Skip to main content
SpringerLink
Log in

Consumers’ preferences for a local food product: a real choice experiment

  • Published:
Empirical Economics Aims and scope Submit manuscript

Abstract

This paper analyses consumers’ preferences for a local food in Spain and assesses their willingness to pay (WTP) using a real choice experiment to mitigate possible hypothetical bias. In particular, preferences for fresh lamb meat were investigated and two attributes evaluated, “locally grown” and the type of lamb meat. Data came from an experiment conducted in Spain during 2009. An error component random Parameter model with correlated errors was used to estimate the effect of the attributes on consumers’ utility and derive their WTP. Results suggest that consumers positively value both attributes and are willing to pay a premium of 9 % price increase for the “locally grown” lamb meat (“Ojinegra from Teruel”) and 13 % price increase for the “Ternasco” lamb meat. If we assume a market where only “Ternasco” lamb meat without indication of the local origin is sold, and then a new “Ternasco” lamb is introduced in the market with the “Ojinegra from Teruel” label, this new local lamb meat would capture 18 % of the market if the package is assumed to be sold at 3.5 \(\hbox {C}\!\!\!\!\!=\) and a 10 % market share if the package is assumed to be sold at 4 \(\hbox {C}\!\!\!\!\!=\).

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. According to the European Committee of the Regions (1996), the concept of “local food” has been used to define natural goods or services produced or provided by different enterprises in rural areas with an established socio-economic identity. “Local food” clearly refers to a geographic production area that is circumscribed by boundaries and in close proximity to the consumer (Hand and Martinez 2010).

  2. Although those consumers’ perceptions cannot be true and even be against some basic economic principles (see Lusk and Norwood 2011 for a discussion).

  3. “Black eyes” because the animals have black colour around their eyes.

  4. Other breeds could not be adapted in this area due to the difficult climatic and geographic conditions. The “Ojinegra from Teruel” breed has a high capacity to run on top of mountains in semi-extensive farms, maximizing the use of the natural resources of the area. In addition, “Ojinegra from Teruel” sheep are not fed with supplements. Moreover, “Ojinegra from Teruel” is a breed included in the Official Catalogue of Livestock Breeds in Spain and the regional government is promoting the expansion of this breed to improve the rural development of this area and keep its population.

  5. Zaragoza is the largest town in the Aragon region located at around 140 km from the producing area.

  6. As Lusk et al. (2008) point out, most applications of incentive compatible preference methods have involved experimental auctions, with more than 100 academic studies. However, up to date such auction methods have not gained the widespread popularity among marketing academics and professionals as has the different conjoint analysis.

  7. They used a within subject non-hypothetical choice experiment.

  8. The field work and the data recording were done by a private marketing research company. Researchers developed a protocol with the experiment instructions for the interviewers who were personally instructed by the researchers on how to conduct the experiment.

  9. We questioned whether interviewees always, almost always, occasionally, hardly ever and never buy the food for the household. Consumers who indicated never were not selected.

  10. The percentage of participants who choose the non-buy option is small and lies between 2 % for the choice set 3 and 21 % for the choice set 4.

  11. Socioeconomic and demographic interaction terms were assumed to be fixed in the estimation.

  12. Estimation for this model is available upon request.

  13. Off-diagonal elements of the matrix represent the amount of cross-parameter correlations previously confounded with the standard deviation parameters of the model (Hensher et al. 2005).

  14. The same applies for the OJITER variable. If we estimate the model defined by \(U_{njt} =\mathrm{{ASC}}+\beta _1 \mathrm{{PRICE}}_{njt} +\beta _2 \mathrm{{TERNASCO}}_{njt} +\beta _3 \mathrm{{OJITER}}_{njt} +\varepsilon _{njt} \), the amount of variance directly attributable to the OJITER variable is 0.036 and not 0.28. The difference value is the cross-product correlation with the TERNASCO random parameter estimate. The diagonal Cholesky element for the variable OJITER (0.036) is not statistically different from zero, this implies that the variable OJITER is not heterogeneous around the mean of the estimated parameter. In other words, there is evidence that consumers’ preferences for the “locally grown” label (OJITER) are indeed homogenous after allowing cross-correlation across attribute parameters.

  15. The unconditional probability is given by \(P_n (\theta )=\int {S_n (\beta _n )f(\beta _{n{}} {}} \vert \theta )~\mathrm{{d}}\beta _n.\)

  16. Nowadays all the lamb meat is sold without this label and as mentioned in the text, 84 % of slaughtered lambs in Aragon correspond to “Ternasco”, then, our assumption is close to the current market situation. The value of the final lamb meat production in Aragon in 2009 accounts for 86.9 millions Euros.

  17. As the “Ojinegra from Teruel” producers.

References

  • Adamowicz W, Boxall P, Williams M, Louviere J (1998) Stated preference approaches for measuring passive use values: choice experiments and contingent valuation. Am J Agric Econ 80:64–75. doi:10.2307/3180269

    Article  Google Scholar 

  • Alfnes F, Guttormsen AG, Steine G, Kolstad K (2006) Consumers’ willingness to pay for the color of salmon: a choice experiment with real economic incentives. Am J Agric Econ 88(4):1050–1061. doi:10.1111/j.1467-8276.2006.00915x

    Article  Google Scholar 

  • Barreiro-Hurlé J, Gracia A, de-Magistris T (2009) Market implications of new regulations: impact of health and nutrition information on consumer choice. Span J Agric Res 7(2):257–268

    Google Scholar 

  • Bernabeu R, Tendero A (2004) Diferencias en las preferencias de los consumidores de carne de cordero. Distribución y Consumo 73:101–107

    Google Scholar 

  • Bernabeu R, Tendero A (2005) Preference structure for lamb meat consumers. A Spanish case study. Meat Sci 71:464–470. doi:10.1016/j.meatsci.2005.04.027

    Article  Google Scholar 

  • Bond CA, Thilmany D, Bond JK (2008) Understanding consumer interest in product and process-based attributes for fresh produce. Agribusiness 24:231–252. doi:10.1002/agr.20157

    Article  Google Scholar 

  • Cameron TA, Poe GL, Ethier RG, Schulze WD (2002) Alternative non-market value-elicitation methods: are the underlying preferences the same? J Environ Econ Manag 44:391–425

    Article  Google Scholar 

  • Campbell D (2007) Willingness to pay for rural landscape improvements: Combining mixed logit and random effects models. J Agric Econ 58(3):467–483. doi:10.1111/j.1477-9552.2007.00117.x

    Article  Google Scholar 

  • Campbell BL, Lesschaeve I, Bowen AJ, Onufrey SR, Moskowitz H (2010) Purchase drivers of Canadian consumers of local and organic produce. HortScience 45(10):1480–1488

    Google Scholar 

  • Carlson F, Martinsson P (2001) Do hypothetical and actual marginal willingness to pay differ in choice experiments? J Environ Econ Manag 41:179–192

    Article  Google Scholar 

  • Carpio CE, Isengildina-Massa O (2009) Consumers willingness to pay for locally grown products: the case of South Carolina. Agribusiness 25(3):412–426. doi:10.1002/agr.20210

    Article  Google Scholar 

  • Chambers S, Lobb A, Butler L, Harvey K, Traill BW (2007) Local, national and imported foods: a qualitative study. Appetite 49:208–213. doi:10.1016/j.appet.2007.02.003

    Article  Google Scholar 

  • Chang JB, Lusk J, Norwood FB (2009) How closely do hypothetical surveys and laboratory experiments predict field behaviour? Am J Agric Econ 91(2):518–534

    Article  Google Scholar 

  • Conner D, Colasanti K, Ross BR, Smalley SB (2010) Locally grown foods and farmers markets: consumer attitudes and behaviours. Sustainability 2:742–756

    Article  Google Scholar 

  • Costanigro M, McFadden DT, Kroll S, Nurse G (2011) An in-store valuation of local and organic apples: the role of social desirability. Agribusiness 27(4):465–477. doi:10.1002/agr.20281

    Article  Google Scholar 

  • Darby K, Batte MT, Ernst S, Roe B (2008) Decomposing local: a conjoint analysis of locally produced foods. Am J Agric Econ 90(2):476–486. doi:10.1111/j.1467-8276.2007.01111.x

    Article  Google Scholar 

  • de Magistris T, Gracia A, Nayga R (2012) On the use of honesty priming task to mitigate hypothetical bias in choice experiments. Working paper 12/01. Centro de Investigación y Tecnología Agroalimentaria de Aragón. Gobierno de Aragón. Available on line at http://www2.cita-aragon.es/citarea/bitstream/10532/1827/3/2012_031_1.pdf. Accessed 27 Feb 2012

  • Ding M, Grewal R, Liechty J (2005) Incentive-aligned conjoint analysis. J Mark Res 42:67–82. doi:10.1509/jmkr.42.1.67.56890

    Article  Google Scholar 

  • European Committee of the Regions (1996) Promoting and protecting local products: a trumpcard for the regions. Committee of the Regions, Brussels

  • Giraud KL, Bond GA, Bond JJ (2005) Consumer preferences for locally made speciality food products across Northern New England. Agric Resour Econ Rev 34(2):204–216

    Google Scholar 

  • Groves A (2005) The local and regional food opportunity. IGD. http://www.defra.gov.uk/foodfarm/food/industry/regional/pdf/localregfoodopps.pdf. Accessed 6 March 2011

  • Grunert KG (2006) How changes in consumer behaviour and retailing affect competence requirements for food producers and processors. Econ Agrar Recurs Nat 6(11):3–22

    Google Scholar 

  • Hand MS, Martinez S (2010) Just what does local mean?. Choice, 1st Quarter 25(1): 1–4

    Google Scholar 

  • Hein JR, Ilbery B, Kneafsey M (2006) Distribution of local food activity in England and Wales: an index of food relocalization. Reg Stud 40(3):289–301. doi:10.1080/0034300600631533

    Article  Google Scholar 

  • Hensher DA, Rose JM, Greene WH (2005) Applied choice analysis. A primer. Cambridge University Press, Cambridge

  • Hess S, Rose J (2009) Should reference alternatives in pivot design SC surveys be treated differently? Environ Resour Econ 42:297–317

    Article  Google Scholar 

  • Hu W, Woods T, Bastin S (2009) Consumer acceptance and willingness to pay for blueberry products with nonconventional attributes. J Agric Appl Econ 41(1):47–60. doi:10.1093/erae/jbr039

    Google Scholar 

  • Hu W, Batte MT, Woods T, Ernst S (2012) Consumer preferences for local production and other value-added label claims for a processed food product. Eur Rev Agric Econ 39(3):489–510. doi:10.1093/erae/jbr039

    Google Scholar 

  • Hustvedt G, Bernard JC (2008) Consumer willingness to pay for sustainable apparel: the influence of labelling for fibre origin and production methods. Int J Consum Stud 32:491–498. doi:10.1111/j.1470-6431.2008.00706.x

    Article  Google Scholar 

  • Instituto Aragonés de Estadística (IAEST) (2010). Datos básicos de Aragón, Año

  • James JS, Rickard BJ, Rossman WJ (2009) Product differentiation and market segmentation in applesauce: using a choice experiment to assess the value of organic, local and nutrition attributes. Agric Resour Econ Rev 38(3):357–370

    Google Scholar 

  • Johansson-Stenman O, Svedsäter H (2008) Measuring hypothetical bias in choice experiments: the importance of cognitive consistency. Berkeley Electron J Econ Anal Policy 8(1):article 41. Available at: http://www.bepress.com/bejeap/vol8/iss1/art41. Accessed 11 May 2010

  • Keeling-Bond J, Thilmany D, Bond CA (2006) Direct marketing of fresh produce: understanding consumer purchasing decisions. Choices 21(4):229–235

    Google Scholar 

  • Kezis A, Gwebu T, Peavey S, Cheng H (1998) A case study of consumers at a small farmers’ market in Maine: results form a 1995 survey. J Food Distrib Res 29(1):91–99

    Google Scholar 

  • Lancaster K (1966) A new approach to consumer theory. J Polit Econ 74:132–157

    Article  Google Scholar 

  • List JA (2003) Does market experience eliminate market anomalies? Q J Econ 118:41–71. doi:10.1162/00335530360535144

    Article  Google Scholar 

  • Loomis J, Bell P, Cooney H, Asmus C (2009) A comparison of actual and hypothetical willingness to pay of parents and non-parents for protecting infant health: the case of nitrates in drinking water. J Agric Appl Econ 41(3):697–712

    Google Scholar 

  • Loureiro ML, Hine S (2002) Discovering niche markets: a comparison of consumer willingness to pay for local (Colorado grown), organic, and GMO-free products. J Agric Appl Econ 34(3):477–487

    Google Scholar 

  • Lusk J, Roosen J, Fox JA (2003) Demand for beef from cattle administered growth hormones or fed genetically modified corn: a comparison of consumers in France, Germany, the United Kingdom and the United States. Am J Agric Econ 85(1):16–29. doi:10.1111/1467-8276.00100

    Article  Google Scholar 

  • Lusk JL, Schroeder TC (2004) Are choice experiments incentive compatible? A test with quality differentiated beef steaks. Am J Agric Econ 86(2):467–482

    Article  Google Scholar 

  • Lusk JL, Fields D, Prevett W (2008) An incentive compatible conjoint ranking mechanism. Am J Agric Econ 90(2):487–498. doi:10.1111/j.1467-8276.2007.01119.x

    Article  Google Scholar 

  • Lusk JL, Norwood FB (2011) The Locavore’s Dilemma: why pineapples shouldn’t be grown in North Dakota. http://www.econlib.org/library/Columns/y2011/LuskNorwoodlocavore.html. Accessed 10 Oct 2012

  • McFadden D (1974) Conditional logit analysis of qualitative choice behavior. In: Zarembka Paul (ed) Frontiers in econometrics. Academic Press, New York, pp 105–142

    Google Scholar 

  • Roininen K, Arvola A, Lahteenmaki L (2006) Exploring consumers perceptions of local food with two different qualitative techniques: laddering and word association. Food Qual Prefer 17(1–2):20–30. doi:10.1016/j.foodqual.2005.04.012

    Article  Google Scholar 

  • Scarpa R, Del Giudice T (2004) Market segmentation via mixed logit: extra-virgin olive oil in urban Italy. J Agric Food Ind Organ 2:article 7

  • Scarpa R, Campbell D, Hutchinson G (2007) Benefit estimates for landscape improvements: sequential Bayesian design and respondents rationality in a choice experiment. Land Econ 83(4):617–634

    Google Scholar 

  • Scarpa R, Thiene M, Marangon F (2008) Using exible taste distributions to value collective reputation for environmentally friendly production methods. Can J Agric Econ 56:145–162

    Article  Google Scholar 

  • Schneider ML, Francis CA (2005) Marketing locally produced foods: consumer and farmer opinions in Washington County, Nebraska. Renew Agric Food Syst 20(4):252–260. doi:10.1079/RAF2005114

    Article  Google Scholar 

  • Street D, Burges L, Louviere J (2005) Quick and easy sets: constructing optimal and nearly optimal stated choice experiment. Int J Res in Mark 22:459–470. doi:10.1016/j.ijresmar.2005.09.003

    Article  Google Scholar 

  • Street D, Burgess L (2007) The construction of optimal stated choice experiments. John Wiley & Sons, Hoboken

    Book  Google Scholar 

  • Tonsor GT, Schroeder TC, Pennings JME, Mintert J (2009) Consumer valuations of beef steak food safety enhancement in Canada, Japan, Mexico, and the United States. Can J Agric Econ 57:395–416. doi:10.1111/j.1744-7976.2009.01158.x

    Article  Google Scholar 

  • Train K (2003) Discrete choice methods with simulation. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Volinskiy D, Adamowicz W, Veeman M, Srivastava L (2009) Does choice context affect the results from incentive-compatible experiments? The case of non-GM and country-of-origin premia in canola oil. Can J Agric Econ 57:205–221

    Article  Google Scholar 

  • Wolf CA, Tonsor GT, Olynk NJ (2011) Understanding U.S. consumer demand for mild production attributes. J Agric Resour Econ 36(2):326–342

    Google Scholar 

  • Yue C, Tong C (2009) Organic or local? Investigating consumer preference for fresh produce using a choice experiment with real economic incentives. HortScience 44(2):366–371

    Google Scholar 

  • Zepeda L, Leviten-Reid C (2004) Consumers’ views on local food. Journal of Food Distribution Research 35(3):1–6

    Google Scholar 

Download references

Acknowledgments

This research is part of the project entitled “La diversificación de producciones como alternativa de sosteniblidad de las explotaciones de raza Ojinegra de Teruel” (PET2007-06-C03-01) funded by Instituto Nacional de Investigación y Tecnología Agraria y Alimentaria (INIA-Spanish Government).

Author information

Authors and Affiliations

  1. Unidad de Economía Agraria y de los Recursos Naturales, Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA), Gobierno de Aragón, Avda Montañana 930, 50059,  Zaragoza, Spain

    Azucena Gracia

Authors
  1. Azucena Gracia
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Azucena Gracia.

Appendix

Appendix

Table 6 Population by sex and age in Spain and Zaragoza (%)
Full size table

Rights and permissions

Reprints and permissions

About this article

Cite this article

Gracia, A. Consumers’ preferences for a local food product: a real choice experiment. Empir Econ 47, 111–128 (2014). https://doi.org/10.1007/s00181-013-0738-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00181-013-0738-x

Keywords

JEL Classification

Search

Navigation