Identification of consumer segments and market potentials for organic products in Nigeria: A Hybrid Latent Class approach

Given the growing interest in the potential of organic agriculture to correct environmental externalities in sub-Saharan Africa, we use data from a hypothetical stated preference survey conducted in Nigeria to determine the market potentials of organic products as well as show how the relative importance that consumers attach to organic attributes varies strongly as a function of underlying attitudes. We specify a latent class structure that allows us to jointly analyze responses to stated choice and assignment to latent classes, while avoiding measurement error problems. Our results reveal that consumers are willing to pay premium for both environmental and health gains achieved through organic production systems, although their quantitative valuation is higher for the health concerns. Furthermore, we note that individuals with stronger preferences for organic products tend to attach a global value to the third party organic certification program attributes, whereas the valuation tends to be more restrictive among respondents that prioritize the status quo option (conventional alternative). We also observe that differences in respondents’ geographic location and level of awareness of organic food production characteristics (prior to the survey) have significant impact on consumers’ choices.