organic food, country of origin, choice experiment, Agribusiness, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing,

Gao, Zhifeng

Swisher, Marilyn E.

Xie, Jing

Zhao, Xin

English

Research Papers in Economics

The Impact of Country of Origin Label on Consumers'
Willingness-to-Pay for Organic Food
Jing Xie
Food and Resource Economics
University of Florida
Zhifeng Gao
Food and Resource Economics
University of Florida
Xin Zhao
Horticulture Science
University of Florida
Marilyn E. Swisher
Youth and Community Science
University of Florida
Poster prepared for presentation at the Agricultural & Applied Economics Association’s 
2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011
Copyright 2011 by [Jing Xie, Zhifeng Gao, Xin Zhao and Marilyn E. Swisher]. All rights reserved. 
Readers may make verbatim copies of this document for non-commercial purposes by any 
means, provided that this copyright notice appears on all such copies.In 2008, some frozen organic vegetables sold in the Whole
Foods Market (WFM) stores were imported from China
with a small country-of-origin label (COOL) on the back
besides USDA Organic label. The public began to concern
about the quality of the certificate organic food, and
criticized that the environmental benefits of the organic
produces were taking away from the United States. Till
2010 summer, WFM is no longer souring any food
products from China except for frozen edamame.
http://blog.wholefoodsmarket.com/whole-foods-market-responds-
to-wjla/
The Impact of Country-of-Origin Label on Consumers’ 
Willingness-to-Pay for Organic Food
Jing Xie, Zhifeng Gao, Xin Zhao, Marilyn E. Swisher   University of Florida
Mixed logit model: this model can captures the 
heterogeneities in coefficients caused by unobservable 
attitudinal characteristics crossing individuals.
Assume utility function of individuals is:
Motivation from Recent News
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01 1
Prob( | )= ( )
exp( )
ni ni ni ni ni ni
ni J
nj nj nj nj nj nj j
p O OD D X
y fd
p O OD D X
βββ β β
β ββ
βββ β β
=
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− + + ×+ ×+ ∫∑
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Introduction
Motives for WTP on Organic Label
Environment friendliness
Health consciousness, safety concerns
Nutritional value, taste, freshness
Representing high quality life
Motives for WTP on COOL 
Country’s image
Animosity*
Ethnocentrism*
Why There Are Interactions Between These Two Attributes?
*Animosity is an anger related to previous or 
ongoing political, economic or diplomatic events.
*Ethnocentrism is a belief  which thinks it is 
inappropriate, or even immoral, to purchase 
foreign products because to do so is damaging to 
the domestic economy, costs domestic jobs, and is 
unpatriotic.
1.  Misunderstanding or distrust on USDA organic standards. 
True: the products carrying USDA organic label have to meet the 
same standards no matter in which country it is produced. 
Misunderstood: USDA organic food produced in foreign 
countries follow less stringent standards.
Or: even if consumer is clear about the USDA organic standards, 
may not trust it, and believe there is standard distortion aboard.
2. Conflicts in social benefits.
Social benefits of organic food (environmental friendliness and 
support for local/small farmers) for domestic consumers drops 
when COOL shows the products is imported. 
:price,     :dummy variable of USDA Organic
:dummy vector of COOL,     :demographic varibles,     :error term
ni ni
ni ni ni
pO
DX ε
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01 Uni ni ni ni ni ni ni ni p O OD D X βββ β β ε = − + + ×+ ×+ +
Survey and Data 
We use conjoint analysis (CA) to analyze the interaction 
effects between Organic label and COOL. The data were 
obtained through an online survey conducted in November 
of 2010 by Toluna, including  390 completes from 
southeast and northeast of the U.S., who are all age over 
18, primary grocery shopper for their household, and 
purchased fresh produce last month. We have 2 versions of 
the survey. The only difference between these two is one 
provides information of what USDA organic label 
requirements as following, but the other one doesn’t:
USDA Organic: ……No matter where a product is produced, the same 
rules and procedures apply. To make sure that products labeled "organic" 
do meet the USDA requirements, …… certifying agencies that the USDA 
has accredited must verify that all of the products and procedures used in 
production, processing, packaging and transportation comply with the 
USDA requirements and that the inspection revealed no exceptions.
Comparing the results of these two surveys:
Question: How important the 
factor "in which country it is 
produced" do you think when you 
consider purchasing organic food?
1. Not at all Important
2. Very Unimportant
3. Neither Important nor 
Unimportant
4. Very Important
5. Extremely Important
Question: Please indicate how 
strongly you agree with the 
following statement:   
Everything else being the same, I 
prefer organic food produced in 
the United States to organic food 
produced in foreign countries.
1. Agree
2. Neither agree or disagree
3. Disagree
Version 1 Version 2
Frequency Percent Frequency Percent
Agree 140 72.54 140 71.07
Neither 
agree or 
disagree
45 23.32 41 20.81
Disagree 8 4.15 16 8.12
Total 193 100 197 100
Model and Methods
0
.
1
.
2
.
3
.
4
P
e
r
c
e
n
t
a
g
e
1 2 3 4 5
Choice
Version1 Version2
the probability of respondent ’s sequence of choices would 
be given by:
Vector    is estimated using maximum simulated likelihood.
Empirical Results
Choice experiment target: Fresh broccoli
Country of Origin: Canada, China, Mexico, and the 
United States
The empirical results are showing in table 1 (right hand 
side). We found several interesting results which is 
consistent with our hypotheses:
1. Heterogeneities in coefficients  exist. As shown in table 
1, all the standard deviations of random parameters are 
statistically significant.
2. Due to different attitudes towards foreign countries, 
WTP for imported organic food significantly varies 
among production countries.
3. The organic and country of origin labels affect each 
other. All of the coefficients of interaction terms are 
statistically significant.
1. Hulland, J., Todiño, H.S. & Lecraw, D.J., 1996. Country-of-Origin Effects on 
Sellers' Price Premiums in Competitive Philippine Markets. Journal of 
International Marketing, 4(1), 57-79. 
2. Krystallis, A. & Chryssohoidis, G., 2005. Consumers' willingness to pay for 
organic food: Factors that affect it and variation per organic product type. 
British Food Journal, 107(5), 320-343. 
3. Loureiro, M.L. & Umberger, W.J., 2005. Assessing Consumer Preferences for 
Country-of-Origin Labeling. Journal of Agricultural and Applied Economics, 
37(01). 
4. Revelt, D. & Train, K., 2007. Mixed Logit with Repeated Choice: Households’ 
Choices of Appliance Efficiency Level. The Review of Economics and 
Statistics, 80(4), 647-657.
5. Steckel, J.H., Vanhonacker, W.R., 1988. A Heterogeneous Conditional Logit
Model of Choice. Journal of Business & Economics Statistics, 66(30),391-
398.
6. Thompson, G.D. & Kidwell, J., 1998. Explaining the Choice of Organic 
Produce: Cosmetic Defects, Prices, and Consumer Preferences. American 
Journal of Agricultural Economics, 80(2), 277-287. 
7. Verlegh, P.W., Steenkamp, J.E. & Meulenberg, M.T., 2005. Country-of-origin 
effects in consumer processing of advertising claims. International Journal 
of Research in Marketing, 22(2), 127-139.
Reference
Mean of Parameter 
Distributions
Standard Deviations of 
Parameter 
Distributions
Constant -7.964***
(0.743)
Price  -3.325*** 
(0.406)
Organic 2.197*** 3.727*** 
(0.760) (0.921)
Canada 0.318  13.033*** 
(0.786)  (2.248)
China -8.366***  7.840***
(1.184) (0 .930)
Mexico -7.687***  21.539*** 
(1.964) (4.887)
Organic*Canada -2.445*  6.334*** 
(1.418) (2.381)
Organic*China 2.793**  16.076***
(1.227)  (3.107)
Organic*Mexico 3.544*  22.455*** 
(1.987) (4.868) 
Number of 
Observations
13815
Adjust R 
Square
0.12507
Table 1: Mixed Logit Model Using Products of USA as Base:
Note:
1. ***, **, * represent 
significance at 1%, 
5%, 10% level;
2. Products produced 
in the United States 
is the base in this 
model;
3. We assume the 
random parameters 
are all normally 
distributed.

The Impact of Country of Origin Label on Consumers' Willingness-to-Pay for Organic Food

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