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CME: Increased Consumer Willingness to Pay for Steaks, Chicken Breasts and Hamburger

20 September 2013

US - The September edition of Oklahoma State University’s Food Demand Survey showed a sharp increase in surveyed consumers’ willingness to pay for steaks, chicken breasts and hamburger, writes Steve Meyer and Len steiner.

The online survey of 1000 consumers each month tries to measure consumers’ attitudes and valuations of a number of food items, the level of consumers’ spending on food and consumers’ awareness and attitudes toward a number of food issues.

The survey and resulting report are now in their fifth month. The survey is managed by Dr. Jason Lusk, Regents Professor and holder of the Wilard Sparks Endowed Chari in OSU’s Department of Agricultural Economics. Many readers will, of course, recognize the name on this endowed chair as that of Sparks Commodities (now Informa) founder, Dr. Willard Sparks, an Oklahoma State graduate.

Some highlights of the September Foods report are:

  • Willingness to pay (WTP) for beef steaks rose 8.3 per cent in September to $7.15. WTP for chicken breast and hamburger rose 4.2 per cent and 1.3 per cent , respectively, while WTP for pork chops, deli ham and chicken wings fell by 4.4 per cent , 6.7 per cent and 11.7 per cent , respectively.
  • Weekly at-hom food expenditures increased by 1.6 per cent in September to $93.33. Away-from-home expenditures fell by 1.6 per cent to $45.63 for the month. Consumers anticipated reductions in both at-home (-.5 per cent ) and away-from-home (-1.8 per cent ) expenditures over the two week period following the report. Both numbers are more positive (ie. not as negative) as they were in August.
  • One item of interest over time will be whether survey respondents’ actual behavior agrees with their expectations. In August, survey respondents said they would reduce at-home spending by 0.5 per cent  but they actually increased it by 1.6 per cent . They expected to reduce away-from-home spending by 0.5 per cent but cut it by 1.6 per cent .
  • 58 per cent of respondents plan to eat out more often in the coming month while 12.3 per cent plan to eat out less often.
  • More consumers expect higher meat and poultry prices this fall than expect lower prices. This again is interesting given the normal pattern for lower pork prices and the fact that chicken output is expanding. It suggests to us the consumers very likely derive expectations from recent experiences and, as we noted yesterday, the recent pattern is for all prices except turkey to go higher.
  • As was the case in August, consumers plan to buy more chicken and less beef and pork.
  • Salmonella, E. coli and GMOs were the top three topics of which consumers were aware in September but the ratings for all three were below 2.5 on a scale of 1= Heard nothing to 5 = Heard a great deal. Gestation crates, battery cages and BSE saw the largest increases in awareness ratings in September but all three topics remain rated less than 1.5 and rank as numbers 14 through 16 of 16 topics for which ratings were asked.
  • There were no big changes among consumer concern ratings in September. We found it interesting that Madcow and Pink Slime rate as much higher concerns to consumers than do BSE and Lean Finely Textured Beef. Madcow and BSE are the same thing and Pink Slime and Lean Finely Textured Beef are the same thing. People aren’t too concerned about the properly named items. Any question why the press uses the slanderous terms?
  • An ad hoc question revealed that 84 per cent of respondents have never even heard of Zilmax. Only 3.2 per cent knew it was a beta-agonist and only 5 per cent knew it was in the news due to animal health concerns. 6.8 per cent thought it was a growth hormone. We think this underscores something that many of us who are close to agriculture don’t realize: Most people don’t know anything about what is happening in agriculture, don’t look for such things and very likely don’t care. When a Zilmax or animal cruelty story breaks, we notice because we care and because it is our livelihood. Activists notice for the same reasons. The general public, even if it hears about the issue, yawns. Sometimes we grossly over-rate our importance in the everyday lives of consumers.



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