Project EXTENSITY Environmental and Sustainability Management Systems in Extensive Agriculture...

Project EXTENSITY

www.extensity.ist.utl.pt

Environmental and Sustainability Management Systems in Extensive Agriculture

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

Biodiversity

Soil organic matter increase

Carbon sequestration

Water retention

increasing

Erosion decreasing

Flooding regulation

Economic viability

increasing

Decrease of Greenhouse gas

emission

Commercial fertilizers

use decrease

Sown biodiverse permanent pasture rich in leguminous

Productivity increase

Stocking rate increase

Extensity Approach in promoting to Sustainable

Extensive Agriculture to Extensive

Norm of Guaranteed Sustainability

Project EXTENSITY

www.extensity.ist.utl.pt

Environmental and Sustainability Management Systems in Extensive Agriculture

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

Outline

Motivation and Objectives

Method and Experimental design

Results

Conclusions

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

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.

Motivation and Objectives (1)

Voluntary labelling mechanism

Compliance with the Guaranteed Sustainability Norm

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

Motivation and Objectives (2)

Research on ascertaining the preferences of Portuguese’s consumers for such differentiated products is then needed.

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

Estimating the maximum WTP for SLB

Objectives

Obtaining a demand curve for SLB

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;

Visual material was used as interview support.

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

Only beef consumers were approached;

Are you willing to

pay more for

Guaranteed

Sustainability

Labeled Beef than

you pay for

conventional

beef?

Yes

No

Price

offer

Yes

No

What is the

maximum

you would

be willing to

pay for a

kilo of

Guaranteed

Sustainabilit

y labeled

beef?

€/kg

€/kg

Description of SLB against

conventional

1st Interaction

with the

good description

Visual Support

Visual Support

WTP Elicitation Design

Method and Experimental Design (3)

Share

Comparação entre modos de produção

Convencional

Pastagens naturais ou semi-naturais de carácter temporário ou permanente

A engorda dos novilhos é feita em confinamento (15 meses) e à base de rações compostas por

concentrados de alimento produzidos industrialmente

Sustentabilidade Garantida Pastagens semeadas permanentes e biodiversas ricas em leguminosas, mais produtivas o que permite um maior encabeçamento e evita a invasão por matos.

A engorda dos novilhos é feita

predominantemente em regime de pastoreio directo suplementada com forragens produzidas

localmente. O período de confinamento dos novilhos, se aplicado, não pode exceder os 3 meses

I mpactos ambientais Gases com efeito de estufa Emissões: 9,1 KgCO2eq/kg carne/ano Sequestro: 0 KgCO2eq/kg carne/ano

Gases com efeito de estufa Emissões: 10,1 KgCO2eq/kg carne/ano Sequestro: 25,2 KgCO2eq/kg carne/ano

Existe um déficit previsto para 2010 de cerca de 400 kgCO2eq/ habitante, no que diz respeito ao

cumprimento por Portugal das obrigações impostas pelo Protocolo de Quioto.

Erosão do solo

12,8 kg solo/kg carne/ano

Erosão do solo


A formação do solo é um processo muito lento sendo por isso este considerado um recurso finito e não

renovável

Uso de fertilizantes azotados

75,3 kgN/kg carne


51,9 kgN/kg carne

Redução das fontes causadoras da diminuição da qualidade da água

Controlo de qualidade e segurança alimentar Autocontrolo

Certificado por entidades independentes


Convencional












Erosão do solo


Erosão do solo



renovável


75,3 kgN/kg carne


51,9 kgN/kg carne




Conventional

Temporary or permanent natural or semi-natural pastures

Production systems

Guaranteed Sustainability

Permanent Sown biodiverse pastures rich in leguminous.

More productiveHigher stocking rate

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 ImpactGreenhouse 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 erosion12.8 kg solo/kg/meat/year


Soil formation is a very slowly process (non-renewal resource)

Industrial fertilizers75.3 kgN/kg meat


Decrease of diffuse water pollution

Quality control and food safetyIndependent

certification bodiesSelf control


Convencional












Erosão do solo


Erosão do solo



renovável


75,3 kgN/kg carne


51,9 kgN/kg carne





Convencional












Erosão do solo


Erosão do solo



renovável


75,3 kgN/kg carne


51,9 kgN/kg carne




Conventional

Temporary or permanent natural or semi-natural pastures

Production systems

Guaranteed Sustainability

Permanent Sown biodiverse pastures rich in leguminous.

More productiveHigher stocking rate

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 ImpactGreenhouse 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 formation is a very slowly process (non-renewal resource)



Decrease of diffuse water pollution

Quality control and food safetyIndependent

certification bodiesSelf control

Given

as

baseline1210 Varied

across subjects

Bid vector: 11-25 €

Modelling Framework

0, w<0

P(WTP<w)= p, w=0

p+(1- p)F(w), w>0

1

1

1 1 0

(1 ) ( ) (1 ) ( )i

i i i

i

n n

i ii i w

p p f W p p f W

1

1

(1 )i i

n

i

p p

0

( )i

iw

f W

Experimental Design and methodological approach (4)

Are you willing to

pay more for

Guaranteed

Sustainability

Labeled Beef than

you pay for

conventional

beef?

Yes

No

Price

offer

Yes

No

What is the

maximum you

would be

willing to pay

for a kilo of

Guaranteed

Sustainability

labeled beef?

€/kg

€/kg

1

exp( );

1 exp( )

ini p

i pi i p

XL

X

1

22

1

11; , ,

1 1

i iI IN

i i F i i Fi F

i

W X b XL W

Logistic RegressionLog Linear Regression Anchoring correction

Modelling Framework

Experimental Design and methodological approach (5)

Results (2)

Income = 1, 2, 3, 4, 5

1- [385.91 - 771.82]

2- [771.83 - 1,157.73]

3- [1,157.74 - 1.543,64]

4- [1,583.65 - 1,929.55]

5- [≥ 1,929.56]

μ

-1.055

- 0.801

Variable Predicted Probability

0.258

0.167

0.126

0.103

0.088

exp( log )( 0)

1 exp( log )i

ii

IncomeP WTP

Income

Logistic Regression (Probability of WTP=0)

Results (3)

Without anchoring With anchoring

p-value p-value

13.56260709 0 ** 11.9832191 0 **

2.15012219 - 3.1253616 -

0 - 0.3713805 0 **

Log(Income) 0.78938883 0.00037 ** 1.1234402 0.00051 **

Children -0.24550912 0.293 -0.6762203 0.047 **

Comp Import 0.05443948 0.466 0.2244985 0.040 **

Log-Likelihood -1204.04 -1141.08

Log Linear Regression; Anchoring correction

Income = 1, 2, 3, 4, 5

μ 11.983

2

3

- 0.676

0.224

1.123

γ 0.371

Children = 1 / 0

CompImport = 1, 2, 3, 4, 5

1

Variable

12.879

13.657

14.113

14.436

14.686

Estimated WTP

1- [385.91 - 771.82]

2- [771.83 - 1,157.73]

3- [1,157.74 - 1.543,64]

4 - [1,583.65 - 1,929.55]

5- [ 1,929.56]

Spike adjusted WTP

12.135

13.594

13.979

14.276

13.048

Results (3)

Log Linear Regression; Anchoring correction

1 2 3lni i i iw Income Children CompImport

1i i F iw X

Demand Curve for sustainability labeled beef

Assumptions:

Respondent i total monthly consumption of beef is constant (Q)

Respondent i total expense with beef is constant; substitution takes place

Empirical data:

Respondent i total monthly consumption of beef

Consumption pattern of SLB (share, [0,1])

1 2WTP WTPQ q q

1WTPq Q

2 (1 )WTPq Q

1 2 10WTP WTPTot MaxE q WTP q

Results (4)


Results (5)

1

10( ) ,

10iMax

i i i i

WTPq p Min Q Q

p

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


Results (6)

Conclusions

In average, household consumption of SLB decreases 0.8 kg per 1 €

increment in its price.

Consumers are willing to pay an extra price premium ranging between 3

and 3.5 € per kilo of SLB.

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.

Project EXTENSITY Environmental and Sustainability Management Systems in Extensive Agriculture...

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