Identification and Prioritization the Factors Affecting Willingness to Pay for Organic Agricultural Products from the Perspective of Consumers

اقتصاد و توسعه کشاورزی

Article 4, Volume 33, Issue 4 - Serial Number 46, December 2020, Pages 363-376   

Document Type: Research Article

DOI: 10.22067/jead2.v33i4.80696

Authors

M. Zandi Nasab¹; M. Ghaffari^{* 2}; F. Khadem Shahzadeh Taher¹

¹Farabi Campus University of Tehran

²Department of Business Management, Faculty of Management & Accounting, College of Farabi, University of Tehran

Abstract

Introduction: With increasing population, agricultural activities should provide enough food for 80 billion people around the world until 2030. Many farmers are dependent on chemical technologies for pest management and producing enough food. However, despite the many benefits, it is indicated that, chemicals and pesticides, may have bad consequences for the health of human being and environment. Hence, due to the response to concerns about common agricultural activities, the interest in organic products has been increased around the world. Increasing health problems and diseases associated with food products has made consumers to give more importance to buying these products. One of the people's reactions has been moving forward to using organic agricultural products. Many researchers, have proved that, organic products, are safer and better for people's health and unhealthy products are a threat for society. For instance, in developing countries, 5 million children under age of 5 are afflicted to illness symptoms caused by poisonous and chemical residues in food, and more than 3 million people die and in 2010 the World Health Organization has declared that; Iran, ranked 93rd out of 160 countries in the world for bad consequences of agriculture. Organic products have characteristics such as taste, health, and issues related to environment and animals' right, which are not tangible in the first sight. In some cases, when consuming or buying, consumers hardly understand these features. For success and development of organic products these features should be understood by consumers and they should be willing to pay for these products. Organic agricultural products have higher prices for several reasons (such as production conditions and issuing the certificate). Economically, the value of a product is equal to the sum of payments for that product, in addition to the consumers' welfare. Surplus consumer welfare is defined as the difference between the consumer's willingness to pay and the real price paid for it. In this regard the notion of willingness to pay can be defined as the total payment that reflects the difference between the surplus consumer welfare before and after adding or improving one characteristic of food. Many consumers are looking for food safety and they have tendency to pay more for healthy food products, because it simultaneously increases the level of utility and reduces the risks for health. A review of research literature on willingness to pay for organic agricultural products shows that most studies have been conditional on the costs of organic agricultural products and estimation of willingness to pay for them by methods such as valuation and less attention have been paid to the reasons that make consumers to pay for these products. Hence, it seems that an exploratory study for identifying and prioritizing factors affecting the willingness to pay for organic agricultural products has a great importance. Therefore, the purpose of present study is identification and prioritization of factors affecting the willingness to pay for organic agricultural products.
Materials and Methods: This research in terms of purpose is applied and in terms of research method, is descriptive-survey. The statistical population of the study included all consumers of organic agricultural products of Bioneshan shops in Tehran, who have been using these products at the time of collecting the research data on November 2018. To determine the sample size, Comrey and Lee patterns were used, and 384 samples were selected by sampling method. Analyzing the research data was done by SPSS and EXCEL software.
Results and Discussion: Before conducting an exploratory factor analysis, in order to identify factors affecting willingness to pay for organic agricultural products, and in order to ensure that existing data can be used and the number of data is appropriate for factor analysis and the adequacy of exploratory Kaiser-Meyer-Olkin sample size, Bartlett test was used. In the next step, for exploratory factor analysis, research data were analyzed by using main components analysis method and the choice of varimax rotation method. The results of exploratory factor analysis show that, factors affecting willingness to pay for organic agricultural products consist of seven elements or dimensions. These include the quality of products, perceived benefits, income levels, information barriers and access to products, environmental concerns, life styles and food safety. These seven identified factors totally define 68/123% variance of affecting factors on willingness to pay for organic agricultural products. In order to prioritize the factors affecting the willingness to pay for organic agricultural products Shannon entropy was used. According to respondents, food safety is ranked first in terms of its importance.
Conclusion: The first identified factor is the quality of the products which corresponds with the studies of Krystallis and Chryssohoidis (2005) and Villanueva and colleagues (2015). One of the factors that causes the consumer to focus on a product, is the quality of that product. Organic agricultural products are not exceptions to this fact and more than being organic, their quality should be considered as well. The fact that products should be both organic and have a high quality, is difficult due to the lack of chemical and artificial compounds. The second identified factor is perceived benefits, which correspond with the studies of Van doorn and verhoef (2011) and Zaho and colleagues (2018). Consumers consider some benefits for themselves of using each product. In order to enhance the willingness to pay for organic agricultural products, People who are active in agricultural activities, should try to increase the level of perceived benefits in consumers. The third identified factor is income level which corresponds with the studies of Nandy and colleagues (2017) and Vapa-Tankosic and colleagues (2018). One of the obstacles to the expansion of organic agricultural products is people's low income level and higher prices of organic agricultural products. The forth identified factor is information barriers and access to products which corresponds with the studies of Nandy and colleagues (2017) and Sriwaranun and colleagues (2015). Lack of information about organic agricultural products and inadequate supply and availability affects the willingness to pay for them. By increasing information about the benefits of these products the interest in paying for these products will be increased. So when the supply and access to these products can easily happen, and people have access to these products in different stores, the desire to use and pay for this products increases and with increasing supply, the price of these products reduces. The fifth identified factor is environmental concerns, which corresponds to the studies of Nandy and colleagues (2017) and konuk and colleagues (2018). Many people by understanding that organic agricultural products entail less harm to the living environment, are satisfied with paying more for these products. The sixth identified factor is lifestyle, which corresponds to the studies of Skreli and colleague (2017). People who primarily establish a healthy lifestyle for themselves, and care about their health more, have willing to pay for organic agricultural products as a healthy product. The seventh identified factor is food safety which corresponds with the studies of Budak and colleagues (2006) and Chen and colleagues (2015). According to food respondents, food safety has the top priority. Consumers should be certain about the organic state of the products and their health in order to have desire to pay for them.

Keywords

Agricultural; Organic products; Willingness to pay; Consumer Behavior

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