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Consumers’ Willingness to Pay for Organic Beef: Evidence from Dhaka City

P. K Sarma
Senior Scientific Officer
BAU Research System and Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

S. K. Raha
Senior Scientific Officer
BAU Research System and Department of Agribusiness and Marketing, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

This study was carried out in order to identify consumers’ willingness to pay a price premium for organic beef in Dhaka city of Bangladesh during the period July-December 2015. The research surveyed 180 consumers using semi structured questionnaires to examine consumer’s perception about organic beef and assess their willingness to pay for beef. The study revealed that all respondents are willing to pay price premium for organic beef. Consumers are willing to purchase organic beef because these beef are free of pesticides, chemical, drug, steroid, etc. A health conscious is one of the main determinants of willing to pay followed by consumer perception and quality towards the organic beef. A total of 41% of the consumers are willing to pay 0-5% price premium, whereas 30% are willing to pay up to 10% price premium. About 19% of the respondents feel the extra cost for organic beef is reasonable, while 10% considered it too high. The survey also suggested that the consumption of organic beef is increasing; however, develop production method, slaughtering process, processing, packaging, labeling, and innovations hallal certification from Islamic foundation are needed to stimulate further demand. It was also found that only some groups of consumers are willing to pay the premium necessary for alternative methods of production.

Keywords: Consumers preference, Organic beef, Price premium, WTP

Location: In Dhaka mega city of Bangladesh

Start Date: 00-07-2015

End Date: 00-12-2015

Program Area: Socio-economic and Policy

Non-commodity: Willingness

Objectives:

1) To increase understanding of consumers' awareness, attitude and perceptions towards organic beef, 2) To assess consumers’ willingness to pay (WTP) for organic beef, and 3) To identify factors influencing of WTP for organic beef.

Methodology:

The study was carried out in Dhaka mega city of Bangladesh. The Dhaka city was chosen for the high urban population and for the fact that a considerable amount of the commercial beef cattle are come from all over the country. Conveyance sampling technique was used in the study and a total of 180 sample was collected from supermarkets in Dhaka city by pre-determine interview schedule. Descriptive statistics was used to analysis of consumers’ awareness, preference and perception, etc while probit regression model was used to analysis the factors influencing consumers’ willingness to pay for organic beef.
The model is specified as consumers’ willingness to pay for organic beef is: WTPi* = β0+ β1Bids + β2Educ + β3Age + β4Gend + β5Price + β6Sour + β7Incm + β8 Know+ β9Perc + β10Hhsz + Ei.-------- (1) Where: WTPi* = Willingness to pay for organic beef information (Yes =1;0 = No) Bids = Random amount the consumer will be asked to pay in BDT. Educ = Level of education of respondents in years Age = Age of consumers in years Gend = Sex of the respondents (Female = 1, Male = 0) Price = Unit price of beef Sour = Source of beef (Registered = 1, Unregistered = 0) Iincm = Income of consumers in BDT. Know = Knowledge of organic beef information(Aware=1, Not aware=0) Perc = Perception of consumers on organic beef information (1 = No chance of health problem, 0 = chance of health problem) Hhsz = Household size in number Ei = Error Term

Source of Information: J. Bangladesh Agril. Univ. 14(1): 83–91, 2016 ISSN 1810-3030

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Total Budget (Tk.) :

Achievement/Findings:

Consumers are becoming more aware of the quality attributes of organic beef found in the market and are choosing beef that closely match their testes, preferences, price and food safety etc. Consumers’ perceptions and beef attributes tend to influence WTP premium for organic beef. They are willing to pay price premium for organic beef which can be viewed as the cost of investment in human health. Knowledge and awareness about organic beef can affect attitudes and perceptions about the beef and, ultimately, buying decisions of the consumers. Consumers’ willingness to purchase is influenced by limited and erratic supply, higher price of the beef. Most important factors that influence on WTP for organic beef are their concerned issues (price or safety and quality), education, income, price, awareness, cattle breed and household size for food safety and quality assurance. Consumers’ perceptions and beef attributes are significant determinants of WTP for safe and high quality beef products. This study will contribute quantitative information on the consumers’ WTP, a price premium for organic beef and consumers’ attitudes towards and perceptions of organic beef. In turn, higher prices for organic beef will allow rural farmers to invest more in sustainable organic cattle farming technologies such as nets used as physical barriers to growth promoter and steroid.

Knowledge Management: Journal