Consumer, Marketer, and Regulator Demand for Farm Production Practices: Food Safety and Farm Animal Treatment

• Agricultural Economics Workshop

Date and Location

Tuesday, October 1, 2013, 12:10 PM - 1:30 PM
ARE Conference Room, 2102 Social Sciences and Humanities

Abstract

This seminar presents two strands of ongoing work evaluating the regulation of farm production practices, with a focus on food safety and farm animal treatment. Consumer demand for both safer food and the improved treatment of animals has increased in recent years. Marketers often ensure that farms follow particular production practices and certify these standards to consumers. Governments also have begun to mandate that growers adhere to specific production guidelines, including those intended to improve food safety or animal welfare. These practices can be costly for consumers, and in this seminar, I examine the motivations to mandate practices, and the effects of such regulations, when some farms already adhere to food-safety or animal-treatment standards voluntarily. First, using the North American fresh tomato trade as a case study, I simulate the trade effects of pending FDA regulations under the Food Safety Modernization Act. The implementation of FSMA will impose additional regulatory burden on farms producing fresh fruits and vegetables for sale in the United States. The majority of fresh tomatoes grown in the United States since 2007 have been produced under a similar set of standards designed to improve food safety and accountability. I show that the adoption of these standards did little to increase demand or improve the safety of tomatoes. My simulation demonstrates that FSMA will slightly increase the market share of growers and marketers of domestic fresh tomatoes. Second, I demonstrate the conditions under which individuals, nearly all of whom regularly consume animal products, may support mandating farm practices that improve perceived animal welfare. Individuals may support such requirements even though they increase farm costs and cause higher prices for consumers. In fact, under some plausible conditions, as the number of animals affected by such a regulation grows, essentially all individuals will support the regulation. Many factors determine support for such regulations, including knowledge about agriculture and the relative importance of lower food prices. I analyze unique data on precinct-level election results and economic characteristics of the voting population to examine these hypotheses in the context of Proposition 2, a California referendum on hen housing. Although political ideology seems to have been important for voters, my model accurately characterizes the economic incentives to support this referendum.