A new report from the USDA Economic Research Service shows that consumers are willing to pay a premium for organic produce. ERS researchers estimated price premiums for 10 popular fresh organic fruit and vegetables. These price premiums reflect consumers’ willingness to pay for attributes and additional production costs associated with organic foods, such as organic certification and the lack of pesticides during production.
The ERS study used actual consumer purchase data to estimate a pricing model that accounts for various product attributes, market factors, and consumer sociodemographics.
The research found that organic fresh fruit commanded a significant price premium, varying from 13 cents per pound for bananas in 2006 to 88 cents per pound for strawberries. The per pound premium for fresh vegetables ranged from 19 cents for onions and carrots to 54 cents for peppers. Organic price premiums converged in the range of 13-36 cents per pound for 7 of the 10 fresh produce items considered in the study. For fruit, the estimated organic premiums varied from 22 percent for oranges to 40 percent for strawberries. For vegetables, organic premiums varied from about 17 percent for tomatoes and carrots to 62 percent for potatoes.