Do Consumers Really Care About Food Production Methods?

Now that the U.K. has officially left the E.U., many are discussing the form and content of future trade agreements with the E.U. and the rest of the world. When changing trade arrangements, it is important to understand the economic consequences and the likely reaction of consumers. 

This study examined U.K. consumer preferences for four foods produced using methods which are prohibited in the U.K., but which result from relaxing existing trade restrictions. The four products were: chlorine-washed chicken;  hormone implants in beef; ractopamine (a feed additive which promotes leanness and improves feed conversion efficiency) in pig feed; and atrazine pesticide in corn production. The researchers used a state preference discrete choice experiment (DCE) to estimate consumer’s willingness-to-pay (WTP) for foods with these attributes. 

Chlorine-Washed Chicken

Chlorine is used in certain countries (e.g. the United States) to rinse whole chickens to kill microorganisms on the surface of the bird, specifically bacteria like Salmonella and Campylobacter. Chicken treated this way have been excluded from the E.U. market since 1997. The European Food Safety Authority (EFSA) does not view the use of chlorine as unsafe. 

Beef Produced With Growth Hormones / Hormone Implants

The use of additional hormones in animal production is common in countries such as the U.S. and Australia. In beef production, the hormone is usually released into the animal over time through an implant. The animal will grow bigger quicker while consuming less feed, which reduces the costs of production. This also leads to a leaner carcass, which satisfies consumer preferences for less fatty meat and lower amounts of cholesterol. The European Commission banned the use of hormones in animal production on potential safety grounds. There is uncertainty and insufficient evidence about the types of hormones being used and what doses are safe. 

Pig Feed Hormone Additives (e.g. Ractopamine)

Ractopamine increases protein synthesis, making animals more muscular while reducing the fat content of the meat. Unlike hormone implants, Ractopamine does not affect the animal’s hormones. The use of Ractopamine is not currently authorized in the E.U. because the EFSA argues there is insufficient evidence to declare this product safe. 

Atrazine Pesticide Used In Corn Production

The E.U. does not permit the use of Atrazine. The E.U.’s main concern with Atrazine is the off-site environmental impact and the contamination of groundwater. As with all chemicals, small (and safe) residue levels are tolerated in food – e.g. 0.05 mg/kg. 

Experiment Results 

In total, 1,600 survey responses were collected online between December 2018 and January 2019. Respondents were asked to consider the following attributes: method of production, EU Food Safety, organic, CoO, and the Red Tractor label. 

The researchers found that, for chlorine-washed chicken, the RSPCA quality assurance, Red Tractor label and E.U. Food Safety attributes were very highly valued; they also found that a high value was placed on U.K. production; and although positively valued, organic production has the lowest WTP estimate. 

The results for the other products and the WTP estimates were very similar. The largest negative estimate was for hormone implants in beef, followed by hormones in pork and then chlorine-washed chicken. The fact that fewer respondents expressed a negative value for chlorine-washed chicken than for the other production methods might be because of the high value some consumers place on food safety in terms of possible food poisoning. Chlorine-washed chicken has also received a lot of media attention in the U.K. as a result of the decision to exit the E.U. and this might have impacted attitudes to this specific production practice. 

The results suggest that U.K. consumers require a price reduction to purchase products produced using prohibited methods. The discount required for chicken is approximately 26%, for beef it is 36% and for pork it is nearly 60%. 

Implications

It is unclear if the U.K. will retain the same Country of Origin (CoO) regulations once it leaves the E.U. Consumer welfare is increased if consumers can make more informed food choices and providing CoO information supports informed consumer choice. But, meat products that enter the U.K. for use in processed food do not need to declare CoO. Therefore, unless it becomes a requirement to add the method of production to the label, consumers will not be able to make an informed choice regarding specific meat products. 

One way to inform consumers about the food they’re consuming is to increase our use of information technology. With the development of trusted information technology, there is less reason for food products to be offered to consumers without full disclosure of the source, method of production, and supply chain to the final product being made available. But, unless the provision of this is made mandatory, there appears to be little chance of importers voluntarily providing this information. 

Conclusion

The results of this study show that production methods significantly impact consumers’ WTP and the use of prohibited production methods decreases consumers’ WTP.  All other attributes showed significantly positive mean WTP estimates, e.g. U.K. production is highly valued, especially for beef, pork, and corn. 

The results indicate the potential balance of requirements that U.K. trade negotiators should be seeking post-Brexit to produce a trade deal that aligns with UK consumer preferences. No matter what trade deals are concluded by the U.K. government in the future, it appears U.K. consumers display strong preferences for particular food attributes. Clear and transparent food labeling should be used to remove uncertainty regarding purchasing decisions. Enabling consumers to make informed choices is important, and the economic costs associated with any food-related trade deals that ignore this could lead to substantial losses of welfare for U.K. consumers.