Disruptive Technologies, Public Perceptions & Implications for Pork

Ellen GoddardCo-operative Program in Agricultural Marketing and

BusinessUniversity of Alberta

Prepared for the Banff Pork Seminar, 2019

Disruption• Christensen et al (2015) summarized the process of disruptive innovation as: • “Disruption” describes a process whereby a smaller company with fewer

resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.

• Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price.

• Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously.

• Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.”

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When you buy pork, how important are the following factors to you? 1=not important, 3 = very important

Canada National Survey 2011, n=1604

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Livestockfeed

Conditionsunder which

domesticanimalsraised

GM animalfeeds

Animaldiseases

Origin ofanimals,

meat

Antibiotics inmeat

Animals GMfor meat,poultry or

dairyproduction

How Concerned are You About the Following?1= Not Concerned, 5 = Very Concerned

Canada National Survey, 2011, n=1604

Brenna Ellison · Kathleen Brooks · Taro Mieno, Which livestock production claims matter most to consumers? Agriculture and Human Values, (2017) 34:819–831

MEAT MEAT SUBSTITUTEno claim 15low/no/reduced fat 1gluten free 11 3low/no/reduced allergan 12 3environmentally friendly 1social media 4 3convenient packaging 3no preservatives 3 3ease of use 2 5Verified Cdn Pork 1NO Animal 12Environmentally Friendly 1Sustainable Habitat 1Humanely Raised 2No Antibiotics 1organic 4 2GMO free 2 8Hormone free 4 2Environmentally friendly packaging 1Added protein 1

Mintel Global New Products Database 2018 Canada

2011 CQA Canadian Pork

$4.75 per kg $5.00 per kg

2015 Verified Canadian Pork

$/405 gm $1.51 $1.42 $1.82

$3.73 per kg $3.51 per kg $4.50 per kg

Comparison of Willingness To Pay for Pork with Logo across studies: Ex Ante

Results are relatively consistent across studies – different methods different time periods

Dependent variable: Likely to Purchase Pork with the Verified Canadian Pork Label1=unlikely, 2=neutral, 3=likely May 2018Number of observations = 489 Schwarz B.I.C. = 371.535Scaled R-squared = .250900 Log likelihood = -278.650LR (zero slopes) = 127.648 [.000]Number of Choices = 1467

StandardParameter Estimate Error t-statistic P-valueC2 4.33002 3.01605 1.43566[.151]FAMLIVESTOCK2 -0.4497 0.58364 -0.7705[.441]PURCHMEAT2 0.214415 0.357375 0.599972[.549]EATMEAT2 -0.31133 0.331555 -0.939[.348]TRUST2 -0.1778 0.587846 -0.30246[.762]AGE2 0.014264 0.021778 0.654945[.513]MALE2 -1.01978 0.594087 -1.71655[.086]HHLDSIZE2 0.343012 0.35392 0.969179[.332]KIDS2 -0.67388 0.485312 -1.38855[.165]EDUC2 -0.16952 0.150713 -1.12479[.261]RURAL2 -0.24857 0.727675 -0.3416[.733]LOWPRICE2 0.071991 0.325032 0.221488[.825]ANTIBIOTC2 -0.28751 0.39218 -0.73311[.463]ENVIRON2 0.112682 0.362192 0.311112[.756]INCOME2 0.013542 9.39E-03 1.4421[.149]C3 -2.95686 3.02625 -0.97707[.329]FAMLIVESTOCK3 -0.51505 0.571944 -0.90052[.368]PURCHMEAT3 0.630558 0.361985 1.74195[.082]EATMEAT3 -0.29729 0.333724 -0.89082[.373]TRUST3 0.067868 0.572975 0.118448[.906]AGE3 0.034526 0.021385 1.61448[.106]MALE3 -0.63943 0.581934 -1.0988[.272]HHLDSIZE3 0.380811 0.350984 1.08498[.278]KIDS3 -0.66782 0.478712 -1.39504[.163]EDUC3 -0.13318 0.14842 -0.89735[.370]RURAL3 -0.66886 0.72268 -0.92553[.355]LOWPRICE3 0.353481 0.316954 1.11525[.265]ANTIBIOTC3 -0.25874 0.388056 -0.66676[.505]ENVIRON3 1.16315 0.36357 3.19925[.001]INCOME3 0.011478 9.25E-03 1.24017[.215]

males are less likely to be neutral rather than disagree with purchase intention for VCP

more frequently you purchase meat more likely to agree with purchase intention for VCP

more concerned about environmental outcome more likely to agree with purchase intention for VCP pork

I would purchase pork with the VCP logo in preference to pork without

New Technologies in Agriculture

• Are new technologies disruptive?• Will they continue to be disruptive?

• Does that mean we can’t use them?

John Bostock, The development and implementation of European regulations for (fish and shellfish) traceability, Presentation given at the Symposium on seafood traceability and certification organised by Aqua-Int on behalf of the Korean Ministry of Oceans and Fisheries and Korean Fisheries Association, Busan, South Korea, 22 May 2015.

The press photographed Mr Gummer - then Agriculture Minister in the Conservative government - tucking into the burger with his little girl at a boat show in Suffolk on May 6 1990.

Chatelaine, July 1968

Second big Trust Issue

Product being sold unlabeled –is that a good thing?

The Canadian Biotechnology Action Network solicited public statements from Canada’s largest grocery chains, to clarify store policy on the sale of genetically modified (GM or genetically engineered) salmon for consumers.

Costco(September 2017)

Federated Co-operatives Ltd(September 2017)

IGA (Owned by Sobeys)(September 2017)Loblaw(September 2017)

Longo’s(September 2017)

Metro(September 2017)

Overwaitea Food Groups“August 2017)Sobeys(November 2017)Walmart CanadaSeptember 2017)

Stated Preference

• Done in a couple of different ways • Trying to test for Robustness across Specifications

and Time• Also trying to distinguish between acceptance of

the technology and the trait

Year TRAITDisease Resistance Disease

ResilienceCarnosine Feed

EfficiencyReduced Antibiotic Use

2012 √Genomics Vaccination

√ √ Genomics

2015 √ √ √ √

2017 No Method

√ √

Different Combinations of Genomic Selection and Traits Tested

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Study 1: Distribution of WTP in $, Pork, Percentage

Genomics versus Vaccination Disease Resilience

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$ per package (0.405kg)

Disease Resilience Feed Efficiency Carnosine Antibiotics Used Therapeutically

Study 2 : Willingness to pay for different traits,% of sample

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Study 3: Distribution of Pork $, Consumer vs Citizen, Percentage

Consumer Buy Citizen Vote

Source: FOOD 4.0: THE FUTURE OF FOOD INNOVATION IN ASIA https://eiuperspectives.economist.com/sustainability/fixing-asias-food-system/white-paper/food-40

Relative Riskiness of Different Approaches to Disease Resilience

Most and Least Important Applications of Genomic Selective Breeding

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2006 2008 2009 2009 2011 2012 2015 2016 2017

Average Level of Trust in Various Agents in the Food System, Canada 1=low trust 5 = high trust

Government Farmers Retailers Manufacturers

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3.10

3.20

3.30

3.40

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3.60

3.70

2006 2008 2009 2009 2011

Trust in Farmers: Components1= Low trust, 5 = High Trust

Competence

Transparency

Commitment

Disruption

• Neither new products or technologies need to be fatally disruptive

• Unfortunately it does seem important to keep on top of what are the burning issues and address them

• Ignoring them will not solve anything• Farmers are key to communicating with the

consumer

Acknowledgements

• Two Genome Canada LSARP projects on pig disease resilience

• Agriculture Funding Consortium • Many students and post docs working on theses

and journal articles including Violet Muringai, Albert Boaitey, Anahita Matin specifically