Universidade do Minho. Núcleo de Investigação em Microeconomia Aplicada (NIMA)
Abstract
The increased depletion of biological diversity in agriculture can be attributed to the
massification and standardization of production. Another argument is the often
mentioned lower productivity of these varieties and the lack of a market price premium
that compensates for these higher production cost. Policies to address this issue can
either rest on market instruments or on command and control initiatives. The paper aims
to determine the role that the origin of the apple variety plays in consumers’ choice,
controlling for the place of production. Most literature analyzing the role of origin of
production finds that national or local productions have a positive effect on consumers’
choices, receiving a positive price premium. However, appellation of origin has, to our
knowledge, never been analyzed in the fruit market. Determining, in a controlled
design, whether the Portuguese traditional variety has a positive price premium and
characterizing the socio-economic characteristics of consumers valuing this attribute the
most can provide valuable insights for apple producers and policy makers. It can help
designing more effective strategies to increase market shares or identifying market
niches for producers and to promote agro-biodiversity more effective by policy makers.
Our results indicate that consumers are willing to pay a statistically significant price
premium for the national varieties. In addition, consumers that value the national
variety, on average, buy larger quantities and buy more frequently, buy specific
varieties, are more aware of products characteristics and are on average older. These
results are encouraging for policy makers as they demonstrate the potential for policies
based on market instruments as consumers are responsive to price. In addition, the
analysis of consumers’ heterogeneity typifies the segments that are more willing to buy
national varieties. Finally, the results also indicate, to apple producers and marketers,
possible ways to increase their market shares by identifying the socio-demographic
characteristics of consumers more willing to buy national varieties at higher prices that
may compensate for the increased costs of production.Fundação para a Ciência e a Tecnologi