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Organic Premiums of U.S. Fresh Produce

Author

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  • Smith, Travis A.
  • Lin, Biing-Hwan
  • Huang, Chung L.

Abstract

The study uses the 2005 Nielsen Homescan panel data to estimate price premiums and discounts associated with product attributes, market factors, and consumer characteristics, focusing on the organic attribute for 5 major fresh fruits and 5 major fresh vegetables in the United States. The results suggest that the organic attribute commands a significant price premium, which varies greatly from 13 cents per pound for bananas to 86 cents per pound for strawberries among fresh fruits and from 13 cents per pound for onions to 50 cents per pound for peppers among fresh vegetables. In terms of percentages, the estimated organic price premiums vary from 20% above prices paid for conventional grapes to 42% for strawberries among fresh fruits and from 15% above prices paid for conventional carrots and tomatoes to 60% for potatoes. Furthermore, prices paid for fresh produce are found to vary by other product attributes, market factors, and household characteristics.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:nccest:37626
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    File URL: http://purl.umn.edu/37626
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    Cited by:

    1. Lopez, Ramon E. & Yoon, Sang Won, 2013. "Sustainable Economic Growth: Structural Transformation with Consumption Flexibility," Working Papers 142561, University of Maryland, Department of Agricultural and Resource Economics.
    2. Kathryn Boys & David Willis & Carlos Carpio, 2014. "Consumer willingness to pay for organic and locally grown produce on Dominica: insights into the potential for an “Organic Island”," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(3), pages 595-617, June.
    3. Zhuang, Yan & Dimitri, Carolyn & Jaenicke, Edward C., 2010. "Price Reactions And Organic Price Premiums For Private Label And Branded Milk," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116388, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
    4. Tajima, Kayo & Yamamoto, Masashi & Ichinose, Daisuke, 2016. "How do agricultural markets respond to radiation risk? Evidence from the 2011 disaster in Japan," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 20-30.
    5. McFadden, Jonathan R. & Huffman, Wallace E., 2017. "Willingness-to-pay for natural, organic, and conventional foods: The effects of information and meaningful labels," Food Policy, Elsevier, vol. 68(C), pages 214-232.
    6. Berney, Gerald & Grajewski, Gregory & Hinman, Don & Prater, Marvin E. & Taylor, April, 2010. "Marketing Maine Tablestock Potatoes," Research Reports 147004, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
    7. López, Ramón E. & Yoon, Sang W., 2014. "Environmental Sustainability with a Pollution Tax," Working Papers 166244, University of Maryland, Department of Agricultural and Resource Economics.
    8. He, Na & Bernard, John C., 2011. "Differences in WTP and Consumer Demand for Organic and Non-GM Fresh and Processed Foods," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(2), August.
    9. Campbell, Benjamin L. & Khachatryan, Hayk & Behe, Bridget K. & Dennis, Jennifer & Hall, Charles, 2014. "U.S. and Canadian Consumer Perception of Local and Organic Terminology," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 17(2).
    10. Schrock, Rebecca, 2010. "Determinants Of The Demand For Organic And Conventional Fresh Milk In Germany– An Econometric Analysis," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116387, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
    11. Elofsson, Katarina & Bengtsson, Niklas & Matsdotter, Elina & Arntyr, Johan, 2016. "The impact of climate information on milk demand: Evidence from a field experiment," Food Policy, Elsevier, vol. 58(C), pages 14-23.
    12. repec:eee:jfpoli:v:69:y:2017:i:c:p:154-165 is not listed on IDEAS
    13. Owusu, Victor & Owusu, Michael Anifori, 2010. "Measuring Market Potential for Fresh Organic Fruit and Vegetable in Ghana," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95955, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    14. 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.

    More about this item

    Keywords

    fresh fruits and vegetables; hedonic price; organic produce; organic premium; product attributes; Nielsen Homescan; Agricultural Finance;

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