Source: UNIVERSITY OF GEORGIA submitted to
ASSESSING THE CONSUMER BEHAVIOR, MARKET COORDINATION AND PERFORMANCE OF THE CONSUMER-ORIENTED FRUIT AND VEGETABLE SECTOR
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
Reporting Frequency
Annual
Accession No.
0224574
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
S-1050
Project Start Date
Oct 1, 2010
Project End Date
Sep 30, 2015
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Project Director
Huang, C.
Recipient Organization
UNIVERSITY OF GEORGIA
200 D.W. BROOKS DR
ATHENS,GA 30602-5016
Performing Department
Agricultural & Applied Economics
Non Technical Summary
In recent years, greater concerns with respect to diet and nutrition have led to an increased number of marketing and promotional messages focused on the benefits of eating fresh fruit and vegetables. Both consumers and retailers have responded to the spotlight on fresh produce, resulting in increased purchases, marketing resources and even new legislation to promote Specialty Crop production in the US. Consumers and households are also fueling changes in the food system as they seek to purchase their produce through channels as diverse as direct marketing and traditional supermarkets, and with expectations as broad as picking their own produce to highly branded products with 3rd party certifications. Still, little is known about the response of increasingly demanding consumers and food supply chain partners, the changing coordination and supply chain responses of fruit and vegetable enterprises or the response to regulations and policies developed to oversee and guide new innovations in this sector. Our intended outcomes and impacts are to inform policymakers on the market performance of fresh produce enterprises under new policies and marketing strategies, and guide industry stakeholders in their long-term planning on consumer behaviors and demand changes.
Animal Health Component
(N/A)
Research Effort Categories
Basic
(N/A)
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6036299301015%
6095010301035%
6075010301050%
Goals / Objectives
Objective 1: Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets. Objective 2: Analyze the relative benefits and costs, to producers and consumers, of government and industry-led marketing and policy programs (certifications, Leafy Greens marketing order, Country of origin labeling, farmers markets) using both theoretical approaches and empirical evidence from multi-state applied research projects. Objective 3: Assess the changing coordination and supply chain management strategies being implemented in the fruit and vegetable sector and identify strategic organizational and marketing implications for a set of firms that are diverse in terms of commodity, marketing approach and size of operation (including small and mid size farms).
Project Methods
We will extend past research and work cooperatively with other states on models, surveying and experimental approaches to improve the validity of market valuation estimates on a variety of produce claims (production origin, organic, nutrient claims, other production protocols). As the methods used evolve (as discussed below), the group will collaborate on marketing studies, identified by industry and NGO groups as high priority, to evaluate consumer behavior. Specifically, we will focus on the emerging local market designations and integrate them into consumer demand and valuation analyses using techniques that incorporate product characteristics and locale. To assess the effectiveness of marketing programs, we plan to examine the impacts of various governmental health, local food and marketing order initiatives, sharing expertise on research design, and coordinating in at least one case where a similar marketing platform has been adopted by other states (MarketMaker). In addition, we will use estimates from past and on-going market studies to evaluate expected impacts of various policies that form, change and evolve in produce markets, including, but not limited to Country of origin labeling, food safety and nutritional claims.

Progress 10/01/10 to 09/30/15

Outputs
Target Audience: Nothing Reported 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? PI is no longer with the college.

Publications


    Progress 10/01/13 to 09/30/14

    Outputs
    Target Audience: Nothing Reported 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? PI is no longer with the college.

    Publications


      Progress 01/01/13 to 09/30/13

      Outputs
      Target Audience: Nothing Reported 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? PI is no longer with the college.

      Publications


        Progress 01/01/12 to 12/31/12

        Outputs
        OUTPUTS: The U.S. food consumption patterns including fruits and vegetables have changed substantially over time because of changes in population composition, consumer preference, personal income and education level, social structures, government intervention, and health and diet concerns. Hence, it is very important to understand the interrelationships between fruits and vegetables and other food commodities. A better understanding and knowledge of the demand structure and its associated effects of prices and income changes on the quantity demanded is useful for forecasting future demands and in appraising the likely outcome of potential changes in national food programs. We develop a complete demand system that includes 6 broad food groups and 1 nonfood group. The food groups are: (1) meats, (2) staples, (3) fresh fruits, (4) fresh vegetables, (5) processed fruits and vegetables, and (6) desserts. The complete system consisting of 37 individual food items plus one nonfood group was estimated based on the data that cover the period from 1953 through 2008. The empirical estimation was implemented in sequential steps using the iterative seemingly unrelated regression procedure. The study yields a total of 1,482 estimated demand elasticities to update previously reported elasticities based on more recent time series data. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Not relevant to this project.

        Impacts
        There are a few implications could be drawn from the empirical results. First, increasing population has driven up demand for food. By 2020, the United States is expected to add between 50 and 80 million people and food expenditures are projected to rise 26 percent between 2000 and 2020. The projected increases in U.S. population will boost food sales by $208 billion. The changing age compositions of the population and growing ethnic diversity are also expected to affect per capita food consumption. For example, the consumption of milk usually decreases as age increases. Increasing Hispanic population is also expected to decrease per capita consumption of dairy products. Our results show that expenditure share on milk consumption decreased from 1.65% to 1.31%. The changes in substitution and complementary relationships among food groups and individual categories observed in this study reflect changes in food consumption patterns and lifestyle. People used to consume a great amount of red meats such as beef and pork have shifted to consume more poultry and fishery products because of healthy consideration. Americans have accustomed to eat out more frequently as they become more affluent. As income increases, consumers are more likely to choose convenience and healthful food by changing their diets to include more fruits and vegetables and less meats. Our results show that expenditures on processed food products such as frozen fruits and fruit juice, canned tomatoes and canned fruits cocktail have increased over the study period. Last but not least, results presented in the study reflect reduction in consumption on food with high energy and caloric as manifested in recent consumer trends.

        Publications

        • No publications reported this period


        Progress 01/01/11 to 12/31/11

        Outputs
        OUTPUTS: The demand and consumption of fruits and vegetables in the United States have grown significantly in recent years due to increasing concerns about health and dietary quality of Americans. The U.S. Department of Agriculture has been promoting and recommending increased consumption of fresh produce consistently through its publication of the Dietary Guidelines for Americans. Since the 1990s, a growing body of research has focused on the degree to which the production and supply of produce needs to be increased to meet the daily intake level recommended by the Guidelines. However, research on the demand for various forms of fruit products has been relatively unexplored. Knowledge of price and income elasticities for different form of fruit products is important for farmers, marketers, and retailers in terms of adopting production and marketing schemes that optimize the use of farmland and shelf space. Thus, a study was conducted to estimate a demand system of fruit products and to analyze the demand interrelationships among various product forms. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Not relevant to this project.

        Impacts
        A quadratic AIDS model was estimated for a demand system consisting of fresh fruits, fruit juices, and frozen and dried fruits based on annual per capita consumption data in the United States. The results show that all own-price elasticities are negative and less than one, suggesting that demand for these fruit products is price inelastic as to be expected. Fruit juices are found to be expenditure elastic (1.732) conditional on the total expenditure on fruits, while fresh fruits and frozen and dried fruits are found to be expenditure inelastic, 0.985 and 0.352, respectively. The fact that expenditure elasticity for fresh fruits is found being close to unitary suggests that demand for fresh fruits is likely to respond proportionally to changes in the amount of money expended on fruits. Furthermore, the demand system is found to be dominated by complementarity relationships, which is reasonable given that the demand is for different forms of fruit products instead of different fruits. The implications to be drawn from this study suggest that the demand for fresh fruits has become more responsive to changes in income than previously reported. The magnitude of the expenditure elasticity for fruit juices suggests that the demand for convenience is highly sensitive or influenced by changes in income. In other words, increasing in consumers' income will increase their demand for fruit juices more than proportionally. Further research could be conducted to examine the welfare implications of the elasticity estimates due to some policy changes such as changes in indirect taxes on fruits.

        Publications

        • Zhang, F., Huang, C.L., Lin, B.-H., Epperson, J.E. and Houston, J.E. 2011. National demand for fresh organic and conventional vegetables: Scanner data evidence. Journal of Food Products Marketing 17(4):441-458.
        • Mekonnen, D., Huang, C.L. and Fonsah, E. Analysis of fruit consumption in the U.S. with a quadratic AIDS model. Selected paper presented at the SAEA annual meeting, Birmingham, AL, 2/4-7, 2012.