Preferences for the Farmer-Owned Label: Evidence from Cheese Consumers in the United States

Abstract

Abstract Driven by external developments like industry consolidation and price volatility, organized farm producers seek opportunities to generate rent in the value-added segment of the agri-food industry. Given inherent constraints with cost efficiency and product quality, farm producer organizations (FPOs) may use branding to pursue differentiation. An opportunity is facilitated by the farmer-owned label, which constitutes an ownership signal to consumers. However, empirical evidence of the economic viability of the farmer-owned label is limited. Following a choice experiment with 296 cheese consumers in the United States, we specify a random parameter logit model and find a positive willingness-to-pay for the farmer-owned label which is in excess of private and corporate brands in the same product category. In the final model, the mean willingness-to-pay is estimated at $1.74. While the farmer-owned label is proven to be economically viable in a competitive product category, consumer preferences are heterogeneous. Also, there is no compatibility between the farmer-owned label and indicators of family ownership and product origin.