Consumer Characteristics and Willingness to Pay for Locally Produced Product: A Case Study of Rib-eye Steaks in the Northern Great Plains

Kuo-Liang Chang, Pei Xu, Jerry Warmann, Todd Lone, Zelie-Sandra Munzimi and Emmanuel Opuko

Journal of Agriculture, Food Systems, and Community Development, 2013, vol. 4, issue 1

Abstract: This study examined crucial product attributes, consumer characteristics, and corresponding willingness to pay (WTP) for locally produced rib-eye steaks. We focused on consumers at farmers' markets because the rising trend of buying local is believed to have generated higher sales for local producers in recent years. This paper is the first demand-side study to focus solely on high-value beef cut in the state of South Dakota. We conducted an experimental survey study, and the data suggested a significantly higher WTP for locally produced rib-eye steaks. The results also indicated that all product attributes selected for inclusion in this study contributed to a higher WTP for shoppers at farmers' markets, especially in terms of juiciness and color of the steaks. We also found that two consumer characteristics — household beef intakes and health knowledge — significantly contributed to higher WTP.We recommend that local producers continue improving the quality of their meat; however, producers should be aware that improving quality would possibly result in diminished profits. Our study also indicates that although consumers at farmers' markets are willing to spend a higher price premium for better steaks, the additional WTP vanishes once the product's quality reaches a certain level. To improve profitability, we suggest that local producers develop effective market strategies to target and recruit customers who are willing to pay higher premiums for locally produced food.

Keywords: Consumer/Household Economics; Livestock Production/Industries; Marketing (search for similar items in EconPapers)
Date: 2013
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