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Estimating Consumers' Willingness-To-Pay for Country-Of-Origin Labels in Fresh Apples and Tomatoes: A Double-Hurdle Probit Analysis of American Data Using Factor Scores

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Author Info

  • Mabiso, Athur
  • Sterns, James A.
  • House, Lisa
  • Wysocki, Allen F.

Abstract

Data are collected from primary shoppers in Gainesville Florida, Atlanta Georgia and Lansing Michigan using a Vickrey (fifth-priced sealed bid) experimental auction and a survey questionnaire to provide a sample of 311 observations useable for analysis. The average willingness to pay (WTP) for country of origin labeling (COOL) "Grown in the U.S." in apples and tomatoes are calculated then tested for equivalence to assess if WTP is produce specific. A double-hurdle probit model is then estimated to ascertain the prominent determinants of WTP for COOL. Independent variables include demographics, food safety and factor scores derived from a factor analysis of food quality and food preference variables. Results show that on average consumers are willing to pay $0.49 and $0.48 for COOL in apples and tomatoes respectively with 79% of the consumers willing to pay more than $0.00 for apples labeled "Grown in the U.S." and 72% in the case of tomatoes. Premiums are found to be statistically equivalent suggesting that WTP for COOL is not produce specific. The double hurdle probit estimation finds most independent variables insignificant with the exception of the food quality factor scores and consumer trust levels for information they receive from U.S. government agencies. Location, age and income also turn out to be significant factors in the case of the truncated part of the estimation as do food quality and food safety concerns.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19418.

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Date of creation: 2005
Date of revision:
Handle: RePEc:ags:aaea05:19418

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Keywords: Consumer/Household Economics;

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Cited by:
  1. Darby, Kim & Batte, Marvin T. & Ernst, Stanley C. & Roe, Brian E., 2006. "Willingness to pay for locally produced foods: A customer intercept study of direct market and grocery store shoppers," 2006 Annual meeting, July 23-26, Long Beach, CA 21336, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Moser, Riccarda & Raffaelli, Roberta & Thilmany, Dawn D., 2011. "Consumer Preferences for Fruit and Vegetables with Credence-Based Attributes: A Review," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 14(2).
  3. Jones, Ghangela & Jennings, Shauntez & Ibrahim, Mohammed & Whitehead, Jackie, 2010. "Will Consumers Pay a Premium for Clone-free labeled Meat products? Evidence from the 2009 Sunbelt Agricultural Exposition," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 57269, Southern Agricultural Economics Association.
  4. Musengezi, Jessica D. & Rossi, Frederick J. & Larkin, Sherry L., 2006. "A Double Hurdle Model of Preferences for a Proposed Capacity Reduction Program in the Atlantic Shark Fishery," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35361, Southern Agricultural Economics Association.
  5. Melanie Lefevre, 2011. "Willingness-to-pay for Local Milk-based Dairy Product in Senegal," CREPP Working Papers 1108, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
  6. Plastina, Alejandro S. & Giannakas, Konstantinos, 2007. "Market And Welfare Effects Of Mandatory Country-Of-Origin Labeling In The Us Specialty Crops Sector," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9735, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Joseph, Siny & Lavoie, Nathalie, 2008. "Effectiveness of COOL in the U.S. Seafood Industry," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6260, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Julie A. Caswell & Siny Joseph, 2007. "Consumer Demand for Quality: Major Determinant for Agricultural and Food Trade in the Future?," Working Papers 2007-4, University of Massachusetts Amherst, Department of Resource Economics.
  9. Henseleit, Meike & Kubitzki, Sabine & Teuber, Ramona, 2007. "Determinants of Consumer Preferences for Regional Food," 105th Seminar, March 8-10, 2007, Bologna, Italy 7871, European Association of Agricultural Economists.
  10. Bolliger, Conradin & Reviron, Sophie, 2008. "Consumer Willingness to Pay for Swiss Chicken Meat: An In-store Survey to Link Stated and Revealed Buying Behaviour," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44155, European Association of Agricultural Economists.
  11. Lefèvre, Mélanie, 2014. "Do Consumers Pay More for What They Value More? The Case of Local Milk-based Dairy Products in Senegal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(1), April.
  12. Fred Kuchler & Barry Krissoff & David Harvey, 2010. "Do Consumers Respond to Country-of-Origin Labelling?," Journal of Consumer Policy, Springer, vol. 33(4), pages 323-337, December.
  13. Pozo, Veronica F. & Saak, Alexander E. & Hanawa-Peterson, Hikaru, 2009. "Product Origin and Reputation for Quality: the Case of Organic Foods," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49503, Agricultural and Applied Economics Association.

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