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For more information about the Department of Agricultural and Resource Economics, and about training and career opportunities, please contact:

Undergraduate:
ugarec@ag.arizona.edu
Phone: (520) 621-6244

Graduate:
garec@ag.arizona.edu
Phone: (520) 621-2421

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Organic Trade Association

Organic Foods
Which Consumers Will Pay the Price?

The only organic foods available a decade ago were fresh fruits and vegetables sold seasonally at farmers markets and food co-ops. Today, organic fresh and processed foods such as, bagged salads, snack foods, dairy products, breakfast cereals, and even chocolate, are sold in mainstream and natural foods supermarkets. Traditional food companies such as, General Mills, Gerber, H.J. Heinz, and Ready Pac, all market organic food items in addition to their conventional foods.

During the 1990s, retail sales of organic foods grew at over 20 percent annually. However, the market share of organic foods at retail is still less than 2 percent of all food sales. Future growth for the organic market depends on identifying which consumers are most likely to continue buying organic or are willing to switch from conventional to organic foods despite higher prices for these items. Who are these consumers?

Agricultural economists are working to answer this question. Both academic and industry studies have discovered economic and demographic characteristics of shoppers buying organic foods. While many of these consumers have higher household incomes, a small group have low incomes--less than $25,000 per household. Age is another important factor: families with babies and toddlers may be more likely to worry about pesticides in conventional foods. Some young adults are concerned about the environmental impacts of conventional farming, while some middle-aged people are more concerned about healthy diets. Whether for health or environmental reasons, these people are more willing to pay the higher prices charged for organic foods.

Faculty Involvement
Gary Thompson has written extensively on the demand for organic foods in the United States and elsewhere. His research uses statistical techniques and store-level data to analyze shoppers' choices of organic foods.

Student Involvement
Julia Kidwell, M.S. graduate, conducted thesis research on the demand for organic produce in the Tucson area. She currently works as a financial analyst for Nations Bank in Savannah, Georgia.

Additional Readings
Thompson, G.D. "Consumer Demand for Organic Foods: What We Know and What We Need to Know." American Journal of Agricultural Economics 80(December 1998):1113-1118.

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