Consumers willing to pay more for rBGH-free milk- study
Montana State University study reveals that diary companies increased sales after labeling their product as rBGH-free, as people were even willing to pay more.
27/05/05 When dairy companies voluntarily labeled milk as having no added bovine growth hormone, they increased sales and increased the price people were willing to pay for their product, a Montana State University master's study reports.
The work is thought to provide the first estimates of the impact of voluntary labeling related to biotechnology issues on retail purchases of a food using regional and national sales data. The question for ag producers is whether voluntary labeling has particular value when highlighting a comparison to biotech products, says MSU Economist Dave Buschena.
Former MSU student Kristin Kiesel and MSU economists Buschena and Vincent Smith published a study based on Kiesel's master's thesis in the May edition of the "American Journal of Agricultural Economics." Buschena was Kiesel's adviser at MSU. She is now studying for her doctorate at the University of California at Berkeley.
Genetically engineered bovine growth hormone, or rBGH, has been called the first major biotech product for food production approved by the FDA. Critics claimed that injecting dairy cows with the engineered hormone led to a human health hazard due to possible increased antibiotic use in those cows and increased presence of Insulin-Like Growth Factor-1 in the resulting milk, despite the lack of scientific evidence for their claims. Because of the claims, some dairy companies began to voluntarily label their milk as having been produced without rBGH.
Kiesel said she was able to use data gathered whenever grocery shoppers had products scanned by a laser-reader at check out. The store gathers information about the purchases based on a product's computer code, which is called its uniform product codes or UPC. Stores frequently make that data available to outside firms. Recently, researchers have also been able to use this data.
Buschena emphasized the importance of the study to milk producers and milk processors. "Voluntary labels in this case were effective in increasing prices that consumers are willing to pay in stores."
Kiesel is extending her concept into a doctoral thesis that looks at both labeling of organic products and household demographics of the people who buy those products. Kiesel's new focus includes the new national organic standards and changes in labeling requirements.
