Will Consumers Pay for Voluntary Testing for BSE? Double-Bound CVM Evidence from Canada

ABSTRACT

The 2003 discovery of bovine spongiform encephalopathy (BSE)-infected cattle in North America led to efforts to ensure the safety of beef produced in that region, and to some discussion regarding testing live cattle for the BSE prion. This article investigates consumer acceptance and valuation of beef from live cattle that have been voluntarily tested for BSE. Using data from an Internet-based survey of Canadians, double-bound estimates of willingness-to-pay (WTP) are measured. Consumption behaviour and perception covariates were significant predictors of expected WTP, while socio-economic and demographic effects had no measurable impact. Expected WTP was not statistically significant, but ranged from 8% for respondents with a high-purchase intention to −3.5% for those with low/moderate-purchase intention. Further analysis on subsamples of the data showed expected WTP ranges from −5% to 5% for those with low/moderate-purchase intention and from 5% to 22% for those with a high-purchase intension.

KEYWORDS:

• BSE
• consumer demand
• willingness-to-pay

Acknowledgments

The author thanks Marc Bellemare, Julian Alston, and Glynn Tonsor for constructive comments, as well as R. Allan Mussell and Claudia Schmidt for assistance in developing the survey on which this analysis was based.

Funding

The financial support of the Alberta Prion Research Institute, PrioNet Canada, and the Alberta Livestock and Meat Agency is gratefully acknowledged. The opinions expressed here are those of the author alone and do not necessarily reflect those of the funding agencies. Any errors or omissions are the responsibility of the author.

Notes

¹ A larger literature has explored the impact of BSE on consumer preference in other regions of the world (e.g., Burton & Young, 1996; Ishida, Ishikawa, & Fukushige, 2010; Jin & Koo, 2003; Peterson & Chen, 2005; Schlenker & Villas-Boas, 2009; Verbeke & Ward, 2001).

² Voluntary versus mandatory labelling has been explored in other contexts. For instance, Hu et al. (2005) explored voluntary versus mandatory labelling in the context of food products derived from genetically modified organisms (GMOs). Their results suggest consumer value information provided via mandatory more so than information provided via voluntary labelling.

³ Heterogeneity of median income across countries coupled with differences in beef prices could also lead to heterogeneity in perceptions of the affordability of beef, and especially beef products with niche characteristics.

⁴ This PCA used a varimax rotation and yielded two factors with eigenvalues greater than 1.

⁵ The low-purchase intention category includes those with a response of unlikely, somewhat unlikely, and very unlikely, and accounts for 9% of the sample. The moderate-purchase intention category includes those with a response of unsure, likely, and somewhat likely, and accounts for 56% of the sample. The high-purchase intention category includes those with a “very likely” response, and accounts for 35% of the sample.

⁶ Aubeeluck’s (2010) premiums are based on a comparison of striploin steaks from domestically produced animals with no safety assurances to the same cut and country-of-origin, but from animals that have been tested for BSE. Lim et al. (2013b) report a marginal WTP of $5.70/lbs. According to data on the U.S. Bureau of Labor Statistics (2014) Website, the average price of sirloin steaks (a close substitute to striploin, for which no price is available) in the United States in 2010 was about $5.83/lbs, thus leading to a 98% premium.

Additional information

Funding

The financial support of the Alberta Prion Research Institute, PrioNet Canada, and the Alberta Livestock and Meat Agency is gratefully acknowledged. The opinions expressed here are those of the author alone and do not necessarily reflect those of the funding agencies. Any errors or omissions are the responsibility of the author.