Metin Cakir
Associate Professor
Department of Applied Economics
University of Minnesota
Abstract
Organic foods are one of the fastest-growing food market segments in the United States, with an average annual growth rate of approximately 14 percent in the last two decades. Despite the large and growing importance of organic foods, we have only limited information about retail price premiums and how these have changed over time, across space, and products. This paper addresses the gap by estimating retail price premiums for organic fresh fruits and vegetables (FFVs) using data and methods that are novel to the field. Specifically, we estimate premiums by constructing panel price indices for both conventional and organic FFVs using point-of-sale scanner data. Our sample includes data from grocery stores and mass merchandisers in 24 contagious Metropolitan Statistical Areas between 2009 and 2017. Our main result is that the national average organic price premiums in the FFV market range between 58 and 92 percent over the period 2009-2017. The premiums are persistent and have been trending upward over this period. We also find that differences in premiums across regions are substantial, while they have slightly converged during the study period. Another substantive contribution of the paper pertains to the “ideal” measurement of price premiums, that has been overlooked in the prior literature. We show that price premiums are substantially overestimated if the compared basket of conventional products is not the same as that of organic products.
Bio
Metin Çakır is an associate professor in the Department of Applied Economics at the University of Minnesota. Dr. Çakır conducts research in the areas of consumer economics, food and agricultural policy, and industrial organization. His work is published in leading journals such as American Journal of Agricultural Economics, Journal of Retailing, and Food Policy; and received awards, including a Quality of Research Discovery Award from the American Agricultural Economics Association. Dr. Çakır is teaching a capstone business strategy course and a course in managerial economics for undergraduates, and an applied consumer theory course for Ph.D. students. Recently, his teaching received the Distinguished Undergraduate Teaching Award from the College of Food Agricultural and Natural Sciences. Dr. Çakır is a member of the AAEA and served in several different positions in the Association. Currently, he serves as an associate editor for the American Journal of Agricultural Economics.
