Consumers’ willingness to pay for organic products, both with existing brands as the exclusive signal of quality and with additional signals incorporated

Summary

The main objective of this deliverable is to evaluate consumers’ WTP for organic products and compare both with existing brands as the exclusive signal of quality and with additional signals incorporated. We used an experimental market and we determined consumer’s willingness to pay (WTP) for produce grown with different pesticide levels. For our experimental markets conducted in Portugal (April, 2009), France (May, 2009)and Greece (February, 2010) consumers’ WTP were estimate using the apple example, for three levels of pesticide reduction: i) “Regular”: apples produced in the respect of the legal legislation. These apples don’t have any cue. ii) Integrated Pest Management (IPM): apples produced with a decrease of the pesticides’ use. In our experimental markets, IPM strategy involved three different signals with a “generic” IPM certification, a retailer brand and a protected designation of origin, (iii) “Organic”: apples produced without any synthesis pesticides. More recently, we conducted the experimental market in Netherlands (October,2010). In this country, we tested two types of organic certification: The conventional organic certification, tested in the previous countries (where no chemical pesticides have been used in 3 the production process) and a certification “Organic Plus” where no chemical and organic pesticides have been used. After showing that consumers’ premium for pesticide reduction is not independent from the product’s sensory attributes, we give the quantitative results for the consumers WTP for a pesticide reduction. It should be noted that demand for organic products seems relatively important in the EU countries that we tested. However in Netherlands, organic production seems to be less valued by the consumers. Countries where the experimental auctions were conducted do not necessarily correspond to countries where income levels are highest in the EU (specifically for Portugal and Greece). Moreover, we show that the income is not significant to explain the premium for organic products. This means that the demand for organic product is likely to grow significantly within the EU in the coming years, this demand involves a priori all segments of the population and the willingness to pay for these products is relatively large. This positive result was not observed for less restrictive alternatives (in terms of pesticide reduction), leading to limit the contribution that we can expect from consumers in favor of a partial reduction of pesticides (for example, using integrated pest management-IPM-system). In terms of pesticide reduction, "Nothing but organic" seems to be the leitmotif of European consumers, so it is reasonable to consider an important development of this mode of production in the coming years.