Research roundup: Understanding our customers
Friday, April 12, 2019
By Hannah Thompson-Weeman, vice president of communications, Animal Agriculture Alliance
At the Animal Agriculture Alliance, we are always keeping an eye out for topics and trends that may impact consumer perceptions of our industry and farmers’ ability to do business. Understanding our customer’s motivations and values is critical to continuously evolve, innovate and meet their expectations. Surveys and other research projects are one way for us to keep a pulse on what’s happening now — and what could be coming down the line.
We’re hearing a lot about customers demanding certain production practices (cage-free eggs, slow-growing broilers, pork from pigs kept in group housing, “hormone-free” dairy). While we all question whether it is customers making those demands or activist groups, that is a topic for another time.
Regardless of who is asking for these products, food companies are listening and have adopted a variety of policies on animal welfare for their supply chain. I’ve often heard farmers say they will raise an animal in just about any way that a customer wants, as long as they are willing to pay for it. That raises the million-dollar question: Are customers willing to pay the necessary premium for many of the label claims we’re seeing?
Purdue University ag economist Jayson Lusk set out to answer this question last year, using cage-free eggs and slow-growing broilers as case studies. After a very strategic and well-funded campaign by activist groups, more than 225 food companies have adopted policies saying they will source only eggs from cage-free housing systems within the next five or 10 years. Currently, cage-free egg production is inherently more expensive than conventional due to increased costs and decreased efficiencies. The price difference between a dozen conventional and cage-free eggs is about $1. Will most customers pay that difference?
Dr. Lusk’s research says no, they won’t. The study found there is some potential for greater market share for cage-free eggs than currently observed but not a majority market share. Additionally, more than half of egg shoppers are price sensitive, showing willingness to pay less than 40 cents more per dozen for cage-free eggs.
It’s important to note that removing the option to buy the more affordable, conventionally produced eggs significantly increases the share of consumers not buying eggs at all (which I would contend was the goal of activist groups who pushed for these policies).
The study also looked at slow-growing broilers, a newer issue that hasn’t gained as much attention and most food companies haven’t yet taken a stance on. One of most interesting results of that portion of the study was a glimpse into just how little consumers know about modern broiler production (and most likely animal agriculture in general). Only 3 percent of respondents knew that broiler production is cage-free and only 12 percent knew that chickens in the U.S. are not given added growth hormones.
Both parts of the study also looked at the role of information in influencing consumer perspectives. Respondents for both the egg and broiler studies were shown information from different sources, some in support of moving to cage-free/slow-growing production and some in opposition.
In the broiler study in particular, information did make a difference in purchasing behavior. Willingness to pay more for chicken labeled “slow-growing” dropped after respondents were shown critical information (a resource from the National Chicken Council about sustainability trade-offs) and increased when they were shown supportive information (news articles quoting only activist groups).
This should be a wake-up call to all of us: We need to be more proactive in communicating about potentially sensitive issues. There is a lot of power in being the first to talk about something rather than being defensive and reacting to accusations.
While this study focused on the poultry industry, there are absolutely some key take-home messages for dairy.
- Activists will call for specialty production practices in dairy — we should be predicting what those may be and thinking about how the industry will respond.
- Food companies should not commit to pledges that will raise food costs, as most consumers are not interested in paying more, regardless of labels.
- Information does change minds — we need to amp up the volume of sharing images and stories from our farms so that we are the ones shaping consumer perspectives on dairy.
Groups like the Alliance, Edge Dairy Farmer Cooperative and Dairy Business Association are here to help put these takeaways into action to secure and enhance the future of dairy. I hope you’ll join us in sharing the story of nature’s most nearly perfect food.