What Are Consumers Willing To Pay For? A Preliminary Study On Chocolate Offers Surprising Insights

By November 17, 2017Chocolate

Two studies released in the last month show confusion abounds when it comes to food. The first—”Effects of the National Bioengineered Food Disclosure Standard: Willingness To Pay for Labels that Communicate the Presence or Absence of Genetic Modification”—from Brandon McFadden, as assistant professor in the Department of Food and Resource Economics at the University of Florida, and Jayson Lusk, head of the Department of Agricultural Economics at Purdue University, looked at pricing around two very different protocols: organic and genetically engineered foods.

The U.S. Department of Agriculture currently defines organic foods as “foods that are grown on soil that had no prohibited substances applied for three years prior to harvest. Prohibited substances include most synthetic fertilizers and pesticides.” For meat, the USDA requires that animals are “raised in living conditions accommodating their natural behaviors, fed 100% organic feed and forage, and not administered antibiotics or hormones.” Processed, multi-ingredient foods have to contain at least 70% organic ingredients and have to be free of artificial preservatives, colors and flavors. Any non-organic ingredients can’t be produced by using prohibited practices such as genetic engineering (more commonly known by the imprecise term “genetic modification”), “but can include substances that would not otherwise be allowed in 100% organic products.”

Genetically modified foods (known as GMOs), on the other hand, are defined by the Non-GMO Project as “a plant, animal, microorganism or other organism whose genetic makeup has been modified in a laboratory using genetic engineering or transgenic technology.”

 But how much of that is common knowledge to consumers—and what value do they place on those definitions? The researchers surveyed 1,132 people across the United States to determine how much consumers were willing to spend on a box of 12 granola bars or a pound of apples labeled “USDA Organic” versus “Non-GMO Project Verified.” They learned that consumers were willing to spend $0.35 more for granola bars with non-GMO labeling than for boxes that read “contains genetically engineered ingredients.” Those same consumers were willing to pay $0.09 more for bars labeled “USDA Organic.” When it came to the apples, respondents were willing to pay $0.35 more for those labeled “non-GMO” and $0.40 more for those labeled “USDA Organic.” This led the lead researcher to conclude that consumers view the two labels as synonymous.

This is concerning—because those terms have very different implications for farming, the environment and, possibly, our health—but is more troubling when coupled with the preliminary study “Hedonic Pricing of Chocolate Quality Characteristics: Is there A Difference for Fruit or Nut Chocolate?” by Willie B. Bedell and Michael R. Reed, a graduate student and professor, respectively, in the Department of Agricultural Economics at the University of Kentucky.

Through a cross-sectional data analysis of the retail prices of 160 chocolates sold on Amazon, Walmart and eBay during August 2017, the duo found a price premium on bars labeled organic and non-GMO (though most ingredients in a chocolate bar—including cocoa—are not genetically engineered); however, chocolates marked as fair trade “sell at a discount of $0.02 per gram or 44% less than chocolates not labeled fair-trade [sic].”


Source: https://www.forbes.com