Consumer Willingness to Pay for Organic Rice: With reference to Kurunegala District in Sri Lanka

Abstract

Consumer willingness to pay is a dynamic phenomenon that depends heavily on consumers’ perceptions and attitudes. Organic rice purchasing behavior has been increased in recent years due to the perception that such products are safer, healthier and more environmentally friendly than conventionally produced alternatives. This study was focused to examine: consumers’ willingness to pay for organic rice, consumers’ perceptions on willingness to pay organic rice, and effect of socio demographic characteristics on willingness to pay for organic rice in Sri Lanka. A questionnaire survey was conducted with 100 consumers selected by multi-stage sampling technique in Kurunegala district which is highly vulnerable for agro chemical based diseases in Sri Lanka. Data analysis was done by using Contingent Valuation Method and Ordered Probit Regression analysis. The study found that 100 percent of consumers have selected organic rice at the same bid price and 96 percent of consumers agreed to pay an additional payment on organic rice. Monthly income, education level, and positive perceptions on organic rice increase willingness to pay for organic rice and price premiums. Consumers who perceive to have low residues of pesticide, higher nutrient and higher quality of organic rice than non-organic rice hold a probability of paying high premium. Consumers’ main motivation for buying organic rice is the health concern. Policy makers can identify the range of price increase of such organic rice without damaging the existing demand for organic rice and it is a timely need to introduce new marketing strategies to expand the market segment in organic rice in Sri Lanka.

Keywords

• consumer perception
• contingent valuation
• ordered probit regression model
• organic rice
• willingness to pay