641 Consumer Demand for Organic Foods

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  • 1 Department of Ag. & Resource Economics, University of Arizona, Tucson, AZ 85721-0023

Sales of organic foods at retail have grown at rates from 20% to 35% in many countries throughout Europe, Asia, and the Americas during the 1990s. Yet market shares of organic foods remain quite small, less than 5%of retail value in all countries throughout the world. As mainstream retail outlets have begun to carry and promote organic foods, lack of availability of organic foods has become less of an impediment to consumer demand. The major impediment to continued growth in organic food demand is high price premiums for organic foods over conventional food counterparts. Some of the highest price premiums at retail are displayed by fresh and frozen vegetables and fruit; premiums as high as 250% for frozen green peas in the United States have been recorded. Indirect evidence in the form willingness-to-pay studies and retail pricing experiments indicate that the majority of consumers will not pay such high price premiums for organic fruit and vegetables. Small market shares at retail tend to corroborate consumers' willingness to pay such high prices. How much prices of organic fruit and vegetables would have to be reduced relative to conventional produce in order to increase market shares of organic produce is not clear.

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