Progress 01/01/08 to 06/14/12

Outputs
OUTPUTS: The main outputs from the project during the period were seven consumer surveys related to the consumption of organic foods (apple consumption in the US, baby food consumption in the US, soymilk consumption in the US, soymilk consumption in China, milk consumption in the US, and two surveys on egg consumption in the US) and demand analyses using retail scanner data sets (milk and eggs). The studies on apple and baby food focused on consumer preferences towards the origin of food products in the case of fresh and processed foods. The studies on baby food and soymilk focused on the consumer response to the organic attributes of the ingredient used in processed foods, as well as the characteristics of the manufacturer. The studies on milk focused on the relationship between consumer behavior and store choice (conventional versus natural store types). The studies on eggs focused on consumer perceptions on product features related to animal welfare. Demand analyses for milk and eggs focused on the demand for organic products that are also differentiated by store outlet or by brand type. The project findings resulted in three completed Masters theses, one published article in a peer-reviewed journal, one published proceedings, one manuscript currently under review at a peer-reviewed journal, five selected papers at national and regional meetings, two selected posters at national and regional meetings, and two outreach presentations. PARTICIPANTS: Dr. Xianghong Li (KSU), Dr. Hikaru Hanawa Peterson (KSU), Dr. Tian Xia (KSU), Dr. Alexander Saak (IFPRI), graduate students at KSU (Veronica Pozo, Frank Lonca, Yue Zheng, Yan Heng). TARGET AUDIENCES: Participants in the organic industry, including producers, processors, handlers, and retailers; policy makers, and agricultural economists. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Our findings confirmed a clear preference among consumers in the US and in China for domestic sourcing of food products, even for organic products and ingredients of processed food products. Currently, it is not feasible for most organic processed products to be made from domestically sourced ingredients. The processors are encouraged to consider this trade-off in evaluating their procurement and marketing strategies of organic products. In the analysis of Chinese consumer preferences on organic and non-GM (genetically modified) soymilk relied greatly on nationalities of certifying agencies. US certified organic products were valued higher than EU or Chinese certified organic products, but Chinese-certified non-GM products were preferred over those certified by US agencies. The US industry should be aware of such perception in one of the fastest growing overseas markets. Related to animal welfare, our findings show that food cost is one of the most important factors influencing consumers' choice of animal-based food products. Thus, providing eggs at a low price is critical for producers. That said, the majority of the respondents (over 94%) were willing to pay a significant premium for improving hens welfare attributes, respectively around $1 per dozen. If management practices such as those without battery cages, providing outdoor access, or only relying on natural molting are not as costly as the estimated premia, producers could be better off incorporating these practices. In addition, although functional eggs account for a relative small share in the market, the results indicated that consumers clearly preferred them and are willing to pay extra for these eggs. The findings for organic and non-organic products were consistent between studies on milk and eggs. Demand for organic products is more own-price elastic than demand for non-organic products in compensated terms, but was less responsive to the changes in expenditure. The organic and non-organic products were mostly substitutes, but the substitution pattern was asymmetric with a greater tendency for demand to switch from non-organic to organic products than from organic to non-organic products, which can be explained by the differences in income effects.

Publications

• Heng, Y., H.H. Peterson, and X. Li. Consumers Preferences for Farm Animal Welfare: the Case of Laying Hen. Selected Paper at the Agricultural and Applied Economics Association annual meeting, Seattle, WA, August 2012.
• Li, X., H.H. Peterson, and T. Xia. U.S. Consumer Demand for Differentiated Eggs. Selected Poster at the Agricultural and Applied Economics Association annual meeting, Seattle, WA, August 2012.

Progress 01/01/11 to 12/31/11

Outputs
OUTPUTS: U.S. and Chinese consumers' valuations of attributes of organic soymilk were analyzed based on two separate consumer surveys. U.S. and Chinese Consumers' preferences towards location of origin of ingredients of organic and non-GM soymilk were compared to draw implication for the future of the bilateral soybean trade between these two countries. An MS thesis based on the soymilk surveys was completed. The analytical results on U.S. consumers and Chinese consumers from the soymilk surveys were presented at the 2011 American Agricultural Economics Association annual meeting and the 2011 Canadian Agricultural Economic Society and Western Agricultural Economics Association joint annual meeting. One paper on consumer perceptions of organic soymilk attributes has been submitted for review for publication in a peer-reviewed journal; the other is in preparation. U.S. demand for organic milk was examined and demand elasticities for organic milk at various retailing channels were estimated based on national retail scanner data. The results were presented at the 2011 Food Distribution Research Society annual conference. Background information on U.S. egg industry has been assimilated and the relevant literature was reviewed. A consumer survey has been designed to understand consumers' perceptions towards various animal welfare-related provisions in organic egg production will be conducted. In addition, a second survey with an emphasis on eliciting preferences on farmer operational scales and animal welfare attributes are in the process of being finalized. Another survey on farmer operational scales and brand attributes of organic milk has been drafted as well. PARTICIPANTS: Dr. Xianghong Li (KSU), Dr. Hikaru Hanawa Peterson (KSU), graduate students at KSU (Yue Zheng, Yan Heng). TARGET AUDIENCES: Participants in the organic industry, including producers, processors, handlers, and retailers; policy makers, and agricultural economists. PROJECT MODIFICATIONS: In addition to the study on organic eggs focusing on farmer operational scale and location, a consumer survey is also designed to examine consumer preferences towards various production attributes with an emphasis on animal welfare as an extension to the proposed activities in the project. The latter survey was added due to the ongoing discussion of possible legislative changes on eggs in several states. The understanding of U.S. consumers' attitude towards various attributes will generate useful information to the US egg industry.

Impacts
The analyses of consumer surveys on soymilk attributes suggested that consumers in U.S. and China were willing to pay premiums for processed foods such as soymilk with organic and non-GMO ingredients despite of significant differences in cultural, economics and development stages of organic industries. The premium for organic soybeans was significantly higher than that for non-GMO beans. U.S. consumers were shown to hold strong preferences for organic soymilk produced with domestically produced soybeans. U.S. respondents showed preferences towards national brands and were willing to pay more for them relative to store brands. In contrast, Chinese consumers' valuations on organic soymilk relied greatly on nationalities of certifying agencies. U.S. certified organic product was valued higher than EU or Chinese certified organic products, but Chinese-certified non-GMO products were preferred over those certified by U.S. agencies. Regarding organic milk, the examination on the national sale data showed a premium for organic milk. Organic milk and conventional milk could be substitutes or complements depending on fat content. Moreover, organic milk sold in mainstream grocery stores and organic milk sold in natural stores were found to be substitutes.

Publications

• Peterson, H. H., and X. Li. 2011. Consumer Preferences for Product Origin and Processing Scale: the Case of Organic Baby Foods. American Journal of Agricultural Economics 93(2): 590-596.
• Zheng, Y., X. Li, and H.H. Peterson. 2011. In Pursuit of Safe Foods: Chinese Preferences for Soybean Attributes in Soymilk. Selected paper at Canadian Agricultural Economic Society and Western Agricultural Economics Association joint annual meeting, June 29 to July 1, Banff Centre, Canada.
• Zheng, Y., H.H., Peterson, and X. Li. 2011. Consumer Preferences for Attributes of Organic Processed Foods: The Case of Soymilk in the United States. Selected poster at the American Agricultural Economics Association annual meeting, July 24-26, Pittsburg, PA.
• Li, X., and H.H. Peterson. 2011. The Evolving Demand for Organic Milk. Research paper presented at the Food Distribution Research Society annual conference, October 15-19, Portland, OR.
• Zheng, Y. 2011. Valuation of Country of Origins of Organic Processed Food: A Comparative Study of Consumer Demand for Soymilk in the United States and China. M.S. Thesis, Kansas State University, April 2011.

Progress 01/01/10 to 12/31/10

Outputs
OUTPUTS: Consumer surveys were designed to understand consumers' perceptions towards location of origin of ingredients and operational scale attributes of organic processed. A version for baby food and another version for soymilk were administered in the US. Consumers' willingness to pay for baby food attributes was analyzed. A related survey was developed and administered to examine preferences for organic foods among Chinese consumers using the soymilk version. The analytical results from the baby food survey were presented in an invited paper session at the 2010 American Agricultural Economics Association annual meeting and the paper appears in the proceedings issue. More generally, the findings from the project were shared at the 2010 USDA-CSREES Agribusiness Markets and Trade Project Directors meeting. A master thesis based on the baby food survey was completed. The survey version on milk has been drafted. We also obtained national sales data to obtain demand elasticities for an organic product and began examining the data. PARTICIPANTS: Dr. Xianghong Li (KSU), Dr. Hikaru Hanawa Peterson (KSU), graduate students at KSU (Yue Zheng, Franck Lonca), Rita York (the Community Mercantile in Lawrence, KS). TARGET AUDIENCES: Participants in the organic industry, including producers, processors, handlers, and retailers; policy makers, and agricultural economists. PROJECT MODIFICATIONS: As an extension to the proposed activities in the project, we modified and administered a version of the soymilk survey in China. The organic market is emergent and growing in China. It will most likely become an important outlet for the US organic industry in a few years, but so little is known about their consumer preferences. A comparison of consumer preferences in both countries will generate useful information to the US organic industry.

Impacts
The responses to the national surveys suggest that baby food consumers have acknowledged the benefits of organics over conventional counterparts, and despite heterogeneity in preferences, all were willing to pay a premium for organic products. At the same time, organic attribute was not among the highest priority for an average baby food consumer. Indeed, the average willingness to pay for a combination of the two primary features of organic products restricted use of pesticide and genetically modified organisms exceeded that of the organic. Yet, half of our sample regarded organic as very and extremely important, and the organic sector will likely continue to grow for baby food, while the penetration rate remains below this percentage of organic valuing population. The results were robust about the majority of population (90 percent) preferring products of large-scale companies over smaller counterparts or private labeled products. While it remains to be seen how this reliance towards well known brands apply to food products beyond baby food, our results suggest that the organic food sector will remain segmented in the near future with large dominant food corporations partaking. At the same time, our findings confirmed a clear preference for domestically grown ingredients, even for processed food products. Currently, it is not feasible for most organic processed products to be made from domestically sourced ingredients.

Publications

• Li, X., and H.H. Peterson. The Impacts of Imports and Consolidation on the U.S. Organic Food System. Invited Presentation at the USDA NRI Project Directors meeting, Denver, CO, July 2010.
• Lonca, Franck. Consumer Preferences for the Origin of Ingredients and the Brand Types in the Organic Baby Food Market. M.S. Thesis, Kansas State University, December 2010.
• Peterson, H.H., and X. Li. Consumer Preferences for Product Origin & Processing Scale: The Case of Organic Baby Foods. American Journal of Agricultural Economics 92, 5 (2010), doi: 10.1093/ajae/aaq153.
• Peterson, H.H., and X. Li. Consumer Preferences for Product Origin and Processing Scale: The Case of Organic Baby Foods. Invited Paper at the American Agricultural Economics Association annual meeting, Denver, CO, July 2010.

Progress 01/01/09 to 12/31/09

Outputs
OUTPUTS: A national consumer survey aiming to understand consumers' perceptions towards location of origin and operational scale attributes of organic apples was completed. The U.S. consumers' willingness to pay for apples towards the interested attributes was analyzed. The analytical results from the survey were reported in a poster at the 2009 USDA-CSREES Agribusiness Markets and Trade Project Directors meeting and were also presented in a Selected Paper session at the 2009 American Agricultural Economics Association annual meeting. Moreover, a master thesis based on the survey was completed. The study on the other three products, milk, soymilk, and baby food, has been initiated. The background information on these products has been assimilated and the relevant literature is being reviewed. We are also in the process of obtaining national sales data to obtain demand elasticities for an organic product. PARTICIPANTS: Dr. Xianghong Li (KSU), Dr. Hikaru Hanawa Peterson (KSU), graduate students at KSU (Veronica F. Pozo, Yue Zheng, Franck Lonca), Rita York (the Community Mercantile in Lawrence, KS). TARGET AUDIENCES: Participants in the organic industry, including producers, processors, handlers, and retailers; policy makers, and agricultural economists. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The responses to the national survey suggest that consumers value local, conventional apples more than certified organic apples. The preference for domestic organic apples over imported organic apples was also apparent. Moreover, the results show that consumers were willing to pay more for apples from small orchards than from large orchards but were indifferent among various types of retail store. The finding that U.S. consumers distinguishes organic apples by source and scale of supply chain operations offers insights to participants in the U.S. organic produce sector on making effective production, marketing, and procurement strategies.

Publications

• Li, X. and H.H. Peterson. The Impacts of Imports and Consolidation on the U.S. Organic Food System. Poster presented at the USDA-CSREES Agribusiness Markets and Trade Project Directors meeting, Milwaukee, WI, July 2009.
• Pozo, Veronica F. Consumer Preferences for Emerging Trends in Organics: Product Origin and Scale of Supply Chain Operations. M.S. Thesis, Kansas State University, December 2009.
• Pozo, V., A. Saak, and H.H. Peterson. Product Origin and Reputation for Quality: the Case of Organic Foods. Selected Paper at the American Agricultural Economics Association annual meeting, Milwaukee, WI, July 2009.

Progress 01/01/08 to 12/31/08

Outputs
OUTPUTS: In the first year of this project, field study was conducted in the collaborated store to collect information on imports in fresh organic produce as well as in processed/packaged organic products on a monthly basis. The store level retail sales and marketing data were also acquired. In addition, a field trip was made to a major distributor of organic produce to obtain information on the imports of organic produce. A consumer survey aiming to understand consumers' perceptions towards location of origin and operational scale attributes of organic products was under development. The survey will be completed in 2009. Participations in organic workshops held in Chicago and Washington DC built interactions with several other NRI organic projects, which may extend the impacts of the project. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The collected information on the imports of organic products contributes to the paucity of organic import data and improves understandings of the magnitude of organic imports. The estimation of the impacts of imports on the U.S. organic food industry based on the collected data will be of interests to the U.S. organic sector as well as policy makers. The U.S. consumers' willingness to pay for source specific and scale specific organic foods elicited from the consumer survey will offer insights for participants in the U.S. organic industry on making effective production, marketing, and procurement strategies. Such information also contributes to making market intervention policies.

Publications

• No publications reported this period