U.S. Consumer Demand for Organic Fluid Milk by Fat Content

Abstract

This study examined consumer demand for organic fluid milk in the current maturing organic market using a nationwide weekly retail scanner data set. An Almost Ideal Demand System in which both organic milk and conventional milk were further decomposed into products with different fat content was estimated. The demand for organic milk was shown to be price elastic. The results also revealed substitutions between organic milk and conventional milk products differing in fat content. The substitution pattern was asymmetric and there was greater movement toward organic milk than back toward conventional milk for the same relative change in price.