Consumer Acceptance of Agricultural Biotechnology: A Market Experiment with Conventional and Biotech Sweet Corn

Transcription

1 Agricultural Issues Center University of California March 2005 Consumer Acceptance of Agricultural Biotechnology: A Market Experiment with Conventional and Biotech Sweet Corn Jennifer S. James, Shelby Fleischer, Dave Johnson, Bradley Schwab, John Lord, Anthony Resh, Michael Villa, and Jo Anna Hebberger Presented by Jennifer S. James at the Entomological Society of America Meeting in Cincinnati, OH October 23, 2003 Agricultural Issues Center University of California Jennifer S. James is an Assistant Professor of Agricultural Economics, Pennsylvania State University. She can be contacted by at JJames@psu.edu for further information about this report. Shelby Fleischer is a Professor of Entomology, Dave Johnson is a Senior Research Associate, and Jo Anna Hebberger is a Research Assistant, all at Pennsylvania State University. John Lord is a Professor of Food Marketing at St. Joseph s University. Bradley Schwab, Anthony Resh, and Michael Villa are graduates of the Agribusiness Management program at Pennsylvania State University. Supported in part by the Agricultural Marketing Resource Center

2 Consumer Acceptance of Agricultural Biotechnology: A Market Experiment with Conventional and Biotech Sweet Corn Jennifer S. James, Shelby Fleischer, Dave Johnson, John Lord, Bradley Schwab, Anthony Resh, Michael Villa, and Jo Anna Hebberger Abstract: Consumer acceptance of agricultural biotechnology could be an important determinant of its future. While most of the current knowledge about the attitudes of U.S. consumers about biotechnology is based on telephone survey data, this type of data may not accurately reflect consumer behavior in the marketplace. A market experiment was conducted to measure actual consumer choices between conventionally grown sweet corn and sweet corn developed using modern biotechnology. Two similar varieties were grown at a Penn State farm, delivered to nine participating stores in the Philadelphia area, clearly labeled as either Biotech or Conventional and sold side-by-side. Relative prices of the two varieties were varied, and an informational brochure was available to consumers at the corn display. While sales data are fairly imprecise, they indicate that approximately 25 to 35 percent of the sweet corn sold was the biotech variety. Survey data were collected from over 700 consumers who purchased sweet corn at participating stores to gather consumer characteristics that may be linked with particular choices. Preliminary analysis of survey data indicates that 35 percent of respondents did not realize that there were two types of corn for sale. Among those who noticed the two types of corn, 38 percent bought some biotech, while 40 of those who did not notice bought some. When asked about the most important things they considered when choosing their corn, 64 percent of consumers said it was the corn s appearance, 20 percent said price, and only 16 percent mentioned biotechnology as influencing their choice (3 percent said they wanted biotech, and 13 percent said they didn t). In addition, the majority of respondents spent less than a minute making their sweet corn choice. Based on these preliminary results, it appears that whether or not this particular product was developed using biotechnology was not a major influence on the choice of most consumers. It is one of several corn characteristics that busy consumers may or may not take the time to notice or to factor into their decision-making process.

3 Consumer Acceptance of Agricultural Biotechnology A Market Experiment with Conventional and Biotech Sweet Corn Presented by Jennifer S. James Asst. Prof. of Agricultural Economics Pennsylvania State University

4 Motivation for Study Knowledge about consumer preferences regarding biotechnology largely based on survey data Are stated preferences (surveys) consistent with revealed preferences (market)? Labeling Producers and retailers may consider labeling Will consumers buy Biotech sweet corn if I label it? Labeling policies receive lots of attention Consumers say they want labels (in surveys) When consumers reveal their preferences in the market: Do labels influence consumer choices? What role do prices play? What role does information play? Attempt to go beyond hypothetical surveys and measure actual behavior

5 Study Design Three components, all focused in Philadelphia area Not representative of national population Telephone Survey Experimental Auctions Simulated market to collect consumer valuations Market Experiment Grow, label, and sell Bt and non-bt sweet corn Varying prices Providing different types of information

6 Grow the Corn at the Penn State Farm... Syngenta s Boreal Syngenta s WSS0984 (Bt-Boreal) White supersweets 78-day

7 to Maximize Marketing Time Four plantings, each with: 1.5 acres Bt and 1.5 acres Non-Bt Plantings: May 15 through June 13 (wet spring) Expected harvest: August 13 through September 5 Actual harvest: August 12 through August 30 Thanks to: Shelby Fleischer, PSU Entomology for finding funding, seed, land, etc. Syngenta for seed, Warrior Dave Johnson, PSU Farm Manager, for expertise and persistence

8 Harvest the Corn while preserving its identity and controlling for quality.* *In an attempt to minimize the role quality variation plays in consumer choices.

9 Costs of Identity Preservation Grading, marking, and packing took far longer than hand harvesting. Thanks to: Dave Johnson and Jo Anna Hebberger Farm-Labor Management Farm Help: Alicia Geib Katy Heil Vanessa Hershey Jennifer Morrison Derek Stoner Nicholas Strassmann Haley Young Liz Marshall Heidi Gyorke Bonnie Hershey Neal McPheron Shane Stoner Eli Wenger Amy Young David Riley Eric Asp Approximately 700 hours in the field over 3-week period

10 Keep it Cool on farm and to wholesaler

11 Wholesaling and Retailing Find participating stores 9 stores in Philadelphia area Thanks to: John Lord, Professor of Food Marketing, St. Joseph s University, and participating stores Worked with produce wholesaler Deliver directly to stores One more logistical hurdle (opportunity for identity mix-ups)

12 (ideal) Corn Merchandising Biotech Sweet Corn Developed Using Biotechnology to Control Pest Damage Conventional Sweet Corn Developed and Grown Using Conventional Methods

13 (less-than-ideal) Corn Merchandising

14 Informational Brochure Thanks to: Council for Biotechnology Information and Fleishman-Hillard, Inc. for brochure design and printing assistance (not content)

15 Corn Pricing Retail stores to follow one of five pricing schedules Biotech priced at 25% discount 10% discount same price 10% premium 25% premium Relative to conventional In theory, change pricing schedule when change price of corn In practice, very few price changes (still sorting this out)

16 In-Store Surveys Thanks to: Purpose: To link specific consumer characteristics with Biotech vs. Conventional choice Crystal Dubois Emily Graham Mary Jameson Ryan Lewis Christine O'Hara Aaron Piscioneri Mike Ramsey Tony Resh Brad Schwab Chris Vassil Jill Vecchione Mike Villa Approximately 800 hours in stores over 3-week period

17 Final Thanks (before preliminary results) Agribusiness Management Students (on job market!): Brad Schwab Personnel management, communications with produce managers, merchandising management, survey management Tony Resh Merchandising management, survey management Mike Villa Merchandising management, survey management Funding Agencies USDA-RAMP (primary funding) National Institute for Commodity Promotion Research and Evaluation (partially funded pilot in 2001) UC Davis Agricultural Issues Center With additional support (as noted above) from Syngenta, Council for Biotech Information, and Fleishman-Hillard, Inc.

18 Descriptions of Stores Store # Median Income Up- or Downscale City or Suburb 1 68,723 Up Suburb (NW) 2 67,997 Up Suburb (NW) 3 95,502 Up Suburb (W) 4 42,397 Down City 5 43,184 Down City 6 44,728 Down City 7 42,262 Up (small) City 8 81,740 Up Suburb (N) 9 93,444 Down Suburb (N)

19 Biotech Market Share by Store (interpret with caution) 1 44% 2 45% 3 8% (error?) Store Number % 27% 28% 28% 8 20% 9 16% Overall 26% 0% 10% 20% 30% 40% 50% Biotech Market Share

20 Store Sales and Biotech Market Share (interpret with caution) Store # Up- or Downscale Total Sales (dozen ears) % Biotech (on average) 1 Up % 2 Up % 3 Up 389 8% 4 Down % 5 Down % 6 Down % 7 Up (small) % 8 Up % 9 Down % All 5,099 26%

21 Putting Sales Data in Context Sales data are not very precise PLU for conventional corn was standard PLU for biotech corn was special (not used often) Tried to hold quality constant across Biotech and Conventional (threw out a lot of corn) PLUs and quality issues mean that Biotech market share may be understated Orders from stores were roughly 33% biotech, 67% conventional

22 Survey Data 719 Surveys were collected in stores From people who purchased either type of corn First two questions: When you chose your sweet corn today, did you notice that there were two different kinds for sale? What type of corn did you purchase today?

23 Survey Respondents and Biotech versus Conventional Did Notice Two Types of Corn Did NOT Notice Two Types of Corn Percent of Sample 65% 35% Percent who Bought Some Biotech 38% 40%

24 Time-Starved Consumers or Low-Priority Assigned to Corn Thinking about how you chose your corn today, how much time would you say you spent deciding which corn to buy? Less than a minute About a minute More than a minute, but less than 5 minutes More than 5 minutes % of those who Noticed 63% 23% 13% 1% % of those who Did NOT Notice 72% 18% 9% 1%

25 Important Factors in Choice of Corn Thinking about how you chose your corn today, what were the most important things you considered in making your choice? For instance, was the appearance of the corn most important, its price, or something else? Price (bought cheaper) Appearance Didn t want biotech Wanted biotech Wanted to compare Other % of Total Sample 20% 64% 13% 3% 6% 18% % of Those Who Noticed 2 Types 18% 57% 19% 5% 9% 19%

26 Awareness of Biotechnology Biotechnology is also sometimes referred to as genetic engineering or genetic modification. Before today, had you read or heard anything about food produced using biotechnology? Heard of Biotech % of those who Noticed 54% % of those who did NOT Notice 43% 39% of these people bought some biotech 37% of the other 46% who hadn t heard of biotech bought some

27 Trust Issues Government vs. Grocery Stores I trust the government/grocery stores to tell the truth about food produced using biotechnology Grocery Stores Strongly Agree /Agree Neutral /Not sure Disagree /Strongly Disagree Total Government Strongly Agree or Agree Neutral/Not sure Disagree/Strongly Disagree 33% 13% 16% 4% 8% 10% 2% 2% 14% 38% 22% 40% Total 61% 22% 17%

28 Summary of Key Findings Bt sweet corn accounted for 25-35% of sweet corn sales at participating stores Appearance and price were influences mentioned most often We attempted to hold quality (and appearance) constant If Bt sweet corn looks better than conventional, our survey data suggest that market share will be higher The majority of consumers spent less than one minute making their corn choice Influence of information provided in stores is minimal Labels influencing choices? 35% of consumers surveyed did not take notice 15% mentioned Biotech as influencing choice of corn Working on sorting out prices so that we can link to choices

29 Other Lessons Learned More consumers trust grocery stores than the government regarding biotech foods Working with grocery stores was very challenging Problem with PLUs (probably understated Bt market share) and signage Based on our experience, mandatory labels seem infeasible Viability of future value-added biotech applications in fresh market? Stores willing to sell it Would require packaging, SKUs, or extensive coordination