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Abstract

The organic dairy category is one the fastest growing categories of organic production in the U.S. Organic milk consumers generally cite perceived health benefits and lower risk of food contamination, as well as perceived superior quality and low environmental impact of organic farming methods, as the major motivations for preference of organic over conventional milk. While the properties of organic milk that are valued by consumers are fairly well-known, there is more ambiguity regarding the demographic characteristics of the typical organic milk consumer. This research makes use of experimental data and utilizes a relatively novel non-parametric modeling approach, the CART analysis, in identifying how willingness to pay for organic milk varies with the demographic profile of experiment participants. A more traditional econometric approach utilizing a Tobit regression is also performed to compare the results of the two models. The study finds that perceived taste of organic milk and concern for the risk of consuming conventional milk are major factors that separate experiment participants into groups with high and low WTP for organic milk.

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