Surveys of mid-Atlantic consumers conducted by Penn State researchers part 13

In the last post, I discussed some Penn State research involving consumers' willingness to pay for organic produce. To continue on with that subject, the PSU researchers also studied the demographics of the survey respondents.

One question asked participants if they purchase certified-organic fruits and vegetables. Based on their response (yes or no), participants were then tested for any significant differences between demographic groups (metro area, gender, age, ethnicity, income level, education level, number of adults living in household and number of children living in household) to examine if certain consumer segments were more likely to report purchasing certified-organic produce.

Testing revealed that a significantly smaller percentage of participants with an annual income level below $25,000 purchased organic produce as compared to those with an income level of $100,000 or greater (Figure 1).

Figure 1

Also, a smaller percentage of participants age 21 to 24 reported purchasing organic produce compared to participants age 26 to 36 (Figure 2).

Figure 2

In addition, the data showed that a smaller percentage of participants who had received at most some high school education or were high school graduates purchased organic produce compared to participants with either an associate’s/technical school degree, bachelor’s degree, or master’s degrees or higher (Figure 3).

Figure 3

Click here to read the full press release.

As an ag entrepreneur selling (or not selling) organic produce, what does this mean for you? Would you change your marketing techniques to target people in these demographics? Do buyers of your organic produce fit these demographics? Is this data surprising to anyone?

Surveys of mid-Atlantic consumers conducted by Penn State researchers part 12

As a food producer, setting a price for your product can be difficult. When setting a price, you must consider product production costs, competitors, target customers, and product qualities. One example of a production cost (and subsequent product quality) is producing certified organic products. In 2010, Penn State researchers conducted a study on consumer purchasing habits. One question asked participants how much they would be willing to spend on a pound of certified organic apples compared to a pound of non-certified organic apples priced at $1/pound.

As you can see by the graph below, 32.1% of respondents said they were unwilling to pay more for organic Gala apples. Conversely, 57.6% indicated that thy would be willing to spend at least $1/pound for organic Gala apples.



This survey only asked respondents about organic Gala apples, but this specific example can be helpful in understanding consumers' willingness to pay for organic produce in general. To read more about this study, please read the press release.

When pricing your organic produce (or any product), you must carefully position your price to attract the most buyers. It is extremely important to inform and remind consumers about the product attributes and proposed benefits of your product through appropriate advertising and in-store promotions. Want more help in pricing your product? Check out our Value-Added Marketing Series. We have a publication titled "Product Pricing: What Do I Charge?" which will give you some good info on pricing your product!

Surveys of mid-Atlantic consumers conducted by Penn State researchers part 10

Are you curious as to why people buy organic produce? Continuing with the research conducted by Penn State on consumer purchasing behaviors, reasons why people buy organics was specifically studied.

A series of questions asked participants to indicate their certified-organic purchasing behaviors including whether or not they purchased certified-organic fruits and vegetables. Participants who responded “Yes” to this question (34.2%) were then prompted to answer two additional questions: a) how frequently they purchased certified-organic fruits and vegetables and b) for what reasons they decided to purchase certified-organic, as opposed to purchasing conventional options. The majority of participants who reported purchasing certified-organic fruits and vegetables either made these purchases 2 to 3 times per month (30.7%) or once per week (29%).

Additionally, when participants who reported purchasing certified-organic produce were asked if a given “concern” encouraged them to purchase such produce, as opposed to purchasing conventionally-grown produce, a variety of concerns appeared to impact their purchasing decision. For each of the concerns presented, participants responded that they “Agree” to “Somewhat Agree” that the individual concern positively influenced their decision to purchase certified-organic fruits and vegetables. For example, participants responded that when making a fruit or vegetable purchasing decision, they “Agreed” that the “impact of pesticides on the environment” concerned them (see graph below).



To read more about this topic, please visit midatlanticspecialtycrops.com.

As an ag entrepreneur (selling conventional produce), what does this information mean to you? If you are selling organics, how does this information align with what you hear from your customers?

Surveys of mid-Atlantic consumers conducted by Penn State researchers part 5

Another area for the PSU researchers to study was the effect of children on household preferences for locally grown and certified organic produce.

The responses suggest that a greater percentage of individuals who had children in the household selected options that emphasized “Certified Organic,” while individuals without children were more likely to select options that included “Locally Grown.” For example, the first set of options (where both were “Locally Grown”) shows a greater percentage of consumers with children (65.7%) compared to those without children (60.3%) selected the option that included “Certified Organic.” In Set 2 (both “Certified Organic”) and Set 3 (neither “Certified Organic”), those with no children in the household preferred the “Locally Grown” option by 5 to 6 percentage points.

One explanation for this difference is that individuals may have the tendency to purchase organics for their children to eat but they are not necessarily purchasing it for themselves to consume.

To read more about this survey, please read the press release.

As an ag entrepreneur, how can this information be used to position your food products for these demographic groups? If you sell organics, are most of your organic purchases from parents? How do the terms "certified organic" and "locally grown" affect consumers' perception of your products?

School lunch programs getting health boost with natural and organic ingredients

School lunch programs around the country are getting makeovers. The National Farm to School program states that a fresh produce movement started about 10 years ago in a few California schools and has grown in a 39 state program with over 2,000 school districts as members. According to the National Farm to School program website, the National Farm to School program "connects schools with local farms with the objectives of serving healthy meals in school cafeterias, improving school nutrition, providing health and nutrition opportunities that will last a lifetime, and supporting local farmers."

School districts are not only looking for local foods, but they are also looking for organic. For example, a school district in Olympia, WA has implemented a junk food ban and is recommending organic foods in their cafeterias. Unfortunately, cost is the single greatest hurdle to implementing organic programs in more schools. Generally, organic foods cost more for farmers to produce (hence greater cost to the schools) due to annual organic certification costs as well as expensive pest control and fertilizing methods because cheaper synthetic pesticides and fertilizers are prohibited in organic farming.

To help farmers off-set annual organic certification costs, the Agricultural Marketing Service (AMS) of the USDA has implemented a cost-share assistance program for farmers in all states, US territories, Washington DC, and Puerto Rico. The AMS has allotted $1.5 million in fiscal 2008 (October 1, 2008 to September 30, 2009) for this program. According to the USDA, the money is predominantly geared toward smaller farms so that they will be able to meet the standards developed by the National Organic Program. The assistance will be limited to 75% of an individual producer's certification costs with a maximum of $750.

As a farmer, have you thought about growing organically but the cost of annual certification makes your production unprofitable? Do you think the cost-share program will be a big help to farmers or do you think it's not that big of a help? After reading about the school lunch program, do you think you could market your products to local schools?

Organic school lunches program article

Organic certification cost-share article