Assessing demand for organic lamb using choice modelling

Abstract

The worldwide market for organic foods is growing fast, but New Zealand meat producers have been slow to respond. Specifically, New Zealand producers have little or no organic lamb products for export or domestic sale. Part of the reason for this hesitancy to meet demand with supply is that the nature of the demand and consumer willingness to pay for the product is not well understood. The purpose of this study is to investigate New Zealand organic food consumers’ attitudes towards organic food and production methods and to evaluate consumer willingness to pay for an organic lamb product. Data for this study was collected using computer aided personal interviewing (CAPI) in supermarkets and speciality stores in Christchurch and Wellington. The study questioned consumers about their consumption habits, attitudes towards organic food and production methods and presented choice modelling scenarios to test willingness to pay for different attributes of lamb. Factor analysis is used to group the 12 attitudinal questions into three factors which were then placed into a two step cluster analysis to create consumer segments. Choice modelling was then used to measure consumer preferences for the tested attributes of lamb. From the factor and cluster analysis three distinct consumer segments were found and labelled as Committed Organic Seekers, Convenience Organic Consumers and Incidental Organic Consumers. These labels reflect each group’s organic consumption habits and attitudes towards organic food. The choice modelling results show that there is a willingness to pay for organic lamb. The three identified consumer groups state they would pay a premium of 61%, 44% and 26% respectively for organic lamb over standard pasture raised lamb. This paper gives an insight into consumer attitudes and preferences towards a product that could provide a way for New Zealand farmers to increase their returns. It contributes to the body of knowledge about the likely consumer profiles of regular consumers of organic food. There are only a few other studies that have attempted to measure consumer attitudes and willingness to pay for organic meat, however, the author is not aware of any published example of a study that has specifically investigated demand for organic lamb anywhere in the world. The study provides information about stated willingness to pay for five different attributes of lamb; this information should be of value in assisting the industry by showing which product offerings are likely to generate the highest sale price.