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Research Papers in Economics

 
International Food and Agribusiness Management Review 
Volume 7, Issue 3, 2004 
 
Executive Summaries 
 
 
Consumer Attitudes Towards Genetically Modified Foods in Emerging 
Markets: The Impact of Labeling in Taiwan 
Pierre Ganiere, Wen Chern, David Hahn and Fu-Sung Chiang 
 
In 2001, Taiwan enacted a law for genetically modified food (GM foods) labeling 
beginning January 1st 2003. Under this regulation, food containing more than 5% of 
GM ingredients must be labeled. Over the last decade, Taiwan has imported most of 
its soybeans from the United States which is the world-leading country in research, 
development and sales of Genetically Modified Organisms (GMOs). In order to 
assess the effects of the new policy on trade, a telephone survey dealing with the 
consumer acceptance of GM foods was conducted in 2002. A total of 257 interviews 
were completed, using a random digit dialing. 
 
Attitudes towards GM foods are studied through the use of a multiple 
correspondence analysis (MCA). This method is combined with a cluster analysis to 
construct a typology of consumers’ attitudes. Results show that only a minority of 
the population, 13% of the sample, are extremely opposed to GM foods. The rest of 
the population is composed of proponents of the technology, 52%, moderate 
opponents still in a decision-making process, 30%, and a fraction of non-involved 
consumers who have no opinion, 5.5%. The implementation of the mandatory 
labeling is not expected to have a significant impact on consumer purchase 
behavior; most consumers will continue to purchase the same food items even if 
they contain GM ingredients. The new regulation would therefore not affect 
significantly the agricultural trade relationships between Taiwan and the U.S. 
 
Can the Private Sector Be Competitive and Contribute to Development 
Through Sustainable Agricultural Business? A Case Study of Coffee in 
Latin America 
Bernard Kilian, Lawrence Pratt, Connie Jones and Andrés Villalobos 
 
Latin America’s conventional coffee producers have responded to the recent market 
crisis and to an increasing demand for sustainable food in North America and 
Europe by exploring sustainable coffee certification concepts. Some producers feel 
that by switching to sustainable production they can meet new quality demands 
from consumers, attain higher prices and improve their economic performance. 
However, most Latin American coffee producers lack the adequate differentiated trade statistics and other market intelligence necessary to make an educated 
decision on their entrance into this market. Furthermore, if they do decide to enter 
the sustainable market, many lack knowledge about which certification concepts 
are best for their particular production capabilities.  
 
By providing Latin American coffee producers with well-researched documentation 
on the different certification concepts and the market, these producers will be better 
informed to make intelligent decisions about coffee production. Informed decisions 
can both improve output and profit, helping local economic situations and also 
guiding local, national and international market flows for sustainable coffee.  
 
The first part of the article introduces and describes the following main certification 
concepts: Organic, Fairtrade, Rainforest Alliance and Utz Kapeh and lists current 
Latin American coffee supplies for each certification. This general information is 
followed by a price analysis conducted to identify the price differentials being paid 
for certified coffee. Since certification impacts go beyond prices, a subsequent 
economic evaluation with emphasis on Central American farm conditions has been 
carried out to analyze farm income and cost structures and their relation to 
sustainable certifications. Additionally, other economic impacts are considered, such 
as access to credit, certification promotion, among others. Most information was 
gathered through primary source interviews and market analyses.  
 
The findings show that in 2002/03 Latin America already produced approximately 
250,000 hectares of certified coffee, which equals an export volume of around 90,000 
tons/year. Among the four chosen certifications, organic is the most applied, with 
more than 60% of the total sustainable production. The Fairtrade certification 
reaches the highest price differentials of in average 62 US cents/lb; whereas, in the 
case of organically-certified coffee, only few producers are able to reach significant 
price differentials of occasionally even more than 100 US cents/lb, however the 
average amounts just for approximately 20 US cents/lb. Producers with Rainforest 
Alliance certification reach an average price differential of 15 US cents/lb, and those 
with Utz Kapeh, about 7 US cents/lb. The microeconomic analysis results prove that 
many coffee farmers in Central America, despite having sustainable certifications, 
are not able to reach positive farm incomes. 
 
These analyses imply—for managers, but also for institutions working in certified 
coffee production—that certification needs to be seen only as one part of an entire 
farm management strategy to improve farm income. In general, higher farm 
incomes are derived from optimized farm management in combination with a 
higher-quality and more-flavorful product. Under these circumstances sustainable 
certifications then will help differentiate the coffee product even more, which is of 
high value given the recent maturation of the sustainable foods market. 
 
 
 Identification of Niche Market for Hanwoo Beef: Understanding Korean 
Consumer Preference For Beef Using Market Segment Analysis 
Renee Kim and Milton Boyd 
 
Korean Hanwoo beef producers are interested in improving the image of Hanwoo 
beef for Korean consumers, as the Korean beef market is becoming increasingly 
open to international competition. This study examines the consumer profile and 
positioning for the Hanwoo beef product in South Korea. A survey of 480 consumers 
is conducted to analyze preferences for 33 attributes of beef purchasing decisions. 
Factor analysis was used to determine factors that are important in beef purchasing 
decisions, and cluster analysis was used to identify a niche market for branded 
Hanwoo beef. 
 
Factor analysis results indicated that effective labeling and quality assurance of 
Hanwoo products, the meat quality, price and branding are important to the 
positioning and marketing of the Hanwoo beef product. Thus, policy makers and 
Hanwoo marketers should enhance these aspects of beef attributes in developing 
policy and marketing strategies of Hanwoo beef. 
 
According to cluster analysis, half of the sample respondents chose either Hanwoo 
or imported beef for specific positive factors (i.e. price or quality). These were the 
Price Import Buyers, the Quality Import Buyers and the Quality Hanwoo Buyers. 
The other half of the sample respondents included consumers who purchased 
Hanwoo due to safety concern or quality assurance (the Safety Hanwoo Buyers) and 
consumers who were indeterminant (the Middle of the Road Shoppers).  
 
Special attention has to be paid to the Safety Hanwoo Buyers, the Quality Import 
Buyers and the Middle of the Road Shoppers. They represent a potential for market 
growth for Hanwoo beef, and specific- marketing strategies should be addressed to 
them. An important task for Hanwoo marketers is to increase consumers’ 
knowledge of how Hanwoo’s quality is different from imported beef since knowledge 
level of the quality of Hanwoo was found to be relatively low among consumers. 
Hanwoo producers and marketers would need to clearly communicate distinct and 
observable benefits of Hanwoo to consumers- such as high level of marbling in High 
Quality Beef (HQB) Hanwoo products. This marketing strategy should be targeted 
to the Middle of the Road Shoppers who are indecisive on beef choice and the 
Quality Import Buyers who perceive Hanwoo and imported beef as comparable 
substitutes.  
 
Hanwoo producers and marketers might also organize generic promotion activities 
periodically with public institutions to increase awareness of branded Hanwoo beef. 
This marketing strategy should be effectively communicated to the Safety Hanwoo 
Buyers who had the highest demand for branded Hanwoo and for quality assurance. 
The Safety Hanwoo Buyers also had a high level of distrust in labeling system of 
beef products and may perceive branding of Hanwoo beef as an extension of quality 
assurance and safety measure. 
 Hanwoo producers could sell HQB Hanwoo directly to specialty stores (e.g. HQB 
Hanwoo-only retail outlets) as an alternative to address consumer concern for 
quality assurance of Hanwoo. These specialty stores should be located in residential 
area where residents’ socio-economic characteristics match with targeted consumer 
profile-consumers who have relatively high income (US$2000 to 5000) per month, 
have children and who are younger (30 to 39 years old) and married.  
 
California Strawberry Production and Methyl Bromide 
Gregory A. Baker 
 
This teaching case describes the challenge facing the California strawberry industry 
over the potential loss of methyl bromide, a key chemical fumigant. The case, set in 
1997, describes the importance of methyl bromide to the California strawberry 
industry. The impacts of methyl bromide usage on key constituent groups, including 
environmentalists, farmworkers, and communities, are described. 
 
The case is ideal for teaching the application of stakeholder analysis in 
undergraduate classes, graduate classes, and management seminars. Students may 
be asked to identify the principal stakeholders and their perspectives, develop 
alternatives, and recommend a course of action. 
 
Saskatchewan Wheat Pool 
Marv Painter 
 
Saskatchewan Wheat Pool is a teaching case which provides an in-depth look at the 
grain handling and farm input sectors in western Canada. A history of 
Saskatchewan Wheat Pool is provided to show how the company and the industry 
have evolved to current day. The companies in this industry, including Cargill, 
Agricore United (Archer Daniels Midland), Saskatchewan Wheat Pool, and others, 
have significantly grown their capacities in the last ten years, to the point where 
competition is fierce. The capacity in the industry is currently overbuilt and 
rationalization is taking place. This has put severe financial pressures on each 
industry participant. 
 
Saskatchewan Wheat Pool had a long and proud history as Saskatchewan’s largest 
co-operative. Up until 1998, it had been very successful both financially and in 
providing service to farmer-members. However, in the mid 1990s the company 
embarked on an aggressive expansion plan that left it in severe financial distress. 
Mayo Schmidt was brought in as CEO to turn the company around. The case 
illustrates to students how quickly a company can go from good profitability to large 
losses and bankruptcy. Students are asked to assess what went wrong and provide 
a strategy (or critique the current one) for the company. The main focus of the case 
is on the events that led to the financial distress and on Mayo Schmidt’s plan to 
turn the company back to profitability. His strategy was to sell off all non-core 
assets and focus on the core businesses that built the company; grain handling and 
supplying farm inputs. By 2004, it appeared that his strategy was working. 
 A Local Cooperative's Financial and Strategic Analysis of the Evaluation 
of Potential Merger Partners 
Joan Fulton, Susan Hine, Jennifer Vandeburg and Kevin McNamara 
 
The Research Question 
 
Locally owned agricultural cooperatives are a mainstay of the business sectors of 
our rural communities, and face challenges of survival.  As agriculture continues to 
industrialize, local cooperatives are being squeezed from two directions.  The 
agribusinesses with which they must deal at the national and regional level are 
pushing for efficiency, often forcing the local cooperatives to operate with smaller 
margins.  In addition, local cooperatives face the challenge of losing business as 
their farmer members get larger, and have sufficient volume to buy directly from 
the manufacturer.  Local cooperatives are responding by consolidating through 
mergers and acquisitions.  In some cases, a local cooperative has a choice of merger 
partners and the management and Board of Directors must evaluate their different 
strengths and weaknesses.   
 
Study Description 
 
The case at hand involves a locally owned cooperative in the United States, Alton 
Valley, involved in farm supply and grain marketing.  This is a two-part teaching 
case that has been written so that each part can be used individually or together at 
the discretion of the instructor.  This two-part case is designed to be used in either 
the undergraduate classroom or in extension programming with cooperative 
managers and directors.  Part I (case one) focuses on how to use financial analysis 
in business reorganization decisions and Part II (case two) focuses on how to 
analyze alternative business reorganization possibilities from a strategic 
management perspective.  The material for this case was developed through in-
person interviews which were conducted with the managers of locally owned farm 
supply/grain marketing cooperatives in Indiana and Colorado (35 in each state) in 
the spring of 2000.  This case is representative of locally owned cooperatives in the 
United States.  It is not a reporting of a specific business, but rather is hypothetical 
in nature. 
 
Findings/Results 
 
A teaching note provides direction as to how this case could be used in both the 
classroom and with cooperative directors.   
 
Management Implications 
 
Finding new ways to conduct extension programming is extremely important in 
today’s agricultural environment.  The competition for producers’ time is steadily 
increasing and they need to know that the time they dedicate to extension programs 
is going to be worthwhile.  Thus a case format such as this should help directors 
learn through a hands-on experience how to handle some of the more difficult issues 
facing them in their cooperatives today.  This case can also be an effective teaching tool in undergraduate cooperatives or agribusiness courses, where students are 
increasingly concerned about the real world relevance of what they are being 
taught. 
 
Traceability and Assurance Protocols in the Global Food System 
Arsen Poghosyan, Francisco Gonzalez-Diaz and Yuliya Bolotova 
 
In the 21st century, food industry no longer concentrates its efforts only on food 
production and distribution systems. In the last decade, food contaminations and 
food borne illnesses have provided clear economic and regulatory incentives for 
producers and processors to create and supply improved quality products in the 
marketplace in order to satisfy consumers’ concerns for safer foods. Food supply 
chain participants responded by improving their technologies and increasing 
transparency from farmers to producers, and to the retail chain to gain consumers’ 
trust and comply with new guidelines on food safety. Participants in the food supply 
chain had already discovered that in order to improve product quality, it was 
imperative to determine the main factors of the entire chain that significantly 
affected the quality of the final product and even to lower the costs of production by 
improved processes that traceability offered. Over the last decade, the concept of 
traceability and assurance expanded to incorporate whole agribusiness supply 
chains, which was later adopted as the basis for any food safety programs and 
regulated by laws. The motivation towards implementing traceability and 
assurance protocols was clear – to stay competitive in existing markets, and to 
expand into new ones which now demanded higher quality foods to meet consumers’ 
perceived quality and safety requirements. Traceability and assurance certification 
was becoming a precondition for market access to an increasing number of retail 
and manufacturing companies globally.  
 
To analyze the current state of the agribusiness firms with regard to their level of 
implementation of, and compliance with, food traceability and assurance protocols, 
a student survey project was conducted during the 2004 IAMA World Forum and 
Symposium conference in Montreux, Switzerland, June 2004. Focus interviews were 
conducted with seventeen industry leaders based on an interview guidelines 
designed and developed by Dr. Eluned Jones, an Associate Professor of Agricultural 
Economics at Texas A&M University, and the IAMA scholarship students. 
 
 
 

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