Earth-friendly pork: A niche market waiting to happen

Good news-and possibly a new market-await Iowa pork producers who have the know-how and inclination to produce pork in environmentally friendly ways.

Recently completed research funded by the Leopold Center suggests that one way to add value to pork production is to capitalize on meat produced in ways that benefit the environment. Work done by ISU economics professor James Kliebenstein and graduate student Sean Hurley suggest that consumers may be willing to pay nearly $1 more for a package of pork chops produced under a system that improves air, groundwater and surface water quality.

What's more encouraging is that participants in the willingness-to-pay research experiment came from diverse markets: Iowa Falls and Ames in Iowa; Raleigh, North Carolina, and Corvallis, Oregon. In each of these areas, 62 percent of the randomly selected participants would pay a premium for pork raised in a system that offered maximum environmental benefits. Those systems were described as operations with an 80 to 90 percent reduction in odor, and 40 to 50 percent reductions in potential groundwater and surface water contamination. The researchers surmise that "as the [pork] industry develops methods that help sustain or improve the environment, there is a segment of society that will support a market for such products."

Prior to developing their research methods, Kliebenstein and Hurley met with pork production groups, animal scientists and agricultural engineers to develop realistic scenarios of various pork production methods and their effects on the environment. The economists then conducted a conventional attitudinal survey and a sealed-bid auction process in which randomly selected consumers used real money and real products to determine their willingness to pay for goods. During four different rounds of bidding, the experiment participants began with no information other than the appearance of the packages, to increasing information about the various systems under which the pork loin chops were produced.

In the final round of bidding for the two-pound packages, bids ranged from $3.61 for a package with no environmental attributes connected to it, to $5.13 for the package with three environmental attributes. The study also found a steady increase in the premium participants were willing to pay as more attributes were attached, rising 12 to 16 percent for odor and groundwater benefits, to a 37 percent increase for the triple-attribute package. Single-attribute packages had a slightly higher average bid than the typical "no attribute" package.

Interestingly, more than 90 percent of the auction participants said they would buy a meat product that had environmental attributes specified on the label. This appears to mesh with recent research in the United Kingdom showing that there are premiums paid by consumers for "free range" pork. What's next for the economists' study? "We plan to conduct an in-store study to show actual consumer behavior in purchasing actual pork products with these environmental attributes," says Kliebenstein. "The limited number of in-store studies tend to show that premiums paid in in-store studies are about half as much as in auction experiments."

Regardless, the research shows promise for niche market development for producers who use environmentally friendly systems, and perhaps offers some incentive for Iowa pork producers to adopt such systems.

Further information about the research is available by contacting Kliebenstein at jklieben@iastate.edu, phone (515) 294-7111, or Hurley at shurley@iastate.edu, phone (515) 294-8891.