Track Session at the AAEA Annual Meetings Washington DC, August 04-06, 2013
Is it Healthier, Tastier, and Who Buys it? – Current Issues Surrounding Organic Food Production and Consumption
Organizers: Carola Grebitus (firstname.lastname@example.org) and Christiane Schroeter, Ph.D. (email@example.com)
Consumers are willing to purchase organic foods and pay premiums (Hu et al 2011) even for those products with less than 100% organic ingredients (Batte et al 2007). Monier et al. (2009) estimate that the world area dedicated to organic food production tripled between 1999 and 2007. In 2007, “green surfaces” occupied 24% of cultivated land in Europe. So far, multiple studies have investigated consumer behavior towards organic food products. These studies have focused on consumers’ perspectives and the role that quality cues and quality attributes play in influencing consumers’ choice of organic and conventional products in addition to selected demographic characteristics and consumer attitudes. Other research investigates the producer side and what organic means for the supply chain. While organic has been claimed to be healthier, tastier, better for the environment, or more acceptable regarding animal welfare, controversies have occurred on multiple occasions and especially recently, when the New York Times asked “Has ‘Organic’ Been Oversized?”
This session offers an insight into current issues regarding organic consumption and production. All papers present current empirical studies. We will discuss whether consumers are more altruistically or egoistically motivated when buying organic purchase.
Organic may not be healthier for YOU, but it could be for the farmer…
Dumortier, J. 1, Evans, K.S. 2, Grebitus, C. 3, and P. Martin4
1 School of Public and Environmental Affairs, Indiana University – Purdue University Indianapolis, Indianapolis, IN 46202
2 Department of Economics, St. Lawrence University, Canton, NY 13617
3 Morrison School of Agribusiness and Resource Management, Arizona State University, Mesa, AZ 85212
4 Department of Earth Sciences and Department of Geography, Indiana University - Purdue University Indianapolis, Indianapolis, IN 46202
Among others, benefits associated with increased organic food production and consumption can be broadly categorized as reduced pesticide exposure of (i) consumers, (ii) farm workers and their families, and (iii) the environment. Previous literature suggests that consumers are primarily concerned about their own or their family’s health and therefore are willing to pay a premium for the reduction of pesticides in their diet. Yet, some of the most severe health threats arise from pesticide exposure of farm workers, their families and rural communities, particularly in developing countries. Migrant and seasonal farm workers are primarily ethnic minorities who are excluded from federal laws that protect other workers. Farm workers live and work under substandard conditions that place them at increased risk of pesticide-related illness. Chronic effects, including cancer in adults and children, adverse reproductive outcomes, delayed neuropathy and neurobehavioral effects, are also associated with occupational and environmental exposure to pesticides. Awareness by consumers is especially complicated for those who live in regions where food production is geographically separated from food production. This paper explores consumers’ organic food consumption in the context of reducing pesticide exposure of farm workers and their families. We aim to investigate the health effect of pesticides on farm workers and their families and consumers’ willingness to pay to reduce this pesticide exposure. To do so, a consumer survey is carried out using qualitative and quantitative methods to measure consumers’ perception and attitudes towards health effects of organic production on farm workers; we apply informational interventions to assess the change in consumer decision making when informed of the dangers farm workers are exposed to in the production of certain conventional produce.
Dynamics in the Purchasing Behavior of Organic Produce
Schroeter, C. and X. Cai
Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407
Once considered a niche product, organic food has become more accessible for consumers through its availability in conventional supermarkets. Consequently, the customer base of organic foods has changed. Societal, economic and retail environmental variables, along with food cultural factors impact an individual household’s purchasing decision of organic produce. In addition to an increased demand for organic food, increased media attention may have altered consumer perceptions. The seminal work by Brown and Schrader (1990) determined that the number of published articles in medical journals and/or popular newspapers on cholesterol and fat can be used to explain food purchasing behavior choices of meat. Similarly, the media attention regarding organic food has been increasing exponentially over time. It is assumed that rising media attention on organics and the linkage to health issues leads to increased public awareness. However, as stated in the recent NYT article, there are opposing views regarding the consumer benefits of organic food. Therefore, there is a need for a comprehensive assessment of organic produce purchasing factors with these macro dimensions. We will include an annual index of newspaper articles weighted by a factor representing the relative proportion of all journal articles providing negative information about organic food consumption. This information could improve the understanding of the actual purchasing decisions of organic/conventional food.
To add a dynamic dimension to our analysis, we use the 2007 and 2010 Symphony IRI Group of Information Resources Inc. (IRI) National Consumer Network Panel on individual households’ pre-packaged spinach purchases. In additional to purchasing information, variables of interest include food cultural features such as family income, family size, ethnicity, and number of young children. Food environmental information from the 2007 and 2010 USDA-ERS Food Atlas is merged by each household’s Federal Information Processing Standards (FIPS). This information includes local food accessibility and availability variables such as household insecurity index, the number of supercenters in the neighborhood, the number of farm direct sales, the number of low-income families, the number of fitness facilities, and the average amount of fast food expenditures in selected U.S. states. In order to estimate the treatment effects of the newspaper article exposure, a propensity score matching (PSM) model was utilized.
Current economic studies that focus on organic food consumption present limited information about the profile of the organic spinach consumer. The range of factors has been restrictive, limited to either demographic or socio-economic determinants. Our results provide a unique contribution to the organic demand literature, because consumer attitudes constantly evolve and modify demand behavior accordingly.
“Local is the New Organic”: Do Consumers Agree?
Hu, W.1, M. Batte1, T. Woods1 and S. Ernst2
1 Department of Agricultural Economics, University of Kentucky, Lexington, KY 40546
2 Department of Agricultural, Environmental and Development Economics, the Ohio State University, Columbus, OH 43210
The U.S. Market for Organic Foods and Beverages estimated that sales of organic food and beverages increased from $1 billion in 1990 to $26.7 billion in 2010. In between 2009 and 2010 alone, the sales went up by 7.7%. Among all organic foods and beverages, the fruit and vegetable sector experienced the fasted development reaching 11.8% growth rate since 2009. Currently, about 11% of all fruit and vegetable sales in the U.S. are organic. Much attention has been given to fresh fruit and relatively less is known about processed products, which account for the lion’s share of all fruit sales. This study focuses on consumer preference for organic blackberry jam. When discussing food with modern attributes, one cannot ignore the fast expanding sector of local food. Of the numerous studies examining market response to organic and local foods, very few have assessed the potential for substitution or complementarity among these characteristics. Is local the new organic? We offer insights to answer this question. Unlike the existing literature, we explicitly consider organic and local food at various levels. Using a choice experiment survey conducted in the states of Ohio and Kentucky, this study included four levels of organic: a USDA “100% organic” logo, a USDA “at least 95% organic” logo, a label indicating “made with organic blackberries”, and no organic labeling. A total of four levels of “local” labeling are also considered, including: sub-state regional labels, state-specific local logo, a multi-state regional label, and no local labeling. A number of other blackberry jam features were also considered in the experiment, including brand name, nutrition claims, as well as the price. Over 1,900 respondents returned their survey. Consumer choice behavior and implied preferences are modeled through a series of discrete choice models. Both observed and unobserved consumer heterogeneities are controlled to the extend that parameter identification is feasible. Different levels of organic and local features are modeled as stand-alone characteristics as well as interactions. Results indicate that most consumers clearly differentiate organic and local attributes in most situations. However, depending on their demographic and socioeconomic characteristics, segments of consumers do appear to trade or compensate organic for local features.
Moderator: Dawn Thilmany, Colorado State University