Substitutes or Complements? Consumer Preference for Local and Organic Food Attributes

Abstract

This research examines consumer preference and compares their willingness-to-pay for a host of value-added attributes of processed blackberry jam, and focuses on various organic and local production location designations. Instead of being treated as a binary attribute, three levels of USDA organic are considered: 100% organic, at least 95% organic, and made with organic ingredients (at least 70% organic). For local production, three levels are also included in the analysis: cross-state region (the Ohio Valley), state boundary (state-proud logos), as well as sub-state regions. Stated-preference data collected from a choice experiment in a mail survey in Kentucky and Ohio are used. Results from the study confirm positive willingness-to-pay for both organic and local attributes. However, consumers were willing to pay comparatively more for jam produced locally in regions smaller than the border of a state compared to organic jam. Furthermore, substitution and complementary effects between food attributes were investigated. The study found strong substitution effects between organic and local production claims, an issue that has thus far received minimal treatment in the existing literature on organic and local food willingness-to-pay studies. The results indicate a large degree of overlapping values in the willingness-to-pay for these two food attributes. In addition, the “small farm” attribute considered in the study also appears to be a substitute for organic and local attributes, which confirms the previous belief that one of the many reasons consumers purchase organic or local products is to support small or family-owned farms.