Who Can Chinese Consumers Trust for Safe Food?

David L. Ortega, H. Holly Wang,
Laping Wu, Nicole J. Olynk

Department of Agricultural Economics, Purdue University

Abstract:
Food safety issues often arise from problems of asymmetric information between consumers and suppliers of food with regards to product-specific attributes or characteristics. Severe food safety scandals were observed recently in Chinese market that not only caused directs economic and life loss but also created a distrust in the food system and may threaten food security. The challenge of the asymmetric information problem lies in the inherent structure of the governing bodies which oversee food safety and quality. Unlike the United States and other developed countries, China’s food safety is regulated by several government entities with different and sometimes overlapping responsibilities. As a result, consumers don’t have a comprehensive food safety and quality system to rely on when making their consumption decisions. In an effort to maintain the food supply of the world’s largest economy safe, the Chinese government has approved a series of tougher food safety laws and regulations. Although publicized as a tough approach to food safety, it is unclear whether this latest effort will make China’s food safer and improve the country’s image to its agricultural trading partners. While much attention has focused on the problems plaguing China’s food inspection system, little research has been dedicated to analyze consumers’ concerns over food safety. In this paper we measure consumer preferences for select food safety attributes in pork. More specifically we estimate consumer’s willingness to pay for a traceability system, an independent (third party) certification program and a product-specific information system within the pork supply chain using a choice experiment approach. We compare and contrast several modeling strategies to capture heterogeneity of consumer preferences. The data used in this study was collected from a choice experiment administered in seven major metropolitan cities in China, yielding a statistical sample of 6,720 observations. Our results suggest a high degree of substitutability between the selected food safeties attributes and show that Chinese consumers have the highest willingness-to-pay for a government certification program, followed by a traceability system, third party certification and a product-specific information system. Heterogeneity of consumer preferences and willingness to pay for the select food safety attributes was found by implementing a latent class logit model based on attitudinal responses as well as a mixed logit model. Policy implications of the model results are discussed with particular attention given to food security issues.

Keywords: Food safety, choice experiment, willingness to pay, preference heterogeneity, random parameters logit, latent class logit.