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Wednesday January 17, 2018

What one study suggests about the possible risk of promoting foods as "raised without" key technologies

Are "raised without" products risking category sales?Labeling foods based on the methods we farmers use (and don't use) gives health-conscious consumers a broader range of product choice, even as it offers you added high-margin product lines. However, one new study suggest any added margin of non-rBst and organic niche milk may not begin to cover the demand hit they could to the remainder of staples in your dairycase. It suggests they may actually be reducing overall profitability by turning shoppers away from the conventionally raised products next to them – even the whole department.

The study, reported in November 2009’s American Journal of Agricultural Economics, tested 148 grad students and staff at New York’s Cornell University, asking them first to taste test and then to bid the price they’d be willing to pay for a quart of three kinds of milk: conventionally produced, rBST-free and organic.

Traditional market research asking consumers their willingness to pay for traits like hormone-free and antibiotic-free tend to ignore the demand affects of competing conventional products, said the authors. So to try to assess that confounding factor, they varied the order in which they presented the different milk types to the participants. They also gave them handouts containing nutrition information for each flight of milk only as it was offered. They were careful to ensure the nutrition information was identical for conventional, rBST-free and organic milk, explaining the products differed only by production process.

When the consumers’ stated willingness to pay for each milk type was viewed without regard to order, the result mirrored what other studies have found: The average willingness to pay was $1.03 for skim milk produced conventionally, $1.06 for skim milk produced without rBST, and $1.40 for skim milk produced organically—a typical marketplace premium. However, when the research controlled for the order in which the milks were presented, the results were sobering.

COULD YOU BE CUTTING YOUR PRICE BY HALF?

Presenting conventionally produced milk as the last alternative—in effect as the fall-back standard fare once the “premium” raised-without products were sampled—led the study participants to drastically discount their willingness to pay for that conventional milk. The bid price for conventional milk fell from $1.28 when presented first to only 61¢ when presented last—a cut of more than 50 percent. The study authors believe this mirrors the grocery: Where consumers are aware of all product choices, they discount values within the choice range.

And it gets worse.

When the researchers averaged the overall willingness to pay for all milk types, the average price was $1.22 for participants who sampled conventional milk first. For those given the conventional milk last, though, the overall bid price for all milk types was only 90¢—a statistically significant decrease of more than 26 percent for the whole category.

“...the introduction of milk labeled as being rBST-free or organic could have a much greater influence than simply reducing [willingness to pay] for conventional milk,” they said. “The availability of rBST-free and organic milk could reduce the demand for all types of milk.”

Whether the same phenomenon can be expected to occur with other “raised without” products like antibiotic-free isn’t clear, since the study did not test specifically for that. However, it may be a safe assumption.

“The larger stigma effect of organic compared with rBST-free milk on conventional milk is intuitive, since organic milk is free of more than rBST, having additional claims of being pesticide and antibiotic free,” they wrote.

Source: Kanter C, Messer KD, Kaiser HM. Does Production Labeling Stigmatize Conventional Milk? Amer J Agr Econ. 2009 Nov;91(4):1097–1109.

 

Dr. John Waddell Dr. John Waddell, a veterinarian from Sutton who specializes in consulting with pig farmers, is also a past president of the American Association of Swine Veterinarians and is active in translating complex animal-agriculture scientific issues to pet veterinarians and non-veterinarians. We asked him for his take on the recurring claims in the media that Congress should prohibit "overusing antibiotics" in animal farming, and the issue with "80 percent" of U.S. antibiotics being used in the daily feed of farm animals.

First, let's start with a little fact check. That claim that 80 percent (first it was 70 percent, now it's grown to 80 percent) of all antibiotics in this country are used just to make animals grow faster comes from an inflated 10-year-old estimate circulated by a Boston environmental activist group that USA Today once called the “greenest of US environmental groups….” The group actively lobbies against numerous social issues including carbon emissions, SUVs, biotechnology and the war in Iraq, arguing we should save the planet by all cutting down our consumption of energy, housing, travel and meat, among others.

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