Academic journal article Journal of Agricultural and Applied Economics

Relative Importance of Factors Affecting Customer's Decisions to Buy Pick-Your-Own versus Preharvested Fruit at North Carolina Farms

Academic journal article Journal of Agricultural and Applied Economics

Relative Importance of Factors Affecting Customer's Decisions to Buy Pick-Your-Own versus Preharvested Fruit at North Carolina Farms

Article excerpt

This study identifies the most important factors affecting customers' decisions to buy pick-your-own versus prepicked strawberries and muscadine grapes at direct- market operations in North Carolina. The relative importance analysis identified the region of location of the operations and prices as the explanatory variable explaining most of the variation observed in the customer's decision to choose the type of fruit to purchase. The estimated price elasticities indicate that sales of each type of fruit are very sensitive to prices.

Key Words: conditional and random parameters logit models, demand analysis, pick-your-own fruit, relative importance

JEL Classifications: D12, Q13

According to the U.S. Department of Agriculture the number of direct-market outlets operated by U.S. farmers continues to grow. Results from the U.S. Census of Agriculture indicate that the value of agricultural products sold directly to individuals for human consumption more than doubled from 1992 to 2002, increasing from $404 million to $812 million. The number of farms selling products directly to the consumer also increased during the same period, from 86,432 to 116,733 farms (U.S. Department of Agriculture, 2002 Census of Agriculture). The most common farmer-toconsumer direct markets are pick-your-own (PYO) operations, roadside stands, farmers' markets, and direct farm markets. The major difference between PYO operations and the other direct-market outlets is that customers are allowed to harvest their own produce at the PYO farms, whereas the farmer harvests the produce for the other outlets.

The focus of this paper is on customers who visit strawberry and muscadine grape PYO operations in North Carolina. These two commodities were selected for this study because North Carolina consumers have a long tradition of purchasing these fruits at directmarket outlets. Strawberries are also increasingly popular with all U.S. consumers (U.S. Department of Agriculture, 2005), whereas the market for muscadine grapes (Vitis rotundifilia) is concentrated in the southeast.

Our study identifies the factors affecting customers' decisions to purchase prepicked or PYO strawberries and muscadine grapes. A major contribution of this paper is estimation of price effect on customers' decisions to buy PYO versus preharvested fruit at the farm. A review of the literature indicates that little attention has been paid to the analysis of price effects in the context of PYO marketing, despite the relevance and importance of this aspect in economics and marketing analysis.

Another contribution of this paper is the assessment of the relative importance of the factors affecting customers' decisions. This information is important for the design and implementation of marketing strategies for these operations.

Literature Review

Demand for PYO Fruit

Only a few studies are found in the economics, horticulture, rural sociology, ethnography, geography, and extension literature that examine farmers' markets in the United States (Brown). In fact, our literature review identified only 11 studies in the last 20 years that looked at the demand for PYO products.' These studies have mainly focused on characterizing the type of customers visiting PYO operations and exploring their motivations and shopping behavior.

According to these studies, customers who visit PYO operations have higher incomes and education levels than the average of the population. The majority of customers come from a distance of about 20 to 25 miles from the farm. During the 1980s the average age of the consumers was between 35 and 45 years, but in the most recent surveys the average age was around 50 years. Finally, most of the shoppers are women, it is common for couples to shop, and children are frequent members of the shopping parties. These studies also consistently report that the main factors that motivate customers to visit PYO farms are the freshness of the products, the quality of the produce, prices, and the experience of visiting the farm. …

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