2015 ICABRRavello, Italy

Consumers’ Willingness to Pay for Low Acrylamide Potato Products With Information

Effects

Wallace E. Huffman and Jonathan McFaddenDepartment of Economics

Iowa State Universitywhuffman@iastate.edu

We thank the J.R. Simplot Company for financial resources, experimental products and technical assistance. We also thank the U. of Wis. for financial resources from a USDA-NIFA specialty crop grant.

I. IntroductionPotatoes are the leading vegetable crop in the U.S., contributing about 15% of farm sales receipts for vegetables Over 50% of potato sales (65% of potato use) are to processors for French fries, chips and other processed potato products, with the balance going into the fresh market

Acrylamide is a small organic compound known to be a neurotoxin and carcinogen In 2002, it was first identified in cooked foods, esp. rich in carbohydrates It is a by-product of the Maillard reaction of amino acids (e.g., asparagine) and reducing sugars that are formed under high temperature cooking (above 250o F) The Maillard reaction produces the dark-colored pigments on potato chips, fries and hash browns, but also on cookies, breads, and roasted coffee beans and peanuts Under Proposition 65, California requires restaurants to post a warning that “cooked potatoes that have been browned, such as French fries, hash browns and baked potatoes,

contain acrylamide, a chemical known to the State of California to cause cancer.”

The USDA-University of Wis. project has undertaken research to lower acrylamide in potato products and improve the quality of processed products My research examines consumers’ willingness to pay for potato products that have low acrylamide producing potential using biotechnology under different food labels and information treatments The J.R. Simplot Company provided us with experimental low acrylamide potato products for display in our lab experiments so as to have “truth in labeling,” the Innate TM potato,

but at the end of the experiments all subjects were told that only conventional products are available today.

This presentation focuses on an early analysis of data collected from participants in a set of food experiments—experimental auctions of potatoes, fries and chips—conducted in spring 2014 in the Des Moines, IA, Los Angeles, and Boston areas.

II. Recruitment of participants for our experiments: Survey and Behavioral Research Services, ISU, developed a protocol for recruiting participants 18-64 years of age who could follow directions in English Des Moines area participants: SBRS started with a landline list of phone numbers -Eligible individuals were told that an Iowa State University Research project was recruiting individuals to participate in a project collecting

information on consumer assessment of food products on April12 -They would be paid $65 for about 90 minutes of their time -Willing participants could choose among available starting times: 9:00am, 11:00am, 1:30pm (and 3:30pm) -They received a confirmation letter with location of the lab site and

directions Los Angeles area participants: We worked with Focus & Testing for April 26th Boston area participants: We worked with Answer Quest for May 17th

III. Key features of the experiments

Activities of Participants: Flow Diagram

Random n-th price auction:1) View the product(s): Before we ask you to bid on the product(s), we will ask you to come to

the front of the room and view the product(s).2) Write down your bid for the product(s) :After returning to your seat, we ask you to write down your bid for the product(s) on your “bid sheet(s).” Completed bid sheets will be collected by the session monitor or an assistant.3) Choosing the binding round: Once bids have been submitted for all rounds, we will randomly select one round to be the binding round, i.e., the round of bidding from which the winner(s) will be selected.4) Choosing the random price: For the binding round, we will rank the bids for each product from highest to lowest. Next, we will choose a random number larger than 1 but not larger than the total number of participants. This random number determines the rank of the bid that becomes the “random price.”5) Determining who wins the auction for each good: Everybody who bids strictly higher than the random price will be a winner of the product(s) but will pay the random price, and not the price that she or he bids. No winner(s) will buy more than one unit of each product, though the winner(s) could win different product(s).

Figure 2

Food Labels: Conventional

Food Labels: Low acrylamide

Figure 3

Figure 4

Information Statements and Treatments – NIFA ExperimentsInformation Statements/Perspectives (each limited to 1, 8.5”x11” sheet of paper)1) An industry perspective on low acrylamide potatoes using biotechnology

-General Statement -Nutrition and Health

-Environmental Impacts and Food Security2) A scientific perspective on acrylamide exposure -General Statement

-Nutrition and Health-Environmental Impacts and Food Security

3) An environmental group perspective on biotechnology-General Statement-Nutrition and Health-Environmental Impacts and Food Security

Information Treatments (Order effects were insignificant)4) An industry perspective only2) A scientific perspective only3) An environmental group perspective only4) An industry perspective & a scientific perspective5) An industry perspective & environmental group perspective 6) A scientific perspective & environmental group perspective

IV. Summary Statistics and Results

Table 1. Summary Statistics WTP Differences: NIFA Sample

Table 2. Regression Analysis of WTP Differences: 5 lbs. potatoes (N=300)

Table 3. Regression Analysis of WTP Differences: 2 lbs. Frozen Fries (N=300)

Table 4. Regression Analysis of WTP Differences: 12 ozs. Chips (N=300)

V. Some Conclusions Low acrylamide biotech potatoes are the first example of the application of biotechnology to significantly improve the food safety of foods commonly consumed in the US. Consumers are willing to pay more for food safety, even when delivered through biotechnology i) Willingness to pay for biotech fresh potatoes, chips, and frozen fries increases by the largest amount when subject get the “Scientific Perspective” (on acrylamide) and only slightly smaller increases occur when both the “Scientific Perspective” & “Industry Perspective” (on using biotech to reduce acrylamide levels) relative to “Environmental Group Perspective.”

ii) Willingness to pay for biotech fresh potatoes, chips, and frozen fries increases significantly but by a smaller amount when the subjects the “Industry Perspective;” “Industry Perspective” & “Environmental Group Perspective;” and “Scientific Perspective” & “Environmental Group Perspective” are disseminated to participants relative to the “Environmental Group Perspective.”

iii) Our results suggest that information on food labels and in packaged form may be quite important for affecting consumers’ acceptance of biotech low acrylamide potato products

Table 2. Regression Analysis of WTP Differences: 5 lbs. potatoes (N=300)

Table 4. Regression Analysis of WTP Differences: 2 lbs. Frozen Fries (N=300)

Table 3. Regression Analysis of WTP Differences: 12 ozs. Chips (N=300)