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Impact of Hormone Use Perception on Consumer Meat Preference PDF

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The Impact of Hormone Use Perception on Consumer Meat Preference
Ruoye Yang

Ph.D. Student

Department of Agricultural Economics

Oklahoma State University

522 Agricultural Hall

Stillwater, OK 74078

Email:
Ruoye.yang@okstate.edu
Kellie Curry Raper

Associate Professor

Department of Agricultural Economics

Oklahoma State University

514 Agricultural Hall

Stillwater, OK 74078

Email:
kellie.raper@okstate.edu
Jayson L. Lusk

Professor

Department of Agricultural Economics

Oklahoma State University

411 Agricultural Hall

Stillwater, OK 74078

Email:
jayson.lusk@okstate.edu
Selected Paperprepared for presentation at the Southern Agricultural Economics Association
Annual Meeting, Mobile, AL, February 4-7, 2017

Copyright 2017 by Ruoye Yang, Kellie Curry Raper, and Jayson L. Lusk. All rights reserved. Readers may
make verbatim copies of this document for non-commercial purposes by any means, provided that this
copyright notice appears on all such copies.
Abstract
Consumers see retail beef products labeled as produced with no added hormones (NAH),
but also see similar labels on pork and chicken products on market shelves despite the fact that
added hormones are not used in production. This may mislead consumers to think hormones are
used in meat production as a whole. This research examines the impact of hormone use
perception on consumer preference for meat products. Specifically, we assess consumer
perception of hormone use in different livestock species as compared to actual use in production.
We then assess whether hormone use perception affects consumer choice for unlabeled meat
products. Finally, we identify whether consumer perception of hormone use affects willingness
to pay (WTP) premiums for meat products labeled as produced with NAH. Choice experiment
data was collected using Oklahoma State University monthly Food Demand Survey. Results
indicate that consumers underestimate the rate of hormone use in cattle production, but
overestimate the rate of hormone use in pork and chicken production. Results from a conditional
logit model suggest that consumer perception of hormone use can affect food preferences for
unlabeled meat products. Using a Tobit model, we also found WTP premiums for the NAH label
are affected by consumer perception of hormone use and by demographic characteristics.
Impact of Hormone Use Perception on Consumer Meat Preference
Introduction

Hormone use in meat production has received much recent attention from media,
consumer groups and other sources. Hormones act as growth promotants in animals for improved
weight gain and feed efficiency before slaughter in meat industries. It is estimated that more than
90 percent of all U.S. feedlot cattle are injected with hormones to improve growth rates (USDA,
2013). Six different kinds of steroid hormones are currently approved by Food and Drug
Administration (FDA) for use in beef production: estradiol, progesterone, testosterone, zeranol,
trenbolone acetate, and melengestrol acetate (FDA 2015). Currently, federal regulations do not
allow these or other hormones to be used in poultry (chickens, turkeys, ducks) or hog production
(USDA, 2015). FDA does allow the use of recombinant bovine growth hormone (rbGH) to
increase milk production in dairy cattle, but it is not used in beef cattle (FDA 2015). Though
hormone use is prohibited by federal regulations in poultry and swine production, other growth
promotants are used in production. In swine production, beta-agonists (e.g. Ractopamine) are
widely used to enhance lean muscle gain and feed conversion by stimulating receptors on cell
surfaces and promoting proteins synthesis in muscle tissue. Beta-agonists work at a cellular level
without affecting the hormone levels of the animal (American Meat Science Association, 2015).
Beta-agonists, such as Ractopamine and Zilpaterol, are also used in 60% to 80% of feedlot cattle
in the U.S. (Penn State Extension, 2016). Controversy has been raised on the impact of beta-
agonists on animal welfare and export issues (Agweb, 2013).

Consumers, however, may think differently about the prevalence of hormone use in
livestock production. Given the prevalence of news and information about hormone use,
consumers may perceive that prevalence of hormone use in the meat industry as a whole is very
high. Research indicates that hormone use in cattle does not pose a risk to human beings or the
environment and its use is approved by FDA (Capper and Hayes, 2015; Cattle network, 2012;
FDA, 2015). Still, consumer concerns exist regarding hormone use, including potential health
risks (Organic Consumers Association, 2007; Health, 2016).

Consumer concern about the safety of hormone use in livestock production is relatively
high. A study conducted by the Food Marketing Institute (1995) found that 50% of consumers
said hormones were a serious hazard. Lusk, Fox, and McIlvain (1999) found that consumer
concern about animal growth enhancers, including hormones, was higher than concern for
additives, preservatives, and antibiotic use, but lower than concern for bacteria, spoilage, and
chemicals. Moreover, research shows that consumers do not always equally believe the
information on probabilities presented in advertisements, experiments or surveys (Hayes et al.,
1995). Teisl and Roe (2010) showthat people’s perceptions of the likelihood of getting sick from
food-borne illness can differ from the probabilities of food contamination in reality. Similarly,
consumer perception of hormone use for different livestock species may differ from reality.
Introduction of food labels can also create uncertainty and influence beliefs about the quality of
unlabeled products (Dannenberg, Scatasta and Strum, 2011). Consumers see beef products
labeled as produced with no added hormones (NAH), but also see similar labels on pork and
poultry products on market shelves despite the fact that added hormones are not used in
production. This may mislead consumers to think hormones are used in pork and poultry
production. What are consumer perceptions of hormone use in production of beef, pork and
poultry? Does consumer perception of hormone use affect demand for beef, pork or chicken?
Are consumers willing to pay more for meat products labeled as produced with NAH over those
without the label?
Knowledge of consumer perception of hormone use across different livestock species
increases our understanding of purchase decisions for various meat products. Consumer beliefs
affect choice, thus measuring consumer beliefs in studies of consumer choice is needed (Lusk,
Schroeder and Tonsor, 2014). Lusk, Schroeder and Tonsor (2014) suggest willingness to pay
(WTP) can be estimated more precisely by distinguishing beliefs from preferences in food
choice. WTP estimates for meat products may be improved by considering consumer perception
of hormone use for different livestock species. In addition, econometric approaches that do not
account for differences in beliefs across people may yield misleading estimates of welfare
changes (Marette, Roe and Teisl, 2012). The inclusion of consumer perceptions of hormone use
in livestock production could improve measures of the welfare implications of meat product
labeling.

Economists have conducted many studies about the impact of hormone use on beef
demand. For example, Lusk, Roosen and Fox (2003) compared consumer valuations of beef
ribeye steaks from cattle produced with and without growth hormones or genetically modified
corn in France, Germany, the United Kingdom, and the United States. They found that French
consumers place a higher value on beef from cattle that have not been administered added
growth hormones than U.S. consumers. Platter, et al. (2003) reported that consumer ratings of
beef palatability are affected by the use of hormonal implants on cattle. They found that steaks
from non-implanted steers were rated as more desirable for overall eating quality than steaks
from implanted steers. Capper and Hayes (2015) quantified the environmental and economic
impact of withdrawing growth-enhancing technologies (GET), including hormone implants,
from the U.S. beef production system. They concluded that withdrawing GET from U.S. beef
production would reduce both the economic and environmental sustainability of the industry.
However, there is no study examining the accuracy of consumer perceptions regarding the
prevalence of hormone use in cattle, hogs and chicken production. In addition, studies regarding
consumer preference for NAH products have been limited to beef, since hormones are not used
in pork or chicken production. However, if consumer perception of hormone use differs from
reality, WTP for pork or chicken products labeled as produced with NAH may be impacted.

Many studies elicit consumer WTP for various beef products and for health and
environmental outcomes (Adamowicz, 2004; Dannenberg, 2009; Grunert et al., 2009; Lagerkvist
and Hess, 2011). However, this large body of applied work often does not explicitly separate
WTP estimates into consumer beliefs and preferences for product attributes. Most WTP studies
are constructed such that attributes are assumed to be known with certainty and beliefs across
people are the same. However, Lusk, Schroeder and Tonsor (2014) showed that controlling for
subjective beliefs can substantively alter the interpretation of WTP and the ultimate implications
derived.

Economists often estimate WTP for certain attributes. WTP may be closely related to
consumer beliefs about the attributes and their own demographic and socio-economic
characteristics. Lusk (2011) estimated the linear effects of demographics and consumer food
values on relative preferences for organic food using choice experiment data. His result indicated
that the model including relative price changes, consumer food values and demographic
variables is the most preferred specification as compared to models without demographics by
likelihood ratio tests and comparisons of the AIC values.

The purpose of this paper is to identify the impact of hormone use perception on
consumer preference for meat products. Specifically, we assess consumer perception of hormone
use in different livestock species, as compared to actual use in production. We then assess
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