How knowledgeable and informed are consumers about organic products? Overall, although there is some knowledge and awareness about organic products, consumers are not consistent in their interpretation of what is organic. Second, while consumers typically understand the broad issues about organic foods, many tend not to understand the complexities and niceties of organic farming practices and organic food quality attributes. Uncertainty regarding the true attributes of organic, and skepticism about organic labels, part of which stem from reported cases of (inadvertent) mislabeling, and product misrepresentation, and partly because of nonuniform organic standards and certification procedures, may hold some consumers back from purchasing organic.
What is the single most important factor that drives demand for organic products? Concern for human health and safety, which is a key factor that influences consumer preference for organic food, is consistent with observed deterioration in human health over time and, therefore, motivates consumers to buy organic food as insurance and/or investment in health.
What are the key economic issues and considerations that affect organic product purchase?
The proportion of consumers who are willing to pay a price premium for organic food decreases with premium level. On the other hand, premiums tend to increase with (combinations of) preferred attributes. In addition, demand tends to depend more on the price differential with respect to conventionally grown products, than on actual price. In contrast to sensitivity of demand to changes in price, income elasticity of demand for organic foods is generally small.
Issues of relevance to policy analysts: It is important for policy analyst and researchers to note that organic fresh fruits and vegetables currently dominate the organic