There is a lot to know about the food we eat. The ingredients in a jar of spaghetti sauce, a box of cereal, or a cup of coffee could come from around the corner or around the world; they could be processed by children or by high-tech machines; they could be grown on huge corporate farms or on small family-run farms; or they could be mostly artificial or 100-percent natural.
While a description of a food product could include information on a multitude of attributes, not all of them are important to consumers or regulators. Information on some attributes could affect the health and welfare of consumers by influencing their food choices. Information on other attributes might have no effect ...view middle of the document...
If consumers decide that the information’s significance or accuracy is questionable, they will not use it to modify their purchase decisions. Researchers from the University of California and ERS found, for example, that the geographic branding of Washington State apples is losing its impact because it does not convincingly differentiate the State’s apples from those grown in other areas.
To bolster the meaningfulness of their message, firms often rely on advertising and other types of outreach. In 2005, the U.S. food industry spent $32 billion on advertising and $66.5 billion on packaging to differentiate their products from the competition (see “Food Product Introductions Continue To Set Records”).
Firms may also try to convince consumers of the validity of their labeling claims by using third-party labeling services. By offering an “unbiased” assessment of a labeling claim, these services help strengthen the credibility of voluntary labeling (see box, “Third-Party Labeling Services Can Improve Market Efficiency”). A number of entities, including consumer groups, producer associations, private companies, national governments, and international organizations, provide third-party services. The Good Housekeeping Institute, for example, founded for the purpose of consumer education and product evaluation, sets product standards and provides consumer guarantees for a multitude of goods, including foods. Two private companies, Société Générale de Surveillance (SGS) and AIB International (originally the American Institute of Baking), verify and certify food safety for a wide range of food products. USDA’s Agricultural Marketing Service (AMS) has developed official grade standards for meats, eggs, poultry, dairy products, fresh fruits, vegetables, tree nuts, peanuts, and other commodities. ISO, a worldwide federation of national standards institutes, promotes the development of international standards for a variety of products and production processes.
The value of the labeling service generally depends on the credibility and reputation of the providing entity. In some cases, national governments or associations of national governments may be the most widely recognized and reputable third-party providers of labeling services. But this is not always true. For example, although U.S. consumers tend to have confidence in USDA and the Food and Drug Administration (FDA) to regulate food safety, Europeans rank national bodies far below international, environmental, consumer, and farm organizations in terms of trustworthiness.
Private and government labeling services have helped support an explosion of voluntary food labeling. American grocery store shelves have become veritable encyclopedias of labeling claims. A single carton of eggs sold in a national grocery store chain, for instance, is labeled with a “cage free” claim, the grocery store “quality and satisfaction money-back guarantee” logo, the Orthodox Union symbol of kosher...