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Country of Origin Labeling for Meat

About a decade ago, the US Congress passed mandatory country of origin labeling for a variety of food products including beef and pork.  At the time, we did some research on the costs of the law and the demand responses that would be required to offset those costs.  

In the intervening years, the law was implemented, the US was taken to court by Canada and Mexico, and the US labeling law was deemed to be an illegal trade barrier by the World Trade Organization (WTO).  However, rather than dropping the law altogether, lawmakers have doubled down and made them even more onerous and costly in an attempt to comply with the WTO ruling (you can read the current regs here).    ​

There is a key disconnect that is driving much of this debate.  When you ask people on surveys if they want to know the origin of their meat products, almost all say "yes."   But, when you look at the data on whether people read origin labels or whether demand for meat has been affected by the origin laws, a much different story emerges.   ​

Given that backdrop, I found the recent editorial by the president of the National Cattlemans Beef Association interesting (the Kansas Study to which he refers is here, and as you can see, I was a co-author on that publication)​.  Here is an excerpt:

It seems as if the first thing that is said whenever COOL is brought up is, “I am proud of the cattle my family raises,” and that is absolutely correct. I too am very proud of my family’s operation and all the work my wife and I, with our children and grandchildren, do to produce great beef. But a mandatory labeling program run by the federal government is not the way I want to showcase my product and add value. Labeling programs can work - just look at Certified Angus Beef or Safeway’s “Rancher’s Reserve.” These are marketing programs that are run by individuals with a specific interest and that is to promote and sell more beef to put on dinner tables across America. That is why these programs are successful. Additionally there is a tremendous amount of time and effort that goes into marketing these programs to the consumer.. But slapping on a label that says where this product was born, raised and slaughtered does not achieve the same result. In fact, a study by Kansas State University conducted in November of 2012 titled Mandatory County of Origin Labeling: Consumer Demand Impact made some key findings on this subject. The study found that mere country-of-origin information has not impacted consumer demand for beef or other covered products, and in fact, that many consumers are unaware labeling information exists. This is the issue with allowing the federal government to mandate a marketing program - it is not in their wheelhouse. Marketing at its very core relies on the distinction of one product from another. Neither USDA, nor any other government agency, can make that distinction based on origin labeling.

The Food Demand Survey (FooDS)

For a number of years, I've thought about creating a monthly survey to track consumer knowledge, concerns, and preferences for various food-related issues.  After no small amount of effort, and thanks to the funding from the Willard Sparks Endowment and DASNR and the assistance of Susan Murray, that vision has now become a reality.  

The inaugural issue is now up online, and we will to follow with regular monthly releases.

Of course, this initial issue can't report changes , but that information will come.

For those who might be interested, the purpose of the project is to provide timely information on:

  • Indices of consumer sentiments on (or beliefs about) the safety, quality, and price of food consumed at home and away from home.
  • Indices of consumers' anticipated demand for various meat products consumed at home and away from home.
  • Awareness of food-related issues or events that could affect demand.
  • Emerging policy or marketing issues.

It is envisioned that such data could be used by analysts to:

  • Construct and analyze trends in beliefs, demand, and awareness
  • Forecast changes in consumption
  • Compliment (i.e., merge with) existing sources of secondary data (e.g., USDA disappearance or scanner data) in food demand analysis

Some of the motivations for starting the project include the following.

  • Although scanner data is available to analyze immediate past behaviors, it is inherently backward-looking.  A consumer survey can be devised to be forward looking, potentially providing better forecasts.  Moreover, analyzing demand using scanner data is tricky due to issues of supply shifts, endogeneity, unobserved quality variation, promotions, etc that can be overcome with a well-designed survey.
  • Current meat demand indices are aggregate, quarterly, assume a constant demand elasticity, and attribute all price/quantity changes to shifts in demand; a survey is more rapid and can better isolate demand-side issues.
  • Existing surveys of consumers (i.e., panel diaries or home scanning data) only focuses on at-home food consumption; away from home food consumption now accounts for just under half of all food expenditures.
  • Although some marketing companies routinely track eating intentions and awareness of food issues, the data is proprietary and is not publically released in any uniform fashion.  Moreover, their survey questions are not always designed using state-of-the-art techniques in consumer research.


  

 

Why I'm an Economist and Not a Psychologist

​This quote from Michael Moss's book Salt, Sugar, Fat accurately sums up one of the main reasons I see economic analysis as preferable to psychological explanations (and it is one of the main reasons I often prefer non-hypothetical economic experiments to hypothetical surveys).

Pg. 150: “There is not a lot to be gained from asking people why they like something because they don’t bloody know.”  - Fancis McGlone, former Unilever scientist

A Vote-Buy Behavior Gap

Glynn Tonsor at Kansas State University has created a great resource for the readers of Feedstuff magazine.  Glynn writes a periodic column where he takes recent research from the academic literature and boils it down to a layman's perspective.  I was pleased to see he featured some work by Kate Brooks at the University of Nebraska and myself in his most recent column.  Here were the implications Glynn took from our research:

Implications: This study highlights the potential pitfalls of inferring public preferences from private choices. In this particular study private choices suggested stronger preferences than were reflected in public preferences for a ban restricting production practice options. Conversely, in other settings the opposite behavioral differences are observed. One of the clearest examples is the approximate 5% market share held by cage-free eggs (revealing that the majority of egg consumers are not willing to pay cage-free market premiums) and majority of residents expressing support in ballot settings for bans on laying hen cages. There are several reasons researchers may find the same individual to behave differently when making decisions as a food purchasing consumer than when making decisions as a voting resident. Identification of these reasons and the economic implications of these behavioral patterns are an area in need of additional research as there is a growing list of parallel examples that present complex dilemmas for livestock producers.

Research on The (lack of) Effectiveness of Bloomberg's Large Soda Ban

Much has been written about the merits or demerits of Bloomberg's large soda ban (here was my recent take on it in the New York Daily News).​

However, there has been much less actual research conducted to determine whether such restrictions might curb consumption or on how retailers might respond.  Well, some researchers from UC San Diego conducted a small scale study on the issue that was just published in the journal PLoS One.

What they showed is that food companies can get around the ban by offering bundles of smaller-sized drinks and that people respond in kind by buying more soda!  The study reminds me of what happened when San Francisco tried to ban giving away toys in Happy Meals; McDonalds decided to instead sell them for a very low price ($0.10).  

That's the problem with a lot of these regulations - people and companies find a way around them in ways that the regulator couldn't envision and, as this PLos ONE study shows, it might even lead to weight gains.  It's like squeezing a balloon - the air doesn't leave it just moves to a different place.  Banning large soda or Happy Meal toys doesn't diminish demand for these items, it just causes people to seek out alternative means to get them.  ​

Here is the study abstract:​

Objectives
We examined whether a sugary drink limit would still be effective if larger-sized drinks were converted into bundles of smaller-sized drinks.
Methods
In a behavioral simulation, participants were offered varying food and drink menus. One menu offered 16 oz, 24 oz, or 32 oz drinks for sale. A second menu offered 16 oz drinks, a bundle of two 12 oz drinks, or a bundle of two 16 oz drinks. A third menu offered only 16 oz drinks for sale. The method involved repeated elicitation of choices, and the instructions did not mention a limit on drink size.
Results
Participants bought significantly more ounces of soda with bundles than with varying-sized drinks. Total business revenue was also higher when bundles rather than only small-sized drinks were sold.
Conclusions
Our research suggests that businesses have a strong incentive to offer bundles of soda when drink size is limited. Restricting larger-sized drinks may have the unintended consequence of increasing soda consumption rather than decreasing it.

While the study findings are intriguing, it must be said that the study is far from perfect.  For example, the study involves a bunch of college students making a number of hypothetical choices.  I'd much prefer to see an experiment where people actually had to pay (and eat) what they bought.  Moreover, as the study authors readily acknowledge, the study doesn't reveal whether people would actually drink both sodas or just give one to a friend, nor did it differentiate between diet or full calorie soda.  Thus, there appears to be fertile ground for additional research.