Determinants Of The Demand For Organic And Conventional Fresh Milk In Germany– An Econometric Analysis
An increasing number of studies deals with consumer decisions regarding organic food, but only a few provide quantitative estimates of price and income elasticities. This paper contributes to the existing literature by providing own-price elasticity estimates as well as an analysis of the sociodemographic determinants of demand for organic milk. The analysis is based on the GfK Consumer Scan Scanner panel dataset on food purchases of German households covering a sample period of four years from 2004 to 2007. A two-step estimation procedure is applied. First, a probit regression examines which household characteristics affect the probability to buy organic milk. Second, a fixed-effects panel regression determines factors that have an impact on the quantity demanded. Finally, the study investigates whether the price elasticity of demand depends on income, age or household size and whether the price elasticity varies among different retail formats. The results show that the probability to buy organic milk increases with education and income level. Furthermore, the demand is on average higher in households with young children and with a female being mainly responsible for food purchases. However, the probability declines when there is more than one child per household. The results of the fixed-effects regression indicate that the demand for organic milk in Germany is highly price-inelastic. Low absolute price elasticities for organic milk indicate that price promotions at retail level will not lead to an increase in sales. As expected, for all types of milk price sensitivity is higher, but still inelastic, in discount shops than in other retail formats such as supermarkets or large-scale retail. Demand in organic food shops is the least responsive to price changes. Besides, households headed by a person younger than 25 or older than 45 years show a higher price responsiveness than middle-aged households.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.eaae.orgEmail: |
More information through EDIRC
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Monier Sylvette & Hassan Daniel & Nichèle Véronique & Simioni Michel, 2009. "Organic Food Consumption Patterns," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-25, December.
- Glaser, Lewrene K. & Thompson, Gary D., 1999. "Demand For Organic And Conventional Frozen Vegetables," 1999 Annual meeting, August 8-11, Nashville, TN 21583, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Gary D. Thompson, 1998. "Consumer Demand for Organic Foods: What We Know and What We Need to Know," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1113-1118.
- Astrid Jonas & Jutta Roosen, 2008. "Demand for milk labels in Germany: organic milk, conventional brands, and retail labels," Agribusiness, John Wiley & Sons, Ltd., vol. 24(2), pages 192-206.
- Deaton, Angus, 1986. "Demand analysis," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 30, pages 1767-1839 Elsevier.
- Gary D. Thompson & Julia Kidwell, 1998. "Explaining the Choice of Organic Produce: Cosmetic Defects, Prices, and Consumer Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 277-287.
- Wier, Mette & O'Doherty Jensen, Katherine & Andersen, Laura Mørch & Millock, Katrin, 2008. "The character of demand in mature organic food markets: Great Britain and Denmark compared," Food Policy, Elsevier, vol. 33(5), pages 406-421, October.
- Frykblom, Peter, 1997. "Hypothetical Question Modes and Real Willingness to Pay," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 275-287, November.
- Faical Akaichi & Rodolfo M. Nayga, Jr & José M. Gil, 2012.
"Assessing Consumers’ Willingness to Pay for Different Units of Organic Milk: Evidence from Multiunit Auctions,"
Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie,
Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(4), pages 469-494, December.
- Akaichi, Faical & Gil, Jose Maria & Nayga, Rodolfo M., Jr., 2009. "Assessing Consumers’ Willingness To Pay For Different Units Of Organic Milk: Evidence From Multi-Unit Auctions," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60982, Agricultural and Applied Economics Association.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
- Smith, Travis A. & Huang, Chung L. & Lin, Biing-Hwan, 2009. "Does Price or Income Affect Organic Choice? Analysis of U.S. Fresh Produce Users," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(03), December.
- Glaser, Lewrene K. & Thompson, Gary D., 2000. "Demand For Organic And Conventional Beverage Milk," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36346, Western Agricultural Economics Association.
- Steven T. Yen & Andrew M. Jones, 1997. "Household Consumption of Cheese: An Inverse Hyperbolic Sine Double-Hurdle Model with Dependent Errors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 246-251.
- Huang, Chung L, 1996. "Consumer Preferences and Attitudes towards Organically Grown Produce," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(3), pages 331-42.
- Govindasamy, Ramu & Italia, John, 1999. "Predicting Willingness-To-Pay A Premium For Organically Grown Fresh Produce," Journal of Food Distribution Research, Food Distribution Research Society, vol. 30(2), July.
- Misra, Sukant K. & Huang, Chung L. & Ott, Stephen L., 1991. "Consumer Willingness To Pay For Pesticide-Free Fresh Produce," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
- Zhang, Feng & Huang, Chung L. & Lin, Biing-Hwan & Epperson, James E., 2006. "National Demand For Fresh Organic And Conventional Vegetables: Scanner Data Evidence," 2006 Annual meeting, July 23-26, Long Beach, CA 21107, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Smith, Travis A. & Lin, Biing-Hwan & Huang, Chung L., 2008. "Organic Premiums of U.S. Fresh Produce," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37626, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
- Feng Zhang & Chung L. Huang & Biing-Hwan Lin & James E. Epperson, 2008. "Modeling fresh organic produce consumption with scanner data: a generalized double hurdle model approach," Agribusiness, John Wiley & Sons, Ltd., vol. 24(4), pages 510-522.
- Jolly, Desmond A., 1991. "Differences Between Buyers and Nonbuyers of Organic Produce and Willingness to Pay Organic Price Premiums," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 9(1).
- Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
- Zepeda, Lydia & Li, Jinghan, 2007. "Characteristics of Organic Food Shoppers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(01), April.
When requesting a correction, please mention this item's handle: RePEc:ags:eaa115:116387. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.