The Impact of Consumer Beef Safety Awareness on U.S. Beef Exports

ABSTRACT

We quantified the impact of consumer awareness about beef safety on U.S. beef exports. An index to reflect consumer awareness is constructed based on publicized reports in the media. Results showed a 0.8% reduction in U.S. beef exports arose from foodborne-disease news. In addition, using impulse response functions derived from a panel vector autoregressive model (panel VAR with the system GMM estimator), we found that the negative impact of a shock in food safety news intensified after three quarters and then diminished. Investing in any scheme that minimizes the impact of food safety events, such as quality labeling, is suggested.

KEYWORDS:

• Consumer awareness
• beef safety
• panel data
• U.S. beef exports

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Non-genetically modified organisms.

² Recombinant bovine somatotropin is a growth hormone used in dairy farming to increase milk production.

³ Bovine spongiform encephalopathy (BSE) or mad cow is a fetal neurological disease that can occur in adult animals, aged five years or older.

⁴ One noticeable fact is that when a food disease is recognized in an exporting country, although the country may regain its market share over time, it may have to switch from higher value markets to lower value markets. Lower value markets are those that have had food safety issues in the past. Webb, Gibson, and Strutt (2018) provide more numerical details about this issue.

⁵ To estimate a panel VAR, we are not able to employ a standard fixed effect estimator because lagged endogenous variables lead to bias in panels. This bias can be overcome by using GMM or instrumental-variables estimators (Holtz-Eakin, Newey, and Rosen 1988).

⁶ The GDP implicit price deflator is the ratio of the current-dollar value of GDP to its corresponding chained-dollar value, multiplied by 100 (U.S. Department of Commerce 2017).

⁷ Federal Reserve Economic Data (FRED). https://fred.stlouisfed.org/.

⁸ Archival Federal Reserve Economic Data (ALFRED). https://alfred.stlouisfed.org/.

⁹ LexisNexis Academic. http://www.lexisnexis.com/hottopics/lnacademic/.

¹⁰ U.S. Food and Drug Administration (FDA) investigations suggest that rotisserie chicken salad purchased from Costco stores was a possible source of this outbreak (FDA 2015).