Performing Department
Food and Resource Economics
Non Technical Summary
Fresh fruits and vegetables play important roles in consumer healthy diet as their consumption is associated with the reduction of several health related diseases such as obesity, diabetes etc. Realizing this the relationship, per capita consumption of fresh produce has increased by 14% in the United States from 1987 to 2011. Although the per capita consumption of some fresh produce is still below recommended levels specified in the American Dietary Guideline (Gao et al. 2013), fresh produce consumption is expected to continue growing as government keeps making efforts to promote the consumption of fresh fruits and vegetables and there is increased number of marketing and promotional messages on the benefits of eating fresh fruits and vegetables (Cook, 2011; Huang and Huang, 2007; Clemens, 2004; U.S. Department of Agriculture, Economic Research Service, USDA-ERS).Compared to some other food products, fresh produce has some unique characteristics. They have a larger number of types and varieties; are perishable with limited storage and shelf life, and their physical attributes tend to be more easily affected by changing conditions such as production method and whether. As a result, fresh produce growers and retailers are facing both significant challenges and opportunities. On the one hand, they need to face a more complicated product differentiation situation, therefore, more challenges. On the other hand, they have more opportunities to develop new niche market by changing the way their products are produced or simply promoting their products as carrying certain existing characteristics.One of the biggest questions is: what products should be produced? Inappropriate selection or promotion of a product or product characteristics may result in stagnant sale, therefore, a potential loss to both retailers and growers. Suitable selection of production and marketing strategies will result in significant increase in the sale for growers or retailers. Avoiding the wrong or developing the right production and marketing strategies requires that the fresh produce industry has a thorough understanding of consumer preference and demand for fresh produce characteristics. Research has shown that consumers are demanding food that can provide personal, social, environment, and animal welfare benefits with their increased understanding of the relationship between food and personal health, the society, and the environment. As consumer knowledge or perception of the multidimensional effects of food production keeps growing, their demand for fresh produce will become more diverse. Therefore it is important to accurately estimate consumer preference for fresh produce attributes to provide critical information for policy makers and fresh produce industry to develop appropriate policy as well as production and marketing strategies.There are two main streams of methods to estimate consumer preference. One type of method uses revealed preference data that record consumer choice in real grocery shopping. Another type of method uses stated preference data where most time a survey or experiment auction are used. Both types of method have their limitations. Revealed preference method relies on current market information, therefore, it is difficult to estimate consumer demand for new products or product characteristics. Stated preference method in many times is hypothetical, in which no real money transactions exist thus may result in hypothetical upward bias estimates. Even non-hypothetical methods have various limitations such as the unrepresentativeness of sample, relatively small sample size (due to the restriction of budget, non-hypothetical method can rarely obtain a very large sample size), unrealisticness of the lab settings etc. Although many research has combined stated and revealed preference method, these approaches have limited application due to the difficulty to collect comparable stated and revealed preference data. All these suggest that there is critical need to keep developing and improving the methods and models that can better estimate consumer preference and welfare measures such as consumer willingness to pay (WTP).The proposed project will help identify the factors affecting the estimates of consumer willingness to pay, therefore provide more accurate and critical information for marketing strategy design and policy develoment to promot fresh fruit and vegetable consumptions.
Animal Health Component
0%
Research Effort Categories
Basic
15%
Applied
80%
Developmental
5%
Goals / Objectives
Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets.
Project Methods
To determine the factors that may affect the consumer WTP estimates, a design of designs approach can be applied (Henser 2006). By estimating consumer preference of the same produce attributes, we can determine the conditions under which these methods may result in the same estimates. Another approach is to identify a benchmark WTP to which the estimates from all the methods can be compared to, therefore to evaluate the effectiveness of using different methods to estimate consumer WTP. In addition, new design and econometric methods in the experimental auction, or choice experiment that take into the consideration of uncompensatory rules in consumers' choice process can also be developed.