Consumer Willingness to Pay for Locally Grown Produce Designed to Support Local Food Banks and Enhance Locally Grown Producer Markets

by David B. Willis, Carlos E. Carpio, Kathryn A. Boys, and Emily D. Young.

Abstract

This study investigates the possibility of using local food banks as a distributor in the local food supply chain. A mixed logit model is used to estimate the price premium consumers are willing to pay at retail outlets for locally grown products, if consumers have knowledge that a portion of the purchase price will be used as a donation to support local food banks. Estimates reveal that average households are willing to pay 11.68% ($0.17/lb) more for locally grown produce relative to non-locally grown, and 10.75% ($0.33/lb) more for locally produced animal products. When the locally grown product attribute is combined with a food bank donation the WTP premium increases to 22.33% ($0.33/lb) for produce and 20.50% ($0.64/lb) for animal products. Consumers are only willing to pay a small price premium for products that contain the donation attribute but are not locally grown. However, a strong complimentary relationship was found between the local and donation attribute which suggest consumers have a stronger preference to donate when purchasing locally grown products than when purchasing nonlocal products.

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When local supply chains are utilized, a greater share of all wage and proprietor income is retained locally. Moreover, this research has shown that consumers of locally grown products are willing to pay an additional price premium if the price implicitly includes a donation to a local food bank. Thus, it may be possible to use the donation as a carrot to get non-profit food system intermediaries (for example food banks) to work with small, local, farmers to sustain and expand the operations of small farmers and, in turn, stimulate local economies.
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http://ageconsearch.umn.edu/bitstream/150288/2/Willis%20et%20al%20AAEA%2...

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