WILLINGNESS TO PAY (WTP) FOR ORGANIC FOOD: THE CONSUMER PERSPECTIVE

Abstract

Consumption of organic food among consumers in Phillipines has increased in recent times due to increased awareness of health benefits of organic food. The purpose of this paper is to estimate the average amount a consumer is willing to pay in Philippine for fresh organic milk. This paper used the Double Bounded Dichotomous Choice (DBDC) model to identify key determinants of consumers’ willingness to pay (WTP) for fresh organic milk. The results showed that organic product label, consumers’ awareness about nutritional benefits of organic milk, agility, and income were key determinants of consumers’ WTP for fresh organic milk. The paper estimated average consumers’ willingness to pay for one litre of fresh organic milk to be SAR 14 while the nonparametric estimates of WTP ranged in values from as low as SAR 10 to as high as 12 SAR. The results are important to the domestic dairy companies and existing European organic long-life milk exporters to Philippine to initiate business ventures on organic fresh milk business.