Public Service Announcement 2

Many readers of this blog have subscribed and receive posts in their email through an RSS feed. Unfortunately, it appears the RSS to e-mail service I’ve been using (feedburner) will no longer be supported by google and this function will be discontinued. Thus, I’ve exported my contact list over to a new service (mailchimp). Right now, both services are “on.” Thus, if you are a subscriber, you should receive this message in two different emails (sorry for cluttering your inbox). If you don’t see two messages, chances are the email from the new service has ended up in your spam folder, and you may need to add me to your “safe list.” I plan to keep both delivery services “on” for the next couple weeks, after which time feedburner will stop sending emails.

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Public Service Announcement

Many readers of this blog have subscribed and receive posts in their email through an RSS feed. Unfortunately, it appears the RSS to e-mail service I’ve been using (feedburner) will no longer be supported by google and this function will be discontinued. Thus, I’ve exported my contact list over to a new service (mailchimp). Right now, both services are “on.” Thus, if you are a subscriber, you should receive this message in two different emails (sorry for cluttering your inbox). If you don’t see two messages, chances are the email from the new service has ended up in your spam folder, and you may need to add me to your “safe list.” I plan to keep both delivery services “on” for the next couple weeks, after which time feedburner will stop sending emails.

By the way, if you aren’t a subscriber and would like to receive my posts in your inbox (and hopefully not your spam folder), you can do so with the form below (or the one at the very bottom of the page.

Thanks for reading!

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Consumer Acceptance Of Gene Edited Foods

That’s the title of a research paper co-authored with Vicenzina Caputo and Valarie Kilders for the Food Industry Association (FMI) Foundation. The paper came out in 2020 (based on surveys in 2019), but somehow I neglected to mention it here on the blog but was reminded of it earlier today when it was referenced.

Here is the executive summary.

The purpose of this project was to determine market potential and consumers’ beliefs, knowledge, understanding, and acceptance of gene-editing technology and gene-edited foods with the ultimate goal of providing valuable information to producers, retailers, consumers, and policy makers.

To achieve the project objectives, a nationwide consumer survey was developed. The survey was designed and programmed into an online accessible format by the director in August 2019 and administered to 4,487 U.S. food shoppers in September 2019. Different treatments were set up which varied the food product, whether the product was fresh or processed, and the information provided about gene-editing. Respondents were randomly grouped into the treatments. In each case, respondents completed simulated purchasing scenarios where they chose between products labeled to be organic, non-GMO, bioengineered, conventional, or gene-edited at varied price levels.  The core findings are as follows.

·       Regardless of food product, presence of processing, or information, mean willingness-to-pay for organic labels was higher than the other food labels/claims. Respondents considered organic food to be healthier, safer, and more beneficial for animal welfare, but also anticipated organic being more expensive.

·       Willingness-to-pay for gene-edited products tended to be lower than that for conventional and bioengineered ones. However, willingness-to-pay significantly increased with the provision of information; particularly information about the benefits of gene-editing technology. This evidence suggests that willingness-to-pay is not much changed by merely providing respondents with information about gene-editing technology, but rather it is necessary to supplement this information with specific benefit messages if the technology is to be more widely accepted. Benefits to the environment and consumers show an overall stronger impact than benefits to the farmers.

·       Consumers have a very low level of awareness and knowledge about gene-edited products when compared to the mediocre knowledge and high awareness of GMOs. About half of the respondents indicated they had never heard of gene-editing. 

·       Respondents completed open-ended word association tasks, which revealed fear associated with the unknown. Negatively connoted words dominated mentions in relation to “gene-editing.” Furthermore, these mentions closely resembled those given for genetically modified products.

·       Despite the positive perception of the organic products, respondents mostly purchase conventionally produced food products. Even though respondents have higher willingness-to-pay for organic food, it is also higher priced. When directly asked about primary purchase motivations, respondents typically rank price and taste first, while production methods usually fell somewhere in the middle of a list of possible motivations.

·       The cluster analysis resulted in three distinct risk preference segments, risk loving, risk averse, and risk neutral. A closer look at the segments by treatment reveals that when provided with basic information the share of respondents in the risk averse group increases and the risk loving group decreases. This effect reverses when information on the environmental benefits are provided.

·       The willingness-to-pay for gene-editing varies across type of products and levels of processing. As for the former, consumers are willing to pay relatively more for fresh gene-edited vegetables (tomatoes and spinach) compared to fresh meat when information is provided to them. For fresh plant products, the willingness-to-pay is higher compared to their processed counterpart.  On the other hand, the willingness-to-pay for gene-edited meat is higher for bacon than for pork chops.

·       Despite somewhat negative opinions about gene-edited food, some consumers value having the option to buy them. When consumers are informed of the benefits of gene-editing, the market share for gene-edited products (when pitted against organic, non-GMO, conventional, and bioengineered) exceeds 15%. Consumer willingness-to-pay to have gene-edited foods available range from $0.00 to $0.23 per choice.

Results of this study reveal consumers generally think about gene-editing in a negative light. However, over half of the respondents indicate having never heard of the technology. Simply informing consumers about the technology has trivial effects on willingness-to-pay, but specific information about the benefits of gene-editing can significantly improve consumer acceptance of gene-editing.

Consumer Food Buying during a Recession

That’s the title of a paper Brandon McFadden and I wrote for Choices Magazine. Here’s the introduction:

“COVID-19 caused significant disruptions in food supply chains and altered consumer buying behavior. The impacts of COVID-19, most notably in the restaurant and food service sectors, are still being realized in food markets months after the initial shutdown. COVID-19 is a unique event with idiosyncratic effects on food consumption. Nonetheless, there are likely longer-term effects of the pandemic that are perhaps more predictable. The pandemic has caused a recession and spike in unemployment during the first quarter of 2020 (NBER, 2021), and there is much that has been learned about consumer food spending and buying behaviors during prior economic downturns that can be leveraged to gain insights about consumer food spending during the pandemic.

There are many differences between the present pandemic-induced recession and the Great Recession, which was associated with a deterioration of the housing market. The Great Recession’s impacts on food spending operated almost exclusively through changes in income and unemployment, whereas the COVID-19 impacts on food spending include these channels and more, including consumer demand shocks (increase in demand for food at grocery and reduction in demand for food away from home) and supply shocks (regulations affected the supply of food service options and temporary slowdown in meat processing from worker illnesses). Additionally, government support during the pandemic actually caused aggregate personal income to increase (FRED, 2021a), and along with a fall in spending on entertainment and travel, aggregate savings rates to increases as well (FRED, 2021b), although the effects are highly heterogeneous across households (Chetty et al., 2020). Despite these differences, understanding the impacts of changes in income, unemployment, and time availability that accompany recessions remains relevant to the current environment.”

The paper goes on to discuss research on how food demand changes with income, eating during the great recession, food insecurity during the great recession, and time allocation, income, and food spending, among other topics.

Food Price Inflation

I was on NBC Nightly News last night talking about rising retail food prices (the whole episode is here, my very short clip starts around the 17:50 mark). I’d previously talked to the Today Show on the same subject and fielded several other media questions in recent days about whether we have a chicken shortage.

All the recent attention on food price inflation is a bit perplexing. The rate of food price increases over the past year is definitely above what we have come to expect in recent years, but we aren’t seeing spikes right now like we witnessed during the initial COVID shutdowns in March 2020 or the beef and pork packing plant shutdowns later in April and May of last year. By “spike” I mean the month-to-month increase. But, we have seen continually increasing prices over the past year for many foods. Perhaps it is the cumulative effect of higher than average monthly increases that is starting to get people noticing. Moreover, there are some wholesale meat prices, like those for chicken breast, chicken wings, pork belly, pork ribs, and beef loins that are running far above average, which is attracting attention as we head into grilling season.

Before showing some data on retail food prices, a few comments about some factors pushing prices higher:

• Overall inflation (including food and non-food items) is on the rise over the past several months. The year-over-year change in the overall price level in March (i.e., March 2021 relative March 2020) was 2.6%. That’s not abnormally high. From 2000 to 2007, the average year-over-year change was 2.8%. However, 2.6% is much higher than we’ve experienced in recent years. During 2019 and 2020, the year-over-year increase in overall inflation was only 1.5%. There is much debate among economists on the issue, but given the high levels of stimulus pumped into the economy and the corresponding high personal savings rates among consumers), all that extra cash floating around seems to be putting upward pressure on prices.

• Turning to food, there appear to be extra costs in the system that are pushing up prices, much of it resulting from COVID. Bureau of Labor Statistics data indicate wages (or, more precisely, average weekly earnings) in food manufacturing are running about 4-5% higher than the same time last year and are about 7-8% higher in food retail.

• Prices of farm commodities like corn, soybeans, wheat, and hogs, have been running significantly higher since this fall. Why? Transportation has picked back up, increasing demand for ethanol, and thus corn (roughly 40% of corn goes to ethanol). China has increased purchases of many U.S. farm commodities, pulling up prices. Adverse weather in parts of the Midwest U.S. and in South America during the most recent growing seasons has affected supply. On the topic of weather, winter storms in the Southern U.S. adversely affected chicken processing a couple months ago. Higher corn and soybean prices are pushing up livestock, poultry, and egg prices.

So, what is happening to retail food prices? Here are some figures I created using data from the Bureau of Labor Statistics (as of March 2021, the last date they’re currently reporting) Below are year-over-year changes in prices of food at home (i.e., though supermarkets and grocery) and away from home (i.e., through restaurants) through March 2021 .

The figure above looks as if prices of food at home have been falling since March of 2020; however, note that the figure reports the implied annual rate of increase. Thus, the figure is showing that the rate of increase has fallen a bit, NOT that food prices are falling. If, instead, we look at the change in prices from a fixed point in the past (say, January 2011), a different picture emerges.

As the figure shows, food prices through grocery are today about 15-16% higher than they were in January 2011. Moreover, there was a big spike in March 2020, and while there was a temporary reprieve, prices in recent months have trended back upward.

If you’re curious about the individual food products driving the increase in food prices, below are the year-over-year changes for four broad categories. As the figure shows, meat, poultry, fish, and eggs are a big driver of the overall increase in price of food at home.

Honing in a little further, below are the year-over-year changes in beef, pork, and chicken prices bought through grocery.

Again, it might be useful to look not at year over year changes (i.e., the rate of inflation), but instead look at the change in prices from a fixed point in the past (January 2011). As of March 2021, retail beef, pork, and chicken prices are about 45% , 17%, and 20% higher than in January 2011, respectively.