a1 Department of Business and Social Sciences, Nova Scotia Agricultural College, Truro, Nova Scotia, B2N 5E3, Canada,.
a2 Agri-Food Chain and Integrated Risk Management Analysis, Agriculture and Agri-Food Canada, Ottawa, Canada,.
a3 Organic Agriculture Centre of Canada and Department of Plant and Animal Sciences, Nova Scotia Agricultural College, PO Box 550, Truro, Nova Scotia, B2N 5E3, Canada,.
Growing interest in organic agriculture has prompted numerous studies that compare various aspects of organic and conventionally produced foods. This paper provides a comprehensive evaluation of empirical studies comparing organic products and conventionally grown alternatives. The emphasis is on key organic consumer demand and marketing issues, including: (1) the implications of an economic definition of organically grown food for consumer demand; (2) attributes that shoppers consider most when comparing organic with conventionally grown products; (3) level and characteristics of consumer knowledge and awareness about organic food; (4) assessment methods and characteristics of organic consumer attitudes and preferences; (5) size of price premium and characteristics of consumers’ willingness-to-pay for organic products; and (6) profile of organic consumers. Overall, although there is some knowledge and awareness about organic products, consumers are not consistent in their interpretation of what is organic. Secondly, while consumers typically understand the broad issues about organic foods, many tend not to understand the complexities and niceties of organic farming practices and organic food quality attributes. Uncertainty regarding the true attributes of organic, and skepticism about organic labels, part of which stems from reported cases of (inadvertent) mislabeling, and product misrepresentation, and partly because of nonuniform organic standards and certification procedures, may hold some consumers back from purchasing organic. Thirdly, concern for human health and safety, which is a key factor that influences consumer preference for organic food, is consistent with observed deterioration in human health over time and, therefore, motivates consumers to buy organic food as insurance and/or investment in health. Fourthly, the proportion of consumers who are willing to pay a price premium for organic food decreases with premium level. On the other hand, premiums tend to increase with (combinations of) preferred attributes. In addition, demand tends to depend more on the price differential with respect to conventionally grown products, than on actual price. In contrast to sensitivity of demand to changes in price, income elasticity of demand for organic foods is generally small. Finally, it is important for policy analysts and researchers to note that organic fresh fruits and vegetables currently dominate the organic consumer's food basket. Furthermore, it is not clear whether frequent buyers consider particular organic products (e.g., organic meat) as normal goods, or if consumers consider such products as luxury goods.
(Accepted March 15 2005)