Progress 09/01/10 to 02/09/16
Outputs
Target Audience:1. Agricultural economists working on consumer's willingness to pay for locally-produced food. 2. Other agricultural and food scientists working on issues in the beef industry. 3. Extension personnel working on issues in beef and local food marketing. 4. State and federal officials involved in regulation and promotion of local food markets. 5. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
Dr. Chang has left SDSU, this report is being filed to complete all progress reports and final reports associated with this Hatch Project
Publications
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Progress 10/01/14 to 09/30/15
Outputs
Target Audience:1. Agricultural economists working on consumer's willingness to pay for locally-produced food. 2. Other agricultural and food scientists working on issues in the beef industry. 3. Extension personnel working on issues in beef and local food marketing. 4. State and federal officials involved in regulation and promotion of local food markets. 5. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. Changes/Problems:Dr. Chang has left SDSU, this report is being filed to complete all progress reports and final reports associated with this Hatch Project.? What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
Dr. Chang has left SDSU, this report is being filed to complete all progress reports and final reports associated with this Hatch Project.
Publications
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Progress 10/01/13 to 09/30/14
Outputs
Target Audience: 1. Agricultural economists working on consumer's willingness to pay for locally-produced food. 2. Other agricultural and food scientists working on issues in the beef industry. 3. Extension personnel working on issues in beef and local food marketing. 4. State and federal officials involved in regulation and promotion of local food markets. 5. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest? The study result has been disseminated through social media and websites such as Minnesota FArm Guid (http://www.minnesotafarmguide.com/news/livestock/beef-consumers-get-information-from-websites-social-media/article_16067af5-f3a3-5f65-8007-74de4a088618.html), Meat and Poultry Highlights (http://www.perishablenews.com/index.php?article=0041520), and Farm and Ranch Guides (http://www.farmandranchguide.com/news/livestock/beef-consumers-get-information-from-websites-social-media/article_084af03c-a8ce-11e4-a1e6-97551374f52c.html). What do you plan to do during the next reporting period to accomplish the goals? Finish the second stage of the study (focus group and in-person interview) with an emphasis on finding how the South Dakota Beef Industry Council can utilize their social media to draw more visitors to its websites and to promote more beef consumption. Apply the Latent Class Model and Choice-Based Conjoint methods to conduct a local beef survey study to highlight the key attributes that creating real price premiums for the locally-produced beef products, also identify the attributes that consumers ignore when they purchase beef.
Impacts
What was accomplished under these goals?
Continue the results from previous review period, I served as leading PI to apply and received a research fund from South Dakota Beef Industry Council titled "Beef or Chicken? A Pilot Study of the Generation-X and Millennial Consumers' Meat Choice, with an Emphasis on Improving the Effectiveness of the Beef Industry Council Social Media Outlets" ($9,100; Co-PIs: Lisa Elliott, Shannon Sand, Rocky Daley). The United States is one of the world's largest beef producers and home to one of the largest fed-cattle industry in the world (USDA, outlook report, 2012). Historically, cattle and bulk commodity productions have been key components to the economies of Northern Great Plains. Beef holds the largest market share of the United States domestic meat market, accounting for 30.5% of the U.S market's total value (Market Line Industry Profile Report 2012). The beef demand for consumers in the Midwest is even larger. The annual average beef consumption per capita in the Midwest was 73 pounds in 2005, approximately 6-7 pounds higher than the national average (Davis et al. 2005). Despite the high demand in the domestic and world markets, the U.S. domestic beef consumption has shown a decline over the past decades (USDA ERS, 2011). Research has suggested that health concerns are one of the determinants (along with other determinants such as price differentials and demographic changes) for the decreasing demand of beef and, on the contrary, the rising demand and market share of poultry/chicken products. Studies have also shown that consumers are willing to pay a premium for lean beef products. According to the information published by the USDA, eating beef can be a healthy choice for consumers. Data indicates that six of the leanest beef cuts contain only one more gram of saturated fat than skinless chicken breast. Moreover, these lean beef cuts provide eight times more vitamin B12, six times more zinc, and three times more iron than a skinless chicken breast (USDA 2013). However, many consumers, especially younger ones, are not aware of this nutrition information and wrongfully perceive beef as unhealthy food. According to the Cattlemen's Beef Board (2013), 45% of the older Millennial and Generation-X consumers (aged from 25 to 44) expressed that they would choose to purchase beef more often if they knew about the nutrition content. Consequentially, the beef industry has launched new promotion campaigns via social media outlets to target the Millennial and Generation-X consumers. It addition to their website, the South Dakota Beef Industry Council (2013) currently utilizes popular social media outlets; including, Facebook (https://www.facebook.com/SDBeef), Twitter (https://twitter.com/SouthDakotaBeef), and Pinterest (http://pinterest.com/sdbeef/) Through efforts of the SDBIC, recipes, nutrition information and beef production information is shared through pins, posts and tweets. Over 51% of Americans age 12 and up have a Facebook account according to a study conducted in 2011 by Arbitron and Edison Research. The study also indicates 90% of all households in the U.S. have internet, and two thirds of households have access to wi-fi networks. Therefore, the object of this study is to carefully examine the impacts of social media outlets regarding their effectiveness in encouraging Millennial and Generation-X consumers to purchase more beef. Young consumers are well-known for their effectiveness in communicating and learning through social media. The SDBIC has established high-quality social media platform. Our proposal aims to support and improve the work already being done by the council staff, by providing a research-based study to increase the effectiveness and quality of posts, pins and tweets. Each social media outlet draws a different type of use, who is seeking different information from each social media outlet. Little is known about which types of pins, posts and tweets that is the most desirable, effective and influential for consumers. This study aims to deliver practical insights and information on tailoring content (tweets, posts, pins) for each social media outlet. Successfully providing the right information to the right consumer will increase the effectiveness of the current SDBIC social media platform already in place. The objectives of our studies are: 1) Provide a household-level record of young consumers' meat expenditure pattern and trade-off between beef and other meats (especially chicken); 2). Examine the impacts of pins, posts and tweets regarding their effectiveness in encouraging older millennial and Generation-X consumers to purchase more beef; and 3) Generate practical marketing insights to assist the SDBIC in continuing to successfully target young consumers within South Dakota and increase their demand for beef. To accomplish of the goal, the research team conducted the following two studies during the review period: 1) one on-line household meat consumption survey (in two steps). We conducted a household survey study in November 2013-March 2014 targeting on consumers aged 25-44 from selected cities and rural towns in South Dakota to participate in the study; 2) a focus group study/in-persona interviews. Based on the study results of the on-line survey, we selected 20-25 consumers who provide reasonable representation of South Dakota millennial and Generation-X consumers to conduct in-person or phone interviews to solicit their opinion of the impacts of social media on enhancing beef consumption (currently finishing). The study result indicated that (based an online survey completed by 126 respondents,websites are their No. 1 source of nutrition information and recipes, followed by family and friends, following by magazines and social media. However, for nutrition information, social media takes a back seat to health professionals, magazines and television--in that order.The survey also found that although most respondents have basic nutrition, there are also noticeable misunderstanding that may potentially discourage more beef consumption. For example, more than half the respondents identified beef as containing more iron than other meats, but about 75 percent of the respondents did not know chicken thighs could contain more fat than lean steaks. In terms of food shopping decision and preference, the survey results suggested that about 45 percent of respondents indicated that they had shopped groceries based on information posted on the social media. About 77 percent of the total survey respondents indicated they are willing to try new products based on their friends' suggestions over the social media, although about 73 percent of the respondents never shopped any meat products on-line. This finding suggests there is a potential marketing opportunity for the beef industry to explore the on-line shopping outlets and social media to promote beef consumption. On the other hand, the majority of respondents expressed nutrition and health were the first priorities when they considered beef purchasing. However, although statistically insignificant, about 55 percent of respondents considered price was important when purchasing beef (compare to 58 percent for chicken).The analysis result from the Almost Ideal Demand System (AIDS) also showed that, when faced with higher beef prices, the survey respondents purchase less meat in general, rather than selecting less expensive alternatives. Finally, while display and placement were more important when it comes to marketing poultry than beef, the survey result showed those who shopped when they were hungry were more likely to buy beef on impulse.
Publications
- Type:
Websites
Status:
Published
Year Published:
2014
Citation:
Beef consumers get information from websites, social media (http://www3.sdstate.edu/news/articles/beef-consumers-get-information-from-websites-and-social-media.cfm)
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Progress 01/01/13 to 09/30/13
Outputs
Target Audience: Agricultural economists working on consumer’s willingness to pay for locally-produced food. Other agricultural and food scientists working on issues in the beef industry. Extension personnel working on issues in beef and local food marketing. State and federal officials involved in regulation and promotion of local food markets. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided? This project has provided me the opportunities to present my work and share my findings with other scholars who are interested in the subject matter at professional conferences and regional meetings (for example, 50th Missouri Valley Economics Association annual Meeting in Kansas City, MI. Oct 16-21, 2013). I was also able to utilize the resources to conduct multidisciplinary research projects with scholars who provided different perspectives to study issues related to South Dakota local food markets and consumer behaviors. How have the results been disseminated to communities of interest? 1. Consumers' willingness to pay for locally-produced Rib-eye beef study: The study result has been accepted and published in the Journal of Agriculture, Food system, and Community Development during this review period (http://dx.doi.org/10.5304/jafscd.2013.041.003, pp. 1–23). A brief report summarizing the main finding of the study had also been published through IGROW Platform (hosted by the College of Agriculture & Biological Sciences, South Dakota State University) to reach local producers, stakeholders, extension specialist, and general public who are intereted in the subject matter. 2. Economic Impacts Study of South Dakota Local Food System Study: The result of the study has been accpeted and presented in the 50th Missouri Valley Economics Association annual Meeting in Kansas City, MI. Oct 16-21, 2013. A brief report summarizing the main finding of the study had also been submitted to IGROW Platform to reach local producers, stakeholders, extension specialist, and general public who are intereted in the subject matter. What do you plan to do during the next reporting period to accomplish the goals? For the next reporting period, I plan to develop and conduct the following two reserch projects: 1. Beef or Chicken? A Pilot Study of Young Consumers’ Meat Choice in South Dakota, with an Emphasis on the Influence of Internet-Based Communications (with Lisa Elliott): The United States is one of the world's largest beef producers and owns the largest fed-cattle industry in the world (USDA, outlook report, 2012). Historically, cattle and bulk commodity productions have historically been one of the key components to the economies of northern Great Plains due to its comparative advantage in climate and soil. Beef is an ideal product for producers in the region due to its higher value-added and high demand. However, despite the high demand in the domestic and world markets, however, the U.S. domestic beef consumption has shown a trend of decline over the past decades. The United States Department of Agriculture (USDA) - ERS’s statistics (2012) reveals an overall declining trend in the total U.S. beef consumption from 2002 to 2011. The inflation-adjusted retail beef price has declined about 25% from 1970 to 1998 (LMIC, 1999). Among all the possible reasons, consumers’ demand for healthier meat choice has been recognized by scholars and beef industry. On the other hand, eating beef can be a healthy choice for consumers. Data indicate six of beef’s leanest cuts only contain one more gram of saturated fat than the skinless chicken breast does. Moreover, these lean cuts provide eight times more vitamin B12, six times more zinc, and three times more iron than skinless chicken does (USDA 2013). However, many consumers, especially younger ones, are not aware of such nutrition information and wrongfully perceive beef as unhealthy food. According to Cattlemen’s Beef Board (2013), 45% of the older millennial and Gen-Xer consumers (aged from 25 to 44) expressed they would choose to purchase beef more often if they knew about the nutrition content. Consequentially, the beef industry has launched new promotion campaign (“Beef. It’s What’s for Dinner” campaign) to introduce young consumer with easy-cooking beef recipes and details of beef nutrition information. For South Dakota beef consumers, the South Dakota Beef Industry Council (2013) also provides resourceful beef nutrition and health information via facebook (https://www.facebook.com/SDBeef), twitter (https://twitter.com/SouthDakotaBeef), and pinterist (http://pinterest.com/sdbeef/) to deliver nutrition information and cooking tips to targeted (mostly younger) consumes. On the other hand, although young consumers are well-known for their effectiveness in communicating and sending messages through social-media, little is known about the influences of these new social-media regarding their usefulness in encouraging consumers to consume more beef. Therefore, the object of this study is to carefully examine the impacts of utilizing different marketing outlets regarding their effectiveness in encouraging older millennial and Gen-Xer consumers to purchase more beef. This research will focus on local (South Dakota) younger consumers in expecting to deliver practical insights to assist the beef industry to successfully target on young consumers and their demand. The beef industry and the community should benefit from the valuable information generated from this study to better understand young consumers’ meat preference and what marketing strategies will effectively encourage them to consume more beef products. 2. South Dakota Local Beef Marketing: Opportunities and Obstacles (with Lisa Elliott): South Dakota produces high quality cattle that are later processed into high quality beef down the supply chain. Producers have the potential to capture more of the added value that they create along the supply chain. One way that the industry can try to capture the added value is through developing branded products. One example of this in South Dakota already is the South Dakota Certified Beef Program. This program has production, management and traceability requirements. The requirements of the brand are important because they should be developed by identifying the characteristics that are important to consumers and that consumers are willing to pay for the enhanced product. Producers need to utilize this information to compare the consumers’ willingness to pay to the cost of producing a certain attribute. Producers can capture that additional value that they have created in the supply chain by using different marketing strategies (for example, direct marketing, vertical integration, and producer alliances and cooperative structures). Another marketing strategy that can be used to capture added-value is through producers joining a producer alliance or cooperative where the group retains ownership of the animals in the feedlot collectively. The group could develop a contract with a slaughter facility and negotiate a contract that gives producers a premium for their product. A collective producer group could also vertically integrate by purchasing a meatpacking plant and process their own beef and sell is directly to buyers. Potential exists for producers to be able to capture more of the value that they create in the beef value chain within the state of South Dakota. However, the feasibility of the direct marketing, vertical integration, and the development of producer alliances and cooperative structures takes investigation of the interest of participants all along the beef value chain which start with the producers, backgrounders, feedlots, processers, retailers, and all the way down to the consumers. Exploratory research needs to occur to see what strategies would work best for South Dakota producers. This research project aims to use qualitative research (case study) method to identify potential areas where South Dakota beef producers could use various marketing strategies to capture more value from the high-quality cattle that is raised in South Dakota. Beef production is becoming more competitive in nature and by investigating potential value-added marketing strategies could provide an alternative for producers to increase their profitability through niche markets. By performing case study research, this study is able to develop a survey that collects more information into the local beef supply and marketing chain and sheds light on the possibility of different marketing strategies.
Impacts
What was accomplished under these goals?
In this review period, I have accomplished the following two projects: 1. Consumers' willingness to pay for locally-produced Rib-eye beef study: Continue the effort from the last review period, I have formally finished this research project. This study applied the Choice-Based Conjoint analysis to study consumers’ preferences and WTP for locally produced rib-eye steaks. We selected shoppers at five different farmers’ markets to participate in the survey study in order to acquire information regarding which consumers at farmers’ market might potentially pay higher price premiums for locally produced rib-eye steaks. The main findings are as follows: i). All the beef attributes included in the study (brand, price, leanness, color, juiciness, and production methods) contribute to higher price premium, especially for brand difference, color, and juiciness attributes. Consumers' willingness to pay (WTP) to replace national-brands with locally produced steaks was $3.47 per 8 oz. The WTPs to replace South Dakota Certified with locally produced rib-eye steaks was $0.68 per 8 oz. The WTP premiums to increase leanness from 80% to 85%, 90% and 95% were $1.17, $ 1.57, and $1.86 per 8 oz., respectively. The estimated WTP to upgrade the steak color from brown to red and cherry-red were $2.56 and $2.53, respectively. The WTP to upgrade steaks from not juicy to juicy or very juicy were $3.65 and $3.97. The WTPs to purchase steaks produced by organic and natural producers (compare to conventional producers) were $1.59 and $1.60. ii) Consumers generally prefer South Dakota Certified and locally produced steaks. However, data also indicate that the preference demonstrated by our sample shoppers for purchasing “locally produced” rib-eye steaks varies according to different consumer attributes. Additionally, the estimated coefficients of color and feed/production variables indicate that consumers’ utility only increases by switching from low to middle or from low to high quality meat; however, the difference in utility between consuming middle and high quality steaks is negligible. Instead, the increasing coefficient values for leanness suggest that decreasing exterior fat in steaks will constantly advance consumers’ utility. We find that for our sample shoppers at farmers’ markets who demonstrate a significant preference for locally produced steaks, their definition of “locally produced products” simply means products produced in South Dakota. Overall, our study results suggest that South Dakota consumers at farmers’ markets generally are willing to pay a premium for locally produced steaks. However, the small difference in WTP between steaks produced in-state or in nearby communities implies that these consumers generally define “local” as anywhere in the entire state of South Dakota. Furthermore, the results from mixed logit model analysis suggest that the higher price premium for buying locally comes primarily from consumers whose households consume more beef than other meats and whose nutrition-related knowledge is excellent. 2. Economic Impacts Study of South Dakota Local Food System Study: A Survey Study in the Southeast South Dakota: This study investigates the economic impacts of the local food system within southeast region of South Dakota (Brookings, Minnehaha, Lincoln, Moody, Turner, Clay, Lake, and Union counties), with an empahsis on locally-prodcued beef, vegetable, and fruit products sold in local food marketing system. Because this study is the pioneer effort to estimate the economic impacts of the local food system in South Dakota, we chose to use the regional input-output modeling system to construct our economic model due to the lack of data needed for other advanced economic models.To measure the direct, indirect, and induced effects, we used IMPLAN , a software developed and provided by MIG, INC (http://implan.com/). The IMPLAN system provided us with county- and state- level model structures and data to effectively estimate the multiplier effects from any initial injection to an economy. With the information we learned from personal interviews and surveys, IMPLAN also enabled us to make educated changes of the default setting for the local economic structure to enhance the accuracy of estimate economic impacts. Aside from IMPLAN and the data we obtained through surveys, this study also incorporated several different sources to gather background information via literature review, government public data (USDA 2013), and the assistance from local experts (Dakota Rural Action). We sent out a survey to local growers and producers within an area around SE SD during August to October 2013 to collect the information for the study. From the 127 local growers listed in our data set (where we gathered the information by visiting several farmers markets and by consulting with the Dakota Rural Action Local Foods Directory), 69 agreed to participated in the study and 20 returned the survey with usable information (approximately 31.9% participation rate). The main finding are as follows: i) To allow potential statistical discrepancy, this study created an approximation of the total sales based on the statistical nature of the information gathered from the usable data and the suggestions from local experts. The estimated total sales in the study area ranged from $4,026,716 to $4,244,050. The estimated economic impacts for the three scenarios ranged from 6.81 million to 7.18 million dollars. Notice that the estimate sales and economic impacts are strictly a conservative figure based on the assumption that we only had 120 local producers/growers who participated in direct sales in the study area. In reality, we expect the economic impacts of local food system in SE SD to be larger if we allow more economic agents to be included in the analysis. ii) The estimated sales from direct marketing for local beef products in 2013 was $1,285,947. Local growers and producers suggest that beef sales contained approximately 30.3% of sales from direct marketing in the study area (southeast South Dakota). The estimated economic contribution to the local economy was approximate 2.1 million dollars.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Chang, K. L., Xu, P., Warmann, G., Lone, T., Munzimi, Z., & Opoku, E (2013)Consumer Characteristics and Willingness to Pay for Locally Produced Rib-eye Steaks: A Case Study of Consumers at Farmers Markets. Journal of Agriculture, Food system, and Community Development, http://dx.doi.org/10.5304/jafscd.2013.041.003, pp. 123
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Progress 01/01/12 to 12/31/12
Outputs
OUTPUTS: Two studies were undertaken in order to accomplish the following three objectives: 1) identify key product attributes and consumers willingness to pay (WTP) for the locally produced beef product, with an emphasis on the high-value cut beef; 2) identify the social and demographic characteristics of customers who shop at local food markets and the reasons they shop local; and 3) conduct a general review of current development of US direct marketing in the local food markets. 1. Consumers' willingness to pay for locally-produced Rib-eye beef study: In this study, I chose to apply the Choice-Based Conjoint (CBC) technique to design the survey instrument. The CBC technique enabled researchers to transform the research objectives and selected product attributes into questionnaires. The following six product attributes were selected: brand, price, leanness, color, juiciness, and production methods (i.e., organic, nature, or conventional). We delivered 716 questionnaires by personal contacts at five different farmers' markets during the months of July and August of 2011. Among these five markets, one was located in the Sioux Falls metropolitan area, and the rest were located in small, rural towns in eastern South Dakota. Of the 716 questionnaires delivered, we received 251 retuning surveys but only 212 surveys were usable for the analysis. The overall usable response rate for the study is approximately 29.6 %. From the total 212 qualified responses, 100 were from Sioux Falls, the largest city in South Dakota, and 112 were from rural towns where the population ranged from 1,100 (De Smet) to 21,000 (Brookings). Based on conditional logit analysis, the results indicate that all the attributes included obtained higher price premium, especially for brand difference, color, and juiciness attributes. The WTPs to replace national-brands with locally produced steaks was $3.47 per 8 oz. The WTPs to replace South Dakota Certified with locally produced rib-eye steaks was $0.68 per 8 oz. The WTP premiums to increase leanness from 80% to 85%, 90% and 95% were $1.17, $ 1.57, and $1.86 per 8 oz., respectively. The estimated WTP to upgrade the steak color from brown to red and cherry-red were $2.56 and $2.53, respectively. The WTP to upgrade steaks from not juicy to juicy or very juicy were $3.65 and $3.97. The WTPs to purchase steaks produced by organic and natural producers (compare to conventional producers) were $1.59 and $1.60. The mixed logit regression model suggested consumers who spent higher percentage of total food budget on meat and consumers who had better knowledge (or more involvement) in agricultural production also showed higher WTPs for locally produced steaks. 2. Current development of US direct marketing in the local food markets study: In summer 2012, I conducted a study (with intern Mr. Thaibault Goualin from National Polytechnic Institute of Toulouse, France) of current development in the US direct marketing, with an emphasis on local food markets. We carefully reviewed current literatures, USDA data, and spent hours of in-person interviews with local agricultural producers in Brookings, South Dakota and Fresno, California. PARTICIPANTS: Warmann, Jerry; Langelett, George; Thaibault Goualin; Alexandre; Richard, Felix; Xu, Pei; Munzimi, Zelie-Sandra; and Emmanuel Opoku. TARGET AUDIENCES: 1. Agricultural economists working on consumer's willingness to pay for locally-produced food. 2. Other agricultural and food scientists working on issues in the beef industry. 3. Extension personnel working on issues in beef and local food marketing. 4. State and federal officials involved in regulation and promotion of local food markets. 5. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
1. The consumers' willingness to pay for locally-produced Rib-eye beef study results suggest all product attributes selected for inclusion in this study contribute to consumers' higher WTP. Among all of the attributes included, juiciness and color were the most important product attributes in generating higher price premiums. Other attributes, including brand difference, fat content, and feed methods, also contributed to consumers' higher WTP. In addition, this study discovered that while being "locally produced" has a notable effect on consumers' WTP, only consumers with higher family meat budgets or a better knowledge of nutrition demonstrate a significant price premium for locally-produced rib-eye steaks. The study results recommend South Dakota local beef producers to continue improving the quality of their products, as our study results suggested a higher premium for better quality steaks. However, although consumers would pay premiums to reduce exterior fat and to switch from conventional to natural or organic meat, the resulting profit margins are not as high as improving color and juiciness. Accordingly, I recommend beef producers to concentrate on improving the taste and appearance of rib-eye steaks (other than on the health-related attributes). Besides, while consumers are willing to pay for higher quality meat, the profit margins (WTP's) diminish once the quality of steaks improves to a specific level. Therefore, we recommend local beef producers to examine the costs and benefits when making any decisions to upgrade the product quality. The study also recommend future studies on the costs and WTP of beef products focus on one beef cut and smaller geographic location to generate results that are more precise and to avoid heterogeneity issues. Besides, consumers with some specific characteristics are more likely to pay higher premiums for locally produced steaks. To expand the marketing opportunity for beef producers, we also recommend further research and efforts to identify the relationship between consumer characteristics and potential profit margins. 2. The local food marketing study found farmers who sold their products directly to consumers, grocery stores, or restaurants often generated higher profit margins than they could on the conventional commodity market, which provided a great market potential of direct marketing for small-scaled farms. Small producers often could not compete with large producers who could produce large amount of standardized products for commodity markets. However, direct marketing provided niche markets for small farmers to specialize in organic, customer-specific products, where being small scale could actually be an asset when selling directly to local buyers. The high quality justified a higher price to the consumers. According to the information collected from our interviews with local farmers, several small-scaled local producers in South Dakota reportedly generated higher profits via direct marketing than conventional bulk commodity production.
Publications
- Chang, K. L.; Xu, P., Warmann, J., Lone, T., Munzimi, Z., and Opoku, E. Consumers: Characteristics and Willingness to Pay for Locally-Produced Agricultural Products: A Case Study of Rib-Eye Steaks in the Rural Great Plains (2013)(currently under review by Journal of Agriculture, Food Systems, and Community Development)
- Chang, K.L and Thaibault Goualin: Current development of US direct marketing in the local food markets. South Dakota State University Economic Commentator (2013)(under review).
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Progress 01/01/11 to 12/31/11
Outputs
OUTPUTS: Two survey studies were undertaken in order to accomplish the following two objectives: 1) identify key product attributes and consumers' willingness to pay (WTP) for the locally produced beef product, with an emphasis on the ground beef; 2) identify the social and demographic characteristics of customers who shop at local food markets and the reasons they shop local. Consumers' willingness to pay for locally-produced ground beef study: In this study we chose to apply the Choice-Based Conjoint (CBC) technique to design the survey instrument. The CBC technique enables researchers to transform the research objectives and selected product attributes into questionnaires. The following six product attributes were selected: brand, price, leanness, organic, grass-fed, and cut differences. A total of 300 questionnaires were given through personal contacts in Brookings, South Dakota, in August and September 2010. A total of 117 completed surveys were returned and 103 were used for the WTP analysis for a useable usable response rate of 34.3%. Based on conditional logit analysis, the results indicate that the brand, price, and leanness attributes were the three major components for estimating consumers' preferences. The WTPs to replace national-brands with South Dakota Certified or Locally-Produced beef were $0.73/kg and $1.57/kg, respectively. The WTP premiums to increase leanness from 80% to 93% and from 85% leanness to 93% were $1.30/kg and $ 0.82/kg, respectively. The estimated WTPs for other attributes (cut difference, grass-fed, and organic) were not significantly different from zero. Farmer's Market Survey Study: A survey instrument was designed to identify the key reasons why local consumers choose to at shop farmer's markets in eastern South Dakota. Researchers delivered questionnaires at farmer's markets in four different locations during July and August 2011. From Sioux Falls, a total of 97 questionnaires were completed of 353 delivered, compared to 100 of 352 completed consumer surveys in the more rural cities of Huron, Brookings, and De Smet. Overall, there were no significant differences in demographic and social characteristics of consumers' in the urban and rural areas. Both groups had very similar levels of nutrition knowledge and health attitudes. The relatively higher income of the urban consumers did not transfer to higher food budgets. The Rural consumers who attended the farmer's markets tended to have lower incomes and were more likely to be the main grocery shoppers for the family. They also consumed more red meat than the urban consumers. Better quality food is the most important reason that encourages urban consumers to shop at farmer's markets in South Dakota. Supporting local farmers is listed as the second most important reason. Urban consumers identified "Entertainment" and "Family Enjoys Visiting Farmer's Market Together" as the third and fourth reasons to shop at farmer's markets. Further results indicate that "Family Members Prefer Food from Farmer's Market" was the fifth important reason for consumers in South Dakota to shop at farmer's markets. PARTICIPANTS: Underwood, Keith; Warmann, Jerry; Langelett, George; Schultheiss, Alexandre; Richard, Felix; Xu, Pei; Munzimi, Zelie-Sandra, Mayen, Carlos. TARGET AUDIENCES: 1. Agricultural economists working on consumer's willingness to pay for locally-produced food. 2. Other agricultural and food scientists working on issues in the beef industry. 3. Extension personnel working on issues in beef and local food marketing. 4. State and federal officials involved in regulation and promotion of local food markets. 5. Local agricultural product producers working on establishing or expanding local-food market opportunities and niche markets. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
The conditional model analysis indicates that brand differences and leanness were the two dominate components for constructing consumers' utility and WTPs, whereas the importance of other attributes including cut difference, grass-fed, and organic were all relatively insignificant. The mean WTPs generated by the conditional logit model implied that consumers' WTP to replace national brands with locally-produced ground beef was $1.57/kg after controlling for hypothetical bias. We suggest that local producers utilize this information by emphasizing that their beef products are locally-produced when developing both their marketing and packaging strategies. We also suggest producers advertise the location of the product's origin. Hence, the results suggest that extra efforts to connect with consumers who have a close tie to the local beef industry are crucial and profitable for connect producers. Thus, local producers may wish to explore marketing channels that have a comparative advantage in attracting consumers through entities such as farmer's markets, community-supported agriculture (CSA), the internet, and direct sales. Further, results suggest that consumers were willing to pay $1.30/kg to increase leanness for ground beef from 80% to 93%, suggesting that improved techniques for reducing beef fat content provide potentially important means to add value to beef products. Other product attributes such as cut difference (between sirloin and chuck), grass-fed, and organic do not generate considerable WTP increases. Because transferring from conventional to organic or grass-fed meat production is often quite costly, the results from this study suggest that local small- and medium-scale producers be cautious about such decisions, because the price premiums may be minimal. The farmers' market study identified the most important attributes that determine consumers' decision about whether to shop at local farmer's markets in South Dakota. Survey responses suggest that food quality, supporting local, family entertainment, and food safety were the main reasons to encourage local consumers to shop at farmer's markets. On the other hand, unfriendly business schedules, price concerns, limited product options and quantity were cited as reasons for preventing consumers to shop more at farmer's markets. The information generated by this study is expected to be useful for producers and market managers as they explore further market opportunities and enhance the current marketing strategies.
Publications
- Chang, Kuo-Liang, Underwood, Keith, Langelett, George. 2011. "Consumer Segments and Willingness to Pay for Locally-Produced Beef". Invited paper at the 48th Annual Meeting of the Missouri Valley Economics Association Meeting. Kansas City, Missouri. Oct 20-23, 2011.
- Chang, Kuo-Liang Chang, Pei, Xu, Underwood, Keith. 2011. "Consumer's Segment and Willingness to Pay for Locally Produced Beef in the Rural America: A Case Study in the Rural Town of the Northern Great Plains". Invited paper in the Food Distribution Research Society 2011 Annual Conference. Portland, Oregon. Oct 15-19, 2011.
- Chang, Kuo-Liang, Warmann, Jerry, Alexandre Schultheiss, and Felix Richard. 2011. "Reasons to Shop at Farmers' Markets: A Survey Study in South Dakota". South Dakota State University, Economics Commentator: No. 535.
- Chang, Kuo-Liang, Underwood, Keith, Langelett, George, and Xu, Pei. 2011. "Consumers' Willingness to Pay for Locally-Produced Ground Beef: A Case Study", South Dakota State University, Economics Commentator: No. 538.
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