The importance of the origin of apple varieties : results from a discrete choice experiment in Portugal

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.