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Putting Their Money Where Their Mouths Are: Consumer Willingness to Pay for Multi-Ingredient, Processed Organic Food Products

Author

Listed:
  • Batte, Marvin T.
  • Hooker, Neal H.
  • Haab, Timothy C.
  • Beaverson, Jeremy

Abstract

In response to dramatically increasing adoption in consumer markets, the National Organic Program (NOP) initiated novel labeling standards for food products in the U.S. in 2002. This program is a particularly relevant standardization effort for multi-ingredient processed foods. Rather than a simple binary message (organic or not), gradations of organic content are now codified. No existing published study evaluates consumer willingness to pay or motivation to purchase in response to such a rich organic label. This article presents evidence of the impact of the NOP through analysis of data collected in seven central Ohio, USA grocery stores. Results suggest that consumers are willing to pay premium prices for organic foods, even those with less than 100 percent organic ingredients. The magnitudes of WTP premia varied significantly among consumer groups, suggesting that targeted marketing may be effective for organic merchandisers.

Suggested Citation

  • Batte, Marvin T. & Hooker, Neal H. & Haab, Timothy C. & Beaverson, Jeremy, 2006. "Putting Their Money Where Their Mouths Are: Consumer Willingness to Pay for Multi-Ingredient, Processed Organic Food Products," Working Papers 204879, Ohio State University, Department of Agricultural, Environmental and Development Economics.
  • Handle: RePEc:ags:ohswps:204879
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    References listed on IDEAS

    as
    1. 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.
    2. 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 331-342.
    3. Wang, Qingbin & Sun, Junjie, 2003. "Consumer Preference And Demand For Organic Food: Evidence From A Vermont Survey," 2003 Annual meeting, July 27-30, Montreal, Canada 22080, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Buzby, Jean C. & Ready, Richard C. & Skees, Jerry R., 1995. "Contingent Valuation In Food Policy Analysis: A Case Study Of A Pesticide-Residue Risk Reduction," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 2), pages 1-13, December.
    5. Timothy C. Haab & Kenneth E. McConnell, 2002. "Valuing Environmental and Natural Resources," Books, Edward Elgar Publishing, number 2427.
    6. T. Robert Fetter & Julie A. Caswell, 2002. "Variation in Organic Standards Prior to the National Organic Program," Food Marketing Policy Center Research Reports 072, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    7. 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.
    8. repec:wly:riskan:v:21:y:2001:i:2:p:319-330 is not listed on IDEAS
    9. 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. 0(Number 2), pages 1-10, July.
    10. Underhill, Sheila E. & Figueroa, Enrique E., 1996. "Consumer Preferences For Non-Conventionally Grown Produce," Journal of Food Distribution Research, Food Distribution Research Society, vol. 0(Number 2), pages 1-11, July.
    11. Baker, Gregory A., 1999. "Consumer Preferences For Food Safety Attributes In Fresh Apples: Market Segments, Consumer Characteristics, And Marketing Opportunities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-18, July.
    12. repec:wly:riskan:v:20:y:2000:i:5:p:735-746 is not listed on IDEAS
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    More about this item

    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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