Food quality vs food patriotism

British Food Journal Food quality vs food patriotism: Russian consumers’ preferences for cheese after the food import ban Mirzobobo Yormirzoev, Ramona Teuber, Tongzhe Li,

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Article information: To cite this document: Mirzobobo Yormirzoev, Ramona Teuber, Tongzhe Li, (2018) "Food quality vs food patriotism: Russian consumers’ preferences for cheese after the food import ban", British Food Journal, https:// doi.org/10.1108/BFJ-02-2018-0088 Permanent link to this document: https://doi.org/10.1108/BFJ-02-2018-0088 Downloaded on: 31 October 2018, At: 06:10 (PT) References: this document contains references to 44 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 18 times since 2018* Access to this document was granted through an Emerald subscription provided by Token:Eprints:7IK9BPRZRJETKCEU2MBM:

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Food quality vs food patriotism Russian consumers’ preferences for cheese after the food import ban

Food quality vs food patriotism

Mirzobobo Yormirzoev National Research University Higher School of Economics, Perm Campus, Perm, Russia

Ramona Teuber Downloaded by Justus Liebig Universitat Giessen At 06:11 31 October 2018 (PT)

Kobenhavns Universitet, Copenhagen, Denmark, and

Received 13 February 2018 Revised 21 June 2018 Accepted 28 July 2018

Tongzhe Li University of Windsor, Windsor, Canada Abstract Purpose – The purpose of this paper is to investigate the role of perceived food quality and consumer ethnocentrism and potential trade-offs between these two concepts in Russian consumers’ food purchase decisions after the implementation of the Russian import ban. Design/methodology/approach – Survey data were collected via in-person interviews in the City of Perm, which is one of the largest and most industrial cities in Russia. A double-bounded dichotomous-choice contingent valuation model is utilized to estimate willingness to pay (WTP) and to analyze factors that affect consumers’ choice. Findings – The results suggest that most respondents do not consider domestically produced cheese as a risky product in terms of food safety but simply of lower quality than imported cheese. However, the average respondent’s WTP discount for domestic cheese compared to imported cheese is 8 percent, which is relatively small. This corresponds to participants’ opinion that buying domestic cheese is the right thing to do since it supports Russian farmers and producers. The results indicate further that with increasing education and income levels, individuals are less likely to prefer domestically produced cheese for either economic or quality reasons. This effect is stronger for the quality preference. Research limitations/implications – The results indicate that if the Russian government aims at expanding the domestic food market further, more attention needs to be paid to ensuring the quality of domestic food products in order to increase consumer acceptance and WTP. Originality/value – This is the first study providing empirical evidence on Russian consumers’ attitudes and perceptions of domestically vs imported food products after the implementation of the Russian import ban, which can be considered as an external policy shock. Keywords Consumer attitudes, Food quality, Contingent valuation, Willingness to pay, Russian import ban Paper type Research paper

1. Introduction In response to western sanctions in the context of the Ukraine crisis, the Russian Federation implemented an import ban on certain food and agricultural products produced in the west in August 2014. The imposed import ban has been justified from the Russian side by “protecting the national security of the Russian Federation”[1]. Since then, the USA, Canada, European Union (EU) member countries, Australia and Norway are forbidden from exporting fruits, vegetables, dairy products, fish, seafood and meat to the Russian market (US Department of Agriculture, 2017). The import ban is fully in line with the state declared food security policy aimed at achieving self-sufficiency in key food categories by promoting domestic production and reducing food imports (e.g. Wegren, 2014; Wegren et al., 2016). Even though the Russian Federation is self-sufficient in grains and eggs, it is import-dependent for beef and dairy products given the All the three authors contributed equally to the paper.

British Food Journal © Emerald Publishing Limited 0007-070X DOI 10.1108/BFJ-02-2018-0088


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decrease in livestock production after the dissolution of the Soviet Union (Liefert and Liefert, 2015). At the same time, the quality and competitiveness of Russian agricultural production is in question (Food and Agricultural Organization of the United Nations, 2014). Russian media reported several cases of product falsification, violations of sanitary norms and overuse of additives and preservatives in domestic food production (Moscow Times, 2016). In particularly, the quality of domestically produced dairy products has been the focus of several reports indicating that there is a tendency for Russian cheese producers to substitute milk for palm oil – a cheaper ingredient[2]. For instance, Rosselkhoznadzor, the Federal Service for Veterinary and Phytosanitary Surveillance estimated that currently roughly 78 percent of cheese produced in the Russian Federation could not truly be defined as dairy because of milk substitute products used in its production. Before the implementation of the ban, Russia imported around 20 percent of its dairy consumption, with the EU providing 81 percent of these imports (Boulanger et al., 2016; Food and Agricultural Organization of the United Nations, 2014). Hard cheese was a particularly heavily imported product. Following the ban’s implementation, Russian cheese imports dropped by around 50 percent in 2015, recovering slightly in 2016. Currently, the major cheese supplier to the Russian market is Belarus, which accounts for about 80 percent of cheese imports. The remaining import share is distributed among Kazakhstan, Argentina, Serbia, Ukraine and Uruguay (Agroinvestor, 2017). The amount of domestically produced cheese and cheese products increased from 499 thousand tons in 2014 to 600 thousand tons in 2016, an increase of over 20 percent (Rosstat, 2017). Over the same time period, however, domestic milk production increased by only around 2 percent, while palm oil imports reached a record high (Rosstat, 2017; Faostat, 2018). These numbers support anecdotal evidence that some Russian cheese producers substitute milk for palm oil in order to reduce costs. The practice of replacing dairy fats with lower cost vegetable oils is also found in other markets, in Russia, however, most of this substitution seems to be done illegally, that is, without proper labeling (Agrimoney, 2015). Given this background, for certain foods like hard cheese, Russian consumers today seem to face a trade-off between food safety and quality on one hand, against food ethnocentrism or patriotism on the other. In this context, the term “food patriotism” has been used by Russian government officials to indicate that eating domestically produced food is the “right thing to do” (Fossett, 2013). However, a clear understanding of Russian consumer acceptance and willingness to pay (WTP) for domestically produced food after the implementation of the import ban is missing. While there are studies addressing the impact of the import ban in terms of trade effects and potential export losses (e.g. Boulanger et al., 2016; Kutlina-Dimitrova, 2015; Liefert and Liefert, 2015; Smutka et al., 2016), studies investigating Russian consumers’ food preferences after the ban’s implementation are scarce. We are only aware of the study by Wegren et al. (2017) who used telephone survey data to assess support for the government’s food security policy and to analyze the impact of the self-imposed food embargo on Russian consumers. Their results indicate that when consumers are faced with two products that are equal in price and quality but differ in the country of origin (i.e. Russian vs foreign), 94 percent would buy the Russian product. Thus, these study results confirm previous findings from studies focusing on ethnocentrism under ceteris paribus conditions (e.g. Supphellen and Rittenburg, 2001). However, as pointed out above the ceteris paribus assumption (i.e. domestic and foreign products are identical except of the country of origin) likely does not hold in reality. Thus, our paper contributes to the existing literature by analyzing the potential trade-offs consumers might face by choosing between domestically produced food vs food produced abroad. Hard cheese is taken as an example. More specifically, we investigate whether certain consumer segments in Russia might prefer domestically produced foods even where these foods are perceived as being of inferior quality (e.g. in terms of food safety risks and/or taste) compared to imported food products. Thus, this study provides empirical evidence on consumer perceptions, acceptance and


WTP for domestically produced food products that are supposed to fill the gap of the supply of prohibited food products in the future. Such timely empirical evidence is important in order to inform the industry and stakeholders of its potential influence on the Russian food market. This paper specifically focuses on hard cheese for the following reasons. First, cheese has historically been one of Russia’s most highly imported products (prior to the ban). Second, hard cheese has been covered extensively in the media due to concerns about ingredient substitution. Finally, hard cheese is a commonly consumed product. A contingent valuation (CV ) approach, a survey-based economic valuation technique, was utilized in order to quantify consumers’ WTP for domestic vs imported hard cheese. Moreover, consumers filled in a questionnaire on perceptions about food safety and quality issues as well as how the domestic production of cheese would impact the domestic economy. 2. Previous consumer research Two strands of literature are highly relevant to our investigation. The first strand focuses on Russian consumers’ food choices, while the second analyses the phenomenon of consumer ethnocentrism. 2.1 Factors influencing Russian consumers’ food choices Few studies have investigated Russian consumers’ food choices in general, their attitudes toward food safety authorities, and their attitudes toward particular product characteristics. Berg et al. (2005) conducted a study on food safety risk perceptions and trust in food safety authorities for Russia, Denmark and Norway. Their results highlighted that Russian consumers tend to have a fairly low trust in foods albeit with significant differences across food product groups. In total, 83 percent of respondents thought that fruits and vegetables were rather safe to eat, while only 35 percent thought that fish was safe. Moreover, only 40 percent of Russian respondents expressed full trust in the existing food control authorities. Popova et al. (2010) investigated Russian consumers’ perceptions of food risk management. Their results indicated that most respondents consider that the primary responsibility for food safety in Russia lies with the consumer, since official authorities are not believed to be managing food risks at all. With respect to the perceived quality of domestic vs imported foods, focus group participants indicated that Russian producers may be as good or as bad as foreign producers. Besides, Honkanen and Frewer (2009) provided information on general food choice motives highlighting that sensory motives were ranked as most important, followed by availability, food naturalness, price, mood and health. More recent results for Russian consumers focusing on consumer preferences for specific food attributes were presented by Bruschi, Shershneva, Canavari, Dolgopolova and Teuber (2015), Bruschi, Teuber and Dolgopolova (2015) and Dolgopolova et al. (2015). Bruschi, Shershneva, Canavari, Dolgopolova and Teuber (2015) investigated urban Russian consumers’ attitudes and perceptions regarding organic food, showing that almost all participants had a positive opinion about organic food products. The perceived benefits of organic food were primarily confined to the naturalness and perceived purity of the products due to the absence of additives, preservatives and genetically modified organisms. As well, Dolgopolova et al. (2015) reported results from focus groups investigating acceptance of functional food. Their results stressed that food-neophobia and distrust in food-related institutions is rather widespread among Russian consumers. To sum up, the existing empirical evidence indicates that Russian consumers tend to place a strong emphasis on sensory quality, naturalness and healthiness of food. Moreover, there seems to be a pronounced distrust in food-related institutions, including producers, processors, retailers and food safety authorities.



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2.2 The role of food ethnocentrism and patriotism in consumer choices Overall, consumers’ consumption decisions have been shown to be affected by their ethnocentrism preference (Han, 1988). Consumer ethnocentrism is thereby defined as the beliefs held by consumers about the appropriateness and morality of purchasing domestic products and the rejection of foreign products (Shimp and Sharma, 1987). Food ethnocentrism has been studied in different contexts, such as in the importance of origin effects on consumers’ food choices (e.g. Orth and Firbasová, 2003; Van Ittersum et al., 2003). These studies pointed out that consumers tend to use origin as a quality cue. Even though consumer ethnocentrism is a global phenomenon, country differences seem to exist in the degree of ethnocentrism expressed by consumers. People in developed countries tend to prefer domestic products or products imported from countries with a similar level of development. In contrast, some studies have found that consumers in developing and emerging economies consider foreign products as being of higher quality or representing a higher status level (e.g. Batra et al., 2000; Pouta et al., 2010). However, it has been argued that a domestic purchase bias may be especially pronounced in emerging economies and societies subjected to major economic or political changes (Dmitrovic et al., 2009). In such a situation, consumers’ concern for their ethnic and cultural identities may become even more pronounced – normative and affective dimensions are likely to play a significant role in consumer behavioral responses (Dmitrovic et al., 2009). The implementation of western sanctions against Russia and Russia’s subsequent imposition of an import ban on western products can clearly be considered a significant economic and political change. Furthermore, there is the empirical evidence that nationalistic and patriotic tendencies are on the rise in the Russian Federation (Kolstö, 2016). Accordingly, it seems reasonable to assume that these tendencies might also influence the attitudes and perceptions toward domestically produced vs imported foods. In combination with the anecdotal evidence regarding the inferior quality of certain domestically produced food products in terms of sensory quality and potential food safety risks due to ingredient substitution, the trade-off between food quality and food safety vs consumer ethnocentrism/patriotism seems to be an important consideration. 3. Data and methodology In-person consumer surveys were piloted with Russian consumers during the summer of 2016. The final data were collected between September and December of the same year in the city of Perm. Perm is one of the largest and most industrial cities in Russia with around 1m residents, and is located on the cusp between the European and Asian parts of the country. In total, 400 respondents were interviewed in front of grocery stores. By using multiple locations of a single major store chain, we aimed at increasing the diversity of the sample, in terms of both income and demography. Respondents were selected randomly – every third shopper was approached. Those customers who stated that they do not purchase hard cheese at all were excluded from follow-up questions. Each survey required 10–15 min to complete and every participant received 150 rubles (about two and half US dollars) for their participation. Table I provides a comparison of the socio-demographics of the city and country with corresponding variables in the sample. The median age of the sample is lower compared to the city and national levels. In terms of gender distribution and presence of children, our sample contains a relatively high share of male shoppers and people with children at home. Overall, our sample respondents are better educated than the general population. Respondent employment status is comparable to Perm’s official statistics but remains different from the country’s indicator. These differences should be kept in mind when interpreting the results. In order to estimate consumers’ relative WTP for domestically produced vs imported cheese and analyze factors that affect consumers’ choices, we used the CV method


Sample statistics Perm Population Median age (years)

400 33.0

Sociodemographic Variables Male (%) Children under 18 present in household (%)

63.6 39.9

Education Secondary education (%) Secondary special or technical (%) College degree (%) Bachelors’ degree (%) Master’s degree and higher (%) Median household income Employment status Employed (%) Others (%)

Census statistics Russia Perm 146,267,000 39.3 46 21

1,992,000 39.8


45.9 24.3

5.0 25.3 18.3 37.3 14.3 50,000–75,000

18.0 30.3 4.4 22.8 3.2 49,235

16.3 30.8 3.3 16 5.2 48,497

63.8 36.3

73.4 26.6

64.8 35.2

(McLeod and Bergland, 1999; Lopez-Feldman, 2012). This empirical approach is widely used for estimating individual WTP-based upon the responses of market-type questions with dichotomous choices (Kanninen, 1993; Venkatachalam, 2004). This method is particularly popular in studying the relative WTP resulting from specific product characteristics (Li and McCluskey, 2017; Gabrielyan et al., 2014). It directly applies to our study, which focuses on estimating how WTP for hard cheese changes in response to changes in product origin. In this study, consumers responded to double-bounded dichotomous-choice bid questions, and their answers were analyzed to measure their WTP for domestically produced cheese. Each respondent was first asked if they were willing to purchase domestically produced cheese at the initial bid (BI), which was the current average market price of domestically produced cheese in grocery stores at the time of this study. It allows us to directly compare participants’ WTP for domestically produced cheese to WTP for imported cheese. If the respondent’s answer was “yes,” then the respondent was asked whether they were willing to pay a higher price (BP) for domestically produced cheese. Alternatively, if the answer to the initial bid was “no,” then the respondent was asked whether they were willing to purchase the domestically produced cheese at a lower, discounted price (BD) compared to imported cheese. One of four premiums (5, 10, 20 and 30) was randomly assigned as the second bid to each survey participant who answered “yes” to the initial bid. One of four discounts (–5, –10, –20 and –30 percent) was randomly assigned as the second bid to each survey participant who answered “no” to the initial bid. These percentages were chosen based on perceived consumer valuation. Running a pilot study allowed us to verify the validity of these ranges. We evaluated the responses from the survey based on a double-bounded, dichotomous-choice model (Hanemann et al., 1991; Venkatachalam, 2004). It is asymptotically more efficient compared to the single-bounded model. Hanemann et al. (1991) reported that a potential drawback of the double-bounded model is that it may exhibit bias due to possible anchoring arising from the initial bid. However, they later pointed out that the bias is outweighed by the gain in efficiency. Furthermore, since we took the current average market price for domestically produced cheese as the initial bid, it may serve as a natural anchor of which consumers could be aware – even with a single-bounded model. Answers expressed by respondents to the CV questions were reflected in four possible outcomes in the double-bounded model: the respondent was not willing to purchase domestically

Table I. Census and sample statistics


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produced cheese at the same price as imported cheese and did not want to buy domestically produced cheese at the discounted price either (“no” to both bids); the respondent was not willing to purchase the domestically produced cheese at the same price as imported cheese but was willing to buy it at the discounted price (i.e. “no” followed by “yes”); the respondent was willing to purchase the domestically produced cheese at the same price as imported cheese but was not willing to buy it at the premium price (i.e. “yes” followed by “no”); the respondent was willing to purchase the domestically produced cheese at the same price as imported cheese and also was willing to purchase it at premium price (i.e. “yes” followed by “yes”). Using the double-bounded model with these four outcomes allows us to place the respondent’s true WTP for domestically produced cheese into one of four intervals: ½1; BD Þ; ½BD ; BI Þ; ½BI ; BP Þ; or ½BP ; þ1Þ; where BD, BI and BP are discounted, initial and premium bids, respectively. The bidding mechanism results in the following discrete outcomes: 8 ðNo; NoÞ 1; WTPoBD ; > > > > < 2; BD pWTP oBI ; ðNo; YesÞ (1) D¼ 3; BI pWTPoBP ; ðYes; NoÞ > > > > : 4; BP pWTP; ðYes; YesÞ; where WTP denotes the respondent’s WTP (or bid function) for domestically produced cheese. The individual WTP outcome is based on the random utility model where the respondent maximizes their utility by choosing to purchase a product at the associated bid amount if the utility derived from this commodity is higher than from refusing the bid and foregoing the product. The probability of each outcome can be written as: 9 8 8 9 F ðvðBD ; RÞÞ > > 1> > > > > > > > > > > > < < F ðvðBI ; RÞÞF ðvðBD ; RÞÞ = 2= ; (2) for j ¼ PrðY ¼ jÞ ¼ F ðvðBP ; RÞÞF ðvðBI ; RÞÞ > > > 3> > > > > > > > > : ; > > ; : 1F ðvðBP ; RÞÞ 4 where F(.) is a cumulative distribution function that characterizes the stochastic components of utility, v(B, R) denotes the difference in the indirect utility function between purchasing a commodity at bid B and declining the bid and R is a vector of characteristics affecting indirect utility. The function v(B, R) in previous expression for the individual i can be expressed as: vðBi ; Ri Þ ¼ ar0 Bi þm0 X i ;

i ¼ 1; 2; 3. . .::n;

(3)

where Bi represents the bid amount offered to survey participants i and Xi represents the observable characteristics of the survey participant i. α, ρ and µ are unknown parameters to be estimated. Hence, the log-likelihood function can be expressed in the following form: 9 8 I Y i¼1 ln F ðarBDi þm0 X i Þ > > > > > > > > n < X þI Y i¼2 ln½F ðarBIi þm0 X i ÞF ðarBDi þ m0 X i Þ = ; (4) x ln L ¼ > þI Y i¼3 ln½F ðarBPi þm0 X i ÞF ðarBIi þm0 X i Þ > > i¼1 > > > > > ; : þI Y ln½1F ðarBPi þm0 X i Þ i¼4 where I Y i¼j is the indicator function for each j outcomes ( j ¼ 1, 2, …., 4) for individual i. The function F(g) is defined top beffiffiffithe standard logistic distribution having a mean of zero and standard deviation of s ¼ p= 3: The maximum likelihood method is used to estimate the model. Table AI contains a description and explanation of covariates used in the model.


4. Results Table II presents information about the respondents’ attitudes and perceptions toward domestically produced cheese. Most survey participants expressed a positive attitude toward the existence of domestically produced cheese at the store and around half of respondents did not connect any risks with its consumption. Yet, in terms of healthiness, quality, safety, as well as taste, most respondents favored imported over domestically produced cheese. More than half of survey participants indicated that the production and supply of domestic cheese would benefit the Russian economy, and 45 percent stated that purchasing domestically produced cheese is the right thing to do. In total, 47 percent of respondents remained neutral about the environmental benefits which could result from domestically produced cheese. With regard to trust in the country’s food control authorities, the results show a rather heterogeneous picture. Around one-third of respondents indicated that they do not trust the official food control authorities, whereas about 44 percent of respondents expressed their trust in the authorities. A ten-point Likert scale to quantify respondents’ preferences between food safety and its price demonstrates that survey respondents are more inclined toward food safety. Next, we used a factor analysis to aid in our identification of potential influences on consumer behavior. Intuitively, when examining how consumers’ WTP vary between domestic and imported food, each consumer’s inherent perceptions would influence one’s response. As shown in Table III, based on the factor loadings (Hair et al., 1998), the first factor, quality preference, captures a latent sense of belief associated with domestic food quality. The second factor, economy preference, describes a latent positive attitude toward domestic food in the economy. Note that some of the variables can be explained by both factors to different degrees. For example, participants who put higher value on either the quality or economic benefit of domestic cheese tend to believe that “domestic cheese is generally better.” We use these two factors in the econometric model described later in this section and expect both variables to have a positive impact on the WTP for domestic cheese. Moreover, we investigated how these preferences change with different consumer characteristics. We ran regressions to show the marginal effects of different demographics on the two identified factors (Table IV ). The results indicate that with increasing education and income levels, individuals are less likely to prefer domestically produced cheese for either economic or quality reasons. This effect is stronger for the quality preference. On the other hand, age has a positive effect on the quality preference. Female participants are less likely to prefer domestic cheese for economic reasons but are more likely to perceive domestic cheese as being of high quality. Figure 1 shows the distribution of probability of purchasing domestic cheese for each bid amount. As expected, the probability of saying “yes” to purchasing domestically produced cheese generally increases when the price decreases. The probability of saying “yes” to the initial bid is 46.5 percent. The lowest level of probability is 24.6 percent for a 30 percent price premium. The highest level of probability is 73.9 percent for a 20 percent price discount followed by a similar 70.0 percent for a 30 percent price discount, suggesting that consumers are not sensitive to price changes when there is a sufficient discount. Our results suggest that domestically produced cheese is a normal good while the demand can be price-inelastic over some price intervals. Furthermore, Table V presents the estimated marginal effects of the variables from the double-bounded CV analysis. In our sample, the WTP for domestically produced cheese is heterogeneous among different demographic groups. Specifically, consumers who are primary shoppers or have children in their households are more likely to choose to purchase domestic cheese. On the other hand, better-educated individuals reported a 6 percent lower WTP, indicating that those consumers tend to prefer imported over domestic cheese. The results indicate further that attitudinal variables play an important role in WTP for domestic cheese. However, the results also indicate that food safety is not a significant



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Variables

Respondents (%)

Relation to the existence of domestically produced cheese at the store Very positive Somewhat positive Neutral Somewhat negative Very negative Don’t know

16.33 41.46 25.88 12.06 2.01 2.26

Existence of health risks associated with the consumption of domestically produced cheese Yes, very high risks Yes, some risks No, no risks at all I don’t know

3.02 21.61 56.03 19.35

Domestically produced cheese is healthier and more nutritious than imported cheese I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

7.75 48.50 32.50 9.50 1.75

Domestically produced cheese currently offered at the store is of high quality I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

8.00 41.00 14.25 31.50 5.00

Domestically produced cheese benefits the Russian economy I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

1.25 3.25 14.00 52.25 29.25

Domestically produced cheese offers environmental benefits I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

9.25 12.00 47.00 26.75 5.00

Domestically produced cheese is safer than imported cheese I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

10.50 42.75 31.25 13.25 2.25

Domestically produced cheese tastes better than imported cheese I strongly disagree I disagree I neither agree nor disagree Table II. I agree Response summary to I strongly agree selected questions used in the empirical analysis

30.33 40.35 17.04 10.03 2.26

(continued )


Variables

Respondents (%)

Buying domestically produced cheese is the right thing to do I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

3.25 8.25 16.00 45.25 27.25

I can rely on Russian food control authorities that domestically produced food is safe to eat I strongly disagree I disagree I neither agree nor disagree I agree I strongly agree

17.25 15.25 23.00 37.00 7.50

Food safety vs food pricea 1 0.25 2 0.25 3 2.76 4 5.76 5 10.78 6 14.04 7 22.81 8 19.55 9 8.77 10 15.04 Notes: aReported measurement of how important are lower food safety risks compared to lower food price, continuous Likert scale of 1 ¼ only price is important to 10 ¼ only food safety is important

Variable

Factor loading

Factor 1 – prefer domestic cheese for quality reasons (quality preference) Domestic is generally better 0.6217 Domestic has better quality 0.4050 Domestic benefits the environment 0.5161 Domestic is safer 0.7645 Domestic has better taste 0.7750 Domestic is more reliable 0.5681


Table II.

Score coefficient 0.1659 0.0400 0.1547 0.3202 0.3267 0.1821

Factor 2 – prefer domestic cheese for economic reasons (economy preference) Domestic is generally better 0.3311 0.1208 Domestic is the right thing to do 0.6628 0.3649 Domestic benefits the economy 0.6242 0.3266 Domestic has better quality 0.5560 0.1208 Note: Consumer agreement with the respective statement was rated from 1 to 5 (1-strongly disagree; 5-strongly agree)

concern when consumers choose between domestic and imported cheese. That is, all variables associated with food safety are statistically insignificant. Intuitively, individuals who believe that domestic cheese is generally bad are willing to pay less for it. Interestingly, consumers who think that domestic cheese helps the economy or the environment are not willing to pay more for it. On the other hand, those who believe that domestic cheese has

Table III. Factor analysis results summary

a better taste and is better controlled are significantly more willing to pay for it, and the magnitude of its marginal effect is the largest among all variables. The same can be said for those who believe that purchasing domestic cheese is the right thing to do. Table VI further summarizes how attitudinal variables affect WTP for domestic cheese by using the identified factors (reported in Table III). The marginal effects of other variables remain similar to those when individual attitudinal variables are used in the model. As expected, WTP increases either when a consumer prefers domestic cheese for economic or for quality reasons. Nevertheless, quality preference (0.24) has a statistically significant larger effect (χ2 ¼ 2.57) than economy preference (0.18) on the WTP premium. Next, we estimate the mean WTP calculated following Hanemann (1984) as: WTP ¼

1 a^ þ m^0 X : r^

(5)

The results suggest that in our sample, consumers, on average, are willing to pay less for domestic compared to imported cheese (8.0 percent price discount). We calculate the confidence intervals around the estimated mean WTP using the delta method (Greene, 2008). In percentage terms, the mean WTP for domestic cheese falls between 2.9 percent and 13.0 percent price discount over imported cheese.

Economy preference Coefficient SE

Parameters Population density Education Income Child in household Primary shopper Table IV. Marginal effects of the Age demographic variables Female Constant on factors (ordinary least squares) Notes: Prob., probability.

Prob.

Quality preference Coefficient SE

0.02 0.05 0.68 −0.03 −0.02 0.04 0.52 −0.16*** −0.06* 0.04 0.10 −0.13*** 0.09 0.08 0.30 −0.01 0.11 0.09 0.24 −0.15 0.00 0.00 0.81 0.01*** −0.24*** 0.09 0.01 0.18* 0.24 0.21 0.24 0.39* *,**,***Significant at 10, 5 and 1 percent levels, respectively

0.06 0.04 0.04 0.09 0.10 0.00 0.10 0.22

1 0.9 0.8 Probability (yes)


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0.7 0.6 0.5 0.4 0.3 0.2

Figure 1. Change in estimated probability of choosing Russian domestic cheese given different bids

0.1 0

–30% –20% –10% –5% Initial bid Discount

Source: Own presentation

5%

10%

20%

30% Premium

Prob. 0.60 0.00 0.00 0.93 0.13 0.00 0.07 0.07

Parameters

SE

Probability

0.02

0.70

0.03 0.03 0.03 0.02 0.03 0.03 0.03 0.03 0.03 0.02 0.01

0.01 0.66 0.54 0.58 0.79 0.61 0.13 0.00 0.00 0.00 0.83

Socioeconomics Population density −0.02 Education −0.06*** Income 0.00 Child in household 0.08* Primary shopper 0.11** Age 0.00 Female −0.04 Constant – Note: *,**,***Significant at 10, 5 and 1 percent levels, respectively

0.02 0.02 0.02 0.04 0.05 0.00 0.05 –

0.40 0.00 0.88 0.09 0.03 0.62 0.37 –

Parameters

SE

Probability

0.02 0.03 0.03 0.01 0.05 0.02 0.02 0.04 0.05 0.00 0.05 –

0.28 0.00 0.00 0.20 0.26 0.00 0.72 0.20 0.02 0.46 0.37 –


Frequency Attitudes/perceptions Domestic is generally bad Domestic has more risk Domestic is generally better Domestic has better quality Domestic benefits the economy Domestic benefits the environment Domestic is safer Domestic has better taste Domestic is the right thing to do Domestic is more reliable Food safety is more important than price

Marginal effect 0.01 −0.07*** 0.01 0.02 0.01 −0.01 −0.01 0.05 0.09*** 0.12*** 0.06*** 0.00

Marginal Effect

Frequency 0.03 Quality preference 0.24*** Economy preference 0.18*** Food safety is more important than price −0.02 Population density 0.05 Education −0.07*** Income −0.01 Child in household 0.06 Primary shopper 0.11** Age 0.00 Female −0.04 Constant – Note: *,**,***Significant at 10, 5 and 1 percent levels, respectively

5. Discussion and conclusions Overall, our results indicate that most respondents do not consider domestically produced hard cheese to be a risky product in terms of food safety concerns but simply of lower quality in terms of taste than imported hard cheese. Thus, on average, they are also not willing to pay the same price as for imported cheese. However, the average WTP discount is only 8 percent. Consequently, even though over 70 percent of respondents agreed that the taste of domestically produced cheese is inferior to that of imported cheese, the discount for domestically produced cheese is rather small. This might be due to the consumers’ opinion that buying Russian cheese the right thing to do, since it supports Russian farmers and


Table V. Marginal effects of the explanatory variables on mean WTP

Table VI. Marginal effects of the explanatory variables on mean WTP using factor analysis


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producers. This is particularly reflected in that respondents agreeing to this statement expressed a statistically significant higher WTP for domestic cheese. In fact, the magnitude of this marginal effect was the largest among all variables included. Thus, our results tend to confirm a strong normative component in Russian consumer behavior toward domestically produced food. This finding supports our research hypothesis that Russian consumers today face a trade-off between sensory quality (imported cheese) on one hand and food patriotism or ethnocentrism (domestic cheese) on the other. In addition, it is interesting to highlight the strong dichotomy in the answers regarding the overall quality of domestically produced cheese. Around 50 percent of respondents disagreed that domestically produced cheese is of high quality, whereas over 40 percent agreed that it is of high quality. In combination with the answers regarding the taste statement, these results indicate that for a certain segment of consumers taste is not the dominant quality indicator. This consumer heterogeneity with respect to how to define the quality of domestically produced cheese offers interesting insights worthy of detailed consideration in future studies. In particular, given the limited sample size of our study, further investigations might address consumer heterogeneity at the national level by using a representative sample of the Russian population. Our results further indicate that despite the strong normative component in the support of domestic dairy products, the sensory quality of Russian dairy products is clearly in question. Even though the majority of respondents indicated that they do not associate major risks with consuming domestically produced cheese, the substitution of raw milk for palm oil in combination with false or missing labeling certainly undermines consumers’ acceptance of domestically produced dairy products. Such inferior product quality might lead to a general mistrust in domestically produced goods, which may in turn be applied to other product categories unaffected by such quality problems. The limited trustworthiness of Russian cheese producers might, consequently, not only have significant impacts on the future development of Russia’s dairy market but on the domestic food market in general. Accordingly, if the Russian government aims at further supporting the expansion of the domestic agricultural and food sector, concrete actions against illegal substitution and mislabeling must be taken in order to raise the quality of domestically produced food products.

Notes 1. “O merakh po realizatsii Ukaza Prezidenta Rossiyskoy Federatsii ot 6 August 2014g. No. 560 ‘Opremenenii otdel’nykh spetsial’nykh ekonomicheskikh mer v tselyakh obespecheniya bezopasnosti Rossiyskoy Federatsii’.” (On Measures for the Implementation of Presidential Decree No. 560 from August 6, 2014 “On the Application of Special Economic Measures in Order to Ensure the Security of the Russian Federation”.) www.kremlin.ru (accessed August 6, 2014). 2. There are several cases reported at the website of Roscontrol, a non-profit organization that monitors food standards: https://roscontrol.com/category/produkti/molochnie_produkti/siri/

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Appendix

Variable

Description

Shopping behavior Frequency


Reported frequency of cheese consumption, continuous scale of 1 ¼ least frequently to 4 ¼ most frequently Food safety is more important Reported measurement of the importance of lower food safety risks than price compared to lower food price, continuous scale of 1 ¼ only price is important to 10 ¼ only food safety is important Primary shopper 1 ¼ primary shopper, 0 ¼ otherwise Attitudes toward domestically produced cheese (continuous scale of 1 ¼ strongly disagree to 5 ¼ strongly agree unless otherwise indicated) Domestic is generally better Domestically produced cheese is generally healthier and more nutritious than imported cheese Domestic has better quality Domestically produced cheese currently offered at the store is of high quality Domestic benefits the economy Domestically produced cheese benefits the Russian economy Domestic benefits the Domestically produced cheese offers environmental benefits environment Domestic is safer Domestically produced cheese is safer than imported cheese Domestic has better taste Domestically produced cheese tastes better than imported cheese Domestic is the right thing to do Buying domestically produced cheese is the right thing to do Domestic is more reliable I can rely on Russian food control authorities that domestically produced food is safe to eat Domestic is generally bad Reported overall feeling about the existence of domestically produced cheese at the store, continuous scale of 1 ¼ very positive to 5 ¼ very negative Domestic has more risk Reported health risks associated with the consumption of domestically produced cheese, continuous scale of 1 ¼ no risks at all to 3 ¼ very risky Demographics Population density Education Income Child in household Age Female

1 ¼ Rural, 2 ¼ Suburban, 3 ¼ Urban Continuous scale of 1 ¼ secondary education to 6 ¼ PhD Continuous scale of 1 ¼ less than 30,000 RUB to 5 ¼ more than 90,000 RUB 1 ¼ Presence of child under 18 in the family, 0 ¼ otherwise Reported age 1 ¼ Female, 0 ¼ otherwise

Corresponding author Ramona Teuber can be contacted at: [email protected]

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Table AI. Description of explanatory variables