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1,
Vicki
1 McCracken ,
Joan
2 Ellis
WSU School of Economic 2 WSU Department of Apparel Merchandising, Design and Textiles Funded by CAHNRS Undergraduate Research and Creative Projects Grant ABSTRACT
There has been a steep rise in the demand for organic food products from $1 billion to $14 billion in the last 14 years (Forbes, 2010). Though the cost of producing organic food products is higher, consumers value locally or organically produced foods. This is because they perceive those products to be healthier, more environmentally friendly or more supportive of small scale agriculture and local rural communities than their conventionally produced counterparts (Darby et al, 2006). The overall objective of this research was to determine the impact of factors like organic and functional product preferences, beliefs about organic and functional products, and demographic variables on a consumers willingness to pay (WTP) for organically produced apples and milk, and flax seed bread.
1 Sciences
ANALYSIS
143 usable observations with 60 variables from survey questions. Variables were classified into groups of related components and Principal Component Analysis (PCA) was performed on each of the groups From each group the component with the highest Eigen value was extracted. These components represent the principal factors for the WTP models. The following critical components were identified Credibility of the store (Credence) Preference of the consumer (Preference) Visual appearance of the products (Appearance) Size of the household (Size) Family income (Income) Environmentally friendly Products. (Environment) These components represent the principal factors which may influence WTP:
Variable Name Organic Milk Coef Organic Milk T-value Milk Coef
RESULTS
Milk T-value Organic Apples Coef Organic Apples T-value Bread Coef Bread T-value
Appearance OrgFood Which Store General Purchase Food Info Food Nutrition Price Household Previous Purchase Amount Purchase Gender Education Race/Ethnicity Student Age Income
.040 -.001 -.053 -.009 .114 .182 -.005 -.167 .303 -.033 -.033 .101 .148 -.009 .014 -.117
1.02 -0.03 -1.13 -0.20 1.88 3.79 -0.08 -1.89 2.15 -0.23 -0.20 -0.03 0.65 -1.43 -0.75 -0.68
-.017 -.126 .029 -.006 .083 .223 .006 -.143 .309 -.023 -.031 -.447 -.046 .001 .058 .050
-0.55 -2.78 0.78 -0.17 1.69 5.86 0.11 -2.01 2.71 -0.19 1.83 -1.88 -0.26 0.31 0.43 0.36
.016 .022 -.019 -.012 .027 .269 -.038 -.016 .072 -.079 -.245 .129 .154 -.009 -.112 ---
0.50 0.49 -0.49 -0.32 0.52 6.66 -0.65 -0.22 0.60 -0.64 -1.68 0.52 0.82 -1.76 -0.79 ---
.020 .08 .053 .004 -.064 .372 .021 -.151 .228 .212 .331 .149 .007 .005 .057 -.104
0.48 0.48 1.09 0.08 1.00 7.49 0.30 -1.63 1.54 1.36 1.84 -0.48 0.03 0.69 -0.32 -0.58
Ag Employment
Regression analysis for willingness to pay (WTP) was then carried out, using these components and additional socio-economic information provided by participants
Buying Obligation No Buying Obligation
DISCUSSION
Generally the results suggest that the largest impacts on Willingness to Pay included the general importance of price, previous purchase of product, the amount usually purchased, where the participant usually shopped, the importance of nutrition, and specific information about the consumer such as their Race/Ethnicity, Education, Age. The importance of included variables, however, varied across products. The specific variables that were most often significant are Which store milk was usually purchased Previous amount and purchase of milk Food Nutrition Information. Education, Race and Age of individuals purchasing organic products Field Price for all four products