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Potato demand in an increasingly organic marketplace

Author

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  • Ming-Feng Hsieh

    (Department of Agricultural and Applied Economics, University of Wisconsin-Madison, Madison, WI 53706-1503)

  • Paul D. Mitchell

    (Department of Agricultural and Applied Economics, University of Wisconsin-Madison, Madison, WI 53706-1503)

  • Kyle W. Stiegert

    (Department of Agricultural and Applied Economics, University of Wisconsin-Madison, Madison, WI 53706-1503)

Abstract

The authors investigate pricing and demand issues for four fresh potato categories (russet, red, white, and minor colored), organic fresh potatoes, and two processed potato categories (frozen|refrigerated and dehydrated) using a nonlinear generalized almost ideal demand system (GAIDS) that is closed under unit scaling (CUUS). The model used regionally aggregated at-home consumption data from 2000 to 2005. Estimated uncompensated own price elasticities for fresh potatoes were highly significant and ranged between −0.5 and −1.6. The study was designed to capture the effects of the aggregate organic market on the prices, expenditures, and demand for each potato category. Organic food market penetration elasticities suggest that specialty potatoes (organic and minor-colored) are particularly well positioned if demands for organic products continue to rise, red potatoes are not well positioned and evidence of the early warning signs of slippage in market share for white and russet potatoes may exist. Producers and promoters of conventional potato products should account for the increasingly important role of organic products in making decisions. As an auxiliary exercise, we also statistically sourced the variance of the organic potato price premium relative to the other four fresh potato prices. At the present time, the variability of the organic potato premium is not much affected by production costs or other supply-related factors: the premium variability was driven largely by demand, and demographic|seasonal factors. Producers should be cautious about shifting to organic potato production until lower cost practices emerge. [JEL Codes: D120, Q130, Q180]. © 2009 Wiley Periodicals, Inc.

Suggested Citation

  • Ming-Feng Hsieh & Paul D. Mitchell & Kyle W. Stiegert, 2009. "Potato demand in an increasingly organic marketplace," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 369-394.
    • Handle: RePEc:wly:agribz:v:25:y:2009:i:3:p:369-394
    DOI: 10.1002/agr.20209
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    Cited by:

    1. Vasiliki Fourmouzi & Margarita Genius & Peter Midmore, 2012. "The Demand for Organic and Conventional Produce in London, UK: A System Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(3), pages 677-693, September.
    2. Schroeck, Rebecca, 2011. "Wie sensibel reagieren deutsche Verbraucher auf Preisänderungen bei Bio-Eiern? Eine Nachfrageanalyse mit Haushaltspanel-Daten," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114492, German Association of Agricultural Economists (GEWISOLA).
    3. Dragone, D. & Ziebarth, N.R., 2015. "Non-Separable Time Preferences and Novelty Consumption: Theory and Evidence from the East German Transition to Capitalism," Health, Econometrics and Data Group (HEDG) Working Papers 15/28, HEDG, c/o Department of Economics, University of York.
    4. Schröckl, R., 2012. "Wie sensibel reagieren deutsche Verbraucher auf Preisänderungen bei Bio- Eiern? Eine Nachfrageanalyse mit Haushaltspanel-Daten," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47, March.
    5. Lusk Jayson L, 2010. "The Effect of Proposition 2 on the Demand for Eggs in California," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-20, April.
    6. Dragone, Davide & Ziebarth, Nicolas R., 2015. "Economic Development, Novelty Consumption, and Body Weight: Evidence from the East German Transition to Capitalism," IZA Discussion Papers 8967, Institute of Labor Economics (IZA).
    7. Dragone, Davide & Ziebarth, Nicolas R., 2017. "Non-separable time preferences, novelty consumption and body weight: Theory and evidence from the East German transition to capitalism," Journal of Health Economics, Elsevier, vol. 51(C), pages 41-65.
    8. Islam, Shahidul, 2013. "Marketing organic foods through conventional retail outlets," MPRA Paper 107275, University Library of Munich, Germany, revised 2013.

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