To better understand how information about potential health hazards influences food demand, this 31-page case study examines consumer responses to newspaper articles on avian influenza or bird flu. The focus here is on the response to bird flu information in Italy as news about highly pathogenic H5N1 avian influenza (HPAI H5N1) unfolded in the period October 2004 through October 2006, beginning after reports of the first outbreaks in Southeast Asia, and extending beyond the point at which outbreaks were reported in Western Europe.

This analysis examines three questions about bird flu-induced reductions in poultry demand:


• How fast does news about bird flu raise consumers' risk perceptions and reduce poultry purchases?
• How large is the reduction?
• How long does the reduction last?

As stated in the Introduction, "Knowing how consumers responded to these announcements and, more generally, to news about the safety of the food supply, is important for the design of food policy. Public information programmes that effectively communicate risk information could prevent consumers from responding out of proportion to the risks they face. Consumers and food suppliers both might gain if consumers do not avoid foods that are safe. When consumers make informed risk decisions, they create incentives for food suppliers to take cost-effective safety precautions. Also, accurate assessments of consumer responses to food safety risk information will help the public sector gauge the need for industry relief.


In the private sector, understanding how consumers worldwide react to food safety news is important from a marketing perspective. Exports of US poultry may be buffeted by food safety news overseas if consumers at export destinations worry about the safety of poultry products." Estimated poultry demand, as influenced by the volume of newspaper reports on bird flu, reveals the magnitude and duration of newspaper articles' impacts on consumers' food choices. Larger numbers of bird flu news reports led to larger reductions in poultry purchases. Most impacts were of limited duration, and all began to diminish within 5 weeks.


The report continues with an analysis of how the United States (US) consumer market might react in comparison and contrast to the Italian consumer market. It suggests that US/Italian income differences give US consumers, who spend a smaller percentage of their total income on food, greater ability to make dietary changes; but, in fact, the price elasticities (driven by demand for the product) reveal that Italians are three times as responsive as Americans to changes in prices or income. Further, the extent of reactions to news about human health and safety was thought to depend on consumers’ perceptions of changing health risks. As stated here: "A detection of HPAI H5N1 in the United States is likely to generate extensive media coverage for a while; the news would be about a potentially fatal illness. But, if consumers are told that the risk is negligible and their prior assessment is that the risk is negligible, there would be no reason for consumers to change risk perceptions if they believe public health authorities are credible." This is supported by the media handling of the 2003 bovine spongiform encephalopathy (BSE) [Mad Cow Disease] in which government agencies emphasised the risk was negligible. However, the article cautions that consumer response is widely variable, pointing to the reaction to the news of E. Coli bacteria in spinach in the US in 2006.


Hence, the article concludes that "[a]n unfamiliar risk raises the uncertainty about behavior, and even the limited available evidence does not all point to the same outcomes."

Avian Influenza Daily Digest on September 2 2008.