Consumer demand for organic foods – attitudes, values and purchasing behaviour

Katrin MILLOCK, Mette Wier and Laura Mørch Andersen

Archived at http://orgprints.org/4754 

Abstract

In this paper, we use a unique combination of questionnaire data and real market purchase data on organic food to examine whether stated values can predict purchase behaviour. Our data cover around 2000 households during 1997-2001 and it is combined with a survey administered on the same panel in 2001. We distinguish between use values (health, taste and freshness attributes) and non-use values (environmental and animal welfare attributes). Non-use values are on average valued much more than use values according to consumers’ own statements. However, combining these consumer statements with their actual market behaviour, it becomes evident that the propensity to purchase organic increases significantly with the weight assigned to use values. We test this empirically by estimating simple logit and multinomial logit models of consumer choice dependent on stated values and individual characteristics. Stated use values increase the probability of being an organic user to a significant extent. The effect of stated non-use values is lower, but not always significant depending on food product group. Whether we consider stated willingness to pay extra taxes to finance a subsidy for organic farming or observed willingness to pay for organic products on the real market, the majority of consumers are only willing to pay if they hold both types of value. 

That is, acknowledgement of non-use values can explain part of actual purchasing behaviour, but the contribution from use values is much larger. Thus, we can conclude that even though households assign the highest values to the non-use attributes when surveyed, it is the valued use attributes that make them buy organic foods.

Keywords: 	willingness-to-pay, organic foods, contingent valuation, non-use values, revealed versus stated preferences

Consumer demand for organic foods – attitudes, values and purchasing behaviour

1. Introduction
The Danish market for organic foods offers a useful ground for empirical research on consumer demand for organic foods, since it is relatively mature and does not suffer from the supply shortages and barriers that dominate most of the markets outside of Denmark. Here we use data that distinguish itself by being based on observations of stated as well as actual purchasing behaviour of a large number of organic as well as conventional foods. The data contain information at the individual household level (utilising panel data of 2000 households’ daily purchases during 1997-2001) and is described further at www.akf.dk/organicfoods. In addition, the actual purchase data is supported by a questionnaire (available at www.akf.dk/organicfoods), surveying households in the very same panel (response rate 77%) for information on attitudes, values and food habits. In this paper, we combine the panel and survey data in order to identify important characteristics of consumers with high propensity to purchase organic foods, with special emphasis on the 
importance of valued organic product attributes.  

2. General food attitudes
2.1. Valued food attributes in general
We start  by describing the main features of the survey results. Consumers in general seem to focus very much on medicine and pesticide residues in food products – around 80% find that it is of great importance that there are no residues in the product. In comparison, between one third and less than half find it of great importance that the product looks appetizing, that it has low fat content, that animal welfare has been taken into consideration, that it is produced within the country, and that the production is environmentally friendly. Characteristics like low price, high vitamin and mineral content, being branded, easy to prepare or organic are all of even smaller importance. Some of these characteristics are significantly more valued among organic buyers than non-buyers. We define buyers as consumers holding an organic budget share (all food types) higher than 2.5%, following the definition of “medium- and heavy users” applied in other Danish studies (Økologisk Landsforening, 2002; GfK Danmark, 2001). Thus, not surprisingly organic buyers are more focussed on residues, animal welfare, and environmental attributes, less focussed on low prices, and more often they prefer national products, compared to non-buyers. For the other attributes, there is no significant difference between buyers and non-buyers. Origin is important to most consumers, and 72% would rather buy conventional Danish fruit and vegetables than organic foreign fruit and vegetables. Thus, the origin attribute commonly overrules the organic attribute – this holds to a higher degree for non-buyers, though. 

Most consumers (80%) find they have higher confidence in the quality of food products when the producer is Danish, and when there is information on the packing about where and how the product is produced. Especially the latter factor holds to a larger extent for organic buyers. Other important factors for consumer confidence are that the food is bought in a specialist shop. In contrast, characteristics like the product being bought at the farm gate or markets are less important and may even decrease consumer confidence – this holds to a larger degree for non-buyers though.

2.2 Risk perception
In everyday life, consumers most often worry about spoiled food, salmonella and other bacteria, plus medicine and pesticide residues. Less often, they are concerned about cholesterol, mad cow disease and genetically modified organisms (GMO’s). However, even though most consumers are not worried about GMO’s in their everyday life, they are indeed concerned about it: Almost all consumers agree that use of gene technology in food production may have undesirable effects on nature and personal health in the long run. Very few believe that gene technology will be used to produce healthier or more environmentally friendly foods. Thus, wider use of GMO’s in food production would possibly be met with extensive consumer opposition. 

Health concern is significantly more prevalent among organic buyers than non-buyers. Most consumers feel the risk of falling ill with bacteria is much lower when the product is labelled guaranteed salmonella or campylobacter free – trust in these labels are higher among buyers than non-buyers, though. If the product is Danish or organic, almost all consumers feel it either lowers or does not change the risk of bacteria contamination (from chicken), and mad cow disease (from beef).

71% of consumers agree that foods should be tested more thoroughly for pesticide residues, and organic buyers agree significantly more often. Additionally, buyers are more positive towards banning harmful pesticides. 

2.3. Environmental concern and responsibility
Only a minor part of the respondents agrees in statements saying that environmental pollution is not as extensive as claimed, that it makes no sense to act environmentally friendly, either because each individual’s own contribution is negligible or because we are already doing enough today, or that it is not within the consumers’ power to solve the problems of pollution. Organic buyers disagree significantly more often than non-buyers. Thus, few consumers neglect the existence of environmental problems, and few reject their own responsibility. The results suggest that it is widely acceptable to state environmental concerns. 

Buyers are more often members of organisations for the protection of nature and animal welfare, and they recognize and notice the Nordic Swan Label (an environmental label) more often than non-buyers. These findings suggest that organic buyers also behave (and think) more environmentally friendly in general. Few consumers (6-12%) like other people to notice them purchasing organic foods or find it important to set a good example by buying organic foods – not unexpectedly, significantly more among buyers than non-buyers, though. Thus, when it comes to purchasing organic foods, the importance of social role appears to be minor. 

3. Organic food – knowledge and trust 
3.1.The  Danish organic label
The national Danish organic label is well known – 93% of all consumers recognise it. In general, the respondents have a good knowledge of the organic rules. However, consumers in the main believe that the label is more comprehensive than it actually is. Surprisingly, there are almost no significant differences in knowledge of the rules behind the organic label between buyers and non-buyers. Most consumers (59%) have general confidence in Danish products with the Danish organic label – only 29% have general confidence in foreign products carrying the same label, though. Around half the consumers believe that the rules are good enough to ensure animal welfare, nature and health. Only a small proportion of consumers (12-13%) disagree in these statements. Trust in organic products without the label is low – especially, for foreign products. 

Respondents commonly think it is important to increase the stringency of all types of organic production rules, especially with respect to (drinking) water protection, and use of additives, pesticides, and medicine. Thereafter consumers are concerned about use of gene technology, use of colouring agents, and animal welfare. Least important are protection of wildlife and nature, use of fertilisers, energy savings, and environmentally friendly packaging (in that order). Buyers are significantly more dedicated to increasing the stringency of all types of organic production rules.

3.2. Barriers to buying organic food
The main stated barriers for not purchasing organic foods in general (i.e. for all consumers, willing as well as not willing to pay a price premium for organic products) are lack of trust in any health effect from eating organic foods (due to the existence of many other risk factors in everyday life), too high organic price premiums, lack of trust in organic certification and control, and simply that there are many other things that are important to spend money on (i.e. lack of interest in organic products). For fruit and vegetables, foreign origin seems to be an important barrier: most consumers prefer conventional domestic products to foreign organic products, as mentioned in Section 2.1. Other important stated barriers are perceptions of organic products having bad appearance and shorter duration. As expected, these barriers are more prevalent among non-buyers. However, one barrier – supply shortage – appears to be mainly a problem for buyers. 

Combining these stated barriers with information on actual purchase behaviour, however, shows that not all stated barriers actually prevent consumers from buying organic foods. Thus, assigning weight to bad appearance or shorter duration does not influence the organic budget share significantly. Instead, two more statements expressing lack of interest in organic goods (lack of knowledge on what organic products really are, and simply forgetting to buy organic goods) are both important barriers to actually purchasing organic food.  

4. Perception and valuation of organic attributes
4.1. Defining value types
In the following, we apply various types of product attributes or more general values or benefits. First, we distinguish between private and public goods. Private goods can only be consumed by one household (e.g. an organic potato can only be eaten once, in one household). In contrast, public goods can be shared, and the utility of the consumption is independent of (and not excluding) consumption in other households.  

Second, consumers that purchase organic foods (buyers) may have use values, such as utility from taste, health and freshness, i.e. private good attributes which can only be enjoyed by actually consuming (eating) the product. Non-use values are in our study public good values related to improved environment and/or animal welfare.  Other  non-use  values, not directly handled in this study, are existence value (utility from knowing organic farming exists), vicarious value (utility from indirect consumption, e.g. reading about or watching a television program on organic farming), bequest value (utility from preserving organic farming for future generations), and altruistic value (utility from knowing that other households derive utility from organic food). Finally, another type of value is the option price, i.e. the value of keeping the possibility of consuming organic foods sometime in the future. 

4.2. Stated valued attributes  
In the questionnaire, we elicit stated willingness to pay (WTP) in different manners. First, we ask all respondents for stated valued food attributes in general at the beginning of the questionnaire. Second, we ask for the willingness to pay for four specific organic product types (milk, rye bread, potatoes, and minced beef) . Third, we ask for the willingness to pay extra taxes to finance a subsidy in order to ensure future organic production. (The exact wording of the questions can be found in the Appendix.) In this manner, we reveal stated valued organic product attributes in various ways: for organic goods in general, and for the four specific products (for those willing to pay more for these).

As regards the willingness to pay for specific organic food products, between one fifth and one third of the households state they are willing to pay more for organic products, depending on product type. Most consumers are willing to pay extra for organic milk and bread, fewest for potatoes and beef. On average, the stated price premium ranges between 25% and 38% more, depending on product type. 

Interestingly, valued product attributes seem to differ somewhat from food product attributes in general, as described in Section 2.1. For organic foods, most consumers (including those not willing to pay more) state that improved animal welfare and environmental protection are the two most important features of organic production. Health attributes are ranked lower. Most consumers perceiving organic products as healthier believe they are healthier because of the absence of pesticide and medicine residues.  

By and large, there are no big differences in valued product attributes across product types. An aggregation of all organic attributes into either use values (defined as private attributes only enjoyed when actually eating the product, e.g. health, taste, freshness), or non-use values (defined as public attributes enjoyed independently of actually eating the product, e.g. animal welfare, environmental attributes) yields interesting results. Table 1 shows the percentage of total value assigned to each value type for organic foods in general, and more specifically for each of the four products handled in the questionnaire, plus median and standard deviation. Note that we have observations on answers to the general valuation of organic products from 1003 households, while we have only between 91 and 154 observations on the evaluation of specific organic products. The reason is that, for specific products, only households stating they are willing to pay more for the product, answer these questions.

INSERT TABLE 1 HERE
 
It is evident from Table 1 that non-use values are assigned around  twice as much weight on the “importance scale” as use values. Around two third of total value can be assigned to non-use values, leaving one third assigned to use values. This result holds across product types, as well as for organic goods in general. Furthermore, the median and standard deviations indicate rather identical distributions, as medians and standard deviations do not vary much across product types. 

Comparing specific use and non-use value types reveal that environmental and animal welfare attributes are equally important. For use values, health attributes are the most important, taste the second most important, and finally, freshness the least important.

5. Linking attitudes and stated values with willingness to pay
The survey instrument asked for willingness to pay in two manners: through the price paid for specific products, and through an annual tax to finance a subsidy to ensure future organic production. Since the sample for stated WTP for specific products is quite small (around 400 respondents), we focus here on the link between stated values and stated willingness to pay a yearly tax to support organic production.

About one fourth (26%) of all consumers are willing to pay on average DKK207 (around EUR28) per month in extra taxes. However, out of these, a little more than half state that they are not willing to pay more for any of the four organic products handled in the questionnaire. Also, when taking into account actual consumption behaviour, this group holds much lower average organic budget shares (3.3%) than the group both stating they are willing to pay extra taxes and also stating they are willing to pay more for at least one of the four organic products (organic share 11.8%). This indicates that some households, with a low propensity to buy organic foods (and hence not willing to pay for private benefits like taste, freshness, and health that can only be enjoyed by actually consuming organic products), are in fact willing to pay for non-use values like environmental and animal welfare benefits associated with organic production.

Combining information on whether respondents are organic buyers or not with information on willingness to pay taxes reveals interesting differences in the willingness to pay between buyers and non-buyers. By furthermore breaking these groups down by stated acknowledgement of organic goods having (or not having) use value and/or non-use value, even more differences become observable.    

5.1. Identifying groups and value types 
Table 2 provides an overview of the relative size of various consumer groups. Of the 1191 households that responded to the question on values associated with organic goods in general, we have purchase data for 2001 for 1165 respondents. 42% of all households are buyers (according to our definition of having an organic budget share over 2.5%), and 58% of all households are non-buyers. 74% of all respondents are not willing to pay extra taxes in order to ensure future organic farming, while 26% are willing to do so. Table 2 concerns these 26% of all respondents. 

INSERT TABLE 2 HERE

It appears from Table 2 that more than two third of those willing to pay extra taxes are organic buyers (group 1, 18% of all households). All of these have stated non-use values (group 1A), and almost all of these also have stated use values (group 1Aa, 17% of all households). A priori this group is expected to have the highest willingness to pay, as they may hold all types of values. Part of the use value is encompassed by the value of organic foods purchased, and part is encompassed by a private consumer surplus for households willing to pay more than the market price. Thus, buyers’ willingness to pay extra taxes may first include a private consumer surplus, second it may include an option price for households valuing the possibility of buying organic goods in the future, and third it may include all types of non-use values. Group 1Ab (consumers with stated non-use values, and no stated use-values, 1% of all households), can neither have a private consumer surplus, nor an option price, as they state they have no use values. Consequently, we expect the willingness to pay for this group to be lower than the willingness to pay for group 1Aa. Please note that group 1Aa is much bigger than 1Ab and 1B, suggesting that almost all buyers assign both types of values.

No households (buyers as well as non-buyers) without stated non-use values (group 1B and 2B) are willing to pay extra taxes – thus, all households willing to pay extra taxes also assign value to organic goods.

Non-buyers, willing to pay extra taxes and assigning non-use values to organic goods (group 2A), constitute 7% of all households. The vast majority of these (group 2Aa, 6% of all households) also assigns use values to organic goods. The remaining households (group 2Ab, 1% of all households) only assign non-use values to organic goods. Consequently, a priori, we would expect the willingness to pay for this group to be lower than the willingness to pay for group 2Aa. 

74% of all households are not willing to pay extra taxes (not shown in Table 2). Of this group, around one third is buyers. A (very) small part of this group (buyers, not willing to pay extra taxes) is not assigning any type of value to organic farming, but are also – very illogically – buyers.  The vast majority of buyers not willing to pay extra taxes assign value to organic goods, however – and the vast majority assign use values as well as non-use values. 

Two thirds of the households not willing to pay extra taxes are non-buyers. Out of these, the majority actually assigns some value to organic goods. This value must, however, be very low, as these households are not willing to pay taxes, and they hold very low propensity to purchase organic, as they belong to the non-buyer group (organic budget share less than 2.5%). A minority does not assign any type of value to organic farming, which is logically reflected in this group not being willing to pay extra taxes, and not belonging to the buyer group.

5.2. Estimated willingness to pay
26% of all respondents state that they are willing to pay extra taxes in order to ensure future organic farming, and on average, they are willing to pay DKK207 (around EUR 28) per month, as appears from Table 3. Around this mean, a large variation is observed – the highest willingness to pay is DKK1500 per month, while the lowest is DKK5 per month.
Three out of five organic buyers are not willing to pay extra taxes, while two out of five are willing to pay DKK219 (EUR 29) on average. Nine out of 10 non-buyers are not willing to pay extra taxes while one out of ten is willing to pay DKK180 (EUR 24) on average.

INSERT TABLE 3 HERE

In general, the willingness to pay estimates seem sensible. It appears that willingness to pay is generally higher for buyers (DKK219) than for non-buyers (DKK180). Second, for non-buyers,  households having use values as well as non-use values hold higher willingness to pay (DKK181) than households having only non-use values (DKK170).  As this group is currently not purchasing organic foods, the higher willingness to pay due to use values may correspond to an option price.

However, for the two groups of buyers that state they assign values to organic goods, the difference in their willingness to pay is very small. Buyers assigning both types of values, (and possibly having private consumer surplus as well as option value), hold a willingness to pay a little lower (DKK218) than buyers assigning non-use values only (DKK221). Before jumping to conclusions however, it is worth noticing that the latter group is very small (8  households – 1% of the total sample), which makes estimates for this group rather uncertain. The bids in this group lie between DKK50 to DKK500. 

A more detailed analysis can be done by studying the influence of stated values and attitudes on the level of the willingness to pay a tax. We assume that certain characteristics and attitudes of the consumer influence whether the consumer responds yes to the question on willingness to pay a tax to sustain organic production. If this latent variable exceeds a certain threshold, then the consumer responds yes, and the magnitude of the WTP bid is modelled in a second step. In other words, we assume a linear relation between the WTP bid and the respondent characteristics, including stated use and non use values:

where WTPi is the WTP bid of individual i, β is the vector of characteristics to be estimated, Zi is the vector of individual characteristics and stated values, and u1i is an error term. Since we only observe WTP bids for respondents having stated that they are willing to pay such a tax, the dependent variable is only observed when . We thus use a Heckman sample selection model to correct for the bias that would arise if the latent variable was not taken into account. We assume that the variables in Xi that determine whether an individual makes a positive bid or not include attitudes and knowledge of organic production. For example, it seems logical to suppose that the barriers discussed above determine whether a respondent has sufficiently strong attitudes towards organic food to express a positive willingness to pay. In our sample, those attitudes are measured by questions relating to whether the consumer has knowledge about what organic production stands for, or whether she has confidence in the organic production rules, or the control of organic food products. It is only when these variables are sufficiently strong to make the respondent being willing to pay a tax for organic production that the other characteristics of the individual – income, education, use and non-use values – will determine the level of the WTP. The regression results from the Heckman sample selection model are presented in Table 4. To interpret the results, note that Jutland rural is the base for the geographical categorical variable, vocationally oriented high school is the base for the education variable, and maximum age 20-29 the base for the age variable. 

INSERT TABLE 4 HERE

As for the selection equation, we find that barriers indeed have a significant negative influence on being willing to pay a yearly tax to sustain organic production. The most important significant barriers are no interest in organic products and no trust in the health effects of organic production. Stating no trust in the control of organic production is also a significant variable in not giving a positive WTP bid. Once a respondent states a positive WTP, it is income (as proxied by food expenditure) and education level that influence the level of the WTP bid in a significant manner. In addition to these parameters, however, stated non-use values have a significant positive impact on the level of WTP. In comparison, the coefficient with regard to the level of stated use values is much smaller but it is not at all significant. Having children in the age group 0–14 years has a positive impact on the WTP level, but it is significant only on a 13% level. 

When it comes to being willing to pay a yearly tax to sustain organic production, it thus seems that use values constitute a relatively small fraction of total value. Willingness to pay extra taxes appears instead to reflect primarily non-use values. This confirms the previous analysis of the cross tabulation in Table 3. Table 3 furthermore indicates that there is no significant private consumer surplus – because, if there were, buyers holding both values types would have much higher willingness to pay than respondents holding non-use values only. Consequently, organic products and prices must be so abundant and differentiated in Denmark that there appear to be no unexploited consumer surplus.

We can analyze the impact of stated use and non-use value further by estimating the probability of being in a specific sub-group. The empirical estimation is based on a standard random utility framework, where consumer utility is modeled as a function of individual-specific characteristics and stated values and attitudes. Individual i’s utility from choice j is specified as:

where	βj is the vector of coefficients to be estimated,  is a vector of consumer i’s socio-economic characteristics and stated values and attitudes, and  is an error term linked to the  fact that we do not observe actual utility but only the fact of being in a specific sub-group. For this application there are four categories: 1) no user and no willingness to pay a tax, 2) no user but with a willingness to pay a tax, 3) user but with no willingness to pay a tax, 4) user with willingness to pay a tax.  Using the assumption that the error terms are independent and identically distributed and distributed according to the Weibull distribution, the probability that individual i belongs to category j is:

which can be estimated as a multinomial logit model. The sub-group of individuals that are no users and have no willingness to pay a tax is set as the base category and we estimate the probability of being in one of the other sub-categories. 

INSERT TABLE 5 HERE

Table 5 confirm the above conclusions: holding use values increases the probability of being in a user sub-group, but it is stated non-use value that seems to increase the probability of being willing to pay a yearly tax for organic production. The coefficient on non-use values increases the probability of being in the groups “no user tax” and “user tax” and it is statistically significant at a 5% level. The higher the education level, the more likely it is that the individual belongs to the sub-categories of users and of users and tax payers. There also seems to exist a geographical pattern in that respondents in the capital region are more likely to be actual consumers of organic food, all else equal. This reflects the easier access to diverse organic food product groups in that region. By comparison, expressing a positive willingness to pay an extra tax for organic food production shows no such geographical influence. Income has a positive significant impact on being in the sub-category of individuals that are users and that are willing to pay a tax as well. Concern for pesticide residues in food increases the probability of being in this sub-group too, but it is significant only at a level of 11%. 

6. The effect of stated values on actual purchasing propensity
In the previous Section we concluded that holding non-use values was positively linked to the stated willingness to pay for organic food products. This does not necessarily mean that consumers actually purchase organic food products for environmental and animal welfare concerns. Certain observations qualify such a conclusion. First, almost all (94-97%) households that state they are willing to pay more for the organic products presented in the questionnaire claim to have use values as well as non-use values. Almost no (between 1-3%) consumers assigning only use or non-use values to organic products state they are willing to pay more for such products. Thus, holding both types of values appear to be a prerequisite for buying. Second, 98% of the households stating use values also state non-use values. Thus, consumers can have non-use values without having use values, while the opposite does not hold: If you have use values, you have non-use values as well. 

To test if these findings on stated willingness to pay and stated values for specific products (presented in the questionnaire) also hold for actual willingness to pay on the real market, we combine information on stated values for organic goods in general with actual purchase behaviour. Of the 1191 households that responded to the question on values associated with organic goods in general, we have purchase data for 2001 for 1165 respondents. Indeed we do find that households stating both types of values also hold high organic budget share on the real market. Thus, consumers can be divided into 4 groups, as shown in Table 6: Households with both types of values constitute 66% of all households and hold an average organic budget share of 5.5%, households having non-use values only constitute 16% and hold an average organic share at 2.5%, and households stating neither use nor non-use values constitute another 16% - this group holds an average organic share at 1.2%. The fourth group, households stating use values only, is negligible (1%).

INSERT TABLE 6 HERE

These results suggest that non-use values are generally acknowledged, but that only those having use values in addition actually purchase organic food to a high degree. Households having both types of values purchase more than twice as much organic food than households having non-use values only. And again, these households (having non-use values only) purchase more than twice as much organic foods than households having neither use nor non-use values. The very same pattern can be observed when looking at specific product groups. 

We explore the question further by estimating the probability of being in a specific consumption group. We initially categorized consumption levels into 4 groups: heavy (10 % or more organic budget share), medium (an organic budget share between 2.5 and 10%), light user (less than 2.5% organic budget share), and no-user. Results from a preliminary multinomial regression on this basis showed that the group light user had almost no significant coefficients. We thus merged the light and no-user groups, and instead estimated a simple binomial model of the probability of being a medium or heavy user compared to the base category light/no-user. As before, for the categorical variables, Jutland rural is the base for the geographical variable, vocationally oriented high school is the base for the education variable, and maximum age 20-29 the base for the age variable. Below we present results for the aggregate level of organic food consumption as well as for the five separate food groups milk, cereals, meat, vegetables, and other food products (e.g. tea, coffee).

INSERT TABLES 7-12 HERE

The binomial logit estimations of the probability of being a heavy or medium user of organic food products indicate several significant results. First, barriers towards organic consumption (no interest, no knowledge, no trust either in the control of organic production or the actual health effects from organic consumption) have a negative influence on the probability of having a large budget share of organic consumption. Second, income always has the expected positive impact, although it is not significant on the aggregate level, nor for organic meat. Third, the coefficient for non-use values is generally smaller than the one for use values, although it is not always statistically significant. The notable exception is the ‘other’ food products group, where the coefficient on non-use values largely exceeds the one on use values in the estimation of the probability of being in the heavy user group (but the use value coefficient is not statistically significant here). The size of the coefficients on use and non-use values are almost of the same size for the vegetables and meat product groups. Stated use values always increase the probability of being in the heavy user group, but for the ‘other’ food and meat product groups it is not statistically significant at a 10% level. We thus note differences in the impact of use and non-use values across product groups. Use values seem to affect the strongest the probability of purchasing milk and cereals, whereas non-use values have a stronger influence on organic meat products and the ‘other’ food category. For vegetables, the impact of use and non-use values is almost identical, but for this group, part of the use value may be taken up by the significant positive impact of the variable concern for pesticides.

The model does not explain the probability of buying organic meat products very well, probably because it is a rather small specialized market for organic products. For the other food groups the model seems to work quite well. Geographic location (being in the capital region or in a city) and higher education increases the probability of being a heavy buyer of organic foods, and to a much larger extent than neither income or stated use values. Concern for pesticide residues has a significant positive impact on the probability of being a heavy or medium user of organic milk, cereals, and vegetables. Somewhat surprisingly, having children never turns out to have a significant impact on the probability of being a heavy user of organic food. 

7. Conclusions
Combining household level information on stated values and attitudes with real market purchase data reveals interesting new knowledge on household demand for organic goods. In the present study on Danish data, we find that one out of six consumers does not acknowledge any benefits for organic foods. Furthermore, one out of six acknowledges environmental and animal welfare attributes only. The majority however – two third of all consumers – acknowledge and value organic products for their environmental and animal welfare attributes (non-use values), as well as for their health, taste and freshness attributes (use values). The highest propensity to purchase organic is found in the group having both types of values. Their average organic budget share is twice as high as the corresponding share for those having non-use values only.

According to consumers’ own statements, non-use values are on average more valued than use values: consumers generally assign around twice as much weight on the “importance scale” to non-use values, than to use values. This holds for all types of organic products. However, combining these consumer statements with actual market behaviour, it becomes evident that propensity to purchase organic increases significantly with the weight assigned to use values. The probability of being a consumer of organic food increases with non-use values as well, but this effect is not always statistically significant, depending on food product group. That is, acknowledgement of non-use values can explain part of actual purchasing behaviour, but the contribution from use values is by far the main driver. Thus, we can conclude that even though households assign highest values to the non-use attributes in survey questions, it is the valued use attributes that makes them buy organic foods. 

Our results suggest that the variation of organic shares and valued organic product attributes across family types is to a large extent related to specific household characteristics. For example, higher disposable household income (approximated by total food expenditure), age and education level all significantly increase the probability of being a heavy consumer of organic food (defined as having an organic budget share of at least  2.5%). Somewhat surprisingly, the presence of children does not have a significant impact on the probability of consuming organic food products. Barriers that significantly influence the propensity to buy organic are lack of trust in control, lack of interest in organic goods, and lack of trust in any health effect from eating organic goods (due to the existence of many other risk factors in every day life). Not surprisingly, concern about health risk from eating foods with pesticide residues increases the probability of being a consumer of organic products. 

About one fourth of all respondents are willing to pay extra taxes in order to ensure future organic farming, and on average, they are willing to pay DKK207 (around EUR28) per month. It appears that willingness to pay is generally higher for buyers (DKK219) than for non-buyers (DKK180). There appear to be no big differences in the estimated willingness to pay for households assigning both types of values with the estimate for households assigning non-use values only. This holds especially for buyers, indicating that there is no significant private consumer surplus for Danish buyers with use values. Instead, willingness to pay extra taxes appears to mainly reflect non-use values.

References
GfK Danmark (2001). GfK ConsumerScan. Den økologiske forbruger 2000 (in Danish). Copenhagen.
Økologisk Landsforening (2002). Forbrugernotat 2002 (in Danish). Århus. 

TABLES

Table 1. Distribution of stated value on use and non-use values by product type 
Product type	Value type	N	Mean
(%)	Median
(%)	Standard dev.
(%)	
Organic products in general	Use values	1003	34	40	21	
	Non-use values	1001	66	60	21	
Milk	Use values	154	41	44	16	
	Non-use values	154	59	56	16	
Bread	Use values	111	37	40	17	
	Non-use values	111	63	60	17	
Potatoes	Use values	91	37	40	15	
	Non-use values	91	63	60	15	
Beef	Use values	100	38	42	16	
	Non-use values	100	62	58	16	

Table 2. Buyer group and stated values – identifying groups and value types
	Willing to pay an extra tax to support organic farming
	
BUYERS with stated…. 		
          …non-use values and use value	Group 1Aa         17%         	
          …non-use values only	Group 1Ab          1%	
     All buyers with non-use value	Group 1A        18%	
		
     All buyers with no non-use value	Group 1B          0%	
		
ALL BUYERS	Group 1          18%
	
NON-BUYERS with stated 		
          …non-use values and use value	Group 2Aa           6%	
          …non-use values only	Group 2Ab           1%	
     All non-buyers with non-use value	Group 2A          7%	
		
     All non-buyers with no non-use value	Group 2B          0%	
		
ALL NON-BUYERS	Group 2           7%	

TOTAL (all households, willing to pay extra taxes)	
                        26%	
Notes: 
- Percentage figures are percentage of total sample. Total sample=1165 households.

Table 3. Average WTP by buyer group and stated values
	Willing to pay an extra tax to support organic farming
Mean WTP (DKK) 	
BUYERS with stated…. 				
          …non-use values and use value	218			
          …non-use values only	221			
     All buyers with non-use value	219			
				
     All buyers with no non-use value	 —			
				
ALL BUYERS	219			
				
NON-BUYERS with stated 				
          …non-use values and use value	181			
          …non-use values only	170			
     All non-buyers with non-use value	180			
				
     All non-buyers with no non-use value	 —			
				
ALL NON-BUYERS	180			
				
TOTAL	207			
Notes: 
- Total sample=1165 households.
- Groups holding no households are marked with  —.
- 5 households stating they are willing to pay taxes have been removed from the sample. This is because they also state they will reduce their organic consumption due to the increased tax payment. In-/excluding these families changes mean WTP within subgroups with DKK1 only.
- Bids from 12 households giving unrealistically high bids are not included in the WTP estimates. Excluding these families reduces mean WTP for group 1Aa from DKK288 to DKK218, and for group 2Aa from DKK193 to DKK181.
- 1 household willing to pay more taxes, but not assigning any value (neither use, nor non-use) to organic products has been removed from the sample. In-/excluding this family changes mean WTP with DKK1 only.
- 1 EUR= 7.4 DKK (January-February 2004).

Table 4. Heckman sample selection model on the willingness to pay a yearly tax to ensure organic production

	Coefficient	Significance level	
Taxwtp			
Constant	167.84	0.15	
Use values	2.68	0.83	
Non use values	39.73	0.02	
Education=long advanced studies	116.34	0.08	
Maxage 60-95	-101.90	0.05	
Kids 0-14	75.61	0.13	
Kids 15-20	25.47	0.64	
Lnweekunit	48.42	0.05	
			
Select			
Constant	-0.19	0.02	
Notrustcontrol	-0.20	0.02	
Notrusthealth	-0.65	0.00	
Nointerest	-0.63	0.00	
Noknowledge	0.05	0.49	
Concernpest	0.08	0.19	
			
N=1087	p-value: 0.01		

Table 5. Multinomial logit model of the probability of being in a specific sub-group compared to not being a consumer and not being willing to pay a yearly tax for organic production

	Coefficient	Significance level	
No user tax			
Constant	-2.39	0.04	
Use values	0.25	0.04	
Non use values	0.52	0.00	
Geographic region=Capital	0.52	0.25	
Geographic region=East	-0.07	0.85	
Geographic region=Jutland city	-0.07	0.87	
Education=short advanced studies	-0.01	0.97	
Education=medium long advanced studies	-0.03	0.94	
Education=long advanced studies	0.60	0.33	
Maxage=30-44	-0.89	0.14	
Maxage=45-59	-0.29	0.63	
Maxage=60-95	-0.41	0.52	
Kids 0-14	0.34	0.39	
Kids 15-20	-1.09	0.07	
Notrustcontrol	-0.07	0.76	
Notrusthealth	-0.64	0.01	
Nointerest	-0.97	0.00	
Noknowledge	0.10	0.61	
Concernpest	-0.14	0.50	
Lnweekunit	-0.15	0.65	
			
User no tax			
Constant	-1.65	0.04	
Use values	0.24	0.01	
Non use values	0.06	0.52	
Geographic region=Capital	1.15	0.00	
Geographic region=East	0.32	0.29	
Geographic region=Jutland city areas	0.25	0.42	
Education=short advanced studies	0.38	0.12	
Education=medium long advanced studies	0.50	0.04	
Education=long advanced studies	0.89	0.02	
Maxage=30-44	0.57	0.28	
Maxage=45-59	0.52	0.34	
Max age=60-95	1.01	0.06	
Kids 0-14	0.02	0.94	
Kids 15-20	-0.41	0.25	
Notrustcontrol	-0.32	0.03	
Notrusthealth	-0.16	0.25	
Nointerest	-0.72	0.00	
Noknowledge	-0.27	0.08	
Concernpest	0.09	0.48	
Lnweekunit	-0.03	0.91	
			
User tax			
Constant	0.27	0.11	
Use values	0.56	0.00	
Non use values	0.78	0.00	
Geographic region=Capital	1.08	0.01	
Geographic region=East	0.48	0.22	
Geographic region=Jutland city areas	0.77	0.05	
Education=short advanced studies	0.13	0.67	
Education=medium long advanced studies	0.50	0.09	
Education=long advanced studies	1.50	0.00	
Maxage=30-44	-0.86	0.11	
Maxage=45-59	-1.08	0.05	
Max age=60-95	-0.57	0.31	
Kids 0-14	-0.23	0.50	
Kids 15-20	-0.33	0.42	
Notrustcontrol	-0.62	0.01	
Notrusthealth	-1.40	0.00	
Nointerest	-1.49	0.00	
Noknowledge	0.05	0.80	
Concernpest	0.27	0.11	
Lnweekunit	0.71	0.01	
			
N=867	p-value=0.00	PseudoR2=0.25	

Notes:
- No user tax = respondent that does not purchase organic food but expresses a positive willingness to pay an extra tax to support organic farming.
- User no tax = respondent that purchases organic food but expresses no willingness to pay an extra tax to support organic farming.
- User tax = respondent that purchases organic food and has a positive willingness to pay an extra tax to support organic farming.

Table 6. Perceived organic product attributes and average organic budget share, 2001
	Non-use values
(environmental and animal welfare attributes)	No non-use values
(no environmental or animal welfare attributes)	
Use values
(improved taste, health etc)	Average organic share: 5.5
(66% of all households)	Average organic share: 3.5
(1% of all households)	
No use values
(no improved taste, health etc) 	Average organic share: 2.5
(16% of all households)	Average organic share: 1.2
(16% of all households)	
Note: N=1165 households

Table 7. The probability of being a heavy or medium user in terms of overall consumption level (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.34	0.00	
Non use values	1.11	0.21	
Notrustcontrol	0.68	0.00	
Notrusthealth	0.71	0.01	
Nointerest	0.48	0.00	
Noknowledge	0.79	0.06	
Concernpesticides	1.24	0.05	
Geographic region=Capital	2.66	0.00	
Geographic region=East	1.43	0.17	
Geographic region=Jutland city areas	1.51	0.11	
Education=short advanced studies	1.38	0.12	
Education=medium long advanced studies	1.68	0.01	
Education=long advanced studies	2.60	0.00	
Lnweekunit	1.32	0.16	
			
N=872	p-value=0.00	Pseudo R2=0.24	

Table 8. The probability of being a heavy or medium user in terms of the consumption level of milk (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.42	0.00	
Non use values	1.00	0.97	
Notrustcontrol	0.70	0.00	
Notrusthealth	0.73	0.01	
Nointerest	0.82	0.12	
Noknowledge	0.81	0.08	
Concernpesticides	1.37	0.00	
Geographic region=Capital	2.27	0.00	
Geographic region=East	1.08	0.73	
Geographic region=Jutland city areas	1.38	0.16	
Education=short advanced studies	1.68	0.01	
Education=medium long advanced studies	1.81	0.00	
Education=long advanced studies	2.19	0.02	
Lnweekunit	1.45	0.05	
			
N=872	p-value=0.00	Pseudo R2=0.17	

Table 9. The probability of being a heavy or medium user in terms of the consumption level of cereals (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.21	0.01	
Non use values	1.15	0.07	
Notrustcontrol	0.75	0.02	
Notrusthealth	0.94	0.61	
Nointerest	0.81	0.10	
Noknowledge	0.82	0.09	
Concernpesticides	1.25	0.04	
Geographic region=Capital	4.97	0.00	
Geographic region=East	2.27	0.00	
Geographic region=Jutland city areas	1.62	0.05	
Education=short advanced studies	1.31	0.16	
Education=medium long advanced studies	1.89	0.00	
Education=long advanced studies	2.51	0.00	
Lnweekunit (income proxy)	1.53	0.02	
			
N=872	p-value=0.00	Pseudo R2=0.16	

Table 10. The probability of being a heavy or medium user in terms of the consumption level of meat (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.19	0.15	
Non use values	1.22	0.20	
Notrustcontrol	1.09	0.73	
Notrusthealth	0.87	0.57	
Nointerest	0.48	0.01	
Noknowledge	0.87	0.53	
Concernpesticides	0.98	0.90	
Geographic region=Capital	2.67	0.06	
Geographic region=East	2.17	0.13	
Geographic region=Jutland city areas	2.70	0.05	
Education=short advanced studies	0.75	0.40	
Education=medium long advanced studies	1.14	0.68	
Education=long advanced studies	1.20	0.67	
Lnweekunit	1.39	0.25	
			
N=872	p-value=0.01	Pseudo R2=0.09	

Table 11. The probability of being a heavy or medium user in terms of the consumption level of vegetables (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.14	0.06	
Non use values	1.15	0.09	
Notrustcontrol	0.84	0.14	
Notrusthealth	0.81	0.10	
Nointerest	0.71	0.01	
Noknowledge	0.88	0.33	
Concernpesticides	1.26	0.03	
Geographic region=Capital	1.90	0.01	
Geographic region=East	0.98	0.94	
Geographic region=Jutland city areas	1.53	0.08	
Education=short advanced studies	1.15	0.69	
Education=medium long advanced studies	1.49	0.04	
Education=long advanced studies	1.64	0.12	
Lnweekunit (income proxy)	1.77	0.00	
			
N=872	p-value=0.00	Pseudo R2=0.12	

Table 12. The probability of being a heavy or medium user in terms of the consumption level of other food products (base category: light/no-user).

	Odds ratio	Significance level	
Use values	1.03	0.74	
Non use values	1.51	0.00	
Notrustcontrol	0.77	0.11	
Notrusthealth	0.70	0.03	
Nointerest	0.55	0.00	
Noknowledge	0.74	0.06	
Geographic region=Capital	3.68	0.00	
Geographic region=East	2.11	0.03	
Geographic region=Jutland city areas	2.06	0.03	
Education=short advanced studies	1.07	0.78	
Education=medium long advanced studies	1.27	0.29	
Education=long advanced studies	1.81	0.08	
Lnweekunit (income proxy)	1.40	0.13	
			
N=872	p-value=0.00	Pseudo R2=0.19	

APPENDIX

Willingness to pay questions:

6. What price would you be willing to pay for standard milk?
I would pay at the most ________ kr for 1 litre of standard milk.

7. Would you be willing to pay more for organic milk?
Yes______
No______

8. If  yes, what price would you be willing to pay at the most for organic milk?
I would pay at the most_____ kr for 1 litre of organic milk.

Now, consider the following situation: organic farming is no longer profitable, so organic farmers would be forced to convert to usual current production methods. In order to avoid this situation, government could subsidize organic farmers. With extra subsidies to organic farming, continued organic production would be secured and the possibility to purchase organic food products will continue to exist.

45. Would you be willing to pay additional taxes in order to finance such extra subsidies to organic farming?
If you answer yes, you will still have the possibility to buy organic food products at the prices you face today, and organic farming would continue to the same extent as today. Without the extra subsidies there will be no more organic farming, and you could no longer purchase organic food products.

Yes___
No____

46. If yes, how much would you at the most be willing to pay in additional taxes per month?
Please keep in mind that if you pay more taxes, you would have less money available for other uses. Also remember that organic food products will not become cheaper, so you should take into account the usual expenditure on organic food products that you normally buy.

I would pay at the most ____ kr more taxes per month in order to secure continued organic production.

47. Would you then change your consumption of organic food products?
Please keep in mind  that organic food products would have the same price as before. Also remember that any money spent on organic food is not available for other purchases.
(tick just one choice)

Yes, I would increase my consumption of organic food products ………………… _____
No, I would continue buying organic food products to the same extent as before…. _____
Yes, I would decrease my consumption of organic food products…………………. _____

(The follow-up questions on the reasons for paying more taxes are not translated. The entire questionnaire is available from the authors upon request.)