An In-Store Assessment of Consumers' Willingness-to-Pay for Organic Apples: Does Size Matter?

Organic food sales in the US have grown about 20% annually, from $ 3.6 billion in 1997 to over $ 21 billion in 2008. The demand for organic food exceeds supply despite increases in US and Washington State certified acreage and increases in imports of organic food. Premium prices for organic foods exist at the farm gate and retail levels. Larger organic producers are filling market demands, accounting for a growing share of total organic sales (84% of total market by 2006). Consumers have demonstrated willingness-to-pay (WTP) a premium for organic fruits, but high premiums may deter additional market growth. Willingness-to-pay data collected solely by questionnaire is typically biased upward as there is no incentive for consumers to reveal their true preferences. This study assesses consumers' WTP for two distinct sizes of certified organic (labeled) Washington Extra Fancy grade 'Fuji' apples (Malus xdomestica) using an auction mechanism at the point of purchase. The experiment consisted of two rounds of bidding, and completion of a paper questionnaire to obtain information on beliefs and attitudes. Our results indicate that individuals in our sample were less willing to purchase organic over conventional apples; however, consumers who were willing to purchase organic fruit were willing to pay significant premiums. Although the size of apples did not significantly impact willingness to purchase, larger apples received a premium. The premium associated with organic was constant across different apple sizes. We also found that, although demographics impacted the level of WTP, organic premiums were constant across sample demographics.