Pricing strategies for organic vegetables based on Indonesian consumer willingness to pay

An awareness of the dangers of chemicals contained in food could potentially have led to a significant increase in demand for organic food in Indonesia. Yet the demand for organic products remains relatively low. This could be attributed to high price, limited product choice, consumer distrust toward organic products, satisfaction with conventional food, or a lack of consumer perceived differences in the taste of organic products. The purpose of this article is threefold. First, to analyze the factors that influence the Indonesian consumers’ willingness to pay (WTP) for several types of organic vegetables. Second, to calculate the price increase incurred by consumers of organic vegetables. Third, to determine a recommended pricing strategy based on consumers’ WTP for certain common organic vegetables, including broccoli, cauliflower, cabbage, pak choi, lettuce, and carrots. Using an accidental sampling technique, samples were derived from 154 respondents living in urban areas. Descriptive analysis, crosstab, logistic regression analysis and the contingent valuation method were all employed. Findings suggest that the variables of age and income significantly affect WTP. The highest percentage of WTP was for cabbage, followed by carrots, broccoli, cauliflower, pak choy, and lettuce. The recommended pricing strategy is the default value pricing method.<p></p>