Agricultural & Resource Economics
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Item ESSAYS ON QUALITY CERTIFICATION IN FOOD AND AGRICULTURAL MARKETS(2017) Adalja, Aaron Ashok; Houde, Sebastien; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation features three essays exploring the market impacts of two types of quality certification---a voluntary non-GMO label and a mandatory food safety standard. In the first essay, I use a hedonic framework to examine whether firms use a voluntary quality certification for non-GMO products to extract rent from customers. Using U.S. retail scanner data coupled with data from a voluntary non-GMO label, I find no evidence of price premiums or quantity changes for newly certified non-GMO products. Instead, the label may induce firms to develop new non-GMO products targeted to high-valuation consumers. The second essay examines how voluntary non-GMO food labeling impacts demand in the ready-to-eat [RTE] cereal industry. I estimate a discrete-choice, random coefficients logit demand model using monthly data for 50 cereal brands across 100 DMAs. Consumer tastes for the label are widely distributed, and this heterogeneity plays a substantial role in individual choices; but, on average, the non-GMO label has a positive impact on demand. I estimate welfare effects by simulating two labeling scenarios: one in which all brands use the non-GMO label, and one in which no brands use the label. The simulation results suggest that non-GMO labeling in the RTE cereal industry may improve consumer welfare on average. In the final essay, we use data from an original national survey of produce growers to examine whether complying with the Food Safety Modernization Act's Produce Rule will be prohibitively costly for some growers. We examine how food safety measure expenditures required by the Rule vary with farm size and practices using a double hurdle model to control for selectivity in using food safety practices and reporting expenditures. Expenditures per acre decrease with farm size, and growers using sustainable farming practices spend more than conventional growers on many food safety practices. We use our estimates to quantify how the cost burden of compliance varies with farm size. We also explore the policy implications of exemptions to the Rule by simulating how changes to exemption thresholds might affect the cost burden of each food safety practice on farms at the threshold.Item Food Product Recalls: Trends and Demand Impacts(2016) Tselepidakis, Elina; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Food product recalls, the removal of risky food products from the marketplace, can impose significant burdens for consumers, producers, and regulators. The purpose of this dissertation is to offer an in-depth investigation of the trends and demand impacts of food product recalls. The first objective is to analyze trends and patterns of food product recall events from 2004 to 2013. The analysis considers multiple factors, including the types of foods being recalled, the reasons for initiating the recalls, the severity of the risks posed by the recalled products, and the geographic distribution. The second objective is develop a general Bayesian model to illustrate how consumers form perceptions of risk based on personal experiences and external signals, such as recall events. The model illustrates frequently observed behavior following the release of negative information: an immediate change in behavior, followed by a gradual return to previous, routine behavior. The third objective is to estimate the impact of leafy green recall events on the demand for packaged leafy green products by analyzing disaggregated household purchasing data. The results of this analysis suggests that iceberg and romaine recall events negatively impacted demand for the implicated leafy green in the weeks immediately following the recall. The fourth objective is to estimate the impact of STEC-contaminated ground beef recall events on the demand for ground beef products, differentiating between recalls prompted by consumer illness investigations and those prompted by laboratory testing. The results suggest that the impacts of recalls prompted by consumer illnesses outbreaks were often greater in magnitude and lasted longer than the impacts of recalls prompted by pathogen testing.Item DEMAND FOR SAFER FOOD IN DEVELOPING COUNTRIES(2016) Ordonez, Romina Valeria; Hoffmann, Vivian E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)According to the WHO, in less developed countries approximately 2.2 million people—most of whom are children—die annually of food and waterborne diseases. In these economies, information on the safety attributes of food is usually not available and enforcement of food safety regulations is often weak, particularly within markets for locally consumed food. Still, food safety in the developing world has long been considered a secondary concern relative to food availability. The goal of this dissertation is to contribute to a deeper understanding of some of the constraints that surround demand for safer food along food supply chains in developing countries. Consumers’ demand for safe food can be thought of as an investment in preventive health, which has been shown to be extremely low in developing countries. Hence, this dissertation contributes to the economics literature that explores the impact of health-related information on preventive health behaviors in poor countries. This dissertation focuses on the role of food safety information in affecting people’s purchase behavior in a developing country setting. Because food safety is mostly a credence attribute that cannot be ascertained—or is too costly to ascertain—even after consumption, the provision of information has an important role to play in the reduction of information asymmetries inside the food chains. Among the several actors that are involved in food value chains, this dissertation focuses on small-scale informal intermediaries and consumers. The effect of information on these actors’ demand for safer food is assessed through the estimation of willingness to pay for food labeled as having safer characteristics, and through the analysis of the effect of different types of health-related information on the decision of whether or not to purchase food advertised as safer to eat. To achieve this, two field experiments using revealed preference methods were conducted in Kenya, where maize, the staple food, is frequently contaminated with aflatoxin, a naturally-occurring fungal toxin that is harmful to human health. A brief introductory chapter is followed by a comparison of the advancement of food safety policy and research in developed countries with the corresponding evolution in developing countries (Chapter 2). The framed field experiment described in Chapter 3 tests whether maize traders in informal markets are willing to pay more for higher quality and safer maize. 369 traders from different markets across Kenya participated in a second-price sealed-bid auction in which information on moisture content and aflatoxin contamination of maize auctioned was varied experimentally using labels. The results show that information on moisture content significantly affects traders’ willingness to pay and suggest the observability of moisture content is limited. Also, the effect of information does not appear to be driven by the possibility of selling drier maize to the formal sector, nor by the intention to keep the dryer maize for own family consumption. Further, the impact of providing traders with information on aflatoxin contamination is over twice as large as the effect of moisture content information. These results show that there is potential for strengthening the price-quality relationship within this context by increasing the availability of information on maize quality and safety. Chapter 4 presents the results of a field experiment conducted among customers of small retail shops in Nairobi and smaller urban centers in eastern Kenya. Packages of maize flour were tested for aflatoxin, labeled as safe to eat when they complied with the aflatoxin regulation, and offered for sale at a 20% premium above the price of untested maize. Information messages about the health consequences of aflatoxin exposure and about local contamination prevalence were randomly varied across customers as they entered the shops. The results show that the impact of health messaging on purchase of tested maize varies significantly depending both on the specific content of the message, and on the characteristics and prior beliefs of consumers. Information on the local prevalence of aflatoxin contamination, which exceeded the vast majority of customers’ contamination priors, had the strongest impact on demand. This study demonstrates that combining information on the prevalence of a risk with its health consequences is an effective approach for encouraging preventive health behavior.Item Seafood Safety Regulations: Do They Make Our Food Safer?(CANRP, 2012-01-06) Alberini, Anna; Lichtenberg, ErikHow do new federal guidelines for food safety affect the behavior of seafood processors? How well are they working? Could they be improved? Dr. Anna Alberini and Dr. Erik Lichtenberg at the University of Maryland take a closer look.