Date Full Report Received02/08/2017
Date Abstract Report Received02/08/2017
InvestigationInstitution: LLC, Market Economics
Primary Investigator: Ted Schroeder
Co-Investigators: Dermot Hayes, Glynn Tonsor, Jason Lusk
Funded ByNational Pork Board
Pork quality variation has been well documented and overall eating quality of fresh unenhanced pork chops has been linked to product color and marbling. The National Pork Board is working with USDA to develop a voluntary pork quality grading system that would assign pork chops one of three grades. A well-functioning quality standard could eventually better align pork product flows with consumer demands and ultimately provide opportunities for producers to realize price premiums for hogs exhibiting desirable meat quality. Despite well recognized attributes that affect pork eating experiences, no known research has focused on consumer demand for a retail pork quality labeling system.
The overriding purpose of this project is to determine consumer valuation of pork quality under different labeling situations. This provides the industry guidance on the relative merits of alternative approaches to implementing a pork quality grading system.
In July of 2016, we conducted a national survey of 5,011 U.S. pork consumers. This survey provides a host of information on consumer preferences for pork chops and related pork purchasing and consumption patterns. A split sample, choice experiment was included to compare consumer pork valuations under alternative possible pork quality labeling situations.
The core findings of this study include:
In the absence of quality labels (status quo situation), consumers in aggregate do not differentiate between high, medium, and lower quality pork chops.
This suggests limited awareness of color or marbling as pork quality attributes. It also reflects heterogeneous preferences with some preferring paler, leaner chops.
Across multiple labeling approaches, introduction of quality labels results in consumers on average revealing a stronger preference for higher quality pork chops. While quality grade labels boost willingness-to-pay for higher quality, the results of the study also suggest caution in that willingness-to-pay for chops assigned lower quality grades falls relative to the no label scenario. A USDA “Prime,” “Choice,” and “Select” labeling approach appears most viable, potentially increasing revenue to the pork sector.
Evidence of consumer preference heterogeneity highlights a sizeable segment currently prefers paler, leaner chops that would carry the lower quality grade in the new labeling system.
Ultimately our recommendation is for careful progression with a pork quality labeling system. While our research suggests potential promise, more work is needed on the costs associated with implementing a labeling system, finer details of consumer preference heterogeneity, and inner-industry acceptance of any voluntary system before firm conclusions on overall economic viability can be drawn.