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The use of a hybrid latent class approach to identify consumer segments and market potential for organic products in Nigeria

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  • Muhammad Bello
  • Awudu Abdulai

Abstract

Using data from a hypothetical stated preference survey conducted in Nigeria, we show how the relative importance that consumers attach to organic products’ 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 health and environmental 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 certification program, 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.[EconLit citations: D12, Q13, Q18, Q56]

Suggested Citation

  • Muhammad Bello & Awudu Abdulai, 2018. "The use of a hybrid latent class approach to identify consumer segments and market potential for organic products in Nigeria," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 190-203, March.
  • Handle: RePEc:wly:agribz:v:34:y:2018:i:2:p:190-203
    DOI: 10.1002/agr.21506
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    File URL: https://doi.org/10.1002/agr.21506
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    References listed on IDEAS

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    1. Heath, John & Binswanger, Hans, 1996. "Natural resource degradation effects of poverty and population growth are largely policy-induced: the case of Colombia," Environment and Development Economics, Cambridge University Press, vol. 1(1), pages 65-84, February.
    2. Riccardo Scarpa & Danny Campbell & W. George Hutchinson, 2007. "Benefit Estimates for Landscape Improvements: Sequential Bayesian Design and Respondents’ Rationality in a Choice Experiment," Land Economics, University of Wisconsin Press, vol. 83(4), pages 617-634.
    3. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-598, September.
    4. Fredrik Carlsson & Peter Frykblom & Carl Johan Lagerkvist, 2007. "Consumer Benefits of Labels and Bans on GM Foods—Choice Experiments with Swedish Consumers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 152-161.
    5. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
    6. Julie Guthman, 2004. "Back to the Land: The Paradox of Organic Food Standards," Environment and Planning A, , vol. 36(3), pages 511-528, March.
    7. Muhammad Bello & Awudu Abdulai, 2016. "Impact of Ex-Ante Hypothetical Bias Mitigation Methods on Attribute Non-Attendance in Choice Experiments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1486-1506.
    8. Vosti, Stephen A. & Reardon, Thomas Anthon (ed.), 1997. "Sustainability, growth, and poverty alleviation: A policy and agroecological perspective," IFPRI books, International Food Policy Research Institute (IFPRI), number 0-8018-5607-8.
    9. Probst, Lorenz & Houedjofonon, Elysée & Ayerakwa, Hayford Mensah & Haas, Rainer, 2012. "Will they buy it? The potential for marketing organic vegetables in the food vending sector to strengthen vegetable safety: A choice experiment study in three West African cities," Food Policy, Elsevier, vol. 37(3), pages 296-308.
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    Cited by:

    1. Enoch Owusu-Sekyere & Awudu Abdulai & Henry Jordaan & Helena Hansson, 2020. "Heterogeneous demand for ecologically sustainable products on ensuring environmental sustainability in South Africa," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 39-64, January.

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