Food Demand Survey (FooDS) - May 2016

The May 2016 edition of the Food Demand Survey (FooDS) is now out.  

Some noteworthy results from the regular tracking portion of the survey:

  • For the second month in a row WTP fell for all food products except hamburger, which increased 5.4% this month compared to last.  
  • Compared to one year ago, WTP is lower for all food products.
  • Consumers expect lower chicken and pork prices this month compared to last (and about the same prices for beef), and say they plan to buy more chicken, beef, and pork than they did last month.  
  • GMOs were less visible in the news this month; pink slime and LFTB were more visible.  
  • Concern for GMOs fell this month.

For the ad-hoc questions, we delved into consumers' beliefs about the use of added growth hormones in livestock and poultry production.  

First, participants were asked: “What percentage of the following types of farm animals in the United States are given added hormones to promote growth and muscle development?”.  The average answers were 60% for beef, 54% for pork, and 55% for broiler chickens.  These answers are quite wrong.

Virtually all feedlot cattle in the US are given added growth hormones but NONE of the hogs or broiler chickens are given added hormones.  Fewer than 2% of respondents knew this last fact. That is, 98% of respondents incorrectly think hormones are used in pork and chicken production.  

What impacts might these false beliefs have?  As it turns out, the impacts are non-trivial.  For example, consumers' responses to our initial choice questions that are used to derive WTP for each of the meat cuts depend on consumers perceptions about the prevalence of hormone use.  The larger the fraction of animals a consumer believes receives hormones, the less they're willing to pay for meat from that type of animal.  Here's a quick analysis I ran asking the question: how would consumers' WTP change if they went from having the current average level of false beliefs to knowing the truth?  

WTP for ground beef and steak would fall (because more cattle are given hormones than most people think) and WTP for pork and chicken would increase (because none of these animals are given added hormones despite the fact people think they are).  What this suggests is that demand for pork and chicken is depressed by false beliefs.

We can also see the impact of these sorts of false beliefs in a different way.  Participants were asked a second ad-hoc question on the survey: “If you walked into your local grocery store and saw a package of meat with the label ‘no added hormones’, what is the highest premium you would be willing to pay for the following meats with this label over meats without this label?

On average, respondents said they were willing to pay premiums between $1 and $2 for each of the meat cuts for ‘no added hormones.”  

The highest was for steak ($2.14/lb) and the lowest was for deli ham ($1.32). Of
course, paying a premium for chicken or pork labeled ‘no added hormone’ is superfluous because all pork and chicken production avoids the use of added growth hormones.

False beliefs tend to inflate WTP for ‘no hormone added’ labels. People’s beliefs about hormone use are correlated with their willingness to pay a premium for ‘no added hormone.’ For example, a person who thinks no hormones are used in pork is predicted to pay a premium of $1.44 for pork chops with a ‘no added hormone’ label, whereas a person who thinks 100% of pigs are given hormones is predicted to pay a premium of $1.81. For chicken breast, the same figures are $1.42 and $1.92.

All this perhaps explains why many pork and poultry producers add the claim "no added hormones" to the label.  These labels, however, while truthful, might also be misleading. Because, as our survey shows, people think there are high levels of hormone use in pork and poultry production.