Impact of delivering credence attributes of livestock products on farm

Abstract

There has been an increasing demand for livestock products with credence attributes (CAs), such as environment-friendly and good animal welfare. Although most CAs are strongly related to farm-level production processes, rarely have studies explored the issue from an on-farm perspective. Therefore, this paper aims to explore whether consumers’ willingness-to-pay (WTP) a price premium could incentivise farmers to deliver livestock products with CAs in New Zealand to meet the long-term environmental goal of carbon neutral. We first employ a meta-regression analysis to estimate WTP for CAs of dairy products, and then incorporate the WTP estimates into farm system models to measure the economic and environmental impact (nitrogen, phosphorous and GHG losses) for the farms. Data for the meta-regression models are sourced from a literature survey yielding 32 studies estimating WTP for CAs of dairy products. The results show that price premium ranges from 5.2% to 52.3% for environment-friendly dairy products. FARMAX and OVERSEER are used to model the farm system changes required to deliver ‘green’ dairy and red meat products by using data of the average Waikato dairy farm. The results show that the economic and environmental outcomes are varied over the predicted range in WTP as well as for different farm system scenarios. Findings of the study could help inform NZ farmers as to how to adjust their farm systems in response to market signals and thereby potentially gain a price premium.