Consumer willingness to pay for organic fresh milk in Taiwan

Chin-Huang Huang and Chun-Hung Lee

China Agricultural Economic Review, 2014, vol. 6, issue 2, 198-211

Abstract: Purpose - – The Fresh Milk Logo certifies that dairy product sold in Taiwan really is fresh milk. However, the logo represents only a moral pledge by the manufacturer. No method exists for inspecting whether products are fresh milk or reconstituted milk, and the label does not represent a commitment to the same level of quality and consumer health protection as found in organic foods. The purpose of this paper is to analyze consumer perceptions of organic certified agricultural standards (CAS) and estimates consumer willingness to pay (WTP) a premium should the Fresh Milk Logo be transformed into an organic CAS certified label. Design/methodology/approach - – Exploratory factor analysis is adopted to extract the main determinants of respondent perceptions and preferences. Additionally, the double-bounded dichotomous choice of the contingent valuation method (CVM) and survival function is used to measure consumer WTP a premium for organic fresh milk. Findings - – Consumer consumption preferences for buying fresh milk extracted four main factorial dimensions: Fresh Milk Logo, price/promotion, organic, and product/brand. Respondents are willing to pay US$21.95 extra per year to buy organic CAS milk and the factors affecting WTP are “Fresh Milk Logo” and “organic”. Research limitations/implications - – The problems of the CVM include hypothetical and starting point for price bidding. The double-bounded dichotomous choice contingent valuation model and pre-testing can reduce the biases. The survival function is more flexible, yields more information and permits assumptions regarding parametric distributions without additional costs. The collaboration of survival function with the double-bounded method produces a reliable result that incorporates fewer statistical errors. Practical implications - – Consumers are willing to pay a premium for fresh milk with an organic CAS label that certifies its good quality and safety. Social implications - – Marketing managers can use the study findings to develop effective marketing strategies and refine advertising campaigns to promote organic fresh milk to attract more consumers. Originality/value - – Organic food labels certify food safety, and are associated with the trend toward increasing awareness of environmental and health issues. Perception of organic food labels are introduced into double-bounded dichotomous choice CVM to estimate consumers’ WTP, an approach which has successfully dominated traditional methods, using Likert scale-type measurement.

Keywords: Organic food; Food quality; CVM; Double-bounded dichotomous choice; Survival function (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:caerpp:v:6:y:2014:i:2:p:198-211

DOI: 10.1108/CAER-04-2012-0033

Access Statistics for this article

China Agricultural Economic Review is currently edited by Dr Fu Qin, Dr Jikun Huang, Dr Kevin Z Chen, Dr Weiming Tian, Prof Daniel Sumner, Prof Xian Xin and Prof Holly Wang

More articles in China Agricultural Economic Review from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().