Estimating market equilibrium values of fruit attributes for apple and strawberry using choice experiments with consumers and producers

by Jong Woo Choi

Institution: University of Minnesota
Year: 2015
Keywords: Apple; Choice experiment; Consumer; Fruit attributes; Producer; Strawberry; Agricultural and applied economics
Record ID: 2058581
Full text PDF: http://hdl.handle.net/11299/170988


Rosaceous fruits, which comprise some 90 genera with over 3000 distinct species, are one of the most important plant families and constitute the economic backbone of some U.S. rural areas. Apples and strawberries are two of the most important Rosaceous fruits. To meet the dynamic consumer demand, and to keep apple and strawberry industries sustainable, innovation through development and commercialization of new cultivars has become an increasingly important strategy. We used choice experiments to collect consumer and producer preference data, and then employed mixed logit models to analyze the choice experiment data and simulate each individual producer's and consumer's WTP for the fruit attributes. Based on the simulation results, we derived the supply and demand curves for each fruit attribute, synthesized consumers and producers' WTP information, and derived the equilibrium prices and quantities for each fruit attribute. The apple attributes included in the choice experiments were appearance, crispness, firmness, flavor, shelf-life, size, and price. The strawberry attributes were external color, internal color, firmness, flavor, shelf-life, size, and price. The choice experiment data was collected through a combination of mail-in and online surveys with growers and online surveys with consumers. In total, we got 321 completed apple grower surveys, 86 completed strawberry grower surveys, 801 completed apple consumer surveys, and 1137 completed strawberry consumer surveys. We found producers prefer apples with longer shelf-life and intense apple flavor. Consumers prefer very crisp apples and apples with intense apple flavor. Producers prefer strawberries with intense strawberry flavor and high firmness. Consumers prefer strawberries to have ideal red internal and external color. After incorporating both consumer and producer preferences and WTP information, we found that for apples the highest equilibrium price is for crispness, and for strawberries the highest equilibrium price is for internal color.By estimating the equilibrium prices and quantities, total revenue and total surplus for each fruit attribute, we successfully synthesize producers and consumers' WTP results. Our results provide important information on what attributes would generate the highest total revenue or social surplus so that breeders can allocate their resources accordingly to focus on the improvement of these attributes.