Research Accomplishment Reports 2007

The Impact of Food Safety Scares on the Food Supply Chain in an Environment of Highly Integrated Monopolistically Competitive Agriculture

S.H. Saghaian
Department of Agricultural Economics

 

Project Description

Food safety events are the most challenging issues facing marketing channels of agricultural products today. Food safety is also identified as one of the specific priorities of the targets of opportunity of the College of Agriculture. A key question regarding consumer and producer behavior is how they react when faced with unexpected food safety shocks. Firm-level strategic decision making regarding product differentiation, health and wellness functions of food, and consumer responsiveness, in an environment of highly integrated monopolistically competitive agriculture and food industries is at the heart of this research proposal. Better understanding of consumer reactions to food safety scares helps the food industries construct strategies that can restore consumer confidence after safety crises.

Impact

Results are expected to help exporters and producer create credible quality assurance programs through more effective, transparent communication with consumers. Heightened visibility has created opportunities for branding, labeling, and product differentiation based on traceability and quality. Credence attribute labeling reduces information costs to consumers and results in increased demand for quality-assured products. Producers and retailers can use these results to further differentiate their products and perhaps earn higher premiums, as a strategic response to consumers' risk perceptions. Findings will also reinforce the need for food industry representatives to provide accurate information when a safety crisis arises. Results will show retailers another way to raise consumer confidence in the nation's supply chain by reducing erosion of demand and market share when safety crises do occur.