The Factors Influencing Organic Produce Demand: Evidence From Household Scanner Panel Data

Abstract

Existing literature analyzing consumer demand for organically grown produce has primarily consisted of studies that contain self- reported data from a specific region in the US. Research utilizing direct purchasing behavior of organic produce at the household level is almost non-existent. With the use of ACNielsen household scanner data, consumer demand and loyalty to organic fresh products are analyzed as a function of own price, income, conventional prices, household composition, and demographic attributes. While organic products still maintain a small market share in the produce industry, an empirical model must correctly account for corner solutions where a high percentage of households choose conventional over organic items. In controlling for unobserved heterogeneity of households in a panel model, empirical estimates suggest that price effects, the presence of adolescent children, larger households, income levels, and female head of household demographics are statistically significant influences on organic produce purchase decisions at the household level.