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Monday, August 10, 2015
WHILE Congress considers repealing a law requiring country-of-origin labeling (COOL) on packages of beef, pork and poultry, marketing researchers at the University of Arkansas have found that such labels influence consumer perceptions about food safety and quality.
Researchers found that consumers preferred meat from the U.S. when provided with information only about where the animal was born, raised and slaughtered — and not given information about country-specific meat processing standards.
"The country-of-origin requirement appears to provide consumers with additional information that has both direct and indirect effects on purchase intentions," said Scot Burton, Arkansas professor of marketing in the Sam M. Walton College of Business. "The requirement impacts inferred attributes, meaning that meat products from the U.S. are perceived to be safer, tastier and fresher than meat products from Mexico. Of course, these attributes, in turn, have positive effects on purchase decisions."
Burton conducted the study with University of Arkansas professor of marketing Elizabeth Howlett and marketing graduate students Christopher Berry and Amaradri Mukherjee. Their findings were published in the Journal of Retailing.
Congress passed legislation in the 2002 and 2008 farm bills requiring U.S. retailers to provide origin labels for most meat and poultry products. The labels must identify the country where the animal was born, raised and slaughtered.
The legislation, which was backed by U.S. ranchers competing with the Canadian cattle industry, was also intended to provide customers with information to help them make informed shopping decisions.
The COOL mandate has been controversial, however.
The study found that previous research suggested that consumers do not value U.S.-labeled meat products more than those labeled as simply from North America. Additionally, some groups have estimated that implementation of the COOL requirements would be very costly for retailers.
According to the National Chicken Council, the average American consumed approximately 202 lb. of meat in 2014.
U.S. Department of Agriculture data showed that much of this food was imported: In 2013, 2.25 billion lb. of beef and 124 million lb. of chicken were from farms and ranches outside the U.S., including Mexico, Canada and Australia.
"The implementation of the new COOL labeling requirements is a costly undertaking for retailers and wholesalers," the report notes.
According to the Federal Register, implementation of the COOL requirements would cost roughly $123.3 million, which includes the combined costs of labeling changes for retailers and elimination of the existing commingling flexibility among processors. The costs will be shared by an estimated 33,350 retail and processing establishments owned by 7,181 firms.
From a global trade standpoint, Canada and Mexico claim that the COOL law discriminates against their producers and have threatened to impose billions of dollars in tariffs on American goods. In reaction to this, the U.S. House of Representatives recently voted to repeal the COOL law.
While the main goal of the COOL requirement is to help retail customers make more informed purchases, the potential benefits to consumers are unclear as past studies have revealed mixed results.
"On one hand, some research suggests that consumers do not value U.S.-labeled meat products more than products labeled as products of North America," the report says. "In fact, evidence within the broader COOL literature suggests that the impact of country of origin on consumers' attitudes and behaviors is diminishing."
Additionally, a 2013 study from Kansas State University agricultural economist Glynn Tonsor suggested that the typical U.S. consumer is unaware of these labeling requirements and generally ignores origin labels on meat products.
Other studies, however, have found that origin labels on meat and poultry products can potentially influence consumer attitudes and willingness to pay.
The University of Arkansas researchers used three studies to gain better insight into the effect of COOL on consumer choices.
In a pilot study, 50 U.S. consumers participated in a web-based survey. They were given the product's country of origin only and were asked to share their opinions on food safety, taste and freshness of meat and poultry products from 10 countries: Mexico, India, Brazil, New Zealand, Nicaragua, Russia, Thailand, China, the U.S. and Canada.
Participants perceived meat from the U.S. and Canada to be safer than meat from the other countries.
The researchers said the relative strength of the direct and indirect effects demonstrated in the first experiment should be of substantial interest to retailers and meat processors.
"In the absence of information about the equivalence of meat processing procedures used in the U.S. and Mexico, the effect size for purchase intentions is large," the researchers noted. "These effects suggest an opportunity for some retailers yet raise concerns for other firms."
The results suggest that COOL may be used as an effective promotional tool if appropriately presented and positioned, the report says. For example, a retailer might position and promote itself as selling only meat and poultry from animals born, raised and slaughtered in the U.S.
"Such positioning then may motivate consumers who do not normally consider country of origin to use this information in their subsequent evaluation and choices of meat products," the researchers suggested.
Additionally, they said a retailer's U.S.-only position may lead to other positive inferences about the general quality of product offerings in other categories, support for U.S. businesses and overall concern for their customers. In turn, these factors could positively affect retailer attitudes and patronage decisions.
In the second study, one group of participants received beef and chicken labeled with the U.S. as the country of origin, and a second group received beef and chicken labeled as originating in Mexico. The participants of this study preferred meat from the U.S.
However, the third study revealed that when consumers were told that meat processing standards in Mexico were similar to those in the U.S., purchase intentions for U.S. meat were no longer higher.
These results revealed an opportunity for retailers to promote meat from these other countries, the researchers noted.
"These retailers may design promotion programs using retail signage or posters to inform consumers about the equivalence of meat processing systems between countries," they suggested.
"If the goal of the COOL legislation is to provide consumers with more specific country-of-origin information to benefit consumers when making purchasing decisions, then it is only partially meeting this stated objective," the researchers stated.
They said U.S. consumers most likely have very limited knowledge of the audits USDA conducts of the meat processing systems in countries that supply meat to the U.S.
"Thus, if the USDA is truly striving to help consumers make more informed decisions, they should consider educating consumers about the outcomes of their international processing system audits," the researchers said.