Nav: Home

Average shoppers are willing to pay a premium for locally produced food

June 03, 2008

COLUMBUS, Ohio - New research suggests that the average supermarket shopper is willing to pay a premium price for locally produced foods, providing some farmers an attractive option to enter a niche market that could boost their revenues.

The study also showed that shoppers at farm markets are willing to pay almost twice as much extra as retail grocery shoppers for the same locally produced foods. Both kinds of shoppers also will pay more for guaranteed fresh produce and tend to favor buying food produced by small farms over what they perceive as corporate operations, according to the study.

"Our conclusion is that if a farmer wants to consider producing food for local distribution and marketing it locally, there are people who are willing to pay more for it," said Marvin Batte, a co-author of the study and the Fred N. VanBuren professor of agricultural, environmental and development economics at Ohio State University. "We are not saying that we should be producing all of our foods locally, just that this may be a viable, profitable activity for farmers."

And what's good for farmers also benefits consumers in this case, said Batte, director of the research project.

"This is an indication that certain groups out there value locally produced food and if farmers deliver that, it makes these consumers happier, so it's good for them, too," he said.

Most of the survey was conducted in late 2005. Batte said the findings - and his contention that not all food should be produced locally - still apply today, even in the face of rising fuel and food prices. Many food crops that thrive in specific types of climates cannot be efficiently and affordably produced for local distribution elsewhere. And, he said, those who buy local food to support nearby growers likely would be even more motivated to lend that support in a flagging economy.

The study is published in the May issue of the American Journal of Agricultural Economics.

The researchers surveyed shoppers at 17 Midwestern locations, including seven retail grocery stores, six on-site farm markets and four farmers' markets hosting sellers from multiple farms. The researchers used data from 477 surveys.

The survey presented shoppers with two product options. Both were baskets of strawberries, but they were presented under 80 combinations of price, farm location and farm type. Some scenarios also included a freshness guarantee. After presenting the options, the researchers asked shoppers which basket of strawberries they would buy.

"Statistically, we sorted out what explains each person choosing one basket over the other. We were able to determine how important price was, how important where the strawberries were produced was and whether the freshness guarantee was a factor," Batte said. "Basically what made the biggest difference was local production."

In the study, local production meant the berries were grown within Ohio.

The average retail shopper was willing to pay 48 cents more for strawberries produced locally, and shoppers at farm markets were willing to pay 92 cents extra. With the base price for a quart of berries set at $3, farm market shoppers were willing to pay almost a third more for the local produce.

The freshness guarantee also held meaning for shoppers. If shoppers were promised fresh produce that was recently harvested, farm market shoppers were willing to pay 73 cents extra and retail shoppers indicated they would pay 54 cents more.

The researchers also tried to test shopper interest in supporting small vs. large farms by naming one fictional berry producer "Fred's" and the other "Berries Inc." Shoppers in grocery stores were willing to pay 17 cents extra for a quart of berries from Fred's, and farm market shoppers were willing to pay 42 cents more for the perceived small-farm produce.

"We suspected people who go to farmers' markets go there for a reason, because they are willing to pay more, hunt it down and travel there. But we also found that the typical shopper in a retail grocery store is willing to pay more, as well. And in fact, we're seeing that grocery stores are figuring this out by prominently labeling locally produced food," Batte said. "So we were trying to see if that group of people who shop at retail groceries are willing to pay X amount, and determine what that amount is."

Though the study was conducted in Ohio, Batte said the findings could easily extend to the rest of the country. However, the definition of local would be likely to differ in California, a large state with multiple growing regions, and New England, where several small states are clustered closely together.

"The shoppers are expected to be there in each kind of shopping venue nationally, but 'local' would need to be defined more precisely for various regions," Batte said.

Though not all farmers would be able to set up a niche operation to grow and sell their produce to nearby consumers, Batte said some smaller farm owners could consider adding hand-harvested local production with the expectation that they can charge a premium for that produce.

"Farmers could actually be a little less efficient on the production side and still be more profitable on the revenue side if they can capture that premium price," he said.
-end-
This work was supported by the National Research Initiative of the U.S. Department of Agriculture, the Fred N. VanBuren Program in Farm Management at Ohio State, and the Ohio Agricultural Research and Development Center.

Co-authors of the study were graduate student Kim Darby, outreach program leader Stan Ernst and Professor Brian Roe of Ohio State's Department of Agricultural, Environmental and Development Economics.

Ohio State University

Related Food Articles:

UMD researchers seek to reduce food waste and establish the science of food date labeling
Minimizing food waste is top of mind right now during the COVID-19 pandemic.
Territorial short food supply chains foster food democracy and sustainability
A University of Cordoba study analyzed the governance mechanisms in territorial short food supply chains in Córdoba and Bogotá.
First study on human-grade dog food says whole, fresh food is highly digestible
some pet food companies are developing diets that more closely resemble human food, incorporating human-grade meat and vegetable ingredients that pass USDA quality inspections.
Advancing frozen food safety: Cornell develops novel food safety assessment tool
New research funded by the Frozen Food Foundation developed a modeling tool to assist the frozen food industry with understanding and managing listeriosis risks.
Using controlled environment food production to solve food shortages
Before land and labor shortages prompted by the Industrial Revolution forced food production to move away from cities, agriculture was central to urban environments and their planning.
Food as medicine: UTHealth and partners fill prescriptions for food insecurity
The answer to food insecurity could be as simple as a prescription for healthy food from your health care provider and the means to obtain it, particularly in food deserts, said researchers led by The University of Texas Health Science Center at Houston (UTHealth) School of Public Health.
When it comes to food, one size doesn't fit all: world's largest scientific nutrition research project reveals even identical twins have different responses to food
The first results were revealed from the largest ongoing scientific nutrition study of its kind today, led by an international team of leading scientists including researchers from King's College London, Massachusetts General Hospital and nutritional science company ZOE, showing that individual responses to the same foods are unique, even between identical twins.
Researchers warn: junk food could be responsible for the food allergy epidemic
Experts at the 52nd Annual Meeting of the European Society for Paediatric Gastroenterology, Hepatology and Nutrition are today presenting the results of a study that show higher levels of advanced glycation end products (AGEs), found in abundance in junk food, are associated with food allergy in children.
Food freshness sensors could replace 'use-by' dates to cut food waste
Imperial academics have developed low-cost, smartphone-linked, eco-friendly spoilage sensors for meat and fish packaging.
Toward zero hunger: More food or a smarter food system?
When thinking about ways to end global hunger, many scholars focus too narrowly on increasing crop yields while overlooking other critical aspects of the food system.
More Food News and Food Current Events

Trending Science News

Current Coronavirus (COVID-19) News

Top Science Podcasts

We have hand picked the top science podcasts of 2020.
Now Playing: TED Radio Hour

Making Amends
What makes a true apology? What does it mean to make amends for past mistakes? This hour, TED speakers explore how repairing the wrongs of the past is the first step toward healing for the future. Guests include historian and preservationist Brent Leggs, law professor Martha Minow, librarian Dawn Wacek, and playwright V (formerly Eve Ensler).
Now Playing: Science for the People

#566 Is Your Gut Leaking?
This week we're busting the human gut wide open with Dr. Alessio Fasano from the Center for Celiac Research and Treatment at Massachusetts General Hospital. Join host Anika Hazra for our discussion separating fact from fiction on the controversial topic of leaky gut syndrome. We cover everything from what causes a leaky gut to interpreting the results of a gut microbiome test! Related links: Center for Celiac Research and Treatment website and their YouTube channel
Now Playing: Radiolab

The Flag and the Fury
How do you actually make change in the world? For 126 years, Mississippi has had the Confederate battle flag on their state flag, and they were the last state in the nation where that emblem remained "officially" flying.  A few days ago, that flag came down. A few days before that, it coming down would have seemed impossible. We dive into the story behind this de-flagging: a journey involving a clash of histories, designs, families, and even cheerleading. This show is a collaboration with OSM Audio. Kiese Laymon's memoir Heavy is here. And the Hospitality Flag webpage is here.