The USDA quality grades may mislead consumers 1

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1 Published November 21, 2014 The USDA quality grades may mislead consumers 1 E. A. DeVuyst, 2 J. L. Lusk, 3 and M. A. DeVuyst 4 Department of Agricultural Economics, Oklahoma State University, Stillwater, ABSTRACT: This study was designed to explore consumers perceptions about and knowledge of USDA beef quality grades. Data were collected from over 1,000 consumers in online surveys in November and December 2013, and estimates were weighted to force the sample to mirror the U.S. population in terms of age, gender, education, and region of residence. When asked to rank Prime, Choice, and Select grades in terms of leanness, only 14.4% provided the correct ranking with 57.1% of respondents incorrectly indicating steaks grading Prime were the leanest. Despite perceptions that the Prime name indicated the leanest product, in a subsequent question, 55.6% of respondents thought Prime grade to be the juiciest of the 3 grades. In addition to inquiring about perceptions of 3142 the grade names, respondents also indicated perceptions of pictures of steaks. Only 14.5% of respondents correctly matched the steak pictures with their corresponding USDA quality grade name, an outcome that is statistically worse than would have occurred through pure random matching (P = 0.03). When asked to match pictures of steaks with expected prices, 54.8% of respondents incorrectly matched the picture of the Prime steak with the lowest price level. More highly educated consumers with greater preferences for steak consumption were more likely to provide correct answers. Results reveal substantial confusion over quality grading nomenclature and suggest the need for more education or for a transition toward more descriptive terminology at the retail level. Key words: beef quality, consumer research, marbling, USDA quality grades 2014 American Society of Animal Science. All rights reserved. J. Anim. Sci : doi: /jas INTRODUCTION 1 Partial funding provided by the Oklahoma Agricultural Experiment Station and Willard Sparks Endowed Chair. 2 Professor, Department of Agricultural Economics, Oklahoma State University. Corresponding author: eric.devuyst@okstate.edu 3 Regents Professor and Willard Sparks Endowed Chair, Department of Agricultural Economics, Oklahoma State University. 4 Concurrent undergraduate student, Department of Agricultural Economics, Oklahoma State University. Received January 10, Accepted April 11, Terminology about quality among segments is not standardized, and this makes communication with consumers about quality more difficult. To reduce consumer confusion, definitions must be consistent, as should language related to quality from sector to sector (National Cattlemen s Beef Association, 2011, p. 8). By some measures, the USDA beef quality grading program is a success. According to the USDA Agricultural Market Service (2013), about 80% of all federally inspected beef slaughter and 94% of steer and heifer slaughter were quality graded in The popularity of the voluntary grading program reveals its value, but its size also underscores its impact on the beef sector. Despite the benefits of the system, the 2011 National Beef Quality Audit (National Cattlemen s Beef Association, 2011) concludes that beef quality terminology is not clear in communicating beef quality. Research shows that consumers prefer the taste of higher marbling signaled in current grading system (Emerson et al., 2013; Killinger et al., 2004; Platter et al., 2003) and that consumers value quality grades when selecting steaks (Mennecke et al., 2007). However, it is not clear that the current nomenclature conveys eating satisfaction and value information to consumers. The objective of this paper is to determine the extent that USDA quality grades communicate marbling, juiciness, and relative retail price information to consumers. The issue is critical to maintaining and increasing beef demand. If consumer quality expectations are not met, consumers are less likely to purchase beef in the future. If the beef sector fails to clearly communicate quality between segments, it is unlikely that the industry provides clear quality information to consumers.

2 The USDA quality grades may mislead consumers 3143 To determine the extent that USDA quality grades communicate information to consumers, 2 national surveys were conducted. The surveys assessed consumers knowledge of how USDA quality grades relate to leanness and juiciness. The surveys also assessed consumers knowledge by requesting that they match pictures of rib eye steaks with their quality-grade names and their relative prices. MATERIALS AND METHODS The questions analyzed in this study were taken from the Food Demand Survey (FooDS) project in the Department of Agricultural Economics at Oklahoma State University (Stillwater, OK). Oklahoma State Institutional Review Board approval was obtained (number AG-13-26) before initiating the survey. The FooDS is a monthly online survey with a monthly sample size of at least 1,000 individuals weighted to match the U.S. population in terms of age, gender, education, and region of residence. The FooDS tracks consumer preferences and sentiments on the safety, quality, and price of food at home and away from home with particular focus on meat demand. This study analyzes 3 questions that were added to the November 2013 installment and 1 question added to the December 2013 installment. The analysis makes use of responses of 1,020 respondents to the November survey and 1,017 responses to the December survey. Two questions on the November survey were added in which respondents were asked to rank USDA quality grades in terms of leanness and juiciness. The initial question was phrased as follows: Rank the following USDA beef quality grades in terms of LEANNESS with 1 being leanest and 3 being fattest. Respondents were then shown the words Select, Choice, and Prime, and with their mouse, they could move each word up or down to indicate the relative ranking. To avoid an order effect, the grade names were randomly ordered across respondents. Following this question, respondents were asked, Rank the following USDA beef quality grades in terms of JUICINESS with 1 being juiciest and 3 being driest. Again, respondents were shown the words Select, Choice, and Prime, and with their mouse, they could move each word up or down to indicate the relative ranking. As with the prior question, the grade names were randomly ordered across respondents. Respondents were additionally asked to match pictures of steaks (from grading cards) with their respective quality grade names. On the left-hand side of the screen were shown pictures of 3 steaks of varying marbling levels, and respondents were requested to match the pictures of the beef rib eye steaks to their respective USDA quality grades. On the right-hand side of the screen were 3 boxes with the words USDA Prime, USDA Choice, and USDA Select, and respondents had to drag each picture into 1 of the 3 boxes (each box could only hold 1 picture). The ordering of the pictures was randomly varied across surveys. In the December survey, a similar picture-matching question was posed, but rather than asking respondents to match pictures with quality grade names, they were asked to match pictures with expected prices. Figure 1 shows the exact question asked. Respondents matched pictures of rib eye steaks to retail prices of US$4, $8, and $12 lb 1. (These prices correspond to $8.82, $17.62, and $26.46 kg 1, respectively.) The ordering of the pictures was randomly varied across surveys. Analysis of data consists, straightforwardly, of simply calculating the percentage of respondents following a particular ranking or matching pattern. Confidence intervals for the percentages are calculated using a normal approximation to the binomial distribution. To analyze factors affecting the likelihood of a correct set of responses, probit regressions were estimated. The regressions include a standard set of demographic characteristics in addition to 2 questions added to capture relative preferences for steak and ground beef. The steak and ground beef preference measures were determined as follows. As a standard part of FooDS, each respondent answers 9 discrete choice questions in which they indicate which 1 of 8 food options (hamburger, beef steak, pork chop, deli ham, chicken breast, chicken wing, beans and rice, or tomato pasta) they would most prefer to purchase (or a ninth option indicating if these were the only options, I would buy something else ). The 9 questions are identical except for the prices of the food items. The measure of relative steak preference was simply calculated as the number of times a person chose the steak option, and likewise, the measure of relative ground beef preference was simply calculated as the number of times a person chose the hamburger option. These variables range from a low of 0 to a high of 9. All reported statistics are calculated using survey weights derived from iterative proportional fitting techniques of Izrael et al. (2000, 2004). The weights, when applied to the data, force the sample to match the U.S. population in terms of age, education, gender, and region of residence. RESULTS AND DISCUSSION Results reveal that the USDA quality grades have, at best, little meaning to consumers. In Table 1, the percentage of consumers ranking Select, Choice, and Prime by leanness and juiciness and are reported along with 95% confidence intervals. Only 14.4% of the respondents were correctly able to match the terms Select, Choice, and

3 3144 DeVuyst et al. Figure 1. Picture price matching question. Prime as the leanest, middle, and highest fat content beef. A 95% confidence interval for this ranking is 12.2 to 16.5%. If respondents had randomly guessed the rankings, the expected correct percent of rankings is 16.7% (1/6). Not only were respondents more likely to be incorrect than chance (P = 0.03), the USDA quality grades may actually mislead consumers regarding fat content as 57.1% of respondents thought Prime was the leanest.

4 The USDA quality grades may mislead consumers 3145 Table 1. Consumer ranking of quality grade names by fat content and juiciness Percent Responding Prime Choice Select Fat content 1 Percent indicated grade is leanest 57.1% [54, 60.1] % [16.9, 21.7] 23.6% [21, 26.2] Percent indicated grade is middle 19.8% [17.3, 22.2] 47.7% [44.7, 50.8] 32.5% [29.6, 35.4] Percent indicated grade is fattest 23.2% [20.6, 25.7] 32.9% [30, 35.8] 43.9% [40.9, 47.0] Percent giving correct ranking 14.4% [12.2, 16.5] Juiciness 1 Percent indicated grade is juiciest 55.6% [52.5, 58.6] 24.6% [21.9, 27.2] 19.8% [17.4, 22.3] Percent indicated grade is middle 23.1% [20.5, 25.7] 42.7% [39.7, 45.8] 34.2% [31.3, 37.1] Percent indicated grade is driest 21.3% [18.8, 23.8] 32.7% [29.8, 35.6] 46% [42.9, 49.0] Percent giving correct ranking 32.6% [29.7, 35.5] 1 Results based on responses of 1,020 consumers demographically weighted to match the U.S. population. 2 Numbers in brackets are 95% confidence intervals. At first glance, it appears that consumers are better able to translate USDA beef quality grades into relative juiciness, as 32.6% of respondents correctly identified the rankings of the grades on juiciness. However, as indicated, 57.1% of respondents indicated that Prime denotes the leanest beef and 43.9% indicated that Select was the fattest beef. It is unclear whether respondents know (or guessed) the correct ranking on juiciness. It seems likely, given the incorrect ranking for leanness, that the term Prime denotes a superior product and that consumers perceive leanness to be superior to fatness. Consumers were next asked to match pictures of rib eye steaks to their appropriate quality grade. Only 22.5% of responded correctly matched the heaviest marbled steak to Prime. Similarly, only 24.2% were correctly able to label the least marbled steak as Select (Table 2). Only 14.5% of respondents were able to correctly match all of the pictures to their appropriate USDA quality grade. If randomly assigned, we would expect 16.7% of the respondents to correctly assign grades to the pictures. The 95% confidence interval on actual percentage correctly assigning grades to pictures is 12.3 to 16.7%, barely covering the percentage of correct assignments expected from randomly assigning matching pictures and quality grades. Finally, respondents were asked to match pictures of steaks to the prices that consumers expected to pay for the steaks pictured. Prices were given as $4, $8, and $12 lb 1 ($8.82, $17.62, and $26.46 kg 1, respectively.). Only 29.2% of consumers were able to correctly match the picture of the Prime grade steak to the highest price with 54.8% indicating that it was the lowest priced steak. Similarly, 49.5% of respondents thought that the picture of the Select grade steak was the highest priced with only 35.3% correctly matching it to the lowest price. Overall, less than one-fourth of respondents were able to match all of the pictures to the correct price. There is other empirical evidence that consumers do not understand USDA quality grades and fat content. Lusk et al. (2003) also reported that U.S. consumers preferred steak with lower intermuscular fat (IMF) content based solely on visual evaluations. Similarly, Grunert (1997) found that consumers in the United Kingdom, Spain, Germany, and France preferred, based solely on visual inspection, less fat content. Furthermore, Grunert concluded that consumers do not link fat to taste and tenderness. Unnevehr and Bard (1993) reported that consumers consistently dislike external and seam fat while inconsistent rankings were found for IMF. Our results and these previous studies suggest that USDA beef quality grades are not informative to consumers regarding fat content and associated palatability. Numerous studies (e.g., Platter et al., 2005; Smith et al., 1987; Savell et al., 1987) show that consumer prefer highly marbled steaks when measured via taste panels. However, as Grunert (1997) concluded, consumers do understand that higher fat content is associated with greater eating satisfaction. So, consumers believe, based on visual inspection, that the leanest steaks will be the most palatable. But these expectations may not be met when consuming the product. This will lead to dissatisfied beef consumers and likely lead to reduce future consumption. The U.S. public has been led to associate fat with unhealthy eating and so this creates the belief that leaner beef must be the superior product. It is unclear how much of an investment in education would be necessary to inform consumers of the desirability/palatability of highly marbled beef. To further explore the potential for educational needs regarding the link between IMF and eating satisfaction, we use probit models to assess potential audiences for education. Four models were estimated with dependent variables consisting of dummy variables indicating respondents who 1) correctly ranked quality grade name by leanness, 2) correctly ranked quality grade name by juiciness, 3) correctly matched quality grade name to picture, and 4) correctly matched picture to price. Explanatory variables were age variables, education variables, ethnicity/race variables, regional variables, gender, primary shopper, farm employment experience, children less than

5 3146 DeVuyst et al. Table 2. Consumer matching of pictures with quality grade names and prices Prime Choice Select Percent Responding Quality grade test 1 Percent indicated picture is Prime 22.5% [20, 25.1] % [21.4, 26.6] 53.5% [50.4, 56.5] Percent indicated picture is Choice 23.0% [20.5, 25.6] 54.6% [51.5, 57.6] 22.4% [19.88, 24.9] Percent indicated picture is Select 54.4% [51.4, 57.5] 21.4% [18.9, 23.9] 24.2% [21.5, 26.8] Percent giving correct ranking 14.5% [12.3, 16.7] Price test 2 Percent indicated picture is $4/lb 54.8% [51.7, 57.9] 9.9% [8.1,11.8] 35.3% [32.3, 38.2] Percent indicated picture is $8/lb 16.0% [13.8, 18.3] 68.8% [65.9, 71.6] 15.2% [13.0, 17.4] Percent indicated picture is $12/lb 29.2% [26.4, 32.0] 21.3% [18.8, 23.8] 49.5% [46.5, 52.6] Percent giving correct ranking 24.4% [21.7, 27.0] 1 Results based on responses of 1,020 consumers demographically weighted to match the U.S. population. 2 Results based on responses of 1,017 consumers demographically weighted to match the U.S. population. 3 Numbers in brackets are 95% confidence intervals. Table 3. Factors associated with the probability of correct ranking and matching using probit regression modeling Variable Correctly ranked quality grade name by leanness 1 Correctly ranked quality grade name by juiciness 1 Correctly matched quality grade picture to name 1 Correctly matched quality grade picture to price 2 Intercept 0.773* (0.241) (0.210) 0.493* (0.243) (0.229) yr vs * (0.188) 0.504* (0.167) (0.187) (0.171) yr vs (0.191) (0.154) (0.186) (0.163) yr vs (0.188) (0.150) (0.193) (0.164) yr vs (0.192) 0.328* (0.144) 0.448* (0.183) 0.33* (0.156) yr vs (0.179) (0.150) (0.175) (0.151) High school vs. college degree 0.315* (0.131) (0.111) 0.680* (0.133) (0.114) Some college vs. college degree 0.422* (0.144) (0.116) 0.452* (0.137) (0.125) White vs. other race (0.171) 0.305* (0.155) (0.173) (0.170) Black vs. other race (0.209) (0.183) (0.212) (0.199) Native American vs. other race (0.319) 0.721* (0.276) (0.362) (0.351) Hispanic vs. non-hispanic (0.139) (0.118) (0.143) 0.367* (0.155) Northeast vs. West region 0.372* (0.174) 0.342* (0.133) (0.153) (0.141) Midwest vs. West region (0.148) (0.126) (0.154) (0.132) South vs. West region (0.138) (0.112) (0.136) (0.121) Female vs. male (0.112) (0.092) (0.111) 0.260* (0.101) Primary shopper? (0.122) (0.102) (0.126) 0.230* (0.106) Worked on farm? (0.165) (0.146) (0.167) (0.123) Children under 12 in house? 0.369* (0.137) (0.105) (0.134) (0.113) On food stamps? (0.146) (0.109) 0.327* (0.158) (0.124) Steak preference 0.072* (0.035) 0.076* (0.03) (0.037) (0.032) Ground beef preference (0.040) (0.032) (0.037) 0.067* (0.032) 1 Results based on responses of 1,020 consumers demographically weighted to match the U.S. population. 2 Results based on responses of 1,017 consumers demographically weighted to match the U.S. population. 3 Numbers in parentheses are standard errors. *Statistical significance at the 0.05 level.

6 The USDA quality grades may mislead consumers 3147 age 12 in the home, government nutrition assistance, steak preference, and ground beef preference. Results for the probit model estimations are reported in Table 3. Across the 4 models, few variables are consistently significant. In each model, an age variable is significant. Middle-aged consumers aged 45 to 54 yr old were significantly less likely to correctly rank quality grade by juiciness and correctly name and price match than more respondents aged 65 and older. Education is significant in 3 of the 4 models. Less educated consumers were less likely to correctly rank quality grade by leanness and to match the quality grade with the correct picture than were those with a college degree. Respondents from the Northeast were less likely to correctly match grade terms to leanness and juiciness. Respondents who had a higher preference for steak were significantly more likely to correctly rank quality grades by leanness and juiciness but they were no more likely to be able to correctly match pictures to grade names and prices than were consumers exhibiting less steak preference. Few other variables appear to impact the likelihood that respondents could correctly answer the 4 questions. In many applications, concerned would arise about the lack of significance of our model and variables. In this case, it identifies that the educational need is widely shared across a range of demographics. Regardless of the demographic cross-section, consumers were generally unable to relate USDA quality grades to leanness and fat content. Furthermore, regardless of cross-section, consumers were unable to match pictures of rib eye steaks with varying fat content to their appropriate USDA quality grades and relative retail prices. In short, it appears that few of the respondents were knowledgeable of how fat content is related to USDA quality grades, eating satisfaction, and price. Implications Results indicates that consumers across a wide range of demographics do not understand the relationship between fat content, USDA beef quality grades, eating satisfaction, and price. This discordance can lead to retail consumers believing that they are purchasing a more satisfying steak than they actually obtain. Unmet expectations mean that consumers are likely to reduce future beef purchases. Speer (2013, p. 7) states that, The industry needs to maintain a full-court press in creating highquality beef to ensure customer satisfaction. However, if the current grading system fails to adequately inform consumers of the relative quality of grades, there remains the likelihood that consumers expectations will be unmet. There are 3 potential methods for addressing this lack of understanding. First, the current quality grading system could be dropped in lieu of private or third-party systems. Throughout its history, the federal quality grading system has always had its share of detractors (Harris et al., 1996), and the results presented herein highlight some of their concerns. Second, an educational program could be developed to promote knowledge of the link between higher marbled beef and taste. This effort would need to be nationwide and reach across all demographics. The costs of such an effort, however, are likely to be large, and it is unclear what effects they may have particularly when one realizes the existence of many prior educational efforts that have been undertaken in the 70 yr existence of the Prime-Choice quality grade nomenclature. Branded beef products, such as Certified Angus Beef, are attempts by the private sector to fill the information void and capture premiums associated with providing more information than USDA quality grades. These efforts have been successful to some extent as branded beef demand has outpaced USDA Choice demand growth (Zimmerman and Schroeder, 2013). Finally, consumers could likely benefit from more descriptive nomenclature. For example, the Uniform Retail Meat Identity Standards (Cattlemen s Beef Board and National Cattlemen s Beef Association, 2014) is used to improve information flows to consumers regarding meat cuts. Similarly, beef quality grades could either be changed to be more descriptive or additional information added to packaging at the retail level, for example, USDA Prime Higher Fat, Most Juicy, USDA Choice Juicy, and USDA Select Less Fat, Less Juicy. Literature Cited Cattlemen s Beef Board and National Cattlemen s Beef Association Retail Marketing. Accessed 19 March Emerson, M. R., D. R. Woerner, K. E. Belk, and J. D. 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Eskridge Consumer sensory acceptance and value for beef steaks of similar tenderness, but differing in marbling level. J. Anim. Sci. 82: Lusk, J. L., J. Roosen, and J. A. Fox Demand for beef from cattle administered growth hormones or fed genetically modified corn: A comparison of consumers in France, Germany, the United Kingdom, and the United States. Am. J. Agric. Econ. 85:16 29.

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