Analyses into consumers' willingness to pay a certain price in multi-level labelling systems: The animal welfare label as an example

Currently, livestock farming is an issue that lends itself to heated debates. Especially from consumers' point of view, the topic has a negative connotation and thus the term "factory farming" is part and parcel of that discussion. Animal welfare conditions, differ greatly amongst animal farms. Besides conventional and organic livestock farming there is an intermediate stage developing in the market: A husbandry system comprising requirements going beyond legal regulations but not fulfilling organic standards. A multi-level labelling system could possibly be a solution to make consumers aware of the existing differences within the certification system. A higher degree of animal welfare will incur higher costs. Therefore, using two case studies, this paper provides an analysis of German consumers' willingness to pay for a multi-level animal welfare labelling system. It was found that although consumers are prepared to pay more if such a system was used additional costs would still not be covered. To further the agreement to pay more, an improved communication strategy could potentially be a solution.