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Will consumers pay less for fat on beef cuts? The case in Bloemfontein, South Africa

Listed author(s):
  • Shongwe, M.A.
  • Jooste, Andre
  • Hugo, A.
  • Alemu, Zerihun Gudeta
  • Pelser, A.
Registered author(s):

    There is increasing evidence that most of the fear expressed by consumers in terms of the link between cholesterol in the diet and heart disease is, amongst others, related to the amount of fat in red meat and dairy produce. The result is that many consumers are cutting back on, if not avoiding, red meat products. A major challenge ahead of the beef industry is to supply a product that complies with the demands of more sophisticated and health conscious consumers. But, even if the beef industry could respond positively to consumers needs, it is uncertain whether consumers would pay more for beef containing less fat. In this paper the willingness of consumers to pay for less fat in selected beef cuts (T-bone and rump) was investigated with a log-linear hedonic price model. The results showed that more affluent consumers in Bloemfontein were (i) willing to pay for additional external fat (this was contrary to expectations). This was attributable to the culture of food consumption and traditional cooking style (braai). The result does not imply that the amount of external fat can be unlimited, but rather that current external fat levels are desired by consumers; (ii) seam fat had a negative impact on prices of the selected beef cuts in Bloemfontein indicating that reducing the amount of a less desired attribute could shift the demand curve outward; (iii) marbling fat did not have a significant impact on prices of selected cuts in Bloemfontein; and (iv) cuts classified as bone-in was discounted by consumers in Bloemfontein. The study further found that one can't merely assume that international trends are applicable to the South African situation, but this needs further research. It is hence proposed that a similar study is conducted for South Africa as a whole.

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    Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

    Volume (Year): 46 (2007)
    Issue (Month): 4 (December)

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    Handle: RePEc:ags:agreko:8018
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    1. Ferguson, Meagan & Anderson, John D., 2001. "Value Of Ultrasound-Based Predictions Of Carcass Quality Grade," 2001 Annual meeting, August 5-8, Chicago, IL 20620, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Unnevehr, Laurian J. & Bard, Sharon K., 1993. "Beef Quality: Will Consumers Pay For Less Fat?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(02), December.
    3. Kinnucan, Henry W. & Chang, Hui-Shung (Christie) & Venkateswaran, Meenakshi, 1993. "Generic Advertising Wearout," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(03), December.
    4. John D. Jackson, 1997. "Effects of Health Information and Generic Advertising on U.S. Meat Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 13-23.
    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    7. Lucas, Robert E B, 1975. "Hedonic Price Functions," Economic Inquiry, Western Economic Association International, vol. 13(2), pages 157-178, June.
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