Pork: The Other Red Meat

Remember the long running campaign by the Pork Board?

The campaign pitching pork as the other white meat made sense at a time when there was rising concern about fat content and red meat consumption and increased competition from chicken.  But, times have changed.

One of the changes has come about from scientific developments.  As it turns out, pork color is a good indicator of eating quality, and in blind taste tests, consumers prefer redder pork to whiter pork.  Do consumers know this?  Could a quality labeling system help coordinate the pork supply chain and better align production with consumers' eating expectations?

These were the questions that led to this paper just released by the journal Food Policy that I co-authored with Glynn Tonsor, Ted Schroeder, and Dermot Hayes with funding by the National Pork Board (a longer report of the results is here).

We surveyed about 2,000 consumers for the analysis reported in the Food Policy paper.  We were mainly interested in how consumers' choices between pork (and other meat) products varied with the color of the pork and whether and which kinds of labels were present.  Consumers were randomly assigned to a control (with no labels) or one of several treatment groups that utilized different labeling systems.  Below shows a particular choice question used in the various treatments.  

We use the choices consumers made in these treatments to back out consumers' willingness-to-pay, but even more importantly, the probability a consumer buys any type of pork and the expected revenue from pork.  For the economists out there, I'll note that we also have some methodological innovation.  Rather than just looking at the probability of buying a type of pork at a given set of prices, we also invert the equations to look at the equilibrium price of pork at a given quantity of different types of pork (this is important because in the short run, pork producers can't easily produce a larger amount of higher quality pork).

So, what did we find?

We find: 

“In the absence of a cue in the “no labels” control, on average, participants do not differentiate among the three quality levels [or pork colors]. There is no significant difference in average WTP [willingness-to-pay] for the three different colored chops. This is consistent with industry interest in adding quality labels to facilitate further separation of pork quality by consumers. The introduction of a single Prime label for the highest quality chop in Treatment 1 results in a significant increase in the WTP for the chop that would carry the highest quality grade; however, there is a significant reduction in WTP for the lower quality chops that did not carry labels in this treatment.  ... When all pork products have grade labels, there is a significant premium for higher vs. lower quality pork and total pork sales rise, as do expected revenues. This can be seen in [the figure] as the mean WTP estimates for all pork qualities lie above those in the control condition with no labels.”

We go on to show there is significant heterogeneity in consumer preferences.  We find that 28% to 40%, depending on the labeling condition, of consumers prefer white pork to red pork.  

From the conclusions: 

“The choice experiment data analysis suggests that a USDA grade using Prime, Choice, and Select or Good, Better, Best labels would be most likely to increase expected pork revenue and the probability of purchasing pork. Additional important opportunities are present within this strategy. Foremost is that even with quality labels on the pork chops, a significant fraction of consumers preferred lower quality than Prime even when the three quality products were priced the same. Such consumers either do not understand the quality grade rankings of Prime, Choice, and Select (though results were similar for Best, Better, Good, which should be less prone to confusion), or this group of consumers were ignoring the quality grade labels and relying on product color to influence their choices. A possible response would be to segment consumers and to use the grading system only on those consumers who prefer red chops. Segmentation could be done by exploring preferences across states, institutions, income categories, ethnicity, and by export market. Despite the possibility for segmentation, however, we show, that if all qualities are present, only labeling the highest quality is likely to reduce total pork sales and revenue”

As this piece in the Federal Register indicates, the USDA Agricultural Marketing Service is seeking public comment on the usefulness of such a labeling system.  Maybe one day in the future you will see new pork quality grade labels in the grocery store.  

Diet quality, environmental impacts, and food waste

A few years ago when the federal dietary guidelines were being discussed, there seemed to be a growing consensus that nutritional goals and sustainable goals could be jointly achieved with a single diet.  I pushed back some on that at the time (e.g., see here or here).

I ran across this paper by Zach Conrad and colleagues that was just published in PLoS ONE.  The paper shows that there is unlikely to be a silver bullet diet free of trade-offs when multiple dimensions of comparison are involved.  Here's from the abstract:  

“Higher quality diets were associated with greater amounts of food waste and greater amounts of wasted irrigation water and pesticides, but less cropland waste. This is largely due to fruits and vegetables, which are health-promoting and require small amounts of cropland, but require substantial amounts of agricultural inputs. These results suggest that simultaneous efforts to improve diet quality and reduce food waste are necessary.”

Scientific, Ethical, and Economic Aspects of Farm Animal Welfare

That's the title of a new report put out by the Council for Agricultural Science and Technology.  Nicole Widmar and I helped contribute to the section on economics.  

A lot is covered in a mere 40 pages.  The main section heads include: 

• Roles of Science and Ethics in Evaluating, Understanding, and Improving Animal Welfare
• Economics and Markets for Animal Welfare
• Regulation of Animal Welfare
• Assessment of Welfare
• Advances in Animal Welfare and Outstanding Challenges
• Emerging Topics
• Future Neets

It’s an honor to join such a prestigious group of scientists in pulling together this multidisciplinary report.  

Are animal welfare and profits well aligned?

I recently ran across a claim I've heard many times in the past about animal protein production and animal welfare.  It goes something like the following: happier animals put on weight more efficiently because they aren't stressed by disease and discomfort. So, a producer can't make money unless they takes care of their animals, meaning the profit motive and improving animal welfare are aligned.  

There is an element of truth to this line of reasoning.  But, it's not the whole story.  I discussed this issue in a paper entitled Animal Welfare Economics published back in 2011 with Bailey Norwood.

Here is a key paragraph describing the problem:

“It is instructive to consider the trade-off between animal well-being, productivity, and profitability using a simple example. Imagine an egg producer facing the short-run problem of deciding how many hens to stock in a barn with a fixed amount of space. Suppose the animal scientists’ arguments are correct and each hen tends to produce more eggs when they are happier and fewer eggs when sadder. If hens are too densely stocked—for example, so tightly caged that they cannot move or turn around—they will clearly be unhappy and unproductive. Thus, providing a bit more space per hen will increase both welfare and output. At some point, however, too much space is undesirable from both a production and a welfare standpoint. A single isolated hen is likely to be lonely (visitors to egg farms will notice that hens often prefer to flock in groups even in a free-range environment), and as chickens expend energy roaming about, they will be less productive compared to hens more tightly confined. Of course, productivity and welfare are not perfectly aligned and it is probably true that hens would prefer more space than would maximize their individual egg output.”

We then walk through a numerical example showing that even when animal welfare and animal output are very highly correlated, a producer will tend to stock hens more hens than would be given by the stocking density that would maximize animal welfare. The main insight is that the producer aims to maximize the profit from the BARN not the ANIMAL.  

The figure below shows the particular example we walk through.  The rest of the details are in the paper.

We write:

“Though many producers care passionately about the well-being of the animals under their care, few would argue that the goal of commercial agriculture is to maximize animal well-being. Nevertheless, many in the agriculture community want to argue that animals are most happy when producers are most profitable. A little economic reasoning shows that this is not the case. In a competitive environment, producers who wish to stay in business face incentives to adopt production systems and practices that maximize profit, and profit-maximizing outcomes are not the same as animal welfare-maximizing outcomes. Thus, the real question of interest is not whether profitability must be sacrificed to achieve higher levels of animal welfare, but rather how much.”

Impacts of health information on perceived taste and affordability

The journal Food Quality and Preference just released a new paper I co-authored with Jisung Jo, a former student who now works at the Korea Maritime Institute.

Here is the motivation for the work:

“One of the key mechanisms policy makers have utilized to encourage healthier eating is the provision of information via nutritional labels. However, research has shown that the provision of health information does not necessarily increase consumption of healthy foods ... A possible reason for the largely ineffectual impact of nutritional labeling might be because health information not only updates consumers’ health perceptions but also affects other perceptions, such as taste and affordability, which are the primary drivers of consumer purchase behavior ”

In other words, if you see a new labeling indicating a food is healthier than you previously thought, do you now think it will be less tasty?  Or more expensive?  

To explore this issue, we surveyed consumers in three different countries (US, China, and Korea).  We showed consumers a picture of a food item and asked them to rate the item, on simple scales, in terms of perceived taste, health, affordability, and purchase intention.  We did this for 60 diverse food items. Then, the ratings of all 60 foods was repeated after the subjects had received information about each food item’s healthiness, which was conveyed via a "traffic light" labeling system (green=healthy, yellow=medium healthiness, red=unhealthy).   Here's an example of one of the questions asked before and after the information:

Unsurprisingly, the provision of "green" labels tended to increased perceived healthiness and the provision of "red" labels tended to reduce perceived healthiness.  Of more interest is how these labels affected perceptions of taste, affordability, and ultimately purchase intentions.  

Unexpectedly, we found that providing information that a food was healthier than people previously thought tended to increase perceived taste.  People also tended to think items that are less healthy than previously thought will ultimately be less expensive.

We created the following graph to look at how projected changes in purchase intentions (after provision of health information) would change if one ignores the fact that health information also affects perceived taste and affordability.

“Across all scenarios and in all three countries, we find that negative health information has the biggest effects on purchase intention changes. Intriguingly, the average purchase intention in scenario B is larger than that in scenario A. The values for scenario D are the same as the actual average of purchase intention (since they are just the model evaluated at the mean effect changes of all variables included in the model). Comparing the purchase intention changes as one moves from scenario A to D shows the effect of ignoring integrated health-taste-affordability perceptions.”

Overall, this research underscores the need to understand how labels which convey health information might also alter other perceptions related to taste and affordability.