CONSUMER'S PERCEPTIONS OF ENVIRONMENTAL RISKS AND THE DEMAND FOR FOOD SAFETY

Public concern regarding food safety has emerged as a major policy issue. Chemicals and biotechnological processes are perceived as risks of food safety despite their contribution to an efficient, low cost agriculture and food industry. Increases in uses of biotechnological processes for foods are expected to be a major potential source of productivity improvements for Alberta and Canadian agriculture in future years. However, the demand for food safety involves increasing awareness and concern by consumers of chemical inputs and biotechnological processes in the agriculture and food industries. Nonetheless, there is a lack of basic economic and agricultural economic theory and methodology to analyze these issues and a need for policy, socioeconomics and marketing research on biotechnology and other environmental risk situations in the agricultural and food industry. This project was directed at developing and applying economic theory and methodology to help fill this gap. A major contribution of the project is the identification and verification of methodologies of stated choice to analyse tradeoffs arising from food safety perceptions of concerns by consumers. One component of the research project involved assessment of Alberta consumers' stated preferences and purchase behaviour for foods exhibiting a range of environmental risks, including perceptions of pesticide residues and hormonal treatments derived from biotechnological processes. The results of this survey indicated that Albertans were more concerned about pesticide use in food production than about the use of hormones. In contingent valuation questions developed for the study, more Albertans wish to restrict pesticide use (relative to a base case of not restricting either hormones or pesticides). They tended to persist in these choices in the face of potential increases in food costs, reflecting a higher level of concern with pesticides than hormones. Increasing education increased this concern. Increasing food cost decreased the probability of choosing to restrict pesticide or hormone use. Women appeared to perceive pesticide use in food production as a greater food safety risk than was perceived by men. The inferred average willingness to pay to restrict pesticide and growth hormone use in food production amounted to about 25% and 13% respectively of the average Albertan's food expenditures respectively. In the second survey of consumers' food/environmental risk perceptions undertaken relative to this project, the responses of a random sample of consumers to the use of recombinant bovine somatotrophin (rBST) in milk production were elicited using a stated preference methodology. A conditional logit model of consumer choice was developed and tested to analyse consumers' choices of milk with varying characteristics of fat content, price, freshness and rBST treatment. Awareness of rBST presence or otherwise is implied by labelling. The approach attempts to simulate market conditions with and without rBST labelled milk and to predict consumers' responses to variations in these conditions. Welfare calculations for a representative consumer indicate welfare losses with the introduction of rBST. These were slightly less for a male than a female household food purchaser and were less for food purchasers with higher levels of income and education. There was a small welfare gain when the representative food purchaser was offered a full range of "rBST" and "non-rBST" milks. The results suggest that making appropriately labelled "rBST-free" milk available to consumers could decrease consumer welfare losses associated with any introduction of rBST. The outcomes from application of these methodologies were related to the evidence of consumers' purchasing behaviour after licensing of the technology of rBST for use in the United States; this introduction did not require labelling. The assessment suggests a critical impact of product labelling policies and strategies on potential market impacts. An assessment is also made of Canada's food safety regulatory framework. The need for increased transparency and greater public participation in regulatory processes as means to increase public confidence in such food safety regulatory processes, specifically relating to biotechnology, is also identified.