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 South Dakota State University
  • Pei Xu California State University, Fresno
  • Jerry Warmann South Dakota State University
  • Todd Lone California State University, Fresno
  • Zelie-Sandra Munzimi South Dakota State University
  • Emmanuel Opuko South Dakota State University
Keywords: Beef, Conjoint Analysis, Farmers Markets, Local Food, Rib-Eye Steaks, Willingness To Pay, WTP

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.

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Author Biographies

Kuo-Liang Chang, South Dakota State University
Assistant Professor, Box 504, Scobey Hall, Department of Economics, South Dakota State University; Brookings, South Dakota 57006 USA; +1-605-688-5322.
Pei Xu, California State University, Fresno
Department of Agricultural Business, California State University-Fresno; Fresno, California 93740 USA.
Jerry Warmann, South Dakota State University
Department of Economics, South Dakota State University; Brookings, South Dakota 57006 USA.
Todd Lone, California State University, Fresno
Department of Agricultural Business, California State University-Fresno; Fresno, California 93740 USA.
Zelie-Sandra Munzimi, South Dakota State University
Department of Economics, South Dakota State University; Brookings, South Dakota 57006 USA.
Emmanuel Opuko, South Dakota State University
Department of Economics, South Dakota State University; Brookings, South Dakota 57006 USA.
Published
2013-11-06
How to Cite
Chang, K.-L., Xu, P., Warmann, J., Lone, T., Munzimi, Z.-S., & Opuko, E. (2013). Consumer Characteristics and Willingness to Pay for Locally Produced Product: A Case Study of Rib-eye Steaks in the Northern Great Plains. Journal of Agriculture, Food Systems, and Community Development, 4(1), 99–121. https://doi.org/10.5304/jafscd.2013.041.003