reported suggest that at the consumer level, chicken fresh and frozen products are not perceived to be perfect substitutes, within a narrow category such as fresh chicken breasts, they are not perceived as even close substitutes, within the fresh category branded products such as those developed by Lilydale and Maple Leaf are not perceived as perfect substitutes. As well, an initial look at the demand for individual chicken products by household suggests that there is far from a common buying pattern across Canadian households, even within a single province. The results also suggest that health and convenience attributes are driving Canadian consumer preferences. Simulation results highlight the fact that pricing strategies followed by major processors/retailers within Canada can influence the returns to generic advertising and research. Further research could provide additional robust estimates of the chicken product substitutability existing in the Canadian market and an increased understanding of the market characteristics currently operating. The results presented here suggest that further work in this area is important for the chicken industry to pursue.consumer behaviour, chicken consumption, differentiated products, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, D12, Q11, Q18,

Canadian Consumer Attitudes and Purchasing Behaviour of Omega-3 Products

The development of innovative functional food products is a major trend in today's food industry. The growth of this industry is driven by increased consumer awareness of their own health deficiencies, increased understanding of the possible health benefits of functional foods, development in formulation technologies, a positive regulatory environment and changing consumer demographics and lifestyles. While there has been a proliferation of omega-3 products such as milk, eggs, yogurt, and margarine in the Canadian food market, very little is known about consumers of omega-3 products. In our study we use ACNielsen HomescanTM data combined with ACNielsen Panel TrackTM survey data to develop profiles of omega-3 consumers in Canada. The focus of the study is on consumers of four products: omega-3 milk, omega-3 yogurt, omega-3 margarine and omega-3 eggs. We investigate whether there are significant differences between consumers and non-consumers of omega-3 products based on their age, income, education, and household composition. We also investigate whether a household's knowledge of the Canadian food guide, knowledge of nutrition labels, and consideration of health benefits influences the decision to purchase omega-3 products. The results from the ordered probit model estimation show that an aging (baby boomer) population is the most frequent purchaser of omega-3 products, the presence of children in the home increases the purchasing frequency of omega-3 yogurt and omega-3 margarine, and reading the Nutrition Facts panel and health benefits are important factors that affect the purchase of omega-3 products.omega-3 fatty acids, nutritional labelling, health benefits, ordered probit model, Food Consumption/Nutrition/Food Safety, C81, D12, I19, Q19,

Certification of Pork Products

The objective of this paper is to provide insights on the welfare distributional impact on consumer and producer welfare resulting from the development and implementation of a credence certification program in the U.S. pork sector. The certification program can provide various levels of tracking and tracing in the marketing chain. The modeling framework follows that of Nilsson (2005), which encompasses product differentiation and substitution across meat products at the consumer level and across live animal types at the farm level. Processors and retailers have potentially bilateral market power and can supply either or both certified and conventional meat products. One of the key findings is that while as the conventional market contracts and the certified market expands as expected, the magnitude depends on whether suppliers are single-or multiproduct providers. On aggregate, total welfare increases by 15 to 24 percent depending on industry structure