INTRODUCTION
The increasing consumer demand for higher quality and safety food products
makes organic food products an interesting consumption option. Interest
in organically produced food is increasing throughout the world in response
to concerns about intensive agricultural practices and their potential
effect on human health as well as on the environment. In Iran, as in many
Asian countries, the rapid socio-economic development was accompanied
by a modernization and industrialization of the agri-food production.
Loureiro et al. (2001) showed that factors affecting the probability
of choosing organic apples are consumers’ environmental, food safety
attitudes and socio-demographic characteristics. Results of Torjusen et
al. (2001) indicated that income is positively related to the probability
of buying organic foods, while other socio-demographic characteristics
are not statistically significant. Millock et al. (2004) showed
that higher income, age and education level of the consumer significantly
increase the probability of consuming of organic foods. However, the presence
of children does not have a significant impact on the probability of consuming
organic food products. Chang and Zepeda (2005) revealed that consumers
are more anxiety about utilized chemical material and its effect on environment
and farm animal. Organic products consumers have more information toward
organic products. Also have more tolerance for higher price of these products.
Results also showed that more consumer information about organic farming
and having label and access to organic products are the most effectiveness
ways for transporting organic products to consumption path. Verhoef (2005)
indicated that economic and marketing variables have significant effects
on both the choice and the frequency of purchasing organic meat while
consumers’ emotions, environmental considerations and socio-demographic
characteristics only affect the frequency of purchase. Durham and Andrade
(2005) showed that the main reasons for organic purchase are concern for
health and the environment but environment is more effective of health
in consumers’ decision to purchase. Also, price and demographic variables
explain the buying decision. Results of Kuhar and Juvancic (2005) showed
that income and the availability of the product in the store largely determine
the purchasing frequency of organic fruit and vegetables. Moreover, two
quality aspects of a food product (taste and visual attractiveness) and
consumers’ environmental concerns are also factors explaining the
frequency of purchasing organic fruit and vegetables. Tsakiridou et
al. (2006) found that factors explaining the probability of purchase
organic olive oil are income, household size, age and whether consumers
pay attention to food labels when shopping. However, consumer’s attitudes
towards organic product attributes (price, health, etc.), food safety
and environmental concerns were not statistically significant in explaining
the probability of purchasing organic olive oil. Onyango et al.
(2007) showed that females, younger and more educated people are more
likely to buy organic foods. In addition, food attributes such as naturalness,
vegetarian and local production are important factors increasing consumers’
probability of purchasing organic foods. Wier et al. (2008) showed
that organic food purchase decisions are primarily motivated by private
good attributes such as freshness, taste and health benefits, attributes
that may be perceived as being compatible with modern production and sales
structure.
Khorasan Razavi is one of the most Northeast provinces of Iran. Mashhad
is the biggest city of this province that has 2.85 million people. Agricultural
sector in this province is one of the important regions of Iran. In recent
year, a new wave for extension and cultivation of organic products is
growing in this province especially in Mashhad. So, it is necessary that
determine households views of Mashhad about consuming and potential willingness
to pay for purchasing of organic product. This information can use in
policy making about pricing and marketing of organic products in Khorasan
Razavi Province. This research tries to study potential consumers’
views toward factors affecting on organic products demand on sample of
Mashhad households from Khorasan Razavi Province of Iran.
MATERIALS AND METHODS
Data
To potential consumers’ views toward factors affecting on organic
products demand and effectiveness of each factor on willingness to pay
for these products a survey carried out in 2006 in Khorasan Razavi Province.
For this purpose, a sample including 240 households of Mashhad selected
by using simple random sampling method. Mashhad placed in Northeast of
Iran and in Khorasan Razavi Province.
Tobit Model Specification
This research to study factors influencing on willingness to pay for
organic product used Tobit model that classify in limited dependent variables
models (Maddala, 1983). According to computed partnership index and defined
sensor threshold (a = 0) Tobit model defined as follow:
where, 
is Latent or unobserved variable (an index of households willingness to
pay for using the organic products) and Yi observed variable
and Xi is a vector of repressors (here variables influencing
on willingness to pay of households) including: age (X1), education
(X2), family size (X3), income (X4),
sex (X5), acquaintance with organic products (X6),
anecxiety of existence chemical residue (X7), freshness of
products external (X8), nutrition value (X9), confidence
about organic product test (X10). B is a vector of parameters
values and u is an error term. Some of the households interviewed did
not have any willingness to pay. For the households that had willingness
to pay is the actual level of willingness to pay for consuming of organic
products. For those not undertaking willingness to pay is zero. In Tobit
model dependent variable is a random variable and has probability distribution
and it possible to determine each observation probability.
Equation 2 and 3 present probability
on each zero and non zero observation respectively that P is probability
distribution and F(0) is cumulative density function of determined error
in B’Xi asures according to define of cumulative density
function for censored random variable provide from Eq. 4:
As ui in Eq. 1 for Yi more than
zero means censored random variable and destitution function of Yi
having similar distribution function as ui, therefore Eq.
4 for more that zero observation and if ui assumed to have
normal distribution:
where, δ2 is error term variance and π is the constant
term, according to define, likelihood function determined by multiply
probability distribution function of both sum of observation, means:
where, Î 0 and Î 1, respectively equal
to multiply observations that equal to zero and more than zero:
Through maximum of Eq. 7 two parameters δ and B
or model parameters determined where 
and 
,
respectively sum of Nl and N0 are zero and non zero:
where, Cl KxNl , Xi matrix for bigger than zero
observation and C0 is N0 matrix.
where, Φ is probability distribution function (PDF) and Φ is
cumulative density function (CDF) and 
.
Expected value in Tobit model defines from Eq. 10 and
for observation more than zero defines from Eq. 11 (Eq.
6, 9, 12, 13):
Tobit model and ML estimator’s addition to present unbiased estimators
provide the situation to separate change effects of each exogenous variable
on dependent variable into two effects, change in probability of potentially
responders to actually partners and effect of change in activity measure
of present partners. Total effect (total elasticity) is change of each
effective variables such as Xj on expected value which makes
by Eq. 13 that Bj is the variable Xj
estimated coefficient and is the probability of existence in actual partnerships
and total effects separate as Eq.13:
That first term from right hand shows effect of changes in variable Xj
on partnership measure of enjoyed responders, multiply probability of
settle in this group (effect of Yi > 0) and the second
term from right hand shows changes in variable Xi on probability
of enjoyment responder to partnerships of pay for organic foods, multiply
expected value for partnerships (effect of Yi > 0).
Total elasticity = Observed elasticity (effect
of Yi > 0)+ expected elasticity (effect of YI
>0) |
Reported parameters as total effect, percent change in partnership measure
for all of potentially and actually partnerships for one percent change
in each o f independent variables and effect of Yi > 0 shows
only same reaction from people that have potential partnership. Effect
of Yi = 0 shows also same reaction from people that could have
actual partnership and so that present probability of settle into actual
partnerships (Loureiro et al., 2001).
RESULTS AND DISCUSSION
Economical-Socially Attributes
Table 1 showed economical- socially attributes of
the sample. Average age of responders is 35.81 years with 30.65 year in
men and average age 30.65 year in women. Also, average education of responders
is licentiate’s degree, average family size is 4 person and average
income of responders is about 2900 thousand rials per month.
According to Table 2 age, family size, organic products
external freshest are statistically significant. Education levels, family
size and nutrition value have negative effect on willingness to pay for
organic products. According to Table 2, with increasing
household’s age, willingness to pay for purchasing organic products
will increase. Older people have higher level of willingness to pay for
organic products. Because these households are more awareness toward organic
products. Several studies found that younger consumers have higher willingness
to purchase for organic products than older consumers. However, other
studies found that older consumers also have a high willingness to buy
organic products. Consumers, who have more income, higher level of willingness
to pay for organic products. Also, Wier et al. (2008) revealed
that disposable income, age and education significantly increase organic
budget share. Schobesberger et al. (2008) showed relationship between
income and education and purchasing of organic product is positive. Women
consumers have more willingness to pay for organic products because awareness
level of women about nutrition is high. Awareness about organic products
also has positive effect on willingness to pay for organic products. People
who have information about organic products have higher level of willingness
to pay. The other effective factor is anxiety about existence chemical
residue in nutrition. People that are anxiety about chemical residue,
have higher level of willingness to pay for purchasing organic products.
| Table 1: |
Average key characteristics of selected sample |
 |
| Table 2: |
Tobit model of potential willingness to pay for purchasing
of organic products |
 |
| Squared correlation between observed and expected values
= 0.21. **, *** Significant at 5 and 10% level; ns: Non-significant
|
| Table 3: |
Elasticity of willingness to pay for organic products |
 |
Wier et al. (2008) showed that health considerations play a major
role in consumer preferences for organic foods. Other important attributes
are environmental, animal welfare and quality attributes. Also, the pioneers
of organic consumption were primarily motivated by environmental concerns,
but that as food safety concerns increase, the demand for organic foods
increases faster. According to Table 3, revealed that
people age have positive relationship with willingness to pay, i.e., with
increasing one unit of people age willingness to pay for organic products
will increase 2.596%, that 1.524% of it is belong to people which now
have willingness to pay for organic products and 1.072% of it belong to
people that want to purchase organic product in future. Willingness to
pay have negative relationship with education level such that with increasing
education level, willingness to pay measure will decrease 1.085% that
0.637 of it belong to present consumers and 0.448% of it belong to people
that want to purchase in future. Results showed that with increasing family
size willingness to pay for organic products will increase, such that
with increasing one unit of family size willingness to pay will decrease
1.566%, that 0.919% of it belong to consumers that want to purchase organic
product now and 0.647% belong to people that will buy these products in
future. Also, households income have positive but little effect on willingness
to pay, such that with increasing one unit (10000 rials) in households
income, willingness to pay will increase 0.768%, which 0.451% of it belong
to current demand organic product and 0.317% belong to consumers that
will purchase these products in future. Having anxiety toward existence
chemical residue in conventional nutrition products is one of items that
have positive effect on willingness to pay for organic products, i.e.,
with 1% increasing in anxiety about existence chemical residue willingness
to pay for organic products will increase 1.38%, so 0.81% of this measure
belong to households that want to consume organic products now and 0.57%
belong to households that want to purchase these products in future. Results
showed that organic product external will increase willingness to pay
for these products. Therefore, if external products improve 1%, willingness
to pay for organic product will increase 1.867% so that 1.096% of it belong
to people that want to consume organic products now and 0.771% belong
to groups of consumers that want to purchase organic product in future.
Also, nutrition values are not important for consumers and even have negative
effect on willingness to pay for organic products. As with 1% increase
in nutrition value of products, will decrease willingness to pay equal
to 2.962%, where -1.739% of it belong to that group of people want to
consume organic products now and 1.223% of it belong to people that will
consume this products at future.
According to estimated results, encourage of consumers to organic products
consumption, encourage farmers to produce organic products and without
any chemical material and make sustainable marketing for organic products,
increasing the households awareness about organic products, expansion
of organic product cultivation, government payment for supporting of producers
suggested.
CONCLUSION
This study carried out to determine factors influencing on consumer’s
potential willingness to pay for organic products in Iran by using data
of 240 households of Mashhad and Tobit model in 2006. Results showed that
product appearance and measure of consumers’ information is effective
on willingness to pay for organic products. In addition, consumers’
anxieties from chemical residue in nutrition have positive effect on willingness
to pay for these products. Also, results showed that household’s
education level has negative effect on willingness to pay for organic
products. Encourage of consumers to organic products consumption, encourage
farmers to produce organic products and without any chemical material
and make sustainable marketing for organic products, increasing the households
awareness about organic products, expansion of organic product cultivation,
government payment for supporting of producers suggested.
Subscribe Today
