Project EXTENSITY

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Guaranteed Sustainability Label is it a way of
promoting sustainable agriculture?
Cristina Marta-Pedroso
Gonçalo M. Marques
Tiago Domingos
Environment and Energy Section, DEM, Instituto
Superior Técnico, Lisbon, Portugal
Project EXTENSITY
Environmental and Sustainability Management
Systems in Extensive Agriculture
www.extensity.ist.utl.pt
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Extensity Approach in promoting to Sustainable
Extensive Agriculture to Extensive
Norm of Guaranteed Sustainability
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Guaranteed Sustainability Label is it a way of
promoting sustainable agriculture? A consumers
preferences assessment for sustainability
labeled beef
Cristina Marta-Pedroso
Gonçalo M. Marques
Tiago Domingos
Environment and Energy Section, DEM, Instituto
Superior Técnico, Lisbon, Portugal
Project EXTENSITY
Environmental and Sustainability Management
Systems in Extensive Agriculture
www.extensity.ist.utl.pt
4
Outline

• Motivation and Objectives

• Method and Experimental design

• Results

• Conclusions

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Motivation and Objectives (1)

• The label is expected to convey consumers
  relevant information for their purchase decisions

• The label aimed to differentiate beef regarding

• Production process (environmentally friendly)

• Animal welfare (decrease of the confinement
  period)

• Health and food safety (rastreability)

• Independent control of quality

• Voluntary labelling mechanism

Compliance with the Guaranteed Sustainability Norm

• Farmers will adopt the label if it would become
  a mechanism that effectively facilitates farmers
  capturing the rewards of their superior
  performance in relation to the conventional
  production process.

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Motivation and Objectives (2)

• There is a general agreement on the increasing
  of consumers preference for green and safety
  agri-food products

• Only a few studies aimed at investigating the
  Portuguese consumers preferences for certified
  agri-food products have been carried out.

• Research on ascertaining the preferences of
  Portugueses consumers for such differentiated
  products is then needed.

Objectives

• Estimating the maximum WTP for SLB

• Obtaining a demand curve for SLB

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Method and Experimental Design (1)

• In the recognition of the importance of
  revealing consumer preferences for such
  differentiated products a contingent valuation
  survey was carried out across a sample of
  Portuguese consumers.

The contingent valuation survey

• Face to face interviews were used for
  administering contingent valuation questionnaire

• Only beef consumers were approached

• Interviews were carried out by a survey and
  opinion studies company at hypermarkets in the
  metropolitan area of Lisbon.

• Visual material was used as interview support.

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Method and Experimental Design (3)
WTP Elicitation Design
Visual Support
What is the maximum you would be willing to pay
for a kilo of Guaranteed Sustainability labeled
beef?
Yes
/kg
Are you willing to pay more for Guaranteed
Sustainability Labeled Beef than you pay for
conventional beef?
Description of SLB against conventional
Price offer
Share
Yes
1st Interaction with the good description
/kg
No
Visual Support
No
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Production systems
Guaranteed Sustainability Permanent Sown
biodiverse pastures rich in leguminous. More
productive Higher stocking rate
Conventional Temporary or permanent natural or
semi-natural pastures
Fattening (steers after weaned) occurs in
confinement (15 months). Diet is based on
concentrates.
Steers fattening occurs in direct grazing
supplemented by hay and silage
Environmental Impact
Greenhouse Gases Emissions 9.1 kgCO2eq/kg/meat
Sequester 0 kgCO2eq/kg/meat
Greenhouse Gases Emissions 9.1 kgCO2eq/kg/meat
Sequester 25.2 kgCO2eq/kg/meat
There is a deficit of about 400
kgCO2eq/inhabitant for 2010 in terms of
Portuguese compliance with the Kyoto Protocol
Soil erosion 7.2 kg solo/kg/meat/year
Soil erosion 12.8 kg solo/kg/meat/year
Soil formation is a very slowly process
(non-renewal resource)
Industrial fertilizers 75.3 kgN/kg meat
Industrial fertilizers 51.9 kgN/kg meat
Decrease of diffuse water pollution
Quality control and food safety
Self control
Independent certification bodies
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Production systems
Guaranteed Sustainability Permanent Sown
biodiverse pastures rich in leguminous. More
productive Higher stocking rate
Conventional Temporary or permanent natural or
semi-natural pastures
Fattening (steers after weaned) occurs in
confinement (15 months). Diet is based on
concentrates.
Steers fattening occurs in direct grazing
supplemented by hay and silage
Environmental Impact
Greenhouse Gases Emissions 9.1 kgCO2eq/kg/meat
Sequester 0 kgCO2eq/kg/meat
Greenhouse Gases Emissions 9.1 kgCO2eq/kg/meat
Sequester 25.2 kgCO2eq/kg/meat
There is a deficit of about 400
kgCO2eq/inhabitant for 2010 in terms of
Portuguese compliance with the Kyoto Protocol
Soil erosion 12.8 kg solo/kg/meat/year
Soil erosion 7.2 kg solo/kg/meat/year
Soil formation is a very slowly process
(non-renewal resource)
Industrial fertilizers 75.3 kgN/kg meat
Industrial fertilizers 51.9 kgN/kg meat
Decrease of diffuse water pollution
Bid vector 11-25
Quality control and food safety
Self control
Independent certification bodies
Given as baseline
Varied across subjects
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Experimental Design and methodological approach
(4)
Modelling Framework
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Experimental Design and methodological approach
(5)
Modelling Framework
What is the maximum you would be willing to pay
for a kilo of Guaranteed Sustainability labeled
beef?
Yes
/kg
Are you willing to pay more for Guaranteed
Sustainability Labeled Beef than you pay for
conventional beef?
Price offer
Yes
No
/kg
No
Logistic Regression
Log Linear Regression Anchoring correction
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Results (2)
Logistic Regression (Probability of WTP0)
Income 1, 2, 3, 4, 5
µ

-1.055
- 0.801
Variable
Predicted Probability
1- 385.91 - 771.82
0.258
2- 771.83 - 1,157.73
0.167
3- 1,157.74 - 1.543,64
0.126
4- 1,583.65 - 1,929.55
0.103
5- 1,929.56
0.088
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Results (3)
Log Linear Regression Anchoring correction
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Results (3)
Log Linear Regression Anchoring correction
Income 1, 2, 3, 4, 5
Children 1 / 0
CompImport 1, 2, 3, 4, 5
µ
11.983
?
0.371
1.123
- 0.676
0.224
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Results (4)
Demand Curve for sustainability labeled beef

• Empirical data
• Respondent i total monthly consumption of beef
• Consumption pattern of SLB (share, ? ? 0,1)

• Assumptions
• Respondent i total monthly consumption of beef
  is
• constant (Q)
• Respondent i total expense with beef is
  constant
• substitution takes place

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Results (5)
Demand Curve for sustainability labeled beef
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Results (6)
Demand Curve for sustainability labeled beef
In average, monthly household consumption of SLB
decreases 0.8 kg per 1 increment in its price.
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Conclusions

• Consumers are willing to pay an extra price
  premium ranging between 3 and 3.5 per kilo of
  SLB.

• In average, household consumption of SLB
  decreases 0.8 kg per 1 increment in its price.

• Regarding my initial broad question about
  whether guaranteed sustainability label beef is a
  way of promoting sustainable agriculture we
  concluded that there is demand and that the
  estimated WTP should be framed in farms financial
  analysis.