EVALUATING THE IMPACTS OF PRODUCTION PROCESS AND PRODUCT ORIGIN ON WILLINGNESS TO PAY FOR SHRIMP

The 2002 Farm Bill included a provision requiring various agricultural commodities to comply with country of origin labeling (COOL). Proponents of COOL argued that the policy would support U.S. producers and benefit U.S. consumers. This argument was based on the assumption that U.S. consumers prefer domestic products to imported products and hence the demand for U.S. products would increase following the implementation of COOL. However, analyzing the impact of COOL on shrimp, one of the first commodities covered the program, is complicated by recent trade disputes, concerns over the safety of farm raised products and potential stigma effects associated with the 2010 Gulf Coast BP oil spill. Shrimp is produced by two methods: Fresh-catch shrimp are harvested directly from the ocean, while farm-raised shrimp are produced in managed ponds. Both processes have benefits and detriments that influence consumers\u27 preferences. Furthermore, most shrimp produced in the United States is produced by the fresh catch process, while most imported shrimp is farm raised. Thus, disentangling the effects of country of origin labeling on demand is complicated by consumers\u27 preferences for a particular production process. Analyzing consumers\u27 preferences for shrimp is further complicated by the recent oil spill in the Gulf of Mexico. On April 20, 2010, a Deepwater Horizon oil rig had an explosion and caught fire, causing oil to leak into the Gulf of Mexico for three months. In addition, other attributes of shrimp, such as size, appearance, smell, and taste, influence consumers\u27 preferences for a specific type of shrimp. An experiment using the Becker-DeGroot-Marschack mechanism is conducted to analyze how attributes, production processes, and stigma affect willingness to pay. The experimental results indicate that shrimp derived from the Gulf of Mexico are stigmatized. In addition, participants preferred domestic to imported shrimp and fresh caught to farm raised shrimp. There was no evidence that participants preferred local shrimp