Progress 10/01/12 to 09/30/13
Outputs
Target Audience: Target audiences for this research include academics, policy makers, the media, consumers, and agribusiness at the state and national levels. Efforts made to deliver science-based knowledge include to people through formal or informal educational programs include formal participation in the Agricultural & Applied Economics Association 2013 Annual Meeting in Washington, DC, August 4-6, 2013, the development of innovative tablet teaching methodologies, and the creation of the CPG Economics blog (www.cpgeconomics.com) with global reach to all Internet users on the World Wide Web. 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 results of this research have been dissemintated through academic journals, academic conferences, invited research seminars, extention presentations, industry trade publications, and the CPG Economics blog (www.cpgeconomics.com). What do you plan to do during the next reporting period to accomplish the goals? Besides revising and resubmitting articles already submitted to academic journals, I will continue to build databases, estimate econometric models, make presentations, and submit papers to academic journals.
Impacts
What was accomplished under these goals?
Under Objective (1), four separate major activities were completed: 1.1 - Using 52 weeks of syndicated point-of-purchase scanner data at the US-level, a hedonic pricing model was estimated and used to quantify the implicit price of convenience in a retail market for value-added meat products worth $1 billion per annum. The 45-cent per pound premium for cooked breakfast sausage was found to be statistically significant while controlling for other important observable product attributes such as package weight, product shape, fat content, sodium content, organic label, Kosher label, meat type, and brand, as well as market conditions such as merchandising, holidays, and seasonality. Additionally, the Turnbull lower-bound estimate of consumer willingness-to-pay for convenience was estimated to be 11 cents per pound. 1.2 - Based on 292,570 observations of syndicated point-of- purchase retail scanner data for 2010, a semilog hedonic pricing model was estimated for 8,519 domestic dry table wine products using a classic pooled panel data regression methodology and White’s heteroskedasticity-consistent standard errors. The model also controlled for other important market conditions such as merchandising, holidays, and seasonality. All of the parameter estimates for the observable product attributes, except the organic label, and a majority of the parameter estimates for market conditions were statistically significant individually and, where appropriate, jointly. The sign of the parameter estimates were nearly all consistent with a priori expectations.As the present study illustrates, oft-overlooked decisions such as size of the container, packaging materials of the container, in-store merchandising, and availability at crucial times of the year are important wine business considerations. This is the most comprehensive hedonic pricing analysis of the U.S. wine industry to date in the literature and the first to address container size, container packaging material, and the organic label. 1.3 - Ahead of the January 1, 2006 deadline for mandatory labeling of trans fat, Nabisco, a leading brand in the market for crackers – a $1 billion processed food category ranked amongst the top sources of trans fat – reformulated a subset of their products and voluntarily labeled them as trans fat free. New products were also introduced and labeled as trans fat free as well. The purpose of this study was to determine the implicit price of products voluntarily labeled as trans fat free. Using a national level weekly scanner data set and controlling for the other observable product attributes, such as non-PHO fat labels, whole grain labels, sodium labels, variety, and package size, in addition to market conditions, the implicit price of the voluntary trans fat free label was estimated to be $0.53 per pound, or a premium over the base case of 17.64 percent. 1.4 - Using information for 3,562 Thoroughbreds listed in Keeneland’s 2011 September Yearling Sale, hedonic pricing models were estimated using both ordinary least squares regression and a Heckman selection model to test the adverse selection hypothesis that vertically integrated sellers whom breed and race are penalized with bid shading relative to sellers whom only breed, ceteris paribus. Though the null hypothesis of no adverse selection was not rejected in the standard regression model, when taking into account censoring due to sellers withdrawing listed yearlings prior to the auction the null hypothesis was rejected. However, the impact of adverse selection was greatly attenuated by bid shading associated with the reputation effect of sellers, both those that are vertically integrated and those that just breed horses, willing to accept final bids less than the stud fee further lessening the winner’s curse. The models controlled for other observable characteristics of the yearlings as well as those of the seller and the structure of the auction. Under Objective (2), food safety is one of the most pressing issues in the food industry. In the past several years, highly visible foodborne illnesses have been covered in the media for salmonella (September-December 2012, Major Product Recall of Sunland peanut butter, nut and seed products; August-September 2011, Class I recall of Cargill ground turkey meat), listeria (August-October 2011, Rocky Ford brand Jensen Farms cantaloupes), E. coli O157:H7 (September 2011, Class I recall of Tyson ground beef), E. coli O104:H4 (Summer 2011, likely German organic bean sprouts), and vibrio (September 2011, Washington State unbranded raw oysters) to mention only a few. Since 2006, at least 20 separate recalls have taken place, from fresh produce to fresh meats to processed foods, due to salmonella alone. Two separate major activities were completed: 2.1 - The focus of this study, salmonella-tainted shell eggs, was deemed a Major Product Recall by the FDA in August of 2010 (i.e., one of only six Major Product Recalls listed on the FDA Web site). It is noted the new FDA Egg Rule was implemented just weeks prior to the recall on July 9, 2010. I identified the econometric model proposed in this paper considering supply side effects since 500+ million shell eggs were recalled. In particular, I estimated a hedonic pricing model to measure the marginal value for pasteurized shell eggs at key points in time before and after the recall while controlling for numerous other observable attributes such as size of container, size of egg, grade, color, brand, certified organic, omega-enhanced, hormone-free, as well as seasonality and holidays. A pasteurized shell egg is subjected to a kill step in which the egg is heated to assure salmonella does not survive on or inside the shell of the egg. The thermal kill step involves specialized machinery, extra processing time, and may result in a higher defect rate for the manufacturer due to higher shell crack rates and unintentional cooking of the egg. Additionally, measures of subjective risk of foodborne illness were constructed using media analysis methodologies summarized in Kalaitzandonakes, Marks, and Vickner (AJAE, 2004) and included in the model. The premium for a pasteurized egg was found to be 7 cents more than the baseline case. 2.2 - The focus of this study, salmonella-tainted peanut butter, was deemed a major product recall by the FDA in 2009. It was an "ingredient-driven" recall; jars of peanut butter, such as Jif and Skippy branded products, were not recalled. Rather, peanut butter used in the production of other foods, such as ice cream, cookies and candy, was tainted. Hence, the ice cream, cookie and candy products were recalled. It is noted that another nut ingredient, pistachios, was also deemed a major product recall by the FDA in 2009 but was not be addressed in this study. It was possible to identify the econometric model for jars of peanut butter in this paper without considering supply side effects such as inventories and shelf space allocation. The premium for jars of roasted peanut butter was estimated to be 33 cents per pound pre-recall and 42 cents per pound post-recall compared to the base case of raw peanut butter.
Publications
- Type:
Journal Articles
Status:
Accepted
Year Published:
2013
Citation:
Vickner, S.S. A USDA-Certified Biobased Product Introduction. American Journal of Agricultural Economics. 95(Number 2, 2013):512-518.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Vickner, S.S. Foodborne Illness, Self-Protection, and the Marginal Value of Pasteurized Eggs. Selected Poster Presentation prepared for presentation at the Agricultural & Applied Economics Association 2013 Annual Meeting, Washington, DC, August 4-6, 2013.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Vickner, S.S. The Role of Tablets in Modernizing the Classroom Experience. Selected Presentation prepared for presentation at the Agricultural & Applied Economics Association 2013 Annual Meeting, Washington, DC, August 4-6, 2013.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2013
Citation:
Vickner, S.S. "Estimating the Implicit Price of Convenience: A Hedonic Analysis of US Value-Added Retail Meat Products." Submitted to Agribusiness: An International Journal.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2013
Citation:
Vickner, S.S. "A Hedonic Pricing Model of U.S. Dry Table Wines." Submitted to the International Journal of Wine Business Research.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2013
Citation:
Vickner, S.S. "Friend or PHO? On the Marginal Valuation of Reducing the Content of Trans Fat in Processed Foods." Submitted to Food Policy.
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