Consumers’ Demand on Food
Safety and Quality in Chinese
Market and its Trade Implications
Holly Wang
Department of Agricultural Economics
IAMO Annual Conference
Halle, Germany, June 25, 2014
Chinese Agricultural Trade
• Chinese agricultural import is growing steadily, including
soybeans, cotton, edible oil, rubber, wood, and wool
• Its export grows slowly, including plywood, fruits, fish,
shrimp, vegetables, and prepared chicken
Chinese Agricultural Trade
• Major importing sources: US, Brazil, Thailand, Australia,
Canada, Indonesia, and Malaysia.
• Major exporting markets: Japan, US, South Korea
Russia
Food Security and Food Demand
•
•
•
•
•
Slow yet large increasing population, >8M/Y
Economic Growth and Dietary Transition
Land and water scarcity on supply side
Urbanization
National food security policy
– Targeting grain 90% self sufficiency, food grain near
100%.
– 2013 600MMT, 97% self sufficiency for rice and
wheat
– 2013 60MMT soy import, 1.5MMT other grain import
• Increasing import in oil seeds, feed, and fiber
Media Reports on Food Safety
April 2011
Tainted Pork Scandal In
China.… ingested the
same steroid,
clenbuterol, which
purportedly eliminates fat
and grows muscle
BBC NEWS
C
April 2012
CCTV exposed the alleged use
of leather waste-products to
make gelatin, .. Capsules for
medicine
April 2011
Three children have
died .. from drinking
nitrite-tainted milk in
Gansu Province
Food Safety in China
Mother morning loss of son
Farmer dumping milk
Premier Wen with media
Milk inspection
Food Safety in China
• National and global awareness
• Sources of food safety problems:
– Fragmented food sector with a large
number of small producers
– Rapid growth
– Loose regulation
– Standards and certification system
– Asymmetric information
• Same as in 19th century of Britain
and 20th century of the US
Willingness to Pay Empirics
• Milk, pork, shrimp, duck
• 2009-2014
• Multiple projects
• Surveys to consumers, restaurant managers
and producers
• Choice experiment and Lancaster utility
• Focused on food safety and country mark
Data
Product
Pork
Milk
Duck
Duck
Shrimp
Subjects
CH
Shopper
CH
Shopper
CH Rest.
Customer
CH Rest.
Manager
US
CH
consumer farmer
Cities
Beijing
Beijing
Beijing
Beijing
Shanghai Shanghai
Shanghai
Shanghai
Chengdu
Chengdu
Chengdu
Chengdu
HuhHot
HuhHot
Guangzhou
Guangzhou
Nanjing
Nanjing
Guangx
i
Wuhan
Wuhan
Fujian
Xi’an
Xi’an
Year
2009
2009
2013
2013
2011
2011
size
420
420
505
102
670
138
# choices/p
16
16
9
9
10
9
National,
internet
Shrimp
Guangdong
Sample Choice Set
• Attributes: price, food safety certification,
brand, country of origin, certifying agent,
traceability, shelf life, antibiotic use, ecofriendly practice, etc.
Attribute
Price
Option A
Price level 1
Option B
Price level 2
Certified for
Food Safety No special claim higher standard
With this
attribute
Without
Attribute 2
Without
Without
Attribute 3
Country 1
Country 2
Country
Check one only ___________
___________
Option C
Not to buy
either
______
Theoretical Framework
U ni  Vni   ni
Vni   ' xni
Econometric Modeling
  price   optout    attribute
K
Vni
p
ni
o
ni
k 1
k
k ,ni
• Random parameters (mixed) logit
– The coefficient, βs, are random, except for
price
– Continuous heterogeneity
exp(Vni )
Pni  
f (  )d
 j exp(Vnj )
• Willingness-to-pay
WTPk = - 2 MUk / MUp= - 2 βk / βp
WTP Results
Pork
Milk
Duck
Duck
Shrimp
Subject
CH
Shopper
CH
Shopper
CH Rest.
Custome
r
CH Rest.
Manager
US
CH
consumer farmer
Ave Price
10
1.75
70
16
10
Gov Cert
10.6
3.55
94.3
17.3
Traceab.
5.9
3rd P. Cert
6.9
Brand
Mkt avg
2.5%
1.69
2.03
Shrimp
4%
61.6
8.4
EU
-17
-27
US
-30
-23
AnBio free
3.2%
FS US
10.1
FS CH
2.3
FS TH
3.4
currency
$
Results
• Chinese consumers are willing to pay for food
safety enhanced products, such as
–
–
–
–
government certified products
3rd party certified products
branded products
traceable products
• They prefer domestic food for their tastes
• American consumers are hesitant for food
imported from China
• Chinese producers are willing to produce
safer products if markets can pay them more
Implications
• Chinese consumers are very concerned
about domestic food safety problems for
animal based food
• They agree food from developed countries
are safer, but are skeptical about imported
fresh food such as chilled meat and
poultry
• There exist opportunities for 3rd party
certifiers
Implications
• Keep importing commodities for processing
– Feed, oilseed, fiber
– Food safety attributes (eg GMO)
• High end food product import
– Powered infant formula, cheese, salmon, beef
– Brand, food service sector
• Non-traditional traders: internet sellers
– Aliexpress
– Shopping
• Exporting value added products
– Processed chicken, processed salmon, aquaculture
– Safety production process
Internet Shopping Service
References
•
•
•
•
•
•
Meador and Wu, “China Agricultural Trade Report in 2012”, USDA FAS
GAIN Report 2013.
Ortega, Wang and Widmar, “Aquaculture Imports from Asia: An Analysis of
U.S. Consumer Demand for Food Safety, Quality and Environmental
Attributes,” Agricultural Economics, 45(2014).
Ortega, Wang, Olynk, Bai, and Wu. “Chinese Consumers Demand for Food
Safety Attributes: A Push for Government and Industrial Regulations.”
American Journal of Agricultural Economics, 94 (2) (2012): 489-495.
Ortega, Wang, Widmar, and Wu. “Chinese Producer Behavior: Aquaculture
Farmers in Southern China.” China Economic Review, 28(2014): 17-24.
Ortega, Brown, Waldron, and Wang. “Agricultural Marketing and Food
Safety in China: A Utility Perspective.” Journal of Agribusiness in
Developing and Emerging Economies, 4(1) (2014):23-31.
Wang, Zhang, Ortega, Widmar. “Information on Food Safety, Consumer
Preference and Behavior: The Case of Seafood in the US.” Food Control,
33(1) (2013):293-300.