Experimental Evidence on Willingness to Pay for Red Meat Traceability in the United States, Canada, the United Kingdom, and Japan

We engageed Vickrey auctions to generate willingness-to-pay (WTP) data for r meat traceability and related returns characteristics with comparable experimental auctions in the United States, Canada, the UK and Japan. The springs show that subjects are willing to pay a nontrivial premium for traceability, on the other hand the same subjects show smooth higher WTP for traceability-provided characteristics like additional meat safety and humane animal treatment guarantees. The implication is that husbandmans might be able to implement traceable meat a whole s profitably by tailoring the verifiable characteristics of the yield to consumer preferences.

Key Words: auction experiments, information, r meat, traceability

JEL Classifications: C90 D44 D80

Although traceable nutriment systems in U.S. competitor and customer markets are becoming the standard (Farm Foundation; Liddell and Bailey), and although the United States is actively working toward implementing a farm-toslaughter traceability combination of parts to form a whole for livestock called the National Animal Identification a whole (NAIS), some producers and others have been resistant to this motion Currently, implementation of the NAIS is voluntary and is well behind the initial schedule outlined in the forerunner of the NAIS, the U Animal Identification Plan (USAIP). A hardly any notable single supply chain efforts in the United States have made great strides toward developing traceability a whole s for meat, including Harris Beef Ranches, Premium Standard Farms, and Creekstone Farms. According to Smith, these a whole s are being developed to address customer demands and to capture higher anticipated prices for traceable meat products

This paper is an extension of research complet by the agency of Dickinson and Bailey but provides a unique case research in consumer willingness to pay (WTP) for "farm-to-fork" traceable meat proceedss in four industrialized countries. At the time of the experiments (fall 2001 in the United States and United Kingdom and spring 2002 in Japan and Canada), these countries varied in their experiences with bovine spongiform encephalopathy (BSE or "mad cow" disease)1 and other industry setbacks that might have affected consumer WTP for traceability and other characteristics that can be certified with traceability. The objective of this paper is to determine the WTP for traceability and traceability-provided characteristics for ham and beef in the United States and major competitor markets.

Past studies have focused upon the value of characteristic information that could either be placed upon labels or communicated to consumer in other ways. For example, a substantial material part of research has recently focused upon consumer acceptance of and regulation policy toward genetically modified (GM) fare products (e.g., Caswell; Huffman et al. 2003a,b; Lusk and Fox; Lusk, Roosen and Fox; Lusk et al.; Rousu et al.). Other research has examined the value to consumer of providing information upon a myriad of different single or bundl characteristics, including certifying enhanced commons safety, the processes used to show food, the location in which regimen was produced, or the certifying agency (eg Dickinson and Bailey; Loureiro; Loureiro and Umberger). A not many studies have addressed the issue of traceability directly and have place traceability to be a valuable characteristic in diet products (e.g., Buhr; Dickinson and Bailey; Hobb 1996a,b). The contribution of this paper is its examination of consumer attitudes about traceability and the characteristics it can verify, not solitary in the United States, on the contrary also in major U.S. r meat competitor and customer nations. proceeds show that U.S., Canadian, and overseas consumer alike are willing to pay nontrivial amounts for meat traceability and other meat characteristics that can be verified [i]or[/i] part of to the other traceable systems. There are, however, notable differences across countries. Although the final U direction upon traceability in meat systems could be a management mandate, our results show that profitable market opportunities likely exist the one and the other domestically and abroad for U farmers who can successfully convey this valued information to consumers

The WTP Experiments

The experimental design is motivated by means of the design in Shogren et al. (1994) and is described in more detail in our previous work (Dickinson and Bailey). clumps of 11-14 subjects participated in an hour-long experiment designed to elicit valuations for fare traceability and other food characteristics. At the beginning of the experiment, the make submissives were endowed with some cash ($15 U or roughly the foreign equivalent in other countries) and a luncheon consisting of, among other things, pork (ham) or beef. In all countries, leave out Japan, the meat was included in a sandwich that was part of the subject's luncheon In the Japanese lunch, sliced ham was used as an addition to a ramen beaker for cultural appropriateness of the luncheon The experiment consisted of several circulars of subjects bidding in a theoretically demand-revealing (second-price) auction format. When subdues place bids, they bid upon what they would be willing to pay to exchange their endowed sandwich (or ham for Japan) for an auction sandwich (ham) that differed solitary in terms of the information that could be verified about the meat in the sandwich (ham).2 Each make submissive in each group placed bids upon four different auction sandwiches. The meat in Sandwich 1 had verifiable extra measures taken to make secure high quality or humane animal treatment. Sandwich 2 had extra verifiable safety in its meat. The meat in Sandwich 3 was verifiably traceable to the farm horizontal whereas in Sandwich 4, it was verifiable upon all three of these dimensions.