Corporate Social Responsibility Initiatives and Consumer Preferences in the Dairy Industry

We conduct a best worst-ranking exercise to investigate consumers’ perception of the importance of twelve possible actions for a dairy farm engaging in Corporate Social Responsibility. Animal welfare is clearly identified as the most preferred activity and a top priority for most consumers. Sustainable agricultural practices, energy consumption, and waste management are ranked as second, third, and fourth respectively. Company involvement in the community has the lowest priority amongst the surveyed consumers. The perceptual profile of four fluid milk labels (Organic, Colorado Proud, Validus and Rbst free) is also investigated, showing that common milk labels do convey some information related to CSR activities. Most prominently, the Validus certification is immediately connected to improved animal welfare. Similarly, Colorado Proud sends a strong message related to locality and community involvement. USDA Organic and RBST-free convey a more complex message, where information cues include better nutrition, taste, and sustainable agriculture. Willingness to pay for the differentiating labels was estimated (stated preferences) to be $0.55/gallon for Colorado proud, $0.64/gallon for USDA organic, $0.49/gallon for RBST-free and $0.46/gallon for Validus. However, a very small share of these price premia could directly be attributed to consumers’ perceptions of implemented CSR activities. The Validus label is a clear exception: as currently framed, it elicits a strong perception of improved animal welfare, which in turn directly affects valuation of fluid milk.