corinna feldmann agricultural and food marketing, university of kassel [email protected] | ...

Corinna FeldmannAgricultural and Food Marketing, University of Kassel

[email protected] | www.uni-kassel.de/agrar/alm

Consumers’ demand for local organic food

Corinna Feldmann & Ulrich Hamm

Biofach Congress 2015, Nuremberg, 12/02/2015



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„Consumers’ demand for local organic food“

• Financial support provided by the Federal Ministry of Food and Agriculture in the framework of the Federal Program on Organic Farming (project no. 2812OE028). The responsibility for the content of this presentation lies with the authors.

• Project duration: 15/09/2013 – 31/12/2015



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Background

• Growing uncertainty when purchasing food– Complex production and processing chains– Increasing transport distances– Multitude of labels and standards

• Consumers ask for better food safety and reliability– Growing demand for organic food– Preference for locally produced food– Need for more transparency



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Buying motives for local and organic food

• Very heterogeneous definitions of local:– Kilometres/miles (specifications: 10-30, 25, 30, 25-50, 100, …)– Political boundaries (states, provinces, countries, …)– Specialty criteria/brand names associated with a region (e.g.

Parma ham)– Emotional/ethical aspects/social relationship (reference to

‚home‘, produced by friends/relatives/neighbours, …)

• Similar associations with local and organic food:– Better quality and taste– Freshness– Healthiness– Environmental benefits– Animal welfare



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Attitude-behaviour gap

• Quality and price considerations in purchase situations

→ Trade-off between quality considerations/moral beliefs and purchase barriers (availability, choice, price) determines attitude-behaviour gap

– reduced for local food, because price is not seen as a barrier– larger for organic food, because it is associated with high price

premiums

• Very committed organic food buyers mind organic price premiums less.

• The majority of consumers is not well-informed about differences in production methods and processes

→ Less motivation to pay a premium for organic food (cf. Similar associations with organic and local food)



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Organic and local food purchase behaviour

• Higher willingness-to-pay for local food compared to organic food (James et al., 2009; Costanigro et al., 2011; Onken et al., 2011; Wirth et al., 2011)

• It remains unclear, whether…– local and organic complement each other (Gracia et al., 2014)

or– compete with each other (Costanigro et al., 2014).

• For organic-minded consumers local and organic appear to be complementary attributes!



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Background of this study

• Combination of consumer survey and choice experiment• 638 respondents in eight supermarkets in four regions in

Germany (urban – rural; North – East – South – West)• Computer-assisted self-interviewing (CASI) • 631 responses were usable for the choice experiment• Four products: apples, butter, flour and steaks• 16 choice sets per respondent (four for each product)



Survey respondents Total (%) Cluster 1 Cluster 2Number of respondents 638 211 427Gender Female 65,2 75,8 60,0 Male 34,8 24,2 40,0Age 18-30 years 19,2 11,8 22,7 31-45 years 31,1 30,3 31,4 46-60 years 35,9 39,8 34,0 >60 years 13,8 18,0 11,7 Average (years) 44,5 47,6 42,9Education No formal qualification 0,3 0,5 0,2

Secondary/Intermediate 40,4 38,4 41,5

College/University qualification 27,7 24,2 29,5

College/University degree 31,5 37,0 28,8

Region North 25,2 28,9 23,4 East 24,9 19,9 27,4 South 24,6 26,5 23,7 West 25,2 24,6 25,5

Significant differences between both clusters:• gender• age• college/university degree• origin from Eastern Germany



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Characterisation of organic-minded consumers

• 211 consumers who view organic production as very important (8 to 10, on a scale from 1 to 10).

• 1/3 of these consumers rate local production as more important (9 or 10, on a scale from 1 to 10).

• Organic-minded consumers are rather female and older than the other consumers.

Organic more important than

local; 65

Organic and local equally important; 82

Organic less important than

local; 64

n=211

• These consumers more likely carry a university/college degree and less likely live in the Eastern part of Germany.



10Results from consumer surveyStatement battery with 25 statements

organic > local

local > further away

organic is healthier and

tastier

would purchase more, if choice and availability

were better would pay more

for local, if officially

regulated

less price-sensitive

purchase influenced by

social environment

Organic-minded

consumers



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Results from consumer survey IIConfidence in food from different countries

Germ

any

Austri

a

Denm

ark

Franc

e

Nethe

rland

s

New Z

eala

nd Italy

Spain

Argen

tina

Israe

lUSA

Domin

ican

Repub

lic

Egypt

Kazak

hsta

n

China

0

1

2

3

4

5

6

7

Cluster 1 Cluster 2

Organic-minded consumers (cluster 1) are less confident in products from abroad.

Significant differences at p≤ 0.05



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Choice experiment

• Attribute-based survey method• Consumer preferences and utility (consumers choose

the most preferred alternative from a set of hypothetical products)

• Preference structure: relevance of different product attributes in comparison

• Choice sets are composed of three product alternatives, varying in three attributes

• Including a no-buy option and a binding purchase decision (closer to real purchase behaviour)



Attributes in the choice experiment

Attributes: Origin, production method, and price– Origin: local, from Germany, from a neighbouring country, from a

non-EU country– Production method: organic, non-organic– Price: four price levels

Prices and countries of origin for different products used in choice experiment

Attribute level Apples Flour Butter Steak

Price 1 2,49 0,69 1,29 3,49

Price 2 2,99 0,99 1,49 4,49

Price 3 3,49 1,29 1,69 5,49

Price 4 3,99 1,59 1,89 6,49

Neighb. countries Austria Italy Denmark France

Non-EU countries Argentina Kazakstan New Zealand Australia



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Example of a choice set



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RPL-model (example for flour)

Statistical significance at level **<0.01, *<0.05

Cluster 1 (organic-minded) Cluster 2 (non-organic)

β Std. error β Std. error

Price -1,3204 -3,0747

Nprice (loglinear) 0,2779 0,344 1,1232 0,1184**

Local 6,2264 0,6761** 5,0972 0,3117**

Germany 5,7554 0,6871** 4,3854 0,2780**

Neighb. country 1,6867 0,5319** 1,1627 0,2292**

Organic 1,276 0,2557** -0,1021 0,5009

ASCNoBuy 1,463 0,7868 -2,7288 0,3478**

No. of obs. 836 1688

LL function -510,844 -1167,266

R² adjusted 0,559 0,5012

Pts 1000 1000



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Willingness-to-pay estimates (organic-minded cluster)

Apples

Butter

Flour

Steaks

0 1 2 3 4 5 6

Organic-minded cluster (cluster 1)

Local (as opposed to 'from a neighbouring country') Local (as opposed to 'from Germany')

Organic production

WTPj =



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Willingness-to-pay estimates (non-organic cluster)

Apples

Butter

Flour

Steaks

-1 0 1 2 3 4 5 6

Non-organic cluster (cluster 2)

Local (as opposed to 'from a neighbouring country') Local (as opposed to 'from Germany')

Organic production

WTPj =



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Results from choice experiment

• Results from choice experiment reflect findings from consumer survey.

• Organic-minded cluster reveals higher WTP for organic.• Organic-minded cluster only prefers organic over local, if

local is compared to a product from Germany.• For steaks WTP for organic is higher.• WTP for butter and flour is generally lower

– lower base price– processed products.



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Conclusions

• Organic-minded consumers strongly value local food production (in some cases even more than organic)

→ organic and local complement each other• For “general supermarket consumers” local is more

important than organic.• WTP for organic and local processed products is lower.• Price is a stronger barrier for organic food purchases.• Quality-price considerations are more relevant in organic

food purchases. • Attitude-behaviour gap: Larger for organic-minded

consumers?!



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Recommendations I

• Clear and transparent communication by producers/processors and retailers for consumers– to reduce uncertainty and increase trust in organic products– especially for products from foreign countries!

• Highlight characteristics of organic food production– clear differentiation of organic as compared to local and other

alternative food products (often no or very vague standards for local)

– emphasize benefits/advantages of organic food production– better knowledge by consumers reduces the purchase barrier

price → closes the attitude-behaviour gap



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Recommendations II

• More research on – differences between processed and unprocessed products– differences between regions and countries (international

context)– attitudes of organic food store customers towards local food.



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The authors gratefully acknowledge the financial support for this report provided by the Federal Ministry of Food and Agriculture in the framework of the Federal Program on Organic Farming (project no.

2812OE028). The responsibility for the content of this publication lies with the authors.

More information:

www.uni-kassel.de/agrar/alm/

[email protected]

corinna feldmann agricultural and food marketing, university of kassel [email protected] | ...

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