Willingness to Pay for Local Food from Different Marketing Channels Iryna Printezis* and Carola Grebitus* *Morrison School of Agribusiness, W.P. Carey School of Business, Arizona State University Number of direct marketing channels is growing Nearly 8,200 farmers markets [1] Over 2,500 community-supported agriculture farms [2] Local food sales will reach $20 billion by 2019 [3] Most of the growth is through intermediated channels (grocery stores and restaurants) Direct-to-consumer sales have reached a plateau Government agencies support direct channels as a means of growing the demand for local food [4] Farmers Market and Local Foods Promotion Program Up to $15 million in grants annually We examine if there is a basis for such support Motivation Research Objectives Experimental Design Online choice experiments: 443 participants Study unprocessed and processed products 1 lb of tomatoes 24-ounce jar of tomato pasta sauce Experimental design with 5 alternatives 36 choice sets, 4 blocks 5 Attributes with various levels Price: $0.99; $2.99, $4.99 Travel time one way: 5 min; 15 min; 25 min Point of Sale: grocery store; urban farm; farmers market Organic production: USDA organic; no label Local production: locally grown; no label Data analysis: Mixed logit models with random and correlated coefficients Analyze consumers’ choices of local food products sold at different outlets Grocery stores, farmers markets, urban farms Answer the following questions: Do consumers prefer to purchase local food through direct channels or from an intermediated channel (grocery store)? Are consumers willing to pay a premium for local food sold at direct marketing channels? What affects consumers’ preferences and willingness to pay for local food? Convenience of the shopping location Whether the food was produced organically Results Conclusion Acknowledgements Consumers are willing to pay More for fresh and processed local products More for fresh and processed organic products More for organic produce sold at urban farms Same for farmers market and grocery store products Less for products from urban farm compared to grocery store Less for products labeled as both local and organic Less for organic food sold at farmers market Less for processed local products sold at urban farms Inconvenience of the shopping location reduces consumer willingness to pay for fresh and processed local food products The following funding sources are gratefully acknowledged: The support provided by the Office of Knowledge Enterprise Development, the Graduate and Professional Student Association, and Graduate Education. EASM-3: Collaborative Research: “Physics-Based Predictive Modeling for Integrated Agricultural and Urban Applications”, USDA-NIFA and NSF-MPS-DMS. References Tropp, D. (2013). Why Local Food Matters: The rising importance of locally-grown food in the US food system. 4th Annual Virginia Women’s Conference October 26, 2013. Local Harvest. 2010. Community Supported Agriculture. Accessed February 2010 at: http://www.localharvest.org/csa Low, S. A. Adalja, A., Beaulieu, E., Key, N., Martinez, S., Melton, A., Perez, A., Ralston, K., Stewart, H., Suttles, S., Vogel, S., & Becca B.R. Jablonski. (2015). Trends in US Local and Regional Food Systems: Report to Congress. United States Department of Agriculture. Economic Research Service. Martinez, S., M. Hand, M. Da Pra, S. Pollack, K. Ralston, T. Smith, and C. Newman. (2010). Local Food Systems: Concepts, Impacts, and Issues. Washington DC: U.S. Department of Agriculture, Economic Research Service, Economics Research Report No. 97 Note: Significant willingness to pay estimates are in bold