The United States Department of Agriculture has awarded a $477,131 grant to researchers from ASU and the University of Tennessee to study foreign consumer preferences and demand for U.S. beef.
The project's goal is to help determine the demand that exists in countries within Europe, Asia, and Latin America to bolster the beef export market. It will allow the researchers to predict what foreign consumers prefer in terms of production practices to enhance exporter profits in the U.S.
"We want to make sure farmers know exactly what their customers in these foreign countries want so they can serve their product to more consumers and make more money," said Karen DeLong, co-director of the project and associate professor in the Department of Agricultural and Resource Economics at the University of Tennessee.
The grant will be split between the two universities, and most of it will be used to fund graduate students from both schools. The remaining money will be spent surveying the outside countries.
“Our grant is going to pay for that Ph.D. or Master’s student to pursue their degrees and give them free education in a sense,” said DeLong. “They get free tuition, a stipend to live on and health benefits.”
The project will focus on surveying to find consumer preferences and import demand modeling with data.
Associate Professor of food industry management Carola Grebitus from the Morrison School of Agribusiness at ASU is the principal investigator of the project. She is responsible for surveying consumers in the target countries to predict what products they will purchase.
Grebitus will be developing survey instruments for the U.K., Germany, China, Mexico and Japan with a doctorate student. They will also utilize online questionnaires to interview roughly 500 consumers from each country.
“We will show them different samples of beef products that are characterized with use of growth hormones or labels such as country of origin,” said Grebitus. “That way we can test how much foreign consumers are willing to pay for U.S. beef.”
The survey also evaluates attitudes and consumer characteristics to help producers tailor their marketing strategies to global consumers.
The demand modeling portion of the project is being carried out by co-director Andrew Muhammad, professor and Blasingame Chair of Excellence in Agricultural Policy at the University of Tennessee.
"I assess how U.S. beef competes with beef from all these other countries within a particular destination market," said Muhammad. "When I say import demand, I mean from the point of view of an importing country that has a demand for a particular product from all countries that produce it around the world."
Demand modeling is based on international trade data that countries report based on a categorization system. The amount imported monthly allows the researchers to determine the demand for the beef.
“I determine how quick a German buyer, for example, will be willing to substitute U.S. beef for a competitor that raised its prices in a cross-price effect,” said Muhammad. “I also look at habit formation, meaning I question if past behavior leads to future consumption.”
The researchers are focusing on markets where the U.S. is either already exporting or attempting to export beef. They must approach the project with an importing country's perspective to better understand its values and reactions to price changes.
“If you have a small change in the price of U.S. beef relative to the price of any other country, you start seeing changes in how (consumers) allocate their purchases,” said Muhammad.
The beef industry is the largest single sector in agriculture, fueling the U.S. economy and making it a valuable sector to study for global trade.
“The United States is one of the largest beef exporters in the world and its exports were valued at $8.3 billion in 2018 and exports account for 15% of total beef production,” said DeLong.
Demand for beef in foreign countries is also valuable to analyze because it is very inconsistent, often fluctuating depending on various factors. According to DeLong, lower incomes due to job losses from COVID-19, cultural differences, seasonality trends and trade disputes all affect the demand for U.S. beef at a given time.
Despite the weight of their work, the researchers are very optimistic about their project as the industry trends upwards, and the potential is evident.
“We’re really delighted about this project and excited to see where our research takes us,” said Grebitus.
Reach the reporter at amley@asu.edu and follow @MartyLey_ on Twitter.
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October 16, 2020 at 09:12AM
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USDA grant awarded to ASU agribusiness professor to bolster beef export industry - The State Press
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