Market Analysis on the Viability of a Local Food Center: Experimental Evidence from Arizona

Abstract

This study analyzes the willingness to pay for different product-oriented and store-oriented attributes of food shopping outlets. It also evaluates the viability of a Local Food Center (LFC) in the remote areas in the United States, such as Yavapai County in Arizona State. For the purpose, a survey experiment has been designed by use with the randomization on discrete choice sets and prize drawing selection and was distributed by Yavapai County Cooperative Extension under College of Agricultural and Life Science in University of Arizona and Prescott Farmers Market group. The same survey was collected with the paper version from on-site farmers markets, other locations, and online platform through social media and local community email lists. Marginal propensity to consume model, probit prize drawing model and bivariate panel discrete choice model are employed in this paper. The result suggested that consumers rely on grocery type of stores and supermarkets as the primary food-at-home source and farmers market frequent shoppers are less price sensitive with a relatively fixed budget on food-at-home expenditure. The prize drawing model has proposed a 16.67% discount rate between prize for farmers markets and prize for grocery stores or supermarkets. The last but not the least, the willingness to pay are highest for a mix basket of local and non-local U.S. only products and purchasing from the outlets with producers’ description and photos. Our findings indicate that LFC is only viable if they can reach to consumers at-large, increase the variety of the products, and be price competitive to grocery type of stores.