Organic Food Demand– evidence from a Danish micro panel

Summary

Only a handful of studies have estimated organic food demand. They all focus on specific food submarkets assuming separability from other food consumption. However, consumers typically associate attributes such as e.g. healthiness and environment friendliness with organic variants of most types of food. If such general organic attributes are important for consumer behaviour then separability may not hold. In this paper we utilize a unique Danish micro panel where all food demand is registered on a disaggregated level with an organic/non-organic indicator to estimate a general food demand system with organic variants. We clearly reject the usual separability assumption and find that the behaviour of Danish consumers is consistent with them perceiving such general organic attributes. In addition estimation of a general demand system makes calculation of economy wide organic price elasticities and other insights into the structure of organic food demand possible.